1 TABLE OF CONTENTS

CHAPTER 4 STATE GOAL COMPUTATION ..................

................................................... .. 2
4.1 Form of Goals .................................

................................................... ...................................... 2 4.2 Proposed Goals ................................

................................................... ................................... 12 4.2.1 Proposed Final Goals ........................

................................................... .............................. 12 4.2.2 Proposed Interim Goals ......................

................................................... ............................ 63
4.3 Alternate Goals................................

................................................... ................................. 158
4.3.1 Alternate Final Goals .......................

................................................... ............................. 158 4.4 Computation Procedure .........................

................................................... ......................... 175 4.4.1 BSER factors informing state emission rate go als ............................................... ......... 175
4.4.2 Data used....................................

................................................... .................................... 225
4.4.3 Calculation .................................

................................................... .................................... 309 4.4.4 Alternative approaches ......................

................................................... ........................... 445 4.4.5 Treatment of data years .....................

................................................... .......................... 553
4.4.6 Other .......................................

................................................... ....................................... 5552 CHAPTER 4 STATE GOAL COMPUTATION

This chapter addresses comments received on the EPA ’s proposed state goal computations for
the EGU GHG Emission Guidelines. Comments received on the following topics are covered by this chapter: form of the goals (Section 4.1), prop osed goals (Section 4.2), alternate goals (Section 4.3), computation procedure (Section 4.4), errors in 2012 baseline data (Section 4.5), rate-to-mass conversion (Section 4.6), state flexib ilities (Section 4.7), other goal-setting approaches (Section 4.8), choice of baseline other than 2012 (Section 4.9), tribe and territory goals from supplemental proposal (4.10), state-spec ific goal computation (4.11), and other state goal computation related comments (4.12).

Commenters also raised issues on topics that are no t covered by this chapter. Please refer to the following chapters for responses specific to those issues:

• Chapter 1: Legal

• Chapter 2: Applicability

• Chapter 3: GHG Mitigation Measures

• Chapter 5: State Plan Considerations

• Chapter 6: State Plans

• Chapter 7: Interactions With Other EPA Programs and Rules

• Chapter 8: Impacts and Cost Analysis

• Chapter 9: Statutory and Executive Orders

• Chapter 10: Rule Language Corrections

4.1 FORM OF GOALS

Section 4.1 covers public comments related to the f orm of the goals including net generation, gross generation, and the form of carbon dioxide.

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.3

Comment 1 : Support for the EPA's proposal to express the rat e-based state goals in terms of emissions per unit of net generation, as opposed to gross generation.

Response 1: See section VI.C. of the final rule preamble of th e CPP for the EPA’s response to
this comment.

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

Several commenters supported EPA's proposal to expr ess the rate-based state goals in terms of emissions per unit of net generation, as opposed to gross generation.

Commenters added as EPA acknowledged in the preambl e to the proposed NSPS for new EGUs, the "net power supplied to the end user is a better indicator of environmental performance than gross output from the power producer." Commenters s aid using net generation as the basis for rate-based standards appropriately rewards efforts to increase the useful output of the power plants while avoiding increases in fuel consumption and emissions. Commenters stated in contrast, a rate-based standard based on gross gene ration would ignore differences in the efficiency of auxiliary equipment and pollution con trol systems among EGUs, and thus fail to fully incentivize the efficient generation of elect ricity. Commenters added using net generation to set state goals is feasible, as EGUs already col lect the necessary data and report net generation data to the Energy Information Administration.

Commenters added using net generation as the basis for rate-based standards appropriately incentivizes owners and operators of EGUs to optimi ze the efficiency of their plants by reducing parasitic loads associated with auxiliary equipment and emission controls; such improvements in efficiency increase the useful output of the plant while avoiding increases in fuel consumption
and emissions. Commenters stated under a standard b ased on net generation, these improvements in efficiency would lower the emission rate and con tribute towards bringing a fossil EGU into compliance.

Commenters added a gross generation-based standard is inconsistent with the overall technology-forcing purpose of performance standards under section 111, as well as EPA's recognition in building block 1 that improvements i n fossil plant efficiency yielding greater useful output while maintaining or reducing emissio ns - are an important part of the BSER.

Commenters added EPA recognizes in the preamble to the proposed rule that "[n]early all EGUs already have in place the equipment necessary to de termine and report hourly net generation," indicating that monitoring and reporting net genera tion would not be burdensome. Commenters added although net generation is currently not repo rted to EPA under 40 CFR Part 75, affected EGUs are generally required to report gross and net generation on a monthly basis to the Energy Information Administration (EIA) through Form 923 s ubmittals. Commenters said recent PSD permits for new and modified EGUs also include emis sion standards based on net generation, providing further support for the feasibility and r easonableness of this approach.

Commenters added every power plant uses a portion o f the electricity it generates (which is called the auxiliary or parasitic load) to run inte rnal processes, such as feedwater pumps, cooling4

fans, and pollution reduction systems; a unit's net generation subtracts the auxiliary load when determining how much electricity the unit generates , such that it only accounts for electricity actually delivered for sale to the grid; by contras t, gross generation standard does not factor out the auxiliary load, but simply calculates the total amount of electricity produced by the unit's generator. Commenters said EPA has properly calcula ted all of the emission targets in the Clean Power Plan on a net output-based rather than gross output-based standard; by considering only net generation, EPA's plan encourages states to min imize the auxiliary load of their electric fleet
and maximize internal efficiencies. Commenters said this will both help curb power plant CO2 emissions and reduce the cost of generating electri city for sale to the grid, which will, in term, help contain electricity costs to consumers; commen ters therefore, strongly supported EPA's decision to use a net rather than gross output-base d standard for its 111(d) rule and urge the agency to maintain the net-based standard in the fi nal rule.

Commenters stated any power plant standard under 11 1(d) should be in terms of net, rather than gross, generation. Commenters supported the EPA app roach of expressing the standard in terms of net generation rather than gross output. The com menters said the goal should be to serve the end users' electric demand with the minimum practic able amount of fuel, and the lowest practicable resulting emissions. Commenters said EP A's election to base emissions rate on net rather than gross generation provides utility engin eers with more tools in the toolbox to meet the desired goal.

Commenters stated EPA should be giving consideratio n to the effects of the installation of pollution control devices on the EGU's heat rate; e ven though controls degrade net heat rate, they provide an environmentally beneficial outcome and s hould therefore be accounted for. Commenters said U.S. EPA should not be making direc t comparisons in between net and gross generation when providing justification for the req uirements imposed under this proposal; gross generation is only a representation of the generato r itself and that such a value reflects nothing else about the generation system. Commenters said i f net generation is to be used, then a
mechanism must be established to credit those units equipped with pollution control devices; failure to do so penalizes those units that have ma de significant investments in environmental controls, the costs of which are paid for by electr icity rate-payers.

In the event that EPA ultimately decides to use net generation, the commenters proposed an alternative reporting approach. Commenters said the EPA reporting system used for hourly emissions data submittals includes a component for standalone quality assurance and quality control data submittals; because there is no need f or hourly net generation data, commenters
recommended that another standalone module be devel oped for total net generation so that the data already provided to EIA20 is directly submitte d to EPA at the same time. Commenters said the relative burden for every reporting facility to meter another data point and change its data collection and handling system to gather that data, to revise the reporting programs to include that data and for EPA to rewrite its own program to accept the data is much greater than if EPA were to simply develop one module to accept the EIA net generation data so that facilities can export that data directly into the EPA database at the same time the data are submitted to EIA.

Comment 2: The goals should be based on gross generation.5

Response 2: The EPA is finalizing the CPP based on subcategory -specific emission performance rates and statewide rate-based and mass-based goals based on net generation as explained in section VI of the final rule preamble of the CPP. S ee section VI.C. of the final rule preamble of the CPP for the EPA’s response to this comment. Ad ditionally, building blocks two and three in the EPA’s BSER operate under the premise that 1 net MWh of lower emitting generation can replace 1 net MWh of higher emitting generation. T herefore, measuring BSER emission performance rates premised on net MWh is more consi stent with the abatement measures considered in the BSER. In regards to the concern of the interaction of net generation and pollution controls, the response to this comment is addressed in section 3.1.4 of this document.

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

With respect to emissions goals based on gross vers us net output, the commenters asserted that any emissions goal for an EGU source that would be affected under a final section 111(d) program should be based on gross generation. Commen ters said any emissions goal under Section 111(d) must be based on the BSER determinat ion applicable to the affected source category. Commenters said the affected source categ ory under the EPA's proposal is a fossilfired electrical generating unit. Commenters said a uxiliary support equipment at a power generating facility has consistently been regulated as separate source categories under section 111 and Part 60 requirements; for example, coal han dling facilities are regulated under 40 CFR 60 Subpart Y. Commenters said auxiliary boilers are typically regulated under 40 CFR 60 Subpart Db or Dc, and are clearly distinct from the EGU. Commenters said non-emitting support systems, such as electric-powered water-intake stru ctures and associated pumping or general facility HVAC systems, are not included in section 111 source definitions; therefore, the emissions goals under the EPA's proposed rule clear ly should be based only on what is achievable at the affected source, which would be d efined as emissions based on either fuel consumed by the actual emissions source or the gros s output (gross MWh) from the emissions source. Commenters said in addition, there are many factors that affect the auxiliary usage requirements at a given power plant; those factors are dependent on many circumstances beyond the practical control of the operator, including ge ographical location, size of the facility and number of units, water availability, previous funda mental design choices for the auxiliary support and pollution control equipment, etc. Comme nters said basing a goal for an affected source category in part on efficiencies that might be gained from auxiliary equipment introduces further inconsistency in how the emissions goal wil l affect each EGU. Commenters said selecting a gross, versus net, basis affects the ef ficiency improvements that can be reliably achieved under Building Block 1; to the extent the EPA relied upon efficiency improvements to auxiliary equipment and non-emitting equipment to s upport its conclusion that a 6 percent average improvement in efficiency is achievable, th e inclusion of auxiliary equipment is inappropriate.

Commenters stated EPA is diverging from its practic e in other air regulations (e.g., MATS) of using gross not net generation for the calculation of emissions rates. Commenters said the net CO2 emissions rate goals are not only more difficul t to meet, but also punitive for stations like the Spurlock station which has 154 MWs of auxiliary power, 45 percent of which is used for pollution controls.6

Commenters stated the unit of measurement for this proposed rule, pounds of carbon dioxide per net megawatt hours is of particular difficulty for utilities. Commenters said by imposing limits based on net megawatt hours instead of the more tra ditional gross megawatt hours, power plants must deduct the power used to run the facility, als o dubbed as parasitic load. Commenters said this appears to be the first time emissions are bei ng measured as net, instead of gross. Commenters said this change also makes it more diff icult for electric utilities to collaborate with their fellow state utilities to meet the state goal s, which is another wrinkle in the EPA proposed rule. Commenters said by using a net measurement ea ch plant must be able to quantify its parasitic load now, and then predict it for future compliance purposes; however, this would be further complicated with the recently finalized 316 B rule that regulates the intake of cooling -- of water for cooling purposes, which also effects natu ral gas plants. Commenters said under 316B, a power plant would need to limit its impact on aqu atic biota after several years of study; the result could be to add a new cooling tower or the l ike, which in turn would add more parasitic load; this results in higher carbon dioxide emissio ns from a plant, not because the increased
carbon dioxide -- that carbon dioxide emissions out put is -- not because of the increase the carbon dioxide from the from the stack, but because the net megawatt hour number is smaller on the denominator side of the equation.

Commenters stated the proposed Existing Source Perf ormance Standard leaves unresolved an open issue concerning reporting generation data for compliance purposes as "net" or "gross" generation; in Section VII of the proposed rule (pa ge 34894) the adjusted emission rate goals are described in terms of "net energy output"; in this section, EPA seeks comment on "...whether the goals and reporting requirements for existing EGUs should be expressed in terms of gross generation instead of net generation for consistenc y with existing reporting requirements and with the proposed requirements under the GHG standa rds of performance for new EGUs".

Commenters recommended continued use of gross gener ation rather than switching to net generation. Commenters said Electric Generating fac ilities have been reporting gross generation since the beginning of the Acid Rain Program in the mid 1990's, with additional units reporting as the result of various NOX reduction programs, as well as the EPA Mandatory Greenhouse Gas Reporting programs. Commenters said significant inv estment has been made in both the hardware and software necessary to comply with the reporting requirements; a change to reporting requirements will require every reporting entity to make both hardware and software changes to their existing systems.

Commenters favored the use of gross load (i.e., gen eration) data over net generation for because of consistency and fairness.

Commenters stated in the document titled "Part of E .O. 12866 and 13563 Review: EPA Response to Interagency Comments on the EGU GHG Mod ified/Reconstructed Source NPRM (clean) (2060-AR88) as part of review of EGU GHG Ex isting Source NPRM (2060-AR33) (5/30/2014)" in the docket for the proposed rule, t he following text is found: "To the extent that
the EPA finalizes modified and reconstructed standa rds for stationary combustion turbines that are consistent with the standards for newly constru cted stationary combustion turbines, the EPA intends to take the same approach with regards to t he use of net or gross output in both final actions." Commenters said in light of the fact that EPA's proposed new source CO2 standards7

under section 111(b) are already based on gross gen eration, for the sake of consistency gross generation should also be used for the section 111( d) standards.

Commenters stated for any state where the proposed rule's goals are to be met on a unit-by-unit (or fleet-by-fleet) basis, the use of net generatio n values penalizes utilities for electricity that i s used to power pollution control systems-mandated by other EPA regulations-that are installed subsequent to 2012. Commenters said in answer to a question KDHE staff asked with regard to affected EGUs using existing EIA forms to report th eir generation under the proposed rule, EPA Region 7 answered: "Kansas will not be using EIA da ta for utilities to show compliance with the 111(d) Plan. The State Plan will need to have monit oring, recordkeeping, and reporting requirements to meet 60.5805. This is also discusse d at 79 FR 34910." Commenters suggested that by using gross generation to meet goal perform ance, affected EGUs, all of which are already Acid Rain sources reporting CEM data to EPA's Air M arkets Program, can be relieved of the burden of new reporting requirements by simply allo wing them use of Air Markets Program (CEM) data to fulfill their requirements (for CO2 e missions as well as electric generation) under the proposed rule.

Commenters noted that EPA solicited comment on whet her the goals and reporting should be conducted on a net or gross basis. Commenters state d that while a net generation basis promotes energy efficiency, they believe that the owner or o perator of an affected source should not be penalized for station service loads due to the oper ation of air pollution control devices such as flue gas desulfurization units, selective catalytic reduction devices, and control technology to reduce particulate matter emissions. Commenters the refore stated that a gross output-based standard is more appropriate than the net output-ba sed standard because well-controlled fossilfuel fired EGUs consume more energy to operate air pollution control devices than uncontrolled units. Commenters stated that the gross output-base d standards are appropriate for both new and existing fossil-fuel fired EGUs. Commenters stated that the definition of gross output should allow for 100 percent of the useful thermal energy being produced and used to be included, as opposed to 75 percent of useful thermal energy bein g produced as proposed. Commenters recommended that regardless of whether the final ru le uses a gross output or net output based standard, 100 percent of the useful thermal energy should be credited.

Comment 3: Goals should be based on absolute emissions, not ca rbon intensity.

Response 3: The EPA is finalizing the CPP BSER as subcategory- specific emission performance rates and equivalent state goals based on carbon intensity and absolute emissions from affected sources. States have the flexibility to choose from any of the compliance metrics including mass-based state goals.

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

Several commenters stated the CPP targets carbon em issions, a critical U.S. GHG contributor; the CPP relies on a performance targets based on th e carbon intensity of each state's fuel mix for power generation. While commenters supported that r eductions in carbon intensity of the U.S. economy should be achieved, performance targets sho uld be defined on the bases if absolute8

carbon emissions. Commenters said because the possi bility that reductions in carbon intensity
can still result in increases in absolute carbon em issions, both goals should be addressed in the rule. Commenters supported a vibrant U.S. economy t hat meets the needs of all the nation's residents, but economic growth should not sacrifice long-term public health and environmental sustainability; this requires that economic goals a nd environmental goals work symbiotically. Commenters said EPA should develop guidance and req uire states demonstrate verifiable absolute carbon reductions, and that absolute carbo n reductions be achieved in environmental justice communities.

Comment 4: Goals should be based on the total mass of greenhou se gas entering the atmosphere.

Response 4: The EPA is finalizing the CPP subcategory-specific emission rates for BSER and providing states with the flexibility to use an equ ivalent blended rate or mass goal as an alternative means for demonstrating compliance. Th erefore, states have the flexibility to use an
absolute mass limit as illustrated in section VII o f the final rule preamble of the CPP.

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

Several commenters stated the rule does not actuall y limit total emissions, but rather the "intensity" of emissions; this means that instead o f capping the amount of greenhouse gas or even carbon dioxide that power plants are allowed t o pump into the atmosphere, the rule establishes a "rate based" emission target for each state, defined as pounds of carbon dioxide per megawatt-hour (CO2/MWh). Commenters said like a die t that limits calories per serving but not the number of servings, such an approach will ultim ately fail if emissions are allowed to rise with increased demand. Commenters said targets shou ld be based on the total mass of greenhouse gas entering the atmosphere, or at a min imum contain mass-based backstops, to ensure that aggressive greenhouse gas reductions ar e achieved.

Commenters understand that Section 111 of the Clean Air Act provides for the consideration of costs, this has been improperly interpreted to prec lude necessary and meaningful action.
Commenters said the consideration of "reasonable" e xpense must also forthrightly address the much greater financial, economic, and societal cost s of inadequate response. Commenters said the EPA can use its authority under Section 111 to establish emissions standards that push states to achieve much deeper reductions; furthermore, the EPA has authority under the Clean Air Act to develop National Ambient Air Quality Standards ( NAAQS) for greenhouse gases (including methane) at levels scientists recognize must be ach ieved to protect health and welfare. Commenters said the EPA should use the strongest to ols available under the Clean Air Act and other provisions of law to avoid climate catastroph e.

Commenters stated fossil fuel power plants are resp onsible for over a third of greenhouse gas emissions in the U.S.; because the sector consists of a finite number of large emission sources, it is one of the most strategic and important to targe t for improvement; in order to demonstrate that the U.S. is serious about climate change, the EPA s hould adhere to the internationally accepted baseline year of 1990 for measurements and set much stronger targets for power plants with required benchmarks for compliance beginning no lat er than 2020.9

Comment 5: CO2 Emission Target Considerations

Response 5: The EPA is finalizing the CPP statewide goals based on CO 2 /net MWh.

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

Several commenters stated the Proposal does not act ually impose CO2 emission limits on fossil fuel plants; rather, compliance is determined based on whether CO2 emission rates averaged across all EGU's meet the goals established for eac h state (or region for states that elect that option); EPA recognizes that while the Proposal giv es states additional room to innovate and find the most effective way to achieve the goals, it cou ld also significantly complicate enforcement.

Commenters added for example, some of the "Building Blocks" assume that public agencies or private actors will increase the utilization of com bined cycle gas units or defer the retirement of nuclear plants or run them at higher capacity facto rs; EPA and many state environmental agencies may lack the jurisdiction to either requir e or motivate such actions. Commenters said the Proposal assumes that EPA will take some enforc ement action against a state that fails to achieve the statewide emission rates, but based on past experience, that is politically unpalatable and it is far more likely that EPA would postpone c ompliance deadlines.

Commenters added EPA can resolve this dilemma by re quiring all fossil fuel EGU's to meet specific emission limits where state or regional ta rgets are not met by rule's deadline. Commenters said these default requirements could re quire fossil fuel plants to meet emission limits in 2030 based on long term rates already ach ieved by coal and gas-fired EGU's between 2008 and 2013. Commenters said on the one hand, thi s approach maintains flexibility - fossil fuel plants would not have to meet the specific, pe rformance based standards where the rule's statewide goals are met; on the other hand, it woul d ensure accountability through enforceable standards that would be triggered by failure to mee t the targets through the more elastic approach that EPA has proposed. Commenters said the CO2 emis sion targets are more likely to be met if the consequences for failing to meet those objectiv es are clear.

Commenters supported setting a single emission rate -based goal determined to be representative of BSER for a typical electric system, along with a n equivalent mass-based goal. Commenters added that as a compliance measure, states that are already this goal should be allowed to demonstrate to EPA that they will continue to meet the emission rate-based or equivalent massbased goal. Commenters added that states that are m eeting the goal could then comply with the proposed rule by submitting a plan to EPA demonstra ting how they will achieve either one of the equivalent goals.

Commenters stated many states, including the RGGI s tates, have already made substantial progress in reducing emissions from their power sec tor. Commenters said EPA should structure the guidelines in a way that recognizes this progre ss and provides equitable treatment to those states. Commenters said EPA should avoid any approa ch that imposes inequitable or disproportionate burdens on early mover states and fails to recognize their substantial progress; for example, requiring an equivalent perc entage reduction for state A, which has already achieved most cost-effective reductions, an d state B, which has taken little action and10

finds many inexpensive emission reduction opportuni ties still available, would effectively disadvantage state A for having taken early action. Commenters stated one approach that EPA should consider is setting a single emission intens ity target (e.g., a system-wide average of 1100 lb/MWh) that would apply to each state, individuall y or as part of a region. Commenters said that approach would require all states to reduce emissio ns but it would be equitable to those states that have already made progress toward meeting the emission intensity target; EPA could consider providing more time to states that have mo re work to do to meet the target.

Commenters stated the EPA goals are actually going to be measured based on the "Adjusted Output Weighted Average Pounds of CO2 Per Net Megaw att-hour From All Affected Fossil Fuel Fired EGU's in the State," or Heat Rate, and i s specific for each state. Commenters said an actual goal will not be known until the state plans are accepted sometime around 2017, and will be calculated by dividing fossil fuel power plant e missions by the total power generation from all sources to come up with an average heat rate from a ll sources including the avoided generation resulting from energy efficiency projects. Commente rs said a simple CO2 emission target for each state would be a lot simpler.

Commenters stated early adopters and more responsib le states are not getting credit for taking action, the commenters understand this; however, it seems more important to have a level playing field now. Commenters asked if EPA set a ca scading limit on carbons per MWh that is the same for every state and that decreases over ti me.

Commenters stated that EPA arrived at a Proposed St ate Goal, termed an "adjusted outputweighted-average pounds of CO2 per net MWh from all affected fossil fuel-fired EGUs." Commenters said EPA reached this figure by dividing the total projected CO2 emissions from the affected EGUs under this scenario by the sum to tal of annual MWh generation from the affected EGUs + annual MWh generation from renewabl e and nuclear generation + annual MWH generation avoided by reduced demand. Commenter s said a great many assumptions and projections inform the data inputted and the struct ure of this calculation.

Commenters stated it is apparent that this is not a ctually a measure of the average output of CO2 per MWh produced from fossil-fired EGUs at a specif ic source. Commenters said it is not something that could be required of, or even derive d from data provided from, a particular fossilfuel fired EGU. Commenters said it is simply a way of expressing numerically, in an artificial, temporal fashion, the expected state-wide reduction in CO2 emission resulting from changes in electricity generation, dispatch and demand in the designated State from application of the four building blocks.

Comment 6: Other Greenhouse Gases CO2e basis

Response 6: The EPA is finalizing the CPP goals based on CO2 em issions. See section VIII of the final rule preamble of the CPP for a discussion of alternative compliance measures.11

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

Several commenters stated consider recognizing and providing a credit mechanism for reductions of other greenhouse gases in place of CO 2 on a CO2 equivalent (CO2e) basis; for example, a coal-fired power plant could reduce its emissions of methane or nitrous oxide and
should be allowed to substitute these reductions fo r any required CO2 reductions on a CO2e
basis. Commenters stated Illinois should be allowed to account for such actions in its state plan.

Comment 7: The EPA's Emission Guidelines Establishing Standard s for States are Consistent with the EPA's Past Practice and Regulatory Require ments.

Response 7: The EPA appreciates the comments of support for est ablishing standards consistently with past practice and regulatory requ irements.

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

Several commenters stated EPA's formulation of the proposed rule is consistent with the Agency's past practice in which EPA has established emission targets and authorized states to develop compliance plans under section 111, which c an include an "allowance system." Commenters said for example, in the regulations for large municipal waste combustors, sources subject to section 111(d) can average their emissio n rates and trade nitrogen oxide emission credits to demonstrate compliance. Commenters said under the current regulations in 40 C.F.R. section 60.22(a), EPA is required to publish standa rds of performance for the pollutant from the affected sources and then publish a guideline docum ent; the regulations further explain that the guideline document provides information to states o n the development of state plans. Commenters said thus, the proposed rule satisfies t he emission guideline requirements in the existing regulations; the proposal and supporting d ocumentation also provide highly detailed and record-based support for EPA's proposed BSER based on current experiences by the states to reduce emissions; it includes information for state s to develop compliance plans, analysis of the building blocks that comprise BSER, state goals bas ed on BSER, and the time in which compliance can be achieved, as well as other inform ation.

Comment 8: The Proposed Rule Should Set a Mass-Based Emission Cap Rather Than a Carbon Intensity Standard

Response 8: The EPA is quantifying the BSER with subcategory-sp ecific emission performance

rates based on lbs of CO 2 /net MWh as discussed in section VI of the final ru le preamble of the CPP. We also provide state equivalent emission rat e-based and mass-based goals. Therefore, per the commenters suggestion, the EPA has provided a mass-based metric that states have the flexibility to use.

The following are summaries of the specific public comments under this comment:12

Several commenters said that allowing states to cre ate carbon efficiency standards may generate
"seam conflicts" at the borders of rate-based state s and states with mass-based, emission cap systems, such as the carbon reduction programs alre ady in existence in California and through the Regional Greenhouse Gas Initiative ("RGGI"). Co mmenters said for example, these conflicts
could arise between states with interconnected elec tricity systems if natural gas units in a massbased state operate slightly more efficiently than those in a rate-based state and have historically been dispatched before the natural gas units in the rate-based state. Commenters said the EGUs operating in the rate-based system (and earning an economic benefit for each MWh produced) could underbid EGUs operating in a mass-based syste m without a corresponding economic
benefit. Commenters said this would be so because i ncreased NGCC generation in the rate-based state lowers the average state emission rate in tha t state, allowing the rate-based state to meet its goal (even while increasing its mass emissions subs tantially). Commenters said at the same time, decreased generation in the mass-based state lowers that state's total emissions, allowing the mass state to meet its goal. Commenters said total overall emissions, however, increase; thus, a piecemeal approach with inconsistent state systems within larger electricity markets could result in shifted generation from states with mass-based s ystems to those with rate-based systems, while overall emissions increase; state-specific ma ss-based caps would prevent this distortion.

4.2 PROPOSED GOALS

Section 4.2 covers public comments related to the p roposed final and interim goals.

4.2.1 Proposed Final Goals

Section 4.2.1 covers public comments related to th e proposed final goals including the stringency, achievability, state’s authority to dev elop, in relation to NSPS standard, disparity between states, and the timing.

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: Support for proposed final goals.

Response 1: The EPA appreciates the comments of support for the proposed goals, please see sections V, VI, and Section VII of the final rule p reamble of the CPP for discussion of changes to the BSER between proposal and final based on commen ts, the quantification of the BSER in this final rule, and a description of the state goals.

The EPA agrees with the commenters that the propose d requirements were viable. The final rule quantifies the BSER in a manner using source-catego ry rates rather than purely relying on state goals. These modifications incorporate commenter f eedback in a manner that makes the expression of the BSER more applicable to source-ca tegories and units within that source13

category. It simultaneously assesses source reduct ion potential from a regional lens rather than a purely within a state lens as proposed. The result ing source-category rates and state goal compliance options similarly represent viable and f easible reductions that are consistent with the

comments above.

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

Several commenters provided general support for the proposed goals and stated they are fair and technically achievable/feasible.

Commenters stated that even states with the most si gnificant reduction goals will be able to meet their targets with relative ease given EPA's conser vative assumptions and the range of emission reduction options available. Commenters said that s ince the Proposed Rule allows states to deploy these types of "beyond the fence line" solut ions to reduce emissions in addition to the onsite options, states will be able to employ the ful l suite of advanced energy technologies. Commenters stated that this flexibility will also a llow states to address a major contributing
factor to excessive emissions: the inherent ineffic iencies of the existing electricity system. Commenters said that by employing more natural gas and renewable generation, expanding demand-side energy efficiency, and deploying additi onal smart grid technologies, states will dramatically decrease their emissions as they displ ace generation from outmoded, high-emitting sources and eliminate inefficiency and waste in the system. Commenters said that given the availability of the full range of advanced energy t echnologies, states will be able to meet their goals easily from a technological perspective and a t low cost, while at the same time increasing grid reliability and resiliency and providing new p roducts and services to consumers. Commenters stated that by driving investment in the se high-value emission-reducing technologies, the Clean Power Plan will accelerate the country's transition to a high-performing grid that is efficient, reliable, resilient, flexib le, clean, affordable, and consumer-focused.

Commenters supported EPA's proposed 2030 compliance deadline; achieving EPA's proposed final target will require significant shifts in gen eration as well as additional transmission. Commenters stated while aggressive, the year 2030 i s an achievable compliance deadline, assuming EPA incorporates changes provided by comme nters.

Commenters asserted the proposed carbon emissions r eduction target for Arkansas of 44% by 2030 from 2012 carbon emissions rates is appropriat e as it reflects the business strategies pursued by the state's electric utilities the last 10 years; Arkansas's electric generation and carbon emissions increased 27% and 39% respectively from 2 005 to 2013 despite retail electric energy sales rising only 1%.

Commenters stated the emission reduction targets ou tlined in the Clean Power Plan are based on EPA's determination of the best system of emission reduction ("BSER") in the form of four building blocks that have been adequately demonstra ted at a reasonable cost; the commenters urged EPA to finalize a 2030 target for Tennessee t hat is at least as stringent as the proposed target - particularly because Tennessee's actual em ission rate (i.e., one that accounts for decisions already made) is much lower than what EPA assumes.14

Commenters supported the adoption of Option 1, but with recommendations for modifying the draft rule; a stable, long-term policy framework is necessary to ensure that the U.S. sustains its commitment to reducing emissions; in addition, the country must adopt ambitious targets that both make significant near term reductions and set us on course to meet the long-term reductions necessary to mitigate greenhouse gas concentrations and the extent of climate disruption. Commenters also supported the EPA's proposed rate-b ased approach; it is likely that more end use of energy will shift to the electricity sector as a greater portion of transportation and space heating become electrified; it is possible that ene rgy efficiency improvements and deployment of more efficient technologies (e.g., ground source he at pumps) and energy storage could enable the electricity sector to absorb new load sources witho ut a significant increase in total load; however, such an outcome is not certain, and a rate-based ap proach would accommodate unforeseen changes in the electricity sector without compromis ing the effectiveness of the Clean Power Plan
framework.

Commenters applauded the EPA for its issuance of it s performance standards for existing sources of carbon pollution; however has some gener al concerns.

Commenters stated Nevada is well positioned to meet and exceed the proposed interim and final goals called for by the Clean Power Plan - and the successful transition Nevada is already undertaking underscores the wisdom of EPA's system- wide approach to reducing carbon emissions. Commenters encouraged the EPA to move fo rward with finalizing these much needed pollution reduction measures. Commenters said trans itioning to a clean energy future in Nevada is already creating jobs and spurring economic deve lopment, as well as improving public health through better air quality; deploying these types o f solutions across the country is critical if we hope to avoid the damages caused by a warming clima te.

Commenters stated with the implementation of existi ng state law, Nevada is in a strong position to meet the interim and final goals set forth in th e Clean Power Plan. Commenters said Eightyfive percent of Nevada's electricity load is served by NV Energy through its operating utilities, Nevada Power Company and Sierra Pacific Power Compa ny. Commenters said Senate Bill (SB) 123, enacted in 2013, provides for the retirement o ver the next five years of 812 MW of NV Energy's coal-fired generation, and the replacement of that generation with lower carbonemitting resources, including significant new renew able energy generation. Commenters said a recent analysis, performed by Western Resource Advo cates, is based on NV Energy's projection of loads and resources under its SB 123 implementat ion plan for the years 2020-2030, and its projection of annual carbon emissions from affected EGUs in its fleet for the same years. Commenters said NV Energy with its SB 123 implement ation plan is on track to achieve an adjusted emissions rate of 796 lbs/MWh in 2020 and 528 lbs/MWh in 2030; the 10-year average of the adjusted emission rates for the 2020-2029 co mpliance period is 678 lbs/MWh, and the company achieves an adjusted emissions rate of 552 lbs/MWh in 2029. Commenters said these projected emission rates for NV Energy easily meet EPA's interim goal for Nevada of 697 lbs/MWh, as well as the final goal of 647 lbs/MWh. Commenters noted that these projections do not assume the retirement of all coal-fired EGUs by 2020. Commenters said NV Energy's projected emissions from the coal-fired North Valmy Generating Station are included until its scheduled retirement at the end of 2025, and its pr ojected emissions from the coal-fired TS Power Plant are included through 2030.15

Commenters supported the Proposal's establishment o f emission goals for states, including an interim goal, which would apply between 2020 and 20 29, and a final goal, which must be achieved starting in 2030. Commenters understood th at state emission goals are not uniform and that some states will be required to reduce emissio ns rates more than others; it appears that even states with even the most significant reduction goa ls will be able to meet their targets with relative ease given EPA's conservative assumptions used in setting emission performance standards and the range of carbon emission reductio n options available for compliance, including the range of renewable energy technologies and ener gy efficiency. Commenters said as a result of certain assumptions and provisions, the proposed rule significantly underestimates the degree to which renewable energy, in particular, can help New York meet its carbon reduction goal.

Commenters stated EPA's target-setting did not take into account many of the carbon-reducing measures that Tennessee had begun pursuing prior to the proposal; when those measures - which include coal unit retirements and conversions, the construction of new natural gas units, and new investments in renewable generation and energy effi ciency - are taken into account, Tennessee will achieve 88 percent of its reduction target mer ely by staying the course. While the assumptions that the commenters made in performing these calculations were simplified in comparison to the level of detail needed to determi ne actual compliance, these calculations nevertheless reflect the achievability of Tennessee 's target.

Commenters stated as a result of the actions taken to date, the New England region is already well positioned in the U.S. as leader in clean ener gy and its ability to meet greenhouse gas emission reduction targets.

Commenters modeled 3 scenarios: business-as-usual ( BAU) scenario against a natural gas fuel switching, scenario, and a 30% Renewable Portfolio Standard (RPS). Commenters said this preliminary analysis shows that Wisconsin can meet EPA's CO2 reduction targets by pursuing two compliance options, a 30% by 2030 RPS, or a sta tewide shift to displace coal with increased dispatch of existing natural gas units. Commenters said while the 30% RPS will require significant construction of new renewable generatio n, it is cost-competitive with the natural gas fuel switching alternative by 2030 (though actual c osts could vary widely depending on many
variables that were not tested in this initial anal ysis). Commenters said the 30% RPS scenario will also result in highly diversified generation m ix that will insulate Wisconsin's utilities and electric ratepayers against volatile fuel prices an d potential CO2 compliance costs.

Commenters said EPA has stated that its determinati on of state-specific emission targets will
reflect emission reductions available to or achieva ble by regulated sources through state plans. Commenters said the Proposed Rule evaluates specifi c alternatives for emission reduction - both directly at the regulated sources and in manners th at may indirectly affect emissions from regulated sources - among several energy generation scenarios, and also insists that states should be afforded substantial flexibility in devising ind ividual plans to achieve these state goals. Commenters said these two principals - achievabilit y of emission levels and state flexibility in devising plans - are fundamental to the consistency of the regulatory framework with the statutory authority.16

Commenters requested that the EPA issue guidelines and approve state-established performance
standards that are based on reductions of carbon di oxide emissions achievable by measures undertaken at fossil-fueled power plants.

Commenters stated that the language of section 111 is sufficiently broad to authorize the selection of an averaging system as the best system of emission reduction, thus expressing state goals as average, state-wide performance levels is reasonable and consistent with EPA's authority under the Clean Air Act

Comment 2 : The EPA should revise/adjust state goals; recomme ndations.

Response 2: The EPA appreciates the comments of support for the proposed goals and recommendations, please see sections V, VI, VII, an d VIII of the final rule preamble of the CPP for a description of the BSER, its quantification, and accompanying state goal compliance options.

In regards to these comments on Virginia’s goal on Brunswick and Warren plants, Dominion Power’s comment confirmed they were under construct ion by NSPS definition. The EPA determined it was inappropriate to ignore any under construction units from the quantification of BSER and establishment of states goals as they are considered affected sources under 111(d). Other commenters suggested that under construction units be included in the quantification of BSER and state goals and that is consistent with ho w the EPA is finalizing the BSER quantification.

In regards to the comment on Arizona’s goal, there is no distributed generation assumed in the BB3 RE levels assumed in the BSER quantification. See section V.E. of the final rule preamble and the GHG Mitigation Measures TSD for further exp lanation of BB3 in the final rule.

In regards to the Louisiana comment, the EPA has re vised some of its baseline Louisiana data per the commenters’ note and comments elsewhere in this document. Notably, the Washington Parish facility was removed from the likely affecte d inventory as commenters pointed out that it was no longer under construction. This change is r eflected in the final rule’s BSER quantification of subcategory rates, and in the Lou isiana state goals.

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

Commenters asserted that EPA does not have the auth ority to consider emissions reductions beyond the fence line in a BSER analysis; however, if EPA decides to proceed with a BSER analysis that includes Building Blocks 2 through 4, then it must consider that a state goal of no less than 2,215 pounds of CO2 per MWh is a more rep resentative and realistic state goal for Wyoming, as evidenced by WDEQ's and PSC's analysis of the Propose Rule. Commenters said the state goal of 2,215 is derived by adjusting inp uts to EPA's model as follows and as supported by the WDEQ and PSC analyses: Adjust Building Block 1 from 6% to 2% and incorporate a 3 year baseline (2010-2012) of 2,343 lbs CO2/MWh; Cor rect Building Block 2 to 95 MW; Adjust Building Block 3 from a 6% escalation factor to a 1 % escalation factor; Adjust Building Block 4 from a cumulative savings of 9.73% to 3.77%17

Commenters requested EPA implement the following re commendations for Virginia: 1) EPA
should remove NGCC units under construction from th e calculation of the state reduction targets; EPA should recalculate the Virginia target s excluding the emissions and megawatt-hours from the Warren and Brunswick NGCC facilities. (Alt hough there is no direct impact to Virginia's target, EPA should likewise remove nucle ar units under construction in the calculation of state targets.) 2) EPA should eliminate the 6 pe rcent adjustment assumed in the calculation of the state target to reflect "at risk" nuclear and r ecalculate the Virginia target accordingly; at this time, there is no existing nuclear generation in Vi rginia that is economically at risk. 3) EPA should adjust the state target to reflect the state -specific renewable potential identified under the NREL Alternative renewable approach. 4) EPA should adjust the state target based on statespecific energy savings instead of the savings real ized by the "best performing" 12 states. 5) EPA should adjust the state target to appropriately rec ognize and credit unit efficiency improvements and uprates achieved prior to the 2012 baseline.

Commenters added when EPA's goal calculations are c orrected to use NGCC net capacity rather than nameplate capacity, and an incremental NGCC em ission rate, Florida's proposed goal in 2030 is above 900 lb/MWh; EPA must correct its erro rs related to Florida's goals, recalculate the goals, and provide an opportunity for public review and comment.

Commenters stated the average emission rate of coal -fired EGUs depends in part on how often they are required to ramp up and down, and the amou nt of time for which they can operate at optimal capacity; integration of increasing amounts of natural gas generation, RE, EE, and redispatch-as contemplated by the Proposed Rule-wil l reduce the average utilization of coal-fired EGUs, thus increasing their average heat rate and C O2 emissions; therefore, even if additional efficiency improvements are feasible, the implement ation of the other Building Blocks could greatly reduce the amount of emission reductions th at would otherwise be achievable through improving coal-fired EGUs' efficiency. Commenters s aid such inefficiencies should be considered by the EPA in its determination of inter im and final emissions targets for states.

Commenters stated Louisiana's final goal should be 1078 lb CO2/MWh, with an alternate goal of 1239 lb CO2/MWh after accounting for discrepancies.

Commenters stated the proposed rule sets Louisiana' s final goal at 883 pounds of CO2 per net megawatt hour (lb CO2/MWh) and specifies the state' s "alternate goal" as 1025 lb CO2/MWh. Commenters said after accounting for discrepancies, Louisiana's final goal should be 1078 lb CO2/MWh, with an alternate goal of 1239 lb CO2/MWh. Commenters asserted EPA's use of incorrect data calls into question the rule in i ts entirety and warrants its abandonment, at the very least EPA should revise Louisiana's goals; how ever, even if these numbers are revised by EPA- the results would still cripple the state's ec onomy.

Commenters stated EPA's use of incorrect data calls into question the rule in its entirety and warrants its abandonment, at the very least EPA sho uld revise Louisiana's goals.

Commenters stated following the correction of a num ber of discrepancies in EPA's data and a revised regional RE target Louisiana's final goal s hould be set at 1131 lb CO2/MWh, with an alternate goal of 1270 lb CO2/MWh.18

Commenters stated the net effect of changes raises Louisiana's final goal to 1078 lb CO2/MWh and its alternate goal to 1239 lb CO2/MWh.

Commenters supported EPA's finalization of a 2030 t arget for Virginia that is at least as stringent as the proposed target - particularly because Virgi nia's actual starting point (i.e. one that accounts for decisions already made) is much lower than what EPA assumes. Commenters re-created the state target EPA computed for Virginia using the fo ur BSER building blocks; for Virginia, the baseline carbon emissions rate for fossil-fuel gene ration in 2012 was 1,438 lbs/MWh; applying each of the four building blocks to Virginia's 2012 baseline resulted in an emissions rate goal of 810 lbs/MWh in 2030, with an interim goal of 884 lb s/MWh average for years 2020 - 2029.

Commenters recommended that EPA correct the Arizona goal to exclude the distributed generation portion of the goal.

Commenters have prepared corrected, but incomplete, Alaska goal calculations; and stated these updated calculations are incomplete because EPA did not provide adequate information to determine the basis for several calculation steps. Commenters said even so, these incomplete,
corrected calculations demonstrate that the recalcu lated interim CO2 performance goal for Alaska should be no less than 1,261 pounds of CO2 p er net megawatt-hour (lb CO2/net MWh) compared to the proposed EPA interim goal of 1,097 lb CO2/net MWh. Commenters said the same incomplete, corrected calculations demonstrate that the final CO2 performance goal for Alaska should be no less than 1,191 lb CO2/net MWh compared to the proposed EPA final goal of 1,003 lb CO2/net MWh. Commenters said the comple tely corrected calculations will likely result in higher goals.

Commenters supported the overall EPA approach of se tting a target rate of CO2 emissions for each state. Commenters said this performance-based approach provides the maximum flexibility to states to achieve the targets, while ensuring th at the essential climate protection goal of significantly reducing greenhouse gas emissions in the electricity sector is achieved; but it is essential to remedy the technical and economic defe cts of the way in which the EPA has gone about setting rates for states. Commenters stated t he major issues in need of remedy, while adopting as much of the EPA approach as possible, a re:

1. The setting of target rates should be technology neutral, unlike the EPA's treatment of natural gas, nuclear power, and hydropower.

2. Emissions and generation from various years shou ld not be combined, emissions should be calculated for each year according to total emissio ns and total generation from all affected sources and all other generation (except the small sources which are consistently omitted from both emission and generation calculations).

3. The separation between the EPA's functions and t hose of the Nuclear Regulatory Commission (NRC) needs to be recognized; the EPA should not as sume that reactor licenses would be extended beyond their current expiry dates; safety and environmental considerations demand that the EPA construct its rule without presuming future NRC actions, one way or another; options
exist that better meet the BSER tests than subsidiz ing existing nuclear plants.19

4. States should have flexibility in meeting the ta rget emission rates, which is already the case in the Draft CPP; however, the EPA should make clear t hat certain approaches like increasing natural gas use may not meet the compliance test un der adverse but realistic venting and warming potential assumptions; the EPA should also make clear that nuclear plants whose licenses expire before 2030 cannot be included in c ompliance plans.

5. The trajectory in 2030 should be compatible with long-term (2050 onward) need for the elimination of nearly all energy-related CO2 emissi ons.

6. The framework should be able to accommodate resi lience of the electric grid and economic justice so that low- and middle-income households a re not disproportionately impacted.

7. The cost criterion should be consistently and re alistically applied to determine the best system of emission reduction; the commenters has used a co st criterion of $20 per metric ton pf CO2 emission reduction or less relative to a new coal p lant for inclusion in the best system of
emission reduction.

8. Non-air quality impacts need to be considered.

9. Water use should be considered; specifically, lo w water use should be a consideration for inclusion in the BSER; the EPA should specify that states must meet their target emission rates
even if there are increases in CO2 emissions due to nuclear power plant derating caused by lack of cooling water or by discharge temperature consid erations.

10. The range of natural gas leakage estimates and global warming potential values that are relevant to climate protection need to be taken int o account; specifically higher published leakage estimates and the 20-year warming potential for methane should be used to estimate the upper limit of potential CO2eq impacts; at the very least, the EPA should use the mean of the published leakage rates and a 20-year warming poten tial for methane (whether from coal, oil, or natural gas fields) to estimate the overall impact of natural gas use.

11. The overall targets set by the EPA are weak giv en the ample opportunities for low-cost or even negative cost CO2 emission reductions and the need for stronger targets for climate protection.

Commenters stated that EPA should evaluate whether and when the level of performance achieved by the RGGI states can be achieved through out the United States using the various tools at the disposal of the states. Commenters sta ted that EPA should structure the emission guidelines to require that states make significant progress in the next decade toward achieving the reductions and performance level demonstrated b y RGGI to be readily achievable by the best systems of emission reduction.

Comment 3: The EPA should strengthen the targets.

Response 3: Please see section VII of the preamble for the fina l rule’s state goals.20

The EPA has revised our methodology for quantifying the BSER in this final CPP. See preamble section V for a description of how it defi nes BSER and what abatement technologies
and levels are assumed to be available. See sectio n VI along with the Regulatory Impact Analysis for CPP Final Rule for a description of th e annual emission impacts. The following are summaries of the specific public comments under thi s comment:

Several commenters stated EPA should strengthen the targets.

Commenters stated the state-by-state targets in the proposal are not based on policies already adopted by each state; the EPA approach underestima tes the use of renewables and conservation and, for some states, assumes less use of renewable s and conservation in 2030 than is already in place today or less than has already committed to b y the state. Commenters urged EPA to more accurately estimate the potential for use of renewa ble energy and to strengthen the state-by-state targets accordingly; the commenters added energy co nservation can realistically play a larger role in displacing carbon emissions and that should be recognized in the state estimates as well.

Commenters stated EPA should strengthen its proposa l by calling for more ambitious reductions of carbon emissions from power plants by at least 5 0% from 2005 levels by 2030.

Commenters added strengthen the targets for reducti ons in carbon emissions; the draft rule purports to require that the power sector cut carbo n dioxide emissions by approximately 30% from 2005 levels by 2030. Commenters said while at first glance a 30% cut seems strong, sector emissions were already 15% below 2005 levels in 201 3, so the rule cuts only another 15% over the next 15 years; this contribution from the power sector to economy-wide reductions is far
lower than the world's best climate scientists have determined is needed to stave off the worst effects of global warming; and it does not arm Pres ident Obama with the ambitious greenhouse gas goal and credible emissions reduction mechanism that other countries must see from our nation during the crucial international climate cha nge negotiations next year - both as proof of U.S. action and as a template that others can emula te.

Commenters stated identifying the "best" system of emission "reduction" must entail a thorough effort to capture feasible and cost-effective reduc tions, taking into consideration the goals and standards set by other countries. Commenters said a carbon emissions target far greater than the target set by EPA is necessary to protect the clima te and is also feasible and cost-effective. Commenters said EPA proposes a target of 30% reduct ion below 2005 carbon emission levels by 2030; but it is feasible and cost-effective to redu ce carbon emissions from EGUs by 55% below 2005 levels by 2030. Commenters said it is also nec essary for achieving climate-related goals; this degree of carbon reduction would be consistent with the European Union's target for GHG reductions of 40% below 1990 levels by 2030, puttin g the United States in a stronger position in the climate negotiations scheduled to take place in Paris in December 2015.

Commenters suggested ways that the EPA can strength en the targets that EPA set for states - and Texas in particular - so that the CPP can get the U .S. closer to the needed level of reductions to make a difference in the fight against climate chan ge. Commenters said given Texas's role as the largest source of carbon pollution emissions from e lectric generating facilities, the largest burner and importer of coal, and nation's largest consumer of electricity, the commenters asserted that the CPP correctly recognizes that Texas must play a leading role in the effort to reduce carbon21

emissions. Commenters said while the EPA's targeted emissions reductions from power plants are ambitious, commenters asserted Texas can do eve n better.

Commenters stated some utilities in Texas are alrea dy moving toward a much higher renewable goal or target; Austin City Council recently passed policy that called upon achieving a 50% renewable target in 2020 and a 65% renewable target for Austin Energy in 2025; Austin Energy responded by stating that it could meet a 50% to 55 % goal by 2025 affordably; CPS Energy has stated it will meet its 20% by 2020 target three ye ars early, while Denton Municipal Utility is already meeting a 40% goal of renewable energy; Ped ernales Electric Cooperative set a 30% renewable energy goal for 2030. Commenters said a s tronger renewable energy target based on what Texas can realistically achieve will promote t he type of energy infrastructure that will ultimately be needed to stabilize the climate. Comm enters said as a policy matter, the EPA should therefore prioritize renewable energy over o ther building blocks by making renewable energy targets stronger and more realistic; more im portantly, the EPA must recalculate Texas's renewable energy targets because there is no suppor t in the record for EPA's arbitrary assumptions that there will be zero renewable growt h before 2017, or after Texas achieves 20% deployment. Commenters asserted a target in the 40% range is achievable in Texas.

Commenters stated both the interim target and the f inal 2030 target should be more ambitious to properly realize reductions that can be achieved. C ommenters said we can achieve significant
reductions over the next half decade and will not h ave to backload reductions towards 2030 as much as the current proposal would entail. Commente rs said overall, EPA's goal of 30 percent reduction by 2030 is too modest; not only does it l eave significant achievable reductions on the table, it is also not likely an ambitious enough ta rget to meet the President's new commitment made in last month's agreement with China to achiev ing U.S. reductions of 26-28 percent by 2025; that can likely only be achieved by deeper cu ts than the CPP currently calls for along with other carbon cutting policies.

Commenters stated EPA proposes a target of 30% redu ction below 2005 carbon emission levels by 2030; this amounts to only about a 7 percent red uction in emissions relative to 1990. Commenters said to set such a low target for carbon emission reductions by 2030 would make it virtually impossible to achieve 84% carbon emission reductions by 2050; in addition the EPA's heavy reliance on natural gas to meet the 203 0 targets makes it even more difficult to achieve higher emissions reductions by 2050. Commen ters said in any event, EPA's proposed reliance on natural gas is not necessary; it is bot h feasible and cost-effective to reduce carbon emissions from EGUs by about 55% below 2005 levels by 2030.

Commenters added EPA fails to recognize that it is both feasible and cost-effective to reduce carbon emissions from EGUs by about 55% below 2005 levels by 2030; this is demonstrated in 48 state-specific models; states can achieve greate r carbon reductions than the targets proposed by EPA, relying primarily on efficiency and renewab le energy; this can be done at costs of carbon reduction per metric ton of CO2 equivalent t hat are generally lower than those in the
Clean Power Plan.

Commenters stated the carbon pollution limit for st ates and existing stationary sources should be increased to the level necessary to bring atmospher ic carbon concentration back to 350 ppm by
2100.22

Commenters stated the proposed target should be gre ater than the 2012 renewable energy levels; to set the bar lower means the country will take a few steps back from reducing carbon dioxide
emission. Commenters said the determination of stat e's renewable energy objective should be based off of what it was before and should not go b eneath it; renewable energy is too valuable to not to reconsider and the country should remain pro ducing more of the treasured energy, no matter of its source. Commenters said by stating th e proposed goal higher, it will strengthen this proposed rule and solidify positive outcomes in the future.

Commenters stated the goal for Nevada should be rec alculated; rather than pushing to continue business as usual and refuse to do anything to addr ess climate change and its peril for future generations, Nevadans want to do more to make their planet and their communities livable in the future. Commenters said the explosive appetite for rooftop solar, offered at only a small savings from the existing utility bill, shows people's desi re for clean energy choices. Commenters said cities including Reno, Boulder City and Las Vegas a re building solar and wind facilities to reduce their carbon footprint; Boulder City has set land aside as a renewable energy zone which is providing hundreds of thousands of dollars in in come to the city. Commenters said it's time to build the new energy economy of the 21st century, w ith healthier families and communities, through doubling down on energy efficiency, demand response, renewable energy, and the many other technologies that will provide a better way f or Nevada.

Commenters stated North Carolina's target is readil y achievable; in fact, North Carolina will not need to take any additional action to comply with t he Clean Power Plan, beyond the actions its electric utilities have already taken to date and t he requirements of North Carolina law. Commenters said North Carolina's post-2012 coal ret irements, its shift to increased natural gas generation, the addition of under-construction natu ral gas power plants, and preservation of existing nuclear reduce the State's emission rate t o 1,377 lbs/MWh. Commenters said when North Carolina's Renewable Energy Portfolio Standar d requirements are added in, the State's
emission rate falls to 949 lbs/MWh - well below the Clean Power Plan target of 992 lbs/MWh. Commenters said EPA should require greater reductio ns in North Carolina to reflect the best system of emission reductions.

Commenters stated because of the clear need for eve n greater carbon pollution reductions, the final Clean Power Plan carbon pollution limits can and must set stronger limits. Commenters said EPA should increase the carbon pollution reduc tion goal of the Clean Power Plan, which can be achieved by finalizing a rule with 1) recogn izes the growth of wind and solar energy and 2) takes full advantage of energy efficiency. Comme nters said the EPA should also encourage strong state implementation plans that include sign ificant renewable energy and efficiency measures and support for workers and under-represen ted communities.

Commenters stated the emissions reductions called f or in EPA's plan are less significant than the reductions climate scientists tell us are necessary ; time is not on our side; according to the Center for Biological Diversity, the proposed 30% reductio n in carbon dioxide from a 2005 baseline by 2030 corresponds to only a 7.7% reduction from 1990 which is the year accepted by the United States Framework Convention on Climate Change. Comm enters said the emission goals in the proposed rule are not adequate.23

Commenters supported a final CPP with stronger CO2 reduction goals; EPA should incorporate CO2 emission reduction goals that are c onsistent with the carbon reduction goals released by the Intergovernmental Panel on Climate Change (IPCC). Commenters said the draft CPP essentially penalizes states with lower CO2 emi ssions by setting higher reduction goals while states with higher CO2 emissions have lower r eduction goals. Commenters said CO2 reductions can be strengthened by increasing the ta rget reduction goals of higher CO2 emitting
states. Commenters said no consideration should be given to lowering the CO2 reduction targets
established in the CPP. Commenters said further del aying action on CO2 will make it harder and more expensive to reduce CO2 emissions in the futur e.

Commenters stated this rule is important for reduci ng carbon dioxide emissions, but it will not
achieve the science-based emissions reduction level s for 2050 discussed by the Intergovernmental Panel on Climate Change. Commente rs encouraged EPA to carefully review the analysis done by the Union of Concerned Scienti sts and the Natural Resources Defense Council that shows a path for EPA to boost cost-eff ective emissions reductions an additional 10 percent by 2030.

Commenters stated the U.S. Environmental Protection Agency (EPA) has proposed a goal for Missouri electric utility generating units to reduc e their carbon pollution by a scant 21 percent by 2030 relative to 2005 emissions; this goal is insuf ficient to help counter the increased frequency and intensity of catastrophic weather events alread y occurring throughout the U.S. and the world. Commenters said the proposed reductions are conside rably less than Missouri is capable of achieving, and that 77 percent of Missourians suppo rt in the Clean Energy Survey report released November 2014. Commenters said given the consolidat ed political power that the investorowned electric utilities wield in Missouri, promulg ation of inadequate carbon reductions will
enable them to lock in the combustion of substantia lly larger quantities of coal for decades, and higher carbon emissions, than can and must be achie ved. Commenters said lowering these goals will prevent the needed protections from being achi eved; given the consolidated political power
that the investor-owned electric utilities wield in Missouri, promulgation of inadequate carbon
reductions will enable them to lock in the combusti on of substantially larger quantities of coal for decades, and higher carbon emissions, than can and must be achieved, if we are to leave a livable world for future generations.

Commenters stated in preparation of comments for th is Rule, several major Illinois environmental organizations conducted an analysis t hat concluded if the State of Illinois did nothing other than what is already being done and w hat is currently planned in energy efficiency and renewable energy growth, Illinois would be able to meet its EPA target. Commenters said they also observe what Illinois has the capacity to do much more than what is currently being planned. Commenters said as was recently demonstrat ed in a report by the Union of Concerned Scientists, Strengthening the EPA's Clean Power Pla n (Oct. 14, 2014)] the contribution for CO2 reduction to be expected from renewable energy sour ces has been greatly underestimated by both EPA and the EIA. Commenters said the UCS reports th at, "increased renewable electricity growth could allow states to collectively cut heat- trapping carbon emissions from power plants 40 percent below 2005 levels by 2030 rather than th e 30 percent reduction EPA included in its
draft rule." Commenters asserted that the EPA needs to correct this underestimate in its Draft Rule, which would then either allow for greater exp ectation for CO2 reduction, a prioritization of renewable energy as a CO2 reduction source, or both . Commenters said give priority to use of24

renewable energy resources and energy efficiency fo r maximum carbon reduction; place state compliance emphasis on the implementation of renewa bles and energy efficiency, the more the
better.

Commenters stated EPA documents that 29 states have established RPS goals and other states are using other measures to promote renewables; how ever, using a bizarre construct or methodology, EPA proposes achieving a national aver age of 13% renewables by 2029. Commenters said the reality is that 21 states will do much less than 13%. Commenters recommended a minimum 30% renewable goal by 2029 for every state that includes only renewables that do not generate CO2; thus biomass combustion should not be
included as a renewable. Commenters said a recent a rticle at Think Progress "HOW RENEW
ABLES IN DEVELOPING COUNTRIES ARE LEAPFROGGING TRAD ITIONAL POWER", NOV. 4, 2014, Jeff Spross reports on an analysis by Bloomberg New Energy Finance. Commenters said developing nations are outpacing de veloped ones in installing renewables and jumping past fossil fuels; in 55 developing countri es, renewable capacity grew by 143% between 2008 to 2013, 28.6% per year; by contrast the Organ ization for Economic Cooperation and Development (OECD) nations saw only 84% growth, 16. 8% per year; if OECD countries saw 84% growth in 5 years, the US should be able to at least achieve 168% growth in renewables over the course of 10 years. Commenters said the Un iverse or Baseline being addressed is not total Greenhouse gas emissions from the electric ge neration sector, but a subset of these emissions; the rule deals with just CO2 and promise s a 30% reduction in CO2 emissions from the power sector only by 2030 from 2005 (not includ ing NGCC plant emissions). Commenters said what is critical to halt climate change is eff ectively dealing with total GHG emissions and achieving 80% reduction by 2050; simply not countin g some emissions from this sector harms goal achievement.

Commenters stated the latest studies require dramat ic cuts (35-65%) to greenhouse gas emissions by 2030, in order to avoid a 2 degree Celsius rise in temperature. Commenters said this proposed rule would only achieve about a 10% reduction; this is not an acceptable goal. Commenters said the EPA's goals fall short of the Intergovernmental Panel on Climate Change's recent goals for developed countries, of reductions from 15 to 40 pe rcent below 1990 levels by the year 2020; and 80 percent reductions by 2050. The commenters s aid the Clean Power Plan should increase its reduction goals to minimize impacts from climat e change.

Commenters stated even though the Clean Power Plan focuses on reducing carbon pollution from power plants 30% by 2030, the EPA estimated st ates could make these reductions faster. Commenters said states can go much further than 30% by 2030 because states are already going beyond EPA's proposal by retiring dirty power plant s and scaling up renewables and energy efficiency. Commenters said for example in Kentucky , the Assistant Secretary for Climate Policy, John Lyons, recently stated that the averag e carbon emissions of Kentucky's fleet of coalfired power plants should meet the new standard by 2020; that's because 11 coal boilers are already scheduled to shut down because of other EPA air quality regulations. Commenters said Kentucky can meet the Clean Power Plan standar ds simply by continuing their present course, with little incentive for additional innova tion. Commenters said that the EPA's listening sessions resulted in a desire for flexibility acros s states; but that flexibility should not override strong incentives for states to "step up their game ." Commenters said while the new EPA standards call for a 30 percent reduction in the na tion's carbon emissions by 2030, Kentucky's25

specific goal is a cut of only 18.3 percent. Commen ters said the Kentucky state agencies will tell you this gives them the flexibility they need, but this degree of "flexibility" is a disincentive for
real action in our state. Commenters said when the EPA set the state standards, it did not incorporate the latest information on coal retireme nts; so the targets given to Kentucky are could be much more stringent and still be totally achieva ble. Commenters understood that states like Kentucky have a major challenge, given that 93 perc ent of the state's electricity is generated from coal; however Kentucky has made little progress in moving the state forward in any way that will allow it to remain anywhere except for the very bot tom of every indicator: from efficiency, to clean power, to protection of human health. Comment ers said EPA's Clean Power Plan continues
the subsidization of obsolete coal-fired and nuclea r power, making it more difficult to move our
state forward onto cleaner resources.

Commenters stated considering current analysis on t he potential to reduce carbon pollution from the power sector and the urgency of doing so, comme nters recommended that the CPP strive to secure a reduction in carbon pollution of at least 40 percent below 2005 levels rather than the 30 percent proposed. Commenters stated this can be acc omplished by:

• Using more current cost and production estimates fo r renewable energy sources;

• Strengthening the targets for energy efficiency, wh ich are significantly undervalued;

• Strengthening the emissions outcome in 2020 (near t erm emissions reductions are vital for climate security); and

• Significantly strengthening the emissions outcome i n the later years (2030 is far too long to achieve such modest emission reductions )

Commenters asked the EPA to respond to a Natural Re sources Defense Council model of a similar but more ambitious set of intensity-based t argets illustrating that it is possible to cut CO2 pollution from America's power plants by 21 to 31 p ercent (relative to 2012 levels) by 2020, and 25 to 38 percent by 2025. Commenters said the estim ated cost ranges from no increase to about $14.6 billion in 2020 with benefits-in saved lives, reduced illness, and climate change avoided-of $28 to $63 billion, far exceeding the estimated cos ts; this analysis illustrates that EPA can strengthen the CPP at reasonable cost.

Commenters stated as EPA refines the Rule, it is cr itical that the emission reductions from the final Rule are at least equivalent to those in the proposed Rule; while this Rule is a positive step, the emission reductions necessary to address climat e change exceed this initial step and for that reason it is important that EPA holds to the reduct ions in the proposed Plan.

Commenters stated an analysis of the IPCC5 report s hows that the EPA's target of 30 percent reduction in the electricity sector relative to 200 5 by 2030 is very inadequate; in fact it amounts to only about a 7 percent reduction in emissions re lative to 1990. Commenters said this target is insufficient and will not put the United States on a path to reductions of about 84 percent by 2050. Commenters said the problem is made more seri ous by the CPP's reliance on increasing natural gas use for a significant portion of its re ductions; relying on natural gas as a "bridge"26

creates the more arduous and costly problem of subs equently eliminating most of this natural gas along with other fossil fuel infrastructure from th e electricity sector by 2050; moreover, the time frame of EPA's CPP does not discuss issues beyond 2 030 or set its target in the needed long-term context. Commenters do not disagree with the 2030 t ime-limit on the CPP. Commenters said the CPP should not undermine or preclude the effectiven ess of longer-term measures that may be required in the future.

Commenters stated in order to meet the challenges p osed by a path that would keep the global mean temperature rise below 2 degrees C, the CPP sh ould address the following long-term lessons that can easily be derived from the IPCC5 r eport:

1. Short-term and medium-term reductions in CO2eq e missions must be compatible with the longer-term elimination of fossil fuels; commenters agree with the EPA that retrofitting carbon capture and sequestration technology on to existing power plants "would not represent the BSER [Best System of Emission Reduction]".

2. A corollary of lesson 1 above is that investment s in fossil fuel-related technologies with long payback times, such as new natural gas production a nd transport infrastructure, should be discouraged; at any rate, the structure of the rule and the approaches for reducing electricity sector CO2eq emissions should not depend on such in vestments; for instance, increasing the production of natural gas for electricity productio n should not be treated as BSER; if venting rates prove to be high, such increases may not even be a compliance mechanism.

3. Fundamental changes in the structure of the ener gy system and, specifically, in the electricity system will be required, given that significant amo unts of variable energy sources (notably wind and solar) will be required to greatly reduce and e ventually eliminate fossil fuels; such changes are required in any case to increase the resilience of the electricity system.

4. If the electricity sector is to be transformed, it must be affordable for middle-income and low income people.

5. Grid resiliency should be a paramount goal of an y carbon reduction plan, given that the adverse impacts of climate disruption include disru ptions in energy production from increased frequency and severity of droughts and storms.

6. Since the cost of CO2 reductions is far lower th an the estimated health and environmental benefits as estimated in the CPP, a more ambitious target than that set by the EPA is, in any case,
indicated.

Commenters said as stated by the EPA, the CPP promi ses to reduce carbon emissions by 30% by 2030; the EPA's final carbon dioxide emissions proj ection for 2030 is 3.655x1012 lbs/yr, which corresponds to a 35% reduction in carbon dioxide em issions from 2005 levels. While this appears to be an ambitious goal, commenters stated they have found that this results in only an 18% reduction in emissions from 2012 levels; meanin g, the U.S. has already achieved half of the 30% goal from 2005 to 2012. Commenters said accordi ng to the EIA, carbon dioxide emissions from energy consumption at power plants in 2012 hav e already decreased by 15% from 2005 levels; therefore, the CPP is actually only requiri ng a 15% reduction in carbon emissions by 2030. Commenters recommended that the EPA set its g oals based on 2012 levels. Commenters27

added the carbon dioxide emissions rate calculation for each state should be corrected to include generation from all sources; in the proposed goal s etting calculation, only the generation from existing fossil fuel plants is included for an init ial carbon intensity value; thus, the adjusted emissions rate will decrease by adding all other ge neration options in the denominator without changing the current energy mix; in order to determ ine a reasonable goal, both the initial and final emissions intensity calculations should inclu de all generation sources.

Commenters stated the proposed rules are strong eno ugh or fast enough to address the scope of the climate crisis; almost half of the reductions f rom 2005 levels that are defined in the rules have already been accomplished. Commenters said the small scale of reductions that are proposed between 2020 and 2030 are inadequate. Comm enters requested the EPA to require far
more substantial reductions in the final decade of the plan, with increased emphasis on renewable energy and conservation. Commenters urged the EPA to strengthen the regulations so
that more substantial reductions in CO2 emissions w ill be achieved; commenters requested targets - for both 2020 and 2030 - that shift more generating capacity to renewable energy sources, and that move more strongly in implementin g end-use energy efficiency.

Commenters stated the Clean Power Plan must set mor e aggressive emissions reduction targets;
emissions reductions must be consistent with what c limate science demands. Commenters said the emissions targets should be strengthened by inc reasing energy efficiency and the use of renewables; energy efficiency is the cheapest, most rapidly deployable solution for reducing
carbon emissions. Commenters said states can cost-e ffectively achieve stronger energy savings than what the EPA is proposing; similarly, states c an produce more renewable electricity than the EPA has calculated under its proposed plan. Comment ers said strengthening the carbon rule should start with recognizing the full potential an d achievable deployment of energy efficiency and renewable energy.

Commenters urged EPA to finalize these historic and urgently needed carbon pollution standards by June 1, 2015, as set forth in the Presidential M emorandum on Power Sector Carbon Pollution Standards; and to strengthen the environmental outc ome of the standards by:

-Recognizing the full potential across the electric system and all resource types to reduce emissions and especially utilizing updated cost and performance data for renewables and energy efficiency to ensure we achieve more at lower cost;

-Strengthening the emissions outcome in 2020-near t erm emissions reductions are vital for climate security; and

-Significantly strengthening the emissions outcome in the later years - 2030 is far too long to
achieve such modest emission reductions

Commenters said considering current data on the pot ential to reduce carbon pollution from the power sector and the urgency of doing so, the Clean Power Plan should secure a reduction in carbon pollution of at least 40% below 2005 levels.

Commenters stated even though the Clean Power Plan focuses on reducing carbon pollution from power plants 30 percent by 2030, the EPA estim ated that we could make these reductions faster; commenters said we can go much further than 30 percent by 2030 because states are28

already going beyond EPA's proposal by retiring dir ty power plants and scaling up renewables and energy efficiency; Kentucky, a heavily coal-dep endent state is an example of this. Commenters said in Kentucky, the Assistant Secretar y for Climate Policy, John Lyons, recently stated that the average carbon emissions of Kentuck y's fleet of coal-fired power plants should meet the new standard by 2020; that's because 11 co al boilers are already scheduled to shut down because of other EPA air quality regulations; in ot her words, Kentucky can meet the Clean Power Plan standards simply by continuing their pre sent course, with little incentive for additional innovation. Commenters said despite this , Kentucky stakeholders have asked EPA for a longer timeline; yet Kentucky already has low er goals than most states. Commenters said it
is clear that states must be asked to adhere to str ong goals in order to finally initiate the fundamental changes necessary to bring about real i mprovements. Commenters said but that flexibility should not override strong incentives f or states to reach their achievable potential.
Commenters said while the new EPA standards call fo r a 30 percent reduction in the nation's carbon emissions by 2030, Kentucky's specific goal is a cut of only 18.3 percent; this degree of "flexibility" is a disincentive for real action in Kentucky. Commenters added when the EPA set the state standards, it did not incorporate the lat est information on coal retirements; so the targets given to Kentucky could be much more stringent and still be totally achievable. Commenters understood that states like Kentucky wil l have a major shift, given that 93 percent of the state's electricity is generated from coal; however Kentucky has made little progress in moving the state forward in any way that will allow it to remain anywhere except for the very bottom of every indicator: from efficiency, to clea n power, to protection of human health.
Commenters said the EPA's Clean Power Plan continue s the subsidization of obsolete coal-fired and nuclear power, making it more difficult to move Kentucky forward onto cleaner resources.
Commenters said other commenters have shown that th e EPA targets are largely modest and that there are alternatives that can result in much deep er carbon cuts; for example, the Union of Concerned Scientists have done an analysis that sho ws Kentucky can achieve significantly larger reductions than the current EPA plan.

Commenters stated the proposed rule falls short of the rapid transition to clean energy that is necessary to prevent a catastrophic increase in glo bal temperature. Commenters said the Clean Power Plan's goals for states underestimate our cap acity to expand clean energy and energy efficiency; these goals are, in many cases, lower t han pre-existing targets of state renewable portfolios and efficiency standards, equal to what states have already achieved, and only minimally higher than U.S. Energy Information Admin istration (EIA) projections under a
"business as usual" scenario. Commenters recommende d inclusion of current state Renewable Energy and Efficiency Standards, which are set by l aw, and determination of future goals based on more recent growth rates (2009 to 2013).

Commenters stated EPA based the reductions on the a gency's calculations of what each state could do; however, some states report that they are already doing more in some categories than EPA has proposed as a target. Commenters said EPA n eeds to set standards that encourage states to do more even if they are already meeting targets

.
Commenters stated the Clean Power Plan proposes a t arget of a 30 percent reduction below 2005 carbon emission levels by 2030; the Intergovernment al Panel on Climate Change (IPCC) has29

said that carbon emissions should be reduced global ly by 41 percent to 72 percent from 2010 levels in order to limit global average temperature rise to 2 degrees Celsius. Commenters said research by the Institute for Energy and Environmen tal Research has found that "it is feasible
and cost-effective to reduce carbon emissions from EGUs by 55 percent below 2005 levels by 2030. This degree of carbon reduction would be cons istent with the European Union's target for GHG reductions of 40 percent below 1990 levels by 2 030." Commenters said to match this, the U.S. would have to reduce greenhouse gas emissions by 40 percent from 1990 levels by 2030, and by 84 percent by 2050. Commenters said the prop osed EPS target amounts to about a 7 percent reduction in emissions from 1990 levels; th is low target would make it almost impossible to play catch-up later and get an 84 percent reduct ion by 2050, and adding in heavy reliance on natural gas worsens the scenario. Commenters said w hile the Clean Power Plan counts on natural gas for reducing carbon emissions, methane emission s are not accounted for and natural gas venting over the next three decades could negate mo st, if not all, of the gains made by the Clean
Power Plan.

Commenters stated it is both feasible and cost-effe ctive to reduce carbon emission to much lower levels without relying on new natural gas or nuclea r energy; according to the Institute for Energy and Environmental Research, "EPA fails to recognize that it is both feasible and cost-effective to reduce carbon emissions from EGUs by about 55 perce nt below 2005 levels by 2030. This is demonstrated in 48 state-specific models, which are described in the IEER Comments."

Commenters stated if the interim targets are loosen ed, commenters recommended that EPA consider ways to tighten the final targets such tha t there is no net increase to cumulative
emissions between 2020 and 2030 relative to the Pro posal.

Commenters stated the proposed regulations are not at all ambitious, and set targets that, even when they are met, will accomplish far too little. Commenters said climate scientists warn that immediate action to dramatically cut all greenhouse gas emissions is necessary to prevent a global temperature rise of more than 2 degrees C, a level at which serious damage will still occur, and beyond which the worst impacts of climat e change cannot be avoided. Commenters said the proposed regulations, which the EPA predic ts could reduce carbon dioxide emissions from power plants up to 30% from 2005 levels by 203 0, fail to adequately respond to this threat.

Commenters stated the state-level targets in the CP P are much too lenient; in fact, the EPA's goals for many states are weaker than the targets t hose states have already set for themselves and expect to meet without any additional action. Comme nters said many states would be able to comply with the rule's weak carbon dioxide targets by simply running gas-fired power plants more often, or by trading allowances for emissions with states like California that are already on track to exceed targets set for them by the rule. C ommenters said another problem is that, even looking just at CO2, the CPP does not actually limi t total emissions, but instead limits the carbon "intensity" of emissions (pounds of CO2/MWh). Comme nters said targets should be based on the total amount of greenhouse gas entering the atmosph ere, or at a minimum should include massbased backstops, to ensure that aggressive greenhou se gas reduction targets are met.30

Commenters stated this rule does not go far enough to ensure adequate carbon emissions reductions; a concerted effort to rein in carbon po llution requires emission targets that are more ambitious, that result in renewable energy and ener gy efficiency potential being more widely realized throughout the country. Commenters said mo re ambitious reductions will allow this rule to do more to stave off the dire consequences of cl imate change for rural communities.

Commenters stated the final rule should go beyond t he 30% reduction now contemplated.
Commenters said the IPCC and others have concluded that, in order to avoid a 2 degrees C (3.7 degrees F) atmospheric temperature rise, the world needs to reduce CO2 emissions by 80% or more by 2030. Commenters said as one of the highest per-capita emitters, the U.S. needs to reduce its share by more than 80%, and power plants must be a major focus; consequently, the target of 30% by 2030 is lower than necessary. Comm enters said this is particularly true because it risks attracting investments that will lead to s tranded costs before 2050; accordingly, EPA should strengthen the rule to require 40%-50% reduc tion by 2030 with clear guidance that additional cuts will be required in the following t wo decades.

Commenters stated with Americans already facing wor sening risks of climate impacts, the EPA's Clean Power Plan is an important step forward in th e effort to limit those risks. Commenters said the Union of Concerned Scientists offer a systemati c and consistent methodology for calculating more aggressive targets for renewable energy genera tion that achieves 10 percent greater emission reductions than the EPA's proposed method, i.e., emission reductions of 40 percent below 2005 levels by 2030. Commenters said the meth odology is a logical outgrowth of the EPA's approaches but does not rely on applying stat e renewable electricity standards (RES) to states without such policies, and it achieves great er reductions in emissions in all regions and in
all but four states.

Comment 4 : The EPA's proposed targets/goals are unreasonable /unachievable/arbitrary and capricious/too stringent/not a valid standard of pe rformance.

Response 4: See responses above.

The EPA disagrees with the commenters’ concern that the BSER quantification imposes a cap on electricity generation. The BSER applies only to e xisting sources; more importantly, as demonstrated by prior regulations that have limited emissions from power plants, a limitation on emissions does not impose a limitation on generatio n, because there are technologies available to facilitate generation while lowering emissions.

The EPA also adjusted the heat rate improvement ass umptions (BB1) as described in section V of the preamble and the GHG Mitigation Measures TSD

.
Demand-side energy efficiency and nuclear energy ar e no longer part of BSER quantification in this final rule as discussed in section V of the pr eamble.

The following are summaries of the specific public comments under this comment:31

Commenters stated there are a number of legal, tech nical, and practical concerns and uncertainties that make implementation of the propo sed rule unworkable; many of these unknowns relate to the assumptions underlying each building block, regulatory strategies that are unproven, levels of implementation that are technic ally and practically unachievable, or interactions that are not feasible to design or enf orce within the existing statutory and regulatory
authorities of the states.

Commenters added EPA acknowledges that some of thes e issues "introduce practical enforceability considerations under a state plan." Commenters said there is no way for states to assure that individual generating units will achiev e the emission reductions associated with block 1, and no technical basis upon which EPA can conclu de that the projected emission reductions will actually occur, because EPA does not evaluate the extent to which such measures have already been implemented, and did not properly acco unt for the heat rate increases associated with recent control equipment installations. Commen ters said there is no way for states to control system dispatch decisions that are entrusted to reg ional authorities, and simply attempting to "freeze" emissions from designated facilities in 20 20 based on projected emissions and generation that accommodate the effects EPA hopes t o achieve through building blocks 1 and 2 does not adequately account for the many factors th at introduce variability into existing units' utilization and emissions, including weather patter ns, unanticipated equipment problems, and changes in local load conditions. Commenters said t he output of renewable resources similarly is heavily influenced by weather conditions, equipment condition, and other factors that are neither controlled nor controllable by the designated facil ities or the states, and EPA has misinterpreted existing state standards by ignoring the extent to which those standards are currently satisfied by participation in multi-state REC markets, the exten t to which they are satisfied in whole or part through energy efficiency measures or alternative p ayments, and the extent to which they rely on unique resources whose status as "renewable" energy sources in any future section 111(d) plan is
uncertain. Commenters said these errors make EPA's cumulative targets unreasonable and arbitrary.

Commenters stated some of the largest work-producin g states face daunting reduction goals; Ohio, which has generated the largest number of NMA utility work hours over the given timeframe, must slash emissions by 28 percent; Penn sylvania, the third-largest contributor of NMA utility hours, by 31 percent; and New Jersey, r anking ninth, must cut CO2 by 43 percent. Commenters added equally instructive is how these s tates rank nationally in terms of the reduction percentages; Ohio's 28 percent reduction goal is only the thirty-second highest goal nationwide, meaning 17 other states face more chall enges; North Dakota's reduction goal of 11 percent is the lowest of the 49 states (Vermont was excluded, because it has no fossil-fueled power plants). Commenters said under any reasonable scenario, an 11 percent reduction in carbon emissions by 2030 (around a decade and a hal f) would be hailed as a monumental achievement but in the scheme put forth by the agen cy, it is the bare minimum - the lowest emissions reduction goal in the entire country; thi s speaks volumes about the unrealistic goals set by the EPA.

Commenters stated in conjunction with the implement ation issues related to enforceability, U.S. EPA has set a goal that is not practically achievab le by Ohio. Commenters said until a statespecific analysis is conducted to determine the fea sibility of these goals, with the added understanding of U.S. EPA expectations related to h ow they must be quantifiable, non-32

duplicative, permanent, verifiable, and enforceable , Ohio EPA cannot support adoption of either of the proposed options.

Commenters stated based on EPA's goal calculations, both a lower baseline emission rate and high levels of RE and EE in the baseline year cause a state's ultimate performance goal to be more stringent due to the fact that EPA's methodolo gy does not take into account coal-fired generation that already was displaced by RE and EE prior to 2012. Commenters said existing (i.e., pre-2012) RE and EE therefore negatively imp acts early-acting states by making the baseline emissions rate artificially low; for examp le, RE displaced a significant amount of coalfired generation in Minnesota prior to 2012; Xcel E nergy retired its High Bridge coal-fired units in 2007 and replaced them with a new NGCC facility in 2008; the following year, Xcel Energy replaced the Riverside coal-fired units with a new NGCC facility. Commenters said these coal retirements resulted in significant reductions in C O2 emissions and the state's average emissions rate; further, in 2008, Xcel Energy brought the Gra nd Meadow Wind Farm online, followed in 2010 by the Nobles Wind Farm as well as large amoun ts of purchased wind power. Commenters said this wind power, which required support from t he NGCCs that Xcel Energy built to replace the retired coal-fired units, also resulted in redu ced utilization of the new NGCC units. The
commenters said absent the retirement of these coal -fired units and the new wind investments,
Minnesota's baseline emission rate would have been significantly higher. Commenters said applying EPA's goal calculation methodology to this higher baseline emission rate would have resulted in less stringent CO2 emission goals for M innesota.

Commenters stated several of EPA's State-Specific E missions Reductions Targets Are Arbitrary and Capricious. Commenters said for Arizona: EPA's BSER analysis ignores 94% of all existing nuclear generation and all existing hydropower; thi s has a profound impact on States such as Arizona that generate a large percentage of their p ower from these zero-emission sources.
Commenters said for Arkansas: EPA failed to conside r potential challenges for States who are members of multiple RTOs; for such States, electric ity generation and use cannot be shifted between the four building blocks on a State-wide ba sis as EPA assumed in the proposal. Commenters said for Pennsylvania: EPA failed to acc ount for and credit early action taken by States with respect to renewable energy and energy efficiency programs; such States should not be penalized by EPA with even lower emissions reduc tion targets as a result. Commenters said for Texas: It is arbitrary and capricious to hold a single State responsible for more than 20% of the total GHG reductions to be achieved nationally under the rule despite the fact that it only generates 11% of the nation's electricity.

Commenters stated requiring New York to seek dramat ic reductions in the electricity generation sector may also have unintended consequences in bro ader GHG emission reduction policy and strategy. Commenters said one potential undesired c onsequence of EPA's proposal is that, if New York is asked to dedicate a disproportionate amount of its limited investment resources in seeking less productive emissions reduction in the electricity sector, this is likely to sacrifice a
level of investment in the more intensive thermal l oad sector, eroding progress towards overall GHG emission reductions; in addition, New York is i nitiating new policies and strategies that are designed to look at all fuel inputs to a building o r industrial facility, and provide energy efficiency or renewable energy alternatives that wi ll improve the emissions profile of the entire structure without isolating electric energy efficie ncy. Commenters said it is anticipated that these initiatives will provide a model for other states o n how to achieve greater levels of scale for all-33

fuels energy efficiency and renewable energy altern atives, in the pursuit of realizing emission reduction levels that create a path to an 80% reduc tion by 2050 across the entire economy. Commenters said for these reasons, particularly giv en the progress the State has already made in reducing emissions from its electric sector, the pr oposal's 2030 target CO2 emission rate of 549 lbs/MWh for New York's power sector is unduly ambit ious and does not account for Statespecific electric system constraints; because of th e unintended implications of the proposal and the potential for economic and competitive disadvan tages to result for the State, EPA should revise the proposal to create more equity in the CP P while simultaneously increasing emission
reductions overall.

Commenters stated none of the options for reducing carbon intensity from AEPCO's Apache Station (heat rate improvements and redispatch) wil l approach either the 735 lb/MWh Interim Goal or the 702 lb/MWh Final Goal; additional measu res will be required.

Commenters stated that there are no viable or cost effective mechanisms by which the targets proposed by EPA for Alabama are attainable.

Commenters stated EPA assumes that Florida can meet a supposed national average of 13% increase in Renewable Energy, with 22,109,614 MWh c oming from that sector in 2029, and that's 11.5% of current generation. Commenters said in order to help meet the final goal, the City of Tallahassee utilities must either get credit for , and/or find another 266 lbs/MWh reductions from reducing energy demand and the use of alternat ive energy. Commenters said only five states currently have a projected renewable portfol io standard this high - and note that we are referring to projections, not actualizations. Comme nters said the 985.77 lbs/MWh already reflects sizeable reductions in energy demand from renewable energy projects. Commenters said City of Tallahassee has been one of the more aggres sive in regard of CO2 reduction and even their nationally recognized and award winning utili ties are unable to meet even the interim goal. Commenters said the real impact of the final goal o f 740 lb/MWh is that a sustainability-award winning, zero-coal municipality would need to obtai n approximately 25% of its current energy needs from non-CO2 emitting sources. Commenters sai d this is a very aggressive goal; commenters suggested that this goal does not reflec t a feasible emissions standard that reflects what is already adequately demonstrated.

Commenters stated through aggressive unit replaceme nts, fuel switching and efficiency improvements, the commenters had successfully reduc ed its carbon intensity over the past 2.5 decades by approximately 40%, despite a correspondi ng increase in customer demand; however, notwithstanding these early and voluntary actions, this award-winning modern and efficient natural gas utility, which also operates one of onl y two hydroelectric power plants in the state of Florida, and which has received international and n ational recognition, still remains well above the EPA interim and final limit of 794 and 740 poun ds per megawatt-hour, respectively. Commenters stated the proposed limits established f or Florida will potentially result in the early adopters, being at a disadvantage in meeting the ne w goals.

Commenters stated there are significant policy and technical impediments that make implementation of this proposal impractical and lik ely impossible; starting with the exclusive role of the Federal Energy Regulatory Commission (F ERC) in determining how energy is dispatched, the proposed rule impermissibly require s States to regulate dispatch in contravention34

of FERC authority; next is the inability of the Sta tes to regulate based upon environmental rather than economic dispatch when such decisions are cont rolled by regional transmission organizations and independent system operators whos e boundaries are not contiguous with state borders. Commenters added there is the potential im pact of the rule on the reliability of the supply of electricity; there are numerous faulty as sumptions on which each of the Building Blocks is based. Commenters said these faulty assum ptions include such critical issues as limitations on source efficiency improvements, natu ral gas availability and existing natural gas generation capacity, shortages of transmission infr astructure for required additional renewable generation, arbitrary treatment of nuclear power, a nd the unrealistic assumptions regarding future potential reduction in electricity demand based on energy efficiency programs.

Commenters stated that EPA should retain compliance flexibility in the final rule. Commenters encouraged the EPA to maintain in the final rule th e compliance flexibility provided to states. Commenters also encouraged EPA to add additional co mpliance options, such as the use of combined heat and power (CHP) systems, which are hi ghly efficient and clean approaches to generating power and thermal energy from a single f uel source. Commenters stated that the goals EPA set for states are too stringent, which leaves states with few options to comply with the regulation. Commenters stated that if EPA were to f inalize the proposed goals without further modification, many states would in fact have very l ittle actual flexibility in how to comply with their goal, if in fact they could comply at all.

Commenters stated "EPA does have authority to hold the industry to a standard of improved design and operational advances, so long as there i s substantial evidence that such improvements are feasible and will produce the improved performa nce necessary to meet the standard." Sierra Club v. Costle, 657 F.2d 298, 364 (D.C. Cir. 1981). Commenters said EPA's proposed BSER simply does not meet this standard because EPA cann ot provide "substantial evidence" that the state goals are feasible. Commenters said the Agenc y has used national aggregated data for each step in establishing BSER; EPA then applies the agg regated data to each state's energy fleet to determine that state's goal. Commenters said becaus e this national data represents EPA's analysis of 48 states total, and not any one individual stat e, EPA is skewing each state goal to the point where it is in no way a reflection of that state's ability to meet it. Commenters added the assumptions underlying the individual building bloc ks are unfounded and fraught with error; thus, EPA has not provided substantial evidence to show that the BSER will produce the performance necessary to meet the standard, nor tha t the BSER is reasonably reliable, efficient,
or cost-effective.

Commenters stated a problem is that reduction targe ts for each state are measured per unit of energy meaning pounds of CO2 per megawatt hour' lik e a diet that limits calories per cookie, but35

not the number of cookies, this won't work in the l ong run because it allows emissions to rise as the demand for power goes up.

Commenters stated the do not support the proposed t argets; goals are unreasonable/unachievable/arbitrary and caprici ous/unfeasible/too stringent.

Commenters stated EPA has asserted that each of the individual targets assigned to states under the proposal are based on reasonably achievable rat her than maximum performance levels; commenters were concerned that, as with its propose d rule for new power plants, EPA is basing enormously impactful mandates on technological or t echnology assumptions that have yet to be demonstrated as achievable at a reasonable cost, an d in some cases achievable at any cost.

Commenters stated there are not sufficient "compens ating" reductions that would allow states to both consider potential adjustments for remaining u seful life and the cost of compliance to meet
their emission standards on schedule. Commenters sa id in Pennsylvania, for example, the stringency of each Building Block leaves no cushion to overachieve in any of them to compensate for fewer reductions under Building Bloc k 1.

Commenters stated EPA underestimates the overwhelmi ng hurdles to installing the infrastructure needed to effectuate this proposal. Commenters said converting existing coal units to natural gas operation would require a multiple of over 2.5 time s the gas currently used by the local distribution system. Commenters said unlike most po wer plants in the U.S., the commenters are currently served by a natural gas pipeline; however , the existing pipeline capacity is far from what would be required to meet such an increased ye ar-round gas demand. Commenters said a new pipeline and associated costs not considered in the proposal would be unavoidable. Commenters said with few exceptions, electric utili ties are not empowered to construct natural gas pipelines. Commenters said given the competing demand that would inevitably ensue following promulgation of this rule, there is no gu arantee that the commenters could persuade a pipeline company to undertake a project on behalf o f a small municipal entity, let alone to complete it under the time constraints in the rule.

Commenters stated the EPA proposes two mandatory em ission rate goals for affected fossil-fuel generation units located in the Commonwealth of Vir ginia (collectively, "Mandatory Goals"). Commenters said affected Virginia units - that is, those that are already producing power or are under construction by 2014 - must first achieve an interim goal of 884 pounds of CO2/MWh, beginning in 2020 ("Mandatory Interim Goal"); then, beginning in 2030, affected Virginia units must achieve a final goal of 810 pounds of CO2/MWh ("Mandatory Final Goal"). Commenters said EPA asserts that the Mandatory Goals for Virgi nia are a lawful "standard of performance,"
which the Clean Air Act defines as follows: "a stan dard for emissions of air pollutants which reflects the degree of emission limitation achievab le through the application of the best system of emission reduction which (taking into account the c ost of achieving such reduction and any nonair quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated." Comme nters said the Mandatory Goals for Virginia cannot be considered a valid "standard of performance" under this statutory provision for many reasons; among other things, the Proposed Regulation establishes Mandatory Goals for Virginia that:36

(A) impose more stringent requirements - in fact, s ubstantially more stringent - for affected, existing generating units than the standard for new units, yet to be built;

(B) will require the retirement of a significant le vel of base load generation that must be replaced
at a cost that is unreasonable and in a timeframe t hat compromises reliability;

(C) fail to recognize significant and recent invest ments that (1) have substantially reduced carbon dioxide and other emissions in Virginia; and (2) if stranded, will also contribute to higher costs and higher bills for Virginia residents and busines ses;

(D) fail to recognize Virginia's significant invest ment in and utilization of zero-carbon nuclear generation and, in fact, effectively penalize Virgi nia by including "at risk" nuclear generation in the calculation of Virginia's goals;

(E) incorporate generic and unsupported expectation s of levels of renewable generation and energy efficiency that, when applied to Virginia, a re extremely ambitious, almost certainly unachievable, and uneconomic under traditional stan dards

Commenters stated, EPA has failed to conduct the ne cessary feasibility or cost analysis on a unitby-unit basis or state-by-state analyses of costs, infrastructure requirements for BBs #2 and #3, permit limitations to re-dispatch, impact on electr ic reliability, feasibility of renewable and energy efficiency requirements or any consideration of early actions taken by utilities and states
to reduce CO2 emissions.

Commenters stated, the state goal computation resul ts in inequitable regulation of states and affected EGUs. Commenters said, in calculating stat e goals, the EPA applied all four Building Blocks to each state's 2012 electric generation to determine the extent to which the state could reduce its CO2 emissions rate by 2030. Commenters s aid, the EPA's methodology in setting the goals is based on its conclusion that the four Buil ding Blocks are part of an integrated "system" of operation of affected EGUs. Commenters said, how ever, the EPA has not taken the steps necessary to develop a technically sound BSER that demonstrates that the four Building Blocks are in fact integrated and achievable (setting asid e the fact that a BSER that extends beyond the definition of the affected source is not legal). Co mmenters said, in fact, the EPA seems to acknowledge that individual states may find one or more of the Building Blocks technically infeasible or too costly to implement. Commenters s aid, the EPA's analysis relies too heavily on modeling scenarios and assumptions rather than on t he hard technical analysis required by the regulations in setting BSER, with the consequence t hat the EPA fails to address real concerns
that individual states will face serious hurdles to implementing the Proposed Guidelines. Commenters said, the EPA simply concludes that ther e will not be a problem because the rule provides the states with so much flexibility. Comme nters said, for example, the EPA believes the proposal is justified because it believes the rule is imposing "reasonable" levels of each Building Block ("rather than the maximum") and that a state should be able to increase its use of another Building Block, in such case, to compensate for a l ower or no use of another Building Block. Commenters said, in fact, the EPA's proposal is nei ther reasonable nor flexible, and will result in significant inequities among states. Commenters sai d, there are a number of issues which create37

these inequities that include inappropriate relianc e on a single baseline year: unrealistic and flawed assessment of the capability of achieving he at rate improvement targets; renewable energy growth, and demand-side efficiency goals; fa ilure to account for differences among the states across the nation; and failure to appropriat ely credit or account for efforts many EGU sources and states have already taken that have red uced the intensity of carbon emissions. Commenters said, a legally constructed section 111( d) rule would afford the required flexibility for each state to design its own rules that would a chieve the objectives and guidelines established by the BSER for the affected source category and to hold its own sources accountable for compliance with source reduction targets that have been adequately demonstrated as achievable. Commenters said, here, the EPA is propo sing a course of action that will in essence force many states to enter into interstate compacts or trading programs or else turn over implementation of the rule to the EPA, not because they are exercising the flexibility afforded under section 111(d) but because the severity of th e EPA's required emissions reductions will require a level of control that is simply not feasi ble or technically achievable within those states. Commenters said, as such, the proposed rule is beyo nd the EPA's authority under the CAA.

Commenters stated, the proposed rule also will crea te inequity by forcing many EGU owners and operators to abandon or significantly curtail opera tion of generating units where significant
investments have been made to install state-of-the- art control systems to meet MATS and other air regulations, including the Clean Air Interstate Rule, the Mercury and Air Toxics Standards, and in North Carolina, the North Carolina Clean Smo kestacks Act. Commenters said, for regulated utilities, these costs are typically born e by customers in accordance with rates approved by state regulatory commissions. Commenters said, w here the EPA's stringent and unjustified state emissions goals force retirement or significa ntly reduced utilization of these assets, the rule creates an inequity for consumers who must bear the costs related to these stranded investments and at the same time face significant cost increase s through implementation of the Proposed Guidelines requirements. Commenters said, in fact, Duke Energy has already taken actions in North Carolina through upgrade of its coal-fired fl eet, retirement of older generating units, and installation of new natural gas combined cycle faci lities which not only reduced emissions of SO2, NOx, mercury, and other criteria or hazardous air pollutants, but also resulted in a 28 percent reduction in CO2 emissions from 2005 levels through 2013. Commenters said, but under the Proposed Guidelines, not only is there no credi t for those actions, but North Carolina is punished for taking these actions by given a lower starting emission rate. Commenters said, and the citizens of North Carolina (and South Carolina to the extent impacted by ratemaking decisions) will now be subject to goals that are un duly strict and that are not equitable across the states. Commenters said, EPA has effectively create d 50 subcategories of sources and tailormade BSER by using each state's emission rates as t he starting point for the application of its Building Blocks. Commenters said, never before has EPA taken this sort of approach to establishing any limit or guideline under section 1 11. Commenters said, EPA's actions, which result in setting 50 different BSER limits for the same types of sources, is arbitrary and capricious.

Commenters stated the Proposal aims to achieve its objective of lower CO2 emissions, not by controlling emissions at the source as is typically done, but rather by forcing a shift in the type of

resources used to serve electric retail customers. Commenters added it is, in effect, a resource38

planning rule. Commenters stated utilities have dif ferent means of resource planning, both from a legal structure and economic perspective. Comment ers stated because the utility is vertically integrated and serves as a balancing authority, the steps it eventually would take pursuant to a state plan to meet the rule's goals are complicated and might conflict with state resource planning rules and oversight - particularly in the proposed timeframes.

As discussed in section V of the preamble, the EPA believes all affected EGUs have strategies available to them individually to meet their subcat egory-specific emission performance rate.

Comment 5: The EPA's proposed state goals and analysis are fla wed.

Response 5: Based on comments and our further consideration, th e EPA is modifying the expression of the BSER from a state goal to subcate gory-specific emission performance rates in the final rule as suggested in the above comment. The EPA disagrees with the commenters’ suggestion that this change merits re-proposal. As described in Section V and VI of the preamble, these subcategory-specific emission perfo rmance rates are consistent with the proposal expression of the BSER which took comment on the im pact to different subcategories. Whereas the proposal blended the BSER adjusted generation a nd emissions from all affected fossil sources together to provide states flexibility thro ugh a state goal, this final rule provides subcategory-specific emission performance rates as the expression of the BSER while also including rate-based and mass-based goals to provid e flexibility to states and sources. By simply segmenting the steps it proposed, these subcategory -specific emission performance rates are a clear logical outgrowth of the proposal. The conce pts and underlying data were available at proposal, and the EPA can accommodate the commenter s’ suggestion of subcategory-specific rates without providing new material or concepts.

In regards to comments on VT and DC, section 111(d) of the Clean Air Act requires the EPA to
establish the BSER for affected sources. Because t hese states/districts have no affected sources
– the EPA did not establish a BSER for these areas.

As explained in Section V of the preamble, the EPA has revised its heat rate improvement.

The EPA’s building blocks are informed by historica l data, deployment patterns, and established cost and performance criteria as described in Secti on V of the preamble and the GHG Mitigation
Measures TSD. The EPA believes the BSER is cost-ef fective and feasible. Subsequent to establishing the BSER, the EPA used the IPM power s ector model to further test the cost and viability of the BSER. States have the flexibility to determine the best aggregate pathway to compliance among its affected sources and distribut e that reduction burden in the most appropriate manner. Therefore, there is no unit-le vel technical limitation that cannot be addressed through the myriad of compliance pathways available to the state.

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

Commenters stated that EPA's proposed state goals a nd analysis are flawed.39

Commenters said the analysis generally overestimate s the possible reductions available from the Building Blocks, resulting in state goals that may not reflect the reductions that are achievable.

Commenters stated the goals are flawed due to EPA's failure to apply its definition of BSER only to the source category subject to regulation. Comme nters said because this defect pervades EPA's entire methodology for calculating state emis sion goals, EPA must withdraw the Proposed
Guidelines.

Commenters added EPA has no authority to regulate t he behavior of consumers, and its simplistic evaluation of the potential for future e nergy efficiency measures ignores fundamental aspects of program design and achievability. Commen ters said there are errors in each and every one of the blocks upon which the state goal calcula tion is based that make the final result arbitrary and capricious; all of these errors infla te the prospects for future emission reductions, and simply shift the search for effective ways to m eet the arbitrary goals from one building block to another and beyond, to measures EPA admits are n ot cost-effective, in a continuous loop of legally, technically, and practically flawed option s that impairs the development of any workable compliance solution.

Commenters stated the assumption of a nationwide 6% HRI across the coal-fired fleet is technically infeasible and impractical and should n ot be used without further research and validation to form state CO2 intensity goals.

Commenters stated challenges under the Proposed Rul e and "Generation-based" State Goals since the proposed rule regulates in-state generati on only, it:

1. Favors states that import emitting generation, w hich have reduced or no compliance obligations (e.g. VT and DC);

2. Favors states that consume their own in-state em itting generation, which have more policy options available to achieve compliance;

3. Disfavors states that export emitting generation , which must claim emitting generation that they're not consuming or paying for;

4. Favors states that export renewable generation, which may be able to claim reductions without paying for them; and

5. Disfavors states that import renewable generatio n, which are paying for reductions that they may not be able to claim.

Commenters said the Proposed Rule will potentially disincentivize policies and measures that affect reductions anywhere but at in-state generati on that is consumed in-state; exporting units will not be affected by demand-side efforts in the exporting states and reductions at those same units caused by demand-side efforts at the importin g state will not be counted. Commenters said states that are net importers, for example, se e little reason to enact policies and pursue activities that reduce emissions from those generat ors; the result leaves low-cost, demonstrated
reductions on the table.40

Commenters stated U.S. EPA's proposal, while legall y dubious, is also factually deficient. Commenters said the reductions proposed under build ing block 1 are grossly overstated and the reductions proposed under building blocks 2 through 4 are impractical under state law. Commenters said U.S. EPA should revise its set goal for emission reductions based on a realistic assessment of building block 1 and allow the state of Ohio to implement a SIP to achieve those reductions as required by 111(d).

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, EPA's interim and final budget goa ls need to be adjusted to reflect the
corrections in the technical data to reflect the ac hievable CO2 emission goals while still having a
reliable electric network. Commenters said these ad justments also need to take into account the timing required to implement the significant change s that would be required by the electric industry. Commenters said the interim and final bud get is unachievable for utilities as a key component of the State of Florida's goal. Commenter s said the proposed rule avoids limiting emissions from individual emissions units; instead, it implements a state-wide emissions cap; the resulting numerical limit is unique to each state. Commenters said how the cap is met remains partially in the discretion of each state, but EPA' s goals assume a state, particularly those with Florida's circumstances, will have to heavily force the use of renewable or zero-carbon emitting resources and demand-side energy conservation and e fficiency practices or else purchase offsets
from other states. Commenters said it remains to be seen whether such offsets will even be
available.

Commenters stated the proposed rule does not includ e adequate specifics to determine whether the Alaska CO2 Performance Goals can actually be ac hieved; EPA should determine whether the performance goals can, as a practical matter, be ac hieved before promulgating this rule.

Commenters stated the Proposed Rule specifically pr ohibits states from making any "case-bycase" exceptions based on factors such as: (1) unre asonable costs of control resulting from plant age, location, or basic process design; (2) the phy sical impossibility of installing necessary control equipment; or (3) other factors specific to the facility (or class of facilities) that make application of a less stringent standard or final c ompliance time significantly more reasonable. Commenters said the Proposed Rule rejects the possi bility of a "less stringent standard" or final compliance time; instead, the Proposed Rule require s that any state CAA section 111(d) Plan must show "achievement of emission performance equi valent to the goals established by the EPA, on a timeline equivalent to that in the Propos ed Rule."

Commenters stated EPA must redo its energy efficien cy assumptions and state targets.
Commenters said the EPA assumed that without the CP P, incremental energy efficiency does not occur; this is an incorrect assumption and has led to a much higher target for energy efficiency by state. Commenters said the EPA assumption grossl y overstates the benefits of the CPP; according to the EIA, for example, the industrial s ector has reduced its energy intensity by 41 percent since 1987. Commenters said this has been a chieved largely through voluntary energy efficiency improvements; the industrial sector has demonstrated that it does not need a regulatory framework to improve energy efficiency. Commenters said the EPA should rethink its approach to energy efficiency; industrial companies have fir sthand experience nationwide on electric utility delivered energy efficiency programs; a bet ter way forward is to drive energy efficiency41

through the residential sector and through improved appliance standards, heating and cooling systems, and better building codes.

Commenters said that, The Proposed Rule's method of determining a state’s target relies a on a legally and technically flawed basis which, creates more uncertainty and more stringent targets. Commenters said the Building Blocks are in compatible with the BSER required under section 111(d) for two reasons. Commenters gave the reason that Building Blocks 2, 3 and 4 impose reduction goals that cannot be achieved by i ndividual sources.

See section V of the preamble. The EPA believes tha t all affected EGUs have compliance options available to them to meet the subcategory-s pecific emission performance rates.

Comment 6: The EPA should work with states to set goals/let st ates set goals.

Response 6: The EPA is expressing the BSER as subcategory-speci fic emission performance rates for this final rule. Per commenters’ suggest ions, states have the flexibility to establish unit

level requirements within the state and demonstrate that those requirements will result in a rate or mass outcome that complies with values put forth in sections VI and VII of the preamble. The EPA supports the commenters’ suggestion that states be allowed to customize program targets
and timelines for sources in the state. Section 11 1(d) does require that the EPA establish a BSER, and it has met that obligation in this final rule while providing states as much flexibility to customize source requirements as possible as lon g as they still demonstrate compliance as discussed in section VIII of the preamble.

There are no BB4 EE assumptions in the final rule B SER quantification as described in Section V of the preamble.

The EPA engaged in significant stakeholder outreach during the comment period. Feedback received through that notice-and-comment process in formed the final rule BSER quantification.

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

Commenters stated that EPA should address state-spe cific concerns about the proposed emission rate goals. Commenters said that EPA should work wi th the states and RTOs to set achievable state goals that reflect future in-state conditions

.
Commenters stated that EPA should revise the Propos ed Rule to allow States to set the standards of performance, and to determine the extent to whic h, and the timing for applying those standards individually for each unit in its jurisdi ction.

Commenters stated the EPA should allow Pennsylvania and other states to set less stringent performance standards and longer compliance schedul es for power plants within their jurisdiction, and Pennsylvania and other states sho uld be given maximum flexibility by the EPA to implement carbon dioxide performance standards f or fossil-fueled power plants within their jurisdiction.42

Commenters stated when determining the need for new electric generating facilities, the commenters always considers the utilization of rene wable energy resources and, by Florida law,
cost effectiveness must be considered. Commenters s aid the Florida Statutes require consideration of electric system reliability and in tegrity, reasonable cost, fuel diversity, and reasonably available renewable and conservation mea sures. Commenters said based on the FCG analysis, the cost of achieving the proposed CO2 em issions reductions using a proposed 10 percent renewable energy component for calculating the 2030 goal is not reasonable; accordingly, commenters requested that EPA withdraw the proposed state goals and work with states to adjust renewable energy generat ion targets to achievable levels within a
reasonable time-frame.

Commenters added by establishing state limits the C PP has limited the state environmental agencies flexibility to establish unit by unit limi ts under section 111(d). Commenters supported allowing states to conduct unit by unit evaluations to establish emission limits and the flexibility to use building blocks 2-4 to calculate compliance.

Commenters stated because of the calculation errors and incorrect assumptions underlying the EE savings goal of the Proposed Rule, EPA should wi thdraw the 1.5% annual incremental savings goal, and the 10.3% annual cumulative goal for 2029, and work with the state to develop goals that are technically and economically feasibl e for North Carolina based on North Carolinaspecific facts.

Commenters stated EPA incorporates concepts for CO2 emission reductions that states currently have no authority to enforce such as energy efficie ncy programs and renewable energy
initiatives. Commenters said much consideration sho uld be given to allow states to develop their own methods for including these efforts to meet the final state goals. Commenters said this proposal essentially requires the incorporation of renewables and energy efficiency programs to meet the required reductions. Commenters said this is unchartered territory for many states and should therefore not be presented as requirements b ut as potential compliance options.

Commenters stated EPA should allow each state to cu stomize its own program targets and timelines after taking account of its generation po rtfolio, history of CO2 reduction measures, potential for renewable generation, and local econo my. Commenters said providing states with this small measure of input will go a long way to e nsuring EPA targets and timelines are practically achievable. Commenters said in this eff ort, EPA should allow credit to regulated entities for emission-reduction steps already taken

.

Comment 7: The EPA should not make goals lower than New standa rds (NSPS); should not be more stringent than NSPS.

Response 7: The EPA disagrees with the comparison between strin gency of state goals and NSPS rates as the two metrics are not apples-to-app les. First, the EPA has modified our approach to quantifying the BSER from state goals t o subcategory-specific emission performance rates. However, the commenters concern still translate – a nominally higher 111(b) rate is less stringent that a 111(d) state goal or subcategory-specific emission performance rate.43

However, the EPA believes this mischaracterizes the issue by treating two different metrics similarly. The metric for the NSPS standard is dif ferent than the metric for the section 111(d) standard and the two should not be compared to each other. The 111(b) standard pertains solely to emissions and generation (and corresponding emis sion rate) at a source. The 111(d) rates may reflect additional inputs and thus a nominal compar ison of the two numbers is not an accurate gauge of relative stringency.

Based on comments received, the EPA is promulgating a final expression of the BSER as subcategory-specific emission performance rates, wh ere every affected EGU in a given subcategory is given the same rate. This addresses the commenters concern about inequitable treatment of technologies depending on geographic l ocation.

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

Commenters stated that the goals for existing sourc es proposed under 111(d) are more stringent than the CO2 per MWh emission level requi red by EPA to be achieved by new coal or gas power plants under Section 111(b) of the CAA.

Commenters added that Texas' interim 853 lbs/CO2 MW h and final 791 lbs/CO2/MWh goals are
lower than the standards for new units under Sectio n 111(b).

Commenters added EPA has set emission guidelines fo r 26 states at a level more stringent than the 1,100 lbs/MWh New Source Performance Standard ( NSPS) established by EPA in the 111(b) rulemaking governing new fossil-fired power plants. Commenters stated it is preposterous to have an emission standard for existing power plants that is below the standard for new power plants; the absurdity of an existing source standar d that is more stringent than a new source standard becomes even more pronounced when such str ingency is brought about as a result of an unfair and unlawful action to penalize states and r egional governmental entities such as TVA that have been in the forefront developing and promoting nuclear power.

Commenters stated the Existing Source Proposal impo ses unreasonable and unlawful burdens on the states because the final emission goals set for th thereunder are unattainable; indeed, many of the states' final emission goals are significantly lower than the emission standards for new sources under the New Source Proposal and modified/ reconstructed sources under the Modified Source Proposal. Commenters said it is manifestly u nreasonable to require existing sources to emit at a fraction of what is required of new and m odified/reconstructed units; the inherent
differences between new and modified/reconstructed sources on one hand and existing plants on the other justify a higher emission standard for ex isting plants. Commenters said for example, the costs associated with installing emission controls at existing plants is generally much higher than installing the same emission controls at new and mo dified/reconstructed plants; this is one reason why EPA has historically imposed stricter emission controls on new and modified/reconstructed plants.

Commenters added for many states, including South C arolina, the goals under the proposed Section 111(d) rule are more stringent than those i n the Section 111(b) rule for new sources. Commenters said South Carolina's goal in the propos ed rule is 772 lbs CO2/MWh and the EPA has proposed an emissions rate of 1,000 lbs CO2/MWh for new large NGCC units in its new44

source review standards (NSPS) for fossil fuel-fire d electric generating units under Section 111(b). Commenters asserted that the intent of Sect ion 111 of the CAA is to allow existing sources to achieve less stringent standards than ne w sources; in addition, because of this discrepancy, the replacement of the South Carolina' s current generating capacity with new fossil fueled capacity would result in an allowance for hi gher CO2 emissions.

Commenters stated the Proposed Regulation requires existing fossil fuel units located in Virginia
to achieve a carbon emission rate that is as much a s 26% lower than the carbon emission rate that the EPA recently determined can be achieved by new units using the best available control technology. Cs said compared to Virginia's Mandator y Goals of 884 and 810 pounds of CO2/MWh, the new source performance standard for a new coal unit is 1,000 to 1,050, and for a new gas unit is 1,100; thus, a new fossil unit in V irginia - which can only be constructed using the absolute best control technology and without ph ysical and other engineering limitations attendant to existing infrastructure - faces a far less stringent compliance requirement than existing units. Commenters said such a topsy-turvy result for Virginia could seem a mere oddity to the general public when considered in the contex t of electric generation units; however, it would be hard to imagine the EPA advancing such a p roposal in areas that are more familiar to everyday life. Commenters asked would it be rationa l to require the current owners of automobiles or lawnmowers throughout Virginia, for example, to meet an emission standard that is 26% more stringent than required for the product ion of new cars or lawnmowers that must use the best available technology. Commenters said turn ing regulation on its head in this way - requiring older, but still useful equipment to meet a standard that the EPA admits cannot be achieved even by entirely new equipment - is a reci pe for stranding prior investments and requiring significant additional investment, both o f which will likely be paid for in large part, if not entirely, by consumers. Commenters said in fina lizing its Proposed Regulation, the EPA should correct this irrational and inequitable resu lt, consistent with the logic found elsewhere in the Proposed Regulation. Commenters said when consi dering carbon capture and sequestration, for example, the Proposed Regulation recognizes tha t modifications of existing units "entail additional considerations beyond those at issue for new units" - including the expectation that such costs "would be expected to be substantial," a nd that "some existing EGUs might have space limitations and thus might not be able to acc ommodate... expansion." Commenters said existing generating units cannot rationally be expe cted to achieve more than new units of the same type; there is no legal or rational basis to s et Virginia's Mandatory Goals for existing units below the standards required for new units.

Commenters stated EPA's CO2 emission rate target fo r existing EGUs in Virginia in 2030 is very aggressive, and is set at a level that is more stri ngent than EPA's proposed rule for new sources. Commenters said as proposed, EPA has determined tha t CO2 emissions from affected existing sources in Virginia can be reduced to 810 lbs/MWh, while a new coal-fired EGU, whether located in Virginia or elsewhere would need only to meet a standard of 1,100 lbs/MWh; in fact, a new natural gas-fired combustion turbine over 850MM Btu/h heat input could locate in Virginia and only be required to meet a 1,000 lbs/MWh rate. Commenters said it has been longstanding CAA policy to consider new sources as presenting an opportunity to install the most advanced air pollution control equipment; for example, the N SR program requires consideration of the "best available control technology" on a case-by-ca se basis before construction can commence on a new major source; similarly, the CAA has provi ded less stringent requirements for existing sources. Commenters said EPA specifically recognize d that costs are considered under CAA45

section 111 (d). EPA explained: "Such a considerati on is inherently different than for new sources, because controls cannot be included in the design of an existing facility and because physical limitations may make installation of a par ticular control systems impossible or unreasonably expensive in some cases." Commenters s aid the differential between new and existing source regulation has also been reflected in previous CAA section 111 (d) rules that have promulgated less strict standards for existing sources than those contained in a predicate CAA section 111 (b) rule for the new sources; but E PA's Proposed Rule stands this established procedure on its head. Commenters said this result is also contrary to EPA's prior interpretation of CAA section 111(d) guidelines; in reviewing how the regulation of greenhouse gas emissions ("GHGs") could occur under the CAA section 111(d), EPA previously indicated that: "Section 111(d) guidelines, like NSPS standards, must reflec t the emission reduction achievable through the application of BDT. However, both the statute a nd EPA's regulations implementing section 111(d) recognize that existing sources may not alwa ys have the capability to achieve the same
levels of control at reasonable cost as new sources . The statute and EPA's regulations in 40 CFR 60.24 permits states and EPA to set less stringent standards or longer compliance schedules for existing sources where warranted considering cost o f control, useful life of facilities; location or process design at a particular facility; physical i mpossibility of installing necessary control equipment; or other factors making less stringent l imits or longer compliance schedules appropriate." Commenters said EPA previously unders tood that CAA section 111(d) is based on the best technology that might be applied to an exi sting source and that existing sources may not have the capability to achieve the same levels of c ontrol as new sources. Commenters said in the Proposed Rule, EPA offers no explanation why it dep arts from this established methodology, or the general expectation that existing source contro ls should be less onerous than those applied to new sources. Commenters said Virginia is also at a significant disadvantage vis-a-vis its neighboring states, which all have 2030 emission ra te goals that are substantially higher than Virginia's goal of 810 lbs/MWh; the Proposed Rule w ould require greater CO2 emission reductions on a pound per megawatt hour basis for a ffected units in Virginia than from similar units in Kentucky or West Virginia.

Commenters stated EPA's algorithm that combines all four building blocks provides a state-wide emission rate goal for existing power plants in man y states that is more stringent than EPA is proposing for new power plants; this is not a reali stic or a reasonable outcome. Commenters said GHGs are well-mixed, and take many years to leave t he atmosphere; their effect is long-term and global and, generally speaking, the atmosphere is u nconcerned where the CO2 molecule originated. Commenters said it is appropriate to co mpare the proposed Section 111(d) statewide goal for existing EGU sources with the proposed Sec tion 111(b) unit standard for new EGU sources; EPA has proposed for state-based CO2 emiss ion performance interim and final goals of 647 lb/MWh and 531 lb/MWh, respectively. Commenters said EPA has proposed emission rates for new EGUs ranging from 1,000 lb/MWh /MWh to 1,10 0 lb/MWh, depending on the type and size of the unit. Commenters said according to EPA' s Technical Support Document: Goal Computation, New Jersey's existing EGUs are achievi ng an emission rate of 1,035 lb/MWh. The commenters said if the existing EGUs were to be rep laced by new EGUs, the fleet would be subjected to a collective emission rate of 1,000 lb /MWh to 1,100 lb/MWh; this is in the range of New Jersey's existing EGUs. Commenters said it is n ot reasonable to expect deeper emissions reductions from existing EGUs than what is required from new EGUs; a uniform national goal in46

this range could achieve the same 30% CO2 reduction as EPA projects it will achieve under the rule proposal.

Commenters stated EPA has proposed to set the Inter im and Final Goals below 1,000 lb/MWh for a number of States, including Arizona; setting the rate below 1,000 lb/MWh creates substantial practical problems and equity issues. C ommenters said even modern NGCC units may not be able to consistently achieve a rate that is much below 1,000 lb/MWh; this means that modern NGCC units will, in States with low Interim and Final Goals, need to "blend" their emissions with renewables or energy efficiency step s to achieve a rate that is below their native
emission rate.

Commenters said in states, such as Arizona, where t he NGCC units are owned primarily by "merchant" facilities and the population is served by traditional utilities (whether IOU, public or cooperative), this disparity creates significant pr oblems. Commenters said in order to the NGCC units to run, they must reduce their emissions; how ever, the merchant NGCC operators likely have no renewables and no opportunity, as generatio n facilities only, to develop substantial energy efficiency improvements that would have the effect of reducing the NGCC EGU's carbon
emission rate. Commenters said in order for merchan t NGCC units to run in states with Interim
and Final Goals below the carbon emission rate achi eved by an NGCC unit, the State must either require the merchant plants to install RE (which ma y or may not be within their financial means), purchase RE or energy efficiency credits from a tra ditional utility or other entity that has such credits (if any such EE credits exist or are allowe d by the Proposed Rule, which is unclear), or
else order the in-state utilities to achieve additi onal reductions to offset the "excess" emissions of the merchant NGCC units. Commenters said if, as is the case in Arizona, a sizeable portion of the merchant NGCC power is directed to the export m arket, it is not clear that the State will be willing to impose additional costs upon its citizen s and taxpayers for the sole benefit of a foreign state's citizens and taxpayers. Commenters said the net effect may be that these units either shut down, resulting in an increase in the overall carbo n intensity, or are forced out of the interstate market; in any event, the interconnected nature of the grid will suffer and EPA's IPM Modeling, which relies heavily upon such interstate movement of electricity to meet the Proposed Rule's Interim and Final Goals at reasonable costs, may pr ove illusory. Commenters said the practical solution to this problem is to set the Proposed Rul e's goal no lower than the eventual NSPS rate and allow use of the Building Blocks as an alternat ive to meeting the NSPS goal.

Commenters stated the EPA's methodology for setting state goals for CO2 emissions is flawed and results in unrealistic and unfair targets that states are mandated to achieve. Commenters said the BSER scheme that EPA has developed imposes extr eme CO2 reduction mandates on many states, far beyond what can be realistically achiev ed. Commenters said whether measured in terms of the percentage reduction over the status q uo or the tonnage reduction, imposing actual CO2 emission goals below 1,000 lbs CO2/MWh is unrea listic. Commenters said EPA's methodology results in 26 states being required to meet targets below 1,000 lbs CO2/MWh - as low as 215 lbs CO2/MWh in Washington. Commenters sa id it virtually forces states to shift to entirely renewable generation to meet their electri city needs, without consideration of the specific circumstances of each individual state, th e reliability of the electric grid or the cost of electricity to consumers. Commenters said such stri ngent target-setting is regulatory overreach,
and is so disconnected from the facts that it const itutes arbitrary and capricious decision making. See, e.g., Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 10347

S.Ct. 2856, 2866, 77 L.Ed.2d 443, 458 (1983) (agenc y action will be upheld only if it "articulates a satisfactory explanation for its action including a 'rational connection between the facts found and the choice made'") (quoting Burlington Truck Li nes, Inc. v. United States, 371 U.S. 156, 168 (1962)).

Commenters stated for example, South Dakota, which in 2012 emitted less carbon dioxide than 46 other states, was saddled with a 35% reduction r equirement, bringing its target in at 741 lbs CO2/MWh - in a state that has only one coal plant a nd one NGCC plant. Commenters said the targets force extreme reductions in states where re newable energy has a long history and CO2 emissions are already low; South Dakota produces 74 percent of its energy from renewables - 50 percent hydro and 24 percent wind - with only 26 pe rcent from fossil fuels. Commenters said many other states are in a similar position; it is patently unfair to force extreme reductions on states that already have low CO2 emissions. Comment ers added the Clean Air Act, Section 111(d)(1)(A) states that the Administrator may esta blish standards of performance for any existing source of an air pollutant. Commenters sai d in South Dakota, only two units are considered affected EGUs; rather than looking at th e actual emissions of the affected EGU, and looking at the BSER available to those particular E GUs to come up with an appropriate target, the EPA looked "outside the fence" resulting in ext rapolations on renewables and energy efficiency that have little to do with the actual a ffected units.

Comment 8: The EPA should use the NSPS limit under 111(b) as m inimum emission rate for existing NGCC.

Response 8: The metrics for the NSPS limits are different than the metric for the existing source limits and should not be compared to each other. T he EPA promulgated different metrics given the different direction provided under sections 111 (b) and 111(d) of the Clean Air Act.

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

Commenters stated in calculating state goals under section 111(d), EPA has assigned a more stringent CO2 emission rate to existing NGCC units (900 lbs./MWh for Arizona) than proposed for new units under section 111(b). Commenters asse rted that the analysis EPA conducted under its section 111(b) proposal should hold true under the section 111(d) proposal since EPA evaluated all existing units as a basis for establi shing the proposed emissions rate limit for new units. Commenters said in the proposed section 111( b) rule, EPA's proposed CO2 emissions rate for new units is 1,000 lbs./MWh-gross (approximatel y 1,031 lbs./net MWh) for NGCC units with a capacity greater than 850 MMBtu/hour. Commen ters said EPA asserts that these emission rates can be met over the lifetime of a modern high efficiency NGCC unit and are representative of the emission rates of the best performing NGCC u nits in the country. Commenters said therefore, in a final rule EPA should use the same CO2 emission limit proposed for new NGCC units by EPA under section 111(b) in January 2014, as a minimum emission rate assumption for existing NGCC units.48

Comment 9: Disparity between the state goals.

Response 9: As explained in the preamble sections V and VI, th e EPA took a subcategoryspecific approach in this final rule meaning that e very affected EGU within the same subcategory
in the continental U.S. face the same emission rate expression of BSER. Moreover, the state goals expressed in the final rule reflect a more na rrow range of emissions rates. See the CO2 Emission Performance Rate and Goal Computations TSD for CPP final rule.

The regionalized approach in this final rule distri butes reductions from a building block category across a given region.

The EPA agrees with commenters that a BSER quantifi cation should be expressed in some type
of uniform metric and believes it has achieved that through its use of subcategory-specific emission performance rates. States that already ha ve lower emitting generation or other abatement measures underway will benefit from those on the way reductions.

The EPA does not agree that the commenters’ concern regarding Brunswick and Warren facilities are relevant to this final rule or propo sal. The comments support the classification that they are under construction units and suggest under construction units not be included in the BSER quantification. However, the EPA believes the agency has an obligation to establish BSER for likely affected sources. These facilities are treated in the same manner as they are subject to the same BSER subcategory-specific emiss ion performance rate as every other affected NGCC unit. Moreover, the regionalization a pproach in this final rule extends that reduction potential to out-of-state sources in the eastern interconnect, and therefore Virginia does not bear all the generation replacement assumptions within its own state.

In regards to comments about the Louisiana, Arkansa s, Texas, and South Carolina state goals, the EPA notes that we are no longer quantifying the BSER through the use of a state goal, but rather through subcategory-specific emission perfor mance rates. However, the EPA is providing compliance flexibility, and in many of these states , the final CPP state goals are different than the proposed values that the commenters expressed conce rn with.

As described in preamble Section V, demand-side ene rgy efficiency is not part of the final rule’s BSER quantification.

See the Regulatory Impact Analysis for CPP Final Ru le and the Resource Adequacy and Reliability Final TSD for a response to comments on cost estimates and grid reliability.

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

Commenters stated there is disparity between the st ate goals.

Commenters stated there is disparity between the go als between the early action states and other states that have been less proactive.49

Commenters stated some states can do more to reduce their emissions at lower cost, and do so cost effectively (e.g., greater deployment of energ y efficiency programs).

Commenters stated the 2030 CO2 emissions goal or ca rbon dioxide emissions goal for many states is lower than the beginning baseline for sev eral of the states; EPA appears to be picking winning and losing states for economic development.

Commenters stated do not penalize states for their success; energy production and consumption does not start and stop at state borders; complianc e must not disproportionately penalize one state at the gain of another.

Commenters stated that MA, NY, and RI, have advance d energy efficiency and renewable programs, are members of RGGI, have already signifi cantly reduced their emissions, but the proposed rule does not recognize these achievem ents.

Commenters stated the Northeastern states that part icipate in RGGI have been national leaders in carbon dioxide reduction; yet, the draft rule appea rs to ask more of those states than of other states across the country. Commenters said it would be extremely unfortunate if the result of 111(d) were that the Northeast was disadvantaged fo r being an early leader on carbon emission
reductions.

Commenters added the rule largely relies on clean e nergy leaders like Minnesota to make further reductions in carbon emissions to provide an overal l level of national rule stringency while asking less of states with currently underdeveloped clean energy resources; such a strategy may not take full advantage of the "low-hanging fruit" of carbon emissions reductions that remain available in many states, while seeking more aggres sive reductions from states well-into their clean energy transition.

Commenters added the necessary CO2 reductions and r esulting compliance costs will be distributed unfairly amongst the states; residents and businesses in states bearing higher compliance costs will also be disproportionately im pacted economically as electricity prices
increase as a result of the rule. Commenters said f uture economic development may also be impacted as potential future businesses weigh opera ting costs of locating a facility in one state versus another; additionally, the disparate state g oals will, by extension, necessarily result in comparative disparate treatment of EGUs depending o n the state in which the EGUs are located.

Commenters added for example, instead of all coal-f ired EGUs being required to meet BSER in a similar manner across the country, the emission l imit that a particular coal-fired EGU may be required to meet will be vastly different depending on where the source is located; in states where electrical generation is predominately coal-b ased (e.g., Kentucky, North Dakota, and West Virginia), the state goals are significantly less s tringent than in states that have diversified generation mixes including coal and other fossil fu el-fired sources (e.g., Texas and Florida). Commenters said a state with a much more stringent goal, such as Texas, would be forced to require more CO2 reductions from coal-fired EGUs wi thin its jurisdiction than a state with coalfired EGUs that has a much less stringent state goa l. Commenters said the EPA provides no justification for why EGUs within the same source a nd fuel category should be subject to wildly varying standards of performance and thereby varyin g costs and controls, including shutdowns,50

depending only upon the state in which they operate ; the EPA also has no legal basis for establishing state-specific standards of performanc e.

Commenters added the goals are set in a way that cr eates inconsistencies between states; this offers neighboring states a competitive advantage o ver Michigan. Commenters said given that Michigan was an early adopter of a renewable portfo lio standard (RPS) and energy efficiency (EE) programs and other states were not, Michigan i s tasked under the proposal with a greater level of renewable energy (RE) and EE goals. Commen ters said this is an inequitable burden that must be equalized in the final rule; those impacts are contrary to the requirement that USEPA "must not give competitive advantage to one state o ver another in attracting industry" when setting new source performance standards.

Commenters stated other Midwestern states do not ha ve to reduce at such a high percentage as Minnesota; also, emission reduction efforts taken p rior to 2012 should count toward any such emission reduction percentage calculation.

Commenters added the clean power plan unreasonably asks states in our region to bear a disproportionate and higher burden of CO2 emissions reductions compared to the nation as a whole- especially our state of Arkansas at 45 perce nt.

Commenters added of greatest concern is the imposit ion of greater and unreasonable emission reduction requirements upon some states, such as Vi rginia and North Carolina, which already have reduced their carbon intensity, diversified th eir generation portfolios and achieved emission reductions, while providing much less stringent req uirements on states that have been less forward-looking. Commenters said this dichotomy cre ates an economic and competitive advantage to those states that have done the least and a disadvantage to those who have done the most; EPA essentially penalizes early action and re wards inaction, and incorrectly assumes these states can do significantly more simply because the y have access to multiple sources of electricity generation.

Commenters added in Virginia, the State Corporation Commission (SCC) has been responsible for oversight of utility rates for more than 100 ye ars; the SCC was established by the Constitution of Virginia and has broad regulatory o versight of utilities, telecommunications, banking and insurance. Commenters said with regard to electric utilities, Virginia's successful application of the regulatory compact concept has l ed to reliable service and stable, competitive rates when compared to national or regional average s; at the same time, Virginia ratepayers have made substantial investments in clean energy, as de monstrated by Dominion's consistent ranking in the lowest one third of carbon emitters by inten sity among major power producers.
Commenters said the draft rule has the unintended c onsequence of penalizing states that took aggressive, early action to produce energy in a mor e environmentally responsible manner, such
as Dominion's closure or conversion of coal units a t seven of its Virginia power stations within its regulated generation fleet.

Commenters added the proposed rule does not give ap propriate credit to investments already made by Virginia utilities and their customers, and the state's recent reductions in CO251

emissions; Virginia's generation portfolio includes lower carbon generating sources such as highly efficient natural gas combined cycle units ( NGCC), non-emitting nuclear units, and growing use of renewable resources. Commenters said this balanced generation fleet, which also includes coal-powered units, provides Virginians wi th a reliable, affordable and environmentally-responsible supply of electricity.

Commenters added the EPA rule will affect Virginia and North Carolina disproportionately, compared to the reduction goals assigned to other n earby states; for example, West Virginia's 2030 carbon intensity goal of 1,620 pounds per mega watt-hour of generation is twice the level set for Virginia at 810 pounds per megawatt-hour; K entucky's 2030 goal is more than twice as high; Maryland's 2030 goal of 1,187 pounds per mega watt-hour is more than 46 percent higher than Virginia's. Commenters said targets in these a nd many other states are above the level EPA has proposed for new sources; this allows these sta tes the option of using NGCC build to achieve compliance; for states like Virginia and North Caro lina, with emission rate goals lower than the standard proposed for new sources, incorporating th ese units into state compliance plans would create significant compliance challenges; assuming it could be accomplished, a compliance strategy in Virginia that replaces all existing coa l-fired generation with comparable amounts of state-of-the-art NGCC generation would not achieve the proposed interim target of 884 lbs/MWh or the proposed 2030 of 810 lbs/MWh.

Commenters added this disparity actually incentiviz es new NGCC build in states with higher targets and emissions than in states with lower tar gets and less emissions; the fact that EPA proposes existing source standards are more stringe nt than the standard for new sources certainly raises question as to whether new units should ever become regulated under 111(d) or will be ever be credited with meeting the affected state's goal; for example, a single 1,300 MW, 920 lb CO2/MWh NGCC unit in West Virginia, similar to the Brunswick facility being constructed in Virginia, would calculate to offset approximately 6 percent of West Virginia's total CO2 emissions at a 70 percent capacity factor with its emission rate well below the West Virginia target of 1,620 lb/MWh; by contrast, the same plant located in Virginia would be expected to remain under 111(b) rules because its permitted emi ssions rate would be above the statewide Virginia target. Commenters said although the actua l impact to the environment would be the same, whether the units are located in either state , the accounting with respect to the existing source rule as proposed would be substantially diff erent.

Commenters added this disparity is further exacerba ted in Virginia by the inclusion of NGCC units that were under construction as of January 8, 2014 in the calculation of the state goals; Dominion Virginia Power's (DVP) Warren and B runswick power generating facilities are captured by this inequitable and unfair policy whic h results in an increase in the stringency of the Virginia state target by almost 40 lb/MWh; this met hodology disadvantages states, such as Virginia, that are meeting future energy needs proa ctively with lower-carbon emitting combinedcycle natural gas-fired base load generation. Comme nters said furthermore, including an "at risk" nuclear component in the computation of the state t arget for states, such as Virginia, with existing zero-emitting nuclear generation further r educes the proposed reduction targets without accomplishing its intended purpose of preserving ex isting nuclear units; as a result, states such as Virginia for which nuclear generation provides a si gnificant amount of the state's electric generation are neither recognized nor credited for investments in tins carbon-free nuclear generation.52

Commenters stated the issue of state-by-state equit y is important to Virginia, a state whose balanced electricity portfolio, downward emissions trajectory, and reasonable electricity costs are a rough proxy for what is envisioned at the nationa l level under this proposal. Commenters said using EPA's 2012 baseline, Virginia has reduced its power plant CO2 emissions 38 percent from a 2005 peak, transitioning steadily from coal to ga s and relying on nuclear for 40 percent of its generation - twice the national average; yet its em issions reduction target is proportionally stringent compared to those of states that have don e less. While commenters acknowledged that a one-size-fits-all emissions target is impractical among states with vastly different power sectors, commenters also asserted it is good policy to reward states that have taken steps to reduce the carbon intensity of their power sectors.

Commenters stated one key way to address this equit y issue and properly reward states with balanced electricity portfolios is to include all z ero-emitting capacity in the 2012 compliance baseline; nuclear accounts for 40 percent of Virgin ia's electricity portfolio, yet only 6 percent is factored into the state's target in the draft stand ard. Commenters said not including one third of Virginia's current overall generation significantly skews the picture of its electric sector.

Commenters were concerned that North Carolina might be unable to achieve these objectives under the methodology and assumptions EPA used to d etermine proposed state carbon performance standards. Commenters said unlike other states in the Southeast, elected officials in North Carolina previously took forward-thinking act ions that reduced carbon emissions, spurred renewable electricity generation, and improved ener gy efficiency. Commenters said rather than reward North Carolina for these actions, the propos ed rule could impose higher compliance
burdens on North Carolina than it would have had it not taken early action. Commenters said any final rule must not result in higher compliance bur dens for North Carolina than for neighboring
states that chose not to take similar bold actions.

Commenters added the proposal sets wildly different targets for each state, varying on a rate basis from a low of 215 lb/MWh to a high of 1783 lb /MWh. Commenters said on a percentage basis, the targets present power sector reductions that vary from a low of 15% to a high of 73%, which will pit one state against another in comment ing on this rule proposal. Commenters said these numbers are based upon what EPA thinks it kno ws best about every aspect of every state power generation sector, developing fuel source inf rastructure, dispatch, energy markets, energy usage demands of businesses now and in the future, energy usage demands and habits of citizens, and the weather. Commenters said the inequities of this proposal are clear from the numbers alone; but the basis and background for such number s are weak and depend upon too many assumptions about too many unknowns.

Commenters added EPA's proposed goals create inequi ty among states, and specifically result in a disproportionate impact on Florida. Commenters sa id EPA has proposed different interim and final goals for each state; such an approach is arb itrary and capricious and unfair, as it creates economic competition among states and requires some states, such as Florida, to shoulder a disproportionate amount of the economic burden. Com menters said for example, EPA proposed final goals of 1,783; 1,771; 1,763; and 1,714 lb/MW h-net for North Dakota, Montana, Kentucky, and Wyoming, respectively; Florida's proposed goal in 2030 of 740 lb/MWh-net is less than half of these states' goals, and 25 percent less than th e national average.53

Commenters added the disproportionate impact on Flo rida is illustrated by comparing states' percent reduction requirement, as well as the perce ntage of coal-fired capacity EPA projects will retire. Commenters said for example, EPA's modeling projects over 90 percent of Florida's coalfired capacity to be prematurely retired while proj ecting that none of North Dakota or Montana's coal-fired capacity will be prematurely retired, an d it actually projects a delay in retirement of 1,379 MW of coal fired capacity in Kentucky compare d to the Base Case. Commenters said EPA's methodology unfairly penalizes states like Fl orida with an already-significant percentage of NGCC; this result is completely inequitable, and places states with lower interim and final goals at a severe disadvantage compared to states w ith higher interim and final goals. Commenters said EPA cannot reasonably justify such different treatment among states, and its approach is thus arbitrary and capricious.

Commenters stated the USEPA's goal computation meth odology may lead to inequitable results. Commenters stated that the Clean Power Plan propose s a methodology to calculate state goals that is applied uniformly to the states; however th e methodology results in some states having much more stringent goals than others. Commenters s aid generally the states with the worst
carbon emissions are asked to lower their emissions the least, and states that have made more investments toward natural gas generation and renew able energy sources, such as Nevada, are being asked to lower their emissions the most. Comm enters said this disparate treatment objectionable.

Commenters stated the Clean Power Plan's proposed m ethodology for setting goals on a state-bystate basis is fundamentally unfair to states like Oregon, where the carbon profile of the electric sector is significantly lower than the national ave rage; the proposal's methodology and the assumptions it uses to calculate goals punish state s and electric power customers like ours that have already made significant investments to addres s climate change. Commenters said that disproportionate burden potentially puts our state and region at an economic disadvantage
relative to the rest of the nation.

Commenters added EPA can take several steps to bett er align emission reduction targets with states responsibilities for power sector emissions; for example, EPA can i) recognize carbon reduction measures that take place between proposal of the Clean Power Plan and 2020; ii) apply a "floor" and "ceiling" to the amount of coal plant output displaced by NGCCs, and iii) "cap" the amount of energy efficiency assumed by leading stat es in Building Block 4.

Commenters added states that have already obtained large CO2 emission reductions, such as Wisconsin, are being required to reduce emissions m ore than those that have not taken significant steps to decrease emissions; for exampl e, those states that have invested in efficient natural gas plants, and consequently are reducing e missions from other higher emitting sources, have more stringent goals than they would have if t hey had not invested in these facilities; this perplexing approach needs to be corrected in any fi nal rule.

Commenters stated the Proposed Carbon Rule may acco mplish a 30 percent reduction to carbon emissions however, it exacts much greater emission reductions in some states than others and the reductions have no relationship to existing CO2 sta te emission levels. Commenters said this application imposes a heavier burden on some states as opposed to others; using Arizona as an example, the state has a well-balanced energy portf olio and fairly young fleet of EGUs; however,54

some states which have a less balanced and more pol luting energy mix face significantly less
reductions than Arizona. Commenters said the result is that states like Arizona are being forced to carry a more significant burden than other state s because of its diverse energy mix and early implementation of RE and EE. Commenters said the EP A goal calculation methodology leads to disproportionate and unequal results among the stat es. The commenters said states with large coal fleets and little or no NGCC or nuclear genera tion contribute significantly more to the national CO2 emissions than states with balanced po rtfolios and aggressive RE and EE programs; yet, based upon EPA goal calculation meth odology, those states contribute significantly less to the overall 2030 reduction es tablished by EPA. Commenters recommended that the EPA revise its goal calculation methodolog y to establish a balanced reduction strategy among the states that at least has some relationshi p to the state's contribution to nationwide CO2
emissions.

Commenters stated the proposed rule has a dispropor tionate impact on Arizona relative to other states, even though Arizona has a more balanced por tfolio and has put in place aggressive energy efficiency and renewable energy standards to reduce greenhouse gas (GHG) emissions. Commenters said Arizona was among the first states to adopt renewable portfolio requirements in 1994, which were replaced in 2006 with the curre nt Renewable Energy Standard and Tariff (REST). Commenters said the REST calls for TEP, UNS E and other regulated utilities to supply 15 percent of their retail load through renewable r esources by 2025. Commenters said in 2010, the ACC adopted the Energy Efficiency Standard, whi ch calls for TEP and UNSE to increase the savings realized through approved energy efficiency programs each year until the cumulative savings reach 22 percent by 2020. Commenters said t he EPA seems to imply [79 FR 34833, 34834, 34853, 34865, 34897] that these aggressive p rograms provide Arizona with an ability to achieve the second highest emission rate reduction of all states.

Commenters were concerned about the equity of the p roposed rule; states with less than 5% coalfired generation have an average percent reduction obligation (35.6%) significantly higher than those with more than 70% coal-fired generation (20. 3%). Commenters said 24 states with more coal-fired generation than Louisiana (on a percent basis) have lower percent reduction goals. Commenters said per EPA's data, Louisiana's 2012 CO 2 emission rate was 1466 pounds per megawatt hour (lb/MWh); therefore, Louisiana's goal of 883 lb CO2/MWh represents a 40% reduction. Commenters said Arizona, Arkansas, Georg ia, Minnesota, and South Carolina are the only states with more coal-fired generation than Lo uisiana for which EPA's proposal imposes more stringent obligations (on a percent reduction basis).

Commenters stated per section 111(d) of the Act, th e BSER must reflect the "degree of emission limitation achievable" by an existing EGU and canno t be dependent on any other unrelated aspect of a state's generation profile, including i ts existing NGCC fleet or its perceived potential to develop new RE resources. Commenters added propo sing a unique goal for each state does not comport with how the electrical grid is operated; t he "movement" of electricity is coordinated by regional transmission organizations, most of which service multiple states and dispatch without regard to political boundaries.55

Commenters stated EPA demonstrates that many states are moving quickly to adopt the most promising clean and sustainable energy options-ener gy efficiency and nonfuel renewables like solar and wind. Commenters applauded the use of the se clean and least cost options for compliance with the Carbon rule; however, EPA set v ery low targets for those states that have done the least thus far on energy efficiency and re newables; apparently the less you have done already, the less you are asked to do.

Commenters stated by forcing Minnesota to reduce it s carbon emissions 41 percent by 2030 will jeopardizes Minnesota's economic vitality by reduci ng our market competitiveness. Commenters advocated for and encouraged the EPA to pursue a we ll diversified mix of power sources; a diversified combination of power sources will serve Minnesota, and the country, well over time by balancing affordable and reliable power with env ironmental responsibility. Commenters
asked the EPA to better balance Minnesota's mandate to reduce its carbon emissions the by 41 percent. Commenters said all states should be asked to step up and meet a fair and equitable mandate; there are additional states that should be mandated to participate at higher levels.
Commenters asked the EPA to reconsider Minnesota's mandate for a 41 percent carbon emission reduction in favor of additional participation by s tates with lower mandates; by maintaining a fair and equitable mandate utilities will continue to ut ilize a well diversified fuel source mix while maintaining affordable energy for rate payers and r emaining competitive.

Commenters understood that different states will ha ve different targets based on feasibility, electrical systems, and other variables; however as written, it seems that the proposal requires more of states that have already made substantial c arbon reductions - like Delaware - than of states that have not yet acted. Commenters were con cerned that as proposed, the Clean Power Plan will place early action states at a competitiv e disadvantage; the commenters asked that the EPA consider adjusting the state targets to address these inequities.

Commenters stated the inadequacies of the EPA's cal culation can be seen by the striking differences in each state's final reduction require ment, caused primarily by the assumptions that underlie the building blocks. Commenters said while Idaho currently does not generate electricity from coal plants within its borders, it consumes coal-generated energy from at least five other states that export it to Idaho; if CPP c ompliance forces the exporting states to decrease their coal generation, such will force Idaho to com pensate by increasing its CO2 generation from its own in-state existing natural gas plants in ord er to make up for the states no longer able to export coal-generated energy to Idaho because of th eir own EPA imposed regulations.
Commenters said the effect of this is that Idaho's initial carbon baseline as assumed by the EPA, as well as Idaho's resulting emissions-reduction re quirements going forward have been erroneously calculated. Commenters said the fact is that Arkansas is a net exporter of electricity and, as such, is severely penalized by the CPP. The commenters said unless energy exporting states are compensated for the cost of controlling emissions incurred in supplying energy to other regions, regulating based on the location of the po wer source rather than the location of the user will be a primary example of the CPP's inequity and inherent inefficiencies.

Commenters stated the proposed rule imposes a highe r standard of performance (ostensibly as BSER) on existing EGUs located in states that have already required significant GHG reductions, as compared to units in the same regula ted source category located in states that have taken no or less aggressive measures to reduce GHG emissions. Commenters said the primary56

reason for the proposed rule's disparate impact is that EPA has determined the proposed state goals by applying EPA's BSER formula to each state' s current level of performance, regardless of the measures a state has already taken. Commente rs said such an approach ultimately corresponds to the imposition of varying, rather th an uniform, performance obligations on sources within the same source category, and cannot qualify as a BSER-derived standard; thus, the state goals that EPA has developed would dispar ately impact EGUs in states that are "ahead of the curve" in planning for climate change becaus e the relative stringency of the goals in these states is significantly greater than in less proact ive states; in other words, the state goals in the proposed rule would require states that have alread y achieved meaningful GHG reductions to impose measures on affected entities that exceed co rresponding measures that must be applied in states that have previously achieved less significa nt GHG reductions. Commenters said such inconsistent application of performance standards t o sources within the same source category is contrary to the clear language of Section 111(d) of the CAA, and the concept of BSER.

Commenters stated despite having been proactive in reducing CO2 emissions from the State's electric generating fleet, the electric cooperative s and other electricity providers in South Carolina are disproportionally impacted by the prop osed EPA rule. Commenters said South Carolinians will have to bear the burden of making the largest carbon intensity reduction in the nation; EPA says SC must drop from 1,587 lbs/MWH to 772 lbs/MWh by 2030. Commenters said EPA assigned one state which has a similar CO2 emission rate of 1,552 lbs/MWh a target reduction of just 16 percent; assignments for other states are similarly inconsistent. Commenters
said EPA should be consistent in its rules so that it doesn't penalize states that have been early investors in carbon-free technology and those who h ave limited access to additional natural gas resources. Commenters said EPA's proposal should no t place additional burdens on particular states as to other generation options due to incons istent results when applying EPA's model.

Commenters added that Texas' 2012 baseline level is lower than the final goal set by EPA for 13 other states (HI, IN, IA, KS, KY, MO, MT, NE, ND, O H, UT, WV, WY). Commenters added the proposal would require TX to account for 18-25% of the country's total CO2 reductions.

Commenters stated the disparate impacts of the prop osed guidelines across states illustrate the arbitrary and capricious nature of the proposed gui delines. Commenters said there is clearly no relationship between a state's 2012 fossil emission rate and the amount by which each state
would have to lower its CO2 emission rate based on the EPA's proposed goals, other than perhaps an inverse relationship. Commenters said re quiring states with initially lower emission rates to make larger emission rate reductions relat ive to their base line rate makes no sense.
Commenters said the results of the EPA's IPM modeli ng of the Proposed Guidelines further confirm the inequitable and arbitrary impact of the Proposed Guidelines. Commenters said the Proposed Guidelines would result in significant str anded investments in some states while essentially leaving the coal-fired EGUs in other st ates virtually untouched, and the more a state has done to lower its CO2 emissions by developing N GCC and new nuclear generation, the more impacted they are by the Proposed Guidelines. Comme nters said this is further illustrated by the multiplier effect that values the same MWh of RE or energy efficiency very differently across

states.

Commenters stated that the goals are unfair to some states and that there needs to be uniform
state reductions from baseline CO2 emissions levels

.57

Commenters stated Section 111(d) requires EPA to es tablish uniform performance standards for regulated sources based on a consistent baseline; t herefore, the final rule must fully account for the efforts that states and/or regulated sources ha ve already undertaken to limit CO2 emissions from existing EGUs in determining BSER and setting state goals. Commenters said as proposed, the CPP penalizes states that have undertaken to ac hieve GHG emission reductions by imposing a higher standard of performance on existing EGUs i n states that have already required or
achieved GHG reductions. Commenters said EPA must a djust the state goals to adhere to the mandate of Section 111(d) to impose state goals tha t are reflective of uniform BSER-derived performance standards.

Commenters added EPA should do more to ensure that the emission reductions obligations under the final guidelines more accurately reflect the co mparable emissions reduction potential in all

states.

Commenters stated the effect of EPA's proposed rule is that the performance goals are not equitable across the States. Commenters said some S tates, like Georgia that have made previous efforts to reduce carbon emissions are particularly (and inexplicably) punished; prior to the Proposal, between 2005 and 2012, Georgia had alread y reduced CO2 mass emissions by approximately 30%. Commenters said despite this, EP A's CPP Proposal requires Georgia to
achieve an additional 48% reduction in the State's CO2 emission rate. Commenters said goals for other states who have previously achieved far fewer CO2 reductions are considerably less stringent; if anything, the opposite should be true

.

Commenters stated EPA should ensure that the reduct ions required of each state are generally equivalent by 2030; that is, for those states that have not yet taken action to reduce GHG emissions, the reductions targets should be increas ed because the actual experience of the RGGI states amply demonstrates that substantial reductio ns readily can be achieved from the "low hanging fruit." Commenters said to prevent geograph ic inequities and unequal burdens, all states equally should be required to undertake further eff orts in order to further reduce emissions.

Commenters stated the state-by-state differences pr esent a unique challenge in formulating stateby-state existing source performance standards for electric generating units under section 111(d)
of the Clean Air Act. Commenters said the CO2/MWh " state goals" proposed by U.S. EPA under section 111(d), however, do not take into account t he most material differences from state to state, but rather only consider the extent to which existing coal-fired (and to a very small degree oil- and natural gas-fired) steam electric generati on can be shifted to existing natural gas combined cycle combustion turbines or renewable ene rgy (RE) generation. (The energy efficiency (EE) assumptions underlying the "state g oals" are the same for all states, and the nuclear generation assumption is the same for all s tates with existing nuclear generating capacity.) Commenters said these overly simplistic assumptions threaten to significantly and disproportionately increase the cost of electricity to Ohio businesses and households, and to decrease the reliability of electric service in Ohi o.

Commenters stated the purported flexibility provide d to the states in U.S. EPA's section 111(d) proposal all relates to how mandatory CO2/MWh "stat e goals" are met, not to what the goals should be, or what performance standard is most app ropriate for a given existing source in the source category. Commenters said according to U.S. EPA's proposal, "the goals are binding, and58

the states, in their CAA section 111(d) plans, must meet those goals and may not make them less stringent." Commenters said not only are the states given zero flexibility or discretion in setting the overall level of performance existing generatin g units must meet, but the state flexibility EPA says it intends for meeting the "state goals" also is illusory. Commenters said a state like Ohio does not have multiple ways to reduce coal-fired el ectric generation to the extent, and on the schedule, that U.S. EPA's proposed "state goals" re quire. Commenters said the relatively abrupt decrease in coal-fired generation required, and abr upt increase in other forms of generation required, raise serious concerns about the impact o f the proposed "state goals" on electricity costs and reliability in Ohio. Commenters said U.S. EPA's proposal, moreover, places no limits on its costs to consumers, and does nothing to contain the costs associated with its reordering of generation economics; nor does the proposal have an y contingency plan or safety valve to assure the reliability and security of electricity and nat ural gas supplies. Commenters said the achievement of the CO2/MWh interim goals beginning in 2020, and final goals beginning in 2030, are all that matter under U.S. EPA's proposal

.
Commenters stated the imposition of an inviolate st atewide limit on CO2/MWh emissions from fossil fuel-fired electric generating units, no mat ter how costly (to consumers or taxpayers or both) it turns out to be, violates U.S. EPA's statu tory duty to take into account cost in determining the best system of emission reduction. Commenters said the mandate to decrease coal-fired generation and increase wind, solar, and natural gas-fired generation by 2020 and beyond, no matter what the consequences to the reli ability of electric service, violates U.S. EPA's statutory duty to take into account energy re quirements in determining the best system of
emission reduction. Commenters said U.S. EPA's emis sion guidelines for CO2 emissions from fossil fuel-fired electric generating units must ha ve a cost cap and a reliability assurance
mechanism.

Commenters stated that there is a wide range of sta te-specific 2030 targets that appear to place some states at a competitive disadvantage by requir ing more from states that have already made substantial progress, while requiring less from sta tes that have yet to aggressively implement emission reduction plans. Commenters stated as an example using Building Block 4, Maine is required to reduce demand by 12.1 percent whereas K ansas is only required to reduce their demand by 9.5, despite Maine having much lower emis sions.

Commenters stated just because a certain level of energy efficiency has been reached in one state does not mean it can be repeated in another s tate with a different mix of residential, commercial, and industrial electricity customers; E PA needs to develop the assumptions it uses to calculate state performance goals by evaluating what can be done in each state; EPA should not base the goals on what a few states have done a nd assume they can be repeated either regionally in the case of renewables or nationally in the case of energy efficiency.

Comment 10: Uniform emission rates - not feasible59

Response 10: The EPA disagrees with this comment. As described in Section V and VI of the preamble, the EPA is establishing subcategory-speci fic emission performance rates consistent with previous 111(d) actions and comments received on the proposal. While the EPA appreciates the different boiler characteristics and starting p oints for many sources within a category, the BSER rates expressed reflect subcategory-specific e mission performance rates offer abatement measures to all affected EGUs through potential on- site or off-site actions. The EPA did not need to identify unit-specific rates on a more gran ular level than the subcategory average. Moreover, states have the flexibility to distribute compliance responsibility to the affected EGUs

in its state in different manner if its views it be st to do so.

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

Commenters stated the USEPA requested comment on na tionally uniform emission rates for particular types of affected EGUs. Commenters said uniform emission rates are not feasible for existing sources; unlike end-of-pipe controls of cr iteria pollutants, there is no technological

solution that would lead to a uniform emission rate given the myriad of boiler designs, ages (vintage), and efficiencies. Commenters said it wou ld be impracticable and unrealistic to establish one emission rate for a given class or si ze of existing EGUs.

Comment 11: The EPA should reconsider the timeline for the fin al goals; timing issues.

Response 11: The timing of the final goals is 2030. The EPA di sagrees with the commenters’ suggestion that the final goals should be moved to 2025. The EPA carefully analyzed cost and performance capabilities of building block three po tential and the accompanying annual assumptions regarding potential are based on histor ical deployment levels and determined to be cost-effective. Moving the final goals to 2025 wou ld not be consistent with the building block three assumptions discussed in the GHG Mitigation M easures TSD.

The EPA appreciates the commenters’ concerns regard ing the amount of time necessary to design, permit, and install new technologies associ ated with the BSER. See section V.A for a discussion of timing.

Under the statute and the implementing regulations, EPA identifies a Best System of Emission Reductions for existing sources. There is no sunset provision in 111(d) in 2030.

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

Commenters stated EPA has set up goals for 2030, an d has asked the states to develop average interim goals for the 2020- 2029 period; EPA establ ishes elongated deadlines for states to provide final plans: June 30th 2017 or June 30th 20 18, depending of the approach selected; states need only begin to achieve GHG reductions by 2020, and only need to meet an interim performance level based on their 2020-2029 period a verage. Commenters said this means states can backload most of their gains to the end of next decade without running into compliance60

issues; this timeline will not create an urgent cli mate of investment in solutions anytime soon, especially given the numerous political changes tha t may be perceived to be possible in Washington during that period. Commenters asserted that this delays progress too far in the future to trigger utility investments early on; the existing U.S. coal fleet is significantly aged, with 74% of all coal-fired capacity at least 30 yea rs old and with significant portions even older; nearly one-quarter of the U.S. coal fleet could ret ire by the end of this decade, necessitating significant new investment to replace these plants. Commenters said EPA should consider a more explicit "ratcheting up" method within shorter time intervals, to reflect technology evolution driving down the cost of solutions.

Commenters recommended that the final targets be se t for 2025 rather than 2030 and at levels reflecting a pace of reduction through 2025 compara ble to that proposed in the draft rule through

2020. Commenters recommended that the rule indicate EPA's intent to adopt new targets for a subsequent period based upon an updated assessment of the best system of emissions reduction to be completed by EPA in 2023.

Commenters asserted that EPA has vastly underestima ted the amount of time that it takes utilities to design, permit, construct, and start up new gene ration units; the long period required to make generation changes must also consider the long dela ys in building support infrastructure such as pipelines and electrical transmission lines; both o f these items are difficult if not impossible to achieve under the Purposed Rules. Commenters said t he emission reductions expected under the terms of the Proposed Rule will require new generat ion resources; commenters recommended
EPA extend the time table and back-load reductions rather than front load.

Commenters stated the Proposed Carbon Rule defines the final performance period as 2030 and thereafter, when the state must meet the final emis sion performance level specified in Section 60.5740(a)(3) on a 3 year calendar year rolling ave rage starting January 1, 2030. Commenters said defining the final performance period as 2030 and thereafter for the State Plan is unreasonable; especially for Building Blocks 2, 3, and 4, an EPA enforcement overlay into perpetuity is arbitrary and capricious and is not n ecessary or appropriate.

Commenters stated the final compliance date should be extended.

Commenters added efforts to negotiate and implement interstate plans, or to convert a rate-based emission reduction goal to a mass-based reduction g oal, are likely to be even more timeconsuming, as action will be required by multiple S tates, as well as by RTOs that do not follow state boundaries; given limited legislative calenda rs and the burdens already placed on regulators, each of these steps will take considera ble time - far more than EPA has allowed even

with extensions. Commenters stated that the final c ompliance deadline must be extended, from 2030 to at least 2035, to account for the more real istic timeframes.

Commenters stated the final compliance date should be 2035.61

Commenters stated under the EPA's proposed guidelin es, each state must meet the final goal on a three calendar year rolling average starting Januar y 1, 2030. Commenters said while emissions averaging periods do not alleviate potential issues with or guarantee electrical reliability, this does provide some degree of flexibility for affecte d utilities to achieve the Clean Power Plan compliance requirements. Commenters said there are many reasons that utilities experience fluctuations in operations due to the inherent natu re of electricity production and consequently variations in annual emissions quantities; numerous factors could cause emissions to be higher or lower during a given year including, but not limite d to weather conditions, source and availability of fuel supply, customer energy demand , generation dispatch and outages. Commenters recommended that EPA's final guidelines maintain at least the three-year averaging period for determination of compliance with the fin al goal.

Commenters stated the vast majority of the emission reductions required of states by 2030 - often 90% or more - will be required in the very first ye ar of the rule; as a result, the rule is likely to threaten reliability and accelerate the "lock-in" o f large amounts of new natural gas generation, particularly in some regions, while generally delay ing the deployment of tomorrow's cleaner and cheaper renewable energy and emerging competitive d istributed energy resources.

Commenters questioned whether the publication date of the Proposal is appropriate cut off for crediting previous GHG reduction efforts.

Comment 12: Small Public and Cooperative Utility

Response 12: The EPA appreciates the unique circumstances of th e small public and cooperative utility. However, we disagree with the commenters’ assertion that the proposed or final rule would require a shutdown of these units. The final rule provides multiple compliance flexibilities that would include 1) source-level ac quisition of reduction credits that a source can count towards compliance with the subcategory-speci fic emission performance rate, 2) state plans that also provide a broad platform from which a state can further distinguish requirements for sources in its state and thus accommodate speci al concerns of public and cooperative utilities. The EPA also modeled a compliance scenario with its final emission performance rates, and this scenario showed that many sources that did not meet the subcategory-specific emission performance rates or the state goal on their own re mained in operation given the compliance

flexibilities available to them. See Section V of the preamble for a discussion of BSER, and section VIII for a discussion of state plans. See section VII of the preamble for the final state goals.

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

Commenters stated that while EPA acknowledged Ameri ca's not-for- profit, member-owned Electric Cooperatives are different than most utili ties, EPA's proposal doesn't provide a workable solution to address cooperatives' unique circumstan ces. Commenters added that should a state62

choose to reduce the burden on cooperatives, under EPA's approach the state would need to increase the burden on other utility providers sinc e the state still must meet the EPA's goal.

Commenters stated that the solution is for EPA to r ework their assumptions and set reasonable and achievable state goals.

Commenters stated in the Final Goal period (e.g., 2 030 and thereafter period), the qualifying small public or cooperative utility would need to a chieve the following: -Shutdown the nonachieving unit(s) at the start of the final goal pe riod; or -If any non-achieving unit(s) will remain in operation beyond 2029, then --continue any measu res imposed on the non-achieving unit(s) and the utility by the state plan effective in 2029 ; and --install additional renewable energy or obtain renewable energy credits (in a state plan re cognizing such credits) equal to at least 10% of the non-achieving unit(s)' capacity prior to the st art of the final goal period and every five years thereafter if the unit(s) continue to run.

Comment 13: Comments on Final goals for Tribal and Territories

.
Response 13: The EPA reviewed these comments submitting data c orrections for the tribes and territories and updated its baseline accordingly. See the CO 2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule for the fin al unit-level assumptions used for these sources. The EPA agrees with the commenters that a regional approach should be used for determining the BB3 potential for states and tribes . Section V.A and section VI of the preamble describes how the EPA is shifting to a regionalized building block framework for this final rule. In regards to the territories, the EPA is not quant ifying a BSER or equivalent state goals for the territories as described in preamble section VII.

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

Commenters stated the proposed interim and final go als calculations by EPA for Puerto Rico

contain inaccurate information that must be correct ed; commenters made the following
recommendations:

a. The heat rate values (cHRCoal, cHROil and cHRNGC C) used by EPA were verified and

found to be different from the actual values for th e affected generating units; as specified by EPA, the heat rates selected were based on 2012 dat a from the EIA, Electric Power Annual, Table 8.2: Average tested heat rates by prime mover and energy source 2007-2012. the commenters proved the 2012 real values in a table w ith heat rate values for Oil ST and NGCC on page 7.

b. The net generation value (cPRSales) used by EPA was selected from the 2012 electricity sales (MWh): Form EIA-861 , specifically under the "Sales to Ultimate Consumers" column (18,150,330 MWh); this selection does not represent the amount of energy generated and transmitted to the grid by the affected generating units; moreover, the value includes generation63

from other non-applicable generating units, such as hydroelectric, renewable energy, combined cycles (oil-fired) and combustion turbines sources; instead, EPA should have selected the "Total Sources" item (21 ,296,328 MWh), and exclude all ge neration related to the non-applicable generation sources (1,653,978 MWh); therefore, the net generation value to be used should have been 19,642,350 MWh; the commenters recommended usi ng this value, instead of using sales.

c. Some of the values used by EPA for the Generatio n Capacity of some of the generating units are not correct, specifically for the EcoElectrica, San Juan 5 & 6, and the oil-fired combustion turbines; the commenters provided a table with corr ected generation capacity for units in Puerto Rico Page 8.

d. As expressed by EPA on the TSD, CO2 emission dat a for 2012 were available at the unit level for Puerto Rico, but information was not available for unit-level net electricity generation in 2012; EPA estimated 2012 net electricity generation by multiplying each unit's ratio of maximum net electricity generation to maximum CO2 e missions by the unit's reported CO2 emissions in 2012; the commenters had more accurate data in relation to the real historical values for each generating unit for such period, the comme nters provided a table of net electricity generation in 2012 on page 9.

Commenters stated the targets for the power plants in Indian Country should be revised: 1) correct the formula, 2) adopt the annual two percen t minimum shift from higher-emitting to lower-emitting sources, and 3) adopt and re-allocat e a regional version of the alternative renewable approach based on each areas share of reg ional emissions. Commenters said these revised targets only represent a portion of the opp ortunity for strengthening and balancing state targets, and do not include the corrections to the available quantity of cost-effective energy efficiency and renewable energy.

Commenters stated in regards to the tribal & territ ories supplementary rule; as a result of deep financial difficulty arising during the 1990's, Des eret is party to existing long-term debt restructuring arrangements with its creditors. Comm enters said while the terms of these debt restructures remain in effect, Deseret is prohibite d from, among other things, diversifying its holdings, acquiring (through ownership, constructio n, acquisition, generation purchase or otherwise) additional or different generating resou rces. Commenters said the terms of these arrangements are set to continue through 2030. Comm enters said beginning after 2030, the time frame set for compliance with the final goal under the Supplemental Proposal, Deseret would be once again free to respond and formulate compliance strategy without directly resulting in abrogation or default under its pre-existing contra ctual obligations.

4.2.2 Proposed Interim Goals

Section 4.2.2 covers public comments related to the proposed interim goals including the stringency, achievability, flexibility, and the tim ing.64

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 retain the interim goals, support f or interim goals.

Response 1: The EPA appreciates the comments in support of the interim goals. See sections V and VI of the final rule preamble of the CPP for th e EPA’s response to this comment.

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

Several commenters supported the interim goals.

Commenters added EPA's proposed interim goals are r easonable and EPA's approach reflects the operation of the electric system. Commenters suppor ted EPA's basic premise that the integrated electric generation, transmission, and distribution system itself plays an important role in determining the BSER. Commenters said electricity i tself is a fungible commodity, and the lower 48 states are served by three interconnected electr ic grids through which electricity flows without regard to political boundaries; whether a particula r generation unit operates at any given time depends upon whether the unit will be paid the pric e it requires to operate; if other plants in the same interconnected grid are willing to supply that electricity for a lower price, those will be dispatched instead. Commenters said to the extent t hat environmental regulations raise the cost of generation at higher-emitting facilities, they t end to shift generation away from those facilities toward lower-emitting sources; thus, as EPA has rec ognized in CSAPR and other rules affecting the electricity sector, the most cost-effective app roach to emissions reductions leverages the integrated nature of the electricity market to shif t production from higher-emitting sources to lower-emitting sources.

Commenters added accordingly, it is appropriate for EPA to base standards of performance for

affected sources on reductions that could be achiev ed from so-called "outside the fence" actions - that is, those that exploit the interconnected natu re of the electric system as a whole - while, of course, giving states the flexibility to achieve th ose standards of performance through the policies of their choice. Commenters stated because of the limited potential for reductions from "inside the fence" actions, including modifications to existing fossil fuel-fired generation units or their fuels, EPA must look "outside the fence" to t he electric system as a whole in order to achieve the meaningful reductions in carbon emissio ns from affected units that the Clean Air Act requires. Commenters said the BSER should not be ha ndicapped by artificially restricting CO2 reduction potential to inside-the-fence actions; wh ile the displacement of CO2 emissions by outside-the-fence options must be subject to verifi cation, redispatch to lower-carbon resources, renewable energy and improved end-use energy effici ency undeniably have the potential to reduce CO2 emissions by reducing fossil generation.

Commenters stated EPA's proposed interim target is an essential component of the rule. Commenters said the interim target ensures states a nd utilities begin reducing emissions in the65

near term. Commenters said these emissions reductio ns are critical to addressing climate change, protecting the West's valuable natural resources an d avoiding the most severe impacts on western water supplies, forests and agricultural lands, and rural and urban communities. Commenters said requiring compliance with a final target and n ot an interim target will lead many states and utilities to delay these important emissions reduct ions, and will make mitigating the impacts of climate change in the West difficult, if not imposs ible. Commenters said climate change is driven by the atmospheric loading of greenhouse gases; rem oving or delaying the interim targets would dramatically increase the tonnage of atmospheric CO 2, and jeopardize the ability of EPA's proposal to meaningfully reduce GHGs. Commenters sa id as part of its effort to address climate change, EPA should commit to regularly review the b est system of emission reduction to ensure that it continues to reflect the system that can ma ximize reductions in carbon pollution.

Commenters urged EPA to ensure that a robust requir ement remains for interim carbon
reductions in the 2020-2029 timeframe. Commenters a ppreciated the need for flexibility for states to choose the appropriate glide path for emi ssions reductions over the 10-year time horizon, but the proposal already strikes an approp riate balance by allowing a state to set its own glide path so long as the average rate achieved ove r that time horizon hits the "interim target." Commenters said the State Agencies' comments sugges t a "milestone" approach which the

commenters asserted can be taken based on the rule as proposed - provided that by the time a state gets to 2030, the average emissions rate betw een 2020 and 2029 hits the interim target rate required by EPA. Commenters said allowing states to choose their own emissions reductions goals that don't meet the average interim rate set by EPA over this 10-year time horizon could result in substantially decreasing the emissions re ductions achieved through the program, as well as potentially undermining the short and medium-ter m opportunities for investment in cleaner energy strategies - and the economic benefits that flow from those opportunities for states such
as Nevada.

Commenters recommended the following with respect t o accelerating the schedule for emissions
reductions:

- Interim targets are a necessary component of the final rule to increase certainty of attainment of emissions targets and to provide better enforceabil ity of the rule; EPA should not consider the elimination of interim targets.

- Neither should the interim targets should be rela xed; the commenters urged the EPA to look at strengthening the interim targets established in th e Clean Power Plan as consistent with both the findings of fact and with the purposes of the rule; five year compliance targets would better achieve the objectives of the Clean Power Plan.

- Shorter compliance timelines should be instituted as a risk management tool, to reduce the risk

of shortfalls at the 2020 and 2030 milestones in th e Plan; failures to meet early targets should serve as triggers for further EPA review and recomm endations for corrective action.66

- It will also be important that emissions reductio ns are credited at the time they will actually occur; compliance actions that yield deferred benef its should not be credited with carbon reductions prior to the year in which they produce the reductions.

Commenters stated EPA's proposed interim goals are achievable and sho uld not be relaxed.

Commenters added the proposed interim goals reflect the reality that some emission reduction techniques must be deployed over a longer period of time than others; therefore, the interim goals are based primarily on emission reductions fr om Building Block 1 (heat rate improvements at coal plants) and Building Block 2 (redispatch of generation from coal plants to under-utilized NGCC plants), as well as preservation of some exist ing nuclear generation, that EPA has determined can be accomplished between the rule's f inalization in 2015 and the beginning of interim compliance in 2020. Commenters said additio nal reductions from new renewable energy facilities and energy efficiency projects will be p hased in over the course of the interim period, and the interim goals reflect the average of the ac hievable emissions rates for each of the interim years; thus, EPA proposed a ten-year averaging peri od for compliance with the interim goals to provide sufficient time for states to implement all of the reductions necessary to meet these goals. Commenters said the phase-in of Building Blo cks 3 and 4 and the ten-year averaging period, not to mention the five years between final ization and the beginning of the compliance period, combine to provide the electric industry wi th a gradual "glide path" to the final goals.

Commenters added as a starting point, it is clear t hat significant reductions in CO2 emissions can be achieved by 2020 and sustained thereafter by max imizing the redispatch of coal-fired generation to existing NGCCs; recent PJM modeling p roves as much and other modeling efforts have produced comparable results. Commenters said w hile concerns about electric or natural gas transmission capacity may be real in specific insta nces, these issues are not widespread and should not be used as an excuse to weaken or delay all interim reductions; more importantly, these instances are already factored into the exist ing grid-management system on which Smart System Dispatch relies.

Commenters added if a NGCC plant becomes unavailabl e due to a natural gas curtailment, a different plant will be dispatched to take up its l oad, even if that plant is a higher-cost, higheremissions coal plant; by relying on existing mechan isms of reliability-driven least-cost dispatch, Smart System Dispatch would render moot the potenti al concerns raised by the North American Electric Reliability Corporation ("NERC") with rega rd to resource adequacy and essential reliability services. Commenters said NERC's prelim inary qualitative analysis assumed that the Building Blocks were implemented literally, without regard to reliability-driven least-cost dispatch across states, which necessarily would inc rease costs and reduce reliability margins beyond what would actually be expected to occur.

Commenters stated that U.S. EPA has received commen ts stating that the interim targets may create implementation challenges early in the life of the program where sharp emission cuts are necessary by 2020, however the proposed rule should provide clear glide-paths to ensure that67

states are on track towards their 2030 emission tar gets, and the rule should continue to require states to deliver those reductions as quickly as po ssible.

Commenters stated some Agencies' claim that the int erim targets are infeasible is not supportable except for a plan that makes no changes to business as usual. Commenters said this is, unfortunately, the crux of the comments by the Agen cies: that compliance is not possible with business as usual; however, compliance even in the short term is in actuality quite feasible by utilizing relatively modest increments of the build ing blocks. Commenters said in the years prior to 2025, modest fuel switching to more efficient ga s units along with incremental energy efficiency and new renewables already in developmen t are likely to allow Nevada to meet the targets; it is also highly likely that distributed generation will continue to grow at a geometric pace to help fill the gap. Commenters said in three months this year, SolarCity - one companysigned up 5,000 new solar roof customers in souther n Nevada; there is an enormous appetite for solar as its price continues to plummet.

Comment 2: Support for Interim Goals, however use series of I nterim Goals with alternate time periods.

Response 2: See sections I.A. and VII of the final rule prea mble 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 EPA has proposed a ten-year avera ging period between 2020 and 2029 for states to achieve the interim emission rate target. Commenters said strong interim targets are

essential in order to deliver near-term reductions in carbon pollution and begin to transition the power sector away from high-emitting infrastructure and towards lower-polluting resources.

Commenters said in order to ensure that states are making appropriate progress towards the interim target, EPA should divide the ten-year peri od into two five-year compliance periods;

Commenters stated EPA should commit to regular revi ew of the best system of emission

reduction to ensure that it continues to reflect th e system that can maximize reductions in carbon pollution considering cost, energy requirements, an d impacts on other health and environmental outcomes, as required by the CAA.

Commenters supported the Interim Goals that assure an early ramp up and demonstrable, continuous progress toward compliance with the 2030 target for reduction of carbon emissions; because states may not be able to begin implementin g their plans until 2017, it may be advisable to replace the 2020 interim goal with a series of I nterim Goals, such as three 4-year periods.

Commenters stated states should not be allowed to a verage their performance over the ten-year period from 2020 to 2029; at most, states should be allowed a two-year averaging period to meet68

firm interim targets. Commenters said should EPA de cide to allow a longer averaging period, the agency should at least set "backstops" that functio n as minimal annual targets that must be met regardless of averaging.

Comment 3: The EPA should modify the interim goals; make adju stments.

Response 3: See sections I.A. and VII 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 modify the interim goals to allow states to more gradually meet the final goal; modifying the interim goals such that states are not required to achieve the majority of emission reductions prior to 2020 might mitigate ma ny of the issues Oregon faces with regard to the Boardman Plant. Commenters said in particular, beginning the interim period on January 1, 2021 or thereafter would resolve the issue and alig n the rule with the EPA-approved Boardman 2020 plan; applying block 2 incrementally - as the proposal does for blocks 3 and 4 - may or may not correct the Boardman issue; to address the prob lem, such an approach would need to include Boardman's full generation and associated emissions during calendar year 2020 in the calculation of the interim goal.

Commenters stated in addition to the overall reduct ion requirement, infrastructure limitations, and lack of flexibility for Arizona, the interim de adline timeframe is overly aggressive and currently not achievable; the interim deadline of 2 020 does not provide adequate time to construct the necessary infrastructure and convert all coal generation to natural gas; the citizens of Arizona will continue to require power generatio n, and a shift of this magnitude is simply not possible. Commenters said thus, at a minimum, the i nterim goal must be revised in order to provide any possibility of Arizona being able to co mply with the mandated carbon emission
reductions.

Commenters added apply a regulatory adjustment to t he interim goals to account for coal plants that committed to enforceable retirement dates prio r to the 111(d) proposal. Commenters said the proposal treats several types of EGUs uniquely, inc luding hydropower, nuclear power, and under-construction NGCC units; to hold Oregon and t he few other states that have acted early to retire coal plants during the 2020-2029 timeframe h armless, the final rule could uniquely treat such coal plants. Commenters said the rule could st ipulate that these plants are not subject to 111(d) regulations or amend state goals to account for their emissions prior to their agreed-upon

retirement dates.

Commenters stated the EPA should adopt one or more of the following changes to the Rule, which will strengthen support for the Clean Power P lan, reduce its costs and lead to greater emission reductions prior to 2050: 1) Maintain stro ng 2030 goals for states, but allow them to69

determine their own emission reduction trajectories ; setting only 2030 emission goals - while making showings of feasibility, enforceability and reasonable progress - would give states the time they need to adopt policies for a low cost, sm ooth and more thorough transition to truly clean power technologies. 2) Modify the 10 year com pliance constraint; EPA should change the 10-year compliance requirement so that states must meet one-half of the interim goal, on average, in each of the 10 years from 2020 to 2029, while also meeting the 2030 goal; this would allow each state to set a straight diagonal line gl ide path from 2020 to 2030, or a number of other trajectories that might better suit the state - inc luding dramatic early reductions in any state that deems them prudent. 3) Modify the BSER and its timi ng to better support state glide-paths; EPA should also modify the degree and timing of when it assumes BSER building blocks to be activated, phasing in emission reductions over enou gh time to avoid the negative impacts on reliability, state economies and the environment of mandatory dramatic early emission reductions; in particular, EPA should assume the gr adual phase-in gas redispatch between 2020 and 2029, in recognition of the severe reliability, price and electric system impacts of too rapid a shift in coal and gas dispatch. Commenters said the se changes will allow states to develop plans that ensure a smooth transition from high to low po wer sector CO2 emissions, while limiting the reliability risks, price shocks, and other signific ant problems the proposed rule will create, and achieving greater overall CO2 reductions at a lower cost.

Commenters suggested modifications to the EPA's bui lding block approach include specific adjustments to building blocks 2 and 4 that would i mpact the level of Arizona's goals; these adjustments include:

-EPA consider the remaining useful life of existing plants as well as applying a phase-in of the re-dispatch assumed by building block 2 over the 20 20 to 2030 time period rather than assuming that this re-dispatch could occur by 2020.

-EPA adjust building block 4 to consider a 0.6% ann ual efficiency improvement rather than 1.5% when establishing overall target levels; this bench mark would be more in line with studies of achievable efficiency penetration levels.

Commenters said these building block adjustments wo uld make compliance feasible under more

extended timelines and would be more consistent wit h the emission trajectory of the Arizona Glide Path scenario. Commenters said the adjusted g oals would result in a reduction of the interim goal for Arizona from the unachievable 735 lb CO2/MWh to 1,119 lbCO2/MWh; the final adjusted goal would be slightly higher than t hat proposed in the CPP at 942 lb CO2/MWh versus the proposed 702 lb CO2/MWh.

Commenters stated some utility commentators treat t he 2020 targets in the Plan as requirements, and suggested that utilities would not have enough time to fully comply by 2020; the commenters said in fact, the only requirements in t he Plan are the 2030 annual emissions and the70

average emissions in 2020 - 2030. Commenters said i f Arkansas misses the target for 2020, it can make it up any time before 2030.

Comment 4: The EPA should eliminate the interim goals; Interi m goals unnecessary.

Response 4: See sections I.A. and VII 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 EPA should remove the interim goa ls (2020-2029).

Commenters added it is impossible for States to det ermine during the timeline provided what infrastructure will be required and how long it wil l take to plan, site, and build it; therefore, it i s impossible for States to determine now what phase-i n schedule will be needed to meet EPA's targets. Commenters said EPA thus commits the same basic legal and practical error in its NODA that invalidates its Proposed Rule: it imposes on its own, without statutory authority, universal standards of performance which, by statut e, the States are supposed to set and are supposed to apply on a source-by source basis.

Commenters added the changes to individual plants, transmission and pipeline infrastructure, and the function of state and regional power markets wi ll all necessitate much more time than EPA allocates by imposing 2020 as the interim complianc e goal.

Commenters stated EPA prescribes aggressive interim emission reductions starting in 2020; to reduce the cost of the rule, EPA should eliminate t he interim targets and give states, who possess intimate knowledge of their system needs, the flexi bility to adopt interim milestones as appropriate.

Commenters stated the time allowed to develop a mul ti-state plan is not adequate to address the obstacles associated with this approach; therefore, commenters recommended the EPA remove the interim goal and allow more time for the develo pment of the most effective plan (state or multi-state).

Commenters added EPA can eliminate the need for sep arating Block 2 into two segments reflecting gas infrastructure constraints by establ ishing 2030 as the earliest CPP compliance date, eliminating the interim targets between 2020 and 20 29. Commenters noted that EPA should not compel states to study their natural gas infrastruc ture needs on a "hurry up" basis in order to receive potential relief that might compensate for the many shortcomings in EPA's proposed 2020 interim target date. Commenters said the sitin g of natural gas pipeline infrastructure is done on a national level by the Federal Energy Regulator y Commission (FERC) and development71

requires cooperation between multiple states and ac ross large regions that require considerations beyond the boundaries of energy decisions being add ressed within a single state's planning.

Commenters recommended eliminating the interim goal s; the beginning interim year of 2020 is very aggressive, when considering the final rule wi ll be issued in June 2016, with most states expected to take the allowed two years to develop a n individual state plan or three years to develop a multi-state plan. Commenters said this wo uld mean EPA review of the plan would not be completed until 2019 or 2020 for a multi-state p lan; there is little time for compliance with the interim goal by 2020.

Commenters recommended that after removing the unla wful reductions associated with natural gas dispatching, renewable energy generation, and e nergy efficiency/demand side management offsets, EPA only requires states to meet the final alternate state goals for 2025 or the final state goals for 2030; further, commenters recommended tha t EPA allow each state to decide whether to plan for the 2025 alternate final state mandate or the 2030 final state mandate.

Commenters stated combining the unreasonableness of meeting unrealistic targets with the limited opportunity for heat rate improvements and redispatch in Building Blocks #1 and #2, results in serious consequences both in the short-t erm and long-term. Commenters stated EPRI has determined that any shortfalls within Building Blocks #3 or #4 would require decreases in fossil generation; the "fossil leverage factor" hig hlights that the algebra of the compliance equation results in a multiplier effect; 1 MWhr sho rtfall of nonemitting resources must be made up by more than a factor of 2 MWhrs of fossil gener ation in 20 states across the United States. Commenters said this leverage factor is si gnificantly increased if nonemitting resources are not met by the 2020 interim goal. Commenters sa id this "fossil leverage factor" underscores the reason why the interim goals must be set aside.

Commenters stated the ultimate objective of EPA's p roposed CPP is for states to obtain their specified emissions intensity in 2030; however, EPA has established interim goals between 2020 and 2029 that must be met (or federal action may be taken), even though the 2030 goal may not be in jeopardy. Commenters said complicating this m atter is the fact that EPA set interim goals that are front-loaded, and state plan approval time lines leave insufficient time for action; furthermore, the U.S. Energy Information Administra tion (EIA) data also shows that emissions can vary by more than 10% year to year for reasons outside the control of Electric Generating Units (EGUs). Commenters said the interim goal prog ress, established by each state or multistate compact, should not be over-ruled by EPA for a mere 10% deviation; such enforcement discretion should solely be with state regulators w ho are more familiar with state specific circumstances and planning. Commenters said federal enforcement, if any, should be reserved for gross deviations of any EPA approved plan or a state's seeming unwillingness to participate in the process; thus, Consumers Energy requests tha t EPA eliminate the interim federal goals and enforcement mechanisms, and allow states or multi-s tate compacts to develop their own emissions reduction trajectory within their individ ual plans. Commenters' request maintains the72

concept of the 2030 long-term federal goals, while supporting state specific planning scenarios and infrastructure development.

Commenters urged EPA to eliminate the proposed inte rim goals or allow states to demonstrate compliance with the goals on a voluntary basis. Com menters said the interim goals are too stringent due predominantly to the requirement to m ake reductions from all Building Blocks by 2020, or even beginning earlier in the case of Buil ding Block 3 and Building Block 4. Commenters do not agree with EPA that phasing in Bu ilding Block 2 would solve the issues and allow compliance with an interim target.

Commenters stated numerous factors support the need to eliminate the interim compliance period. Commenters said EPA has not demonstrated th at every state can increase utilization of existing natural gas combined cycle (NGCC) units to 70 % by 2020. Commenters said EPA incorrectly assumes that current natural gas and el ectric transmission infrastructure is sufficient to support this dramatic increase, and EPA does not account for the fact that many natural gas units must back-up renewable generation; increasing generation from existing NGCC units will likely require electric and gas transmission upgrad es and expansions. Commenters said as NERC recently has noted, these projects can take ten to fifteen years to plan, design, site, permit and construct. Commenters added further, the proposed i nterim compliance period does not allow sufficient time for regional transmission organizat ions (RTOs) and independent system operators (ISOs) to evaluate and potentially alter market rul es to accommodate changes in dispatch.

Commenters said EPA's proposed final 2029 goal for Alabama is an emission rate of 1,059 pounds of CO2 per Megawatt Hour (Lbs CO2/MWHr), whi ch represents a decrease of 27% relative to the 2012 baseline of 1,444 Lbs CO2/MWHr . Commenters said in order to meet Alabama's interim goal, over half of the proposed 2 7% emissions rate decrease must occur by 2020; this is less than three years after individua l state plans are due and is an unrealistic goal. Commenters said EPA should either adjust the interi m goal to reflect more realistic goals in the 2020-2024 time frame, or preferably, eliminate the interim goals.

Commenters stated many of EPA's BSER assumptions ar e overly aggressive, and will be difficult to implement in the near term; moreover, it is possible that future changes in electricity markets, unexpected weather events, or the retireme nt of significant megawatts of existing nuclear capacity could further disprove the assumpt ions on which EPA has based state targets. Commenters said the unexpected early retirement of numerous baseload nuclear facilities could require significant, long-term increases in natural gas and coal-fired generation-a situation that is

not unlike that which unfolded in California in the wake of the closure of the San Onofre Nuclear Generating Station. Commenters were skeptical that the proposed interim goals can be met ontime, at reasonable cost, without significant disru ptions in electric reliability. Commenters urged EPA to eliminate the interim compliance target; suc h a target is neither required by the CAA nor necessary to achieve the Proposed Rule's emission r eduction goals. Commenters said elimination of the interim target would allow states and utilit ies to implement emission reductions on a schedule and through mechanisms that will reduce co sts as much as possible for consumers73

while still meeting EPA's 2030 targets. Commenters said if EPA is concerned that states will fail to meet the 2030 targets, the agency could institut e a mid-term review process in 2025 to consider states' progress and ensure that they are making adequate progress toward meeting the final targets. Commenters said such an approach is preferable to EPA's current proposal because it would significantly reduce the near-term reliabi lity and implementation concerns that we and others have raised, while still maintaining the env ironmental integrity of the Proposed Rule.

Commenters stated:

1. EPA should eliminate the interim goal.

2. If EPA retains an interim goal, EPA should allow North Dakota credit for early adoption of renewable energy in demonstrating compliance with t he interim goal.

3. EPA should adjust the interim goal to account fo r the realities associated with increased utilization of natural gas generation.

Commenters stated EPA's proposed rule assumes that emission reductions can be obtained on a steady path beginning in 2020; it therefore propose s binding interim emission reduction goals based on a 10-year average emission rate from 2020 to 2029. Commenters said meeting those interim emission goals requires unreasonably extrem e reductions beginning in the very first year; any shortfall in reductions in the early years can only be made up by later-year emission rates that will necessarily need to be substantially belo w the average emission rate that EPA has set; as a result, Iowa might be required to achieve emissio n rates in later years of the interim period that

are even lower than the final emission rate that EP A proposes would apply beginning in the final compliance year. Commenters said this is unrealisti c; EPA should thus abandon the interim emission reduction goals and the interim emission r ates and, if the other deficiencies in the proposed rule can be corrected, promulgate final em ission guidelines that contain only a final emission reduction target. Commenters said emission s reductions are already being obtained in Iowa, and those reductions will continue to increas e as new technologies develop and as older generation is replaced by newer, more efficient, lo wer-emitting, or non-emitting generation. Commenters said the final emission guidelines shoul d be designed to ensure that the States are on a glide path toward compliance by the final comp liance deadline. Commenters said interim emission reduction goals are not only unnecessary t o achieve this, but are likely to prove impossible to implement.

Commenters stated the proposed interim goals create unfair schedules and burdens on some states in several ways; compliance with the interim goal, particularly for Idaho and Washington which must rely on RE and EE, may require state-lev el legislation and rulemaking that could easily extent to nearly 2020, leaving little time t o plan smooth implementation; further, for Washington State, the EPA baseline assumes the clos ure of the Centralia coal-fired plant, since the state has an agreement to ensure its closure, w ith Unit 1 coming offline by 2021, and Unit 2 shutting down by 2026. Commenters said unfortunatel y, EPA has failed to recognize these74

closure dates and instead has assumed that both uni ts are closed by 2020, years ahead of schedule; this assumption means the only realistic avenue for the state to meet the interim goal is moving the Centralia coal plant closure up by six-y ears; this option is unrealistic and would be damaging to the state, both from economic and power system reliability perspectives. Commenters said ideally the final rule will not inc lude interim goals. Commenters said where it does, EPA should not accelerate plant closure dates ; further, states should be able to determine their own compliance path and, where any interim me asurements are required, demonstrate to EPA that the plans are on track to reach final 2030 goals. Commenters said eliminating the interim goals, or allowing states to develop their own glide path to 2030, would provide true flexibility in the rule; allowing states to determi ne when and how to achieve CO2 emission rate reductions will moderate some of the economic impac ts and unintended consequences of the proposed rule.

Commenters stated in 2013, anticipating the issuanc e of the proposed rule by EPA, the Kentucky Legislature unanimously passed House Bill 388 which directs the Kentucky Energy and Environment Cabinet (EEC) in the implementation to the proposed rule and in accordance with Section 111(d) of the Clean Air Act, to establish b est system of emission reduction that has been adequately demonstrated for coal-fired electric gen eration units subject to the performance standard. Commenters said in developing the perform ance standards the Division for Air Quality must take into account: 1) the cost of achieving th e emission reduction; 2) impacting non-air quality health and the environment; and 3) maintain ing energy requirements needed to serve the load on the electric generation unit. Commenters sa id the Kentucky legislature also limits the application of the proposed rule by the Division fo r Air Quality to reductions in emissions of carbon dioxide that can reasonably be achieved thro ugh measures undertaken at each coal-fired electric generating unit and efficiency and other m easures that can be undertakes at each coalfired electric generating unit to reduce its carbon dioxide emissions without doing the following:

-Switching from coal to other fuels;

-Co-firing other fuels with coal, or

-Limiting the utilization of the electric generatin g unit

Commenters stated EPA's proposed rule is not consis tent with intent of the Kentucky Legislature, who has mandated an approach that is c onsistent with Section 111(d), unlike the over-reach that EPA is attempting with the proposed rule. Commenters said there is the need to eliminate the interim goals and to rather allow imp acted EGUs the full time to ensure that the most cost effective long-term controls are implemen ted.

Commenters stated EPA has also offered no legal jus tification for the interim goals. Commenters said EPA has said that its "state goals form the EP A's emission guidelines"; thus, EPA's regulations would allow the agency to take into con sideration "the time within which compliance75

with emission standards... can be achieved" when se tting its state goals. Commenters said as the D.C. Circuit recognized in 1973, whether a particul ar degree of emission reduction is "achievable" depends on whether the system of emiss ion reduction on which it is based is available, and "the question of availability is par tially dependent on 'lead time,' the time in which the technology will have to be available." Commente rs said the regulations would also allow EPA to "specify different [state goals] or complian ce times or both for different sizes, types, and classes of designated facilities..."; they would no t, however, authorize EPA to specify different state goals for different compliance times, which i s what EPA is attempting to do with its interim goals.

Commenters added nor are interim state goals necess ary under EPA's implementing regulations. Commenters said state plans under section 111(d) mu st include compliance schedules where "Compliance schedule" is defined to mean "a l egally enforceable schedule specifying a date or dates by which a source or category of sour ces must comply with specific emission standards contained in a plan or with any increment s of progress to achieve such compliance." Commenters said additionally, if compl iance will take more than 12 months (which it would, under the CPP), state compliance schedule s must include "legally enforceable increments of progress to achieve compliance for ea ch designated facility or category of facilities." Commenters said the increments of prog ress in state plans would ensure that states, affected EGUs, and/or affected entities would stay on track to achieve required CO2 emission reductions. Commenters said nothing in section 111( d) or Subpart B, however, authorizes EPA to impose its own increments of progress up-front, in the form of interim state goals.

Commenters added EPA's state interim goals may be u nnecessary to some extent; EPA has asserted that states and affected EGUs are already undertaking many or most of the measures that make up EPA's proposed BSER. Commenters said E PA has said, for example, that "[a]verage deployment of RPS-supported renewable ca pacity from 2007-2012 has exceeded 6 GW per year."; EPA reports that "[i]n 2012, RE acco unted for more than 56% of all new electrical capacity installations in the U.S."; EPA also reports that, according to a study by the Lawrence Berkeley National Laboratory, "efficiency programs are 'posed for dramatic growth over the course of the next 10 to 15 years[.]'" Com menters said if these studies and projections are correct, states are moving towards increased RE and demand-side EE even without the proposed command-and-control goals of the CPP.

Commenters asserted that the EPA's interim goals ar e unnecessary and prohibitively expensive, that many of the assumptions that underlie the esta blishment of the EPA's goal are unrealistic and/or inapplicable to Missouri, and that attemptin g to achieve the EPA's goals could have major adverse impacts on electric system reliability, as well as rates. Commenters urged the EPA to, at a minimum: (a) eliminate the interim goals; (b) giv e serious consideration to revising the longterm goals so that they are more practical and econ omically achievable; eliminate the unrealistic interim goals and focus on developing realistic lon g-range targets and timelines.76

Commenters stated as a consideration for the electr ic cooperatives that the CPP abandoned the interim goal and rely only on the final goal. Comme nters said this would allow for cooperatives to diversify their generation portfolio with additi onal NGCC, low carbon emitting and enhanced energy efficiency programs. Commenters said the add itional time would allow for cooperatives to plan for the transition in a cost effect and str ategic manner to better serve their member

owners.

The EPA has not provided a rational basis for impos ing interim goals in advance of the final goal. The commenters stated that section 111(d) of the CAA does not mandate the schedule that the EPA has proposed. The commenters argued that th e EPA's only justification for the interim goals are vague statements of urgency and assumptio ns about what the EPA believes states are capable of doing within the schedule that the EPA h as set. The commenters urged the EPA to remove the interim goals from the rule.

Comment 5: Stringency and Timing of Interim Target.

Response 5: See sections I.A. and V 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 in the proposal, EPA sets an inte rim 2020-2029 emissions target for each state, but allows states the ability to demonstrate compliance with the interim target averaged over the ten-year period. Commenters strongly suppo rts the flexibility that averaging over the ten-year period provides. Commenters said to the ex tent the interim targets are retained in a final rule, commenters requested EPA retain the ability t o demonstrate compliance based on a ten-year average; however, the interim targets EPA has propo sed are aggressive and will nevertheless create a very challenging framework for many states , including Virginia, where the interim 2020 intensity target is almost 70 percent of the 2030 t arget. Commenters said for 11 states, EPA assumes that over 75 percent of the reductions requ ired by 2030 would be achieved by 2020, and on average across all states, two-thirds of all the proposed reductions occur by 2020; this schedule leaves only three years at the most after EPA approval of state implementation plans for electric generating companies to achieve aggressive emission reductions and states to make sweeping changes to their existing electric generat ing, transmission and distribution systems. Commenters said given the stringency of the interim goals, the proposed implementation schedule will force states to adhere to EPA's presc ribed natural gas redispatch and coal unit closures to achieve compliance with the interim goa ls. Commenters said although EPA indicates that states may choose their own path for their com pliance program, by selecting among the four BSER building blocks used to establish the state ta rgets and other GHG-reducing options, it has proposed to make mandatory a minimum rate of progre ss or pace of implementation during the interim (2020-2029) period; this highly prescriptiv e implementation approach is unprecedented77

under Section 111 and arguably contrary to EPA's ow n acknowledgement that the states have discretion to design their implementation strategy.

Commenters stated in determining the final goal and the interim year annual rates, EPA assumes increasing renewable energy (RE) and energy efficie ncy (EE) levels between 2020 and 2029 to reflect the gradual movement of states toward regio nal benchmarks. Commenters said ramping up RE and EE levels reduces the annual rates progre ssively, starting in 2017 and reaching the final goal in 2030 (or in some states earlier); by contrast, the coal plant efficiency improvement and there dispatch of coal to existing NGCC (in Bui lding Blocks l and 2, respectively), remain unchanged between 2020 and 2029. Commenters said re ductions related to both these building blocks jump to their final 2030 levels at the start of the interim period in 2020; in doing so, the EPA goal computation formula implicitly factors in all emission rate reductions associated with Building Blocks 1 and 2, which account for nearly 5 0 percent of the total national emission reduction in 2030 under the proposed rule, in 2020. Commenters said on average, about 67 percent of all rate reductions happen by 2020, with the remainder taking place gradually between
2020 and 2029.

Commenters stated the level and compressed time ass ociated with the interim targets will require states to begin taking action to reduce emissions b efore the interim period starts in 2020 in order to achieve the 10-year average interim emission rat e; the near-term compliance challenge is compounded by the fact that state emission rate goa ls are predicated on states taking actions to reduce emissions before the interim compliance peri od starts in 2020 in order to achieve the 10- year interim emission rate. Commenters said for exa mple, EPA assumed that states will begin ramping up end-use efficiency programs and annual i ncremental renewable generation growth as early as 2017 in order to attain the annual levels of end-use efficiency and renewable generation included in setting the state emission targets; the viability of EPA's Proposed Guidelines depends on the increased availability of both natural gas a nd renewable energy, implying that new natural gas generating capacity will increase 20 percent to 22 percent by 2020 to replace retiring coalfired capacity under Option l, and stating that new natural gas generating capacity will increase nine percent relative to the base case in 2020 unde r Option 2. Commenters said EPA assumes that much of the shift in dispatch from coal to NGC C would occur before 2020; this assumes that adequate infrastructure to support coal unit retire ments and increased utilization of NGCC units can be put in place within as little as two to thre e years. Commenters said most of the significant new renewable capacity will be constructed far from load centers because of the unique siting needs and sensitivities of large-scale wind and sol ar projects; timing for development of natural gas and electric transmission, natural gas storage, renewable and, nuclear generation, and energy efficiency deployment are not sufficiently accounte d for. Commenters said ramping up both renewable energy and natural gas generation will re quire significant infrastructure improvements, most notably, more transmission lines and natural gas pipelines. Commenters said building this infrastructure will require many layers of permitting, design, engineering, procurement and construction as well as years of re gulatory approvals, often at federal, state, and

local levels. Commenters said it should also be not ed that the building blocks for both energy efficiency and renewable energy assume that all sta tes will adopt policies from a subset of states78

selected by EPA, typified by higher rate environmen ts and in many cases different utility regulatory models.

Commenters stated generally, a large number of perm its, consultations, and approvals are needed from multiple government bodies to get a new transm ission line permitted and constructed; the timeline for a transmission project depends on comp letion of planning studies and technical analysis, real estate availability (negotiating rig hts-of-way or exercising eminent domain authority), procurement of long lead time equipment , environmental permitting requirements, public opposition, regulatory approval, and opportu nities for tie-in outages. Commenters said a relatively simple project that will not traverse an environmentally sensitive area, require the exercise of eminent domain, or involve significant public opposition will take up to three years prior to completion of construction. Commenters sai d more complicated projects that will traverse federal lands, environmentally sensitive a reas, or will generate public opposition may take as much as 10 years to complete; they also may run the risk of regulatory conflict where an action required pursuant to EPA regulations may run into regulatory delays from a sister federal

agency.

Commenters stated more broadly, the investments nee ded to comply with state plans will need to be approved by state public utility commissions, su ch as Virginia's SCC. Commenters said EPA should be mindful of the long-standing role of such commissions (more than 100 years in the case of the Virginia State Corporation Commission) in ensuring just and reasonable rates for electric utility customers. Commenters said it shou ld not assume that plans drafted by state environmental regulators will be binding on public utility commissions who have different legal charges, including overall findings of projects bei ng in the public interest and ensuring just and reasonable rates; this is particularly true of the "outside the fence" components of the four building blocks set forth in the draft regulation. Commenters said in Virginia and North Carolina, investments in energy efficiency and renewable ener gy are the province of state public utility regulators, not environmental regulators.

Commenters stated if states decide to include chang es in how electric generating units (EGUs) are dispatched in state plans, changes to existing market constructs may be necessary; the regional transmission organizations (RTOs) and inde pendent system operators (ISOs) will need significant time to work with stakeholders after st ate plans are finalized to determine what market rule changes may be needed. Commenters said the EPA proposed timeline appears to be inconsistent with the defined forward periods for c apacity planning and does not allow sufficient time for permitting, design, engineering, procureme nt and constructing new resources. Commenters said for example, the PJM forward capaci ty auction is held approximately three years in advance of the need for the resource; the commitment of resources into the capacity market has already been established for calendar ye ar 2017; the rationale being that adequate lead time is necessary to support the development o f new generation (specifically new combustion turbines to plan for peak reserves in PJ M) into the market. Commenters said changes to PJMs, or other RTOs/ISOs, market structure often require stakeholder involvement and FERC79

approval, adding further delay to implementing pote ntial changes that may come to rise from such a proposal.

Commenters stated the proposed guidelines would req uire the states to develop and submit implementation plans by June 2016 with the option o f requesting a one-year extension to June

2017 if states can demonstrate the need for such an extension; although the additional year afforded the states to submit state plans is welcom e, it still provides little time for states that do not have sufficient existing renewable or energy ef ficiency programs already underway to get such programs developed, approved at the state leve l and implemented. Commenters said EPA itself assumes that states will need to begin imple menting renewable and energy efficiency measures beginning in 2017 (at a time when some sta te plans may have just been submitted, still be awaiting EPA approval or, in the case of multi-s tate plans, still be in development) to ramp up to meet interim and ultimately final state emission targets. Commenters added the proposal does not take into consideration changes in the directio n of a given energy efficiency program that may be necessary due to the introduction of new tec hnologies or the degree to which specific measures are accepted by the market which, in turn, affects the amount of energy savings attributable to a program. Commenters said the plan does not take into consideration changes in the direction of a given energy efficiency program that may be necessary due to the introduction of new technologies or the degree to which specific measures are accepted by the market; in tum, these factors affect the amount of energy savings a ttributable to a program, or the findings of required measurement and verification measures. For these and the additional reasons stated above, commenters requested EPA to abandon the inte rim target concept in the final rule.

Commenters said states should be able to choose a s moother reduction glide path that achieves the 2030 target without requiring a substantial por tion of those reductions to occur prior to 2020; commenters requested that EPA grant additional flex ibility by:

-Allowing states the option to select compliance wi th EPA's proposed alternative 2025 target, but not establish any interim (2020-2024) target;

-In the alternative, defer to the states to set the ir own interim goals and glide paths based on each state's ability to evaluate state-specific emission reduction opportunities during the interim period; or

-Allowing an annual ramp up for their dispatch from coal to NGCC that is calculated based on the difference between 70 percent and the state's a ctual average historic NGCC capacity factor, instead of the option EPA has suggested in the Noti ce of Data Availability (NODA).

Commenters stated to the extent EPA requires interi m progress with either a 2025 or 2030 target to be monitored, commenters suggested EPA consider calculating interim year rates over the 2020-2029 period that would decline at a constant a nnual rate equal to 10% of the difference between the baseline (2012) emission rate and the 2 025 or 2030 target rate. Commenters also requested EPA retain the ability to meet any interi m target based on a 10-year average.80

Commenters said in addition, EPA should not dictate bi-annual compliance requirements that would trigger federal enforcement or corrective mea sures before the end of the 10-year interim averaging period. Furthermore, commenters requested EPA to provide states the opportunity to seek adjustments to the emission rate targets to re flect changing circumstances over time. Commenters also requested that the Agency allow sta tes to revise and update their plans to respond to future developments such as the availabi lity of newer and lower-emitting technologies, other abatement measures not original ly contemplated by the state at the time the compliance plan was initially developed and submitt ed, impacts of extended nuclear unit outages or other potentially unforeseeable circumstances. C ommenters said adding a process for states to seek and implement modifications to state plans wou ld appropriately recognize that circumstances may change in the next 16 years and w ould allow EPA to retain approval authority.

Commenters stated these alternative and more flexib le approaches appropriately acknowledge that energy regulation and planning is essentially a state responsibility and that full consideration of the factors noted above cannot be reasonably ach ieved in the immediate term and will require a period of many years. Commenters said if the inte rim target is not eliminated, a more gradual compliance glide path to implement the required red uctions would allow states to ensure that there is sufficient time to complete needed infrast ructure development, including electric and/or gas transmission, and would obviate concerns regard ing system impacts of abrupt changes to electric generating, transmission and distribution systems. Commenters said it would also allow a more rational, less burdensome and more cost-effect ive glide path for reductions.

Commenters stated EPA's proposed interim goals pose a "carbon cliff," a regulatory scheme that

causes a sudden and severe reduction in carbon emis sions beginning in 2020. Commenters said EPA does not discuss the interim goals at any great length in the proposal or in the State Plan Considerations TSD; the proposal merely states that the 2020-2029 interim goals are expressed as a 10-year average

Commenters stated EPA's modeling forecasts signific ant coal plant retirements in Illinois (e.g., 3.6 - 4.5 GW) before 2020, mainly due to MATS. Comm enters said much of this modeling is flawed and needs to be re-visited; for example, EPA 's Base Case model identifies the following facilities as retired in 2016: Newton, Wo od River, Joppa, Hennepin, and Edwards Units 1 and 2; however, given the recent significan t investment in emission reduction technologies, including mercury controls to comply with the Illinois Multi-Pollutant Standard ("MPS"), there are no plans to retire these units i n the near future (except Edwards Unit 1), as a
result of MATS or otherwise.

Commenters stated not only are the reductions requi red to meet the interim goals steep, but the compliance time is very tight; under EPA's schedule , states must submit complete plans by 2017 or, if submitting a multi-state plan, 2018. Comment ers said EPA expects to approve complete state plans within 12 months, but even if EPA meets this ambitious goal (given that states will be submitting plans nearly simultaneously), state plan s will not likely become final until 2018 or81

2019. Commenters said because interim goals are eff ective beginning in 2020, the stringent reductions require states to take significant steps towards meeting those goals before the state plan is even approved.

Commenters stated EPA recognizes that renewable ene rgy and energy efficiency measures cannot be implemented in significant amounts until after 2020; accordingly, to comply with the interim goals, forced retirement of plants may occu r. Commenters said as EPA notes, roughly 46 GW of coal plant retirements are expected as a resu lt of other EPA requirements such as the MATS rule; as a result of the CPP, more will retire , and may do so before replacement power is available. Commenters said the industry historicall y retires units in a manner that does not jeopardize reliability, but early implementation of this rule may force companies to choose between complying with reliability requirements and complying with environmental requirements; reliability is not only a function of generation; transmission plays a large role as well; constructing transmission expansions or upgra des to new non-fossil units or NGCC units is time consuming and fraught with permitting, financi ng and locational difficulties; these cannot be solved by 2020.

Commenters stated the interim goals must be elimina ted in favor of allowing states to set achievable reasonable paths toward the final target rate; progress towards the final goal can be assured by requiring states to identify "objective criteria" demonstrating that progress is being

made based on what is achievable in the state. Comm enters urged EPA to eliminate the interim goals and rely on the proposed final goals only. Co mmenters said eliminating the interim goals allows the states flexibility to propose non-bindin g milestones geared to ensure progress, instead of EPA's proposed interim goals and compliance peri ods.

Comment 6: Interim goals - timing

Response 6: See sections I.A. and V 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 EPA should strengthen its proposa l by ensuring that states meet their interim goals by not allowing beginning dates past 2020.

Commenters added EPA should also find ways to encou rage early actions up to the initial (2020) target date, and not create a perverse incentive fo r states and utilities to reserve RE and EE "low hanging fruit" until then, forgoing valuable pre-20 20 emissions reductions.

Several commenters requested a beginning date of 20 25 for interim goals.

Commenters stated establish 2025 as the first compl iance year for the interim standards; this additional time would give states a reasonable time frame to implement additional projects for82

renewable energy and to implement effective energy efficiency measures. Commenters said this allows some portions of Building Blocks # 3 and 4 t o be implemented, enabling better decisions to be made on natural gas dispatching or fuel conve rsion.

Commenters stated the implementation of the rule wo uld be greatly improved if EPA did not require compliance with the interim emission target s until at least the year 2025 or alternatively if EPA removed the interim emission targets from th e program. Commenters said EPA's current proposal requires that state agencies submit their SIP by June 30, 2016 and allows for a one year extension to June 30, 2017 or to June 30, 2018 if a multiple state program is submitted. Commenters said EPA's proposal requires that the in terim emission targets be met during the 2020 - 2029 timeframe starting with the first compl iance period of 2020-2021; thus, in some cases, the SIP's will be due in 2017 or 2018 with s ome emission reductions that are required as early as 2020. Commenters said this rule framework will result in states only essentially being able to try to implement Building Block # 1 (coal p lant efficiency) and some semblance of Building Block 2 (change dispatch of electricity). Commenters were concerned that a number of states may just default to trying to change fuel ty pes to natural gas in a haphazard fashion, which could lead to issues with natural gas availability and potential price increases; a potential price increase could coincide with a number of petrochemi cal projects coming on line (2018 - 2020), putting them in competition for the same natural ga s resources.

Commenters requested that the interim goal be elimi nated, or at the very least, be delayed to the year 2025, with significantly less stringency compa red to the final goal.

Several commenters requested an extension for the i nterim goals.

Commenters stated it is reasonable that additional electric transmission infrastructure will be needed to accomplish the requirements of the CPP pr oposed rule in light of the projected retirements of existing generating units; in the So uthwest Power Pool footprint it takes up to eight years to plan, approve, construct, and place electric transmission facilities in service. Commenters said this eight-year planning and buildi ng cycle does not provide enough time to

construct the electric transmission infrastructure needed to maintain reliability and meet the interim goal in the CPP by 2020; in other words, co mmenters asserted that the interim goals require a choice between meeting the CPP's proposed standards and maintaining reliability. Commenters said the current timeline in the CPP pro posed rule does not provide enough time to accomplish both; because of the large magnitude of reduced carbon emissions required early in the 2020 interim goal compliance timeframe, comment ers asserted that an extension of the interim goal is necessary. Commenter said an extens ion of the 2020 date would allow more time for constructing any needed electric transmission a nd generation infrastructure, which would allow reliability of the bulk electric system, an e lectric system that is central to this nation's economy and way of life, to remain intact.

Comment 7: There is not enough time to implement the proposed interim emission rate goals.83

Response 7: See sections I.A. and V 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:

Several commenters stated that there is not enough time to implement the proposed interim emission rate goals.

Commenters added that for many states, the stringen cy of the interim limits would require most of the emission reductions required by 2030 to be a chieved starting in 2020. Commenters said that EPA's assumptions supporting goal development and the Agency's subsequent IPM modeling supports this conclusion. Commenters state d that it will be impossible for some states to achieve these significant reductions in such a s hort amount of time - potentially as short as two years after a state has developed its plan. Comment ers said that such reductions may require significant infrastructure development and, in all cases, would result in significant economic, social and political upheaval that EPA has not anti cipated or taken into account in its proposed rule. Commenters added, obtaining the permits and b uilding the infrastructure necessary to comply with the rule in 2020 may be impossible in m any states. Commenters stated EPA's assumptions in setting the interim goals, including the Block 2 re-dispatch, the level of renewable energy and energy efficiency savings that are feasible, as well as the "at-risk" nuclear provision, are so aggressive that analysis by some states indicates there is no way to achieve the interim goals without near-term retirement of all e xisting coal-fired generation; in some states, most, if not all, retirements would need to occur b y 2020. Commenters said this would result in the loss of thousands of jobs, threaten electric re liability, and increase electric rates by a significant amount. Commenters stated EPA has not a dequately assessed these impacts.

Commenters added that EPA will have a short span of only four years to implement major portions of the plan as required by the rule - incl uding all critical phases of power planning, permitting, financing, plant design, engineering an d construction and operational systems-testing and start-up. Commenters said several key facts sup port this point:

-Achieving the required emission reductions will ne cessitate colossal investments in our country's energy infrastructure and core power gene ration supply systems.

-Natural gas and nuclear generation capacity will r equire major, unprecedented expansion - even assuming we can count on the most optimistic foreca sts for renewable sources. In the natural gas industry alone, enormous challenges exist for growi ng capacity; thousands of miles of antiquated pipelines throughout the country must soon be repla ced to avoid serious harm to public health and safety; plus, a whole new generation of plants will have to be designed, developed and built.

-Nuclear energy, while another vital part of our en ergy solution, faces difficult and time consuming barriers, not the least of which are lice nsing and permitting.84

-Each of the various stages required for addressing these challenges will involve multiple years of planning, deliberation and review by numerous st ate and local governmental bodies, from state legislatures to utility commissions to local zoning agencies.

Commenters added EPA's aggressive schedule of the i nterim goals would not provide enough time to build the necessary infrastructure needed t o ensure grid stability and reliability to support the amount of renewable generation required to meet state targets over the next 5-15 years while continuing to provide safe and reliable electric se rvice.

Commenters added sufficient time is required to eng age in rational planning, construction and integration of cost- effective resource and infrast ructure solutions that maintain reliable and efficient delivery of electricity. Commenters state d EPA should allow states to submit plans for EPA's approval that specify the interim compliance objectives that best fit their circumstances.

Commenters added the interim goals do not afford a proper glide path for the most cost effective implementation of the rule by 2030.

Commenters added time is required to ramp up new pr ograms and make program redesigns. Commenters stated pilot programs, used to gauge cus tomer interest, market penetration rate, and the ability to make the program cost-effective long -term, are typically run for more than one year. Commenters said pilot programs serve an impor tant function in the utilities' energy efficiency portfolios by exploring the feasibility of programs designed to increase market penetration of new technologies, reach underserved customer segments, and/or explore new distribution channels. Commenters stated given all of these factors, it is simply infeasible to conduct traditional deployment of the energy effici ency programs that would be required by the proposed rule under the extremely short timeline re quired by Rule 111(d).

Commenters added EPA's interim goals are unachievab le. Commenters said the Existing Source Proposal assumes that emission reductions can be ac hieved on a steady path beginning in 2020; it therefore proposes binding interim emission redu ction goals based on a 10-year average
emission rate from 2020 to 2029. Commenters said me eting those interim emission reduction goals requires extremely aggressive reduction effor ts beginning in the very first year; any shortfall in reductions in the early years can only be made up by later-year emission rates that will necessarily need to be substantially below the average emission rate that EPA has set. Commenters said as a result, states might be requir ed to achieve emission rates in later years of the interim period that are even lower than the fin al emission rate that EPA proposes would apply beginning in 2030, this simply is not feasibl e.

Commenters added the proposed interim goal requirin g states to meet 80 percent of the 2030 target by 2020 is completely unworkable, especially given the lack of credit for early action; given the timeline of submitting a plan, and the re ality of receiving timely USEPA approval of a plan, states will have no more than three years to meet the 80 percent reduction requirement.85

Commenters said a more realistic approach would be to permit states to develop a state-specific "glide path" to reach their 2030 target.

Commenters added substantially increasing natural g as infrastructure to meet the goals, which will require adding new interstate and intrastate p ipelines, will require significant time periods and financial investments; adding pipeline capacity in time for the interim deadline is essentially impossible at this time. Commenters stated two new major interstate natural gas pipelines were announced this fall: the Atlantic Coast Pipeline to move gas from shale reserves in West Virginia, Ohio, and Pennsylvania to Virginia and No rth Carolina, and the Mountain Valley Pipeline to connect the Equitrans transmission syst em in West Virginia to the Transcontinental Pipeline in Virginia. Commenters said as proposed, the Atlantic Coast Pipeline project would require three to five years for construction and op eration, assuming no significant delays in acquiring rights of way for the route and equipment ; at best, the project would be completed at approximately the same time as the interim deadline and not be likely to significantly contribute to measures needed to meet those goals. Commenters said the Mountain Valley Pipeline project has planned start of construction by 2016, with completion by 2019, assuming no significant delays in approval, rights of way, or c onstruction; even with a current announcement of this project, the likelihood of its completion i n time to support the interim deadline is extremely low. Commenters said the Atlantic Coast P ipeline and Mountain Valley Pipeline are best cases, since they are at least well along in t he planning stage; any additional pipeline projects needed to meet requirements of the Proposa l will be starting from this point forward or after state plans are crafted. Commenters said this means they would almost certainly be unable to come on line by the interim deadline and would m ore likely be completed several years thereafter; consequently, any interim goal requirem ents in the final Guidelines dependent on natural gas use and availability must be based sole ly on existing infrastructure and cannot be premised on construction of additional capacity sin ce it could not be completed prior to the
interim deadline.

Commenters added increasing the renewable energy so urces in a State within such a short period would be highly unlikely due to the time needed to receive required regulatory permits and authorizations, design, contract for, and install t he necessary equipment.

Commenters added often new transmission will be nec essary to support added renewable energy sources; this takes years to plan and implement; in the East and Midwest, two recent examples of

the time needed to add electric transmission lines occurred in: Pennsylvania - PPL Electric Utilities has proposed a new 500 kV line, due to re gulatory delays, construction of the line is still ongoing, PPL now anticipates that the line will be completed and in service by mid-2015 - three years later than the original schedule; and Minneso ta - ITC Midwest, a regional transmission company, has proposed a 345 kV electric transmissio n line, at best, the line will not be available
for service earlier than 2018-2019. Commenters said as these examples highlight, existing transmission projects around the country take many years to complete, well beyond what could be reasonably expected to meet EPA's interim goal d eadline; and these are electric transmissions projects that are well along in the planning and re gulatory stages. Commenters said new86

transmission needed to meet the requirements of the proposal could not be installed and operated until several years later and certainly not by 2020

.

Commenters added even relatively simple energy effi ciency programs require extensive evaluation, planning, regulatory authorizations and permits, creation of financial incentives, and construction or installation of new equipment to be fully implemented; the energy efficiency programs of even the twelve best performing States have been in place for several decades and with three exceptions, none of them has achieved an ywhere close to the 1.5% annual energy efficiency requirement EPA proposes. Commenters sai d a period of two and one-half years to ramp up the program, even allowing until 2025 as EP A suggests, is entirely insufficient to implement these build block components.

Commenters added by imposing interim goals to be me t by 2020, States, and the regulated entities under the Guidelines, will be required to achieve at least two-thirds of the reductions within at most two to three years after State plans are approved. Commenters said EPA claims states and the regulated community will have suffic ient time to understand the requirements and begin implementing them, which apparently assumes t hey would take action prior to the state plans being finalized and approved; to justify this approach, EPA states that affected sources "will have knowledge of state requirements as they are adopted" and will therefore have more
time to act.

Commenters added the challenges confronting states are many, and EPA's proposal lacks the clarity necessary to guide the development and appr oval of state plans within the very aggressive time frame outlined in the proposal. Commenters sai d the CAA does not set a specific time for the submission of state plans, nor does it establis h a rigid compliance deadline for the designated facilities that are to be governed by the plans; EP A should reassess its schedule, given the
realities of the tasks it has set before the states

.

Commenters added EPA has assumed that all of the me asures required under building blocks 1 and 2, as well as initial steps to implement block 4 and ongoing renewable energy development efforts, can be completed by 2020, and that assumpt ion significantly affects a state's ability to demonstrate compliance with the 2020-2029 goal. Com menters said these assumptions are unfounded, and create a "compliance cliff" in many states, as additional coal generation is projected to retire, natural gas pipeline capacity is assumed to be constructed, and all of the transmission additions and mitigation necessary to accommodate these vast changes in the makeup of the bulk electric system cannot be completed within this time frame; the result is widespread concern over the integrity of the bulk e lectric system.

Commenters added EPA has given no reasoned explanat ion of why it believes the transformation it seeks can be accomplished in less than five year s after the final guidelines are published; its assumptions are inherently unreasonable because the y are based upon significant changes in investments occurring without sufficient regulatory certainty to support those changes. Commenters said EGUs are in large measure regulated entities whose significant investments87

(whether they be generation, transmission or distri bution assets) are subject to the oversight of state regulatory commissions, and are regularly exa mined in careful detail so as to protect the interests of utility customers. Commenters said sin ce this process of regulatory oversight and approval typically occurs at the time the assets ar e placed in service, utilities must be prepared to demonstrate that the investments were prudently mad e, or risk disallowance of recovery for all or a portion of the investment; therefore, until utili ties are reasonably confident that the proposed

investment is consistent with the contents of a sta te plan that will not be disapproved by EPA and replaced by a federal plan, they will have no incen tive to take measures to implement these requirements. Commenters said EPA's proposal assume s that there will be as little as 6-18 months between the final approval of a plan by EPA and the initial compliance date in 2020; such a short period for implementation is arb itrary, unreasonable and unlawful.

Commenters added if EPA finalizes a proposal that i ncludes all or significant portions of the building blocks, EPA should eliminate the interim g oal and provide states with true flexibility to design a glide path toward compliance.

Commenters stated EPA's proposed interim 2020 stand ards are unachievable and will drive inefficient decisions; EPA proposes states achieve significant GHG emission reductions by 2020

under an interim set of standards. Commenters said these interim standards should be not be finalized simply because they require too much too soon; by the time any GHG standards are finalized, there will be very little time to achiev e the interim standards. Commenters said this

will force states and utilities to make rushed and inefficient decisions; a single deadline that provides a long time for more rational and cost eff ective decisions should be implemented
instead.

Commenters stated the timeline to comply with the r ule is effectively 2020, not 2030; for example, the interim target rate for Texas is 853 l bs CO2/MWh (a 33.6% reduction from its 2012 base rate of 1284 lbs CO2/MWh) and the final rate i s 791 lbs CO2/MWh (a 38.4% reduction from the 2012 base rate). Commenters said there is little difference between the stringency, and therefore, compliance obligations under the interim or final emissions target rates. Commenters said while the interim standards are averaged over the period of 2020 to 2029, states like Texas cannot delay compliance to later in the interim per iod; to do so would create a "bow wave" of burdens that would only magnify the already-crippli ng compliance impact of the Rule Proposal.

Commenters added increases in renewable energy and energy efficiency are time delayed and do not help with compliance with the interim goal.

Commenters added under the current schedule, final EPA approval of state plans will not occur until sometime between mid-2017 for single-state pl ans and mid-2019 for multi-state plans; yet the proposed targets for many Western states requir e large reductions by 2020, primarily due to the assumptions in Block 2 related to switching fro m coal to natural gas generation. Commenters

said some states will find it difficult to meet the ir interim goal in 2020 and are concerned that such steep reductions early in the program could pr eclude opportunities to implement more cost88

effective strategies that require more time to ramp up, such as expansion of renewable energy and energy efficiency programs; therefore, states n eed more latitude for establishing a path to the 2030 targets. Commenters encouraged EPA to continue to work with our states to explore how more flexible and different milestones might better support the transition to a less carbon intensive electricity sector in the West by allowin g adequate time for implementation of a wider range of strategies and programs that can be tailor ed to a state's unique circumstances.

Commenters added the interim goals, referred to as "The Cliff," are unworkable in the limited

amount of time between the release of the final rul e and the start of the interim averaging period.

Commenters said the time needed to have South Carol ina's state plan approved at the Legislature (proceeding before federal approval) and to impleme nt the components will not allow the Department enough time to meet the aggressive inter im goal; a better approach would be to develop a glide path transition process where each state will monitor expected progress until the final goal deadline.

Commenters added much of the expected reductions fo r CO2 emissions would have to occur by 2020; commenters said South Carolina's concern is t hat this may not provide sufficient time for adequate implementation of the Distributed Energy R esource Program Act passed into law this year and that full operation of the under construct ion nuclear units at the V.C. Summer Plant may

not occur before 2020. Commenters said South Caroli na's interim reduction goal is 840 lbs.CO2//MWh, to be reached in the period of 2020 - 2029; this is approximately a 47 percent reduction below the 2012 benchmark (1587 lbs.CO2//M Wh); currently, 33 percent of South Carolina's electricity generation is from coal. Com menters said with questions concerning the state's renewable energy hurdles and the displaceme nt of capacity from coal fired units by NGCC, there is concern that some existing coal plan ts could become uneconomically viable and lead to premature closures; this could impact both the baseload generation and the reliability of South Carolina's grid. Commenters said another poss ible impact of the interim goal could be a decrease in the state's flexibility of measures to meet the final goal, perhaps leading to higher costs to consumers for electricity.

Commenters recommended the EPA eliminate the interi m goal, and allow states to determine the best transition phase based upon the development of its own State Plan of action; Energy

Coalition members and other stakeholders have discu ssed the energy planning processes already in place as a foundation to develop a plan to meet the state goal. Commenters said states could incorporate aspects of these processes, for example the Integrated Resource Plans (IRPs), in the progress reports that the EPA seeks in its proposed rule. Commenters said each state could monitor glide path progress, address any delays or deficiencies encountered, and provide clear, timely progress reports to the public and the EPA. Commenters said enabling states the ability to tailor their own glide-path would lead to a better and more economically beneficial plan based on each state's needs and potential resources.

Commenters added the proposed rule sets an overly s trenuous pace to achieve emission reduction goals; although states have until 2030 to comply with the rule's final emission goals,89

Wisconsin's interim goal would effectively require the state to be over 87 percent of the way toward its final goal in the decade beginning in 20 20. Commenters said while compliance with the interim goal would be measured on a ten-year av erage basis between 2020 and 2029, any under-compliance in the early years of this period would have to be compensated for by overcompliance in the later years. Commenters said sinc e any given state plan may not be approved by EPA until as late as the middle of 2019, requiri ng such a significant emission reduction beginning only half a year later in 2020 is not rea listic; even if it is possible to comply with the interim goal, this timeline may present technical c hallenges that will prevent the use of the most cost effective strategies.

Commenters stated the proposed interim compliance p eriod, which begins in 2020 and ends in 2029, does not provide adequate time for compliance planning and implementation to avoid reliability problems, severely limits state flexibi lity, and would have the effect of causing suboptimal planning decisions as compared to merely ha ving a 2030 final goal. Commenters said if the interim compliance period and resulting lack of flexibility drives a large amount of coal unit retirements by 2020, significant time is required t o complete the planning, approval and implementation for replacement generation; upgraded and expanded transmission and distribution facilities; and new natural gas pipeli ne infrastructure that will be required to support the retirements while maintaining system reliabilit y. Commenters said these changes will take years to plan and execute as they must be carefully implemented so as not to cause reliability problems and to minimize cost impacts to consumers; they simply cannot be accomplished before 2020, the start of the interim compliance pe riod.

Commenters added in its October 30, 2014 Notice of Data Availability ("NODA"), the EPA seems to recognize for the first time that the Prop osed Guidelines' interim goals deny states the implementation flexibility and safeguards for relia bility that the CAA requires; this result is the opposite of what the EPA states it intended to pres erve in the Proposed Guidelines. Commenters said the Agency claims that its intent in proposing to require compliance with an interim goal is to "provide states with a reasonable glide path to compliance with their final goals by 2030;" yet the EPA fails to explain why interim goals are nece ssary to achieve the Proposed Guidelines' ultimate goal.

Commenters added EPA believes that "some [Block] me asures may take longer than 2020 to implement, while others can be, and are being, impl emented more quickly;" stated another way, it appears that EPA believes if one Block's require ments are too burdensome, they can be offset by achieving compliance with another Block. Comment ers said this is a false assumption that is particularly relevant in EPA's discussion of stakeh older comments proposing to allow credit for early CO2 emissions reductions; these early-action credits could be used to provide flexibility

and defer additional CO2 reductions until later in the 2020-2029 interim period. Commenters said in GCLC states, however, the Rule Proposal's l imits are so burdensome, so large, and with far-too-short a compliance timeline, it is highly l ike that none of the Blocks' targets will be met by 2020; this provides no individual Block excesses to be used for future offsets.90

Commenters added as EPA has heard from many parties , the Proposed Rule's interim targets present a significant challenge for overall cost, e conomic disruption, stranded assets, and potentially electric system reliability. Commenters said the interim targets are based on the assumption that Blocks 1 and 2 can be fully impleme nted in 2020, which for many states is not realistic. Commenters said even under its current, very aggressive schedule, EPA will likely approve most state plans by 2017 to 2019 at the ear liest, yet the plans will likely require states and utilities to undertake permitting changes, inve stments in new gas and transmission infrastructure, procurement of significantly greate r amounts of firm gas supply, and other actions that will take several years to implement; moreover for some states - including Minnesota, North Dakota and South Dakota - Block 3 is also fully pha sed in by 2020, giving no gradual ramp-in. Commenters said for these and other reasons, NERC a nd several reliability regions (entities primarily responsible for ensuring electric system reliability) have studied the Clean Power Plan and found that stringent interim targets would like ly have an adverse impact on reliability.

Commenters added states with clean energy leadershi p histories have received more stringent final targets, and therefore more stringent interim targets; the three states in which Xcel Energy owns coal plants, Minnesota, Texas, and Colorado, h ave much more stringent final targets - 41%, 38% and 35% below EPA's 2012 adjusted emission rate respectively - than the national average rate reduction of 19%. Commenters said the interim targets in turn are strongly related to the final targets; Minnesota, Texas and Colorado's interim targets are 38%, 34%, and 32% below their 2012 baselines. Commenters said these require d reductions to interim targets are dramatic,

and in some cases unworkable.

Commenters added while it is true that the interim targets incorporate flexibility by allowing a ten-year averaging period, the flexibility is in re ality quite limited; under the proposal, emissions in the early years cannot be much above the interim target value, or the later interim years would actually have to be well below the final target, ef fectively creating an interim target that is more stringent than the final target. Commenters added t here are not many significant, cost-effective CO2 reduction opportunities outside the four Blocks that comprise BSER; in some states, the only viable way to achieve the interim targets may be premature retirement of much or all coal capacity, which will have implications for cost, st randed assets, and reliability.

Commenters added it is true that ongoing emissions reduction efforts prior to 2020 will reduce emissions rates and reduce the gap between 2012 rat es and the interim targets; in fact, Xcel Energy has one of the most robust ongoing emissions reduction trends in the U.S. by, for example, adding 40% additional wind capacity from 2 014 to 2016 on top of our nation-leading wind portfolio; however, the current plans are not nearly enough to achieve the interim targets.

Commenters added the Southwestern Public Service sy stem in Texas vividly illustrates the significant timing problem with the interim targets . Commenters said the in-state Texas 111(d) equivalent emissions rate of the Southwestern Publi c Service (SPS) operating subsidiary is currently about 1,780 lb CO2/MWh; while 450 MW of a dditional wind energy in Texas is being added by the end of 2015 and also shifting dispatch to newer, more efficient natural gas units, by91

2020 the emissions rate will be 1,670 lb/MWh, nowhe re close to the Texas interim target of 853 lb/MWh. Commenters said in fact, achieving that 853 lb/MWh rate, or anything close to it, is all but impossible for the SPS system in Texas in the f ew years before 2020. Commenters said this challenge is compounded by the very short timeline between a final EPA-approved state compliance plan (or federal plan) in 2017-2019 and the first binding target year of 2020.

Commenters added the design of the interim complian ce period, particularly the interim 10-year average goal, limits state flexibility; because the proposal front loads much of the emission reduction, states may be unable to achieve sufficie nt reductions early in the 2020-2029 interim period to meet the interim goals. Commenters said f or Wisconsin, 87 percent of the emission reductions required to meet the 2030 goal will need to be achieved by 2020; there are a number of logistical challenges associated with achieving emission reductions by 2020; utility planning, engineering, acquisition of regulatory approvals, a nd construction are all needed to complete the type of infrastructure improvements (gas pipeline o r electric transmission) that will be required in order to increase the utilization of natural gas combined cycle units enough to comply with the interim goals. Commenters said the time required fo r state legislative processes alone is problematic; for example, non-controversial legisla tion in Wisconsin takes about 27 months to pass; legislation necessary to facilitate a state p lan is likely to be controversial, and consequently

, is likely to take more than 27 months to pass. Comm enters said EPA should phase in re-dispatch from affected steam generating units to NGCC units under Block 2 based on the extent to which additional infrastructure improvements are needed. Commenters said the phase-in would

consider the amount of utilization shift that is fe asible by 2020, and how quickly that amount

could increase after 2020 to the full amount of NGC C utilization that could ultimately be achieved as part of the BSER.

Commenters stated the EPA's proposed interim goals do not provide sufficient time to prepare for compliance. Commenters said EPA approval of sta te plans may be no sooner than 2017 for state-only and possibly as late as 2019 for multi-s tate regional plans. Commenters said EPA's proposal does not adequately factor in the schedule required to deploy additional energy resources and infrastructure (ex. heat rate improve ments, additional renewables, natural gas pipeline, transmission). Commenters said EPA's prop osal must contemplate potential impacts to regional energy markets and allow for a transition that avoids impacts to reliability and minimizes costs by not disrupting economic dispatch . Commenters said a realistic effective date for initial compliance requirements is needed to al low for permitting, regulatory approvals, project development and possible construction. Comm enters asserted that it is imperative for EPA's final rules to provide for planning certainty in order to provide our utility customers with reliable and affordable service; the EPA's Clean Po wer Plan should recognize the nature of electric utilities investments that have long-term energy resource planning cycles covering 10-15 year outlooks, broad system costs and long-lived as set lives.

Commenters stated the interim goals are driven by E PA's estimates of what can be achieved in Building Blocks 1 and 2; however, these estimates a re unachievable. Commenters said first, the heat rate improvement expected from Building Block 1 is unachievable because generating92

companies have already made most of the possible he at rate improvements. Commenters said in Block 2, the emission reductions associated with di spatch of natural gas plants is based on fundamental errors (e.g., unrepresentative heat rat es and use of nameplate capacity) and flawed assumptions (e.g., that adequate gas pipelines and electric transmission infrastructure exists to support NGCC capacity factors of 70%). Commenters s aid the CPP recognizes that the additions and transformations affected by Building Blocks 3 a nd 4 will be gradual and not achieved by 2020, and the commenters' own analysis confirms tha t conclusion. Commenters said utilities are therefore left with limited options, e.g., retiring existing fossil units or curtailing operations, al l before the end of unit's useful life and at signifi cant cost to customers, or accelerating the

addition of unneeded NGCC. Commenters added utiliti es may not be able to implement a retirement strategy for compliance in time to meet the 2020 goals because RTOs often require companies that wish to retire plants to keep them o n line for reliability purposes while transmission or other solutions are developed. Comm enters said as designed, the interim goals simply cannot be met and should be eliminated.

Commenters recognized EPA's concern that eliminatio n of the interim targets may result in less than its desired progress on emission reductions du ring the 10-year period leading up to 2030; however, EPA can ensure significant reductions by i dentifying and requiring state plans to include "objective criteria or milestones" that can be monitored and will provide real emission reductions during the 2020-2029 period. Commenters said this approach, which can be thought of as a "rate of progress" approach, would provide for consideration of the remaining useful life of existing generating resources, grid reliability and customer cost minimization, as required by the CAA. Commenters added this approach would resul t in plans filed by states that EPA could approve, thus minimizing the need for later enforce ment. Commenters said this approach is consistent with EPA past practice; specifically, EP A has allowed states to utilize a rate of progress approach with respect to the Regional Haze program, the Clean Air Interstate Rule, and the NAAQS program. Commenters said such approach is equally appropriate here, where EPA has borrowed from the NAAQS program already. Commen ters said any assertion that the CPP has to follow an NSPS model to be legal, EPA Legal Memo, pg. 8 et seq., is belied by the fact that EPA has used another model - the NAAQS model - for the CPP anyway.

Commenters urged EPA to eliminate the rigid interim goals contained in the proposed rule and allow the states to establish the appropriate glide paths through their detailed state plans that will achieve EPA's alternate 2030 goals, while consideri ng their unique circumstances and the requirement to address remaining useful lives of th e assets at issue; EPA is in receipt of a letter from Missouri's Governor, Jeremiah "Jay" Nixon, whi ch supports flexibility with respect to the interim targets as well as addressing other issues supported in these comments.
Commenters concurred with these recommendations.

Commenters stated eliminating the interim goals all ows states flexibility to develop plans that will ensure progress in the most cost effective and reliable fashion; eliminating the proposed interim goals mitigates legitimate cost and signifi cant reliability concerns as well as the litigation risks that all parties will face as a result of the rule. Commenters said as noted in Missouri93

Attorney General Chris Koster's November 26, 2014, Comment Letter regarding the CPP, any GHG plan must ensure energy affordability and infra structure reliability. Commenters said EPA
knows how to assure that states demonstrate reasona ble progress; it should do so here.

Commenters stated the interim state goals as propos ed in the Clean Power Plan, which would need to be met on average over the 2020 to 2029 tim e period, are very close to the final goals and would require near-term generation changes incl uding replacing most if not all of the coal capacity in the state, enhancements to the gas tran sportation infrastructure, and transmission infrastructure development. Commenters said Arizona 's interim goal of 735 lb CO2 / MWh is 47% below its 2012 baseline emission rate; because Arizona's interim and final goals proposed

are below the emission rate of even the most effici ent natural gas generation, incremental renewable generation and energy efficiency over lev els prescribed in the building blocks would be required to comply.

Commenters stated it can take ten or more years to propose, design, finance, construct, litigate and then operate a new high voltage transmission co rridor; as a result, EPA's interim goals beginning in 2020 are not achievable.

Commenters stated eliminate the interim compliance goal.

Commenters stated EPA's Clean Power Plan requires a 30 percent nationwide reduction in CO2 emissions by 2030; the goal for Nebraska is 26 perc ent; compliance must start in 2020; the EPA

has announced that a final rule will not be issued until June of 2015. Commenters said the Plan allows states to complete state-wide plans by 2016 leaving only a 4 year window for utilities to implement compliance measures; this timeframe is un workable. Commenters said the interim targets in the Plan for 2020 should be eliminated a nd any plan should allow for states and utilities to adequately plan and prepare for future compliance.

Commenters stated even though renewable generation has a more flexible siting process than NGCC, the 10-year timeline needed to put transmissi on in service under present rules does not mesh with the interim target. Commenters said given that states will submit plans in 2016 or 2017, and the EPA needs an additional year to appro ve the states' plans, it will likely be 2018- 2019 before utilities will even know what they will need to do to comply - leaving a very short amount of time to plan, permit and construct necess ary infrastructure prior to the interim period commencing in 2020. Commenters said this defies the empirical evidence of 10 years to commission just an EHV transmission line and likely just as long to traverse the same process for a new NGCC power plant with expansion of natural ga s infrastructure. Commenters said most other utilities will also be engaging in the same p rocess simultaneously, competing for the time and resources of the already overtaxed state and fe deral agencies that handle these processes, as

well as the consultants and contractors who assist on such projects. Commenters said to properly plan for and complete the compliance effort require d for a rule touching all sectors of the electric grid (i.e., electricity generation, transmission an d consumption), commenters stated utilities needs longer than the two-to-four years t o properly respond to an EPA-approved CPP94

state plan. Commenters said eliminate the interim g oals and allow states and utilities to focus on meeting the still challenging final goal.

Commenters stated that there is not enough time to implement the proposed interim emission rate goals, especially additional nuclear generating uni ts.

Commenters added constructing and operating additio nal nuclear generating units would be impossible within the time periods in the proposal; at a minimum, a time period of more than ten years is required to plan and obtain financing, obt ain federal and state regulatory authorizations for the project, construct the plant, and commence operation.

Commenters added a current example is the V.C. Summ er Nuclear Station Units 2 and 3 project in South Carolina; the application was filed in May 2008, following several years of planning and coordination with the staff of the commission; however, engineering and construction delays have pushed the projected completion dates to early 2019 for Unit 2, with Unit 3 extended to early 2020. Commenters said the time period from fi ling of the SCPSC application in 2008 to projected completion will be eleven years for Unit 2, and twelve years for Unit 3; and these time periods do not include the several additional years needed to plan, engineer, and craft necessary regulatory applications prior to 2008.

Commenters added Duke Energy currently has a two-un it nuclear project application pending before the Nuclear Regulatory Commission (NRC) that clearly demonstrates the extended time period necessary to license, construct and operate nuclear generating units. Commenters said the application for the W.S. Lee Nuclear Station near G affney, S.C., was filed with the NRC in December 2007, but the project has been repeatedly delayed; a final hearing on the COL application would not occur until 2016. Commenters said assuming the hearing occurs in 2016, the COL is issued by 2017, and construction commenc es immediately, the units would still not come into service until at least 2023-2025; consequ ently, they would not be available to provide non-GHG emitting generation until well after the 20 20 interim deadline.

Commenters added a recent example of lack of progre ss in adding nuclear (non-GHG emitting) generation is Duke Energy's cancellation of two pro posed nuclear units, Levy 1 and 2, in Florida. Commenters said plans for the two units were announ ced in 2008, however the company cancelled the project last year based on the inabil ity of NRC to issue the needed approval; demonstrating a typical time period requi red prior to issuance of regulatory approvals and start of construction - six years. Commenters s aid combined with the eleven and twelve year construction periods for the V.C. Summer project in SC, this illustrates that a time period in excess of fifteen years to bring on additional nucl ear generation as contemplated in the Proposal
is more realistic.

Commenters added overall, the electric utility indu stry proposed more than two dozen nuclear reactors across the country, but only two major pro jects are under construction: one in Georgia and the V.C. Summer project in South Carolina; thus , the timeline in the Proposal for additional95

nuclear generation to be added by States is entirel y fanciful. Commenters said only nuclear units well along in the planning process or for which reg ulatory applications have been filed could be constructed and operated as part of a state plan pr ior to the 2030 final deadline.

Comment 8: The EPA's interim goals: not enough time meet; goa ls front loaded; unrealistic; overly aggressive; create cliff.

Response 8: See sections I.A. and V 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:

Several commenters stated there is not enough time to implement the interim goals and that the interim goals are front loaded/unrealistic/ overly aggressive/create cliff.

Commenters stated one of the many problems with the interim compliance period is the fact that the EPA has front-loaded the emission reduction goa ls by assuming that Building Blocks 1 and 2 are fully implemented by 2020, and remain at that l evel throughout the 10-year interim compliance period; adding to this problem is the fa ct that the 2020 goals also reflect an increase in renewable energy generation and demand-side ener gy efficiency over the 2012 baseline, thus further lowering the 2020 state goals. Commenters s aid the consequence is that EPA is proposing that many states be required to achieve unrealistic CO2 emission reductions immediately.

Commenters stated while under the Proposed Guidelin es a state technically would not be required to fully achieve its 2020 interim goal, th e more delay there is in meeting the front-end goals, the more aggressive the back end of the prog ram would have to be for a state to be able to meet its 10-year average interim compliance goal; t here will therefore be significant adverse consequences for a state that does not meet its 202 0 goal; in other words, given the significant reductions required of many states in 2020, states will not have the option of starting slowly and working up to the final 2030 goal on their own pace given the requirement that they must meet their average 2020-2029 interim goal. Commenters sa id in fact, if a state were to fail in the early years of the interim compliance period to achieve i ts goals, it would have to actually exceed its final 2030 goal in the later part of the 2020-2029 interim period just to meet its 2020-2029 average interim goal; this means that a state could achieve a rate lower than its final 2030 goal in 2029, for example, yet still possibly be out of com pliance because it may not have met its 10- year average interim compliance goal. Commenters sa id therefore, rather than having a 10-year ramp-up period to the 2030 goals and providing stat es with flexibility in the design of their plans, the interim compliance period creates a 2020 compli ance cliff for many states; given the fact that the measures required to achieve the 2020 goals can not be implemented in many states by 2020, the 2020 goals for many states are simply unachieva ble.96

Commenters stated EPA's decision to rely on nationa lly modeled capabilities to reduce emissions before 2020 results in a highly aggressive approach which fails to adequately account for 1) state specific factors, 2) the need to assure electric re liability or 3) to allow for an economically efficient transition from higher emitting resources to lower emitting resources. Commenters said frontloaded reductions required by the 2020 start o f the program account for a significant percentage of the overall program reductions yet th e availability of these reductions remain inadequately demonstrated to be achievable or admin istratively implementable by the state plan process. Commenters said while targets vary by stat e, the primary reduction opportunities that drive interim goal reductions are the switch from e xisting coal-based generation to natural gasbased generation under Building Block 2 and the 6% coal plant efficiency improvements. Commenters said the incremental natural gas require d to produce this extra power works out to about 4.4 trillion cubic feet (TCF) per year; that would increase gas consumption in the power sector by just over half, compared to 2013, and boo st total US gas demand by 17%. Commenters said to put that in perspective, US dry natural gas production has grown by 4.1 TCF/y since 2008; this data suggests that the US power sector a ctions necessary to meet EPA's expectations would not only consume all natural gas production g rowth in the US but also directly compete with existing users of natural gas to make up the a nnual production shortfall of TCF. Commenters said this shortfall presumes no increase in manufacturing, commercial or residential demand for natural gas and, most importantly, no ex port of domestic fuel supplies. Commenters stated how exactly this transition will occur canno t be established without better insight into state plans but it is noteworthy that as recently as May 2013 NERC was calling for a comprehensive study of the potential impacts of increased relianc e on natural gas electric generation on electric reliability and that the FERC continues to evaluate the linkage between electric reliability and increased reliance on natural gas. Commenters state d the early reduction requirements are expected far too soon and are unachievable; EPA sho uld withdraw the interim targets altogether and allow the states to set their own glide path to wards a 2030 compliance obligation based on
inside the fence measures.

Commenters added the Agency should eliminate the in terim goals; in its current form, application of the interim goal front-loads the imp lementation requirements of the proposed emission guidelines and requires significant reduct ions by the year 2020, leaving only minimal additional reductions to be achieved in each subseq uent year before reaching the state's 2030 final goal. Commenters said the front-loaded nature of this goal stems in part from EPA's goal calculation methodology, which assumes that states will fully implement heat rate improvements under Building Block 1 and redispatch under Buildin g Block 2 (the most impactful component of EPA's proposed BSER) by 2020, with only Building Bl ocks 3 and 4 increasing to the year 2030. Commenters said in practice, the interim goal eliminates any implementation "flexibility" that EPA claims to have provided in the proposed em ission guidelines. Commenters said the Agency should eliminate the interim goals altogethe r and allow states to demonstrate their progress toward achieving the 2030 final goal throu gh the use of a "glide path" similar to the BART regulatory process; under such an approach, st ates would be expected to improve from97

current emission levels to the 2030 final goal targ et level on a uniform rate of progress, but would have the discretion to deviate from this "gli de path" where uniform progress would be impractical. Commenters said at the very least, EPA must ease the unachievable burden of complying with the states' interim goals by either (a) delaying the beginning of the compliance averaging period to a later year, (b) phasing in al l of the Building Blocks and not just Building Blocks 3 and 4, in order to avoid creating a signif icant "cliff" in permissible emissions in 2020, and/or (c) taking some other measure to preserve st ate flexibility in implementing the emission guidelines.

Commenters supported the elimination of the interim goals because they force an overlyaggressive compliance schedule; even assuming that state compliance plans can be submitted and approved in 2016 (which is impossible) utilitie s and cooperatives would have only three years to come into compliance otherwise it is not p ossible to meet the interim goals. Commenters said state compliance plans are much more likely to be approved in 2018 and beyond which will force immediate compliance; compliance, of course, becomes even more difficult in states with lower emissions rate goals. Commenters said EPA's s uggestion that the interim goals could become more flexible based on infrastructure expans ion requirements or book life of affected EGUs does not acknowledge that 2030 is the earliest that a compliance obligation can go into effect. Commenters said flexibility in the complian ce schedule for interim goals does not change
this fact.

Commenters stated in setting the interim compliance period state emission goals, EPA has relied on unrealistic timing assumptions for the implement ation of building blocks 1 and 2 that are unachievable by many states; for example, there are a number of important timing constraints that could substantially impair or preclude the imp lementation of the plant efficiency improvements required under building block 1 by 202 0. Commenters said one important constraint overlooked by EPA is the obligation for EGU owners to obtain the necessary air permit authorizations in those instances where the efficiency improvement project may trigger NSR permitting requirements. Commenters added other important constraints that justify an extended implementation schedule include securing t he financing and contractors to complete efficiency upgrades, and then phasing in those upgr ades during available outage schedules. Commenters said a similar timing problem exists wit h respect to EPA's assumption that states can require the re-dispatch of existing NGCC capaci ty up to a 70% capacity factor by 2020; this is reflected by the fact that this re-dispatch from coal to NGCC generation cannot be realistically achieved in many states until there has been a subs tantial additional build-out of electric transmission infrastructure and natural gas pipelin e capacity. Commenters said this development of additional transmission and pipeline infrastruct ure will likely take years to permit, finance,
and construct.

Commenters stated the timing assumptions used for d etermining when building blocks 1 and 2 will be implemented are totally unrealistic; for ex ample, EPA fails to take into account a number of important timing constraints that would substant ially impede the implementation of the plant efficiency improvements required under building blo ck 1 by 2020. Commenters said these98

constraints include obtaining the NSR permit and PU C authorizations, securing the financing and contractors to complete efficiency upgrades, and th en phasing in those upgrades during available outage schedules; similarly, requiring the re-dispa tch of existing NGCC capacity up to a 70% capacity factor will likely require by 2020 in many states a substantially additional build out of transmission infrastructure and natural gas pipelin e capacity. Commenters said this development of additional transmission and pipeline infrastruct ure will likely take years to permit, finance,

and construct.

Commenters stated EPA's approach is a dramatic depa rture from how EPA calculated the RE and EE components of the state goals under building blocks 3 and 4. Commenters said in the case of these building blocks, EPA has not assumed that states could implement all the RE and EE measures under building blocks 3 and 4 during th e first years of the program; rather, the Proposed Rule has computed each state's goal based on a reasonable phase-in of the RE and EE measures over the entire 10-year interim goal perio d in recognition that states cannot immediately construct the infrastructure or impleme nt the programs necessary to achieve the RE and EE goals of building blocks 3 and 4.

Commenters stated EPA proposed its interim carbon e mission rate goals as a means of assuring reasonable progress towards achieving the final car bon emission rate goal. Commenters said this is the only real purpose of the interim goals, but it is unnecessary. Commenters said as pointed out by EPA, utilities have been, and will continue to take actions every year to reduce carbon emissions; moreover, with a looming final carbon em issions goal, the utilities will be motivated to continue work towards achieving the final goal. Commenters said because the final carbon emission rate goal will be incorporated into the op erating permits of the affected utilities, there will be sufficient motivation to assure compliance with the final goals by 2030; furthermore, the

difference between the carbon emission reduction th at would occur without interim goals and the

carbon emission reduction that will occur with inte rim goals will do little to affect climate change, rendering the interim goals unnecessary. Be cause of these reasons commenters do not support the use of interim goals for achieving the desired outcome of the Proposed Rule.

Commenters stated however, if EPA determines that i nterim goals must be used, at the very least EPA should allow the states to set the interim goal s in order to establish a logical compliance trajectory for each individual state. Commenters sa id each state will have a better understanding of what actions will be necessary to achieve the fi nal goals and the appropriate timing for achievement. For example, commenters stated they ar e currently pursuing actions with the state that will drastically reduce future carbon emission s, but due to certain requirements, these actions cannot be completed until the mid-2020s; th is is exactly the type of information the states will have to use in setting more realistic and achi evable interim targets.

Commenters stated EPA's proposed interim goals are structured such that the majority of the reductions have to occur very early in the complian ce period. Commenters said a recurring concern raised by affected EGUs is their ability to design, procure, and install the necessary control equipment; develop new RE sources; and impl ement demand-side energy efficiency99

programs in a timeframe that will allow for complia nce with the rule. Commenters said others have noted the protracted timespan needed to constr uct new transmission pathways; for example,

SPP notes: EPA has considered neither the cost nor the time required to plan and construct

electric transmission facilities. Commenters said i n the SPP region, as much as eight and a half years to study, plan for and construct new transmis sion facilities has been required. Commenters said compliance with the proposed CPP is impossible due to the transmission expansion that will be required and the time it takes to complete the r equired transmission expansion. Commenters said accordingly, in order to ensure reliable opera tion of the transmission grid and compliance with NERC reliability standards, EPA should elimina te the proposed interim goals applicable during the 2020-2029 phase-in period in favor of a single 2030 goal. Commenters said alternatively, EPA should reconfigure the interim g oals such the majority of the requisite reductions can occur 5 to 7 years following EPA's a pproval of the state plan.

Commenters stated the interim goals are excessively front-loaded and should be eliminated.

Commenters said the Clean Air Act does not mandate any interim compliance goals; indeed, Section 111 contains no deadlines whatsoever; yet, EPA's proposal establishes "increments of emission performance" that begin with rolling two-y ear averages starting in 2020 and aggregate to an interim emission level that is averaged over 2020 through 2029. Commenters said setting an achievable deadline for any proposed rule under Section 111 should not be based on random deadlines, as EPA's current proposal is. Commenters said the initial interim compliance date of 2020 is particularly aggressive in light of the con siderable tasks that the state and electric generating sector must accomplish to meet EPA's dea dlines. Commenters said numerous entities have concluded that EPA's proposed deadlines are si mply unworkable; in its assessment of EPA's proposal, NERC, which is charged with monitor ing and assessing the reliability of the nation's electricity grid, has explained that "[l]o ng lead times for transmission development and construction require long-term system planning - ty pically a 10-15-year outlook." Commenters said based on this and other issues, "NERC is conce rned that reliability-related enhancements may not be able to be completed for a 2020 implemen tation." Commenters said indeed, EPA itself has recognized the practical problems with i ts 2020 deadline; EPA's recent Notice of Data Availability ("NODA") identifies two significant is sues that prevent states from meeting the 2020 interim deadline that EPA proposed - the need for additional infrastructure and concern

about stranded investments.

Commenters regarding the development of the final g oals, the commenters took special exception to the design of the proposed interim goa ls, which are unreasonable and potentially unattainable. Commenters said on a very practical l evel, the interim goals are largely unnecessary given the fact that all electric provid ers will have to make generation resource decisions during the 2020-29 period in order to mee t the 2030 goals. Commenters said the interim period is sometimes referred to as a glide path, but the commenters saw it as more of a BASE jump in which there is a very fast and potenti ally dangerous fall before things level out into a gentle descent.100

Commenters stated the glide path reflected by the i nterim goals developed by EPA for the years 2020-2029 imposes a significant burden on many west ern states. Commenters said to demonstrate compliance, states must calculate the a ctual average emission rate from affected entities over this 10-year period; states have the discretion to determine the trajectory so long as the average rate is equivalent to the EPA interim g oal. Commenters said beginning in 2022, each state would have to compare its actual achieved emi ssions to levels projected in the state plan; however, a significant challenge for some states ar ises from the fact that the required reductions associated with Building Blocks 1 and 2 (generation efficiency and redispatch from existing fossil steam generation to existing natural gas com bined cycle) are assumed to occur by 2020 resulting in a "compliance cliff" for states. Comme nters said "Notably, the interim state emission rate goal is only slightly higher than the final em ission goal, putting pressure on states to make significant progress toward the interim goal in the years prior to the compliance period." Commenters said therefore, planning, prepa ration and steps to achieve actual compliance must begin well before then; this is exa cerbated by several factors:

-The lead times required for regulatory review, neg otiation and approval of resource decisions;

-The lead times for project development (permitting and approvals needed to implement strategies), including infrastructure development; and

-The potential need for new state authority to proc eed with a CPP compliance plan (e.g., some states must pass legislation);

Commenters said the nature and pace of these action s are not at the sole discretion of companies operating these systems, but rather a host of publi c and private stakeholders that will influence the state's strategy. Commenters said the compresse d timeframe risks force a rush to find "whatever works" compliance options, rather than op tions resulting from thoughtful consideration of costs and risks. Commenters urged EPA to change the structure of the interim goal by allowing states to develop their own glide paths under the CPP that demonstrate continuous, reasonable and verifiable progress towa rd the 2030 goal; in this regard, delay would not be an option but states would be able to apport ion the effort from 2020-2029 based on cost

and risk to customers. Commenters said states would continue to operate within the structure of EPA's proposed guidelines, which already requires t hat states submit - and that EPA approve - plans that clearly set forth how to achieve the 203 0 goal; upon approval, the plans become federally enforceable. Commenters said ultimately, if states cannot show reasonable progress toward the 2030 goal, consistent with the projected emission reduction glide path, EPA would have the authority to call for a state to correct i ts plan or issue a federal plan of its own.

Commenters stated the emission rate targets are fro nt-loaded, requiring a disproportionate percentage of emission rate reductions in the early years of the program; these unrealistic

reduction rates do not account for the time needed to accommodate the infrastructure changes needed to achieve them. Commenters said development of new generation and transmission resources takes time; planning, design, siting, per mitting, and construction can easily take as101

long as a decade. Commenters said comparing the int erim emission rate reduction in 2020 (from the 2012 baseline) to the final emission rate reduc tion required by 2030, total emission rate

reductions that must occur between the 2012 baselin e and the 2020 emission rate target reach as high as 90%. Commenters said the median reduction l evel is 66% for all states during that

timeframe. Commenters said under EPA's second build ing block - prematurely shutting down coal-fired generation in favor of natural gas combi ned cycle generation, EPA's emission rate formula results in a 100% decrease in coal generati on by 2020 in some states. Commenters added this premature shutdown of coal-fired generat ion will pose serious reliability risks to the electric grid and result in billions of dollars in stranded investment in expensive pollution control equipment that has been installed in order to compl y with recent EPA regulations. Commenters urged the elimination of the 2020 targets.

Commenters stated as a result of EPA's unrealistic implementation timeframes, the Proposed Rule establishes interim emission rate goals for ma ny states that impose a compliance "cliff," requiring the achievement of very steep CO2 emissio ns reductions immediately at the start of the section 111(d) compliance program. Commenters said nationally, the reductions expected by 2020 average to 75% of the total reductions require d in the ten-year interim goal period. While the commenters supported the concept of a long-term (e.g., ten-year) compliance period for an interim goal, proposing that such substantial reduc tions be front-loaded to the first year of the interim compliance period fails to provide any mean ingful flexibility. Many of the states in which commenters’ members operate illustrate the pr oblem: Arizona is expected to achieve 94% of its interim goal by 2020; other states with sign ificant cliffs include: Colorado (85%), Florida (86%), Georgia (88%), Oklahoma (86%), South Carolin a (89%), and Texas (82%). These commenters members' states face the daunting task o f achieving an enormous percentage of their interim CO2 emission goals by the start of the comp liance program in 2020.

Commenters stated the imposition of such a complian ce cliff by a 2020 implementation milestone would likely have many adverse impacts, i ncluding the premature shutdown of many existing coal-fired EGUs in these and other states; with steep reductions in coal-fired generation imposed so quickly at the start of compliance progr am, there could be significant amounts of existing coal-fired capacity that would most likely not be operating, or be operating at greatly reduced levels, by 2020.

Commenters stated forcing the premature shutdown of these existing coal-fired EGUs in 2020

will result in billions of dollars in stranded asse ts and replacement power costs; notably, many of

these units are not close to the end of their usefu l lives and, in many cases, the units have recently installed expensive pollution control MATS Rule and the Regional Haze Best Available Retrofit Technology requirements. Commenters said g iven that there has been insufficient time to recover the capital costs of these investments, consumers would likely incur higher electricity

costs as a result of these stranded asset costs and from the purchase of replacement power.102

Furthermore, the commenters were concerned about th e increased reliability risks that may result from premature shutdown of many coal-fired EGUs.

Commenters stated to address this problem and provi de additional timing flexibility for the implementation of these stringent reduction obligat ions, EPA should build in reasonable phase-in periods for achieving the required emission reducti ons from building blocks 1 and 2, as contemplated in the October 28 NODA; as a general m atter, this phase-in period should provide additional times for states to account for the sign ificant regulatory, reliability, and capacity issue s that will need to be addressed before they can full y implement building blocks 1 and 2.

Commenters asserted that this outcome can be best a chieved by giving each state the authority (subject to EPA approval) to set its interim CO2 em ission rate goal based on an implementation schedule that is feasible; for example, each state should be allowed to propose a state-specific time schedule for implementing the building block m easures used for computing the state's emission rate goal, based on its ability to install the control measures, the cost of compliance, impacts on reliability, and other relevant state-sp ecific factors. Commenters said under this approach, the state would still achieve the final g oal established by EPA based upon the four building blocks, but the stringency of the interim compliance period goal would be adjusted to reflect the state-specific schedule for implementat ion of the control measures within the state.

Commenters said this would enable each state to dev elop a workable and reasonably achievable plan, with federally enforceable milestones, for im plementation of the emission reductions necessary to meet the final goal; any state request to establish an alternate implementation schedule would be subject to EPA review and approva l, and such requests should not be unreasonably denied.

Commenters added the over-aggressiveness of the pro posed 2020 interim goal is illustrated by the EPA's proposed goals for Florida and North Caro lina; the 2020 goals for Florida and North Carolina account for 76 percent and 71 percent, res pectively, of the total emission rate reduction requirement in 2030 relative to each state's 2012 b aseline. Commenters said for each state, the majority of the 2020 reduction requirement is attri butable to Building Blocks 1 and 2; setting a state's 2020 goal at a level that requires such a l arge percentage of a state's final 2030 goal is unreasonable and unachievable, especially given the exceedingly short time between state plan submittal and approval by the EPA, and 2020.

Commenters stated the proposed interim and final go als established by EPA for Arizona place an unreasonable and inequitable burden on the state to achieve CO2 reductions; particularly problematic for Arizona is EPA's proposed interim g oal. Commenters said the Proposed Rule would require Arizona to achieve nearly 90% of the state's 2030 goal by 2020 - more than any other state in the country; this is due primarily t o EPA's assumptions regarding the application of Building Block 2 to Arizona. Commenters understood that EPA views Building Block 2 as a relatively easy way to achieve reductions in carbon intensity early in the program; where existing natural gas combined cycle (NGCC) generation is pre sent and has a low annual capacity factor in 2012, EPA assumes states can easily shift generatio n from their higher emitting coal and oil103

generation to their lower emitting natural gas gene ration. Commenters said EPA calculated existing Arizona NGCC generation to be operating at an annual capacity factor of 27% in the 2012 baseline year; due to this low capacity factor , EPA assumes that all existing coal and oil generation in the state can be replaced with existi ng NGCC generation by 2020. Commenters said this assumption presumes that Arizona will ach ieve approximately 80% of its 2030 goal by 2020 from application of Building Block 2 alone - a gain more than any other state. Commenters said if EPA does not change its Building Block 2 as sumptions for Arizona, the Proposed Rule will create significant economic impacts within the state and strain the reliability of the state's energy grid.

Commenters asked why did EPA impose such an aggress ive interim target on Arizona and did EPA consider allowing states to develop a more grad ual and less economically disruptive approach to achieving reductions.

Commenters stated the consequence of EPA's approach is that the interim goal imposes a compliance cliff requiring many states to achieve v ery steep CO2 emissions reductions immediately at the start of the section 111(d) prog ram. Commenters said this is illustrated by Arizona, which must achieve 94% of the State's inte rim goal by 2020 under the Proposed Rule; Arizona is not the only state that faces an a lmost impossible task of achieving all of its CO2 emission reductions under building blocks 1 and 2 by the start of the program in 2020.

Commenters stated this front-loading of the CO2 red uction requirements has the effect of requiring states to achieve, on average, 75% of the ir total annual reduction target in 2020.

Commenters stated EPA's proposed implementation sch edule leaves states with insufficient time to meet their CO2 emissions reduction obligations i mposed under building blocks 1 and 2; at most, states will only have two or three years to c omplete all of the measures (including major infrastructure improvements to generation and trans mission infrastructure as well as increases to natural gas pipeline capacity) that would be necess ary to achieve these ambitious reduction
levels.

Commenters stated the establishment of a 10-year av eraging period for meeting the interim goal provides virtually no relief from compliance cliff created by building blocks 1 and 2; this is clearly illustrated by the fact that a state's fail ure to implement at least a substantial portion of these two building blocks will have no choice but i mpose more aggressive RE and EE requirements on the EGUs and other affected entitie s within its jurisdiction in order to make up

for the shortfall in emissions reductions from bloc ks 1 and 2. Commenters said as a result, EPA's

decision to frontload emissions reductions from the se two blocks could lead to at best overly stringent RE and EE requirements and, more likely, result in the failure of states to meet their state goals despite best efforts and the imposition of very onerous compliance costs on affected
entities and consumers within the state.104

Commenters stated the currently proposed interim go als for Arizona are too heavily weighted toward the early years; EPA presumes that these goa ls can be achieved by re-dispatching all coal-fired generation in the state to NGCC units co mmencing in 2020. Commenters said this change is not achievable as envisioned by EPA; ther e are significant concerns regarding electrical reliability and infrastructure that proh ibit the total re-dispatch of the coal-fired fleet to NGCC units by such an aggressive time. Commenters s aid if EPA is unwilling to allow the states to set the interim goals, EPA must be mindful of th e fact that Arizona's utilities need a more level trajectory that provides additional time to fully p repare and respond in a reasonable fashion to the actions necessary to comply with any final goal . Accordingly, commenters supported changes to the Proposed Rule that make the 2020 to 2029 "glide path" more gradual, such as a phase-in of building block 2 as EPA presents in the October 2014 NODA. Commenters said EPA should take into account whether, and to what exten t, additional infrastructure improvements, including natural gas pipeline expansion and transm ission improvements, are needed when developing the goals for building block 2; such an approach would be consistent with the North American Electric Reliability Corporation's ("NERC" ) conclusion that "more time would be needed in certain areas to ensure resource adequacy , reliability requirements, and infrastructure

needs are maintained."

Commenters stated the wide variation in the differe nce between the proposed interim and final goals on a national basis is arbitrary and capricio us; as long as a state has prepared a 111(d) plan documenting compliance with a reasonable final goal , interim goals are unnecessary.

Commenters stated under the EPA's proposed Clean Po wer Plan, Arizona would be required to reduce the carbon dioxide (CO2) intensity of its po wer generation fleet by approximately 47% by 2020 and approximately 52% by 2030 in order to meet its goals. Commenters said Arizona undoubtedly faces one of the most aggressive reduct ion requirements of all states, driven by the application of the EPA's proposed building block ap proach to determining state-level emission goals. Commenters said the interim targets resultin g from EPA's building blocks are unreasonable, are inequitable for Arizona, and cann ot be achieved without major reliability

concerns. Commenters said alternative interim and f inal goals that fully consider the remaining useful life of existing plants would achieve signif icant carbon reductions without jeopardizing grid reliability and result in a lower cost to rate payers.

Commenters added the interim goals provided to the states for implementation in 2020 are simply too steep to achieve without significant eco nomic and electric system dislocation; certainly, the 2020 Illinois goal of 1366 lbs CO2/M Wh is not a pro rata step toward USEPA's final 2030 goal of 1271 lbs CO2/MWh. Commenters sai d the 2020 goal is a 37% reduction from

the baseline in Illinois and a 12% reduction from t he baseline in Kentucky; clearly, USEPA must understand that IMEA will not know the actual compl iance obligation and the means available to meet that obligation until the Illinois EPA and the Commonwealth of Kentucky have completed their state plans. Commenters said given the compli cations within Illinois alone related to its large amount of nuclear and coal generation, its re latively small amount of NGCC generation, its need to address a poorly-functioning renewable port folio standard and the lack of any state105

authority to order generation of any kind to be con structed, that the IEPA will need to seek legislation to implement any state plan. Commenters said this, along with the suggestion by the

Chairman of the Illinois Commerce Commission before numerous venues that a multi-state, mass-based approach seems to be preferable to a rat e-based, portfolio approach using the four building blocks, means more delay; this could leave only a two-year window between knowing the clear compliance obligations and the imposition of the 2020 goal. Commenters said given these facts, the 2020 goal would require somehow ac quiring carbon-free offsets equal to 31% of IMEA's total energy requirements; but between 2020 and 2030, IMEA's offsets would actually go down (to about 28% of energy requirements) based in part on the mid-decade reduction of a power supply agreement consisting primarily of coal -fired resources. Commenters said from this, it should be apparent that the interim goal set for 2020 is too steep and that the rule should focus on the 2030 goal and provide states with the abilit y to phase in their carbon-reduction activities throughout that period.

Commenters stated EPA's decision to enforce "interi m targets" requires states to demonstrate specific and verifiable emissions reductions every year between 2020-2029, before the final compliance date of 2030. Commenters said for states that have a long way to go before they reach EPA's expected "rate of progress," these inte rim targets would require that a substantial percentage of the total expected emission curtailme nt occur before 2020. Commenters said for Indiana, EPA's proposed interim target accounts for approximately 80 percent of the total emissions curtailment the agency expects from the s tate; this is simply not feasible. Commenters said EPA has entertained the possibility that it ma y need to adjust the interim goals and/or final targets for some states; however, EPA officials hav e suggested that any petition for an adjustment has to take place during the comment per iod. Commenters said that expectation places a heavy burden on states to fully evaluate a number of very complex issues in just four months - well before they have a chance to craft a 111(d) Plan, gather data, or run into potential problems during the implementation process.

Commenters stated the interim goals pose a "carbon cliff," a sudden and severe reduction in carbon emissions beginning in 2020. Commenters said the proposed rule would require a state plan to specify the average emissions performance o ver the 10-year interim plan performance period from 2020 through 2029; according to the met hodology employed in the proposed rule, the majority of most states' carbon emission reduct ions must be achieved by 2020 in order to meet the rate-based interim goals; for example, EPA 's proposed interim goal for Missouri of the ten-year average of 1,621 (pounds CO2 per net MWh) is a 17% reduction from the 2012 emission rate of 1,963, whereas the final goal of 1 ,544 is a 21% reduction; Missouri and Illinois must meet, respectively, over 62% and 66% of the fi nal 2030 targets by 2020.106

Commenters stated the Goal Computation Technical Su pport Document ("TSD") reveals EPA's assumption that all of the carbon reductions from a ffected EGUs (i.e., blocks 1 and 2) must occur by 2020; the proposal also assumes that states will expand renewable (RE), and/or energy efficiency and demand response ("EE/DR") over time. Commenters said Appendix 4 to the Goal Computation TSD presents the interim and final stat e goals based on Building Blocks 1 and 2 alone; the final goals in this chart are not as str ingent as EPA's preferred final goals, which rely on all four building blocks. Commenters said the do cument notes "there is no difference between the Interim and Final rates through the first two b uilding blocks as the increasing annual potential only applies to block 3 and block 4." Com menters said therefore, the proposal has designated 2020 as the "carbon cliff" by which time the states and affected EGUs must have already implemented strategies to reduce carbon emi ssions.

Commenters stated Missouri's "cliff" in the propose d rule will force Missouri to adjust several key aspects of its Integrated Resource Planning (IR P), at great expense to its customers, in order to meet the requirements of the rule. Commenters sa id in order to achieve the rate-based interim goals, Missouri would need to immediately commence designing, permitting and constructing

NGCC facilities. Commenters said Missouri's custome r load forecasts do not support the construction of 600 MW of natural gas generation un til 2034, coinciding with the retirement of two coal units; however, the CPP would accelerate t he in-service date of planned NGCC resources by fourteen years, and those resources wo uld need to be twice as large as currently planned (600 MW vs. 1,200 MW). Commenters said none of the 1,200 MW would be needed to

serve customer loads. Commenters said the new NGCC units would also be required to run uneconomically at a 70% capacity factor solely to m eet the interim targets in the proposed rule; for similar reasons, the retirement of the Meramec coal fired energy center would be accelerated. Commenters estimated that the interim goals will ca use an increase in cost to its customers of approximately $4 billion dollars compared to the IR P approach; these consequences are illogical, counterproductive to environmental stewardship and not cost effective; this cannot be what EPA envisioned when the rule was proposed.

Commenters supported the goal of diversifying the n ation's generation fleet, however have a number of concerns with the proposed rule, but ther e is one particular aspect of the proposed rule that is particularly troubling; the interim goals. Commenters said the proposed rule sets both a long term greenhouse gas (GHG) reduction goal to be achieved by 2030, and interim goals beginning in 2020. Commenters urged EPA to eliminat e the interim goals, and allow states to file compliance plans that incorporate GHG reductio n milestones that create a manageable glide path to the 2030 goal. Commenters asserted the inte rim goals are unnecessary to achieve the long-term GHG reductions proposed in the Clean Powe r Plan and create a host of problems that argue for their elimination. Commenters said the go als are too stringent; Missouri will need to achieve approximately 62% of its 2030 goal by 2020; that large a reduction effectively turns the requirement into a 2020 compliance deadline. Commen ters said many other states are in the same predicament; some will have to achieve over 80 % of their 2030 goal by 2020. Commenters said it is unreasonable to expect states to comply with such stringent targets on such short107

notice; such drastic reductions will needlessly inc rease costs and will jeopardize the reliability of the grid.

Commenters stated a flaw from the proposed regulati ons is the application of the interim goal and the subsequent glide path from 2020 to 2030. Co mmenters said the requirements proposed with the interim goal places many states, including Kentucky, in a position where most potential compliance measures must be implemented in 2020. Co mmenters said this "cliff" should be eliminated and the states should develop compliance plans for reaching a 2030 goal based on their specific circumstances. Commenters said based on the regulatory timelines for finalizing the regulations and gaining approval of state compl iance plans, it is not possible to modify the
infrastructure or build new facilities to meet a 20 20 start date.

Commenters opposed the inclusion of the interim goa ls for both the primary and alternate state goals because there is insufficient time to impleme nt the interim goal and to meet the extremely high 2020 interim goal. Commenters said Nebraska wo uld have to reduce its CO2 emission rate more than 50% by 2020 to have a reasonable chance t o meet the interim goal without being faced with the potential problems of significant ov er control late in the interim period as the only means for achieving the final goal. Commenters said due to the minimal time between approval of a state plan and the beginning of the interim pe riod, the interim goal is too stringent and unnecessary to achieve the final goal.

Commenters stated EPA's Clean Power Plan requires a nationwide 30 percent reduction in CO2 emissions by 2030, with interim compliance targets. Commenters said EPA's goal for Nebraska was set at 26 percent; however, the interim complia nce targets are front-end loaded creating a fatal cliff for compliance by 2020. Commenters said a final rule will not be issued until June 2015; it is likely that a State Implementation Plan will not be approved before June 2016; this leaves 4 years or less for utilities to implement c ompliance measures; this is simply not enough time for states or utilities to adequately plan and prepare for compliance and it is contrary to fundamental prudent utility planning. Commenters sa id the electric utility industry is currently making substantial capital investments in its exist ing electric generating fleet to comply with various recent and proposed EPA rules. Commenters w ere concerned that such short compliance deadlines may result in the premature shutdown of s ome of these generating units resulting in

millions of dollars of lost or stranded investment. Commenters strongly urged the elimination of the interim 2020 targets.

Commenters stated the interim goals proposed by the plan are too aggressive; the current proposed interim goal for Iowa of 1341 lb/MWh is on ly slightly higher than the final goal of 1301 lb/MWH. Commenters said the interim goals assu me that Building Blocks 1 and 2 can be implemented immediately after the rule is implement ed, but prior to 2020; this is unrealistic.108

Commenters asserted that the assumptions made for B uilding Blocks 1 and 2 are unrealistic for Iowa's municipal utilities; it is not possible or e conomic for Iowa's municipal utilities to retrofit their existing coal power plants to achieve a 6% he at rate improvement; any economic heat rate improvements have likely already been made. Comment ers said Iowa's municipal utilities do not own any NGCC facilities, and cannot shift generatio n from their coal power plants to NGCC plants. Commenters said therefore municipal utiliti es will be relying on Building Blocks 3 and 4 or other measures such as converting existing coal plants to natural gas, to achieve carbon dioxide reductions; these measures cannot be implem ented immediately. Commenters added the rapid implementation required to meet the proposed implementation goal, is likely to be
uneconomic.

Commenters requested that the interim goal be elimi nated, or at the very least, start no earlier than the year 2025 with significantly less stringen cy compared to the final goal. Commenters said as proposed, there is very little difference b etween the interim goal and the final goal. (In Iowa, the interim goal is 1341 lbs/MWh and the fina l goal is 1301 lbs/MWh.) Commenters said effectively, the EPA has set a 2020 compliance dead line with no appreciable phase-in. Commenters said the option offered by EPA to over-c omply in later years to make up for lack of compliance in the early years is not realistic and may impose unnecessary costs and adverse effects on reliability that would most likely not b e required if additional time were allowed to make necessary changes to the electric system. Comm enters stated when requiring CO2 reductions, EPA's rules should allow for implementa tion of the changes in ways that maintain a reliable, affordable electric system that can be su stained over the long term; for many utilities, and therefore states, compliance with the final goa l will require more time than allowed by the interim goal. Commenters stated therefore, the inte rim goal should be eliminated. Commenters said the enforceable goal should start in 2030 with credit for early actions prior to that date. Commenters said credit for early action will provid e an appropriate incentive for utilities to take

actions to reduce their CO2 emissions and the carbo n intensity of their generation fleet prior to 2030. Commenters stated if EPA requires an interim goal in the final rules, the goal should start no earlier than 2025, and the level of the interim goal should be significantly less restrictive than the final goal to allow additional time for efficie nt, thoughtful planning and implementation of changes that will be required; this may lead to gre ater reductions in the long term if affected entities have more time for planning.

Comment 9: The interim goals limit states' flexibility.

Response 9: See sections I.A. and V of the final rule preambl e of the CPP for the EPA’s response to this comment. The EPA is also finalizin g a different interim compliance period of 2022-2029 in this final rule. Moreover, changes in the BSER quantification approach result in a different relationship between interim and final go als than proposed. On average, there is a greater difference between the two in the final CPP than the proposed CPP due to changes in the deployment path of building block two and building block three. This change addresses some of109

the commenters concerns regarding the limited diffe rence between interim and final at proposal (e.g., Arizona).

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

Several commenters stated that the interim goal lim its state flexibility.

Commenters added the interim goal deprives states o f the flexibility to design their own compliance plans or choose the pace of reductions t o respect state-specific conditions and circumstances. Commenters said in order to satisfy the 10-year average goal, a significant

number of states need to achieve reductions before the start of the interim compliance period in 2020. Commenters stated contrary to EPA's stated in tent of providing states flexibility in setting 2030 emission goals, the interim compliance average goal creates more compliance challenges than it solves. Commenters said the proposed interi m average compliance period and goal would create unnecessary compliance challenges, limit sta te flexibility in designing compliance plans and impose unnecessary additional costs on electric customers.

Commenters added even if state agencies can acquire the necessary statutory authority and somehow meet EPA's aggressive SIP submission deadli nes - and assuming expeditious EPA plan approval - implementation of plans including most i f not all four of EPA's building blocks will be difficult. Commenters said as an example, even i ncreasing heat rate efficiency of individual generating units cannot be accomplished in a short period of time; attempting to meet the heat rate efficiency requirement for individual units wi ll require engineering evaluation and design, and procurement and installation of parts and equip ment. Commenters said completing this process for all affected generating units is very u nlikely to be possible with a three-year or possibly shorter time frame, if plan submission or approval is delayed; and with several hundred units across the country engaged in the same proces s to improve heat rate efficiency at the same time will undoubtedly result in significant delays.

Commenters added even if individual States were abl e to adhere to the one-year plan submission deadline, and EPA approves plans within an addition al year or by June 30 2017, barely two and one half years would remain prior to the 2020 inter im goal deadline; meeting the 70% dispatch goal for natural gas-fired units is likely to requi re significant upgrades and modification of many such units to make them capable of operating at tha t level. Commenters said to the extent that this is required for many units within a State, com pleting the needed upgrades and modifications within the short two and one-half year implementati on period is highly unlikely.

Commenters added the tight timeframe for meeting th e interim goals largely negates the opportunity for States to develop any reasonable al ternatives to EPA's approach, thereby eliminating any flexibility for States and affected facilities; this will force shutdowns of many coal-fired power plants as the only means of achiev ing interim goals in such a short time frame; these plants will often have a useful life that ext ends well beyond the 2030 compliance deadline, and EPA's guidance must be revised in a way that as sures the States and utilities have the ability to keep these plants economically viable. Commenter s said some states will have little choice but110

to shut down coal-fired capacity and dispatch natur al gas (Building Block 2), as the expected ramp up and utilization of either Building Blocks 3 or 4 would occur too late to meet the 2020 goal.

Commenters added EPA suggests States should begin t o ramp up energy efficiency requirements by 2017, States will be unlikely to have legislativ e authority in place for several of the building blocks and, at most, only have authority over build ing block 1; that leaves most States with only the option of forcing fuel switching from coal over to natural gas for base load power plant - assuming they even have the natural gas available a nd infrastructure in place to make such a sudden and dramatic change. Commenters said this wo uld create complications of needing an uninterruptable supply of natural gas, pipelines an d storage and enough sufficient available NGCC units to make up the difference in electric ge nerating capacity.

Commenters stated EPA's requirement for states to a chieve such a significant portion (roughly 60%-90%) of the required CO2 emission reductions ea rly in the interim period defeats the intended purpose of providing states flexibility in achieving the required emission reductions; EPA should consider the full range of o ptions to ensure that each state is given the optimum amount of flexibility in developing its pre ferred approach to achieving the 2030 target.

Commenters stated the interim compliance average pe riod deprives states of choosing which reduction actions and measures to pursue and how qu ickly to implement them, with negative consequences for costs to customers. Commenters sai d many states will have few options to start making reductions by 2020, which limits their abili ty to choose the reductions actions and measures that best reflect their specific circumsta nces and to implement them in a way that

minimizes costs to customers. Commenters stated the interim goal limits the state's flexibility in determining how best to achieve EPA's ultimate goal s, and in doing so, significantly increases

costs to customers.

Commenters added the interim target presents signif icant reliability and affordability issues; no consideration is given to the expected coal plant r etirements. Commenters stated the proposed rule has an inadequate lead time for planning, siti ng, and constructing new electric and natural gas infrastructure; compliance with the rule will d ramatically accelerate a fundamental shift in our generation fleet. Commenters said a reasonable path must be provided for infrastructure, policy, and institutional planning and development to avoid rate shock and capacity shortfalls that threaten reliability.

Commenters stated as written, the vast majority of the emission reductions required of states by 2030 - often 90% or more - will be required in the very first year of the rule; this creates several negative consequences: 1) It would give states and industry strong and legitimate reliability, cost and stranded asset-based arguments against the rule ; 2) It would lead to rapid and widespread deployment of gas combined cycle power plants; this likely over-build of new fossil plants, with commercial lives of 30 or more years, will undercut the U.S. power sector's ability to achieve near independence from carbon emissions by 2050. 3) This over-build of new gas capacity111

would freeze out clean new energy resources for a d ecade or more, undercutting the U.S.'s ability to achieve critical mid-century climate objectives. 4) Due to a high level of legal uncertainty, many states are unlikely to take costly steps to ac hieve the reductions until the legal status of the

rule is clarified - late in this decade at the earl iest - leaving little time for thoughtful implementation, even more drastic initial regulator y impacts and stronger grounds for concern, resistance and litigation of the rule and state pla ns.

Commenters stated the proposed rule provides very l ittle flexibility over when to actually achieve targets; this is because of two key feature s of the proposed rule; first, the interim goal, for many states, is a very high percentage of the t otal reductions required by 2030; second, the rule requires that the average of a state's emissio n performance in each of the years 2020-2029 equal or exceed the interim goal. Commenters said t he 10-year average requirement provides little timing flexibility, and precludes the benefi ts EPA intended it to confer on states.

Commenters added the more Arizona relies on Buildin g Blocks 3 and 4 to achieve compliance with the final goal of 702 lbs CO2/MWh, the farther it gets from compliance with the interim goal; conversely, if Arizona designs its program to comply with the interim goal, it ends up with a final rate that is far lower than necessary to co mply with the final standard and ends up preserving a much smaller portion of its existing c oal-fired generation resources. Commenters said Arizona has no flexibility to shift from one B uilding Block to another to meet its rate-based goal under the program as proposed. Commenters said the state cannot increase reliance on Building Block 1, because the rate-based goal assum es zero coal generation, and the interim goal, prevents Arizona from increasing reliance on Building Block 3 or 4 to preserve coal generation; if no coal generation remains in 2020, increasing the efficiency of coal units will obviously have no effect on Arizona's rate. Comment ers said Arizona cannot increase reliance on Building Block 2, because the interim goal effectiv ely requires the maximum redispatch possible. Commenters said Arizona is not the only s tate in this predicament; EPA's goal calculation spreadsheet makes it clear that a numbe r of other states have goals that presume redispatch of all or a substantial portion of coal and OG generation to NGCC by 2 2020. Commenters added for some states, the presumption o f 2020 implementation of Building Block 1 may present a similar impediment to flexibility. Commenters said EPA therefore should eliminate, or adopt a different approach to, the in terim goal. Commenters said if an interim goal is included in the final rule, it should provide a reasonable phase-in period for all Building Blocks; otherwise EPA will deny Arizona and many ot her states the flexibility it intended to include in the program.

Commenters stated that it would be theoretically po ssible to redistribute reductions over the 10- year interim goal compliance period in order to ach ieve the interim goal without overshooting the final goal. Commenters said the relief afforded by manipulation of the 10-year average, however, would be minimal. For example, commenters are aware of an analysis by Southwest Energy Efficiency Project (SWEEP) and Arizona State University which includes a compliance scenario that would purportedly preserve 35 percent of the state's coal generation in 2020, 25 percent in 2030 while achieving the interim goal of 735 lbs CO2/MWh and a final rate of 692 lbs112

CO2/MWh (thus overshooting the final goal by 10 lbs /MWh). Commenters said there are, however, a number of problems with this scenario; s pecifically, it assumes:

-An implementation schedule for BB3 and BB4 that is far more aggressive than contemplated in EPA's BSER determination and that in ADEQ's view ma y not be achievable.

-Compliance with a rate that is lower than the fina l goal by 2025.

-Compliance with rates in 2026 through 2028 that ar e lower than the final 2029 rate.

-Retirement of 65 percent of the state's coal fleet by 2020, including Unit 3 at Springerville, which has been in operation for less than 10 years, and Coronado Unit 1, which has recently undergone millions of dollars of pollution control upgrades.

Commenters said if anything, the need to incorporat e such aggressive and unrealistic assumptions in order to bring the interim and final goals closer together only serves to demonstrate the inflexibility inherent in the propo sal.

Commenters said the interim goal outlined for Ariz ona is simply unworkable and cannot be achieved. In addition to a more reasonable glide pa th, commenters asserted compliance with any rule must take into consideration disruptions in St ate and local economies and the increased cost

to consumers. Commenters stated Arizona utilities s hould be provided sufficient flexibility to mitigate such disruptions.

Commenters added the manner of demonstrating compli ance with EPA's proposed interim goal, and the consequences of not meeting that goal, are not entirely clear. Commenters stated Colorado has already made binding resource decision s through 2020; taken along with the timing issues for developing and submitting state plans, m eeting the interim goal in 2020 is extremely ambitious. Commenters added that the proposed emiss ion reductions are front-loaded; for example, Colorado's interim goal is very close to t he final goal (within 50 lbs/ MWh).

Commenters stated the Clean Power Plan, as currentl y structured, fails to give sufficient recognition to significant differences in the abili ty of individual utilities and geographic regions to achieve the targeted interim reductions in green house gas emissions within the timeframes established by the Plan. Commenters said as a pract ical matter, given current technology, the only way to achieve the EPA emission reduction targ ets while not jeopardizing the reliability of the electric grid may be to retire coal fueled gene rating capacity and replace much of that retired capacity with renewables, zero output nuclear gener ating facilities or comparatively low emitting combined cycle gas generation. Commenters said the efficiency of coal plants has improved over the years, but still lags behind gas fired generati on. Commenters said allowing for greater compliance flexibility will still achieve significa nt reductions in greenhouse gas emissions with less risk to electric system reliability and with e conomic savings; for example, by making the interim target for Colorado the average of the 2012 calculation and the 2030 calculation, the state would have to meet the average reduction over the 1 0 years. Commenters said with a 2012113

baseline of 1712 lbs/MWh and the 2030 target of 110 8 lbs/MWh, the average reduction is 1410 lbs/MWh; with an interim average goal of 1410 lbs/M W over the 10 years, this would provide Utilities the flexibility to plan additions, retire ments and fuel switches in a staged manner. Commenters respectfully requested that in the final rule the EPA adopt a linearly declining emissions rate over the 2020-2029 time periods, wit h the compliance requirement to meet the average over the 10 year period; this allows flexib ility to utilities and the states to meet the state d 2030 goal in a gradual, flexible manner.

Commenters stated in EPA's October 27, 2014, Notice of Data Availability (NODA), EPA requested comment on its 2020-29 interim targets; E PA notes that "[s]ome stakeholders have expressed concern that the goal setting methodology ...requires states to achieve such a significant portion of the required CO2 emission re ductions early in the interim period that it defeats the intended purpose of providing states fl exibility in how they may achieve the required

emission reductions." Commenters said this concern is absolutely true in Indiana, where the state will be required to achieve approximately 80 percen t of its 2030 emission rate reduction through the 2020-2029 interim period; as structured, the pr oposed interim target will not achieve its intended purpose of providing states with flexibili ty in their "ramp-up" to the final target. Commenters said rather, the interim target is a cli ff that leaves states and utilities without a logical glide path to achieve the final target. Com menters said EPA should remove the interim target from the Final Rule and allow states the fle xibility to develop compliance plans most appropriate to achieve the 2030 final target.

Commenters added the short time frame may also pose significant risks to electric system reliability; coal-fired generation may be forced to retire before replacement generation comes online. Commenters said as currently proposed, exis ting coal utilization will need to be decreased without confidence that other types of ge neration can fill the gap; new electric and natural gas transmission needed for reliability can not reasonably be expected to be built by 2020. Commenters said for these reasons, the 2020 interim target generates significant electric system reliability risks.

Commenters added the 2020 interim target also could unduly increase costs to consumers; for example, utilities may be forced to take actions su ch as prematurely retiring coal units that were recently retrofitted with pollution controls. Comme nters said states should have the flexibility - a stated goal of the Proposed Rule - to craft complia nce plans that address the unique challenges of individual utilities and consumers in an equitable, cost-effective, and risk-reduced manner. Commenters said the interim target speeds this proc ess and forces states and utilities, faced with the threat of "corrective action," into the inflexi ble and intractable position of complying with a decade-long average emission rate amidst the comple xity of a dynamic power market.

Commenters encouraged EPA to alter or eliminate the proposed interim goals that are currently established as requirements under each state plan. Commenters said while it is clearly advisable114

for states to demonstrate progress toward a 2030 fi nal emissions goal, the current 2020 "interim goal" carries stringent caps that will negatively a nd fundamentally restrict the choices available to plant owners in meeting long-term goals. Comment ers said limitations of the interim timeframe (2020) are evident in a number of sectors :

1. Many coal EGUs have made significant capital inv estment in recent years, in large part to comply with EPAs Mercury Air Toxics rule among othe rs, and installed emission reduction retrofits (scrubbers, etc.); in coal-intensive stat es such as Ohio, a 2020 interim goal leaves little room for compliance without converting plants to na tural gas or shutting down, thereby leaving recent capital investments stranded; a phased in sh ift could mitigate the financial impact.

2. Given the limitations of existing natural gas pi peline infrastructure in some areas, the 2020 targets should accommodate different situations; Ne w England states, for instance, remain disproportionately dependent upon fuel oil generati on and face severe natural gas pipeline bottlenecks; the goal setting under Block 2, therefore sh ould be apportioned to pre- and post-2020 periods as the available infrastructure allows, and include a required infrastructure roadmap for pipeline build-out; this will allow proper long ter m planning and avoid poor short term compliance choices.

3. Nuclear development is also constrained by a 202 0 interim compliance deadline; this sector has the longest development horizon of available te chnologies, despite its zero emissions and reliability profile; without a smoother path to com pliance, or some mechanism to account for future nuclear generation toward current goals (eg. "Mark-to-market" style approach), nuclear generation will be placed at severe disadvantage fo r the next thirty years.

Comment 10: The interim goals limits state's flexibilities; ca nnot consider remaining useful

life.

Response 10: See sections I.A. and VIII of the final rule prea mble of the CPP, and section 5.11 of this document, for the EPA’s response to this co mment. In the final CPP, the interim compliance period begins in 2022. EPA has also inc orporated a phase-in of deployment assumptions for building block two, which along wit h the building block three phase-in assumptions – provide for an interim goal that refl ects a more gradual phase-in of the state goals

for most states. See the CO2 Emissions Performance Rate and Goal Computation TSD for CPP

Final Rule.

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

Commenters stated the states do not have the flexib ility that EPA claims and the interim goals in particular undermine the states' authority granted under section 111(d) to consider remaining

useful life. Commenters said EPA has built into the interim goals its assumption that Blocks 1 and 2 can be implemented by 2020; it would be mathe matically impossible for Texas to comply115

with the interim goal while allowing additional tim e for consideration of the units' remaining useful life beyond what EPA has assumed in setting the interim goals. Commenters said given the manner in which EPA has calculated the state go als, the states' consideration of remaining useful life of existing sources would have to made prior to establishing the state goals, not
afterward.

Commenters added this provision of section 111(d) a lso does not support the EPA's interpretation that the standard of performance can be applied on a system basis; Section 111(d)(1) states that the EPA's rules shall permit the state "in applying a standard of performance to any particular source under a plan submitted und er this paragraph to take into consideration, among other factors, the remaining useful life of t he existing source to which such standard applies." Commenters said this provision clearly st ates that any standard of performance established under section 111(d) be applied to an e xisting discrete stationary source of emissions; the EPA has applied its standard of performance to the electrical grid itself including facilities that are not only not subject to EPA's regulatory a uthority under section 111, but do not even meet the definition of a stationary source under th e FCAA, i.e., "any building, structure, facility, or installation which emits or may emit any polluta nt." Commenters said most forms of renewable energy, such as wind and solar energy gen eration, do not emit air pollution and therefore are not a stationary source and not subje ct to the FCAA; nor are non-emitting wind and solar power generation facilities part of the fossi l fuel-fired EGU source categories the EPA has identified as subject to this rule.

Commenters added EPA's emission guidelines are so s tringent that they effectively preclude a state from considering the remaining useful life of a source. Commenters said states will have to achieve significant reductions even before 2020. Co mmenters said 47 percent of the required reduction for West Virginia would be required up fr ont by 2020, clearly an impossible expectation. Commenters said if existing coal-fired EGUs cannot achieve the majority of the required reductions by 2020, they will have to real ize significantly greater reductions in their emission rate to meet the interim goal, far greater than required to meet the final goal in 2030. Commenters said for West Virginia, which has no exi sting or under construction NGCC capacity, very little (0.17 percent) current EE red uctions, and currently only two percent nonhydro RE, there is no scenario under which the inte rim goal can be met; the situation only gets worse when the State's inability to achieve a six p ercent decrease in the coal-fired EGU CO2 emission rate as a result of heat rate improvements is considered.

Commenters added the interim goals create a disince ntive to invest in Building Block 1; implementation of Building Block 1 is compounded by another issue: the interim target goals.

Commenters said the USEPA calculated Nevada's inter im and final goal by essentially closing Valmy and TSPP by 2020; by virtue of having two own ers located in two different states, Valmy is subject to two different retirement schedules: r etirement in 2025 by the PUCN and beyond 2030 by the Idaho Public Utilities Commission; neit her retirement schedule would allow Nevada to comply with the interim goal. Commenters added TSPP was only recently commissioned in 2008; at the time it was commissioned, it was proje cted to operate for at least thirty years, and116

possibly forty years; as one of the newer coal-fire d power plants in the nation and one of the most highly controlled from an air quality standpoi nt, closure of that facility by 2020 would result in a significant stranded investment. Commen ters added nevertheless, the only way that Nevada could meet the interim goal as currently cal culated would be to require the closure of both of those facilities by 2020; continued operati on of the Valmy and TSPP facilities would exceed the proposed goals. Commenters said it would not, then, make economic sense for those facilities to undertake the engineering analyses an d permitting revisions that would be required to achieve any sort of heat rate improvement becaus e they would have to shut down within a very short time after such improvements could be de ployed. Commenters said they would not be able to recover their capital investments; if the f acilities are retired on their normal schedules taking into account the remaining useful life of th e plant, then Building Block 1 should be calculated on a plant- specific basis, rather than on a national average of aged coal-fired
facilities.

Commenters stated as proposed in the CPP, complianc e with the interim state goals requires emission reduction to begin by 2020 and compliance is based on a 10 year average from 2020 to 2029; EPA indicates that it has received several co mments critical of and disputing the so-called "flexibility" of such an approach in that the force d retirements resulting from the CPP and other environmental laws could adversely impact the elect rical systems ability to respond to extreme weather events like the 2014 polar vortex. Commente rs said stakeholders also expressed concerns about how premature retirements would affe ct remaining asset value of existing coalfired generation and resulting stranded cost implic ations. Commenters supported the elimination of the interim targets to allow for cost-effective implementation of state and utility system compliance strategies. Commenters reiterated that t he interim targets be eliminated and replaced with a rate of progress approach that includes both procedural and substantive criteria that states would be detail in their compliance plans to demons trate a reasonable glide path to the 2030
targets.

Commenters stated the Proposed Rule's assumed imple mentation of the entirety of Building Block 2 (BB2) in 2020 deprives Arizona, of any mean ingful flexibility in implementing the CPP; any change in the proposed balance between BBs 1, 2 , 3 or 4 results in Arizona being unable to achieve the Interim Goal, or else results in Arizon a greatly overshooting the Final Goal. Commenters said as a result, Arizona is basically l ocked into EPA's goal setting exercise, which requires the complete redispatch of Arizona's coal- fired EGUs to NGCC EGUs in 2020. Commenters reviewed EPA's Integrated Planning Model ("IPM") runs, which predict that the Springerville coal-fired EGUs will remain on-line u nder the Proposed Rule. Commenters concluded, however, that given the low u tilization rates predicted by IPM for the Springerville EGUs, the more economically rational decision would be to shut down the Springerville plant. Commenters said Springerville is the only coal-fired EGU that EPA's IPM suggests would survive the Proposed Rule and the an alysis concludes that it likely would not. Commenters asserted that its concern that the Propo sed Rule would require the premature
retirement of all Arizona coal-fired EGUs in 2020 i s legitimate and well supported.117

Commenters stated the stringency of the proposed ru le's interim standards requires forced retirements of coal units by 2020 to determine the interim standard for each state, EPA assumed that all emission rate reductions from Building Blo cks 1 and 2 could be achieved at the start of the ten-year interim compliance period. Commenters said as a consequence of this flawed assumption, for many states, almost all of the emis sion rate reductions that the Proposed Rule ultimately requires must be achieved in the first y ear of the ten-year interim compliance period. Commenters said Pennsylvania is left with little or no flexibility to determine a different compliance path to avoid the 2020 compliance cliff under EPA's proposed schedule for implementation. Commenters said EPA intends to fina lize the Proposed Rule in mid-2015, which means that the earliest state implementation plans would be approved by EPA is mid-2017; at most, this schedule leaves 2-and-a-half years for e lectric generating companies to achieve aggressive emission reductions and states to make s weeping changes to their existing regulations and electric generation, transmission, and distribu tion systems. Commenters said given the stringency of the interim standards, the proposed i mplementation schedule will force states to rely on coal unit closures to achieve compliance.

Commenters stated allowing states to develop their own glide paths would also allow states to take into account the remaining useful life (RUL) o f existing assets in compliance planning, which is a fundamental responsibility of the state. Commenters said recognition of RUL provides states with the flexibility to recognize i n their plans generation assets with significant remaining value, thereby reducing the overall cost of state compliance plans to the state's electric consumers; it also supports a more rational path to resource transition, protecting grid reliability as planning takes place for replacement energy infr astructure. Commenters said in proposing interim goals that effectively obligate the early r etirement of coal resources in some states, EPA does not address the remaining useful lives of thes e resources; Section 111(d)(1) states that EPA "shall permit the State in applying a standard of p erformance to any particular source under a plan submitted under this paragraph to take into co nsideration, among other factors, the remaining useful life of the existing source to whi ch such standard applies."

Comment 11: The EPA should eliminate the interim compliance go al and allow states to design their own glide paths and/or goals.

Response 11: The response to this comment is the same as the r esponse to Comment 6 in

section 4.2.1.

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

Several commenters stated that EPA should eliminate the interim compliance goal and allow states to design their own plans and goals.

Commenters stated that rather than impose inflexibl e interim emission rate goals on the states, EPA should allow states to design interim plans tha t demonstrate credible pathways to118

compliance in 2030. Commenters said EPA can, and sh ould, use objective criteria to evaluate state plans and assess whether each plan demonstrat es how the state will reduce its emissions and/or emission rate to achieve its 2030 goals. Com menters suggested two criteria be used to evaluate state plans: (1) procedural criteria, desi gned to ensure that the plans are credible and enforceable; and (2) substantive criteria, designed to ensure that the plans consider factors important to controlling greenhouse gas ("GHG") emi ssions from the power sector. Commenters

stated the criteria should serve as the basis for a n inquiry into whether a state plan adequately demonstrates that it will lead to compliance, altho ugh a state plan need not include all of these elements; indeed, it would be inappropriate to requ ire inclusion of all of the elements since they are not applicable to every state.

Commenters said eliminating the interim targets doe s not mean that no actions will be taken by

each state to reduce carbon emissions before 2030. Commenters stated on the contrary, each state would have the flexibility to determine the most co st effective and reliable way to achieve the 2030 emission goals while outlining the meaningful reductions expected in each individual state plan's glide path. Commenters said EPA should allow states to adopt an approach in their state plans, based on objective criteria that deliver the desired reductions in a manner consistent with consideration of the remaining useful life of exist ing generating resources, grid reliability and

customer cost minimization. Commenters said states would be required to demonstrate reasonable and verifiable progress toward the 2030 goal and could not delay taking action to

reduce emissions. Commenters said States would demo nstrate progress towards the 2030 goal consistent with their projected emission reduction glide path through the annual reporting of emission performance to EPA, taking corrective meas ures if needed to achieve the 2030 emission levels. Commenters stated ultimately, if s tates are unable to show reasonable progress toward the 2030 goal, EPA, as set forth in the CAA section 111(d), still would have the authority to call for a state to correct its plan or to presc ribe a federal plan.

Commenters added there is a significant burden impo sed by the interim compliance requirements: Projection of emission performance fo r nine two-year periods; Calculating and reporting of performance annually for ten years; an d Comparison of performance to the projection annually for ten years with explanations and corrective actions, if needed. Commenters recommended that the interim compliance period and goal be replaced with a nonenforceable glide path. Commenters said the glide p ath approach has been used successfully in EPA's Visibility Improvement (Regional Haze) progra m. Commenters added the state-developed glide path would establish emissions performance ta rgets that would be non-enforceable prior to 2030. Commenters added comparison of one-year emiss ions performance to the glide path would be conceptually more straightforward than compariso n of performance to cumulative multiyear averages as currently proposed. Commenters stated s tates would have the responsibility to make adjustments as required to stay on track to meet th e enforceable 2030 compliance target.

Commenters added EPA should apply the structure it has adopted within the regional haze rule (40 CFR 51.308 (d)(1)) for ensuring reasonable prog ress; under the regional haze program adopted by EPA, the state, not EPA, is responsible for establishing the reasonable progress goals119

as a part of its Regional Haze State Implementation Plan, and is directed to establish goals that represent progress without backsliding. Commenters stated the regional haze program allows the state to assess the cost of compliance, and then de termine the rate of progress needed; the goals established by the state are not federally enforcea ble, but are considered by the Administrator and then approved when the Administrator evaluates the adequacy of the state's plan. Commenters stated alternatively, or as a part of al lowing states to set their reduction goals, an interim goal that reflects an average emissions rat e from 2012 to the final goal would more appropriately take into account the timing of measu res to be implemented to achieve final reduction goals.

Commenters added major transmission upgrade project s could take nearly the entire compliance time period to complete; this further supports a ra tionale for allowing states to set their own interim targets as a part of their planning process , as states would be in a better position to assess state and regional infrastructure improvement impac ts on interim compliance progress. Commenters added this approach also fully recognizes state energy planning processes in Clean Power Plan implementation.

Commenters added for situations where states may fa il to set a reasonable interim goal (or any goal at all), EPA could rely on their proposed inte rim target approach as a "backstop" to ensure reasonable progress on a state-by-state basis. Comm enters suggested, at a minimum, EPA modify the 2020-2029 averaged interim target and in stead identify a single-year interim target (e.g., 2025) level of performance; a reasonably set single-year target would avoid the problem identified above of having to offset performance ab ove the interim target value with proportionate performance below the target value.

Commenters added an interim goal of 70 percent of t he proposed 31.5 percent overall emission reductions by 2020 is unattainable. Commenters said instead, there should be a glide path with reasonable further progress reports describing adva ncement toward meeting the final goal; it is reasonable to expect the reports be required by 202 0. Commenters proposed that the pace and path be left to the state to decide, so long as it attains the final goal set forth in the rule.

Commenters stated the interim target and mathematic al averaging process that EPA proposes are unworkable; EPA should consider a mid-course review process with the states, similar to the regional haze rule, in order to assess progress tow ard meeting a final target. Commenters said experience with the acid rain program, the regional haze program, and other multi-year emission reduction programs indicates that emissions tend to be reduced on a glide path consistent with the availability of engineering, financing, and lab or resources; the sharp energy market dislocations that EPA projects for 2020 could be mi tigated by eliminating the numerical interim target in favor of a mid-course review process. Com menters said if an interim target is maintained in the rule, states should be responsibl e for setting their own individual targets, to reflect state-specific plans for compliance.120

Commenters stated allow states to determine their o wn emission reduction trajectories to achieve the 2030 goals; states are best positioned to manag e the transition of the generating fleet to meet the final goals established by the 111(d) regulatio n; the final rule should eliminate the interim goals and instead require states to propose emissio n reduction trajectories to EPA in their state plans. Commenters said giving states the flexibilit y to appropriately consider the costs (including costs resulting from significant job and other loss es in communities that are often highly reliant on local power plants as economic engines), non-air environmental impacts, planned retirements, and the implications of a massive shift to differen t generating resources for much of the electricity supply provides a forum for properly re cognizing early action to retire coal plants.

Commenters stated EPA should reassess the 2020 and other intermediate goal requirements and allow states to develop alternative phased-in compl iance timeframes that will ensure the final goals are met. Commenters appreciated the complianc e flexibility that USEPA has built into the proposed rule, but noted that some emission reducti on measures may take considerable time to implement (e.g. heat-rate improvements, re-dispatch , and the financing and construction of renewable energy sources); in addition, commenters are concerned with potential unintended consequences due to the requirements of the interim goals; specifically, they may lead to an overreliance on natural gas to meet the goals, thus foregoing other alternatives such as renewable energy or energy efficiency, which may take more ti me to develop, but could result in lower
CO2 emissions.

Commenters stated eliminate the interim emission ta rgets and allow states to design a SIP that meets the emission targets for 2030 and beyond; thi s provides states additional flexibility and meaningful time to design an SIP that could contain all four of the Building Block principles.

Commenters added States, not EPA, are in the best p osition to determine what is possible for a specific timeframe by working with the facilities u nder their jurisdictions; States can more easily take into account, for example, planned retirements and new builds, and can determine the timing of other actions that will be required in th eir state plans. Commenters said because of structural and legal considerations, some states wi ll take longer for similar actions than other states; allowing states to determine their own glid e paths will relieve EPA of a burden best left to states; it will be up to states, then, to justify t he proposed milestones and their associated timing. Commenters said approval of this type of plan could include consideration of planned activities outside of the Building Blocks used for goal settin g. Commenters added averaging the emissions rates for the interim compliance period creates a v ery steep glide path between now and 2020 for

most states. Commenters said alternatives offered i n the NODA to accomplish smoothed glide paths are mainly premised on Building Blocks 1 and 2 without addressing the significant reductions required for Building Blocks 3 and 4; fu rther, the options offered in the NODA may not accomplish the smoothing that has been requeste d.

Commenters stated EPA could eliminate the interim g oals completely, and simply require states to file and develop plans to achieve the 2030 goals with an emission reduction trajectory of the state's choosing.121

Commenters stated EPA could revise its interim goal s to provide a reasonable emission reduction trajectory, while granting states conside rable deference to craft a different emission reduction trajectory. Commenters said EPA could aut horize states to apply the elements of the BSER in establishing their own emission reduction t rajectories, or it could allow states to make non-BSER based adjustments on the basis of reliabil ity, cost, effectiveness and other
considerations.

Commenters stated the interim goal should be replac ed with a milestone approach; commenters suggested the replacement of the interim goal with a milestone approach that is negotiated by the states and the USEPA during the planning process wo uld allow for more measured and effective implementation, providing states with the ability t o meet their electricity needs while continuing to ensure the safety and reliability of the grid, a nd compliance with overarching federal laws such as the ESA. Commenters said many of the measur es identified under each of the building blocks are discrete events that will result in larg e reductions on timeframes that do not fit smoothly along a glide path; for example, as a coal -fired EGU is retired, significant emissions reductions will result, with the compliance pathway resembling a level plain with steep drop-offs rather than a gradually descending glide path. Comm enters said state plans should include compliance milestone targets, rather than a glide p ath, that are aligned with integrated resource planning approvals, instead of an unachievable inte rim goal.

Commenters added EPA's proposed schedule for implem enting the rule leaves states with little or no flexibility to determine a different complian ce path and avoid the compliance cliff; EPA intends to finalize the Proposed Rule in 2015, whic h means that the earliest state implementation plans could be approved by EPA is 2017 or 2018. Com menters said at most, this schedule leaves 3 years for electric generating companies to achiev e aggressive emission reductions and states to make sweeping changes to their existing electric ge nerating, transmission, and distribution systems; given the stringency of the interim goals, the proposed implementation schedule will force states to adhere to EPA's prescribed redispat ch and coal-unit closures to achieve compliance with the goals. Commenters said EPA shou ld forego the interim goals and work with states to develop a glide path toward a legally def ensible BSER taking cost and remaining useful life into consideration as required by the CAA.

Commenters added there are two options for providin g true flexibility when creating the State Plans. Commenters said the best option is the elimi nation of the interim goal; the State Plan already requires biennial reporting, which will pro vide the EPA with an updated measure of how the states are progressing. Commenters said there i s no legitimate reason to force a state into having a pre-requirement when it already has a fina l goal to meet. Commenters said in order to meet the goal, states will need to reduce emissions over time; allowing states to determine the best path to do that will be in the best interest o f the states and the ratepayers who ultimately may have to fund these changes. Commenters said the sec ond option is to establish a glide-path towards the goal that will allow states to more eff ectively reach the target than if they had to122

abruptly comply with a majority of the goal 10 year s prior to the final goal; this would also allow states to take into consideration the remaining use ful lives and book lives of coal plants that would reach the end of their book lives during the 2020-2030 time period. Commenters said the best option is to eliminate the interim goal, allow ing a glide-path towards the end goal with biennial check-ins as required by the State Plan.

Commenters stated EPA should not include the propos ed interim goal in the final rule and should let States establish the 2030 glide path to allow a dequate time to reliably achieve compliance. Commenters said this will provide states and affect ed electric utilities with the flexibility EPA wants to allow and provide a more reasonable timeli ne to achieve EPA's CO2 reduction goals and to develop plans that can be tailored to indivi dual states and regional conditions.

Commenters stated much like the Proposed Rule affor ds states flexibility to establish their own glideslope in their respective plans to demonstrate progress towards achieving the emission goals, EPA should allow the states to establish the ir own enforceable interim goals that will best position them for achieving their respective final emission performance goals. Commenters emphasized that these state-established interim goals would be enforceable, which

means that the affected entities in a states would be required to adhere to the interim emission performance goals (i.e., through emission standards applying to such affected entities) to the same extent that they would have to adhere to feder ally-imposed interim goals. Commenters added EPA should require states to justify the proj ections underlying their interim goals, such that the goals set the states on a reasonable path to attaining the final goals. Commenters said if a state proposed an unrealistically high interim goal , with no clear path towards achieving the final goal, then EPA should find the state plan's interim goals to be deficient and require plan revisions. Commenters believed that incorporating f lexibility would be more consistent with the value of cooperative federalism that undergirds the Proposed Rule generally. Commenters said under this approach, the interim goals established by a state would become enforceable elements of its plan and would be no less binding than the i nterim goals EPA would impose in the Proposed Rule, but would not dictate how and when s tates plot out their trajectory towards achieving their final goals.

Commenters questioned the actual benefits that will be achieved by interim carbon intensity goals; however, at the very least, the states shoul d be allowed to establish these goals. Commenters said allowing the states to set the inte rim goals is more consistent with the legal requirements of the Clean Air Act and because the s tates have a greater understanding of the specific state issues, they are better suited to es tablish interim goals to place each state on a successful path to achieve the final goal.

Commenters stated remove the interim target goal de adlines and let states set the glide path to the final compliance date of 2030.

Commenters stated EPA should allow states to determ ine their own glide paths, using milestones, for reaching the final goal, rather tha n setting out interim goals based on national123

average assumptions. Commenters said states, not EP A, are in the best position to determine what is possible for a specific timeframe by workin g with the facilities under their jurisdictions; states can more easily take into account, for examp le, planned retirements and new builds, and can determine the timing of other actions that will be required in their state plans. Commenters said because of structural and legal considerations , some states will take longer for similar actions than other states. Commenters said allowing states to determine their own glide paths will relieve EPA of a burden best left to states; i t will be up to states, then, to justify the propos ed milestones and their associated timing. Commenters said approval of this type of plan could include consideration of planned activities outside of the Building Blocks used for goal setting. Commenters said averaging the emissions rates for t he interim compliance period creates a very steep glide path between now and 2020 for most stat es. Commenters said alternatives offered in the NODA to accomplish smoothed glide paths are mai nly premised on Building Blocks 1 and 2 without addressing the significant reductions requi red for Building Blocks 3 and 4; further, the options offered in the NODA may not accomplish the smoothing that has been requested.

Commenters stated many states have already undertak en actions that EPA anticipates, including plant upgrades, the building and increased use of n atural gas-fired and renewable generation, transmission line construction, demand-side efficie ncy measures and other actions included within EPA's four building blocks. Commenters said because such actions come at significant cost to ratepayers, states will need to evaluate th e potential economic and other impacts associated with additional near-term and often larg e-scale investments in their energy systems to determine how much additional cost ratepayers can a bsorb and how quickly. Commenters said only state economic regulators will have the inform ation sufficient to determine the appropriate manner and timing of the further investments necess ary to achieve EPA's 2030 carbon intensity target. Commenters said these difficult decisions a re best made by the state within the broader context of assuring that a state's electricity supp ly remains affordable. Commenters said states are also best positioned, in conjunction with regio nal transmission entities, to determine resource adequacy implications of implementation timing; for example, states and regions are best able to

assess:

- existing natural gas transportation infrastructur e (including, among other components, interstate and distribution pipeline, booster compressors, and storage capacity in a variety of geologic formations underground) as well as natural gas supp ly and market conditions to determine whether they would be adequate to support the 70% s tate-average capacity factor for existing NGCC capacity targeted by EPA;

- existing electric transmission infrastructure to determine whether it would be adequate to support the apparently broad regional or inter-regi onal dispatched based substitution of NGCC generation and increased renewable generation conte mplated by the CPP;

- potential limitations on a state's ability to inf luence economic dispatch of generation to implement the CPP;124

- the remaining useful life of existing coal-fired (and other) generation resources, particularly where affected sources have made significant invest ments in such resources to comply with other environmental regulations (e.g., MATS, CSAPR);

- any legislation that may be required to implement the CPP;

- the effect of anticipated load growth;

- particular energy and environmental impacts; and

- state-specific economic impacts of the interim pa th and timing.

Commenters said therefore, consistent with the Cong ressional division of responsibility in sections 110 and 111, EPA should allow states to se t the appropriate pace for implementation prior to the final 2030 performance targets; recomm ends that EPA allow each state to determine both the interim path and the interim timetable to meeting its 2030 performance goal.

Commenters stated states should be able to choose a reasonable emission reduction glide path that achieves the 2030 goal; requiring that states demonstrate compliance with the 2030 goal through implementation of the EPA-approved plan, wi thout reference to the proposed interim 2020-2029 average goal, would give states flexibili ty to design workable compliance plans which establish reasonable compliance glide paths c onsistent with ensuring reliability and protecting consumer interests. Commenters said this would allow states to ensure that there is additional time to complete needed infrastructure d evelopment (including electric and/or gas transmission) in order to provide reliable power, a nd would obviate concerns regarding the system impacts of abrupt shifts in dispatch between existing coal- and gas-based units; these infrastructure developments continue to take more a nd more time as public opposition must be resolved prior to construction. Commenters said it would eliminate conflicts between the timing of the interim period and legislative calendars, ma rket rules and utility investment schedules; it also would recognize and value reductions achieved since 2012, encouraging early action where possible.

Commenters stated eliminating the interim complianc e average goal does not require a fundamental altering of the proposed guidelines; in stead, the proposed guidelines already are designed to allow states to develop their own compl iance plans, and a description of the reduction trajectory to 2030 is a required element of state plans. Commenters said EPA can and should use the proposed approach to state plans to ensure that state plans and emission reduction glide paths are designed to meet - and do actually achieve - the 2030 goals.

Commenters stated EPA should revise the proposed Ru le to allow states to set the standard of performance individually for each unit in its juris diction and to abandon the interim goals altogether. The commenters said if EPA chooses to k eep an interim goal, EPA must permit states to define a phase-in schedule for building block 2 based on infrastructure limitations; this is absolutely necessary to give states a fighting chan ce at trying to comply with the final rule.125

Commenters stated EPA has proposed interim emission s goals that are so stringent that many states will be required to achieve most of their CO 2 emissions reductions by 2020. Commenters said EPA's proposed timetable for the approval of s tate plans leaves states at most with two-anda-half years to implement required CO2 reduction me asures; a task that will be extremely difficult or impossible to achieve without severe e conomic disruption. Commenters said EPA should give states discretion to develop individual ized plans for the 2020-2029 time period that that is tailored to the respective state, and leads to achievement of the EPA 2030 goal on more manageable terms.

Commenters stated the proposed rule includes a larg e amount of information and large number guidelines, many of which continue to lack clarity, which will potentially have a dramatic effect

on each state and consumers. Commenters said it is important that a rule with this potential effect follow a timeline sufficient to develop clarity and a reasonably functional process for implementation. Commenters said as there is no stat utory requirement that reductions be achieved on a particular schedule and to address co ncerns about the pace and timing of reductions, EPA could relax the schedule and still achieve the proposed reductions on a timely basis. Commenters said to provide the necessary rel ief, EPA should finalize the proposed 2030 goals and allow increased flexibility for states to select the interim compliance goals and glide path timeline for meeting the 2030 goal. Commenters said should EPA deem it necessary to have a specific interim target, EPA should allow individ ual states to select the interim goal as long as they demonstrate compliance and meet either the fin al 2025 or 2030 emission rate goals at their discretion. Commenters said in providing this flexi bility with the timeline, the EPA should allow states to use state-specific information regarding energy efficiency and estimated energy savings.

Commenters said the EPA should allow states to incl ude non-binding milestones as a means of measuring and ensuring progress toward the final go al, in lieu of interim compliance periods that serve as binding annual requirements.

Commenters stated the ultimate objective of EPA's p roposed CPP is for states to obtain their specified emissions intensity in 2030; however, EPA has established interim goals between 2020 and 2029 that must be met (or federal action may be taken), even though the 2030 goal may not be in jeopardy. Commenters said complicating this m atter is the fact that EPA set interim goals that are front-loaded, and state plan approval time lines leave insufficient time for action; furthermore, the U.S. Energy Information Administra tion (EIA) data also shows that emissions can vary by more than 10% year to year for reasons outside the control of Electric Generating Units (EGUs). Commenters said the interim goal prog ress, established by each state or multistate compact, should not be over-ruled by EPA for a mere 10% deviation; such enforcement discretion should solely be with state regulators w ho are more familiar with state specific circumstances and planning. Commenters said federal enforcement, if any, should be reserved for gross deviations of any EPA approved plan or a state's seeming unwillingness to participate126

in the process. Thus, commenters requested that EPA eliminate the interim federal goals and enforcement mechanisms, and allow states or multi-s tate compacts to develop their own emissions reduction trajectory within their individ ual plans; the request maintains the concept of the 2030 long-term federal goals, while supporting state specific planning scenarios and infrastructure development.

Commenters stated in setting interim goals, the EPA assumes that heat rate improvement projects can be implemented by 2020; it is unlikely that hea t rate improvement projects could be completed by 2020, given that a state-only plan may not be approved until 2018 and a multi-state regional plan may not be approved until 2019. Comme nters said longer time periods for compliance provide for more flexibility in project management and cost control. Commenters said the projects that offer the greatest heat rate improvement potential are long lead time projects; if many parties across the country are at tempting to accomplish similar projects during the same time period, there may be cost increases o r scheduling concerns due to supply chain bottlenecks in obtaining equipment. Commenters reco mmended to eliminate the interim goal (2020-2029) and allow states to establish a state-s pecific glide path to the 2030 final goal. Commenters said if the interim goals remain, the EP A should allow states to determine a reasonable schedule for implementing heat rate impr ovement projects on a case-by-case basis. Commenters said at a minimum, as suggested in the N otice of Data Availability (NODA), the EPA should phase-in the Block 1 heat rate improveme nts for coal-fired power plants in the Best System of Emissions Reduction (BSER) goal computati on calculation.

Commenters stated in setting interim goals, the EPA assumes that 70 percent NGCC redispatch can be accomplished by 2020; this is not realistic if air, water or other permit amendments, or upgrades to natural gas pipelines and electric tran smission facilities, are required to accommodate increased NGCC operation and changes to the operation of the electrical grid. Commenters said in some cases, NGCC dispatch of 70 percent may not be achievable due to physical site limitations or equipment design const raints. Commenters recommended to eliminate the interim goal (2020-2029) and allow st ates to establish a state-specific glide path to the 2030 final goal. Commenters said alternatively, EPA should allow states to determine a reasonable schedule and feasible level for implemen ting NGCC redispatch in their states based on the extent to which permit modifications and add itional infrastructure improvements (e.g., natural gas pipeline expansion or transmission impr ovements) are needed to support increased use of existing NGCCs. Commenters said if the inter im goals remain, then the commenters supported the suggestion in the NODA of phasing Bui lding Block 2 in gradually over time by assuming a ramp up period.

Commenters stated EPA should eliminate the proposed interim goals and allow states to determine an appropriate path to achieving complian ce with the final emission rate goals in 2030. Commenters said this would allow energy compa nies more time to bring on new generating resources, work to seek solutions to tra nsmission and fuel supply issues created by operational changes, and/or implement conservation measures, and states to ensure there are adequate resources to meet state demand.127

Commenters stated one necessary modification to the proposed rule is that it should delegate to states the complete authority to establish interim goals during the 2020-2029 glide path up to the EPA's final goal imposed in 2030. Commenters said t his necessary change (addressed in the NODA) will address a major shortcoming of the rule as proposed, i.e. it will allow for the consideration of remaining useful lives as mandated by CAA Section 111(d)(1)(B). Commenters said it also allows the states to address many of t he timing issues created by the rigid 2020 interim goal that requires 80% of reductions be ach ieved in such a short time frame. Commenters said this will give the states the opportunity to c onsider the necessary time frame needed to plan, permit and build needed infrastructure required by blocks 2 and 3 as they establish milestones for utilities to meet during the glide path. Commenters said it also provides time to develop EE credit tracking mechanisms; most importantly, it al lows states to work with the industry and other stakeholders to develop their plan to meet th e 2030 final goal in a manner that reflects the nature of their existing fleet, their renewable pot ential, and allows for the most cost-effective approach to prevent economic chaos during the inter im period.

Commenters added many states face a dramatic drop f rom their 2012 emission rate to their interim goal; in South Dakota's case, this drop is from 1,135 pounds per megawatt-hour in 2012 to an interim goal of 800 pounds per megawatt-hour or 85 percent of the overall reduction South Dakota is expected to achieve by 2030. Commenters s aid this occurs because for South Dakota, EPA's first three building blocks are assumed achie vable immediately, or are fully ramped up, by 2020. Commenters said states' 111(d) plans will be approved by EPA in 2017 to 2019; such a short transition from an approved plan to the first binding goal year is entirely inconsistent with utility investment planning. Commenters said in eff ect, states like South Dakota must achieve an emissions rate close to their 2030 target by 2020, and because doing so via the building block measures is not likely to be feasible in South Dako ta, the only option to achieve the 2020 goal is likely to be premature retirement of the state's on ly coal-fired power plant. Commenters said this will lead to high costs, stranded assets, and relia bility issues. Commenters said instead, EPA should: 1. Defer to states to set their own "glide path" to the 2030 goal; States can use existing resource planning processes to identify the most pr actical and cost-effective ways to reach the 2030 goal; and 2. If state plans show a credible tr ajectory to the 2030 goal with reporting milestones and verifiable measures, EPA should not set binding interim goals.

Commenters stated EPA's 2020-2029 interim goal and emissions rate glide path eliminates state flexibility and is economically burdensome to Utah and other states. Commenters said EPA has proposed an interim emissions goal for the state th at is front-loaded and will require Utah to achieve over 75 percent of its CO2 emission rate re ductions between the time the state's plan is approved by EPA and the first compliance year, 2020 ; the effect is to create a 2020 "compliance cliff" that will be extremely difficult to achieve. Commenters said the front-loading of emissions rate reductions means states will only have two or three years to implement the required CO2

emissions reduction measures. Commenters said the i mplementation of EPA's compliance tools, including heat-rate improvements and redispatch, ar e costly, unrealistic and require more time to implement than is allowed under the proposed rule. Commenters said the proposed rule does not adequately address the time or cost of infrastructu re needed to facilitate new power generation,128

including natural gas and renewable power generatio n. Commenters said the EPA has also not addressed the particular challenges of developing n ew infrastructure in the West. Commenters said compared to other parts of the country, utilit ies in the West have large service territories with unique geographical challenges; federal lands cover vast portions of Utah and other Western states, triggering additional planning and permitting requirements under National Environmental Policy Act (NEPA). Commenters said th e EPA has not presented any plan for addressing these issues. Commenters said EPA should give Utah discretion to develop a plan and emissions rate glide path for the 2020-2029 period that is tailored to the state's circumstances yet leads to achievement of the EPA 2030 goal.

Commenters stated EPA has proposed interim emission s goals that are so stringent that many states will be required to achieve most of their CO 2 emissions reductions by 2020. Commenters said EPA's proposed timetable for the approval of s tate plans leaves states at most with two-anda-half years to implement required CO2 reduction me asures; a task that will be extremely difficult or impossible to achieve without severe e conomic disruption. Commenters said EPA should recognize Montana's discretion to develop in dividualized plans for the 2020-2029 time period that are tailored to Montana circumstances f or achievement of any emission reduction goals.

Commenters stated the EPA should allow states to es tablish interim compliance targets and a glide-path as a part of the state's State Plan file d for approval with EPA; no interim goal should be established by EPA. Commenters said EPA has repe atedly stated that its goal is to give states flexibility; the goals set for Arizona do not provi de that flexibility; in fact, they provide Arizona with no flexibility as 90 percent of the goal must be achieved by 2020 in order for Arizona to meet the proposed interim goal. Commenters said rem oving the interim goal could restore some flexibility for Arizona.

Commenters stated the current Interim Goal deprives Arizona of any flexibility in how it implements the proposed rule; Arizona has one choic e only: the way that EPA has set forth the goal calculations; any change in the proposed balan ce between Building Blocks (BB) 1, 2, 3 or 4 results in Arizona being unable to achieve the Inte rim Goal, or else results in Arizona greatly overshooting the Final Goal. Commenters said this e ffectively prevents from exercising any flexibility in shaping a compliance plan for the st ate and greatly increases the costs and reliability risks of the proposed rule. Commenters asserted that the appropriate solution is for EPA to direct states to prepare and submit a propos ed Interim Goal, together with appropriate increments of progress, as part of the State Plan; an Interim Goal that reflects appropriate implementation time frames for BB1, BB2 and EPA's p roposed approach to BBs 3 and 4, should be presumptively approvable. In addition, commenter s recommended that EPA consider granting the states the ability to vary from the presumptive ly approvable goal if the state can identify specific transmission or infrastructure obstacles t o achieving the presumptive Interim Goal in a timely fashion; upon State Plan submittal, EPA woul d review the State Plan, including the129

proposed Interim Goal and increments of progress, a nd would approve the Interim Goal as part of Plan approval. Commenters asserted that this app roach provides improved flexibility and recognizes, as does Section 111, that there may be state-specific issues that require final adjustment. Commenters asserted that if the changes outlined in this proposal are met, the goals

established will be more consistent with the Clean Air Act than those established under the current proposed rule.

Commenters stated the most appropriate solution to address the constraints imposed by the interim goal currently proposed for Arizona is for EPA, as contemplated and directed by Congress, to give Arizona the latitude to define an d track its own progress towards the state final emissions rate goal. Commenters said rather than ma ndating an enforceable interim goal, EPA should give Arizona (and other states) discretion t o develop an individualized plan that establishes programs and measures that set the stat e on an achievable compliance path to meet the established goals; in particular, EPA should al low each state to make its own determination as to which measures can be implemented on a time t able that is manageable for the state but leads to achievement of the 2030 goals. Commenters said a state-based approach to interim progress aligns with EPA's acknowledgment that each state has a unique mix of energy resources; this action would provide states with th e true flexibility contemplated by 111(d) and the ability to develop plans that more fully recogn ize an achievable path to 2030.

Commenters urged EPA to eliminate the proposed inte rim goals and allow states to exercise the authority granted to them by Section 111(d) to set a graduated path for achieving compliance with the final 2030 emission rate goals. Commenters said the proposed interim goals are unnecessary to ensure that states take measurable s teps to achieve reductions throughout the 2020 to 2029 compliance period. Commenters said sta tes have a strong economic incentive to gradually implement emission rate reductions and av oid abrupt changes in their electric generating, transmissions, and distribution systems , which would jeopardize grid reliability. Commenters said allowing states to phase in reducti ons gradually, rather than making sweeping and disruptive changes to the existing electric gen erating system, would provide Oklahoma with reasonable accommodations to complete necessary inf rastructure improvements, including the construction of new generation resources, transmiss ion lines and natural gas pipelines, as well as accommodate unit retirements or repowering and the installation of controls associated with Regional Haze requirements and MATS compliance.

Commenters stated EPA's CPP proposes four 'Building Blocks' as a 'system of emission reduction' under its 'Option 1' approach; however, only the first Building Block can be applied to individual EGU sources subject to regulation under the 111(d) proposal; the other three Building Blocks are out of the control of any particular reg ulated source and are predicated on actions by others. Commenters said the Building Blocks used to develop the individual state goals are inappropriate and are, for Florida at least, based on inaccurate data. Commenters were concerned that because none of the Building Blocks is fully a chievable in Florida, there is no margin to130

make-up under one Building Block the amount to whic h Florida would fall short on another. Commenters said to determine the interim goal for e ach state, EPA assumed that all emission rate reductions from Building Blocks 1 and 2 could be achieved at the start of the ten-year interim goal compliance period; under BB 1, EPA ass umed that each state's fleet of coal-fired generating units could achieve a six percent heat r ate improvement and that the improvement would directly translate to a six percent reduction in net CO2 emission rate. Commenters said under BB 2, EPA assumed that states would be able t o utilize existing and under-construction NGCC up to seventy percent of their capacity; neith er of these is achievable, prudent or economically logical. Commenters said in contrast t o its treatment of BBs 1 and 2, EPA assumed

that emission rate reductions from BBs 3 and 4 woul d ramp up gradually throughout the ten-year interim compliance period. Commenters said as a res ult of EPA's assumptions regarding the implementation of BBs 1 and 2, the interim goals fo r many states are so stringent almost all of the required emission rate reductions required by t he Proposed Rule must be achieved in the first year of the ten-year interim goal compliance period . Commenters said for Florida, EPA assumes 76% of the total reduction required in 2030 would b e achieved by 2020; if the structure of CPP withstands legal challenges and progresses under a building block regime, each state should be allowed to develop its own numeric goals based on w hat it determines is reasonable and
achievable.

Commenters stated as currently proposed, the 2030 f inal goal established by EPA will be challenging for states to meet; each state faces it s own unique challenges with respect to generation mix, transmission infrastructure needs, natural gas supply constraints, market demands and limitations, and legal and political ro adblocks, all of which hinder development and implementation of a state plan and achievement of t he final goal. Commenters said EPA proposes an aggressive interim goal, which for Kans as is a rate-based standard of 1578 lbs CO2/MWh averaged over the years 2020- 2029. Comment ers said compliance with the interim goal is almost as stringent as compliance with the final 2030 goal, which for Kansas is nominally 1499 lbs CO2/MWh. Commenters said according to EPA' s projections, Kansas would need to achieve over half of the required emissions reducti ons by 2020, a mere two to three years after approval of a state plan, and almost 90 percent of the required reductions by 2025. Commenters recommended that EPA eliminate the aggre ssive interim goals and allow each state to determine its own interim reductions and glide p ath toward achieving the 2030 goal and maintaining that final goal thereafter.

Commenters stated the interim goal proposed by EPA is far too aggressive; Kansas is required to achieve 82 percent of its required reductions by 20 20 in order for the state's utilities to meet the interim goal of 1,578 lbs CO2/MWh; the final goal f or Kansas is 1,499 lbs CO2/MWh by 2030. Commenters said Kansas would have only a few years after approval of a state plan to achieve the vast majority of required emission reductions; ninety percent of the reductions would have to occur by 2025. Commenters said EPA should eliminate the aggressive interim goals and allow

each state to determine its own interim reductions and "glide path" toward achieving the final 2030 goal.131

Commenters stated Washington State has some of the lowest carbon emissions in the country and the only coal plant, the Centralia Coal Plant l ocated in Centralia, Washington, shuts down partially in 2020 and fully in 2025, but Washington cannot meet the 2020 goal. Commenters said EPA's interim goal for Washington State is too stri ct and would require too large of a reduction too quickly because application of EPA's building b locks would require the entire 1,460 MW

Centralia Coal Plant to retire before 2020. Comment ers said with a final rule and state implementation plan due out in 2016 or 2017 there i s not enough time to comply with a stringent 2020 requirement. Commenters said effectively the i nterim goal requires the State to make an 81% carbon reduction of its total 2030 goal by 2020 ; this steep cliff caused by the interim goal does not take into account regional reliability iss ues or costs to consumers. Commenters said the only way Washington can comply is to completely shu t down its only coal plant (the 1,460 MW Centralia Coal Plant) by 2020, earlier than planned . Commenters said the Northwest region that Centralia services is already expected to be 1,700 MW short of firm capacity by 2021 after Centralia's Unit 1 is retired; the interim goals wo uld make the region short by an approximately 730 more megawatts of capacity. Commenters said it is not realistic to expect that much new electric and fuel supply infrastructure can be cons tructed to meet this capacity shortfall in such a short timeframe. Commenters stated Washington Stat e will not meet its interim and final goal
until after 2026 when all Centralia units are shut down. Commenters said EPA has determined the 2030 target; therefore, commenters recommended that states should have broad discretion to set an interim goal to ensure the 2030 target is me t and to also address regional reliability and

cost issues. Commenters said EPA should allow each state to adopt their own unique emission glide path (rate or mass) that demonstrates ultimat e compliance with the 2030 date, but takes into account reliability and cost, allowing for alternat ive interim targets and dates; this would provide states the flexibility to adopt binding interim red uction goals on a glide path that makes sense based on each state's unique balance of reliability and cost.

Commenters said the time needed to plan and deploy the infrastructure necessary to support CPP compliance warrants the elimination of the interim target period it stipulated for 2020 through
2029. Commenters said instead the EPA should defer to the states to establish measures needed to achieve the EPA's CPP 2030 target. Commenters sa id the EPA's current glide path is "front loaded" by requiring most states to provide the Blo cks 1, 2 and 3 compliance by 2020 and enabling gradual deployment of efficiency measures through 2030. Commenters said this approach fails to recognize the time necessary to b uild out utility infrastructure necessary to achieve compliance with the CPP and ignores the ong oing integrated resource planning underway in Minnesota that has provided for early d eployment and ongoing measures for Minnesota electric utility greenhouse gas emission reductions.

Comment 12: Glide Path

Response 12: In response to commenters’ concerns and EPA’s eval uation of building block potential in the final CPP, the interim period begi ns in 2022 and ends in 2029 (as opposed to starting at the proposed 2020 year). The EPA has pr ovided illustrative emission values for the interim period steps of 2022-2024, 2025-2027, and 2 028-2029 to show a gradual reduction strategy states may choose to attain the interim go al over the 2022-2029 period. The use of these132

3 year, 3 year, 2 year rates over the interim perio d is discussed in Section VIII. Also, see sections I.A., V.A, and VI of the final rule preamb le 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 the proposed Section 111(d) rule requires states to comply with aggressive near-term emissions rate targets and to demonstrate compliance with those targets over the tenyear averaging period (2020-29) prior to the final compliance date of 2030. Commenters said the difficulty with this approach stems from the fact t hat EPA has set an interim goal that requires Utah to achieve a majority of the required emission reductions, 75 percent, by the year 2020. Commenters said this goal scenario looked at whethe r the design of a less stringent (flatter) goal trajectory could enable a longer transition period to meeting the interim goals while still providing a credible pathway to comply with the 203 0 EPA emissions target for the state of 1,322 lbs/MWH. Commenters said under the current co mpliance trajectory Utah would exceed the interim rate starting in 2020. Commenters said a less stringent Glide Path, created by assuming a straight-line trajectory between 2020-20 30 would move the 2020 emissions rate target of 1,487 lbs/MWH out in time to 2023 and ena ble the state to be in compliance with the Section 111(d) interim standard through 2023, and p rovide an extended period for the state and affected utilities to implement measures while stil l being on a path to achieve Utah's 1,322 lbs/MWH emissions rate target.

Commenters urged EPA to provide states with additio nal flexibility to design a glide path to the 2030 goal that delivers meaningful reductions on a timeline and in a manner that facilitates a least cost approach to the transition to a lower-ca rbon generation fleet and retains existing

commitments to coal retirements. Commenters said su ch an approach can help mitigate concerns regarding an over-build of natural gas power plants as a response to complying with the regulation, but should not alter any state's obliga tion to make consistent progress toward, and to achieve, its 2030 emissions reduction goal.

Several commenters said the EPA should eliminate en forceable interim goals from its proposal and preserve the discretion of the states to determ ine the most appropriate state-specific compliance approach and timeline. Commenters said p roviding the states with the flexibility to propose a more tailored glide path by taking into a ccount the statutory factors such as remaining unit life, energy requirements, and cost, will subs tantially reduce overall compliance costs. Commenters said if states are provided greater cont rol and flexibility, unit closures and other significant compliance measures, including potentia l replacement power, can be incorporated into a longer planning horizon that minimizes stran ded costs and economic dislocation. Commenters said existing state or regional programs and requirements (e.g., integrated resource planning, energy efficiency programs) can provide o bjective criteria through which the EPA can monitor ongoing improvements and ensure that compli ance with final emissions targets will be
achieved.133

Comment 13: The EPA should eliminate the interim goals and all ow a phase in approach for BB 1 & 2; rate of progress.

Response 13: See sections I.A. and V.D. of the final rule prea mble of the CPP for the EPA’s response to this comment. Per commenters suggestio n, the EPA has introduced greater flexibility in the deployment of building block two . Additionally, the final CPP includes an interim period that starts in 2022.

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

Commenters stated EPA should eliminate state interi m goals or, if not, phase in building blocks 1 and 2 over the entire compliance period. Commente rs said as proposed, EPA assumes states can completely achieve building blocks 1 and 2 by t he year 2020, which makes the interim goal for the early part of the compliance period (starti ng in 2020) unreasonably strict. Commenters said under the proposal, Wisconsin would need to ac hieve 40-50% of the state's total emissions reductions by 2020 - just a few years after state p lans are due. Commenters said it is unrealistic to assume states and utilities can make these chang es this quickly, and attempting to do so could negatively affect the reliability and cost of the e lectric system. Commenters said the Midcontinent Independent System Operator (MISO), th e ISO that handles dispatch and reliability for the region, has also expressed conc ern that the interim goals as proposed would create resource inadequacy and reliability problems for the region. Commenters said while it is true that states have ten years to meet the interim goal, the likely impossibility of meeting it in the early years will require states to enact unreas onably strict limits in the latter years; in addition, assuming full compliance with blocks 1 an d 2 by 2020 in calculating the goal entirely ignores the practical matter that plan development will require substantial time following EPA's final rulemaking; further, utilities will need ampl e time to seek construction permits from WDNR, authorizations by the PSCW, perform construct ion and demonstrate compliance with

blocks 1 and 2. Commenters said EPA should eliminat e the numerical interim goals and instead require states to demonstrate that they are making reasonable progress towards their final goals between 2020 and 2030; this approach would be simil ar to the state demonstrations of rate of progress (ROP) already required under other parts o f the Clean Air Act and would rely on state determination of intermediate goals as part of thei r state plan. Commenters said alternatively, if EPA chooses to retain the interim goals, they shoul d allow states to phase in building blocks 1 and 2 over the 10-year compliance period; this woul d be consistent with the construction of building blocks 3 and 4, which are phased in over t he compliance period, and would create a more realistic and achievable glide path for states to follow to reach their final goals.

Commenters stated a reasonable phase-in period for reduced emission intensity at coal-fired EGUs and redispatch is needed.

Commenters stated in establishing the proposed inte rim goals, the EPA's assumptions about the time needed to implement emission intensity reducti ons and redispatch (Building Blocks One and Two) are overly aggressive and may not be achie vable in light of cost, transmission constraints, and reliability concerns. Commenters s aid the EPA proposes to calculate states'134

interim emission goals based on the assumption that both Building Blocks One and Two can be fully implemented by the 2020 start date for the in terim compliance period; thus, the EPA has effectively "front-loaded" the emission reductions that states are expected to achieve from these

measures.

Commenters stated the EPA's assumption that all emi ssion reductions from Building Blocks One and Two could be implemented by 2020 does not accou nt for a number of important constraints; for example, implementation of the equipment upgrad es included in Block One could require an EGU to obtain or modify its state or federal permit s, and could trigger NSR review in certain cases; moreover, the implementation of significant levels of redispatch from coal to natural gas facilities could require the construction of additi onal transmission and pipeline infrastructure that could take years to permit, finance, and construct; until such infrastructure is built, significant redispatch from coal to NGCC units could lead to we ather-or transmission-related reliability

concerns.

Commenters stated because the proposed interim comp liance target is computed as the average of the emission rates of each year in the 10-year i nterim compliance period, states that do not fully implement Building Blocks One and Two by 2020 will find it difficult if not impossible to meet their 10-year average emission target. Comment ers said these states may find it necessary to impose more aggressive RE and EE targets on thei r EGUs or other entities or other measures outside of the BSER in order to make up for the sho rtfall in emission reductions from Building Blocks One and Two; consequently, for certain state s-including those in which SCPPA owns generation assets-the EPA's decision to "front-load " emission reductions from Building Blocks One and Two could lead to RE and EE requirements th at are far more stringent and costly than the EPA assumes, along with potential reliability, pipeline, and transmission constraints.

Commenters stated in calculating other components o f state goals, the EPA has explicitly assumed reasonable phase-in periods, in recognition of the fact that states cannot immediately construct the infrastructure or implement the progr ams necessary to achieve the EPA's RE and EE projections for 2030. Commenters said the EPA sh ould likewise build in reasonable phase-in periods for Building Blocks One and Two that accoun t for the significant regulatory, reliability, and capacity issues that will need to be addressed before states can fully implement Building

Blocks One and Two. Commenters said in the alternat ive, the EPA should allow states to adjust their interim goal to account for the barriers, del ays, and reliability concerns they may face in implementing Building Blocks One and Two.

Commenters stated EPA's second suggested approach t o addressing the problematic interim program targets "involves phasing in building block 2 over time, just as building blocks 3 and 4 are currently phased in." Commenters said the impos ition of 100% of the Block 2 reductions in 2020 -even recognizing that EPA does not propose to specifically require the full extent of Block 2 re-dispatch- represents a very large shift in the carbon intensity required of the generating fleet in one year, which is almost certain to result in s ignificant price impacts in 2020 and possibly thereafter. Commenters said it is not specifically the Block 2 targets that are problematic, but135

rather the sudden increase in NGCC dispatch vis-a-v is the current operating profile of existing NGCC facilities. Commenters said phasing in the Blo ck 2 targets over time would be an effective way to reduce the sudden impact of signif icant re-dispatch to NGCC facilities.

Commenters stated EPA's proposed glide path for rea ching the 2030 emissions rate target is overly restrictive; under the current proposal, the application of building blocks 1 and 2 are assumed to result in emission reductions equivalent to six percent improvement in coal plant heat rates and an increased utilization of natural gas c ombined cycle (NGCC) resources to a 70 percent capacity factor to occur by 2020. Commenter s said in states with significant coal and/or natural gas resources, this results in a dramatic r eduction in emissions that must be implemented by 2020. Commenters said since state plans may not be approved until as late as 2019, this potentially leaves a year or less to achieve these reductions. Commenters said requiring such dramatic emission reductions in such a short time p eriod cannot be reliably or cost-effectively accommodated by the interconnected electric system. Commenters added for example, when applying building blocks 1 and 2 to Arizona's resou rces, all of the coal generation in Arizona, including PacifiCorp's Cholla Unit 4, is completely displaced by natural gas resources by 2020.

Commenters understood EPA's stated intent that stat es are not obligated to apply building blocks 1 and 2 in this manner and may choose to meet the i nterim goals in ways other than the immediate displacement of coal resources; however, given the way the interim goal is designed, with a 2020 start date and limited changes in reduc tions from year to year that do not reflect the step-change nature of resource development, it woul d not be possible to otherwise employ the heat rate improvement projects that are available o r develop enough energy efficiency or renewable energy to allow the continued operation o f certain coal-fueled resources. Commenters added as recognized by EPA, renewable resource deve lopment and energy efficiency programs take years to ramp up and develop; renewable resour ce development timelines in particular are significantly impacted by permitting and constructi on requirements. Commenters said this is particularly true in the Western United States with an abundance of federal lands and wildlife concerns; consequently, states such as Arizona are left with only one means (retirement of coal resources) to meet the interim goals. Commenters sa id these issues are complicated by the fact that many of the NGCCs in states bordering Californ ia were developed by independent power producers with long-term power purchase agreements with California utilities. Commenters said when coupled with the short compliance timeframe fo r emissions reductions associated with building blocks 1 and 2, states are left with no vi able options to comply with the proposed interim goals. Commenters added EPA should remedy t his situation by allowing states to develop their own compliance plan reasonable progre ss trajectories prior to 2030, or at a minimum, phase-in all of the tools it chooses to us e for compliance over the entire 2020-2029 compliance period, including heat rate improvements and increased utilization of natural gas.

Commenters asserted the 2030 targets as currently p roposed can be met and meaningful emission reductions achieved; however, commenters asserted E PA should consider removal of the interim targets or allow a phase-in of heat rate improvemen ts and NGCC re-dispatch in a manner similar to the phase-in of renewables and energy efficiency , particularly in states where these two136

components of BSER impact the ability of those stat es to ensure safe, reliable supplies of electricity at a reasonable cost.

Commenters recommended introducing greater flexibil ity in the application of Building Blocks 1 and 2 by eliminating the requirement that the full magnitude of emission reductions from these building blocks be achieved by 2020. Commenters sai d under the current proposal, the methodology for establishing the interim emission r ate goal requires that emission reductions occur by 2020 that are equal to the BSER assumption s for heat rate improvements and increased utilization of natural gas. Commenters said in stat es with significant coal and/or natural gas resources, this results in a substantial step chang e in emission reductions required by 2020. Commenters said thereafter, emission reductions are assumed to occur through 2030 based on the BSER assumptions for further increased renewabl es and energy efficiency. Commenters said accordingly, though there is a "glide path" availab le for compliance from 2020 to 2029, in many cases this is preceded by steep emission reduction required by 2020. Commenters said such a sudden and steep transition from coal to natural ga s-fueled resources has the potential to result in the costly and unnecessary stranding of assets and create system stability and reliability issues, and does not fully account for the remaining useful life of existing coal-fueled resources. Commenters said allowing states to phase in these c omponents of BSER over the entire 10-year interim period would effectively mitigate the conce rns identified above and establishes parity for the timing of requirements among the four building blocks. Commenters said such an approach could provide relief to states with significant red uction requirements by 2020, as currently proposed, without jeopardizing the ability of state s to meet the final emission rate goals. Commenters said this approach would also allow stat es to take into account their unique circumstances, such as the timing of coal retiremen ts, when proposing how they will meet the final goal.

Commenters stated EPA should adopt a procedure for phase-in of Building Blocks 1 and 2 in state plans. Commenters said the proposed Clean Pow er Plan assumes that building blocks 1 and 2 can be fully implemented by 2020. Commenters had two valid concerns with achieving building blocks 1 and 2 by 2020; improvements relat ed to building block 1 are unit specific and may require significant capital investment; Buildin g block 2 affects ongoing investment in pollution controls. Commenters said Colorado, and l ikely most other states, have experience developing plans to achieve a glideslope with miles tones (for example, the Regional Haze State Implementation Plan) or a future goal with measurab le intermediate actions (for example, the Ozone State Implementation Plan); EPA should adopt one of these procedures for states to use in setting interim milestones for building blocks 1 an d 2.

Comment 14: Interim goals exclude emission reductions achieved before 2020; the EPA should allow credit for early actions.

Response 14: See section VIII.B of the final rule preamble of the CPP for the EPA’s response
to this comment.137

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

Commenters stated the proposed interim compliance a verage period excludes emission reductions achieved before 2020 and perversely limi ts state incentives for initiating earlier emission reductions. Commenters said EPA proposes t o limit the reductions that can be included in state plans to those achieved during the interim period, but this means that states would not be

able to include reductions that occur before 2020. Commenters stated in creating an interim compliance average measured over the period 2020-20 29, EPA has created an arbitrary dividing line: planned emissions reductions that were "on th e books" as of 2012 may not be counted, but the same reductions that were put "on the books" in 2013 or later would be counted.

Commenters added the interim goal as proposed is tr oublesome in part because not allowing RE and energy waste reductions to count prior to 2020 has the perverse effect of delaying implementation of those programs, which can lead to fewer total tons of CO2 emissions being

avoided. Commenters said when a state has shown suc cess in reducing energy waste, and there is political and public willingness to continue these programs, establishing a future date to wait for credit dis-incentivizes the need to continue or exp and these programs until a future year when credit can be taken; there should be some programma tic method to allow credit towards the program goals for permanent reductions achieved fro m 2012 to 2020. Commenters said in addition, to clearly articulating the date by which credit will be counted, it is essential that USEPA provide clarity on how credit will be determi ned in terms of calculating lifecycle savings

and associated emission reductions for measures ins talled prior to 2020. Commenters said these emission reductions from EE programs should be show n to be permanent, recurring into the future, and contributing to CO2 reductions so long as the energy savings were quantified and verified through independent evaluation, measuremen t, and verification. Commenters said in the event that USEPA feels compelled to maintain an int erim goal, 2025 would be more favorable than 2020, time is needed to make the proper adjust ments and accommodation to shift generation to meet the US EPA required goals.

Commenters stated with regard to the suggestion tha t early reductions could be used as a way to ease the 2020 - 2029 glide path, the EPA requests c omment on a range of possible approaches to this type of credit for early action (79 FR 34918 - 34919). Commenters said in the first approach, full accounting of emission reductions continues to begin in 2020, but credit could be received for certain pre-2020 reductions that could be used to reduce the amount of reductions needed during the 2020 - 2029 period. Commenters said the EPA also requests comment in the proposed rule on a second approach in which states could cho ose early (e.g., pre-2020) implementation of state goal requirements, which could provide states with the ability to achieve the same amount of overall emission reductions but do so by making some reductions earlier (79 FR 34919). Commenters asserted that these approaches are too l imited and should be expanded to better represent the progress already made by electric uti lities to reduce CO2 from the power sector and to encourage further early reductions pre-2020. Com menters added, for the second option, while it is more realistic to assume that existing NGCCs are ramped up over time, this suggestion still leaves significant uncertainty of how this schedule would be developed and if the revised138

approach will offer sufficient time. Commenters sai d this approach does not appear to recognize that certain existing NGCCs may have design, operat ional, or regulatory restrictions that need to be factored into the schedule. Therefore, commenter s recommended that the EPA's final guidelines should eliminate the interim goal (2020- 2029) and allow States to establish a glide path to the 2030 final goal to allow adequate time to reliably achieve compliance. Commenters said at a minimum, the EPA's Clean Power Plan shoul d not require reductions any sooner than five years from EPA's final approval of a state pla n (or regional plan).

Commenters stated EPA calculated a 2012 emission ra te for each state as part of the process to set the state-specific emission rate goals, but the interim average compliance period does not start until 2020. Commenters said EPA proposes to l imit the reductions that can be included in state plans to those achieved during the interim pe riod; this means that states would not be able

to include reductions that occur before 2020. Comme nters said for example, states that undertake EE measures in 2015 will only be able to include th e reductions from five years of those measures' estimated 10-year reduction life; similar ly, depending on whether a state chooses a rate- or mass-based approach, retiring coal-based u nits may have a limited impact on state emission rates, especially if EPA prohibits states from including reductions that were already on the books as of 2013 in state compliance plans. Com menters said in creating an interim compliance average measured over the period 2020-20 29, EPA has created an arbitrary dividing
line: emissions reductions achieved after 2019 coun t, but the same reductions achieved before 2020 would not. Commenters said this penalizes stat es and EGUs that have taken early action to reduce emissions, creates disincentives for additio nal early action, is not required by the CAA and unnecessarily limits state flexibility in desig ning compliance plans.

Commenters stated the proposed rule provides little or no incentive for states to implement emission reduction measures prior to 2020, since th ese measures would provide no compliance

benefit until 2020. Commenters said in the case of energy efficiency projects, since such projects have a limited measure life, implementing energy ef ficiency projects before 2020 would reduce the total benefit received over the life of the pro ject. Commenters recommended States should be

allowed to bank credits from emission reduction mea sures implemented after 2012 and prior to 2020; such credits could be in the form of either t ons of emissions reduced or MWh of carbonfree generation. Commenters said states should be a ble to use such credits for compliance purposes beginning in 2020, and should be able to b ank excess credits generated during a compliance period for use during a subsequent compl iance period.

Commenters stated the proposed rule is being interp reted as offering disincentives for action between now and 2020 by utilities and state regulat ors. Commenters said while the proposed rule clearly states that actions between now and 2020 wo uld count toward compliance, it is not clear at all how that would happen, as there is no provis ion for banking credits for use during the compliance period. Commenters said EPA should maint ain this early action incentive and make it more meaningful and clearer, especially if a uti lity pursues a compliance action that their state does not include in the final state plan. Commenter s stated that utilities should be empowered to act to reduce emissions prior to the finalization o f a state plan, even if that state plan does not139

explicitly recognize the compliance option the util ity chose to pursue. Commenters added EPA should also consider how to encourage early actions during the 2012 - 2020 period to reduce cumulative emissions and improve emissions performa nce. Commenters said EPA should also clarify that retirements occurring after the base y ear and before 2020 count toward compliance, regardless of the reason why the specific EGU is be ing retired; the focus should appropriately be on the fact that the specific EGU will no longer be emitting pollution.

Commenters stated EPA's proposed goal calculation m ethodology requires early-acting states to meet more stringent interim goals than states that have thus far made little or no investments in RE and EE. Commenters said the methodology further penalizes early-acting states by requiring them to meet the interim goals on a faster timeline than states that have not taken early action.

Commenters added under the Proposed Rule, a state's 2029 RE target is determined by averaging the 2020 renewable portfolio standards ("RPSs") of states in the same region; for example, EPA set the North Central Region RPS goal at 15 percent : the average of the 2020 RPS goals for Illinois (16 percent), Michigan (10 percent), Minne sota (30 percent), Missouri (10 percent), and Wisconsin (10 percent). Commenters said EPA determi ned the constant rate at which each region would need to increase its RE generation eac h year to reach the regional RPS target if these rates were applied in the period from 2017-20 29. Commenters said the constant rate of annual RE generation increase is called the "growth factor." Commenters said the growth factor for the North Central Region is six percent. Commen ters said EPA applied the region's annual growth factor to each state's 2012 RE generation le vel to calculate a new level of RE generation for that state in the initial year of 2017. Comment ers said this calculation was repeated for each year in the 2018 - 2029 period, such that the 2018 RE goal would be the 2017 RE goal multiplied by six percent, the 2019 RE goal would be the 2018 goal multiplied by six percent, etc.

Commenters added using this regional annual growth factor methodology forces states that had high levels of RE during the baseline period to mee t more stringent interim goals on a faster timeline; for example, Minnesota's maximum RE targe t (which, in this case, is the same as the 2029 RE goal) is determined by multiplying the regi on's RPS goal (15 percent) by Minnesota's 2012 total generation (52,194 GWh), which equals ap proximately 7,889 GWh. Commenters said even though Minnesota's 2012 RE generation (9,453 G Wh) exceeds this goal, EPA added 7,889

GWh to the denominator of Minnesota's BSER calculat ion beginning in 2020 and running through 2029. Commenters said if Minnesota's 2012 R E were less than the state's 2029 goal, Minnesota's annual RE goals would have been determi ned by multiplying Minnesota's 2012 RE by the region's annual growth factor (six percent) beginning in 2018 to determine Minnesota's RE targets from 2020 through 2029. Commenters said the growth factor would be utilized through 2029 unless Minnesota hit its maximum targe t in advance (at which point the growth factor would no longer be used).

Commenters added with Minnesota's 2012 RE exceeding its 2029 goal, the annual growth factor does not apply; instead, Minnesota's 2020 RE goal i s the same as its 2029 goal. Commenters said Minnesota has no cushion to minimize the impact of the other emission reduction measures on140

which the state's goals were based, including the u nrealistic plant efficiency upgrades and increased natural gas dispatch. Commenters said Min nesota's reward for early action on RE is a more stringent final performance goal for RE that m ust be reached by 2020.

Commenters added similarly, existing EE was used in EPA's methodology to determine states' incremental and cumulative EE goals and the rate at which those goals must be achieved. Commenters said specifically, existing EE determine s (1) how quickly a state will reach the proposed 1.5 percent annual EE improvement rate, an d (2) a state's cumulative EE goal (because the cumulative EE goals depend on how quickly a sta te reaches the proposed EE improvement rate). Commenters said EPA assumes that states with higher historic annual incremental EE levels will reach the proposed 1.5 percent incremen tal improvement rate sooner than states with lower historic annual incremental EE levels, result ing in higher cumulative EE savings levels for early-acting states. Commenters said under Building Block Four, EPA added the cumulative EE savings levels to the states' BSER calculation deno minators; a higher cumulative EE savings level results in a lower performance goal; this mea ns that states that have historically high incremental EE levels are faced with more stringent final goals.

Commenters added the states that have historically high incremental EE levels also face more stringent interim goals, which they will be unable to meet if they cannot attain the everincreasing incremental EE savings that EPA incorrec tly assumes are achievable. Commenters said EPA assumes that states with higher historic a nnual incremental EE levels will reach the proposed 1.5 percent incremental improvement rate s ooner than states with lower historic annual

incremental EE levels. Commenters said states with existing EE incremental savings rates greater than one percent begin the performance peri od with a 1.5 percent incremental savings rate, while states with lower starting EE increment al savings rates have a longer ramp-up period. Commenters said if early-acting states are unable t o continue increasing their EE savings by 1.5 percent per year, they will be unable to meet their interim goals, which assume these constantly increasing EE savings.

Commenters stated when the original RGGI Program be gan in 2009, a limited number of "Early Reduction Allowances" were credited into the Progra m as 2009 allowances; similarly, when the amended RGGI Program began in 2014, previously "ban ked allowances" were credited. Commenters recommended that EPA implement a similar crediting approach for early reductions under the CPP; allowing a limited amount of credit for early action would address stakeholder concerns about the potential "cliff" of required re ductions beginning in 2020 and would recognize the imperative that BSER properly include early reductions; however, the overall stringency of the CPP in 2030 should not be weakene d; thus, any credit awarded by EPA in 2020 should be phased out by 2030, in a manner similar t o application of the budget adjustments under the RGGI Program.

Commenters supported EPA's suggestion to devise a s cheme of early reduction credit for states that take early action; early reduction credits cou ld provide an incentive for states to begin more concerted efforts to reduce carbon pollution sooner rather than later. Commenters said early141

reduction credit could also eliminate the apparent disparities between the emissions goals set for early acting states and the goals set for states th at have been less proactive. Commenters asserted that any early reduction credit scheme adopted by E PA should abide by the following principles: Use of early reduction credit should be limited to the state that created the credit; Early reduction credit should expire at the close of the Interim Co mpliance period to preserve national stringency post 2030; Credit for RE should promote renewable s ources with minimal criteria and hazardous air pollutant emissions; and Credit for early and s urplus redispatch to natural gas should only be based on measures that are federally enforceable an d permanent and replace high carbon fuels with natural gas (e.g., burner replacement memorial ized in a federally enforceable operating permit, unit retirement and/or replacement with new natural gas fired unit subject to a federally enforceable operating permit, federally enforceable operating permit requirements to co-fire gas up to a specified percentage of load at all times t hat a unit is operating; or a federally enforceable annual capacity factor limit on amount of coal and/ or oil that can be burned in a unit that converts to interchangeably fire natural gas).

Comment 15: Interim targets for states that pursue multi-state , market-based approaches

Response 15: See section VIII of the final rule preamble of th e CPP for the EPA’s response to

this comment.

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

Commenters stated there is not enough time to coord inate with partners in multi-state power grids.

Commenters added states in regional power grids wil l not even know the final composition of all the state plans by 2020, when compliance with the i nterim goals begins. Commenters stated EPA vastly underestimates the complexity of the power s ystem planning process and the time it takes for new infrastructure development. Commenters adde d that Texas's CREZ process took nearly 9 years from concept to completion, with Texas in com plete control of the execution of this process; transmission and natural gas pipeline plan ning, which can require approvals from multiple states and federal agencies, will take eve n longer.

Commenters stated emission reductions from re-dispa tch of the existing generation fleet comprise a large component of anticipated state and national emission reductions under the CPP; many states have expressed concerns about the timing of emission reductions from redispatch. Commenters said in particular, states hav e requested modification of the interim state targets in order to allow states more time to phase -in measures to re-dispatch the existing fleet. Commenters considered multi-state, market-based app roaches to be the only means to efficiently achieve re-dispatch of generation. Commenters said recognizing that it will take some time for states that do not currently have carbon policies i n place to coordinate and develop multi-state, market-based approaches, the commenters recommended that EPA signal flexibility for states142

that pursue such an approach. Commenters said such flexibility could involve modification of the assumptions regarding the timing of emission reduct ions from re-dispatch in line with later phase-in of a carbon price under a multi-state prog ram. Commenters said alternatively, EPA could establish a 'safe harbor' for compliance with interim targets for states that implement multistate, market-based approaches, in line with any gu idance provided by EPA. Commenters asserted that providing this type of "ca rrot" in the final rule for states that pursue multi-state, market-based approaches will help enco urage states to build multi-state alliances, an outcome the commenters asserted as strongly desirab le and beneficial to all interests.

Comment 16: The EPA should not assume that all efficiency impr ovements and emissions reductions can be implemented by 2020.

Response 16: In response to commenters’ concerns and further c onsideration, the interim period now begins in 2022 and ends in 2029. See sec tions V. and I.A 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 EPA should not assume that all ef ficiency improvements can be implemented by 2020. Commenters said EPA's assertion that all h eat rate improvements can be implemented by that date is unrealistic because state plans may not be completed until 2018 or later, leaving little time for EGU owners to secure regulatory app roval for any heat rate improvements or to secure financing and contractors to complete the wo rk. Commenters said for example, the limited universe of remaining equipment upgrades th at Santee Cooper could implement at coalfired units could increase those units' annual pote ntial to emit other pollutants; because such an increase could trigger EPA's NSR process, Santee Co oper may be forced to undergo a costly, lengthy NSR process in order to achieve the additio nal heat rate improvements EPA requires in the target goal set for South Carolina. Commenters said EPA lacks any basis to assume that such a time-consuming process could be completed in time to meet the Proposed Rule's expectation that all heat rate improvements could be implemente d and on-line by 2020.

Commenters stated some coal states may be able to r ealize a significant portion of their emission reduction requirements before 2020, which would fur ther minimize the first step by preachieving some of it; however, this is likely to on ly happen in states with a unique combination
of features such as:

-Coal plants that are at best marginally economic u nder forward prices for gas and power;

-Less aggressive EPA interim emission reduction goa ls;

-Capacity markets to support cost recovery for repo wering competitive coal plants to low capacity-factor natural gas plants;143

-Ample current and future reserve margins to allow retirements without jeopardizing reliability or (in cost-of-service regulated markets) requiring expensive additions to ratebase that would create unacceptable levels of rate increases ("rate shock"); and

-A willingness to opt for a mass-based state plan u nder 111(d).

Commenters added these conditions do not exist in n umber of coal states; indeed, a number of these states are likely to see increases in CO2 emi ssions between now and 2020, due to economic factors such as higher natural gas prices, economic growth and, potentially, from any nuclear retirements or extended outages in the intervening years.

Commenters added for some states, significant inter im emission goals may be correlated with higher power sector emissions before 2020; for exam ple, states with large amounts of both combined cycle and coal plants have the largest emi ssion reduction requirements from the EPA's second building block (gas re-dispatch); but such m ixed generation fleets will exhibit a strong tendency to increase both coal MWH and CO2 emission s as gas prices recover, consistent with forward market curves and EIA projections, especial ly in competitive markets. Commenters said similarly, states with large amounts of nuclear pow er have a larger emission reduction requirement due to the proposed rules third buildin g block, but may also be more likely to experience a prolonged nuclear outage, retirements or construction delays, both of which would cause fossil plants to run more and produce more CO 2.

Commenters added these CO2 emission drivers are pri marily economic or market-based; by contrast, specific policy efforts to meet some or a ll of EPA's GHG emission requirements prior to 2020 are unlikely in a number of coal states, fo r the simple reason that may be unwilling to embrace costly measures to meet the EPA's requireme nts before legal challenges to the rules are

resolved. Commenters said such resolution is unlike ly before 2020, and may take even longer, leading to the potential need for dramatic reductio ns in the first years of the program but little time for states to develop effective policies.

Comment 17: States cannot increase utilization of existing NGC Cs units to 70 percent by 2020;

BB2.

Response 17: The EPA has adjusted the start of the interim comp liance period to 2022 in this final rule, and has incorporated a phase in of buil ding block two deployment. Both of these adjustments address the concerns below about the im mediate ramp-up assumed for NGCC in 2020. The EPA does not believe any state needs to a chieve reductions prior to the start year.

See sections I.A., V.A., and V.D. 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:144

Commenters stated the proposed interim average goal assumes that the full 70 percent utilization of existing NGCC units has occurred by 2020 and is held constant through the 10-year interim compliance period. Commenters said unlike RE and EE measures, increased NGCC utilization is not phased in over the interim average compliance p eriod; therefore, in order to meet the proposed goals, states must achieve the full magnit ude of the reductions associated with this significant dispatch change starting in 2020. Comme nters added for states in which increased utilization of existing NGCC units drives the strin gency of the emission rate goals, this means that the majority of compliance must be achieved be fore 2020. Commenters stated EPA asserts that the interim period is a "10-year ramp-up perio d," but instead of allowing states to phase-in reductions, the 2020 interim average goals create a n emission reduction 'cliff' for many states.

Commenters stated the currently proposed interim go als for Arizona are too heavily weighted toward the early years and cannot be achieved throu gh the re-dispatch of all coal generation in the state to NGCC. Commenters said though a specifi c resolution is not known at this time, Arizona would have to add new generation, transmiss ion, natural gas capacity or combination thereof, which could not be achieved by 2020, the d ate at which the EPA assumes re-dispatch of

all of Arizona's coal units. Commenters said Arizon a's utilities need a more reasonable trajectory that provides additional time to fully understand t he implications of the proposed rule and to assist the state to develop and implement an approp riate plan.

Commenters stated Mississippi's interim goal is 732 lb/MWh and the final Goal is 692 lb/MWh; this means that in achieving the interim goal, Miss issippi will account for over 90% of its reductions toward the final goal. Commenters said t his is achieved based on the assumption that all of the measures proposed in Building Block 2 ca n be accomplished in a short period of time;

this is not the case. Commenters said several of th e utilities in Mississippi have long-term power and fuel contracts requiring continued operation an d utilization of fuel; in addition, facilities such as Mississippi Power's Plant Daniel and South Missi ssippi Electric Power Association's Plant Morrow, have recently installed new or upgraded pol lution control equipment to meet the requirements of the MATS rule. Commenters said shut ting these units down in such a short time period and switching to other generators would resu lt in stranded assets and increased cost to consumers. Commenters urged the removal of the inte rim goal.

Commenters stated it is difficult to imagine that t he Interim goals could be met by 2020 in a sustainable manner. Commenters said using the resul ts of Ohio EPA's regression analysis, it is estimated that such generation from all natural gas -fired units combined would not be realized
until 2025. Commenters said if the 2012 contributio n of NGCC generation to total natural gas generation (81%) and the results of the regression analysis are considered, projects that U.S. EPA's desired 1,444 TW-h from combined cycle units would not be realized until 2034. Commenters said U.S. EPA's goal setting for NGCC un its goes well beyond what the Ohio EPA analysis asserted is technically feasible; commente rs urged U.S. EPA to examine fully the historical growth of natural gas, understanding tha t such growth is reliant on adequate infrastructure development.145

Commenters stated it is not clear that the dramatic increase in utilization of existing NGCC units by 2020 envisioned by EPA can be achieved. Commente rs said EPA incorrectly assumes that current natural gas infrastructure is sufficient to support this dramatic increase in the utilization of existing NGCC units. Commenters said under EPA's proposed guidelines, existing pipeline infrastructure would need to be expanded in a short time frame; however, it take years to complete contracts and additional three to five yea rs to permit and build new pipelines. Commenters said although the FERC is the lead feder al agency for approving interstate natural gas pipelines, these new pipelines often require ap provals from other federal agencies.

Comment 18: The proposed interim goals will not jeopardize t e lectricity reliability.

Response 18: See section I.A. of the final rule preamble of th e CPP for the EPA’s response to this comment. See the Resource Adequacy Technical S upport Document.

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

Commenters were concerned about the impacts on reli ability and the timeline associated with the interim goals in the CPP proposed rule. Commenters were concerned that: 1) the EPA inadequately considers electric transmission facili ties in establishing the timeline for the interim goals in the draft CCP; 2) the energy efficiency as sumptions relied upon in the CPP are unrealistic and not sustainable; 3) the CPP's utili zation of a 70% capacity factor for combined cycle units is unsound; 4) the CPP's failure to con sider the availability of the materials and labor for constructing the electric transmission and gene ration infrastructure required to comply with the CPP proposed rule; and 5) the short time frame to meet interim goals by 2020 risks the reliability of the bulk electric system.

Commenters stated under the current rule, substanti al emission reductions must occur by 2020 to meet Wisconsin's interim goal; Wisconsin utilities and ratepayers have already made investments in generation and transmission to improve reliabili ty and reduce emissions. Commenters said the steep emission reductions required by the 2020 inte rim goal limits the time available to plan, permit, and construct infrastructure and upgrades, in addition to forcing inefficient retirements. Commenters said given that the rule will not be fin alized until June 2015 with state plans due June 2016 at the earliest, accomplishing a signific ant amount of the required emission reductions prior to 2020 may have system reliability consequen ces.

Commenters were concerned with the reliability impa ct of the USEPA's proposal given the stringency of the interim goal. Commenters said the USEPA states that the "IPM model is specifically designed to ensure generation resource adequacy" but also, "assumes that adequate transmission capacity exists to deliver any resourc es located in, or transferred to, the region." Commenters stated they do not equate resou rce adequacy with reliability and cannot support at this time the USEPA's assumptions regard ing the adequacy of the transmission system to support its resource adequacy position. Commente rs noted that the Western Electricity146

Coordinating Council (WECC), the reliability organi zation for the Western Interconnection, has only begun to complete an assessment of reliability impacts of the proposed rule. Commenters said the WECC noted in its "EPA Clean Power Plan, P hase I- Preliminary Technical Report" dated September 19, 2014 (WECC Report) that "[c]omp rehensive analyses, considering [Remedial Action Schemes], voltage stability, and p ath rating impacts, among other reliability aspects, are still needed to finalize any conclusio ns around system reliability." Commenters said WECC cannot completely and accurately address its c oncerns about the Clean Power Plan's impacts on reliability until states have selected t heir compliance plans, which creates a chickenand-egg situation.

Commenters added the WECC stated some of its concer ns about continued reliability in the WECC Report; first, since the current electric syst em was designed to deliver energy from existing resources, changing the location, size and type of generation may make delivering power to local load a challenge; path ratings may a lso be affected; a second concern is that the location of replacement resources may not have tran smission infrastructure available; siting and construction of generation and transmission resourc es is a long process and could delay implementation of state plans; third, changes in th e types of generation resources that are being used may require changes in operating practices and procedures, and changes in how existing generation is used. Commenters said these changes a ll take time to implement; to do so by 2020 is unreasonable, and could have significant negativ e consequences on system reliability.

Commenters stated the North American Electric Relia bility Corp (NERC) has recently issued a report that cautions the EPA to consider delaying t he interim goal deadline of 2020 "The proposed timeline does not provide enough time to d evelop sufficient resources to ensure continued reliable operation of the electric grid b y 2020," according to the report. "More time for implementation may be needed to accommodate reliabi lity enhancements." Commenters said EPA should carefully evaluate the effect of the Rul e on electric grid reliability prior to rule promulgation; the rule comes on the heels of an eco nomic recession that started in 2009; the additional assets to meet the state goal require si gnificant capital expenditures in order to achieve interim goals in 2020 and a final goal in 2030. Com menters said EPA should refrain from imposing such an aggressive state goal and timeline because such an action would harm the economy during recovery from a recession; EPA shoul d remove the interim goal, impractical deadlines should not be used to rush forward a prog ram of this magnitude and complexity; the unintended consequences need to be vetted, analyzed , and mitigated.

Commenters stated the interim standards proposed by EPA cannot be met while maintaining reliable service in the Entergy region; the interim goals should be removed from the Proposed Rule. Commenters said alternatively, the interim go als should be phased in over a reasonable timeline, or EPA should allow each state the flexib ility to determine its own glide path to the final goal.

Commenters added EPA's Proposed Rule would require Entergy's generation portfolio, and its operations as a whole, including transmission, dist ribution, and energy efficiency programs, to147

change dramatically in a very short time period; no tably, the potential impact on the generation portfolio would affect not only Entergy's coal plan ts, of which it has relatively few, but also its steam oil/gas units, which provide a critical relia bility role in the Entergy system. Commenters said the Proposed Rule develops two types of state emission rate goals, "interim" goals for the years 2020 through 2029 and "final" goals for 2030. Commenters said the formula EPA uses to calculate these goals implies that all emission rat e reductions from Building Blocks 1 and 2 would be realized by 2020 - the start of the interi m period - or soon enough after 2020 to allow the state to meet the interim goal as an average be tween 2020-2029. Commenters said because it is highly unlikely that most states, including Ente rgy's utility states (Arkansas, Louisiana, Mississippi, and Texas), will be able in later year s to have an emission rate significantly lower than the very stringent interim targets, the Propos ed Rule essentially has "front-loaded" the reduction requirements; this requires a steep decli ne in state emission rates in the first years of the interim period in states that already have inve sted in efficient, low emitting NGCC capacity. Commenters said according to the EPA modeling, seve ral of Entergy's fossil units that are important to reliability would close by 2020 in ord er to comply with the Proposed Rule. Several commenters have explained in detail the infeasibili ty of complying with the interim standards as they are set in the Proposed Rule; through its "Por tfolio Transformation" initiative, Entergy, since 2005, has purchased nearly 3,345 MW's of NGCC rated capacity in Louisiana, Mississippi, and Arkansas, where Entergy operates five electric utility companies; in total, 13,074 MWs of installed NGCC rated capacity exists in these three states. Commenters said it is largely for this reason that Building Blocks 1 and 2 make up 77% to 84% of the emission rate reductions called for in EPA's proposed emission rate goals, in turn causing this "2020 cliff" scenario. Commenters said for Louisiana, the proposed re-disp atch of NGCC capacity results in an abrupt 54% reduction in coal fired and oil/gas capacity, f or Arkansas a 64% reduction, for Mississippi a 100% reduction, and for Texas a 52% reduction. Comm enters said the resulting 2020 interim standards in the Proposed Rule are extremely aggres sive, and EPA has not met its obligation to demonstrate that it is feasible to meet them - in p articular, that they can be met while also meeting FERC and NERC reliability requirements.

Commenters stated for states to comply with EPA's p roposed 10-year average goal, many states must achieve the majority of emission reductions by 2020. Commenters said achieving the 2030 goals would require significant changes to the inte rconnected power system and the way that it operates; these changes in the manner in which powe r is generated, transmitted and consumed must be done in a way that maintains operational re liability and provides consumers with leastcost power. Commenters said this would be accomplis hed by eliminating the interim goals and allowing states to establish a glide path to 2030 c ompliance.

Commenters stated EPA's primary attempt to demonstr ate the feasibility of the Proposed Rule is the agency's IPM modeling of the year 2020, which p urports to illustrate an achievable "snapshot" of compliance with 2020 requirements. Co mmenters do not assert that EPA's IPM modeling reflects a realistic picture of an electri c grid that can maintain required reliability standards, partly because its representation of the electric system does not capture all148

transmission constraints and operational requiremen ts; the closure of so many units necessary to grid operations by 2020 is not feasible.

Commenters stated EPA's IPM modeling forecasts that by 2020 there will be 3,974 of MW rated coal capacity retired in Arkansas, 3,045 MW of rate d coal capacity retired in Louisiana, 2,519 MW of rated coal capacity retired in Mississippi, a nd 8,728 MW of rated coal capacity retired in Texas. Commenters said even a cursory inspection of EPA's IPM 2020 modeling shows that the results are not viable; to meet the 2020 standards, EPA's IPM shows closing or not operating a large number of steam gas units that play a critica l reliability role on the system because they are

in transmission constrained areas and five baseload coal units. Commenters said several independent studies, including one undertaken recen tly by MISO regarding voltage and local reliability ("VLR"), confirm that the operation of these units is required to meet reliability requirements, and that the units cannot be shut dow n, and reliability maintained, without billions of dollars in transmission investments, which would take far longer to plan, site, and construct than the few years that would be available between final approval of state 111(d) plans (2017 at the earliest) and 2020.

Commenters stated to demonstrate the infeasibility of EPA's IPM results, and, by extension, the infeasibility of the 2020 interim goals, the commen ters ran their own transmission-constrained dispatch models assuming the closure (or non-operat ion) of the plants consistent with EPA's IPM 2020 compliance modeling and the commenter's load f orecasts from the 2013 business plan; the results were unambiguous - not only could the syste m not be operated in compliance with reliability requirements, but involuntary curtailme nts (rolling blackouts) would be required on a routine basis. Commenters' modeling of EPA's compli ance scenario shows that it would result in a shortage of generation in place to serve load, ca using rotating black outs on the system for approximately 100 days a year, even in "normal" wea ther conditions, likely during the winter
and summer months.

Commenters stated this level of service interruptio n is approximately 1000 times higher than the NERC planning standard for interruption of service due to insufficient bulk system facilities (generation transmission). Commenters said the NERC standard is "one day in 10 years," meaning that system operators and load serving enti ties should have sufficient generation and transmission in place so that service interruptions due to lack of available generation are extremely rare; this standard does not cover outage s caused by local distribution failures, storms that temporarily disrupt transmission, or similar i ncidents. Commenters said removing the generation that EPA's IPM says can be taken out of service would result in electric service interruptions - even with all other generation, tra nsmission, and distribution facilities in place and operating properly - and would violate federal standards.

Comment 19: Regional Effects149

Response 19: The interim period now begins in 2022 and ends i n 2029. See sections I.A, V.A., and VI.B 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 the WECC has begun a phased study process to analyze potential impacts of the Proposed Rule to the western electric generatio n and transmission industry. Commenters said preliminary WECC results indicate that states' deci sions made regarding compliance with the CPP can "drastically impact grid operations, system resiliency, and potentially, compliance opportunities for a neighboring state." Commenters said the WECC has stated that its analyses will continue throughout 2015. Commenters said the EPA should take advantage of such regional analyses to appropriately modify the inter im goal structure.

Commenters stated the RTOs and ISOs will need time to determine any necessary market rule and system changes; obtain state and federal approv als, including FERC approval; and reliably implement the required changes. Commenters said in RTO/ISO markets, the stakeholder process can take six to eight months, even on an expedited basis; FERC approval can take as long as a year or more, and implementation cannot start befor e final approval. Commenters said even on the most expedited basis, RTOs and ISOs would have very little, if any time, to make market changes before 2020.

Comment 20: Interim compliance average period is inconsistent with state planning processes.

Response 20: The interim period now begins in 2022 and ends i n 2029. See sections I.A, V.A., and VI. of the final rule preamble of the CPP for t he EPA’s response to this comment.

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

Commenters stated the proposed interim compliance a verage period is inconsistent and incompatible with state planning and legislative pr ocesses and planning.

Commenters added although state plans are due in mi d-2016, EPA has offered states the option of seeking an additional year (for an individual st ate plan) or two (for multistate plans). Commenters stated additional time to create workable state plans is a welcome flexibility; however, this extension conflicts with legislative schedules in many states. Commenters said several states already have noted that their legisl atures do not meet every year and that the relevant future sessions are out of sync with the p roposed timing for submission and approval of state plans. Commenters stated to the extent that s tates need to pass new legislation to ensure that all elements of compliance plans are enforceable, t he legislative calendar in some states will be an impediment to both ensuring that compliance plan s are completed on time and allowing key compliance measures to reduce emission rates to mov e forward before 2020.150

Commenters stated EPA should eliminate the proposed interim goals in its Final Rule. Commenters said the first interim year is currently 2020, which establishes an unrealistic timeframe for developing and implementing individua l state plans. Commenters said the Final Rule is expected to be promulgated in June 2016 aft er which time states will have two years to develop individual state plans (or three years for multi-state plans). Commenters said if a state plan is submitted in June 2018, EPA is expected to take at least one year to review and grant approval; a state's best case scenario would be to obtain approval by June 2019, thus giving it less than eighteen months to comply with the interi m goals. Commenters said in the event EPA required alterations to a state's plan, approval an d compliance would be further delayed by

another round of state revisions and EPA review lik ely extending into 2020. Commenters said most states (including North Carolina) will be requ ired to undertake statutory revisions and initiate state rulemakings to implement portions of their state compliance plan. Commenters said North Carolina does not have a full-time legislatur e and it is likely that the legislature will have adjourned for the year prior to EPA approval of Nor th Carolina's compliance plan in 2019. Commenters said the resulting state rulemakings wil l require drafting and vetting, public notice and comment, consideration by the promulgating regu latory body and review by the Rules Review Commission; it is extremely unlikely that th ese state legislative and regulatory processes could be completed prior to the interim goal.

Commenters stated implementation of the plan could take longer than projected making the interim 2020 reduction goals for Texas unattainable , primarily because it may be necessary for Texas to pass legislation to implement necessary re duction programs, and the 2015 Texas legislative session will end before the proposed ru le is finalized.

Commenters stated that while TCEQ, as the Administr ator of Texas's air quality program under the CAA, would be responsible for submitting any St ate Plan and monitor compliance with same, it would clearly need the assistance of the P UCT and possibly the RRC.

Commenters contended that EPA has failed to address the extensive level of coordination among state agencies that would be necessary to implement this rule. Commenters explained that the coordination among Texas state agencies that will b e required by Rule 111(d) would also require changes to Texas law and such laws could not be ame nded until 2017 at the earliest. Commenters added that the additional state laws req uired to implement Rule 111(d) in Texas would in turn almost certainly require the adoption of new or amended rules by each affected state agency, including TCEQ, PUCT, and possibly th e RRC and would almost certainly require interagency contracts or agreements between these a gencies. Commenters concluded that EPA's compliance deadlines, particularly its interim comp liance deadlines, do not account for the time needed for state agency coordination (and the assoc iated costs) required by Rule 111(d). Commenters added that Rule 111(d) will also require extensive coordination with FERC to ensure that all entities (both inside and outside o f ERCOT) comply with existing FERC reliability standards. Commenters added that this i s a potentially significant aspect of compliance that EPA has not addressed in the proposed rule. Co mmenters explained that because Rule 111(d) will almost certainly impact grid reliabilit y in Texas and throughout the nation, the compliance obligations of Rule 111(d) may conflict with the compliance obligations of entities151

subject to FERC reliability standards. Commenters a dded that EPA has also failed to address the cost and time implications for states and utilities in coordinating with FERC to implement Rule 111(d).

Commenters urged EPA to ensure that final rule will not compromise the thorough review of Minnesota's Integrated Resource Planning (IRP) Proc ess, with its due consideration of reliability and rate impact. Commenters explained that Minnesot a's regulated utilities file a biennial IRP that evaluates the utility's projected load growth and the least-cost mix of demand and supplyside resources for that utility's service area over the 15-year planning period. Commenters added that review of the IRP is a transparent process: th e utility's modeling is tested and alternative scenarios are modeled, and the public and affected organizations and customers have the opportunity to question and comment. Commenters con cluded that the IRP process has been highly successful, allowing long-term planning to m eet several legislative directives aimed at increasing energy savings, renewable energy, includ ing solar energy, and greenhouse gas reduction. Commenters expressed concern the propose d rule would interfere with the IRP process and that the interim targets in the propose d rule could require steps that are not the most cost-effective for their state for meeting the goal and assuring the reliability of the system. Commenters added that the interim goal fails to acc ount for the manner in which large energy generation shifts occur and is at odds with Minneso ta's energy planning. Commenters concluded that adding flexibility into the interim compliance level is essential for Minnesota's least-cost compliance.

Comment 21: Interim compliance average period is inconsistent with utility investment decision-making.

Response 21: The interim period now begins in 2022 and ends i n 2029. The EPA has included illustrative interim period statewide emission valu es for the periods of 2022-2024, 2025-2027, and 2028-2029 to show a gradual reduction strategy states may choose to attain the interim goal over the 2022-2029 period. See sections I.A, V.A., and VI. 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 the interim compliance average pe riod is inconsistent with utility investment decision-making. Commenters said it takes years for electric utilities to plan, gain approval for and build infrastructure and other supporting proje cts, which includes new efficient fossil-fuel plants; unit-level efficiency retrofits; new transm ission lines to mitigate plant closures and to bring new energy sources to the grid; and a host of other compliance activities. Commenters stated companies generally will not commit to make large financial investments - nor will state PUCs approve such investments - prior to final, EPA approved state plans which could be well into 2018 or 2019. Commenters said this uncertainty will challenge states' ability to meet and152

demonstrate compliance with the interim average emi ssion rates starting in 2020. Commenters stated EPA's assumption that states can take signif icant steps to reduce emissions in advance of the start of the interim compliance period is thus inconsistent with its own regulatory timeline, as such the interim compliance goal does not take into account this lead time necessary to achieving
reductions.

Commenters stated because the capital investment an d operational changes required to comply with the Final Rule cannot occur overnight, the int erim goal has the potential to drive uneconomic actions by a state. Commenters stated No rth Carolina will be required to meet approximately 71% of its final goal by 2020 in orde r to utilize the glide path toward 2030 compliance; achieving 71% compliance by 2020 is bot h impractical and unrealistic and eliminates much of the flexibility that EPA claimed to incorporate into the rule. Commenters

said in the event a state falls behind its interim goal targets in the first five years, it is possibl e that the state would have to meet an emissions targ et in the closing years of the interim period that is more stringent than the final emissions tar get. Commenters said the stringent nature of the interim goal would force states like North Carolina to prematurely close generating units to meet the interim goal, resulting in stranded assets. Com menters said in North Carolina, such early retirements would likely occur at plants where sign ificant investment has been made in environmental and emissions upgrades over the past decade; this would be economically wasteful of ratepayer funds and penalize states tha t have recently invested capital to reduce coal plant emissions. Commenters said states should be a llowed to establish their own glide path and the Proposed Rule should focus solely on achieving full compliance by 2030 and sustaining compliance thereafter.

Comment 22: Interim compliance average period is inconsistent with market schedules.

Response 22: See section I.A. of the final rule preamble of th e CPP for the EPA’s response to
this comment.

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

Commenters stated the proposed interim compliance a verage period is inconsistent with market schedules. Commenters added similarly, for states t hat participate in competitive wholesale markets, the timing of state compliance plans does not account for already scheduled capacity

auctions. Commenters stated because units that are selected in these auctions are expected to be available to provide power in the relevant timefram es, decisions about which resources will be required to be available in 2020 will be made early , before the first set of state plans have been submitted to EPA. Commenters said this will complic ate state planning as it may limit reduction options available before 2020.153

Commenters were concerned about EPA's assumption th at market power will be freely available post-2020, as the Clean Power Plan will substantial ly disrupt existing generation and market
patterns.

Comment 23: Interim compliance period creates compliance uncer tainty because the electric utilities and the regulatory officials will not kno w the amount of reductions needed each year to
stay on target.

Response 23: The interim period now begins in 2022 and ends in 2029. The EPA has included illustrative interim period statewide emission valu es for the periods of 2022-2024, 2025-2027, and 2028-2029 to show a gradual reduction strategy states may choose to attain the interim goal over the 2022-2029 period. See sections I.A, V.A, a nd VI 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 the 2020-2029 averaging period cr eates compliance uncertainty because the electric utilities and the regulatory officials wil l not know the amount of reductions needed each year to stay on target; it would be helpful if EPA developed an accounting framework that applies in each state for making projections and me asuring progress toward meeting the targets.

Comment 24: Alternates for Interim Goals

Response 24: For renewable generating sources built after 201 2, the generation from that capacity in a future compliance year will be eligib le to count towards the state plan compliance
demonstration as discussed in section VIII.

In response to the interim period, EPA is defining a Best System of Emission Reductions based on reduction potential, and as discussed in the GHG Mitigation Measures TSD – it has determined that the building block technologies hav e reduction potential in these early years.

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

Long-term IRP

Commenters stated every two years, each investor-ow ned utility in Idaho must develop a longterm IRP describing how the utility plans to serve its customers' expected electrical needs over the next 20 years; the required IRPs are informed b y detailed analyses of existing and new supply-side and demand-side resources, load-to-reso urce balancing under multiple resource154

portfolios, risk analyses and regulatory compliance scenarios. Commenters said these comprehensive IRPs are developed with input from st akeholder groups and ultimately reviewed and acknowledged by the Idaho PUC.

Commenters stated because the utilities' IRP planni ng processes produce resource acquisition plans that are designed to comply with all state an d federal regulations, the EPA should consider utility IRPs as a reasonable and more efficient alt ernative to the interim goals. Commenters said under an IRP-based alternative to the EPA's propose d interim goals, the state would demonstrate progress toward the 2030 emission goals by providin g utility-specific plans to serve future customer demands in a manner that complies with all the EPA regulations.

Use renewable energy

Commenters asserted that EPA should abandon the int erim 2020-29 goals altogether in the final rule, at the very least the rule should allow state s to use 2013-19 renewable energy to show compliance with the interim goals. Commenters said such a provision would provide a tangible reward to leaders who have promoted the use of rene wable energy, while maintaining the stringency of the final requirements.

EPA Should Replace Interim Targets With Periodic Re view

Commenters stated another consideration would be fo r EPA to replace the interim goals with a less formal periodic review; the 2020 "interim" goa ls are misleading, as the impact occurs by 2020; this means that a state's changes and results need to start well before 2020 in order to hit the interim goal-even with averaging all the preced ing years. Commenters said this is an unnecessary hurdle that will only create more paper work for the states at a time when they should be focusing on meeting their end goals.

Milestone Approach

Commenters stated replacing the interim goal with a "milestone approach" discusses the fact that

much of the carbon reduction must be done with reti rement of large EGUs. Commenters said other building blocks can be applied to reduce carb on emissions gradually; these include energy efficiency and renewable energy increases, increasi ng the use of more efficient gas units, decreasing the use of coal units over time, etc. Co mmenters said it's not essential to wait for a coal unit to retire to step down carbon emissions.

Comment 25: Interim Goals - Timing for Tribes and Territories.

Response 25: This final CPP rule affords sources, states, and tribes the flexibility to comply with their subcategory-specific emission performanc e rates through a variety of mechanisms that may or may not include changes to generation levels at particular EGUs. For instance, the155

Bonanza unit has the flexibility acquire emission r eduction credits (either from EGUs located on its lands or elsewhere) to demonstrate compliance w ith the emission rate.

See sections I.A. and III.A. of the final rule prea mble 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, in regards to the supplemental p roposal, the time remaining and complex jurisdictional issues surrounding the Bonanza Unit cannot be resolved and a plan developed and implemented by 2020. Commenters said the Ute Tribe of the Uintah-Ouray Reservation is a very small entity with extremely limited resources; the Tribe does not have and has not applied for Clean Air Act regulatory authority, and has little in place as infrastructure to support its own environmental regulatory administrative authority. Commenters said EPA Region 8 has issued all federal permits pertaining to Clean Air Act in the past. Commenters said it is unlikely that the

Tribe will have sufficient time and resources to de velop a carbon dioxide plan; EPA will most likely be called upon to do so.

Commenters stated, in regards to the supplemental p roposal, Deseret sells a significant portion of the output from the Bonanza Unit 1 under terms of l ong-term power purchase agreements that predate any contemplated carbon dioxide standard. C ommenters said the terms of those arrangements do not, in several important instances , allow or permit Deseret to pass through or recover increased costs associated with or arising on account of compliance requirements under the Supplemental Proposal. Commenters said these co ntracts include at least one very large, 20- plus year contract in the amount of approximately 1 00 MW of power tied to Deseret's Bonanza unit. Commenters said this agreement will not expir e until September 2024, well into the timeframe set for compliance with the Interim goal under the Supplemental Proposal. Commenters urged EPA to demonstrate the intended fl exibility built into the provisions of 111(d) by commencing the Interim compliance period for the Bonanza Unit 1, and therefore the Uintah-Ouray reservation no sooner than 2025, and t o defer the commencement of the Final Goal compliance period until 2035.

Comment 26: Comment suggesting that interim year rates for the years 2020 through 2029 should decline at a constant annual rate equal to o ne-tenth of the difference between the 2012

and 2030 rates

.
Response 26: The EPA is finalizing interim rates that reflect a phase-in of building block two and a revised building block three. The result is more of a “glide path” on average for states. In this final rule we are providing for increased flex ibility to allow states and regional planning groups to establish glide paths for their interim g oals and toward meeting the final 2030 goal. We are also requiring “check-in’s” that analyze pla n performance during interim timelines and156

may trigger corrective actions to bring plan perfor mance back to the glide path slope, as necessary. Yet we are not requiring that a particu lar glide path follow a set slope, but rather that the plan outline the steps and goals, including ind icators and timelines, such that an effective plan arrives at the set goal when the interim end i s reached. In other words, reductions may be greater during the early portion of a particular in terim, or toward the end of that interim, depending on the particulars of the plan.

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

Commenters stated that another option for addressin g stakeholders' concerns about the potential challenges associated with achieving all of the red uctions that states may need to obtain as early as 2020 is recalculating the interim state emission goals (i.e., not just the dispatch building block but the entire interim goal calculated using all fo ur building blocks) and spread the emission rate reduction requirements more evenly across the inter im years. The commenters stated that one approach for effectuating this change would be for EPA to calculate only two rates -a final goal in 2030 and a comparable composite in 2012. The com menters suggested that interim year rates for the years 2020 through 2029 would decline at a constant annual rate equal to one-tenth of the

difference between the 2012 and 2030 rates. The com menters stated that this would be a relatively simple and straightforward, but potentia lly effective approach to avoid potential problems that affected EGUs and states may have ach ieving compliance with front-loaded interim emission targets relatively soon after thei r SIPs are approved by EPA.

Comment 27: Comment supporting interim goal and glide path, an d suggesting use of a 10-year averaging period in the final rule.

Response 27: The EPA thanks the commenters for support of the in terim goal and glide path approach to meeting the final goal. We are finaliz ing this rule with one interim period beginning in 2022, and retaining the final goal period of 203 0. As such we expect the interim period and the associated 3-year, 3-year, 2-year steps, combin ed with other planning flexibilities afforded to state and regional planning groups, will provide fo r a proactive approach to achieving meaningful GHG reductions and effectively manage th e complex matrix of decisions in doing so.

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

Referring to EPA's request for comment on the 2020 to 2029 glide path in the NODA (79 FR 64548), commenters suggested a milestone approach f or measuring progress during the years preceding the 2030 goal. The commenters stated that a milestone approach would allow for stepped reductions in a manner that comports with t he Nevada Public Utilities Commission's integrated resource planning (IRP), would give stat es greater flexibility in meeting their final goals, and would create meaningful targets that tak e into account planned retirements of coalfired EGUs.157

If, however, the EPA adopts a 10-year averaging per iod in the final rule, then the commenters indicated that they would prefer a modified interim period that accounts for a phase-in schedule. The commenters stated that a phase-in schedule woul d provide time for infrastructure improvements that would support increased existing natural gas-fired generation as well as

modifications that would minimize stranded investme nts. The commenters noted that a milestone approach based on the IRP process would involve mea sured decision making taking into account various stakeholder interests, including inter alia individual states, tribes, utilities, and ratepaye rs. The commenters noted that such a process is more li kely to result in targets that address stakeholder concerns, such as infrastructure improv ements, stranded investments, continued safety and reliability of the grid, and overarching federal laws such as the National Environmental Policy Act.

Comment 28: States should be able to define a glide path that does not necessitate 2-year increments of performance.

Response 28: See response 27 above.

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

Commenters noted that the EPA is proposing states c an create their own glide path during the interim period; however, the EPA is proposing under 40 CFR 60.5815 that states develop increments of emission performance on a 2-rolling c alendar year period for the interim period (2020 to 2029). Given the numerous references to fl exibility and the EPA's understanding that many factors influence the ability to achieve the i nterim goal, commenters expressed concern regarding a 2-rolling calendar year increment of pe rformance. Commenters disagreed with the necessity for such frequent milestones to be achiev ed in the interim period, especially given the implications being proposed relevant to corrective measures and potential penalties or implications for not meeting these 2-year increment s of performance. Commenters stated that essentially the EPA is turning a 10-year interim co mpliance period into a 2-year compliance period.

Commenters disagreed with the necessity for increme nts of emission performance on a 2-rolling calendar year period for the interim period (2020 t o 2029) while post 2030 is based on a 3-year period. Commenters argued that states should be abl e to define a glide path that does not necessitate short 2-year increments. Second, commen ters disagreed with the need for final goal performance checks beyond the final determination o f compliance with the 2030 goal. Commenters stated that the proposal implies 3-year performance checks would continue indefinitely into the future. Commenters stated tha t the EPA is also proposing an option where, in addition to submitting a plan demonstrating emis sion performance through 2030, states would be required to make a second submittal in 2025 show ing whether their plan measures would maintain the final-goal level of emission performan ce over time; if not, the state submittal would158

be required to strengthen or add to measures in the state plan to the extent necessary to maintain that level of performance over time. [79 FR 34905] Commenters disagreed with this approach and stated that these proposed demonstrations go fa r beyond necessity and the intended scope of a Section 111(d) plan and even far beyond the scope of plans under Section 110.

4.3 ALTERNATE GOALS

Section 4.3 covers public comments related to the p roposed alternate final and interim goals.

4.3.1 Alternate Final Goals

Section 4.3.1 covers public comments related to the proposed alternate final goals including the stringency, achievability, state’s authority to dev elop, and the timing.

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: Support for Alternate Final Goals

Response 1: The EPA is not finalizing the alternate goals in the final rule. Please see section V of the preamble for the final BSER determination. P lease see sections VI and VII of the preamble for the final emission performance rates a nd statewide CO2 emission performance goals.

The alternate proposed goals reflected a different set of building block assumptions on which EPA took comment. The final rule can inherently on ly have one set of building block assumptions, so the Agency is not finalizing altern ate goals. However, the comments on the alternate goals still informed the final source cat egory rates and quantification of BSER. For instance, the proposed goals were based on a 6% hea t rate improvement, and the alternate goals were based on a 4% alternative assumptions. Althou gh there are no “alternate goals” in the final rule by the nature of it being final, the final hea t rate improvement assumptions more closely resemble those presented in the alternative goals a t proposal.

The following are summaries of the specific public comments under this comment:159

Several commenters approved the alternate goals as an available regulatory option.

Commenters added that allowing the alternate final goals with the proposed goals would allow maximum flexibility in adopting either goal and its associated timeline.

Commenters requested that states have the flexibili ty to select between EPA's proposal and 5- year option in their state plans.

Commenters added the Alternative Approach more accu rately reflects the emission reduction and deployment potential of renewable energy than t he RPS Approach.

Commenters added EPA has proposed two formulations of the BSER as alternatives for use in state emissions limit target setting; each recogniz es the reality of the interconnected nature of the electric system, which enables lower or zero CO2 em itting sources to substitute for the higheremitting affected sources, thereby reducing CO2 emi ssions from the affected sources overall. Commenters said EPA's first approach relie s on a combination of building blocks 1 through 4. Commenters said the second alternative B SER approach offered by EPA, identified as consisting of building block 1 coupled with "reduce d utilization" of the designated facilities, is grounded more closely in EPA's statutory authority to direct emissions reductions from the

affected sources. Commenters said this "reduced uti lization" BSER is also simpler, more transparent, and easier to comply with, because CO2 emissions reductions at the designated facilities (caused by reduced utilization of those sources) can be readily and directly measured, reported and enforced. Commenters said the alternat ive formulation of BSER under which building blocks 3 (low-or zero-emitting generation sources) and 4 (energy efficiency) reduce utilization of higher emitting affected sources is within EPA's authority.

Commenters added natural gas re-dispatch, energy ef ficiency measures and increased reliance on zero or near-zero emitting renewable energy generat ion costs are clearly "reasonable" as they are already in widespread use; including them in the BS ER will provide indirect incentives for further innovation in these CO2 reducing technologi es - precisely the kind of technological innovation leading to decreased costs associated wi th pollution control that the standard setting process is intended to yield.

Commenters added the concept of "reduced utilizatio n" of the regulated sources is not new, but has long been recognized as a pollution control mea sure under the Clean Air Act; for example, the plain text of the 1990 Acid Rain provisions inc ludes the reduced utilization language, as well as references to energy efficiency, showing that Co ngress clearly intended that pollution controls of the kind contemplated by EPA as the BSER in this rule could "reduce utilization" of existing EGUs, even to the point of unit retirement.

Commenters added the alternative "reduced utilizati on" BSER is a simpler formulation; on the implementation side, it is the CO2 reduction associ ated with reduced utilization of affected sources that can be most simply, easily, and accura tely quantified, tracked, monitored, and160

enforced; such reductions also are squarely within the control of the affected sources and owners and operators would not have to rely on participati on of non-regulated entities.

Commenters respectfully requested that, if a Clean Power Plan is to be pursued, a more rationally established compliance horizon and carbo n emission rate should be provided for Virginia to allow flexibility for the Commonwealth to meet the EPA's goals of reducing carbon output while imposing only reasonable costs on cust omers; the alternative carbon emission rate of 1,216 that EPA presents for Virginia, for exampl e, would achieve a substantial carbon emission reduction for existing fossil-fuel units i n Virginia without compromising reliable and affordable electric service to Virginia's citizens and businesses.

Commenters stated in this proposal, EPA has request ed comment on an alternative set of statespecific goals with a less stringent application of the same BSER with a shorter timeframe; commenters support this alternative approach becaus e it provides a more realistic and achievable goal.

Commenters support providing the option of complyin g with less stringent alternate state goals. Commenters said the alternate goals should r eflect what can realistically be accomplished and what would ensure equity among the states; the alternate goals would involve fixing the errors and revising the assumptions found in the cu rrent computations of what reductions can theoretically be achieved under the four building b locks to incorporate what actually and realistically can be accomplished. Commenters said the alternate state goals would provide the states with less stringent BSER requirements and an accelerated implementation time frame.

Commenters stated as compared to the proposed goals for Indiana, the less stringent alternative goals would mitigate the adverse economic consequen ces of compliance and are more appropriate.

Commenters stated Oregon is among the leading state s in energy efficiency policy and investments, and PGE, their customers, and their pa rtner, the Energy Trust of Oregon are leaders within Oregon at capturing energy efficiency. The c ommenters said the proposed method of determining BSER from energy efficiency does not ma tch our current practices or our understanding of the leading policies that have bee n demonstrated to acquire the most significant savings over time. Commenters said the final Clean Power Plan should adopt the alternate energy efficiency approach outlined in the proposal which assumes that states can achieve 1.0% annual incremental efficiency, approximating the cu mulative level of savings achieved by leading states in 2012.

Commenters stated EPA can capitalize on the changin g landscape of energy markets by shortening and advancing the rule's compliance sche dule while committing to issue updated performance standards that will take effect in 2026 . Commenters said the rule currently is scheduled to take effect in 2020, but there is no r eason that the leading states cannot submit plans by 2016, with approval in 2017 and a phased-in comp liance schedule beginning in 2018.161

Commenters said an accelerated schedule will both r eward states that have and plan to adopt the kinds of policies that will achieve significant CO2 reductions while motivating the less-inclined states to draft an approvable plan, lest they be su bject to an EPA-issued federal plan.

Commenters stated EPA should then be in a position to commence an internal review of the rule by 2020-21, with a proposed revision of the perform ance standards issuing in 2021-22 and a final

rule scheduled for 2022-23. Commenters said States would have up to two years to submit revised plans, allowing for a compliance period for the updated standards commencing in calendar year 2026. Commenters said by adopting thi s accelerated schedule and committing to an 8-year review (similar to the 111(b) approach), the agency can ensure that the emission reductions required in the second half of the next decade are sufficiently stringent and that the rule remains maximally effective.

Comment 2: Support for Alternate Final goals; with modificati ons.

Response 2: The EPA is not finalizing the alternate goals in the final rule. However, we are incorporating feedback received on the alternate go als into the final BSER quantification. Please see section V of the preamble for the final BSER de termination. Please see sections VI and VII of the preamble for the final performance rates and statewide CO2 emission performance goals.

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

Several commenters support the alternate goals, but recognize it needs modifications.

Commenters stated the 5-year option has some merit, because it takes a slightly more realistic approach to Best System of Emission Reduction, howe ver: EPA's calculation methodology penalizes states with under-construction nuclear an d takes away state flexibility in meeting the compliance goal; and the 5-year option requires "to o much, too soon" with the interim goal, and by requiring heat rate improvements, natural gas di spatch changes and energy efficiency targets prior to the rule taking effect in 2020.

Commenters stated the Alternative Approach, when ad justed to adequately capture the contributions from solar, would most effectively ca pture the emissions reductions achievable through application of the BSER to affected EGUs. C ommenters stated the Alternative Approach is more accurate because it does not rely on one po licy to determine the solar potential in a state, as the RPS approach does; thus the Alternative Appr oach would set a more realistic expectation of the amount of solar growth feasible that will cr eate a balanced energy portfolio in each state.

Commenters added the Natural Resource Defense Counc il (NRDC) engaged with ICF to run the Integrated Planning Model (IPM (registered sign)), the same model that EPA uses, to reproduce

EPA's RE Market Potential run based on the below so lar energy recommendations, using up-todate cost and performance assumptions for renewable energy technologies. Commenters stated the resulting national target for renewable generat ion nearly doubles from EPA's estimate,162

growing from 524 TWh in 2030 to approximately 973 T Wh in 2030. Commenters said this clearly demonstrates that significantly higher leve ls of renewable energy are both technically and economically achievable, compared to the levels pro posed in either of EPA's target-setting approaches. Commenters concluded based on these res ults, EPA should strengthen the contributions of renewable energy in its target-set ting to accurately reflect the full potential that these technologies can have in reducing dangerous c arbon pollution from the electricity sector.

Commenters added the EPA should reconsider NGCC cap acity factors for states, like Minnesota, with higher RE potential to reflect the role played by NGCC in backing up RE generation. Commenters added if EPA uses the Altern ative RE approach in the final rule, where expected RE generation is substantially increased f or many states in EPA's determination of BSER, the reliance on a 70% NGCC capacity in buildi ng block 2 target-setting calculations for Minnesota and other states with similar generation profiles should be reconsidered. Commenters said EPA's current assessment of NGCC in building b lock 2 may overlook the role NGCC units have in support of wind and solar power; Minnesota relies on NGCC units to provide energy during peak consumption periods, and in part as bac kup for wind energy. Commenters said Minnesota is concerned whether existing NGCC, run a s base-load plants with capacity upward of 70%, could additionally fulfill their existing role in supporting RE generation and peak load service. Commenters said with current RE generation of about 10,000 GWhr, it might be reasonably expected that with whatever role NGCC pl ays in backing up its wind resource, under the alternative RE approach that expects Minnesota' s RE generation to increase to 18,647 GWhr, Minnesota's reliance on its existing NGCC capacity to back up RE will increase. Commenters

said Minnesota recommends that if EPA finalizes the alternative RE approach, it re-visit NGCC capacity factors on a state-by-state basis to refin e state targets.

Commenters stated the agency has solicited comment on an alternative compliance period ending in 2025, with interim goals applying between 2020 a nd 2024. Commenters urged EPA to adopt

the shorter time frame with two additional features . Commenters said first, EPA should advance the compliance schedule to begin as early as Januar y 2018, rather than 2020. Commenters said second, the agency should engage in a continuous in ternal review of the rule during the compliance period and should commit to issuing a re vised set of emission guidelines that would
take effect in 2026.

Commenters added under either the 2025 or 2030 form ulation of the rule, states are expected to cut their CO2 emissions according to the levels pro vided under Building Blocks 1 and 2 in the first year of compliance, while Building Blocks 3 a nd 4 require incremental cuts spaced out over the remainder of the compliance period; what this m eans is that the substantial majority of reductions occur early on in the compliance schedul e, while later years contribute relatively little in the way of emission cuts. Commenters said they a pprove of the agency's decision to require steep cuts early on, commenters believe that RE and EE - which are phased in more slowly under Blocks 3 and 4 - will provide much greater opportun ities for emission reductions than the rule currently anticipates. Commenters said renewable te chnologies in particular are rapidly dropping in price, whereas fossil fuels will become increasi ng expensive between now and 2030.163

Commenters said between now and 2020, it can be exp ected that the changing economics of the electricity sector to make RE investments significa ntly more attractive across the board, including in states that are currently resistant to these innovations.

Commenters stated EPA has asked if less stringent g oals should be promulgated with a 2025 due date. Commenters said there may be some merit in th is approach if it is coupled with a commitment to revisit the entire program in 2020 to release 2030 goals that will inevitably be more strict that the 2030 goals now proposed.

Comment 3: The EPA's alternative goals like the proposed goal s are flawed and unworkable.

Response 3: The EPA is not finalizing the alternate goals in the final rule. Please see section V of the preamble for the final BSER determination. P lease see sections VI and VII of the preamble for the final performance rates and statew ide CO2 emission performance goals.

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

Several commenters stated EPA is also soliciting co mments on state goals that are higher CO2 emissions rates but the interim goals will have to be met from 2020-2024 and the final goals in 2025. Commenters said for Kentucky, the alternate l imits are 1,951 lbs/netMWh interim and 1,918 lbs/netMWh final. Commenters said this altern ative approach identifies the "system of emission reduction" as including, in addition to Bu ilding Block 1, the reduction of fossil fuelfired EGUs' mass emissions achievable through reduc tions in generation of specified amounts from those EGUs. Commenters said under this approac h, the measures in Building Blocks 2, 3 and 4 would not be components of the system of emis sions reductions, but instead would serve as bases for quantifying the reduction in emissions resulting from the reduction in generation at affected EGUs. Commenters said this alternative app roach contains a more aggressive compliance timeline that the primary CPP option and the lack of projected RE and EE in the compliance calculation for a portfolio approach wil l result in a significant increase in cost and forced retirements. Commenters said like the primar y proposal, EPA's alternative goals do not create a workable framework; the proposed alternati ve does not provide relief from the devastating financial impacts. Commenters said basi ng the calculations on net versus gross emission, the alternative goals include the same un realistic concept that all facilities (or any EGU) can get a six percent heat rate reduction in a ddition to the projects that have already been completed; coal-fired plants are still left having to make the same kind of reductions in capacity

factor to achieve these rates. Commenters said the goal calculation is fatally flawed no matter which Building Blocks are or are not included.

Commenters stated in the CPP Proposal, EPA develope d an alternate set of goals reflecting less stringent application of the building blocks but a shorter implementation period; the alternate final goals represent emission performance that wou ld be achievable by 2025, after a 2020-2024 phase-in period, with interim goals that would appl y during the phase-in period on an average basis as States progress toward the final goals.164

Commenters opposed EPA's alternative set of goals f or the same reasons raised with respect to the Proposal; in particular, the shorter timetable may present deadlines that will not be feasible; however, EPA should allow the states to choose betw een whether they will implement the proposed or alternative goals. Commenters said stat es have a better understanding regarding which standard(s) and deadline(s) they would be mor e likely able to meet, and should, at a minimum, have the requisite flexibility to choose w hich of the two plans they prefer implementing. Commenters urged EPA to extend the sc hedule for states to meet the alternate final goal to no earlier than 2030 while eliminatin g the interim goals and allowing states to determine the emission reduction trajectories that work best in meeting their final goals in the most equitable, cost effective and efficient manner possible.

Commenters stated EPA also solicited comment on the combination of Building Blocks 1 and 2 only as the basis for BSER. Commenters said this is not EPA's preferred alternative, and EPA states that the proposed combination of all four bu ilding blocks is capable of achieving greater

reductions in CO2 emissions from affected EGUs at a lower cost. Commenters said the fatal flaw in EPA's analysis, is the use of Building Blocks 2, 3 & 4, which impose obligations on sources not within the relevant subcategory and which are n ot part of the physical affected source as defined in EPA's proposed NSPS for coal-fired EGUs and IGCC units.

Commenters stated if EPA insists on retaining Block 2 as part of its BSER determination, EPA should also consider as an alternative approach the use of Blocks 1 and 2 only in the goal calculation (and the only two elements of the BSER) . Commenters said under construction nuclear, new nuclear, renewable energy and energy e fficiency measures that fall within Blocks 3

and 4 would be available in the suite of measures S tates could use to comply with the derived CO2 performance standards.

Commenters stated EPA is also soliciting comments o n alternative state goals at higher CO2 emissions rates, but interim goals will have to be met from 2020-2024 as will final goals in 2025; for Indiana, the alternate interim limit is 1,715 l bs/netMWh and the alternate final limit is 1,683 lbs/netMWh. Commenters said this alternative approa ch identifies the "system of emission reduction" as including, in addition to Building Bl ock 1, the reduction of fossil fuel-fired EGUs' mass emissions achievable through reductions in gen eration of specified amounts from those EGUs. Commenters said under this approach, the meas ures in Building Blocks 2, 3 and 4 would not be components of the system of emissions reduct ions, but instead would serve as bases for quantifying the reduction in emissions resulting fr om the reduction in generation at affected EGUs. Commenters said this alternative approach con tains a more aggressive compliance timeline than the primary CPP option and the lack o f projected RE and EE in the compliance calculation for a portfolio approach will result in a significant increase in cost and forced retirements. Commenters said like the primary propo sal, EPA's alternative goals do not create a workable framework; the proposed alternative does n ot provide any relief from the significant cost and reliability impacts that are detailed abov e. Commenters said basing the calculations on net versus gross emissions, the alternative goals i nclude the same unrealistic concept that all facilities (or any EGU) can obtain a six percent he at rate reduction over and above heat rate165

reductions already obtained by projects that have b een completed, and that are not credited by the CPP. Commenters said coal-fired plants are left having to make the same kind of reductions in capacity factor to achieve these rates; the goal calculation is fatally flawed no matter which building blocks are or are not included.

Commenters said while the alternate state goals are slightly less stringent than the goals included in the proposed rule and would be implemented over a shorter time period, the commenters are equally concerned about the feasibility and impact of the rule should the EPA adopt the alternate state goals.

Commenters added NRECA has provided numerous reason s detailing that the interim 2025 compliance option and 2030 compliance building bloc k goals are unachievable; each building block goal is based on flawed assumptions without w hich the building block goals are not

achievable for numerous States. Commenters said the five-year alternative building block goals are no more achievable for similar reasons; they ce rtainly cannot be rationally strengthened.

Commenters added the alternate goals suffer from th e same fundamental flaw as the proposed goals: they are based on an unlawful BSER determina tion; a standard of performance under section 111 must be achievable by individual regula ted sources based on measures that the source's owner can integrate into the design or ope ration of the source itself; Building Blocks 2, 3, and 4 are inconsistent with this requirement. Co mmenters said simply lowering the targets of the various Building Blocks doesn't change this fac t. Commenters said the alternate goals also suffer from the same challenge as the proposed goal s in that the interim compliance period, which begins in 2020, does not allow enough time be tween state plan approval and 2020 to develop and implement a compliance strategy to avoi d stranded investments and potential reliability problems. Commenters said the EPA shoul d not finalize any guidelines that are based on a BSER determination that includes Building Bloc ks 2, 3, and 4, regardless of the level of stringency of any of the Building Blocks; if, howev er, the EPA does proceed with finalizing guidelines that are based on a BSER determination t hat includes Building Blocks 2, 3, and 4, it should finalize goals for 2030 and 2025 without an interim compliance periods, and let each state select whether it will plan to meet a 2030 goal or a 2025 goal.

Comment 4: Oppose alternative goals; shorter timeframe exacer bates problems with achieving goals.

Response 4: See response 1 above.

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

Several commenters stated EPA proposed an alternate set of emissions goals and has asked for comments on the appropriateness of the alternative goals. Commenters stated they do not support the adoption of any of the alternative interim or f inal goals for Arizona. Commenters said most of the problems associated with achieving the Arizo na goals proposed by EPA surround the short166

duration for their achievement; an even shorter tim e period to achieve the goals, albeit somewhat higher, would only exacerbate these problems.

Commenters stated the agency is also requesting com ment on an alternative option, a 5-year period for compliance, in combination with a less s tringent set of CO2 emission performance levels. Commenters said it is unclear, in the provi ded text, why the EPA decided to consider this shorter compliance period and corresponding less st ringent performance levels. Commenters said a shorter compliance period seems unlikely to make it any easier for states to implement their programs to comply with this rule. Commenters said a shorter compliance period may have exactly the opposite effect in many states, even if the performance levels specified are less stringent. Commenters considered this alternative a n unnecessary distraction and urge the EPA to cease any further consideration of it.

Comment 5: Oppose Alternate Final Goals, Support Proposed Fin al Goals.

Response 5: See response 1 above.

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

Several commenters opposed the less stringent alter nate goals and support more aggressive proposed goals.

Commenters stated that EPA's approach is conservati ve and, when combined with the flexibility afforded to states to use additional advanced energ y technologies in compliance plans, shows that the state targets are technically and economic ally easy to meet; there is, therefore, no basis for EPA to adopt less stringent goals.

Commenters said according to the information provid ed by EPA, there has already been a 15.7 percent reduction by the year 2012, and the 30 perc ent reduction can be achieved with existing technology.

Commenters stated the state of Hawaii has implement ed EE/RE programs and is in the beginning stage of implementing Hawaii's GHG Rules that impac t large stationary sources. Commenters said the state-specific detailed planning, public r eview, and early implementation of these programs will enable Hawaii to establish a rational and well documented CO2 emission rate goal in its 111(d) state plan for existing power plants. Commenters said that this state specific approach provides the best way to execute a GHG pro gram "consistent with a vibrant and growing economy and reliable, affordable electricit y to support that economy." Commenters stated they do not support the "alternate interpret ation that the BSER includes, in addition to building block 1, a component consisting of reduced generation from higher-emitting affected EGUs" because (as will be documented below) the ass ociated state specific economic impacts have not been performed by EPA in the development o f the proposed Plan.167

Commenters stated the alternative option of a 5-yea r period for compliance time with a less stringent set of CO2 emission performance levels is the opposite of what needs to be done in the interest of the American people and the global popu lation; compliance can happen within the time period proposed in the Clear Power Plan, and t he plan should incorporate the most stringent carbon pollution reductions as are feasible within the existing proposed compliance time period.

Commenters stated U.S. EPA is proposing two options for goals; first, is the preferred option which is an interim goal applied on a cumulative or average basis during the 2020 to 2029 with the final goal achieved in 2030. Commenters said fo r Ohio, the interim goal is 1452 (adjusted output-weighted-average pounds of CO2 per net MW-h) with a final 2030 goal of 1338. Commenters said as an alternative option, U.S. EPA is proposing a less stringent goal, therefore, less time is provided. Commenters said interim goal s are applied from 2020 to 2024 with a final goal in 2025. Commenters said for Ohio, the interim goal is 1588 (adjusted output-weightedaverage pounds of CO2 per net MW-h) with a final 20 25 goal of 1545. Commenters said ultimately in 2025, the alternative goal would lead to a 23% reduction in CO2 over 2005 levels, compared to the 29% reduction anticipated for the 2 030 preferred goal. Commenters added although this alternative is a less stringent targe t, nevertheless, it also cannot be achieved in

Ohio. Commenters said the U.S. EPA believes evidenc e that one or more of the individual building blocks is not achievable is not sufficient to cause re-evaluation of the goal unless the

state demonstrates that increased control of anothe r building block is not feasible. Commenters have serious concerns with the achievability of eac h individual goal, or the combination of, in

the State of Ohio.

Commenters stated the proposed goals reflect EPA's quantification of the state's average

emission rate from affected EGUs that could be achi eved by 2030 and sustained thereafter, with an interim goal that would apply over a 2020-2029 p hase-in period, through implementation of BSER based on all four building blocks. Commenters said EPA indicates it is also taking comment on a second set of state-specific goals tha t would reflect less stringent application of the same BSBR, in this case by 2025, with interim g oals that would apply over a 2020-2024 phase-in-period. Commenters said Tennessee's goals on this shorter time period are 1,363 lbs/MWh (interim and 1326 lbs/MWh (final). Commente rs said EPA indicates that the interim and final goals, as promulgated in the final guidel ines, will be binding emission guidelines for state plans. Commenters stated they generally supp ort the longer time frame because it appears to allow for more planning and implementation time.

Commenters added the State of Montana prefers EPA's primary proposal of an interim average goal extending from 2020 to 2029 and a final goal b eginning in 2030 over the alternative proposal of an interim goal extending from 2020 to 2024 and a final goal beginning in 2025. Commenters said the longer timeline for compliance provides greater flexibility while also delivering greater carbon emission rate reductions that will further promote a more sustainable society and generate greater environmental benefits

.168

Commenters added climate change is an important env ironmental issue; the opportunity to achieve reductions from power plants, which emit on e third of the greenhouse gas emissions nationwide, is very important; the proposed regulat ion includes an option for a less stringent target. Commenters supported the more aggressive ta rget of 30 percent reduction from the 2005 baseline by the year 2030; according to the informa tion provided by EPA, there has already been a 15.7 percent reduction by the year 2012, and the 30 percent reduction can be achieved with existing technology.

Commenters added under Option 1 (EPA's preferred op tion), EPA is proposing an interim goal for each state for the phase-in period from 2020 to 2029 and the final goal that applies beginning in 2030; EPA proposes, for comment, a set of altern ative goals (State Emission Target Option 2) with a final goal in 2025 based on less stringent b uilding block targets. Commenters preferred that EPA adopt State Emission Target Option 1 since it would result in earlier and greater overall emissions reductions than State Emission Target Opt ion 2.

Commenters supported EPA's compliance Option1; Opti on 2, which proposed a shorter compliance time frame with a less stringent emissio ns reduction standard, offers less opportunity for job creation. Commenters said while the Clean P ower Plan calls for significant reduction goals, it is important to keep in mind that the mor e ambitious and flexible the standards, the greater the potential opportunity for innovation an d economic growth. Commenters said some stakeholders point to the potential for achieving e ven stronger reductions, than those currently proposed, through increased investment in renewable s and energy efficiency; which will have direct benefits for small business owners and opera tors. Commenters said importantly, more job opportunities are created under EPA's preferred Opt ion 1 proposal; therefore, the commenter do not support consideration of Option 2, which propos es a shorter compliance time frame with a less stringent emissions reductions standard and th erefore less opportunity for job creation.

Commenters favored Option 1 over Option 2; even at the 2025 time point, Option 1 calls for a larger reduction in carbon dioxide emissions than O ption 2. Commenters said even those reductions anticipated under Option 1, will not be sufficient to provide adequate protection of human health and the environment; additional reduct ions will be needed. Commenters said Option 1 has additional benefits that also protect health in that the reductions in the emission of SO2, NOx, and PM2.5 will be greater than achieved u nder Option 2.

Commenters disagreed with the Alternative State Goa ls in the Draft Rule on Table 9.15 because

EPA has determined that the Draft Rule demonstrates compliance with the requirements of Section 111(d) as the "best system of emission redu ction...adequately demonstrated." Commenters said the alternative goals are not justi fied and would not make as much progress toward carbon reduction as possible.

Comment 6: Alternate final goals should not be less than NSPS ; the alternate goal is not.

Response 6: See Response 1 above169

As discussed elsewhere in this document and the pre amble, the NSPS 111(b) rates and the 111(d) rates are not comparable as the latter reflects red uctions in generation levels.

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

Several commenters stated any carbon emission rate adopted for Virginia must be higher than what is required for new units. Commenters noted, f or example, that EPA provides an alternative carbon emission rate of 1,216 pounds of CO2/MWh for Virginia, which is calculated "before the introduction of nuclear, renewable, and [energy eff iciency] into the denominator" of EPA's

calculation. Commenters said a carbon emission rate of 1,216 would be a substantial reduction for existing fossil-fuel units in Virginia, as it i s more than 16% lower than Virginia's rate in 2012, and more than 40% lower than Virginia's rate in 2005; however, this alternative rate, along with a more reasonable compliance horizon, would ad dress most of the cost and reliability

concerns identified herein. Commenters said certain ly, the final carbon emission rate should be no lower than the 1,100 pounds of CO2/MWh the EPA h as set for new gas generation using the best available control technology; of course, becau se of the Commonwealth's substantial investment in and production from zero-carbon nucle ar generation, Virginia's entire generation fleet would, in reality, emit carbon at a rate far lower than the EPA contemplates for either new or existing fossil-fired generation in Virginia.

Comment 7: Alternate Final goals - BB1 4% HRI

Response 7: See response 1 above. In regards to the final ru le heat rate improvement assumptions, commenters may see EPA’s response in t he GHG Mitigation Measures TSD and in preamble section V.C

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

Several commenters stated U.S. EPA is proposing an alternative to the 6% HRI proposal; specifically, U.S. EPA is alternatively proposing a 4% HRI as a "reasonable minimum estimate of the technical potential" for HRI on average acro ss affected coal-fired steam EGUs. Commenters stated they do not believe U.S. EPA's ap proach of setting a nationwide average of potential HRIs at either 6% or 4% is appropriate or within U.S. EPA's role under the CAA. Commenters wished to emphasize, just as the S&L Stu dy indicated, the best method for determining the ability for HRIs at individual faci lities is through site-specific evaluations. Commenters said the analysis presented by U.S. EPA applied proposed methodologies and proposed HRIs from the S&L Study. Commenters said h eat rate improvement projections should

be based on what has been done and what could be do ne at individual coal-fired units as well as empirical data on HRIs that can be adequately demon strated to be the direct result of a specific project or best-practices methodologies. Commenters said U.S. EPA's assumption that each

individual coal-fired EGU can obtain a 4% HRI from best practices based upon an examination

of historical heat rates of the entire fleet and an additional 2% for equipment upgrades based170

upon an ill-applied study does not indicate technic al feasibility is possible at the individual units. Commenters said the inaccuracies and challenges dem onstrate that only heat rate studies performed on a unit-by-unit basis conducted in dire ct consultation with on-site operators with knowledge of individual unit operations will be pro ductive.

Comment 8: Alternate Final Goals - BB2 65%

Response 8: See Response 1 for a clarification on why alterna te goals are not part of the final rule package.

However, the EPA used comments on the alternate goa ls such as the one below to inform its final BSER quantification. The interim period now starts in 2022 and EPA has phased in building block two consistent with the commenters s uggestion. See section V.D of the preamble for a response to how combined cycles may operate a t 75% utilization.

EPA notes, that the final rule assumption of 75% ut ilization is based of summertime net dependable capacity instead of nameplate. The 75% utilization value that the commenters are referencing below is based on nameplate capacity an d would consequently reflect a higher generation total for the building block than 75% ut ilization of summer capacity.

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

Several commenters stated U.S. EPA is proposing as part of the alternative set of goals a less stringent target of a 65% average utilization rate; and then U.S. EPA goes even further to request comment on raising the rate to 75%. Commenters wan ted to point out again that in the state driven compliance IPM run, U.S. EPA could only show achievement of a 64% utilization rate. Commenters did not agree that 75%, 70% or 65% is te chnically or economically achievable given the analysis and method U.S. EPA has used to establish feasibility of these various levels.

Commenters stated in the proposal, EPA also solicit s comments on an alternate 65 percent utilization rate, noting that 16 percent of NGCC pl ants had utilization rates over 65 percent in 2012; however, none of the issues identified with r espect to the 70 percent utilization assumption are ameliorated with a 65 percent utilization rate. Commenters said again, EPA applies this assumption in isolation from other assumed building blocks; EPA does not address the possibility/likelihood that an increase in variable renewable generation may actually counter increasing the utilization rate of existing NGCC fl eet to the levels desired in order to balance the integration of new renewable generation onto the gr id. Commenters said increased cycling of

NGCC units to accommodate renewable would decrease efficiency of those units and increase CO2 emissions. Commenters said implementation of th e 65 or 70 percent NGCC dispatch requirement would require states to put an emission s cap on individual coal units in order to move those units ahead of coal in the dispatch queu e (environmental dispatch); this could cause

additional coal units to become uneconomic and to s hut down, especially those in competitive energy markets; it may also cause coal unit curtail ment without regard to reliability needs, which could result in reserve margin risks, and cause som e coal units to run at reduced, less efficient loads, which creates more/additional CO2 emissions. Commenters said it could lead to fuel171

diversity issues, making ratepayers more susceptibl e to natural gas fuel spikes, particularly without substantial investments in new natural gas pipeline infrastructure. Commenters said whether the system as a whole can operate with most NGCC facilities operating at a 65 or 70 percent capacity factor within less than five years as implied by the state goal calculation is very

uncertain. Commenters said transmission constraints limit the ability to re-dispatch the fleet. Commenters said natural gas availability, particula rly during the winter heating season, can limit the ability to re-dispatch the fleet. Commenters sa id the choices that states make in developing their compliance plans may limit the ability to re- dispatch the fleet; also, economics drive the dispatch of individual power plants. Commenters sai d without drastic changes to market rules to run some NGCC facilities out of merit, economic fun damentals may prevent NGCC facilities from achieving an average capacity factor in the ra nge of 65 to 70 percent. Commenters said to the extent this forced dispatch to natural gas appr oach is retained, we request that EPA allow states to ramp to a 70 percent capacity factor in o rder to allow more time to put into place the transmission and pipeline infrastructure necessary to support this level of utilization and allow time for the markets to institute dispatch rules wh ich will allow for this level of utilization.

Comment 9: Alternate Final Goals - BB4 1%

Response 9: The EPA is not finalizing the alternate goals in the final rule. Please see section V.A. of the preamble for discussion of the proposed Building Block 4 and sections VI and VII of the preamble for the final performance rates and st ate goals.

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

Several commenters stated the EPA invites comment o n whether a more stringent incremental goal could be set for demand-side electricity progr ams. Commenters encouraged the EPA to consider setting the goal for annual incremental el ectricity savings from 1 percent to 1.5 percent in states where the average kilowatt-hour usage per consumer per month is significantly higher than the national average.

Commenters stated EPA's proposal includes two optio ns for setting the EE goals or mandates, using 2012 data as the baseline: Option 1) 1.5% "go al" starts in 2017 and continues thru 2030 and beyond, or Option 2) achieve 1.5% in 2020 and t hen a "goal" of 1.0% after that thru 2025. Commenters did not support either option to i ts fullest; while both options will flatten the utility's load curve, given the reality of the chal lenge of actually achieving energy efficiency, it i s more appropriate that the alternative approach offe red by Option 2 be adopted (or that it be lowered further). Commenters said because the suppo sition that 1.5% savings can be achieved each year is inaccurate, it is preferable that the alternative which aligns more closely with actual achievable results is employed by EPA. Commenters s aid in the end, EPA should re-evaluate the methodology and assumptions used to calculate block 4 savings in each state, and should adopt a less aggressive and more realistic approach.

Commenters stated EPA should adopt an alternative o ption for energy efficiency which uses a more realistic goal that reflects the actual level of performance that is achievable, such as the172

0.7%. Commenters said the alternative Option 2 sugg ested by EPA provides for a 1.0 % annual incremental savings to calculate state goals which is admittedly closer to the actual level of performance that is achievable (0.7%), and reflects a goal setting process more closely aligned with actual conditions, but it is still too high. ( Option 2 also uses the 0.15 % per year level for th e pace at which incremental savings are increased fro m their historic levels.) Commenters said using an alternative which sets the initial EE savi ngs at 0.7% in 2020, and then requiring it be maintained at 0.7% through 2025 and beyond (along w ith the incremental 0.15% annual increase), this approach is preferable to the flat 1.5% goal which the commenters have

established is not achievable. Commenters said EPA should use the alternative approach to calculate a more rational goal for states.

Comment 10: Let states have option to plan for 2025 or 2030

Response 10: The EPA is not finalizing the alternate goals in the final rule. Please see sections I.A and V of the preamble for the timing of the fin al emission performance rates and statewide CO2 emission performance goals.

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

Several commenters recognized that EPA desires to r educe CO2 emissions as quickly as possible, which drove both the interim goals and th e final alternative state goals for 2025.

Commenters said while North Carolina contends that the final alternative state goals suffer from the same legal and technical deficiencies as the Pr oposed Rule, the final alternative state goals for 2025 should be left in place as an incentive to encourage states to achieve compliance earlier. Commenters said states should have the option to pl an for compliance with the 2025 or 2030 state goal.

Commenters stated in the proposal, EPA includes and requests comment on a set of state-specific alternative emissions rate goals and related buildi ng block goals that would be achieved in a shorter time frame of five years instead of the pro posed rate over ten years. Commenters applauded EPA for including these altern ative goals, which may turn out to be

more reasonable and achievable at less overall cost ; however, as is the case with much of the Proposed Emission Guidelines, more time is needed f or Virginia to fully assess the benefits and impacts of the alternative goal. Commenters recomme nded that EPA allow individual states to select the approach that is most suitable and benef icial given state-specific circumstances in the final rule. Commenters believed this flexibility sh ould be provided to states that have already achieved significant reductions in their carbon int ensity and which have more substantial reduction requirements

Comment 11: Exclude the Technical Potential Benchmark from the Alternative Approach and Rely on the IPM Model Results with Modifications; S olar.173

Response 11: See response 1 above.

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

Several commenters stated within the Alternative Ap proach, the current proposed rule first establishes a technical potential benchmark that is used in combination with an IPM projected market potential. Commenters did not support the in clusion of the technical potential benchmark in setting a state's target; instead, the commenter s recommended that EPA rely solely on the IPM model when applying its Alternative Approach.

Commenters added as the EPA notes in its proposal, applying NREL's technical potential for solar in each state to determine the state goals ha s limited value. Commenters said that the technical potential is arbitrary because it shows t he solar capacity that could be built in a given state without recognizing real-world limiting facto rs such as economic growth and grid constraints; therefore, the EPA should not rely on NREL's technical potential for setting state goals.

Commenters added the EPA should solely rely on the IPM model for setting the state targets. Commenters said unlike the technical potential, the IPM model takes into account the cost of building renewable generation, as well as grid cond itions in each state and a number of other factors; in addition, the IPM model considers the r esource potential that is considered by NREL's technical potential. Commenters believed that with the correct solar data inputs, the IPM model provides a realistic projection of solar energy pot ential at the state level that can be relied upon for setting state goals.

Commenters added there is precedent to rely solely on the IPM model for setting the renewable targets in each state under the Alternative Approac h. Commenters said the EPA currently uses the IPM model to analyze the impact of air emission s 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 proposed Carbo n Pollution Standards for New Power Plants; therefore, there is precedent to rely solel y on the IPM model for setting the renewable targets in each state under the Alternative Approac h. Commenters said the EPA also notes that "for the development of its latest power sector mod eling platform, 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.

Comment 12: Tribes & Territories - Support for Alternate Final Goals174

Response 12: EPA has shifted to a regional subcategory-specifi c framework for this final rule. Consequently, all fossil steam sources receive an e mission rate of 1,305 lb/MWh. For states/tribal lands that only have fossil steam sou rces – this becomes their goal emission rate. Because state goals are based off adjusted baseline generation levels, the conversion to mass reflects generation from all units operating (or as sumed to operate) in the baseline, and retirements (or generation reduction) after the bas eline period will help the state/tribe move towards its final mass goal.

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

Several commenters stated in the Supplemental Propo sal, EPA solicits comment on alternate goals that would reflect a shorter compliance deadl ine but a less stringent application of the building blocks; for the Navajo Nation, EPA seeks c omment on a proposed final goal of 2,034 lb/MWh that would apply in the year 2025, and an in terim goal of 2,035 lb/MWh that would apply over a 2020-2024 phase-in period.

Commenters supported adoption of the alternate goal approach for sources on the Navajo Nation; any CO2 reductions that are required by the BART ru le for NGS will have to take place by December 31, 2019, and FCPP has already reduced CO2 emissions significantly. Commenters said they are working closely with the Navajo Natio n and APS to explore opportunities to use

emissions reduction credits associated with EGU ret irements or curtailments in a regional trading program to generate funds to spur green energy and low-carbon energy development on the Navajo Nation and to potentially facilitate state g oal compliance. Commenters said if higher alternate goals are finalized by EPA and then conve rted to mass-based goals, it will improve the likelihood that a viable trading program or a multi -jurisdictional arrangement can be developed that would benefit all parties. Commenters encourag ed EPA to work closely with the Navajo Nation to establish mutually acceptable alternate C O2 emission goals that will benefit the Navajo Nation while also providing sufficient flexibility for the owners of NGS and FCPP to continue to operate the plants.

Commenters encouraged EPA to adopt the alternative emission rate goals (2,035 lbs/MWh interim; 2,034 lbs/MWh final) for the Navajo Nation for tribal & territories supplementary rule.

Commenters said there is no difference in the envir onmental benefit between the proposed goals and the alternative goals as all the emission reduc tions are driven by other regulatory programs. Commenters said there is, however, a potential diff erence in the economic benefit from application of the alternative goals through partic ipation in a multi-jurisdictional plan. Commenters said from a cost-benefit perspective, th e alternative goals are clearly superior.

Commenters stated EPA identified alternate final go als for Indian country that reflect less stringent application of the four building blocks a nd a higher emission rate that would be achieved earlier: by 2025, after a 2020-2024 phase in. Commenters supported EPA offering an alternative final goal that can be complied with ea rlier; the commenters would like the flexibility175

to select which goal it ultimately complies with an d would like additional time to make that determination. Commenters said providing additional time to sort out the future operation of plants and flexibility in consideration of an alter nate final goal would be helpful. Commenters said in light of the fact that Building Blocks 2 an d 3 do not practically apply to the Navajo Nation (and the Navajo Nation believes that Buildin g Block 4 should not be applied as EPA proposed), once the BART-related issues at NGS are resolved, the power plants on the Navajo Nation may be in a position to act toward an earlie r final carbon emission goal in exchange for additional flexibility in the emission goal beyond what is contemplated in the Supplemental Proposed Rule. Commenters would like to engage EPA in discussions on what might be possible with regard to a final emission goal or other incen tives for early compliance under a scenario where reductions are achieved prior to 2020.

4.4 COMPUTATION PROCEDURE

Section 4.4 covers public comments related to the c omputation procedure of the final and interim goals, including BSER factors, data used, calculati on, alternative approaches, treatment of data years, and other computation comments.

4.4.1 BSER factors informing state emission rate go als

Section 4.4.1 covers public comments related to the individual building blocks and their
interaction with each other in relation to the stat e goal.

This section contains significant overlap with the building blocks discussed in Preamble Section V, RTC Chapter 3, and the GHG Mitigation Measures T SD. Where the commenters were focusing on the building block quantification and a nalysis, the EPA refers to those respective sections. Where the commenters were focusing speci fically on the manner in which the building blocks are treated in goal computation, the EPA tri es to address that through responses in this
section

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: General support for BSER approach for calculating goals.

Response 1: The EPA appreciates the general support for the B SER approach for calculating goals. Based on comments received and as discussed in the preamble section V, the EPA is no longer including demand-side energy efficiency as p art of its expression of the BSER. However, mitigation measures of this nature may still count towards compliance.176

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

Several commenters stated EPA's inclusion of the sy stem-wide approach to compliance is fundamental to increasing the use of clean energy t echnologies and substantially lowering emissions; without this, the states would have fewe r options for compliance and less flexibility. Commenters said utilizing a diverse portfolio of cl ean energy options available for compliance will make the US economy stronger, reduce emissions and increase resiliency.

Commenters stated when calculating Oregon's BSER an d the rate goal, EPA properly accounted for all energy efficiency investment in Oregon incl uding energy efficiency investments made on the systems served almost solely by hydroelectric p ower.

Comment 2: Difficult to comment/ overall concerns, the EPA sh ould reevaluate its BSER.

Response 2: The expression of the BSER has been modified fro m proposal to reflect subcategory-specific emission performance rates tha t are more consistent with prior EPA 111(d) rulemakings and comments suggesting such an approac h. This addresses the commenters concern that generators of the same subcategory rec eive similar incentives regardless of the state in which they are located.

Based on comment, nuclear generation (including und er construction) is no longer incorporated into quantification of the BSER. Discussion of how and when nuclear generation can be used in compliance is found in section VIII of the preamble

.
Please see section V of the preamble and the GHG Mi tigation Measures TSD for more information regarding the building blocks.

After the initial quantification of BSER subcategor y-specific emission performance rates, EPA further test the feasibility and compliance costs o f meeting the BSER emission reductions using its comprehensive power sector modeling platform. The IPM model is a well-established established model including millions of variables a nd constraints reflecting fuel markets, emissions markets, electricity markets and the inte raction of all three. It is a least-cost linear programming model that optimizes the method for mee ting energy and peak demand requirements of the modeled time horizon. EPA disa grees with the comment that it did not test or recognize the constraints of the power sector wh en evaluating its BSER – both the building block analysis described in the GHG Mitigation Meas ures TSD and the power sector modeling used to evaluate the final rates reflect a very rob ust assessment of system-wide impacts and costs. See the Regulatory Impact Analysis for more information and the EPA Power Sector Modeling Documentation for more information.

The following are summaries of the specific public comments under this comment:177

Commenters stated even with the clarifications prov ided by EPA's October 2014 Notice of Data Availability (NODA), the structure of the Proposed Rule is such that meaningful comments require unique knowledge of each state's compliance plan and predetermination of the reasonable achievability of EPA's modeled emission performance requirements. Commenters said without knowing the structure of the State Implementation P lan, the FPSC cannot address the achievability of EPA's proposed emission performanc e requirements through EPA's best system of emission reduction (BSER) approach or any other compliance approach with certainty.

Commenters stated EEI members companies have identi fied a range of technical concerns with each of the four Building Blocks that comprise EPA' s proposed BSER. Commenters stated EPA overestimated the potential CO2 emission reductions that could result from each of these Building Blocks. Commenters said in addition to spe cific issues with EPA's analysis of potential reductions from each Building Block, any assertion of the achievability of the proposed state goals is undermined by the fact that EPA ignored th e interactions between and among the Building Blocks and state-specific constraints when assessing the reduction potential of each Building Block, and, consequently, proposed state e mission rate goals may not be achievable.

Commenters stated prior to promulgating a final rul e, EPA should, at a minimum reconcile the extensive legal and technical issues that a have be en identified regarding their interpretation, evaluation, and determination of the BSER.

Commenters stated the Agency's emissions limitation s on individual states vary widely and are based on complex and detailed assumptions that may not reflect reality, what is achievable, or even what is within EPA's authority to regulate. Co mmenters said EPA must better explain and disclose the underlying assumptions and data that s erve as the foundation for these binding targets. Commenters said EPA has failed to date to address these issues, provided little to no information regarding what authority it was relying upon to institute such outside the fence expansive regulatory targets, nor how it intends to proceed if it does not approve of individual state implementation plans.

Commenters stated throughout the proposed guideline s, EPA acknowledges and references the vast amount of change occurring within the electric industry today due to a variety of factors, including transformative state policies and signifi cant utility investments; in developing BSER, required by Section 111 (d) of the CAA, EPA specifi cally explains that each of the technologies and measures chosen are being utilized throughout t he country within the electric system.

Commenters were concerned that EPA has taken the fa ct that some states and/or utilities have invested in certain technologies and/or measures, c oncluded that they are equally applicable everywhere and applied the entirety of its BSER to every state, requiring emissions reductions representative of all the technologies and/or measu res (set at best practices levels) from all states in the form of mandatory state goals. Commenters sa id the result is that, for the most part, each state's mandatory goal represents a level of emissi ons reductions built from the application of each and every component of the system with no anal ysis by EPA as to whether that actually makes any sense or is economically reasonable for e ach state. Commenters added then, in a few178

circumstances, EPA requires some states to achieve higher emission reductions, due to the specific choices made by those states and utilities , than other states, but doesn't otherwise adjust the state's goal to reflect the reality that states and utilities have made different policy and
investment choices.

Commenters said EPA's application of its proposed B SER to states reflects the inequity that is created by the agency's failure to develop a BSER t hat is as dynamic as the electric system, reflecting a myriad of state policies and utility i nvestment choices; for example, state goals for Tennessee, Georgia and South Carolina reflect a sig nificant amount of emissions reduction required from the application of "under-constructio n" nuclear units within EPA's System that are not yet complete. Commenters said EPA determined th at these units are technologies that should be included within the System, but only applied the representative emission reductions to these three states. Commenters said on the other hand, EP A determined the growth of renewable energy generation is a measure that should be inclu ded within BSER, but that particular measure, and the associated emission reductions, should be a pplied to every state; therefore, states such as Iowa, Maine, Minnesota, North Dakota, South Dakota and others that invested heavily in a resource that is readily available in these states, have state goals that reflect emission reductions associated with the growth of renewable energy gene ration that they have already met or exceeded. Commenters said every other state, includ ing Tennessee, must make additional investments to grow this resource. Commenters said the application and results make evident that EPA's proposed System does not reflect the dynamic, varied nature of the electric system and may not, for some states, be achieved at a reasonab le cost; in particular, the mandatory nature of the state goals make EPA's proposed guidelines part icularly troublesome.

Commenters recommended EPA reevaluate its BSER, tak ing into consideration the specific comments provided below and revise the System accor dingly, or publish the final guidelines with state goals as presumptive values, for which s tates can request modification during the state planning process in their respective plans.

Commenters stated EPA's approach for determining st ate-by-state CPP targets ignores ownership rights in generating resources.

Commenters stated EPA should not compel regulated s ources to provide for deployment of additional BSER measures to compensate for measures that are demonstrated to have been set too stringently as indicated by exceeding of EPA's cost effectiveness criteria.

Commenters stated EPA should provide additional jus tification for the appropriate assignment of cost effectiveness for setting BSER target stringen cy for the states.

Commenters stated the weaknesses in the analysis ca nnot be ignored. Commenters said a better strategy for EPA is to (1) get the analysis right a nd (2) be technology neutral and not appear to endorse subsidies for any specific resource, as it did in the case of nuclear power.179

Commenters stated inclusion of non-fossil resources in the BSER formula leads to state targets that diverge more than when an average fossil rate is used as the starting point; if states develop a flexible rate-based policy approach and their neigh boring state has a very different target level, there is a possibility that generators of the same type on either side of a state border would face different compliance costs. Commenters said this ki nd of competitiveness issue could lead to environmental leakage, but it would be reduced if t he starting point for developing the state

standards was a fossil rate.

Commenters stated the EPA's definition and use of t he BSER to set state goals proposes a system of compliance that is intrinsically inflexible. Com menters stated the dynamics of compliance, under circumstances of any unplanned shortfall in t he non-emitting resources required for compliance, force an additional curtailment of cove red fossil output, creating a further reduction in supply and forcing states to increase imports or reduce exports. Commenters stated this creates the risk of multi-state compliance failures that co uld disrupt interstate power flows.

Commenters stated EPA states, "We consider our prop osed findings of the BSER with respect to the various building blocks to be severable, such t hat in the event a court were to invalidate our finding with respect to any particular building blo ck, we would find that the BSER consists of the remaining building blocks. The state goals that would result from any combination of the building blocks can be computed from data included in the Goal Computation TSD and its appendices using the methodology described in the p reamble and that TSD." Commenters added the state's target must be adjusted commensurate wi th the elimination of the percentage contribution to the target should a court invalidat e one or more of the building blocks. Commenters stated if Building Block 4, Energy Effic iency, is vacated, Kentucky's target of 1,763 lbs CO2/MWh should increase to reflect only t he effect of Building Blocks 1, 2 and 3; assuming that the loss of one or more of the buildi ng blocks can be made up by the remaining building blocks is not appropriate and should not b e employed by EPA as a backstop. Commenters said there are real technological limita tions to each of the building blocks, and these
limitations cannot be dismissed.

Commenters stated the methodology used in developin g the proposed goals is atypical of an emission rate calculation and the building blocks u sed to establish the goals are highly questionable. Commenters said a typical emission ra te calculation will involve the total mass of emission divided by total generation; the CPP emiss ions standard is calculated as the ratio of expected future emissions after implementing the as sumed building blocks, divided by the sum of fossil, renewable, new or "at risk" nuclear, and generation avoided through energy efficiency. Commenters said the CPP emissions standard represen ts neither the fossil fleet emissions rate nor the emissions rate of the entire generation fle et. Commenters said the resulting measure is used only as a way of setting a state goal and inco rporating the benefits of activities "outside the
fence" of EGUs.180

Commenters stated EPA's "building blocks" analysis of the "best system of emission reduction" is not based on accurate or reasonably demonstrated assumptions in Wyoming and is not consistent with the realities of the electric grid.

Commenters stated, the methodology for determining the BSER should be carefully examined to ensure that it is firmly based on realistic assumpt ions for implementation and achievement of

emissions reductions.

Commenters stated, U.S. EPA has proposed BSER as th e measures discussed above under each of the building blocks and states they "have been " amply" demonstrated via their current widespread use." [79 FR 34835] Commenters have poin ted out several flaws in U.S. EPA's belief that many of these measures have been "amply demons trated." Commenters said, U.S. EPA set a BSER on a broad basis by averaging across multiple units, then applying said average to individual units. Commenters said, this ignores the purpose of BSER. Commenters said, this analysis is unwieldy, unfair and inaccurate when ap plying broad averaging to individual units within a state. Commenters said, as an example, as a deregulated state, the analysis of HRI performed at individual coal-fired power plants uni ts is performed radically different than in a regulated state. Commenters said, in Ohio many of t he coal-fired power plants have already made notable improvements that are ignored in U.S. EPA's nationwide BSER determination. Commenters said, by abandoning U.S. EPA's tradition al method for requiring controls on individual units, U.S. EPA is forcing states to exp and the regulation to entities that do not even have emissions like RE or EE. Commenters said, in a ddition, this method ignores cost assessments and technical feasibility in the rulema king process and, instead, forces states to make BSER determinations with an ultimate goal alre ady predetermined.

Commenters stated, having the ultimate goal already predetermined is not the intent or correct method for a BSER analysis. Commenters said, U.S. E PA is required to consider technical feasibility, costs, size of emission reductions and technology promotion as part of BSER. [79 FR 34835] It is Commenters' believed that U.S. EPA has ignored this requirement by applying a

BSER that does not take into account HRIs that have already occurred but yet are assumed to be able to be achieved again, by requiring an increase in emissions from NGCC with the assumption it will reduce emissions from coal-fired units, and establishing a BSER based on outside-thefence requirements to further reduce coal-fired uni ts generation (EE/RE). Commenters said, further, it should be noted that U.S. EPA never pro vided any analysis to show it is adequately demonstrated that states can meet the goals for ind ividual building blocks in combination.

Comment 3: BSER Building Block Application and Interaction181

Response 3: The EPA agrees with the comment that it should co nsider ways to quantify the regional impact of building block 2 across state li nes. As explained in preamble section V and VI, it has incorporated a regional building block f ramework for all building blocks in the final

rule based on comment.

The flexibility of the emission rates embodied in b oth the subcategory-specific emission performance rate and the state goal does not consti tute a limit on generation from existing

sources. The EPA believes that the metrics and fle xibilities of this final rule do not restrict load growth in existing sources as suggested by the comm enters.

The final BSER quantification does capture the inte ractive effect of all three building blocks. Moreover, the EPA tested the resulting rates throug h its IPM power sector modeling tool to further verify the viability of BSER and the aggreg ate effect of the three building blocks.

EPA does not believe that a reduction in utilizatio n of the fossil steam fleet as a result of building blocks two and three would inherently result in a r eduction in efficiency of the fossil steam fleet. The EPA analyses suggest that the fleet will reduce fossil steam generation by operating some of the older, inefficient units less and operating som e of the more efficient units more relative to 2012 levels. This would potentially lead to increa sed efficiency in the operating coal fleet, not a decrease. As discussed in Chapter 3, the existing fleet is still expected to operate at a high utilization level of approximately (e.g.,>65%) over the programs interim period and 2030. EPA believes it is conservative in continuing to assume the historical baseline average coal fleet

emission rate as its baseline emission rate in a sc enario where building block two and three are expected to reduce generation. Moreover, the less efficient units are generally more likely to retire or reduce generation, meaning the remaining fossil steam generation would actually have a lower emission rate on average (not a higher one).

EPA agrees with the commenters that the NODA approa ch to building block three where the incremental RE generation offsets baseline generati on on a 1-for-1 basis – holding all else equal – would result in a more stringent quantification o f BSER (i.e., a lower rate). As explained in the October 2014 NODA, this is consistent with feedback that the proposed treatment of only adding the block three generation to the denominator under stated its potential.

As explained in section V, EPA has taken a regional ization approach to the building blocks in this final CPP rule which reduces the disparity bet ween some state emission rate goals that existed at proposal and noted by comments below. T his is consistent with the comment that EPA should consider ways to utilize the potential o f natural gas generation to displace coal generation so that the building block more equitabl y reflects emissions performance improvement opportunities across states.

EPA’s quantification of BSER does recognize the int eraction of the building blocks. The comment below suggests that applying building block one first (heat rate improvement) and then building block two causes the building blocks to co ntradict each other. However, this sequence respects the interaction of the building blocks, ra ther than interfere with it. See section VI of the182

final rule preamble for discussion of the subcatego ry-specific emission performance rates and how they were calculated.

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

Commenters stated the methodology for calculating s tate goals is applied consistently across all states, but it leads to real differences in emissio ns targets across states. Commenters said for building block 1, EPA should allow states to demons trate pre-base-year heat rate improvements secured through specific plant upgrades, technologi es, or new plant construction, and provide data on other plant changes that have affected net heat rates, so that EPA can use this information in determining improvement potential for that state . Commenters said for building block 2, EPA should consider ways to utilize the potential of na tural gas generation to displace coal generation so that the building block more equitably reflects emissions performance improvement opportunities across states. Commenters said in des igning the standards, EPA should consider ways to avoid incentivizing natural gas generation and overbuilding infrastructure at the expense of other cost-effective, lower carbon resource alte rnatives. Commenters said if at-risk nuclear remains in the calculation of state goals, and a st ate's nuclear plant shuts down at the end of its license term, or due to safety reasons, the EPA sho uld consider allowing measures to adjust a state's goal or budget appropriately, after conside ring the availability of other zero carbon

resources. Commenters said EPA should take a consis tent approach toward the carbon intensity of resources when establishing state goals and when assessing compliance.

Commenters stated within each state, each utility's CO2 emissions should be evaluated against the building blocks based on the ability of each ut ility to implement those building blocks within its own system. Commenters said in the event that a state has excess credits, those should be the property of the utility and available for it to use toward compliance in another state.

Commenters stated the goal setting and interim targ ets proposed by EPA do not properly take into account all relevant factors that are impacted by both BSER and non-BSER components. Commenters said under the Proposed Rules, the state 's goals are based on EPA's assessment of

the amount of emissions that can be reduced at exis ting fossil fuel-fired EGUs through application of the BSER. Commenters said the propos ed goal for California, in adjusted megawatt hour (MWh)-weighted-average pounds of CO2 per net MWh from all affected fossil fuel-fired EGUs, is 556 pounds per megawatt hour (l bs CO2/MWh) for 2020-2029, and 537 lbs CO2/MWh for 2030 going forward. Commenters said Cal ifornia would have to meet both the interim and final target in order to comply with th e EPA's mandate, utilizing the four building
blocks that reflect BSER.

Commenters stated the state goals, and in particula r the interim 2020 and final 2030 targets, should be reviewed in light of the fact that EPA's assessment of the state-specific requirements183

and the totality of the circumstances faced by each state is incomplete and would adversely impact some states; for example, California already has aggressive emissions reduction goals that are implemented through economy-wide measures. Commenters said one such goal is increased electrification of the transportation sec tor; California's goal for electrification of the transportation sector will result in increased elec tric demand, which increased demand is not specifically recognized as part of EPA's calculatio n of California's reduction targets. Commenters said the determination of state targets also appears to be devoid of an analysis of state's industries, and how increased electrificati on of industries (such as ports and railways) will impact electric generation from existing facilities . Commenters added it appears that the statespecific targets do not account for potential load growth that will be met by existing resources,
rather than new facilities.

Commenters stated the record appears to assume - bu t does not demonstrate - that all load growth in California would be met by new generation, and a s such, the California target set by EPA may be too stringent in light of California's ambitious electrification goals. Commenters stated without supporting data, it is not reasonable to as sume that all load growth will be met by new generation. Commenters said EPA's assessment does n ot appear to fully consider the ramifications of increasing generation from existin g efficient and low-emitting resources, and rather appears to contemplate that increased demand due to population growth (or other factors) would be addressed through new facilities, or can b e offset by energy efficiency measures as the Proposed Rule implies. Commenters said the record d oes not support a conclusion that these increases can be met my energy efficiency savings o r new facilities, and EPA should review and revise the state targets in light of these variable s. Commenters said the Proposed Rule has the potential to adversely impact reliability in severa l regions, including the west. Commenters said the timing of the interim goal has the potential to further restrict the ability of utilities to ensur e the efficient operation of the electric grid; as su ch, EPA should reevaluate the level of the interim goal, and adjust the extent to which states are req uired to "front load" reductions. Commenters said revising - or potentially eliminating - the in terim targets will enable states and their regional partners to develop the gas and electric infrastruc ture that will be necessary to ensure sufficient electric generation resources in their optimal loca tions.

Commenters stated the proposed guidelines do not in clude adequate information as to how EPA's proposed BSER functions as a whole system. Commente rs said EPA proposes the building blocks as a system, but provides calculations that do not illustrate how the blocks may interact

with one another. Commenters said in some scenarios , the blocks will actually work against one another; utilities will improve heat rate at coal a ffected EGUs and then be forced to re-dispatch some of that generation to NGCC affected EGUs. Comm enters said the result will likely be that some of the improved heat rate will be lost at the affected coal EGUs. Commenters said failure to consider these interactions between the blocks, art ificially inflates the actual reductions that may be technically feasible or achievable at a reasonab le cost and forces to states to evaluate these interactions on their own or otherwise over comply to ensure compliance with the state goal.

Commenters recommended EPA evaluate these interacti ons and correct the proposed BSER to account for the interplay between blocks.184

Commenters stated EPA generally overestimates the p ossible reductions available from the Building Blocks, resulting in state goals that may not reflect the reductions that are achievable. Commenters said in setting the state goals, EPA sim ply added the estimated potential reductions from each Building Block. Commenters said this is t he largest overarching flaw in EPA's methodological approach to BSER and the proposed st ate goals. Commenters said because the Building Blocks are part of the interconnected powe r system, they need to be evaluated jointly, taking into consideration their interactions in the context of that system. Commenters said EPA did not consider these interactions, which tend to limit the reduction potential of each when compared to EPA's assessment of the Building Blocks in isolation. Commenters said if EPA relies on the interconnected power system as the ba sis for the BSER determination, the Agency cannot ignore these interactions when projecting th e reductions achievable through each of the Building Blocks. Commenters said the Agency should consider them before finalizing the statespecific emission rate goals; EPA should consider a ny state-specific issues identified in state compliance plans and adjust final state goals if ne cessary.

Commenters stated EPA has stated that the four buil ding blocks may be used in any combination (or none) by states to comply; however, EPA's own m odeling, along with independent analysis, shows that most states will be heavily dependent on implementation of all four building blocks in order to meet their goals. Commenters said because states will be simultaneously dependent on all four building blocks, EPA must take into consid eration the effects of each building block on the other building blocks. Commenters said for exam ple, increasing the capacity factor of the NGCC fleet to 70% under Building Block 2 will inevi tably reduce the capacity factor of the coal fleet, which in turn will degrade the efficiency of the coal fleet in direct conflict with Building Block 1; EPA has not accounted for that adverse imp act.

Commenters stated in its October 30 NODA, EPA propo sed taking a similar approach for Building Blocks 3 and 4 as it did for Building Bloc k 2, which will only lead to tighter standards; that is, in the original CPP proposed rule, renewab le energy and energy efficiency are added to the denominator (MWh), but no corresponding adjustm ent is made to reduce the generation and associated emissions from other fossil sources (as was done with Building Block 2). Commenters said this resulted in a higher BSER rate than the t wo approaches EPA suggests in the October 30 NODA. Commenters said EPA is now proposing two appr oaches for adjusting down the fossil generation and emissions offset by renewable energy and energy efficiency, one is based on a pro-rata share of all fossil generation and the oth er starts with the highest emitting sources (i.e., steam); both approaches would lead to more stringen t emission rate standards relative to the original methodology. Commenters provided a simplif ied example:

-In the current approach, if coal has a 2,000 lb/MW h emission rate and 2012 generation was 10 MWh and the renewable and energy efficiency buildin g blocks add 5 MWh of zero emission generation, the BSER standard would be 1,333 lb/MWh (i.e., 10 MWh x 2000 lb/MWh plus 5 MWh x 0 lb/MWh)/15 MWh).185

-Under the October 30 NODA approach, similar to Bui lding Block 2, the emission and generation of the fossil (in this example coal) wou ld be reduced; so, the calculation becomes 2,000 lb/MWh for 5 MWh of generation (10 MWh of coa l reduced by 5 MWh of non-emitting) and 5 MWh of non-emitting generation; under this ap proach, the BSER becomes 1,000 lb/MWh (i.e., 5x2000 + 5x0)/10); under this approach, tota l generation is equivalent to the historical level and forces energy efficiency and renewable energy t o supplant fossil generation.

The commenters said as shown in the simplified exam ple above, EPA's updated proposed methodology would result in a more stringent standa rd.

Commenters stated in determining what level of RE d eployment is achievable by states, EPA did not consider the system and reliability implication s of adding a substantial amount of RE generation; similarly, EPA did not consider how the integrated power system would affect the achievability of the proposed RE goals. Commenters said EPA's failure to fully consider the electric system as a whole when setting state RE ta rgets undermines the reasonableness and achievability of these goals. Commenters said this failure could result in overall emission increases, even if states satisfy their compliance obligations.

Commenters stated variable RE resources could also be supported by existing simple-cycle CTs, which would need to operate at higher utilization r ates. Commenters said because CTs are less efficient than NGCCs, this could increase overall C O2 emissions and hamper states in their efforts to meet their overall emission reduction go als. Commenters said EPA does not appear to have considered these potential impacts and outcome s when calculating RE potential.

Comment 4: Building Block ordering can affect contributions t o the target rate

Response 4: In this final rule, as discussed in section VI, o rder of the building block calculations in the equation does influence the fin al goal as building block two and three both compete for replacement of fossil steam.

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

Commenters stated a common point of confusion is in analyzing the relative contribution of the individual Building Blocks used to create the EPA t arget rate by state; because the EPA target rate is a fraction (i.e., lbs/MWh) the contribution of each Building Block to making up the target rate depends crucially on the order in which the Bu ilding Blocks are added. Commenters said as a result, if the computation is performed by first removing heat rate improvement (BB1), then natural gas re-dispatch (BB2), renewables and nucle ar (BB3), and energy efficiency (BB4) in that order, the results will be different than if t he computation were performed by first removing BB4, then BB3, BB2, and BB1. Commenters provided it s own assessment of the impact of each Building Block by state that provides data that is comparable across Building Blocks and does not depend upon the ordering. Commenters said this is done by removing one Building Block at186

a time from EPA's computation, calculating the new target rate (and hence the difference), then adding that Building Block back in, before removing the next; in this way, the impact of each Building Block on the target rate is computed from the same baseline (the EPA target rate), and are thus directly comparable; any progressive one-b y-one approach does not have this property and will tend to exaggerate the impact of the Build ing Blocks removed last in the calculations.

Example of How Building Block Ordering Affects Cont ributions to the Target Rate

From the EPA provided spreadsheet '20140602tsd-stat e-goal-data-computation.xlsx' the following can be computed for 2030 that make up the calculation for the target rate in Pennsylvania.

CO2 emissions: 210,942.6 million lbs

Covered fossil generation (BB1&2): 142.52TWh

Expected renewables generation for Pennsylvania (BB 3): 35.33TWh

Existing nuclear generation (at 6% credit - BB3): 4 .48TWh

Energy efficiency (BB4): 18.19TWh

EPA's target rate can then be written down as

Target rate = (210942.6)/(142.52+35.33+4.48+18.19) = 1052 lb/MWh.

Suppose you consecutively remove BB1, BB2, BB3, and BB4 in that order. As you remove each building block, the target rate changes as shown be low

Rate - BB1 = (220849.4)/(142.52+35.33+4.48+18.19) = 1101 lb/MWh.

Rate - BB1 - BB2 = (231891.6)/(142.52+35.33+4.48+18 .19) = 1156 lb/MWh.

Rate - BB1 - BB2 - BB3 = (231891.6)/(142.52+18.19) = 1443 lb/MWh

Rate - BB1 - BB2 - BB3 - BB4 = 231891.6/142.52 = 1 627 lb/MWh.

Now suppose you instead consecutively remove BB4, B B3, BB2, and BB1 in that order. As you remove each building block, the target rate changes as shown below

Rate - BB4 = (210942.6)/(142.52+35.33+4.48) = 1157 lb/MWh.

Rate - BB4 - BB3 = 210942.6/142.52 = 1480 lb/MWh.187

Rate - BB4 - BB3 - BB2 = 220881.4/142.52 = 1550 lb /MWh.

Rate - BB4 - BB3 - BB2 - BB1 = 231891.6/142.52 = 1 627 lb/MWh.

Now compare the incremental contribution of each bu ilding block to the target rate using the two
methods.

Commenters said this example demonstrates that orde ring is important; a change in ordering can change the impact of a single building block by mor e than 50%; furthermore, calculating the numbers by removing Building Blocks in order like t his creates a bias towards those Building Blocks removed last; the example calculations are a ll computed off a common base - the EPA target rate - and are thus comparable.

Commenters stated that the EPA should clearly state the priority order of preference for GHG reduction efforts. The commenters suggested the fol lowing prioritization: conservation, efficiency, distributed generation, renewables (ind ustrial scale), and cleaner fossil fuels. The commenters added that the most environmentally prot ective energy is that energy that is not

used.

Comment 5: Conflicts between results and purported BSER eleme nts

Response 5: The IPM compliance scenario is not intended to rep licate each of the individual building blocks, but rather a least cost compliance scenario to comply with the state goals. Because the EPA was conservative in its replacement assumptions at proposal (as pointed out by commenters), the model was able to realize greater reductions per same amount of MWh by capturing the replacement effect of incremental RE to reduce fossil generation below historical levels of incremental RE and EE generation. Moreov er, the modeled compliance scenario also reflects non-BSER on-the-way reductions that repres ent alternative compliance mechanisms (e.g., scheduled retirements) and therefore lessen the amount of building blocks observed in the

model.

The EPA did receive significant comment on its buil ding block three assumptions and has revised those as discussed in section V 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 from the IPM results that are pub lically available, there are considerable

inconsistencies between the modeled outcomes and wh at EPA has suggested as the BSER for the "building block" approach to calculating state goal s. Commenters said as a prominent example, EPA concludes that the existing NGCC fleet will onl y achieve annual capacity factors of 50-57 percent while the BSER determination suggests that 70 percent capacity factor is achievable. Commenters said as the IPM model is a least-cost op timization, the fact that NGCC units do not188

reach 70 percent capacity factor in aggregate sugge sts there are unaccounted for significant economic and or physical barriers to increased util ization; this calls into question the robustness
of EPA's initial BSER determination.

Commenters stated another example of an inconsisten cy between the IPM modeled outcomes and building block determinations is in the deploym ent of renewable energy resources. Commenters said EPA's modeling suggests a relativel y small amount of new renewable energy development; for wind energy, the dominant source o f renewable energy additions, there is only an 11 to 12 percent increase in generation in the p olicy cases for Option 1, as compared to the base case. Commenters said additionally, the renewa ble energy capacity additions appear to be centered in a few select states and regions, which is contrary to the view that renewable energy

additions are cost effective across all states. Com menters said in light of these inconsistencies,

EPA should revise its BSER determination to reflect the amounts of renewable energy that are economically justified.

Comment 6: BB1 Heat Rate Improvements

Response 6: The EPA has taken into consideration the comments and is promulgating a final CPP rule with a BSER premised on a reduced heat rat e improvement assumption of 2.1%, 2.3% and 4.3% for the Western, Texas, and Eastern Interc onnection respectively. The EPA’s BSER quantification does not assume that individual unit s will all make heat rate improvements of this level, but that on average the coal fleet is capabl e of improving their efficiency relative to 2012 baseline levels by this amount. Please see section V.C. of the preamble for more information regarding building block one and heat rate improvem ent. Also see Chapter 2 of the GHG Mitigation Measures TSD.

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

Commenters stated EPA solicits comment on increasin g the technical potential for heat rate improvements from equipment upgrades incremental to the best-practices opportunity from 2 percent to 4 percent. Commenters said the most eff ective of these upgrades are already in place and that a 2 percent improvement overall is an over ly-aggressive target. Commenters said EPA solicits comment on increasing the technical potent ial for heat rate improvements through the adoption of best practices from 4 percent to 6 perc ent; commenters said the most effective of these practices are already in place and that the p roposed additional 4 percent improvement is not

achievable. Commenters said EPA should work with st ates to determine the proper efficiency improvement potential since EPA's analysis does not properly capture the heat rate variability and some states such as Florida may be outperforming others since they have incentivized these improvements for decades. Commen ters said these specific examples illustrate that EPA's assumptions regarding additional heat ra te improvements are flawed; therefore, if supported by a state evaluation of heat rate improv ement potential, the Block 1 reduction calculations should be adjusted to reflect an accur ate potential heat rate improvement, if any.189

Commenters stated a 6 percent improvement in coal p lant heat rates is not reasonable for Arizona's plants, commenters recommended that EPA r educe Building Block 1 to 1 percent.

Commenters added not all of the measures identified by the Sargent and Lundy report are available to every coal unit, and the installation of some measures would be mutually exclusive of others for some units. Commenters performed a hi gh-level assessment of the possible efficiency improvements that could be realized at c oal units from all of the measures outlined in the 2009 Sargent and Lundy report. Commenters said some of the improvements are not practical units (such as installing variable fan dr ives for induced draft fans and lowering air heater outlet temperatures); some would not result in efficiency gains (such as changing the bottom ash sluicing systems). Commenters' assessmen t determined that if all of the items identified by Sargent and Lundy's report that could be implemented, the average heat rate improvement would be 2% to 4%.

Commenters were concerned that HRI measures made at coal-fired utilities prior to 2012 cannot be considered and are not taken into account by U.S . EPA. Commenters stated that the coal fleet in Ohio is highly efficient when compared to the na tionwide coal fleet. Commenters examination of gross heat rate data for the nation-wide coal-fi red units, using data available from the Clean Air Markets Database showed of the top 10% of units in terms of efficiency (88 units), Ohio utilities represented 13 of these, or 15%. Commente rs said similar representation was observed in 2013 data. Commenters said nationwide in 2012, g ross heat rate was 10,352 BTU/kW-h. Commenters said although Ohio utilities had 19 unit s with heat rates greater than this average, 11
of those units are to retire in 2015. Commenters ur ged U.S. EPA to develop options that would

allow states to take credit for these retirements. Commenters said in U.S. EPA's GHG Abatement Measures TSD [Page 2-18], it is stated that the gro ss heat rate of the nationwide study group is 9,754 BTU/kW-h; following U.S. EPA's goal setting p rocedure, a 6% reduction in this value would yield a reduced nationwide gross heat rate of 9,169 BTU/kW-h. Commenters' analysis demonstrated that the 2001 to 2012 average gross he at rate of Ohio's coal-fired fleet is 9,788 BTU/kW-h. Commenters said accounting for shutdowns due to the MATS rule, Ohio's remaining coal-fired fleet would have a gross heat rate of 9,287 BTU/kW-h; this calls into question whether Ohio's coal-fired EGU fleet could achieve a further 6% reduction, when U.S. EPA's analysis yields a similar value of 9,169 BTU/ kW-h. Commenters added furthermore, given the variability of heat rates, it is likely t hat in some future years, Ohio's coal-fired fleet could potentially meet or exceed U.S. EPA's goal. C ommenters recognized that some units may be able to take some steps to increase heat rates m arginally; commenters do not believe that Ohio's post-MATS-compliance fleet, which will conti nue to operate in a competitive market,

will be able to realize a further 6% reduction as e nvisioned by U.S. EPA. Commenters also wished to emphasize, as Sargent & Lundy also emphas izes, that "installation of additional pollution controls such as that required by regulat ions including BART, MATS, etc. will decrease the heat rate efficiency of any unit as co mpared to its heat rate efficiency before the installation." Commenters said a blanket, nationwid e approach to setting the BSER is not appropriate for all units, and the results of the c ommenters' analysis further reinforces the190

position that any HRI goals should be based on a un it-by-unit analysis of past and potential future HRI projects.

Commenters stated in the proposed regulations, the EPA assumes that a total of 6% heat rate improvements for coal facilities can be achieved th rough best practices that account for 4%, and equipment upgrades that add another 2%; where calcu lations were based on an average for all existing coal facilities. Commenters said such calc ulations would be of limited value when applied to individual coal facilities in Nebraska o r elsewhere, especially those that may have already experienced upgrades. Commenters said also, Nebraska's utilities have already implemented changes necessary to achieve the highes t efficiency from many of their coal generation facilities. Commenters asserted the 6% h eat rate improvement is not realistic; to be achievable and meaningful, improvements should be t ailored to individual facilities.

Commenters recommended a state's goal should be mod ified if sufficient evidence exists to demonstrate that a fossil facility cannot obtain a 6% heat-rate improvement because of efficiency measures already undertaken, i.e., operational befo re the beginning of the rule's baseline data period.

Commenters recommended a state's heat-rate efficien cy target should take into consideration the

nature of the fossil fuel stocks used and available in the state and the extent to which those fuels allow for the safe application of alternative metho ds of consumption for purposes of heat-rate improvement.

Commenters stated heat-rate and efficiency improvem ents made on fossil-fuel generating units in 2012 and beyond should be considered and counted in the rate and goal calculations; any site improvements or modifications made after the availa ble data used in the goal calculation should be eligible for compliance consideration. Commenter s said no matter what baseline data is used for the goal calculation (2012 as proposed by EPA, or a ten-year or longer period as we suggest in this communication), any heat-rate improvements made to existing units during or after the first year of the baseline data period should be co unted for compliance.

Commenters stated the goal calculation should be mo dified if sufficient evidence for a specific site shows that a 6% heat-rate improvement is not a ttainable due to improvements already made at that site; specifically, Montana's 2,100 MW Cols trip facility, the second-largest coal-fired power plant in the West, is in this situation. Comm enters said the facility's operator, PPLMontana, has made several improvements over the pas t 10 years that have increased efficiency of the plant by approximately 5%; these upgrades in clude 3-4% improvement in efficiency resulting from using a new blade design in the turb ine rotors, allowing the plant to use the same amount of steam flow to generate more electricity; a 1% gain from boiler upgrades; and a 0.5% upgrade resulting from cooling tower and fan improv ements. Commenters said those projects do not leave many heat-rate improvements available for the site. Commenters emphasized that certain efficiency improvements that hold promise i n one region of the country may not work in another region; for example, drying moisture out of coal to improve the efficiency of combustion191

will not work for Colstrip because de-moisturized P owder River Basin coal, the fuel for Colstrip's generation, becomes highly combustible. Commenters said experiments at Colstrip with de-moisturized coal have resulted in spontaneo us combustion events. Commenters said after consideration of the efficiency improvements alread y made at Colstrip, as well as the particular combustion characteristics of the plant's fuel stoc k, it becomes apparent that only 1-2% in efficiency gains are available at the facility and that the achievement of a 6% increase in efficiency is not a realistic expectation.

Commenters stated Georgia has already performed all the efficiency improvements that are cost effective and do not expose a possible New Source R eview (NSR). Commenters stated on the Northside Units 1 and 2, $26M was spent on turb ine upgrades yielding approximately a 1.2% improvement in efficiency; the only possible upgrad es remaining for these units are not currently cost effective. Commenters said there may be some r oom for a 1-2% increase in efficiency available for SJRPP 1 and 2 units, but those improv ements are not currently cost effective, and are at risk of triggering an NSR review. Commenters said Georgia Power's Scherer 4, has received significant efficiency upgrades in the pro cess and deploys the best available control technology (BACT).

Commenters stated the risk of an NSR review has his torically been the single major driver preventing even cost effective efficiency upgrades from being implemented; should maintenance or upgrades to a unit result in a net increase in e missions by virtue of an increase in output or in unit use, the unit would be subject to NSR. Comment ers said at this time no guidance has been given by EPA on how it intends to apply NSR provisi ons should an improvement in efficiency mandated by the CPP result in an actual increase in total emissions due to increased capacity or increased usage. Commenters said it is not prudent for any utility to proceed with an upgrade that could trigger NSR without assurances (i.e. inclusio n in the CPP rulemaking) that the rule driving the upgrade will in fact exempt the resultant upgra des from NSR; no such assurances have been given in the proposed NSR.

Commenters stated a more significant hindrance to i mplementing Building Block 1 than NSR is the practical impact of implementing Building Block 2, the re-dispatch of coal-fired generation toward gas. Commenters said any attempt to implemen t Building Block 2 will result in both a reduced average load factor on the solid fuel EGUs, and an increase in the number of starts; both

of these actions result in a decrease in overall ef ficiency which certainly exceeds the 1-2% improvement that may be available, and is likely to exceed even the 6% efficiency called for by Building Block 1. Commenters said reduced load oper ation and increased starts will negate any improvements to overall unit efficiency, and the to tal net unit CO2 emission rate (lb/MWh) will
increase.

Commenters stated it is not at all reasonable or ev en possible to achieve the Florida State 2020- 2029 or 2030 average emission goals for CPP regulat ed units even with all building blocks implemented. Commenters stated facilities can only achieve this goal by effectively retiring all solid fuel units and building gas units that are su bject to Section 111(b). Commenters said since192

the CPP in effect (though not in the rule) mandates forced closure of coal units, Building Block 1 is rendered completely ineffective, impractical, ir relevant and unnecessary; it only exists to give credence to the desired appearance that this rule d oes not in fact force closure of coal units (though it does in practice). Commenters said Build ing Block 1 at a more realistic rate of one to two percent might be viable if BB 2 were abandoned. Commenters said BB1 is the only one of
the four BBs that is effective at the "source" EGU.

Commenters requested that EPA consider the followin g and adjust building block 1 in the goal computation procedure accordingly:

-An EGU's heat rate is not constant; heat rate vari es with such parameters as process design, equipment design, maintenance, cleanliness, weather conditions, fuel energy content, fuel delivery, process water temperatures, and cooling w ater temperatures; heat rate improvements are not uniform or universal; what works for one EG U may not work for another.

-Heat rate improvement projects are limited for new and well-maintained units; some units have been proactively engaged in heat rate improvement e fforts, including implementation of best practices, yet they receive no credit for these eff orts prior to 2012 according to EPA's Clean Power Plan; for these units, it will not be economi cally or technically feasible to achieve an additional 6% improvement; heat rate improvement pr ojects are not permanent; performance deteriorates over time due to age and operation of the unit.

-New Source Review (NSR) rules discourage utilities from larger, more significant, efficiency improvement projects; a major impediment to the typ e of boiler or turbine upgrade projects that could achieve significant heat rate improvements is the fact that they would likely trigger a Best Available Control Technology (BACT) review as part of a Prevention of Significant Deterioration (PSD) permit process; if a plant were not yet equipped with a Selective Catalytic Reduction (SCR) unit to control NO x, a heat rate i mprovement project that might cost $5 million could turn into an SCR project for NO x red uctions with a price tag of $100 million; smaller scale heat rate improvement projects that w ould not trigger a BACT review would not be able to achieve the 6% goal contained in this build ing block.

-Heat rate improvements made at coal-fired EGUs wil l be offset by dispatch changes implemented pursuant to building block 3, re-dispat ch of electricity production to new renewable resources; EPA's proposal is aimed at reducing util ization of fossil-fuel fired EGUs, particularly coal-fired units; increased re-dispatch to renewabl e energy providers, inherently variable resources, will result in coal-fired units cycling up and down and running at minimum loads for which they were not designed; this will have an adv erse effect on heat rate.

Commenters recommended that EPA should make two mod ifications to the proposal with respect to building block 1; first, EPA should adju st the heat rate improvement goal to within a range of 1% to 2%; several utilities have made case s demonstrating achievable heat rate193

improvements in the range of 0.8% to 2%, additional to what they have already implemented but for which they do not receive credit in the propose d rule.

Commenters stated EPA did not consider the punitive impact on auxiliary power and the net basis for heat rate and CO2 emissions in selecting CO2 goals; between 2002 and 2012 a total of 120,000 MW of capacity have been retrofit with FGD, and 140,000 MW of capacity with SCR. Commenters said in 2015 about 955 coal-fired power plants will be operating - of which perhaps 520 are larger than 200 MW. Commenters said among t he larger units, 192 have retrofitted one or more of SCR and FGD process equipment. Commenter s added, the retrofit of either FGD or SCR process equipment can at times be accompanied b y a change in fuel properties, also affects plant heat rate; these actions - undertaken to comp ly with EPA regulations - are not considered in EPA's supporting materials.

Commenters stated Building Block # 1 in the Clean P ower Plan focuses on affected units and heat rate improvements in those affected units. Com menters stated Streeter Station Unit #7 is listed as an affected unit; it is currently operate d as a peaking unit, with operation as a coal fired unit limited to peak demand periods only during a m aximum of a few weeks during the heat of

summer and a few weeks in the winter. Commenters sa id given the few run hours on this unit, the cost estimates of heat rate improvements and th e likelihood of incurring additional environmental regulations (New Source Performance S tandards), a heat rate improvement on
Unit #7 would not be feasible.

Commenters stated in calculating the proposed state goals, EPA did not account for the fact that future emission control projects at any coal-fired EGU could cause the unit's heat rate to increase. Commenters said beyond section 111, other provisions of the CAA will require some existing coal-fired EGUs to install additional cont rols that will increase those units' net heat rates in ways that are not reflected in the 2012 generati on data that is the basis for EPA's proposed state goals; for example, many existing coal-fired EGUs will be required to install additional emission controls in order to comply with the 2012 MATS Rule; others will be required to install further retrofits to comply with regional haze requ irements; EPA is currently considering revisions to the NAAQS for ozone, which could resul t in more areas being designated as nonattainment and having to impose more stringent e mission limits. Commenters said it is obligated by state implementation plans to install emission controls at several coal-fired EGUs, including the installation of SCR and mercury contr ol technologies; the addition of these new emission control measures, and the auxiliary loads they require for operation, will make it more difficult (if not impossible) to achieve the heat r ate improvements proposed by EPA.

Commenters stated in November 2012, GVEA entered in to a Consent Decree with EPA to install certain emission control equipment on Healy Unit 1 and Healy Unit 2 to enable returning Healy

Unit 2 to service. Commenters said as an element of this Consent Decree, GVEA is obligated to install additional air pollution control equipment; this equipment, while reducing nitrogen oxides (NOX) and sulfur dioxide (SO2) emissions, consumes additional energy. Commenters said this additional energy consumption results in a less eff icient heat rate and an increase in the CO2194

emission rate on a pound per net megawatt-hour (lb/ MWh) basis. Commenters said independent of this decrease in heat rate efficiency, GVEA has already taken steps to improve the efficiency of Healy 1 and 2 as a cost savings measure.

Commenters stated an issue with the heat-rate impro vement section of the goal calculation relates to the installation of pollution control eq uipment required under other air quality rules. Commenters said a specific example of this can be s een at the Big Stone plant located in South Dakota and co-owned by Otter Tail Power, Montana-Da kota Utilities, and North Western Energy. Commenters said in order to comply with EPA 's Regional Haze Rule for South Dakota, Big Stone is in the process of installing upgrades to its Air Quality Control System, at a cost of nearly $400 million; however, in addition to requir ing a significant capital cost, those hazereducing upgrades will also require approximately 8 MW of the plant's production. Commenters said this "parasitic load" means that a portion of the plant's power production - and associated carbon emissions - no longer serve consumer load bu t will be used in compliance of an EPA rule.

Commenters said while one EPA rule has the effect o f increasing the plant's rate of carbon emissions output per unit of customer-consumed ener gy, the proposed section 111(d) rule requires significant reductions in that same pollut ion metric.

Commenters stated EPA determined the fleet-wide pot ential for the two types of HRI using fundamentally different analyses; both of these app roaches are flawed, resulting in overly optimistic projections for fleet-wide HRI that may result in state emission rate targets that are

unachievable. Commenters said EPA should revise the HRI goals for any state that can show that EPA's assumptions about HRI potential are flawed wi th respect to the existing fossil-based units
in that state.

Commenters asserted that co-firing might be viable to extend the useful life of a coal plant or as a compliance bridge until a new NGCC unit can be bu ilt, or could provide incremental CO2 reduction required for compliance assurance. Commen ters advocated that co-firing evaluations

remain available to states and affected entities as potential compliance options, however it must
not be relied on as an element of BSER or an additi onal Block in interim or final goal setting.

Commenters stated that while U.S. EPA is proposing BSER as all four building blocks, they are also inviting comment on BSER as a combination of B uilding Blocks 1 and 2 citing "it involves only affected EGUs and generation from affected EGU s". [79 FR 34878] The commenters believed BSER should be based on only inside-the-fe nce application. The commenters also believed BSER should apply directly to the affected EGU and not be a system comprised of multiple affected EGUs and "entities." The commente rs stated that it is unlawful for U.S. EPA to develop a BSER that requires emission increases fro m existing NGCC units.

The commenters noted that U.S. EPA continues to cit e concern that HRIs at coal-fired EGUs might make them more competitive and they will ther efore increase their generation making195

them less effective at reducing CO2 emissions; the "rebound effect." The commenters stated that U.S. EPA uses this to further justify increased uti lization of NGCC, which the commenters noted

increases their CO2 emissions. The commenters state d that they had difficulty with U.S. EPA's concern regarding a potential "rebound effect." Unf ortunately, the commenters stated that due to the nature of this proposal, U.S. EPA has found the mselves in a position where such a ludicrous concern is worthy of consideration. The commenters stated that they can think of no other federal or state regulatory requirement that requires signi ficant monetary investment in a control strategy that reduces emissions (such as HRIs) coupled with an expectation that the investment should result in reduced operation. In general, the commen ters stated that the principle behind

investment in control is that more efficient and we ll controlled facilities will operate more than

less efficient and controlled facilities. The comme nters noted that under Building Block 1, U.S. EPA is requiring investment of potentially millions of dollars to make coal-fired EGUS more efficient. The commenters noted that however, coupl ed with Building Block 2, these same EGU owners are instructed to operate less, or in a cycl ing manner, which in turn reduces the efficiency

of these units. The commenters stated that this is counter to basic engineering principles and

common sense. The commenters stated that this is no t the manner in which Section 111(d) is intended to be implemented. The commenters stated t hat the "rebound effect" should not be a consideration under this proposal and the commenter s believed that this is another reason why this proposal needs to be completely reconsidered. The commenters noted that U.S. EPA also acknowledges it is less cost-effective to implement Building Blocks 1 and 2 together than to implement Building Block 1 alone. The commenters st ated that by reducing overall generation from coal-fired EGUs the combination of Building Bl ocks 1 and 2 also has the potential to raise the cost of the portion of the overall emission red uctions achievable through heat rate improvements relative to the cost of those reductio ns if Building Block 1 were implemented in

isolation. The commenters believed that this is an additional reason why increased utilization of NGCC is not appropriate as the BSER.

Commenters presented a table (Table 1) and stated t hat their coal-fired EGUs did co-fire with natural gas (most notably at Hudson Unit 2) and giv en the amount of natural gas fired at their

three coal-fired steam units the coal emission rate for New Jersey calculated by EPA is not a true emission rate for coal-fired generation only. Comme nters referred to a spreadsheet titled "tsdplant-level-data-unit-level-inventory", where EPA i ncluded all of the CO2 emissions and net generation from their coal-fired EGUs in 2012 regar dless of the fuel burned at the time. Commenters stated that it appears that EPA calculat ed the coal-fired EGU emission rate in Building Block 1 using the total 2012 data from the se units. Commenters stated that they calculated a true annual, average coal-fired genera tion emission rate for their units based on the

CEMS data for the hours when coal was burned at eac h facility. Commenters stated that Table 2 summarizes the analysis with the data EPA included in its spreadsheet titled "tsd-plant-leveldata-unit-level-inventory." (Table 2) Commenters st ated that the inclusion of natural gas cofiring in the coal emission rate puts the New Jerse y coal EGUs at a disadvantage because EPA is seeking an additional six percent heat rate improve ment on units that have lower emission rates because of this co-firing and therefore, EPA must r ecalculate New Jersey's coal emission rate196

based on the hours when the units fired coal only a nd then apply the proper heat rate improvement target to this value.

Commenters stated that at a minimum, if a state can demonstrate that HRI projects already have been implemented at in-state affected coal-based EG Us, EPA should recalculate that state's emission rate goals accordingly.

Comment 7: Building Block 2 considerations that the EPA shoul d take into account.

Response 7: The EPA agrees that using a net summertime capaci ty metric instead of a nameplate capacity for building block two can help control for some of the weather-based generating potential across different regions. Thi s final rule relies on net summertime capacity for building block two as described in section V.D of the preamble.

As explained in section VI of the preamble and the CO 2 Emission Performance Rate and Goal Computation TSD, the EPA has adjusted its treatment of the Deer Creek NGCC facility and

other NGCC units that came online in 2012 to better reflect a full year of operation.

The EPA disagrees with the comment that the proposa l or final rule would require all fossil steam generation in the state of Arizona shut down. See the final Regulatory Impact Analysis for

CPP Final Rule.

The EPA disagrees that the building block two poten tial should be assessed assuming a 1,000 lb/MWh emission rate. Section V of the preamble ex plains the relationship between 111(b) and 111(d) and why they are different. When assessing reduction potential of building block two, to assume all NGCC generation would emit at 1000 lb/MW h would be analogous to assuming that they emit more than current average levels. This a ssumption is inconsistent with the notion of the BSER to identify emission reduction potential.

The EPA has taken into consideration the comments a nd is finalizing a BSER premised on a 75 percent capacity factor using net summertime capaci ty. Please see section V.D. of the preamble and the GHG Mitigation Measures TSD for more inform ation regarding the building block two and re-dispatch from steam EGUs to NGCC Units

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

Commenters stated much of Florida has a climate tha t is humid sub-tropical or tropical; EPA determined the BSER for re-dispatch by ascertaining the top 10% of highest utilized NGCC facilities, which resulted in the setting of the BS ER at 70% of nameplate capacity. Commenters asked if EPA has considered whether summer capacity better reflects the actual generating capacity of affected facilities, and whether a dete rmination of the 90th percentile of NGCC capacity factors should be based upon net summer ca pacity.197

Commenters added in justifying the need for revised building block 2 calculations based on power system dynamics, fuel switching infrastructur e time frames, and reliability issues, several factors can complicate the construction of addition al NGCC capacity:

-Lengthy time lines in siting and permitting new en ergy infrastructure, which can take up to 10 years or more if it is on federal lands.

-The regulatory complexities of siting a new energy facility in non-attainment areas, which would require emission offsets.

-Recent modeling has indicated that if all existing Arizona coal capacity is retired in 2020 it would affect both the reliability and load serving capability of the state's transmission system.

-EPA has simplistically assumed uniformity across R TOs, without considering intra-company, intra-regional dispatch that does not compromise a company and RTO's ability to meet its load.

Commenters stated EPA should work with states to ad just building block 2 targets based on these factors or any other factors deemed reasonabl e by a state. Commenters said for example, in South Dakota, there is one NGCC - Deer Creek statio n (owned by Basin Electric Power Cooperative) - which commenced commercial operation in August 2012 and had a 1 percent annual capacity factor; in EPA's goal setting metho dology for building block 2, Deer Creek is ramped up to a 70 percent capacity factor, requirin g South Dakota's lone coal-fired unit (Big Stone) to reduce operations to an annual capacity f actor of 23 percent; however, EPA fails to consider that the Deer Creek and Big Stone plants h ave different owners and are located in different RTOs (Big Stone in the Midcontinent Indep endent System Operator and Deer Creek in the Southwest Power Pool, beginning in 2015) and se rve different loads.

Commenters stated EPA errs in assuming that natural gas dispatch could be carried out at the levels assumed in the BSER, and in combination with the other elements of the BSER, achieve the overall level of emission reductions required f or compliance under the rule, without rendering excessive numbers of existing coal plants uneconomic, and thus creating severe problems for reliability, high electricity prices, and distorted market outcomes - including the construction of excessive and unnecessary amounts o f new natural gas plants. To correct this error, commenters recommended that EPA phase in the gas redispatch amount in equal increments across the entire 10 year period from 20 20 to 2029.

Commenters stated Natural Gas Combined Cycle (NGCC) plants may have fuel transportation, transmission limits or emission limits that prevent them from running at 70% capacity factor as projected by EPA in setting state goals. Commenters recommended that EPA review and recalculate the assumptions as appropriate for Bloc k #2.

Commenters stated EPA's assumed redispatch of all c oal and oil generation to NGCC must be

modified.198

Commenters stated some individuals have argued tha t efficiency improvements cannot be achieved at coal plants in North Carolina if these plants are also being re-dispatched to natural gas under Building Block 2 and therefore operating at lower capacities. Commenters said this argument conflates the building blocks used to crea te North Carolina's target with the options available for compliance; in reality, increases in generation from other electricity sources - including and exceeding the limited increases envis ioned by EPA's building blocks - will allow

older and less efficient coal units to retire. Comm enters said it is therefore mistaken to assume that inefficient coal plants will continue to opera te at a low capacity and inhibit North Carolina's ability to reach its target.

Commenters stated these comments are applicable to Building Block 2, re-dispatch of 90% of coal-fired energy to natural gas fired combined cyc le (NGCC), and operation of NGCC at a minimum capacity factor of 70%. Commenters stated it should be possible to operate the existing NGCC unit consistently at an average capac ity factor of 70% when coupled with market purchases of NGCC energy adequate to allow solid fu el units to be seasonally idled; it may be more difficult, or may not be possible at all, to a chieve a capacity factor over 70% without opportunity purchases, or without construction of a nother combined cycle natural gas unit (which is not otherwise planned). Commenters said t he key to higher NGCC capacity factors has

been shutdown of solid fuel units in the shoulder m onths, and the commenters' lone NGCC unit does not provide enough capacity or energy by itsel f to achieve that goal.

Commenters stated keeping in mind that the goal of operating NGCC units at a capacity factor of 70% is to re-dispatch 90% of the energy produced fr om solid fuel units to gas-fired NGCC units, the commenters have shown that operating a NGCC uni t at these capacity factors may be possible, but doing so will not achieve the goal of re-dispatching 90% of coal-fired energy to gas. Commenters said for example a system (by 2020) is e xpected to be comprised of approximately 48% coal and/or petcoke fired steam units, 16% natu ral gas fired combined-cycle units, 5% Nuclear (PPA not ownership), 25% simple-cycle gas f ired peaking units, and 6% other units (primarily distillate fired CTs), on a capacity bas is. Commenters stated as the system only has one third the natural gas fired combined cycle (NGC C) capacity as solid fuel, it will not be possible to displace 90% of coal-fired energy by re -dispatching existing NGCC units. Commenters said it is not possible to displace 90% of solid fuel generation by re-dispatch using existing and planned (none planned) NGCC units by 2 030.

Commenters cannot expect to achieve 90% re-dispatch from coal to gas without constructing new gas-fired NGCC units under 111(b); even in that case, technical issues remain. Commenters said first, the replacement generation must be loca ted at or near existing coal-fired sites in order to minimize local transmission impacts such as load and voltage issues. Commenters said second, there is not currently adequate gas transmi ssion capacity into Northeast Florida to support the quantities of gas required for such an operation, either on a firm or non-firm basis, and extensive electric transmission upgrades would also be required. Commenters said in order to support construction and operation of an adequat e amount of new NGCC units under 111(b) to achieve 90% re-dispatch, there must be extensive im provements made to local gas delivery199

infrastructure as well as to the gas transportation infrastructure; the commenters said EPA has
considered none of this.

Commenters stated for purposes of setting state goa ls the state may rely on the ISO to forecast the impact of re-dispatch from coal units to combin ed cycle units. Commenters said the ISO is the regional modeling expert and is in the best pos ition to forecast generation re-dispatch in the region taking into account unit characteristics, tr ansmission congestion and losses, and market prices.

Commenters stated if NGCC units are re-dispatched t o a capacity factor of 70 percent, as assumed by the EPA, the role of these units will es sentially shift from load-following, intermediate resources to baseload resources; howev er, the need for load-following resources

will not be eliminated as a result of the rule. Com menters said if anything, the need for loadfollowing resources will increase due to the increa se in renewable penetration assumed in Building Block 3. Commenters said if NGCCs become b aseload resources, the intermediate load role will likely be taken up by a combination of co al units operating at reduced loads and/or simple cycle peaking units operating at increased c apacity factors. Commenters said both of these actions could result in higher emissions from coal units that would now be load-following and operating at a lower capacity and therefore hav e reduced efficiency (higher heat rates).

Commenters stated in regards to the question of whe ther decreasing the ability to quickly ramp NGCCs up or down adversely affects intermittent ren ewables on the system, simple cycle combustion turbines (CTs) could supplant NGCCs for providing quick ramp up capability when needed. Commenters said simple cycle CTs are less e fficient and more expensive to run than NGCCs, but if located in the appropriate electrical location they should be able to provide ramping capability. Commenters added all intermitte nt resources added to the system since 2011 required to become dis-patchable intermittent resou rces, will be expected to respond to dispatch signals and move in the direction (up or down).

Commenters stated EPA does not appear to have condu cted sufficient analysis of the ability of the existing natural gas pipeline system to support increased utilization of NGCCs. Commenters said based on 2012 data, re-dispatching Wisconsin N GCCs to 70 percent would result in an increase in statewide gas consumption of approximat ely 24 percent. Commenters said page 3-26 of "Regulatory Impact Analysis for the proposed Car bon Pollution Guidelines for Existing

Power Plants and Emission Standards for Modified an d Reconstructed Power Plants" projects a 4 to 8 percent increase in pipeline capacity by 2020, suggesting existing infrastructure is not adequate.

Commenters said additional natural gas storage may also be needed if simple cycle CTs start to be relied on significantly more because of the rule changes; this is especially true if the need grows in the winter. Commenters said currently, sto rage for Wisconsin's needs is available for purchase at a reasonable price, but the pipeline tr ansportation to deliver it is not always available without very significant costs.200

Commenters stated Wisconsin is 'geologically challe nged' in that it does not have suitable geologic formations for natural gas storage fields, and is heavily reliant on storage fields in lower Michigan, and on the interstate pipeline necessary to move the gas from storage to Wisconsin when needed. Commenters said it is likely that as n ew NGCCs come on-line, and existing NGCCs operate at higher capacity factors, there wil l be more competition for limited storage and transportation capacity. Commenters said it is not clear that the EPA analysis has taken note of these types of concerns about the availability of s torage and associated interstate delivery capacity.

Commenters stated it is unclear that NGCC re-dispat ch to a utilization rate greater than 70 percent could be fully implemented by 2020 in all c ases, particularly if air permit or other operational amendments or upgrades to natural gas p ipelines and electric transmission facilities are required to accommodate increased NGCC operatio n. Commenters said the EPA should allow states to determine what level of re-dispatch is feasible and the reasonable schedule for implementing NGCC re-dispatch. Commenters said alte rnately, as is the case with the treatment of renewables and energy efficiency, the EPA should assume a ramp-up period for implementing re-dispatch.

Commenters stated assuming that the permits are rev ised and infrastructure accommodates base load operation, the commenters asserted a 70 percen t capacity factor may be reasonable under anticipated unit availability and market conditions ; however, EPA's analysis should be based on the net seasonal capability that has been demonstra ted to be achievable (instead of nameplate capacity) to avoid overestimating the potential for re-dispatch. Commenters added, EPA should allow states to adjust goals for units with design or other constraints that prevent achieving the 70 percent capacity factor.

Commenters supported that a state should be allowed , but not required to include new NGCC units in its state plan, allowing the units to be i ncluded in the state's compliance calculations under Section 111(d).

Commenters implemented a switch over to NGCC, on wh ich the proposed budgets heavily rely, even before 2012, the year utilized as the budget b aseline. Commenters said an analysis of the 2012 baseline emission and generation figures for t he two City of Tallahassee NGCCs demonstrates that EPA is dictating that each utilit y go far beyond even a switchover to natural gas. Commenters said CO2 Emissions from Hopkins and Purdom from both NGCC and OG Steam for 2012 total 1,195,479 tons. Commenters sai d generation of the two facilities total 2,425,470 MWh, producing an average emission rate f or the two facilities of 985.77 lbs / MWh; yet, the interim and final budgets for Florida are 794 lbs/MWh and 740 lbs/MWh respectively. Commenters said in order to meet these goals, the u tilities of Florida must average this rate; some may be higher, which means some must be even l ower than the goal. Commenters said this leaves only the highly uncertain options of energy demand reduction and alternative energy as sources of reduction or else enter into a trading p rogram and purchase reduction credits.201

Commenters said they have significant concerns over EPA's concept, formulation, and application of Building Block 2 in determining each state's goal rate. Commenters said the first question this approach raises is whether redispatch of power production from one type/group of facilities to a potentially unrelated group of faci lities may be considered BSER; putting aside both that fundamental question and the disparate ef fect of Building Block 2 on the goal rate among different states, commenters asserted that EP A has underestimated the challenges that the redispatch approach presents. Commenters said few, if any, states have an actual excess of clean, reliable natural gas combined cycle ("NGCC") unit c apacity that is sitting idle and simply awaiting this redispatch; increased utilization of modern NGCC production to replace older power sources is likely to continue; however, EPA g rossly underestimates the complexity of the power system in assuming that redispatch represents an opportunity for states to quickly (i.e., by 2020) and easily achieve significant CO2 emission r eductions. Commenters were concerned with building block 2, such as the limitations of existi ng infrastructure, which are discussed in the Notice of Data Availability. Commenters said many o f the "underutilized" natural gas-fired units in Oklahoma were operated at a unit capacity factor of 0.25 or less during 2012, because they are older, less efficient, and less reliable; several o f these units have been kept available for use only in extraordinary circumstances. Commenters added st ate producers maintain reserve units to stabilize grid current when renewable energy genera tion is unavailable. Commenters said these Combined Cycle units, along with any that are more than 30 years old and/or have a 2012 CO2 emission rate of greater than 1,000 lbs/MWh should not be included in the Building Block 2 portion of the goal calculation.

Commenters stated the proposed methodology, as it i s currently applied to South Dakota, produces flawed targets that must be adjusted; for example, applying building block 2 in South Dakota under the proposed methodology results in Bi g Stone Plant, the state's only coal-fired EGU, having to operate at a 23% capacity factor, fo rcing the state's only coal unit to be offline at least half the year. Commenters said this also assu mes that the ability to redispatch resources under building block 2 is technically feasible as a pplied to South Dakota, which is incorrect.

Commenters stated EPA's Building Block 2 calls for increased dispatch of natural gas facilities vis-a-vis coal-fired plants. Commenters said this l ikely would lead to fewer hours of dispatch and more cycling at plants, and as a result lower effic iency and increase the plant's average CO2 emission rate. Commenters said base-load plants ope rate most efficiently when run closer to its peak capacity. Commenters said efficiency is lost w hen the plant is forced to stop and start in response to dispatch instructions. Commenters said to the extent that EPA's regulations add additional cost to operations and make it costly to run relative to plants fueled by natural gas, the number of startup and shutdown events will increase and the plant will run at reduced load levels for longer blocks of time; this leads to a higher a verage heat rate and a higher average CO2 emissions rate than during base load operations.

Commenters stated over the course of the past sever al months, many states have questioned EPA concerning their ability to utilize new NGCC units to meet 111(d) goals for compliance beyond the "111(b) differential" purportedly available und er the proposed rule. Commenters said the202

reasoning for fully using new NGCC generation is si mple: in the face of decreased coal-fired generation and increased (intermittent) renewable e lectric generation sources, fossil fuel generation needs to be available for dispatch to pr ovide critical reliability of electric service. Commenters proposed that EPA allow any EGU whose CO 2 emission rate is lower than a state's goal be factored in to the state's rate calculation for compliance purposes.

Commenters stated when EPA contemplated the re-disp atch of all the state's coal-fired generation to NGCC, EPA must have incorrectly assum ed a command and control authority of the state utilities over the merchant plants within Arizona. Commenters said there are currently five merchant power plants located within Arizona t hat control over 6,550 megawatts of generation capacity; the reality is that the mercha nt plants are free to establish power purchase agreements (PPAs) with whomever they want. Commente rs said the energy from these units may or may not be available for use within Arizona; in fact, some of the merchant plants already have long-term PPAs to supply their energy outside of Ar izona. Commenters said the potential unavailability of this generation creates an additi onal deficit for meeting Arizona's energy needs.

The commenters said the most reasonable choice to o vercome this deficit is to use some of the existing coal-fired generation within Arizona.

Commenters stated Arizona's proposed final goal is 702 lb/MWh; when running in their optimum condition and under prime operating scenari os, NGCC units operate at a much higher carbon emission rate than 702 lb/MWh. (Even EPA ack nowledges in its Section 111(b) rule for new units that a new NGCC unit cannot be expected t o have less than 1,000 lb/MWh.) Commenters said thus, a likely scenario is that an existing merchant-owned NGCC unit operating under prime conditions would emit approxi mately 198 lb CO2/MWh more than the Arizona goal. Commenters said to complicate matters , this same merchant generator could be running this EGU for the purposes of selling the en ergy outside of the state of Arizona; thus, under the Proposed Rule, which requires carbon emis sions from EGUs to be counted in the state in which they are generated, Arizona would have to account for these merchant emissions when evaluating compliance with its 111(d) plan, making it unduly difficult for Arizona utilities to comply. Commenters said under this scenario, Arizon a would be penalized for carbon emissions without reaping the benefit of having re-dispatched a coal-fired EGU emitting an estimated 2,200+ lb CO2/MWh to a lower-emitting NGCC unit; in this scenario, the state would have to

add the carbon emissions from the coal-fired EGU to serve its domestic load to the carbon emissions from any NGCC units generating electricit y for out-of-state consumption to calculate compliance. Commenters recommended that the EPA inc lude a provision in the final rule to
account for such interstate transfers such that the generator's home state is not harmed.

Commenters stated that it is unreasonable for EPA t o assume without analysis that the average

CO2 emission rate for NGCC units in a state will be identical before and after application of the proposed BSER. Commenters stated that under Buildin g Block 2, the Agency expects states to increase utilization of NGCC units to provide more base load generation. Commenters added depending on the design of these units, increased u tilization may actually increase the overall fleet's average CO2 emission rate. Commenters said many of the NGCC units that have203

historically operated at lower capacity factors tha n EPA's target level of 70 percent may have done so because they operate more efficiently at th ose levels than when serving base load. Commenters stated in order to develop a defensible goal calculation methodology, the Agency

must use realistic CO2 emission rates for affected EGUs that reflect the impact of all four building blocks on those units' operations and emis sion rates.

BB2 should not be less than new NSPS 1000

Commenters stated the EPA maintains that these prop osed emission rates can be met over the lifetime of a modern, high efficiency NGCC facility ; however, it should be noted that the emission rate used in the state goals for Florida i s significantly below the proposed emission standard for both categories. Commenters said the e mission rate in the state goal may not be representative of the current NGCC fleet, which alr eady shows historical exceedances, in future years due to efficiency deterioration from the age of the unit and high ambient temperatures in

Florida. Commenters added these emission standards are based off historical data that does not reflect the proposed re-dispatching to current NGCC units in the proposed rule. Commenters said if generation is re-dispatched to these units, thei r efficiencies may deteriorate at a faster rate due
to increased utilization in order to meet demand re quirements.

Commenters stated using an existing source represen tation of BSER that is significantly more stringent than that proposed as new source BSER und er Section 111(b) of the Clean Air Act is illogical and does not align with the intent of the statute. Commenters said for consistency and integrity of both proposals, the EPA should utilize a NGCC emission rate no lower than 1,000 lb/MWh under Building Block 2; it would be even mor e appropriate to determine the rate based on the existing fleet heat input - utilizing 1,100 lb/MWh for those NGCC units with a capacity of
850 MMBtu/hour or less.

Commenters stated they understand that the EPA did not validate the nation-wide assumptions at the plant level; however, these examples show why i t would be inappropriate to base a statespecific limit, derived from unit-specific actual d ata, on nation-wide assumptions. Commenters are not suggesting that the EPA go through the vast effort to change the model to plant-specific calculations; instead, commenters suggested that Bu ilding Block #2 can be both simplified, align with other existing EPA initiatives, and lead to a more appropriate result by using a NGCC emission rate of 1,000 lb/MWh (gross) for all NGCC units with a capacity greater than 850 MMBtu/hour, and an emission rate of 1,100 lb/MWh (g ross) for all units with a capacity of 850 MMBtu/hour or less. Commenters added to what is sug gested here, it would be appropriate to adjust the emission rate up accounting for the use of net generation-based factors in the proposed Clean Power Plan, as compared to gross generation-b ased rates in the NSPS.

Commenters stated Building Block 2 may have only li mited usefulness in Nevada for meeting the goals under the proposed rule; Nevada's load pr ofile is unique; electricity demand is relatively low during the winter months but increas es substantially during the summer months. Commenters said during peak summer hours, replacing energy from coal-fired EGUs with204

energy from NGCC EGUs will require Nevada utilities to secure additional resources to replace the coal capacity. Commenters said resource adequac y levels in Nevada are developed based on meeting peak load plus providing a level of reserve s for contingencies such as forced outages of generation equipment. Commenters said if coal-fired EGUs are to be displaced by NGCC EGUs, this essentially means that coal-fired EGUs must be shut down; Nevada's coal-fired EGUs are not designed to operate in a "stand-by" mode; in fa ct, none of the coal-fired EGU capacity in Nevada has a hot stand-by feature, and the coal-fir ed EGUs were not designed for cycling.

Commenters said the coal-fired EGUs in Nevada take from 8 to 24 hours to get up to full load; if the coal-fired EGUs are shut down, then this will a ffect the level of resources that need to be secured for peak purposes, as the level of reserves will be reduced by the level of coal capacity

that is shut down. Commenters said because of these limitations, the utilities in Nevada would have to find replacement capacity to serve as reser ve if Nevada is to meet its interim and final goals. Commenters recommended adjusting the goal ca lculation to account for utilities that have summer peaking requirements and cannot retire gener ation capacity without securing additional capacity to ensure reliability during peak demand t imes.

Commenters stated there are many ways to reduce pea k load on the demand side of the equation: distributed generation can pick up a significant po rtion of peak load, as can new energy efficiency and employing energy storage technology.

Commenters stated when determining reductions avail able to states from Building Block 2, EPA should consider a state's potential for reducing em issions by redispatching not only to existing NGCCs located within the state, but also to NGCCs l ocated in other states that are electrically interconnected with the state; because redispatch c an and will be performed on a regional basis,

even states with little or no under-utilized NGCC c apacity may still be able to realize substantial emissions reductions through redispatch. Commenters said reductions in carbon emissions achievable through regional redispatch can be alloc ated among states in the region based upon a rational criterion such as historic generation, cos t, or accepted modeling protocols, as EPA has done in the Cross-State Air Pollution Rule ("CSAPR" ) and other rules governing the electricity

sector.

Commenters added when determining reductions availa ble to states from Building Block 3, EPA should ensure that a state's goals are matched to t he means available to comply with those goals. Commenters said for example, if EPA continues to al low states to demonstrate compliance through renewable energy credit ("REC") programs th at allow the purchase of RECs from any other state, then EPA should modify emissions targe ts for Building Block 3 to reflect that possibility of compliance. Commenters said currentl y, the emissions targets are premised on renewable generation presumed to be available withi n state borders; but states that themselves may lack the conditions for robust renewable genera tion may nonetheless be able to carry out substantial emissions reductions in Building Block 3 by buying RECs produced by renewable

facilities in other states. Commenters said Buildin g Block 3 should also account for states' ability to buy clean energy credits produced by nuclear and hydropower facilities with regard to both goal-setting and compliance calculations.205

Comment 8: Appropriate to treat Building Block 2 reductions d ifferently than reductions achieved by Building Blocks 3 and 4

Response 8: The EPA disagrees with the commenters that increm ental building block three generation would not replace fossil steam generatio n. The EPA received significant comments suggesting that as RE generation levels increase we ll beyond historical levels, it will have a significant impact on generation from existing foss il sources. This is supported by the EPA power sector modeling and is described further in p reamble section V.E and the GHG Mitigation Measures TSD. In regards to the relationship betwe en natural gas generation and increased renewable generation see Section V.D or the preambl e.

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

Commenters stated to the extent that NGCC units are able to provide the same essential reliability services that are provided by existing coal-based units, it is appropriate to assume that generation from existing NGCCs could replace genera tion from coal-based steam EGUs in the proposed goal computation equation; because RE and EE cannot provide the same services, EPA should not use a goal-setting calculation that assu mes that these measures can replace fossil

MWh on a one-for-one basis. Commenters said accordi ngly, it is appropriate to have different approaches to the different Building Blocks when ca lculating the state goals, as this recognizes that different generation sources can and do play d ifferent roles in the reliable operation of the interconnected power system.

Commenters added the proposed approach to the numer ic goal calculation is consistent with how utilities forecast load; as in the proposed numeric calculation, incremental RE and EE serve to meet (or avoid) load growth, avoiding new generatio n and the related emissions. The commenters said in the Mass-Based Equivalents TSD, in which EPA implemented the alternate approaches to the numeric calculations discussed in the NODA, EPA assumes the opposite - that "incremental resources under building blocks three and four replace historical generation from

affected fossil fuel-fired sources and those increm ental resources are therefore unavailable to meet new demand for electricity." Mass-Based Equiva lents TSD at 6 n.20. Commenters said this approach is not consistent with utility operations, in which incremental RE and EE are used to reduce future demand and emissions, not reduce hist oric demand and emissions. Commenters said proposed applicability requirements would exem pt existing and new simple-cycle CTs that sell less than one-third of their potential output to the grid. Commenters said if simple-cycle CTs alone were required to support the reliable integra tion of renewable generation into the grid, many of these units likely would exceed this one-th ird sales limit, subjecting them to standards, at least for new units, with which they cannot comp ly. Commenters said it is not clear how renewable generation could be integrated into the g rid under such regulatory conditions.206

Comment 9: The EPA Should Look Beyond State Borders When Calc ulating Reductions Achievable from Dispatch to NGCC Units in Building Block 2 and From Zero-Carbon Electricity Generation in Building Block 3.

Response 9: The EPA agrees with the comment. As described in preamble sections V and VI, it has defined and quantified the BSER in this final r ule in a manner that takes into account the regional interconnectivity of the grid.

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

Commenters stated EPA's Goal-Setting NODA also addr esses, among other things, the following

two issues related to the calculation of emissions goals: first, whether states that have little or no under-utilized NGCC capacity could nonetheless shif t some minimum amount of generation to NGCC plants, even if such plants are located in oth er states; and second, whether EPA should calculate a state's potential for reducing emission s through renewable electricity by calculating regional potential reductions, and then allocating those reductions to states within each region.

Commenters said while these issues relate to differ ent building blocks in EPA's calculations, they are nonetheless related; both issues stem from the more general question of whether state goals should reflect emissions reductions that can be supported only by measures within a state's borders (e.g., redispatch, zero-carbon electricity production, and energy efficiency ), or instead whether state goals should - consistent with the in terconnected, interstate nature of the electricity system - reflect emissions reductions supported by measures that can be taken regionally.

Commenters stated the Proposed Rule limits emission s goals to measures that can be undertaken within a state's borders; limiting future emissions reductions to those within a state border does not fully reflect a state's potential to economical ly reduce emissions. Commenters said for example, under the Proposed Rule, for states with l ittle or no under-utilized NGCC capacity, the emissions goals reflect little or no emissions redu ctions achievable through Building Block 2 (redispatch), even though those states may well be able to achieve emissions reductions by relying upon redispatch from affected EGUs to NGCCs located in other states. Commenters said likewise, for Building Block 3, the Proposed Rule s ets emissions goals based upon a state's 2012 renewable generation, scaled up over time using reg ionally-calculated growth factors; that is so even though a state may be able to achieve emission s reductions by relying upon renewable generation constructed in other states; in fact, th e growth factors are based upon RPS programs that expressly allow reliance on renewable generati on constructed in other states.

Commenters stated the state-bound approach taken in the Proposed Rule artificially and unrealistically limits the reductions that can be a chieved by Building Blocks 2 and 3; for example, Pennsylvania's emission goals reflect redi spatch from its coal plants to the 10 GW of NGCC capacity located within the Commonwealth, but they ignore the reality that Pennsylvania is interconnected with New Jersey. Commenters said EPA projects that after implementation of the Proposed Rule, New Jersey's NGCC fleet will hav e a capacity factor of only 44 percent, far below the 70 percent used as the ceiling for Buildi ng Block 2; New Jersey's NGCC fleet - which is dispatched by the same grid operator as Pennsylv ania's coal fleet - could absorb approximately207

13 million MWh from coal units in neighboring state s. Commenters said if Pennsylvania coal generation were shifted to New Jersey NGCCs until t hose units reached 70 percent capacity, the

net emissions from the two states would be reduced by nearly eight million short tons of CO2 per

year.

Commenters stated in the Goal-Setting NODA, EPA pro poses alternative methods of calculating emissions rate goals that more closely conform to t he integrated, interstate nature of the electricity system; the final rule should account f or emissions reductions that can be achieved through measures taken beyond a state's borders. Co mmenters said for example, as just discussed, coal-fired generation located in one sta te can often be displaced by under-utilized

NGCCs located in another state. Commenters said set ting state goals to reflect the potential for redispatch to NGCCs located in other states not onl y would be reasonable, but failing to account for such potential could significantly underestimat e the degree of emissions reductions achievable through the BSER, which, as EPA has expl ained, takes into account the interstate nature of the electric industry. Commenters said li kewise, EPA should set state goals to account for a state's ability to reduce emissions through r eliance on zero-carbon generation located in another state; doing so would be consistent with EP A's apparent intention that states be able to demonstrate Building Block 3 reductions through the purchase of credits from other states.

Commenters stated in the electricity system, the lo cation of the resource that displaces or avoids emissions reduction is not determined by state boun daries, but instead is dictated by market forces, chiefly cost. Commenters said emissions goa ls reflecting the reductions achievable in that "best system of emission reduction" should, therefo re, reflect the full amount of reductions that can occur in an interconnected region. Commenters s aid in determining the boundaries of the relevant region, it would be natural for EPA to ado pt the boundaries of existing ISOs and RTOs, as those grid operators control dispatch within the ir territory. Commenters said in areas of the country not governed by an ISO or RTO, power flows are managed within "control areas" that similarly can span state lines.

Commenters stated in determining the emission reduc tions that can occur within a region due to redispatch from coal to gas, and then apportioning those reductions to states within that region, EPA could rely upon a version of the Integrated Pla nning Model ("IPM") that it has already developed and used in similar contexts. Commenters said IPM models areas within ISOs and RTOs as sub-markets; the model would allow EPA to p roject where emissions reductions occur in the interconnected electricity system, and EPA c ould easily formulate state goals based upon that modeling. Commenters said this approach would be very similar to the way in which EPA

calculated total allowable emissions from each stat e in the CSAPR based on the state's ability to achieve highly cost-effective emissions reductions, and approximated an allocation based on cost. Commenters said EPA could also use a simpler allocation system, in which the total emissions reductions in a region is apportioned to the constituent states based on historical generation (e.g., MWh produced in 2012), electricit y load (e.g., MWh consumed in 2012) or historic emissions (e.g., CO2 tons emitted in 2012)

.208

Commenters said reductions based on renewable gener ation also should be determined by looking beyond state borders; although the Proposed Rule formulates state goals based upon renewable generation located within the state, it a ppears to contemplate allowing states to demonstrate compliance through RECs purchased from other states. Commenters said a state's emissions goals should be consistent with the means available for compliance; thus, if EPA continues to allow states to demonstrate compliance using RECs generated in other states, then EPA should set state emissions reduction goals cons istently. Commenters said those goals should reflect states' ability to comply by purchasing REC s from other states, and they should include an allocation of potential renewable generation across states capable of supporting it through the purchase of RECs.

Commenters said at a minimum, EPA should set state emission reduction goals for renewable generation based on the reductions that can be achi eved within a region, using the same regions proposed here for Building Block 2 - i.e., regions that reflect the boundaries of existing ISOs and RTOs or "control areas." Commenters said this appro ach reflects the reductions achievable through the "best system of emission reduction" tak ing into account the interstate nature of the electric system; moreover, a regional approach enco urages regional compliance, reducing the risk of "double counting" renewable energy credits by ensuring that renewable generation is only
counted once.

Comment 10: Building Block 3 Renewable Energy

Response 10: The EPA agrees with the commenters that we should account for the replacement potential of historical fossil generation levels wi th building block three. We also agree that we should factor in the regional connectivity of the g rid when assessing reduction potential. The

EPA has taken into consideration the comments and i s promulgating a final rule that relies on a revised building block three. Please see section V .E. of the preamble for more information regarding the building block three and renewable en ergy

.
In regards to the fossil leverage factors, the EPA recognizes commenters concern that as proposed compliance with the state goal emission ra te required significant additional action from in-state generation sources if the state fell short of its RE or EE potential. The EPA feels it has addressed this in multiple ways in this final rule: 1) BB4 is no longer part of the BSER quantification, 2) the regional nature of the build ing blocks (and compliance opportunities) no longer limit states to in-state generation, 3) the flexibilities provided through subcategoryspecific emission performance rates and the mass-ba sed state goals can reflect reduction potential that may not inherently manifest itself o n a state emission rate goal demonstration.

This final rule does not include any existing RE in the quantification of the BSER.

The following are summaries of the specific public comments under this comment:209

Commenters stated both existing and new renewables should receive regionalized treatment in any goal setting methodology. Commenters stated wha tever final specific methodology is adopted by EPA, the goal setting methodology should reflect the reality of the existing regionalized renewable 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 regional load and regional customer s outside of Maine.

Commenters stated EPA has developed the BSER baseli ne and formula by including all the renewables located within each state when developin g that state's target, but in many instances another state may be claiming the output or credit for that development and be buying the energy and/or hold the renewable energy certificates (RECs ) associated with generation. Commenters stated EPA is also considering tracking ownership o f renewables in rate-based approaches using RECs, which could be from in-state or out-of-state generation. Commenters added EPA should create greater consistency between the BSER formula structure, current state renewables tracking, and planned compliance tracking. Commente rs stated the simplest way would be to consider only new RE generation and not include exi sting RE generation in the BSER baseline. Commenters said this allows EPA to avoid allocating generation from existing renewables in the BSER formula, which may be located in one state wit h output claimed by another state. Commenters said looking forward there would be no c oncern about using RECs for tracking generation whether from in-state or out of state ge neration, if the formula is no longer based only on in-state generation; it also avoids the problem of including in-state generation in the determination of a state's target when the state do es not receive the output of generation delivered to and utilized by another state.

Commenters stated there are implications of includi ng all non-fossil resources if plants retire; including total generation and emissions fr om all sources in the BSER formula, including all nuclear and hydro. Commenters stated this appro ach would deliver a lower emissions standard; while this would create an incentive to k eep non- and low-emitting resources running and force any retirements to be replaced with resou rces of similarly low emissions, commenters are concerned that the approach would impose an unf air burden on states that face retirements and thus incentivize the continued use of nuclear p lants that may be unsafe.

Commenters added while there are legitimate reasons to include renewables in the BSER calculation, especially those developed in response to RES/RPS requirements which were implemented to address emissions goals, it is simpl er to treat all resources with the same emissions profile the same. Commenters stated this allows EPA to be technology-neutral and not have to classify resources by type or category, whi ch would be inevitably contentious and timeconsuming. Commenters said for example, existing wi nd (100% included), hydro (0% included), and nuclear (5.8% included) are all treated differe ntly in the BSER formula; again, if the existing resources are excluded from the BSER formula, EPA c an credit all new non-emitting resources in the same way going forward and avoid concerns ab out inconsistent treatment.210

Commenters added including non-fossil resources in the BSER formula leads to more disparate state targets than if an average fossil-only rate i s used as the starting point; of greater concern ar e the distortions such inclusion would create during compliance: if states develop a flexible ratebased policy approach and their neighboring state h as a very different target level, there is a possibility that generators of the same type on eit her side of a state border would face different compliance costs. Commenters stated this kind of co mpetitiveness issue could lead to environmental leakage, which would be solved if the starting point for developing the state standards was a fossil-only rate.

Commenters added the EPA should employ a formula th at fully reflects the potential for zeroemitting resources and demand-side efficiency to re duce emissions from fossil generating units; this will be achieved by basing targets on the use of available Block 3 and Block 4 resources to displace the highest-emitting fossil units (general ly coal-fired power plants) first. Commenters stated this approach will achieve the greatest emis sion reductions from the available resources and thus comports with the Act's mandate to base st andards on the best system of emission
reduction.

Commenters added in the goal-setting equation, EPA correctly accounted for the displacement effect of the resources in Block 2 (natural gas uni ts) but failed to correctly account for the effect of the resources in Blocks 3 and 4; for Block 2, EP A accurately reflected the fact that the increase in generation from natural gas units can a chieve a corresponding decrease in generation (and emissions) at coal-fired steam power plants, b ut EPA failed to apply this approach for Blocks 3 and 4. Commenters stated the original prop osal's state target calculation formula simply adds additional renewable energy and energy efficie ncy megawatt-hours to the denominator of the formula without reducing generation or emission s at fossil-fuel fired plants. Commenters said as a result, under the proposed formula, Block 3 an d 4 resources do not reduce generation or emissions from affected units; rather, they simply result in a somewhat lower state target based on the dilution effect of dividing a fixed amount o f carbon pollution by a larger number of megawatt-hours. Commenters said this fails to achie ve EPA's stated objective to consider the ability of the Block 3 and 4 resources to "reduce, or avoid, generation from all affected EGUs on
a state-wide basis."

Commenters added EPA must ensure that the approach to attributing emission reductions from renewable resources for compliance is consistent wi th the treatment of these resources when setting the state-specific emission goals. Commente rs said if a state cannot use certain RE generation for compliance, that generation should n ot form part of the basis for that state's emission rate goals; put another way, EPA assumes t hat each state's 2012 RE production is relevant in determining a state's potential for fut ure, additional RE generation because EPA based the states' RE compliance goals, in part, on the level of in-state RE generation in 2012. Commenters said If EPA finalizes guidelines that al low for states to use out-of-state RE generation for compliance, the Agency must recalcul ate state goals to reflect where this generation was used for compliance in 2012, not whe re it was produced. Commenters said it would be unfair to base a state's goals on RE gener ation that will be used by another state for211

compliance as it overestimates the potential for RE deployment in that state for compliance

purposes.

Commenters asserted that the approach used by EPA t o calculate the contribution of renewables to the state goal is flawed; Existing Renewable Por tfolio Standards (RPS) that were mandated through legislative action that are not capacity-ba sed were used to calculate regional "averages" for RE generation. Commenters said these averages w ere used to determine the generation level and required growth factor to attain that level; th e growth factor was then applied to each state in order to calculate the target RE generation as a pe rcent of total generation. Commenters said the percent of total generation was then capped to not exceed the regional average. Commenters said it is more appropriate to use a weighted average, s o as not to create unattainable goals based on the RPS averages, where many of the states with hig h RPS contribute much lower amounts of energy to the grid, such as Maryland or Washington D.C. Commenters also asserted that the quantification of RE generation needs to include co st factors, availability during critical periods of energy demand, land use and environmental impact s, and effects on reliability of the electric grid due to meteorological variability.

Commenters added EPA should value incremental renew able energy generation and energy efficiency in Building Blocks 3 and 4 in terms of t he CO2 emissions they avoid by displacing existing fossil fuel generation. Commenters said cu rrently, EPA values them only as additional megawatt-hours ("MWh") of generation, and fails to account for or require displacement of existing fossil fuel-fired generation, an approach inconsistent with the BSER rationale.

Commenters added assure that the renewable energy a nd energy efficiency assumptions used to set state targets are realistic with little uncerta inty in their attainment; this would help avoid shortfalls with multiplier effects, but would still be subject to risk from non-delivery in the short term. Commenters said allowing states to bank "over generation" of energy efficiency and renewable energy would help avoid future shortfalls and their negative consequences.

Commenters added include safety values to limit the reductions in covered fossil output if/when there are shortfalls in BB3 + BB4 output could help keep compliance problems in one state from propagating to other states through the power marke t.

Commenters added longer averaging periods for compl iance provide only limited value under most circumstances; deficits in BB3+BB4 deliveries must be fully covered by subsequent "over deliveries" to comply with the target over the aver aging period. Commenters said given the lead times for adding more renewable energy or energy ef ficiency, this is unlikely to be possible with a three-year averaging period, and in any case requ ires over investment creating an eventual surplus of energy efficiency or renewable energy in the long term.

Commenters added the structure of EPA's goal settin g equation using the building blocks creates inconsistencies for states that fail to meet target s under building blocks 3 or 4 (i.e. a shortfall of renewable energy or energy efficiency). Commenters said the inability of a state to meet its212

required renewable and energy efficiency targets re quires a reduction in fossil emissions from

affected sources in order to meet the state emissio n reduction target; however, the algebra of the target setting equation produces a multiplier effec t that the commenters terms a "Fossil Leverage Factor" (FLF) for each state. Commenters said most states (more than 30) have FLF above 1.0 for both interim and 2030 targets, which means that more fossil generation will need to be curtailed than the shortfall of renewable generatio n or energy efficiency achieved for a state to meet its target. Commenters said this idiosyncrasy in the calculation causes a multiplier effect for shortfalls in achieving building blocks 3 and 4 tha t offers additional challenges to states in developing compliance plans. Commenters recommended that the state targets for building blocks 3 and 4 are developed with clear certainty i n the ability of states to achieve these goals, and that safety valves are provided where circumsta nces beyond a state's control prevent states from achieving their renewable and energy efficienc y targets.

Commenters added under the proposed Carbon Emission Guidelines each state will only receive credit for electric energy generated using renewabl e resources if the renewable energy is consumed within that state; this policy negatively impacts states that already re, or are striving to be, net exporters of renewable energy. Commenters s aid states that provide renewable energy to other areas of the country or a region should recei ve some credit for energy created in that state but exported to other areas. Commenters said if the EPA determines it is necessary to credit states for only that electric energy that is consum ed within each state, then the EPA should at the very least treat carbon emissions similarly and cou nt only those carbon emissions against a state that are actually generated in that state. Commente rs asserted the EPA's formula allowing only a small percentage of credit for electricity generate d by nuclear facilities and no credit for existing hydro-electric facilities is not based on sound rea soning and should be amended to provide full credit for electricity generated by nuclear facilit ies. Commenters said there are two nuclear generating facilities operating in Nebraska, and se veral hydro-electric facilities; if the EPA is truly interested in protecting the environment by l imiting carbon emissions, the current formula providing only nominal credit for electricity gener ated by nuclear facilities, and no credit for hydro-electric facilities, flies in the face of tha t goal. Commenters said nuclear and hydro-electric facilities produce no carbon emissions and have pro ven to be a safe, clean, and reliable method for meeting the baseload generation needs for elect ric consumers. Commenters urged the EPA to revise its proposed guidelines so that full credit is provided toward compliance goals for electricity produced by nuclear generation faciliti es.

Commenters stated EPA must provide clear, consisten t treatment of renewable energy generated in one state, but sold or consumed out of state. Co mmenters said EPA's decision to set goals based on renewable generation, but leave to the sta tes the allocation of credit for that generation for compliance purposes, will promote disharmony, r ather than cooperation, among the states, and incite economic protectionism. Commenters said it also penalizes states that export renewable energy, by building into their goals expo rted renewable energy that cannot be counted toward compliance because it is not consumed in-sta te. Commenters said for all purposes, goal setting and compliance, EPA must assign credit for renewable generation to either the state in which the resource is physically located or credite d to the state where the generation is utilized.213

Commenters stated under the proposed guidelines' pr imary approach to determining RE baseline and target goals, EPA relies on state RES requireme nts to create regional RE targets that are then applied to individual states. Commenters said this approach may overestimate what is achievable in some states, particularly those that do not have existing RES mandates; in addition, EPA misuses state RES programs by failing to recognize RES design elements that reduce the amount of in-state generation necessary for compliance. Co mmenters said EPA fails to adjust state RES goals to reflect the fact that generation from exis ting biomass and hydropower generation cannot be used for compliance under the proposed 111(d) gu idelines. Commenters said although the baseline year penalizes actions taken by EGUs to vo luntarily reduce carbon emissions prior to 2012, RE projects developed prior to 2012 are used to lower the state emission rate target.

Commenters added the EPA's calculation of RE assume s all electric service providers are subject to that states' RES; for example, the MO RES is onl y applicable to investor owned utilities (IOU's), and as such, municipalities and cooperativ es are not subject to the standard. Commenters said the EPA calculated its RE targets b ased upon a broad stroke of applicability.

Commenters stated Oklahoma is and will continue to be a leader in wind power development and generation; in addition to federal wind generation tax credits, Oklahoma has offered generous tax reductions/credits to companies as an incentive to develop wind generation in the state. However, commenters have significant concerns regar ding EPA's concept, formulation, and application of Building Block 3 in determining each state's goal rate. Commenters said there are additional concerns over how the Proposed Rule addr esses incorporating, tracking, and crediting renewable energy ("RE") into and through a state pl an; the proposal would require each state to develop and implement a complex plan based in part on conjecture as to future technical development, policy decisions, and economic conditi ons that will determine the future of RE.

Commenters stated the Building Block 3 component us ed in setting each state's goal rate should better reflect these considerations: Step 4b (renew ables) should provide for adjustments to the 2020 - 2029 existing and Incremental RE values for each state, to account for the likely significant differences between EPA's 6- to 15-year projections and actual conditions. Commenters said unless and until Congress renews th e wind generation tax credits that were in effect in 2012, the renewable energy goals that ass umed high levels of wind growth for the years 2014 through 2030 should be greatly reduced.

Commenters stated the final rules should assume emi ssion reductions occur at affected EGUs in a state as a result of renewable generation in that state no matter whether or not energy production at affected EGUs is actually offset by r enewable generation, and EPA should define simple methods for calculating those assumed reduct ions.

Commenters stated the method used to calculate stat e-specific renewable energy ("RE") is flawed and unworkable for many of the states in whi ch Entergy operates. Commenters said under the proposed method, EPA averages the individ ual state 2020 Renewable Energy Standard requirements within each of six EPA-determined regi ons and then sets a regional renewable target for 2029 equal to this average; EPA then cal culates a regional annual growth rate for RE214

generation that is required for the state to reach the regional target; EPA then applies that growth rate to each state's level of 2012 RE generation. C ommenters said EPA's state-specific RE goals assume states start increasing RE generation in 201 7 and continue increasing RE generation every year through 2029.

Commenters stated the second component of Block 3 i s renewable energy generation; in its proposed approach, EPA assumed that each state coul d increase its use of renewable energy resources to a level consistent with renewable port folio standards ("RPS") in its region. Commenters said EPA took this approach for two reas ons: First, states that have adopted an RPS, like North Carolina, have set state RPS requir ements taking into account issues like feasibility and costs, so these state policy decisi ons serve as a sound basis for the EPA targets; second, renewable resource development pot ential varies by region. Commenters said EPA's decision to adopt a regional approach based o n existing legal obligations of neighboring states ensures that the renewables target reflects regional availability of renewable energy resources; in short, states have already decided th at these investments are feasible and costeffective based on each state's access to renewable energy in its region.

Commenters stated to develop the renewable generati on component of Block 3, EPA first quantified the level of renewable generation in eac h region in 2012, prior to implementation of the RPS; next, EPA estimated the average of the sta te RPS percentage requirements for 2020 in each region and multiplied it by total 2012 generat ion for the region; finally, EPA computed a regional growth factor that would be necessary to b ring the region from the 2012 starting level up to the average regional RPS requirement in 2020. Commenters said for the Southeast region, the regional growth factor is 13% per year; for pur poses of Block 3, North Carolina is part of the Southeast region, which also includes Alabama, Flor ida, Georgia, Kentucky, Mississippi, South

Carolina and Tennessee. Commenters said because Nor th Carolina is the only state in the region with an RPS, EPA based the Southeast regional avera ge on North Carolina's RPS goal. Commenters said for the Southeast region, EPA calcu lated a renewable energy goal of 10% of total 2012 generation by 2029; this amounts to 11.7 million MWh (11,668,176 MWh) of renewable generation, which lowers North Carolina's target emission rate by 165 lbs/MWh.

Commenters said the EPA then claims to build incent ives to encourage each state to reduce its

carbon-intensive fuels. Commenters stated the EPA a pplies its building blocks to create the final carbon goal that it imposes on the states. Commente rs said specifically, through the state budget rate-reduction calculation, the EPA encourages the 'grid' (i.e., state resource planners and, ultimately, state legislatures) to use more low- or zero-emitting generating resources. Commenters stated, however, that not all zero-emitt ing resources are treated equally under the CPP. Commenters said in fact, the EPA's methodology favors wind and solar.

Comment 11: The EPA should reevaluate the BB3 BSER calculation s regarding nuclear generation.215

Response 11: The EPA has taken into consideration the comments and is promulgating a final rule that quantifies the BSER in a form that does n ot incorporate under construction and at risk

nuclear units. These units are not included in the subcategory-specific emission performance rate or state goal calculations. Please see sectio n V of the preamble for more information regarding the building block three and nuclear gene ration

.

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

Commenters stated EPA proposed as part of Block 3 t hat states with nuclear generation be eligible to receive credit for the carbon savings a ssociated with keeping 6% of "each state's historical nuclear capacity" in operation. Commente rs said EPA's 6% assumption is based upon a percentage of total U.S. nuclear power generation t hat EPA deems to be at risk of retirement.

Commenters said EPA should reevaluate the BSER calc ulations regarding states with nuclear generation that is not "at risk," as the national p ercentage is not a uniform national trend and EPA's standing assumption creates a compliance risk for those states.

Commenters stated EPA's final version of the Clean Power Plan should allow states to equitably credit nuclear generation under construction the sa me as renewable energy and energy efficiency to the advantage of the consumer; commenters furthe r supported the inclusion of both new nuclear generating units and uprating of existing n uclear generating units as components of state plans and factored into state compliance; they shou ld not be included in determining the state carbon intensity goal.

Comment 12: The EPA should reevaluate the BB3 BSER treatment o f hydropower

Response 12: The EPA agrees with the commenters that existing hydropower should be treated equally in both the quantification of BSER and in c ompliance. This final rule, as explained in

sections V.E and sections VII and section VII does treat them equally.

The EPA disagrees that South Dakota was unfairly pe nalized at proposal for its hydro power. It was not factored into the state goal calculation at that time. However, the EPA believes its

treatment of BB3 in this final rule obviates the di sagreement by shifting to a regional assessment of incremental RE potential.

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

Commenters stated if EPA chooses not to allow exist ing hydropower to count toward complying with a state's goal, EPA should also remove hydropo wer as a component of the state's total generation when calculating the required amount of renewables in Building Block 3.

Commenters supported efforts by the State of South Dakota to receive credit within the Clean Power Plan for the abundant, clean hydropower that presently exists within the state; while the proposed rule's preamble states that existing hydro power is excluded from 2012 generation for216

purposes of RE generation potential, EPA's calculat ion methodology actually penalizes South Dakota for its exceptionally well-developed hydropo wer sources.

Comment 13: BB4 Energy Efficiency EE

Response 13: The EPA has taken into consideration the comments and is not promulgating a final rule that includes building block four as par t of the BSER. Please see section V.A. of the preamble for more information regarding the buildin g block four and demand-side energy efficiency.

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

Commenters stated there are errors in block 4 goal calculation.

Commenters added EPA inaccurately calculates the tr ansmission and distribution line loss by dividing the total supply of electricity less direc t use energy by retail sales using information from the EIA's United States Electricity Profile 20 10' this results in EPA's proposed line loss of 7.51%. Commenters stated calculating line loss by d ividing estimated losses by total supply of electricity using information from the EIA's United States Electricity Profile 2012 table on the supply and disposition of electricity, provides a m ore accurate and timely reflection of the line
loss. Commenters said this calculation results in a United States line loss of 4.955%.

Commenters noted that the EPA assumed a 7.51% trans mission and distribution loss for a scaling factor nationally, but EIA indicates great variability in state-by-state T&D losses between 1990 and 2012 (http://www.eia.gov/tools/faqs/faq.cf m?id=105&t=3). Commenters asked how the EPA arrived at 7.51% and why did EPA use a nati onal loss rate.

Commenters added EPA has failed to adjust total ret ail sales to remove zero CO2-emitting generation; zero CO2-emitting generation would pres umably grow annually as each state approaches the renewable energy percentage deemed a chievable by EPA. Commenters stated adjusting for the growth in zero CO2-emitting gener ation results in the Block 4 goal determination being different in each year, as the number being added to the denominator of EPA's equation would decrease each year to account for the corresponding increase in renewable energy being developed in accordance with Block 3.

Commenters stated the EPA's methodologies for evalu ating energy efficiency in the BSER rely on NEMS forecasts, based on the AEO2013 reference s cenario for future electricity consumption. Commenters said EPA quantifies energy efficiency contributions in the BSER - and by which state plans could potentially claim cr edit for energy efficiency - is based on the

AEO2013 reference scenario. Commenters said in its process for determining the BSER, the

EPA matches each state to one of the NEMS Electrici ty Market Module ("EMM") regions; next,217

the EPA calculates the baseline future electricity sales for each state by taking its 2012 actual sales and compounding them by the average annual gr owth rate over the period 2012 to 2040 from the matched EMM region, as projected in the AE O2013 reference scenario; thus, in the BSER, energy efficiency potential is measured again st baseline projections from the AEO2013

reference scenario. Commenters stated for over a de cade, NEMS has significantly overestimated national electricity sales.

Commenters stated that a 1.5 percent EE growth rate is unsustainable for purposes of the Proposed Carbon Rule; thus, for the purpose of goal setting, the commenters propose that EPA lower the efficiency reduction level to 0.6 percent per year for those states with EE programs already in effect. Commenters said if the carbon go al is set using a realistically achievable EE percentage, then there is more flexibility for stat es to actually utilize Building Block 4 as a

carbon abatement measure. Commenters said the curre nt Proposed Carbon Rule with EE savings of 1.5 percent per year presents challenges for sta tes with existing EE programs and in essence creates a de-facto requirement effectively eliminat ing all flexibility related to Building Block 4.

Commenters asserted that if EPA decides to base the goals in its final rule on the inclusion of Building Block 4, it should do so based upon an EE goal of 0.60 percent per year, rather than 1.5
percent per year.

Commenters recommended that EPA reduce the target a nnual EE goal to 0.6 percent per year.

Comment 14: EE programs energy star

Response 14: The EPA appreciates the comments regarding energy efficiency programs and Energy Star, however the promulgated rule does not include a building block four as part of the BSER. Please see section V.A. of the preamble for m ore information regarding the building

block four and demand-side energy efficiency.

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

Commenters stated industrial energy consumption in the United States represents nearly 45 percent of the total energy usage and is predicted to increase to over 48 percent by 2020 according to the EIA's 2014 Annual Energy Outlook. Commenters asserted an integral element of reducing carbon emissions is energy conservation . Commenters proposed that EPA take a stronger position on energy efficiency and should a llocate more resources to expand the Energy Star program and work collaboratively with the US D epartment of Energy. Commenters said these programs have collectively been underfunded a nd even had funding reduced while simultaneously representing some of our best energy and greenhouse gas reductions.

Commenters said EPA and DOE need to become serious about energy efficiency; this program

results in a reduction in carbon emissions while im proving the efficiencies of operations and the use of energy.218

Comment 15: Importance of Rigorous EM&V in Energy Efficiency G oal-Setting

Response 15: The EPA appreciates the comments regarding energy efficiency and EM&V, however the promulgated rule does not include a bui lding block four as part of the BSER. Please see section V.A. of the preamble for more informati on regarding the building block four and demand-side energy efficiency. See Section 5.3 of this document for more discussion and response to comments on EM&V. Also see section VII I of the preamble.

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

Commenters stated quantifying the results of state efficiency programs is crucial not only in assessing state compliance efforts, but in determin ing whether the formula upon which state expectations are based is appropriately incorporate d into in the Best System of Emissions Reductions ("BSER") formula. Commenters stated the MWh of savings from efficiency programs are not subjected to metering as are the o ther generation-related factors incorporated into the BSER; therefore the system whereby the sav ings are quantified must be rigorous at a high level of confidence.

Commenters stated in the goal-setting context, rigo rous EM&V will ensure that any standard derived from the results of existing state programs is credible; if the goal-setting methodology relies on efficiency programs with weak EM&V protoc ols, there is a risk that the formula will project efficiency savings that will be difficult t o achieve when stronger EM&V protocols are applied during compliance. Commenters said as with all the other building blocks, the stringency of the standards used in goal-setting must match th e stringency of the compliance expectations,

or distortions will result. Commenters said the EPA must establish robust EM&V guidelines against which the results of state efficiency progr ams should be measured in order for their efficiency-derived MWh to be counted for compliance

.

Comment 16: BB3 RE in/out of state renewables

Response 16: See section V.E of the preamble for a discussion of changes to BB3 in the final rule. These changes reflect the regional nature of RE when quantifying subcategory-specific emission performance rates and state goals. Sectio n VIII also explains how compliance and state plans accommodate the location versus use discrepan cies in generation technologies. In this final rule, existing RE generation is not credited to a state goal (or the subcategory) performance rates, so its location versus use issue is obviated through this change. For incremental RE assumed in building block three, the EPA now takes a regional perspective instead of a statespecific definition of identifying and assigning re newable potential. These changes were made, in part, to address the commenters concerns.

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

Commenters said in many states, the state policies that have delivered the most development and generation from new renewable energy have been stat e renewable energy or portfolio standards (RES/RPS). Commenters said these standards have bee n increasing over time and have led to the219

development of significant new renewable resources, particularly wind and solar; however, while these state policies require an increasing percenta ge of the electricity delivered in the state to be from renewables, most of these state policies do no t require the generating resource to be located in the state. Commenters said many states have deve loped or purchased large quantities of wind generation to satisfy the RES/RPS requirements in o ther states; reflecting this market reality, EPA has proposed that credit for the emission reduc tions driven by renewable energy deployment be assigned to the purchaser of the rene wable energy credit (REC), which commenters supported.

Commenters added state 2012 emission rates under th e proposal reflect in-state renewable energy - although the entities holding the RECs ass ociated with that renewable energy may be

out of state. Commenters said EPA should address co nsistency between the BSER formula structure, current state renewables tracking, and p lanned compliance tracking. Commenters said while there are other ways this could be done, the simplest way would be to consider only new renewables generation and not include existing gene ration in the BSER baseline. Commenters said this allows EPA to avoid allocating generation from existing renewables in the BSER formula; looking forward there would be no concern about using RECs for tracking generation whether from in-state or out of state generation.

Commenters stated under PA's AEPS program, credits from facilities located anywhere in PJM which includes parts of Illinois, Indiana, Kentucky , Michigan and North Carolina; however, these states are not within the same NERC region as PA under EPA's regional approach. Commenters said it should be noted that, in the lat est AEPS compliance period, 41% of Tier I credits are from states located in regions outside of EPA's East Central region; consequently,

credits received from these states could not be con sidered in meeting PA's BB3 standard. Commenters said EPA should consider allowing credit s derived from facilities located in these
states to be utilized under the BB3 construct to me et the EPA CO2 emissions targets.

Commenters stated the EPA proposes to exclude renew able energy imports into PJM which offset generation within PJM; this exclusion of RE imports penalizes states that have designed their RPS programs so as to include utilization of out-of-state renewables. Commenters said RE imports into PJM is effectively displacing fossil e nergy thus lowering GHG emissions as effectively as in-state renewables. Commenters said EPA should modify its requirements under BB3 to give credit to out-of-state renewables with due consideration paid to avoidance of double counting.

Comment 17: The EPA should use a more gradual glide path in ap plying BSER.

Response 17: The EPA agrees with the comment and has incorporate d deployment assumptions in its building blocks that result in interim rates that reflect a more gradual glidepath on average relative to the final goals (from both the final su bcategory and state goals perspective) for this final rule. See section V of the preamble for a di scussion of these building block changes. See sections VI and VII of the final rule preamble for discussion of the subcategory-specific emission performance rates and state goals, respectively.220

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

Commenters stated BSER, as applied to states, is in consistent across building blocks with regard to when states may need to ramp up measures over ti me. Commenters said this application is problematic and it is unclear what impacts that may have, both to the electric system and to state's flexibility to comply. Commenters said whil e the proposed guidelines set state renewable energy generation and energy efficiency targets acc ording to a gradual "glide path" approach over time, the application of BSER requires immedia te and constant reductions for building blocks 1 and 2 as well as for building block 3 (nuc lear generation) at a specific point in time. Commenters said for various reasons, measures withi n buildings blocks 1-3 may not deliver, at a date certain, in whole as the applied BSER assumes. Commenters recommended EPA use a more gradual "glide path" in applying BSER, in its total ity, to states to set state goals.

Comment 18: States with combined-cycle gas and thermal fossil power plants have unfair application of BSER.

Response 18: See section V of the preamble for a more detailed explanation of how the EPA’s quantification of the BSER in this final rule addre sses the regional potential to reduce fossil steam generation in these fossil steam intensive st ates. The EPA made changes to its BSER quantification that reflected greater offsetting im pact of incremental gas and incremental renewable generation in fossil-steam intensive stat es.

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

Commenters stated the Proposal's application of the BSER may unfairly discriminates against states with large amounts of both combined-cycle ga s and thermal fossil power plants. Commenters said while some degree of differentiatio n between states resource mixes may be reasonable to expect in 2030, it would be both more reasonable and more equitable in setting final 2030 goals to anticipate increased penetratio n by then of low and no carbon resources in those states with large amounts of coal but relativ ely few natural gas power plants, and to reduce the redispatch component in states with large amoun ts of both thermal and combined-cycle fossil generation.

Comment 19: The EPA should consider the design life; useful li fe in the final goal calculation.

Response 19: The EPA provides significant flexibility for state s to assign reduction potential in a manner that compensates useful remaining life in a manner that the state best sees fit. The revised approach to quantifying the BSER in this fi nal rule distributes reduction potential across states more than the proposed approach and does not necessitate the shut-down of any particular
unit. See section 5.11 of the RTC for more discuss ion on this.

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

Commenters stated final goals should allow existing EGUs to operate for their design lives including useful life extensions from environmental and other upgrades in order to avoid221

significant stranded investments and to avoid serio us reliability issues, or the final goal date
should be extended.

Commenters requested EPA permit states to adjust th eir goals in accordance with legal and practical necessity, and in consideration of the re maining useful life of existing sources.

Comment 20: Cooperative; BB 2 & 3 unrealistic; affect reliable service.

Response 20: Neither the proposal nor the final rule require an y specific units to reduce their generation. These sources may still avail themsel ves of credits from other lower emitting sources as a means of demonstrating a rate that com plies with a subcategory-specific emission performance rate or a state goal. Moreover, the st ate has the ability to assign reduction burden and corresponding rates in a manner it sees best fi t for demonstrating aggregate compliance with the CPP reduction expectation.

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

Commenters stated because of their location far fro m other sources of generation, and because of the unique cost constraints faced by many rural ele ctric cooperatives, gas-fired and RE sources are often unavailable; this makes the emission redu ctions that EPA assumes can be obtained from Building Blocks 2 and 3 unrealistic. Commenter s said if rural electric cooperatives retire coal units to achieve the CPP's CO2 goals, the inac cessibility of NGCC and RE sources will make it difficult, if not impossible, to continue t o provide reliable service to their members.

Comment 21: Establish each state's standard based on what the state can achieve at each EGU

Response 21: The final rule defines the Best System of Emission Reductions equally for all EGUs of the same subcategory. Because these EGUs c an take advantage of reduction measures already occurring or scheduled to occur, those EGUs located in states that are achieving

reductions in a reference scenario will be able to take advantage of those reductions when demonstrating compliance with this rule. The EPA’s analysis suggest that the distance between reference case and the final state goal for these “ leading” states is generally less than it is for th e more emissions-intensive states.

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

Commenters stated many states have implemented meas ures to decrease reliance on fossil fuel generation, including retirement of coal plants, im plementation of demand-side management and energy efficiency programs, and adoption of renewab le energy portfolio standards. Commenters said the extent to which a state has implemented su ch measures directly affects the amount of additional measures the state can implement going f orward. Commenters said when a state has already implemented the "low hanging fruit" in many of these areas, it is inappropriate to assume that a state (or other states) can continue impleme nting additional measures at the same or higher rate as part of a "one size fits all" standard. Com menters said North Carolina already has the most efficient coal generation fleet in the United States and has lowered its CO2 rate in recent222

years. Commenters said the Proposed Rule should est ablish each state's standard based on what
the state can achieve at each EGU.

Comment 22: Tribes & Territories - Building Block 1

Response 22: For the EPA’s response to this comment, see the CO 2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule support ing the final CPP and see section V.C. of the final rule preamble of the CPP for more informa tion about Building Block 1. As described in section VII of the preamble, Puerto Rico is not inc luded among the areas for which EPA is finalizing goals.

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

Commenters stated on the Supplemental Proposal, EPA required a 6% heat rate improvement (HRI) to the coal-fired EGUs located in Puerto Rico , assuming that it will directly translate to a 6% reduction in the net CO2 emission rate; EPA also calculated an alternative goal, applying a 4% HRI to the affected EGUs. Commenters said the pr oposed 6% improvement consists of a 4% improvement by implementing "best practices" to red uce the hourly heat rate and a 2% improvement by implementing equipment upgrading. Co mmenters said based on this, the adjusted results issued by EPA for building block 1 are 2,083 lbs/MWh for the 6% HRI for 2030 and 2,127 MWh for the 4% HRI for 2025. Commenters s aid in Puerto Rico, there is only one coal-fired facility that is operated and maintained by AES-Puerto Rico, LP (AES-PR); AES-PR is located in the Guayama municipality, at the sout h coast of the Island; therefore, in the case of Puerto Rico, building block 1 only applies to the A ES-PR generating units 1 and 2. Commenters said these EGUs have a generating capacity of 227 M Wh each, and commenced their commercial operation in 2002. Commenters asserted t hat AES-PR will implement most of the best practices and equipment upgrades necessary to comply with the Mercury and Air Taxies Standards (MATS), and that its EGUs heat rate will be impacted upon completing the operational changes to the existing air pollution c ontrol system (dry electrostatic precipitator), which will be required to comply with this new regu lation; in synthesis, the precipitator will be required to operate at higher levels of auxiliary p ower in order to increase the filterable particulate matter (PM Filterable) collection effic iency, resulting in a higher net heat rate. Commenters said there is a potential for the activi ties described in building block 1 not to contribute in achieving the proposed goal for Puert o Rico.

Comment 23: Tribes & Territories BB2

Response 23: For the EPA’s response to this comment, see the CO 2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule support ing the final CPP and see section V.D. of the final rule preamble of the CPP for more informa tion about Building Block 2. EPA relies on a regional approach to identifying reduction potent ial in this final rule, meaning even states or areas of Indian country with affected EGUs that do not have NGCC units within their jurisdiction may see an impact from building block two.

The following are summaries of the specific public comments under this comment:223

Commenters agreed, in regards to the supplementary rule for tribes and territories, with EPA that application of building block 2 for the Navajo Nation results in no change to the emission rate goal as there are no natural gas combined cycl e (NGCC) units on the Navajo Nation available for re-dispatch.

Commenters stated the Supplemental Proposed Rule al so correctly acknowledges that the Navajo Nation does not currently employ natural gas combin ed cycle units ("NGCCs"); therefore, as EPA asserts, building block 2 does not result in an y adjustment to the emission rate goals for the Navajo Nation.

Comment 24: Tribes & Territories - BB3

Response 24: For the EPA’s response to this comment, see the CO 2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule support ing the final CPP and see section V.E. of the final rule preamble of the CPP for more informa tion about Building Block 3.

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

Commenters stated in the Supplemental Proposal, app lication of building block 3 to the Navajo

Nation results in no reduction in the emission rate goal; this is because the methodology calls for multiplying a growth factor to the baseline renewab le energy capacity in the area as of 2012, and

that baseline is zero. Commenters said EPA asks for comment on an alternative methodology, co-proposed for U.S. territories, where the 2012 re newable energy capacity baseline is set at 0.37 percent of the total electricity generation. Commen ters supported EPA's application of the building block as proposed in the Supplemental Prop osal and opposes any adjustments or alternatives to the methodology aimed at increasing the stringency of the emission rate goals. Commenters said the potential adjustment identified by EPA for building block 3 would apply a false value to the calculation, arbitrarily using d ata associated with another jurisdiction. Commenters said the potential adjustment for which EPA seeks comment would represent a change to the methodology used for all the states, with no basis other than a desire for greater stringency. Commenters added, as stated in the Supp lemental Proposal and identified by the Navajo Nation, the identified adjustment for re-cal culating the building block 3 contribution to the emission rate goal results in an amount of rene wable generation that equals a "significant portion of the area's electricity demand"; such a r esult would be nonsensical in terms of developing a compliance plan (i.e. it would require the majority of energy demand on the Navajo Nation to be served by renewable generation without back-up power generation sources).

Commenters added the Navajo Nation had zero renewab le generation in the 2012 baseline year; therefore, EPA's proposed application of an annual growth factor to the Navajo Nation's baseline renewable energy ("RE") generation - an approach co nsistent with the Clean Power Plan's methodology for building block 3 - results in no ad justment to the emission rate goals.

Comment 25: Tribes & Territories - BB4224

Response 25: The EPA is finalizing this rule to not include BB4 in its quantification of the BSER. See section V of the preamble.

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

Commenters stated in the Supplemental Proposal, app lication of building block 4 to the Navajo

Nation results in little reduction in the emission rate goal; this is because the methodology relies on demand-side energy savings based on sales, and t he amount of electricity sales on the Navajo Nation is significantly lower the energy generation from NGS and FCPP. Commenters said EPA asks for comment on whether the methodology should be adjusted in order to achieve a larger reduction in the emission rate goal from this build ing block. Commenters said as with building block 3, the commenters opposed any adjustments or alternatives to the methodology for building block 4 aimed at increasing the stringency of the emission rate goals. Commenters said EPA did not even identify a specific potential adju stment for building block 4, which reinforces the arbitrary nature of any such adjustment. Commen ters said any adjustment would represent a change to the methodology used for all the states, with no basis other than a desire for greater stringency.

Commenters added the energy efficiency goal in buil ding block 4 of 9.15 percent by 2029 for the Navajo Nation is overly aggressive. Commenters said using state data to develop goals relating to energy consumption on the Navajo Nation does not make any sense given the significant difference in energy availability and consumption p atterns between the states and the Navajo Nation. Commenters said energy consumption on the N avajo Nation needs to increase in the future to support much needed economic development.

Comment 26: BSER

Response 26: See sections VI and VII of the final rule preamble of the CPP and the CO 2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP for more information about the final performanc e rates and state goals and how they were
calculated.

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

Commenters stated when determining BSER, it is the EPA's responsibility to identify what emission reduction systems exist and how much they reduce air pollution in practice. Commenters said this allows the EPA to identify pot ential emission limits for the purpose of evaluating each limit in conjunction with its costs and benefits. Commenters stated the Proposed Rule does not prescribe a particular technological system that must be used to comply with a New Source Performance Standard (NSPS). Commenters said however, by departing from the power plant 'fence line' in determining 'best', the modeling technique used to identify reductions for CO2 was flawed in that it had to arbitrarily st retch an identified 'best' measure to match with states that had already spent effort to appropriate ly reduce CO2 emissions. Commenters stated in glossing over prior actions taken to reduce CO2, th e EPA effectively ignores the situational225

increase in compliance costs with the proposal and sets each building block measure at a level that is too stringent to reflect practical reality.

Commenters stated while actions such as increasing energy efficiency can improve environmental outcomes, there is an optimal investm ent point over which further investment in a particular measure becomes uneconomical, even in th e context of compliance. Commenters said because Minnesota and commenters' organization's me mbers have undertaken programs to reduce CO2 related emissions, they are potentially forced to spend more than other entities that may be regulated under this rule

4.4.2 Data used

Section 4.4.2 covers public comments related to the data used to develop the proposed emission goals.

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: Data Errors

Response 1: In regards to the Ohio comment, the EPA has address ed unit-level concerns and is only accounting for the Dresden NGCC facility once. As described in Section V of the Preamble, BB4 is not part of BSER in the final rule

.
In regards to South Carolina comment, as explained in the CO2 Emission Performance Rate and Goal Computation TSD for Final CPP, the EPA did not adjust the baseline based on scheduled or planned retirements. The EPA is using net summerti me capacity to account for the weatherbased generation limitations described by commenter s. As described in Section V of the Preamble, BB3 assumptions have been revised. See t he EPA’s Resource Adequacy and Reliability TSD of the final CPP.

In regards to Ohio/Kentucky/Wyoming comment, the EP A continues to list the nameplate capacity reported in the 2012 EIA-860, but relies o n net summertime capacity to account for the weather-based generation limitations and its buildi ng block two calculations.

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

Commenters stated there are unit data errors and Bu ilding Block assumption errors; the unit data errors are simply oversights by EPA. The commenters for example, units that do not meet EPA's226

applicability criteria are included. The commenters said there are also Building Block assumption errors, such as projecting infeasible he at rate improvements.

Commenters stated EPA bases its proposal on flawed information and assumptions for the four building blocks that are the basis for each state's emissions target.

Commenters stated on March 19, 2014, the Senate Com mittee on Environment and Public Works Minority issued the report: "EPA's Playbook U nveiled: A Story of Fraud, Deceit, and Secret Science." The commenters said this report do cuments the extremely disturbing 20 year saga of the use of severely flawed particulate matt er (PM) and ozone science; this is the same science that was crucial in the 2009 Endangerment F inding and the 2010 / 2013 Social Cost of

Carbon. The commenters said this science has been u sed to justify this rule; the House Science, Space and Technology Committee conducted a thorough two year investigation of the use of secret science by EPA that resulted in an August 20 13 subpoena of EPA.

Chairman Smith: "In September 2011, the EPA's then- Assistant Administrator Gina McCarthy

committed to make the data sets available to the Co mmittee. Even though Ms. McCarthy now leads the agency, she has yet to provide the promis ed data to the Committee. This subpoena could have been avoided. Unfortunately, we've been put in this position by an agency that willfully disregards congressional requests and mak es its rules using undisclosed data. After two years of failing to respond, it's clear that the EP A is not going to give the American people what they deserve - the truth about regulations. The EPA should not base its regulations on secret data; by denying the Committee's request, the agency prev ents Congress from fulfilling its oversight responsibilities and denies the American people the ability to verify EPA's claims. The EPA's lack of cooperation contributes to the suspicion th at the data sets do not support the agency's actions. The American people deserve all of the fac ts and have a right to know whether the EPA is using good science." The commenters said in the EPA's March 2014 response, the
EPA admitted that EPA does not have the data.

Ohio (OH)

Commenters have identified several errors in Ohio's goal computation, including the doublecounting of an existing NGCC unit as a new NGCC uni t and several discrepancies between CO2 emissions reported to EIA and the Clean Air Markets Database; U.S. EPA's use of nameplate capacity, rather than the more appropriate summer c apacity, in the re-dispatch calculations; and the inclusion of 6% "at risk" nuclear capacity.

Commenters asserted that the percent of Ohio's in-s tate generation for EE should be 85.1%, and not the 85.97% used by U.S. EPA in the Goal Setting TSD example. The commenters said the 85.97% number cannot be replicated using the EIA da ta cited by U.S. EPA. The commenters said Ohio's 2012 total retail sales were 152,456,86 4 MW-h, from EIA annual retail sales data; Ohio's in-state net generation in 2012 was 129,745, 731 MW-h, from EIA annual generation data; thus, Ohio's percent generation is 85.1%.227

South Carolina (SC)

Commenters reviewed the data for South Carolina and found the following errors in the EPA's data and key assumptions:

1. Santee Cooper Power Utility's Jefferies Plant, w hich is closed, was included in the EPA computations for South Carolina; the final rule sho uld reflect this change in the data.

2. For Building Block 2, the EPA used the boiler na meplate data, which is not the actual capacity that these units can achieve; the actual capacity f or a natural gas combined cycle (NGCC) unit can be affected by ambient temperature, humidity an d availability of fuel. The commenters suggested that the EPA consider defining a unit's CO2 emissions based on the appropriate actual generation. The commenters said potential alternate sources for this data are the Institute of Electrical and Electronics Enginee rs, Inc. (IEEE) standard term "Dependable Capacity" number for a unit, or US Energy Informati on Administration 860 data. The commenters said these data are based on figures a u nit can actually deliver in terms of generation during a certain time of year, which accounts for v ariances in temperature, air pressure, etc. The commenters also suggested the EPA consider the use of the National Emissions Inventory (NEI) data for more accurate CO2 emissions for units subj ect to this proposed rule; data accuracy is a

concern for the commenters and is the foundation of developing an achievable and approvable state compliance plan.

3. Building Block 3 as proposed sets an inaccurate renewable portfolio standard (RPS) target. The commenters said a recently published document b y The North American Electric Reliability Corporation (NERC) "Potential Reliability Impacts o f EPA's Proposed Clean Power Plan, Initial Reliability Review, November 2014" identified an in accuracy pertaining to the Southeast region's RPS target. The commenters said the EPA sh ould look to the State of North Carolina to better understand their existing RPS. Further, the commenters agreed that the EPA's assignment of this RPS target, based on a single state's RPS, is not the best mechanism for setting a target for multiple states grouped into a region.

4. Energy Coalition members have indicated that the EPA's computation involves many longterm assumptions made by the EPA. The commenters sa id the ability to achieve the state reduction goals can be influenced by many outside f actors, including the status of the national and state economy and even weather. The commenters said while the interim phase time period of ten years may provide some flexibility, the load growth assumptions made by the EPA are very critical. The commenters said utility IRPs pro vide some long-term projections; however,

South Carolina stakeholders have indicated that for critical issues such as load growth projections may be reliably calculated for only 2-3 years into the future, even when taking into account many of the same assumptions the EPA used.

Ohio/Kentucky228

Commenters stated there are errors (in some cases m aterial errors) to the IRP model data posted on the docket; specifically, the IPM run file named "Option 1 Regional" posted on the docket have errors describing OVEC units. The commenters s aid these units include:

I. Column P (EMF Controls) - The data in this colum n incorrectly lists Fabric Filters as a control technology installed on Clifty Units 4, 5 and 6, as well as Kyger Units 1 and 5; neither facility has fabric filters and there are no plans to instal l them.

II. Column BJ (Capacity) - All six units at Clifty Creek are listed as 196 MW; the net maximum MW number OVEC reports to EIA and NERC is 200 MW fo r these units.

III. Column BJ (Capacity) - Kyger Creek there are m aterial errors; Unit 1 is listed as 445.635714 MW (the reported net maximum MW for this unit and t he other 4 Kyger units is 199 MW/each); Units 2, 3 and 4 are listed as 189 MW eac h-off by 10 MW each from the reported net Maximum number reported to EIA and NERC; Kyger Cree k Unit 5 is listed as 120.15 MW; in total, Kyger's capacity is listed as 1,132.79 MW wh ile the actual number should be 199 MW net for each, for a total of 995 MW-a difference of 137 .79 fewer MW than the plant can generate.

The commenters said the heat rates for "summer" and "winter" are the same for our units when they should not be; due to thermal/condenser back p ressure issues during the summer, both plants normally show a heat rate that is approximat ely 3% lower in the summer.

Wyoming (WY)

Commenters stated EPA's information in the document "Wyoming: Goal Setting Comments for Proposed Clean Power Plan" is in error. The comment ers said the document identifies the capacity of Black Hills Power's CPGS combined cycle units as 220 MW; however, the units' output capacity is actually 95 MW. The commenters s aid Air Quality New Source Review (NSR) Permit CT-12636 lists the units as 100 MW bas ed on maximum design. The commenters said the Wyoming Industrial Siting permit lists the units as 95 MW, which is based upon as-built performance. The commenters said the discrepancy is due to different operating capacity at high altitude; the actual name plate capacity of the CPG S combined cycle units is 100 MW; however, in Cheyenne, WY (elevation approximately 6,000 feet ) the combined cycles achieve a 95 MW net output. The commenters said to compare, the com bined cycles in Pueblo, CO (elevation approximately 4,000 feet) achieve 100 MW net genera tion output; these are the exact same units operating in two different environments, impacted b y elevation and air density, both of which reduce output. The commenters said EPA may not rely on incorrect information to establish regulations; the calculation of Wyoming's goal shou ld reflect the 95 MW capacity for CPGS.

Comment 2: The EPA should show data; verify data used to calc ulate promulgated goals.229

Response 2: For the EPA’s response to this comment, see the CO 2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule. The e GRID data used to inform the subcategory-specific emission performance rates and state goals is based on EIA generation data and reported emissions data to EPA. The link provid ed in the comment may reflect a summary of that data, but is not the source of the data.

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

Commenters stated EPA at a minimum should select a representative basis for the final guidelines, and present the information, data, sens itivity analyses, and a complete set of background information, and allow an opportunity fo r public comment on the proposal.

Commenters asked where the source data for the tabl e showing 2012 emissions, electricity generation, and emissions per MWh rates, along with the 2030 goals (available here: http://www2.epa.gov/carbon-pollution-standards/wher e-you-live ) come from. The commenters were surprised to see a data table published withou t any source information and has been trying to recreate the historical emissions rate (lbs/MWh) for each state using data available from the EIA (emissions by state, electricity generated by s tate), but have not been able to reproduce the
numbers.

Commenters stated the Useful thermal output (UTO) f or cogeneration is calculated in the appendix worksheet based on the EAF; the EAF values are given in the worksheet, but EAF is not defined and is also described as the EIA ratio; the commenters could not locate any more

information in the documentations for the Clean Pow er Plan; can EPA provide information to clarify this portion of the plan.

Commenters stated prior to finalizing the Proposed Rule, the EPA should verify the data upon which the goals are based

Comment 3: Difficult to evaluate; most readily available info rmation, not the most appropriate; with regard to achievability, the need for accurate data and appropriate assumptions.

Response 3: For the EPA’s response to this comment, see the CO 2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule support ing the Final CPP.

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

Commenters stated that some criteria about which EP A specifically enquires, i.e., "total electricity sales in each state in 2012" and "total generation in each state in 2012," can only be evaluated if we know how EPA proposes to use the cr iteria in question. The commenters said for230

example, total state RE generation is the wrong sta ndard for an RPS theory if a substantial portion of that generation is exported; further, th e standard should stem from intrastate retail sales of RE, and not from gross intrastate MWh sale s, which is a larger and different number. Commenters are concerned that EPA's approach is bei ng driven by the most readily available information, not the most appropriate.

Commenters stated, the EPA's Clean Power Plan propo sal to regulate utility emissions reductions "beyond the power plant fenceline" is both preceden t-setting and far-reaching making its implementation highly complex. Commenters said, to be successful, accurate data and appropriate planning assumptions need to be factore d into the EPA's BSER analyses. Commenters said, this recognition is critical to es tablishing technically sound and feasible state level CO2 reduction goals that will be achievable i n the final Clean Power Plan rule.

Commenters stated, EPA has not clearly or adequatel y established a set of limits that represents BSER for existing fossil fuel-fired EGUs (e.g., the standard that EPA would apply to a facility under a Federal Implementation Plan or FIP). Commen ters said, once such limits are established, nothing should/would prevent EPA from allowing the states the flexibility in achieving comparable emission reductions by applying the stra tegies contemplated under the building blocks. Commenters said, if EPA believes that the r ule must set a goal rate based on a set of building blocks, it is critical that both the natio nal/regional basis and the state-by-state application of each separate building block goal ca lculation be reasonably attainable, while assuring continued reliability of the power sector. Commenters understood that, as EPA has stated numerous times, states do not have to achiev e the per-block goals, and that the states may use any combination of measures to achieve the over all (and interim) goal by the end of the compliance period. Commenters said, this does not d iminish the importance of EPA's basis, assumptions, data, and calculations for each buildi ng block used to determine the states' goals. Commenters said, if any one part of the calculation is inappropriate, the goal is likely unachievable and does not represent BSER, either na tionally or for a particular state.

Commenters stated, EPA has asserted that each of th e individual building block targets assigned to states are based on "reasonably achievable rathe r than maximum performance levels." Commenters were concerned that, as with its propose d rule for new power plants, EPA is basing enormously impactful mandates on technology assumpt ions that have yet to be demonstrated as

achievable at a reasonable cost and in some cases a chievable at any cost. Commenters said, detailed analysis must be undertaken and made avail able to the public.

Commenters stated, EPA's "building blocks" analysis of the "best system of emission reduction" is not based on accurate or reasonably demonstrated assumptions and is not consistent with the realities of the electric grid.

See Section V of the preamble231

Comment 4: Utility plans to retire existing coal-fired units

Response 4: In regards to Georgia comment, as explained in the CO2 Emission Performance Rate and Goal Computation TSD for Final CPP, the EP A did not adjust the baseline based on scheduled or planned retirements or gas conversions

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

Commenters stated Georgia Power has already made de cisions to retire a number of its oldest, dirtiest and least economic coal-burning units. The commenters said the Georgia Public Service Commission ("PSC") has approved these retirements a s prudent economic decisions that are in the best interests of the utility's customers. The commenters said the units for which retirement decisions have already been made include:

- Plant Branch. Georgia Power has received PSC appr oval to retire all four of its coal-burning units, totaling 1,750 MW, at this facility near Mil ledgeville, Georgia; all four units will cease operation by April 2015; in 2012, the Branch units accounted for 2,099,279 MWh of generation that produced nearly 2.4 million tons of CO2 emissi ons.

- Plant Yates Units 1-5. Georgia Power has received PSC approval to retire five of its coal-fired units, totaling 680 MW, at this facility near Newna n, Georgia; the five units will cease operation by April 2015; in 2012, these five units accounted for 698,523 MWh of generation that produced over 900,000 tons of CO2 emissions.

- Plant Kraft Units 1-4. Georgia Power has received approval to retire these four units, totaling 334 MW, by April 2016. In 2012, these units account ed for 625,568 MWh of generation that produced over 500,000 tons of CO2 emissions.

- McDonough Unit 1. Georgia Power has retired this unit, totaling 299 MW, which in 2012 produced 41,375 MWh of generation and over 55,000 t ons of CO2 emissions.

The commenters said the electric generation and car bon emission levels from these units were included in Georgia's baseline emissions rate; howe ver, EPA did not include the planned retirements of these units when calculating Georgia 's emissions rate target. The commenters said collectively, these units accounted for more than 3 .4 million MWh of coal generation in 2012; applying these retirements to EPA's emissions rate calculation lowers Georgia's emission rate by 32 lbs/MWh or 4 percent of the 2030 target reductio n.

Comment 5: Planned gas conversions

Response 5: See response 4 above.232

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

Commenters stated Georgia Power has received PSC ap proval to convert two to other coalburning units at its Plant Yates (totaling 808 MW) to run on natural gas; the PSC approved the conversions, which will take effect by April 2015, on economic grounds. The commenters said the efficiency of converted units typically pales i n comparison to new or existing NGCC units, and therefore is not particularly cost-effective as a strategy for lowering carbon emissions. The commenters said nevertheless, Georgia may rely on t he Yates gas conversions for compliance purposes, and compared to the coal generation they replace, the converted units will produce

lower carbon emissions. The commenters said in 2012 , Yates 6 and 7 were responsible for 1,673,942 MWh of generation and 1.7 million tons of carbon emissions; the units ran at a capacity factor of 24 percent. The commenters said there is no public information regarding how frequently these units will run in the future or at what rate they will emit carbon; however, assuming they retain their current capacity factor and produce carbon emissions at a rate of 1200 lbs/MWh, the conversions will reduce Georgia's 2012 emission rate by another 25 lbs/MWh or 3 percent of the target reduction.

Comment 6: Planned renewable projects

Response 6: In regards to Georgia comment, as explained in the CO2 Emission Performance Rate and Goal Computation TSD for final CPP, the EP A did not adjust the baseline based on scheduled or planned renewable projects. See sectio n VIII for discussion of how renewable energy projects can be used in state plans.

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

Commenters stated in 2012, Georgia's existing non-h ydropower renewable generation made up 3 percent of all generation, equivalent to 3,278,536 MWh; however, this total does not reflect significant new levels of renewable generation - mo stly solar, but also wind - that Georgia Power is in the process of adding to its energy mix. The commenters said through its Advanced Solar Initiative and related programs, Georgia Power is o n pace to add more than 900 MW of utility scale and distributed generation solar to its suppl y portfolio by 2016. The commenters added earlier this year, Georgia Power entered its first-ever wind deals, under which it will import 250 MW of cost-effective wind generation, al ong with associated renewable energy credits (RECs), from facilities in Oklahoma. The co mmenters said the agreement is for a 20-year term, commencing in 2016; the PSC has or is in the process of approving these programs as in the best interests of Georgia Power customers becau se they will provide benefits in the form of cost savings and fuel diversity.

Commenters stated although the precise capacity fac tors associated with these projects are not publicly available, it is reasonable to assume a 20 percent capacity factor for the solar installations. The commenters said for the wind agr eement, an approximate capacity factor can233

be inferred from the utility's statements; Georgia Power has stated that the project is sufficient to power the equivalent of 50,000 homes. The commenter s said the average Georgia home consumes 13,176 kWh per year; the amount of electri city consumed by 50,000 such homes equates to 658,800 MWh; dividing that figure by 8,8 74 hours and by 250 MW yields a capacity factor of 30 percent. The commenters said assuming a 30 percent capacity factor, these deals will result in 658,800 MWh of renewable generation. The commenters said combined, the above renewable generation projects will provide over 2.2 million MWh of generation; if applied to the existing level of renewable generation in Georgia's 2012 baseline, the result is a reduction of 68 lbs/MWh, or almost 9 percent of the target reductio n.

Comment 7: Planned energy efficiency

Response 7: See preamble section VIII for a discussion of EM&V and use of demand-side energy efficiency measures for demonstrating compli ance.

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

Commenters stated Georgia's largest investor-owned utility, Georgia Power Company, operates eight certified demand-side management programs: fi ve residential and three commercial. The commenters said by 2017, these programs are expecte d to achieve annual incremental savings of 364,508 MWh and cumulative savings of 1.4 million M Wh. The commenters said EPA assumed that states that are net importers of electricity w ill receive credit for only a portion of their ener gy efficiency investments; thus, using EPA's approach, as a net electricity importing state, Georgia receives credit for 88 percent (its share of in-sta te generation) of its energy efficiency

investments. The commenters believed that EPA shoul d not use that discount for importing states like Georgia; nevertheless, even if Georgia can cre dit only 88 percent of these additional savings, if they are added to the 2012 energy efficiency lev els, the effect is to lower Georgia's emission rate by 6 lbs/MWh.

Comment 8: Improperly used nameplate capacity, use nominal ca pacity

Response 8: See section V.D. of the final rule preamble of the CPP for the EPA’s response to this comment. EPA relies on net summertime capacity for this final rule quantification of building block two.

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

Commenters suggested that EPA may consider using mo nthly capacity profiles or some combination of monthly and annual capacity profiles to calculate building block 2 to appropriately accommodate peak hour demand without jeopardizing Arizona's electric system234

reliability. The commenters said as EPA calculated the average capacity factor for states using nameplate capacity, commenters also suggested that recalculate these averages using nominal unit capacities; this is a more realistic method as nameplate capacity is based on manufacturer ratings at standard temperature and pressure. The c ommenters said the nameplate capacities do not reflect real world capacity ratings which are t ypically ten percent less than nameplate, especially at elevated temperatures when demand is highest; furthermore, operation is based on factors that are used to calculate nominal capacity , so capacity factor calculations should be made using nominal capacity to compare apples to ap ples.

Comment 9: The EPA should use net generating capacity instead of nameplate capacity.

Response 9: The EPA relies on net summertime capacity for buil ding block two in the final rule. See section V.D. 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 EPA improperly relied on nam eplate capacity to determine the level of existing NGCC capacity to be available for re-dispa tch to displace coal and oil/gas-fired steam EGU generation.

Commenters added that a more realistic measure of u nit generating capacity is net capacity. The commenters said net capacity reflects the maximum o utput that generating equipment can supply to system load, and it is typically lower than name plate capacity because it reflects capacity reductions due to electricity use for station servi ce or auxiliary loads such as emission control technology. The commenters explained, net capacity for a unit may differ significantly between periods of peak summer and winter demand, reflectin g the effects of ambient temperature and other factors on unit capacity. The commenters stat ed net capacity is a better indicator of the amount of NGCC capacity available for re-dispatch p urposes because it reflects the amount of energy that these units will actually be able to su pply to the power grid in Building Block 2.

Commenters stated in order to support the levels of re-dispatch assumed in EPA's proposed state goals, NGCC units would have to operate at statewid e average capacity factors in excess of 80 percent and above - much higher than the already-in flated utilization level of 70 percent that EPA assumes causing many NGCC units to have to oper ate at even higher annual capacity factors. The commenters said correcting for these i nflated values to use net capacity would significantly increase the state emission goals. Th e commenters stated EPA did not acknowledge the implications of its use of nameplate capacity r ather than other capacity measures, despite the fact that an accurate assessment of the existing NG CC capacity actually available for re-dispatch is essential to developing an achievable emission g uideline using EPA's building blocks. The commenters stated EPA should use net capacity when analyzing and applying Building Block 2 in order to reflect more accurately existing NGCC g enerating capacity and the level of NGCC235

utilization that would be necessary to compensate f ully for displaced generation from other

sources.

Commenters stated using nameplate capacity results in EPA adding an erroneously high level of gas fired generation into a state's goal calculatio n, thereby excessively reducing the amount of coal fired generation included in determining a sta te's goal. The commenters said it is important to recognize that NGCC nameplate and net generation also can be reported including the additional generating capacity derived from the fir ing of duct burners, which are designed for and typically used to provide temporary power augme ntation, but are not always economical to operate because of their higher heat rate. The comm enters said typical design practice does not consider power augmentation modes as continual duty . The commenters said the result of improperly using nameplate capacity and considering the additional power augmentation from the firing of duct burners is the proposal of state goals that are more restrictive than can be justified by EPA's data and are likely impossible f or many states to meet. The commenters said Table 1: NGCC Capacities and Generation, page 69 il lustrates the difference in generation at a 70% annual capacity factor between nameplate and su mmer net capacity for seven example states. The commenters said the difference in gener ation represents the excessive level of NGCC generation that EPA has assumed can be generated by operating at a 70% annual capacity factor under Building Block 2 for those seven states by us ing nameplate capacity instead of summer

net.

Commenters stated the EPA assumed that existing nat ural gas combined cycle ("NGCC") units can be dispatched with a 70% capacity factor; the c ommenters had concerns with the achievability of this assumption; the ability to ru n NGCC units at 70% has not yet been studied; therefore, the reasonableness of this assumption is unknown. The commenters added it is

unknown whether there is sufficient electric transm ission and gas infrastructure in place to operate these units at that level; to help put this in context, in 2013 gas units in the SPP footprint operated at around a 28% capacity factor, which is well below the 70% assumption used by the EPA in the CPP proposed rule. The commenters said t he EPA used the nameplate capacity of

NGCC units to make this determination instead of us ing the net dependable capacity, which would be more indicative of the actual capabilities of NGCC units.

Commenters stated in calculating the energy that wo uld be produced by the operation of NGCCs at a capacity factor of 70 percent, EPA used the na meplate rating of the NGCCs, rather than the net capacity at which the units can actually operat e. Commenters stated the nameplate capacity can vary significantly from a unit's actual net cap acity; the total average net capacity of Wisconsin's NGCC units is approximately 9 percent l ower than the total nameplate rating used by EPA in its calculation. Commenters stated EPA sh ould use an average of the summer and winter net capacity ratings rather than the namepla te capacity to obtain a more reasonable estimate of average annual net capacity of an NGCC unit. The commenters said the same EIA860 database that EPA used to find nameplate capaci ties also provides summer and winter net capacity ratings, as reflected in EPA's NGCC Capaci ty by Age spreadsheet. The commenters said for Wisconsin, making this switch and using th e average of the summer and winter net236

capacity ratings in the goal-setting calculation ma kes the state's interim and final goals approximately 3 percent less stringent.

Commenters stated in the eGRID baseline data for 20 12, EPA used the EIA860 nameplate capacity rating (in MW) by generator as the basis f or any capacity factor or energy production computations; nameplate capacity represents the des ign gross capacity of the generator before any internal plant usage (auxiliary power) is deduc ted, and does not correctly reflect a unit's true capacity due to various operational restrictions, w hereas the net capacity represents the value after auxiliary power is deducted. The commenters s aid net capacity is what a unit can supply to the electrical grid; there is also a seasonal compo nent to net capacity, with summer net capacity being lower than winter net capacity, but both typi cally are lower than nameplate capacity - and occasionally significantly lower. The commenters sa id EPA is using net generation (in MWh) as the input for emission rate calculations on a lb/MW h-net basis.

Commenters recommended that EPA use the average sea sonal capacity for NGCC generation rather than the nameplate capacity when redispatchi ng the NGCC generation; for Arizona, this would be 9,626 MW.

Commenters stated EPA's analysis assumes the capabi lity of the combined cycle resources based on capacity values from the 2012 eGRID report; thes e capacity values are facility nameplate capacities, which do not accurately represent the a ctual net capability of these resources. The commenters said actual net dispatchable capacity is generally less than facility nameplate capacities, and sometimes significantly so, due to the turbine/generator generally being sized larger than the balance of the plant equipment. The commenters said as proposed by the EPA, for the reasons discussed above, the amount of NGCC ene rgy that can be used to offset other affected generation is significantly overstated.

Commenters evaluated how Utah's 2030 emissions rate goal would change if EPA used net operating capacity for both coal and NGCC units; th ree different assumptions of operating capacity were evaluated using data reported by SNL: Summer operating capacity; Winter operating capacity, and; Average annual operating c apacity. The commenters said the effect of using operating capacity is to first reduce the num ber of MWH that are re-dispatched from coal to NGCC; this in turn raises the Utah 2030 EPA emis sions rate goal. The commenters said in the case where summer net operating capacity is assumed the 2030 EPA emissions rate goal increases from 1,322 lbs/MWH to 1,348 lbs/MWH. The commenters said the 2030 EPA goal increases to 1,335 lbs/MWH if net winter operating capacity is used and 1,342 lbs/MWH if the annual average net operating capacity is used to ca lculate the 2030 target rate. The commenters said in all cases, changing the assumptions for NGC C capacity from nameplate to a net operating capacity number raises the EPA 2030 emissions rate goal for Utah and reduces the 2030 compliance gap the state would have to cover in its state 111(d) implementation plan.

Commenters stated EPA used nameplate capacity as a means to determine capacity factor achievability at NGCC units; however, nameplate cap acity does not represent how the unit237

actually performs and can perform; it does not take into account the effect of climate, pollution controls, or other factors on operations; therefore , EPA's analysis relying on nameplate capacity is in error and overestimates the capacity and abil ities of NGCC units. The commenters said by looking only at nameplate capacity, and not looking at the net effect of the variables reducing available load, EPA is basically making the equival ent assumption that a large truck with a 200 horsepower engine will have the same speed and perf ormances as a small sedan with a 200 horsepower engine. The commenters said engine (or f or NGCCs, nameplate generator size) is only one component of determining performance. The commenters said summer and winter net capacities are a far more accurate basis to determi ne actual capacity factors at NGCC units; this data is easily available from the U.S. EIA, despite EPA's claims that these "data are not reported
for the fleet."

Commenters stated the configuration of Front Range is two combustion turbines powering one steam turbine (commenters included a diagram). The commenters said EPA uses the nameplate capacity to determine redispatch potential for NGCC units; in the case of Front Range Power Plants, the two combustion turbines have a nameplat e capacity of 154 MW each and the steam turbine has a nameplate capacity of 233 MW. The com menters said based on this information, EPA incorrectly assumed that Front Range Power Plan t has a total capacity of 541 MW. The commenters said full capacity of the generator driv en by the combustion turbine cannot be achieved at the altitude of Front Range, about a mi le above sea level, and is further degraded in typical summer temperatures. The commenters said th e capacity of the steam turbine relies on output from the combustion turbines, and it too can not physically attain nameplate capacity. The commenters said capacity varies with temperature an d has different summer and winter values. The commenters said for simplicity, we recommend re lying on the highlighted numbers, the average of summer and winter capacity; the Capacity for Front Range Power Plant Must Be
Corrected to 480 MW.

Commenters stated the data that the EPA has used to generate the proposed emissions rate of 740 lbs CO2/MWh for the state of Florida is flawed; EPA has used nameplate generation capacity ratings, when in actuality either summer generation ratings or a weighted average of summer and winter ratings would be more representative of actu al operation. The commenters said in many cases, the facility is unable to reach the nameplat e capacity of the unit that EPA believes is achievable. The commenters provided "Table 3-1. Nam eplate Capacity Ratings vs. Summer Generation Ratings" that addresses the disparity in megawatts that is possibly used in the EPA's
case model.

Commenters stated EPA should use operational capaci ty for all fossil fuel-powered EGUs for consistency and accuracy when determining the amoun t of re-dispatch available. The commenters said nameplate capacity is not appropria te to use for this purpose; nameplate capacity is rarely the amount of generation that is actually possible when taking into account site conditions such as elevation, temperature, and humi dity. The commenters said these factors, are considered when permitting these sources in New Mex ico; using nameplate capacity overestimates the generating capabilities of NGCC f acilities.238

Commenters stated in its calculation of the energy that would be produced by the operation of NGCCs at a capacity factor of 70 percent, the EPA u sed the nameplate rating of the NGCCs, rather than the net capacity at which the units can actually operate. The commenters said nameplate capacity is the nominal maximum output of a generator, assuming a particular set of ideal, often location-specific, operating condition s, including altitude, temperature, humidity and other factors that cannot be controlled by unit ope rators. The commenters said nameplate capacity is not demonstrated capacity, which repres ents the maximum output that can be delivered to the grid as measured by a unit's histo ric performance. The commenters recommended assuming that the permits are revised a nd infrastructure accommodates base load operation, the commenters believed a 70 percent cap acity factor may be reasonable under anticipated unit availability and market conditions ; however, EPA's analysis should be based on the net seasonal capability that has been demonstra ted to be achievable (instead of nameplate capacity) to avoid overestimating the potential for re-dispatch. The commenters added EPA should allow states to adjust goals for units with design or other constraints that prevent achieving the 70 percent capacity factor.

Commenters stated in its application of Building Bl ock #2, EPA first calculated annual generation (MWh) from coal, as well as oil and gas (OG) steam plants, using data from the baseline year of 2012; EPA then determined the amou nt of existing NGCC capacity (MW) that is available in the state, and determined the total an nual generation (MWh) that could be produced by the NGCC plants at 70% capacity factor. The comm enters said imperative to an assumption that coal and oil generation can be pushed to NGCC operating less than 70% is the determination of capacity factor; the EPA calculates capacity fac tor simply as the quotient of the sum of electric generation (MWh) divided by the sum of the NGCC nameplate capacities reported in

eGRID.

CF = GN

where CF = 2012 annual state-wide NGCC capacity fac tor (%)

G = sum of net electric generation from all NGCC in the state in 2012 (MWh)

N = sum of nameplate capacities from all NGCC in th e state in 2012 (MW)

Commenters said the nameplate capacity is a fixed n umber; even if two NGCC in different locations have identical nameplate capacities, they cannot be expected to have the same actual capacity over a year. The commenters said actual un it capacity changes over time as a unit degrades, changes through a maintenance cycle, chan ges due to varying levels of dispatching, and even is affected by the weather. The commenters said the EPA has incorporated as part of a standard setting process a fixed constant for a var iable that is at the whim of Mother Nature.

Commenters said the EPA acknowledges this variabili ty (although they did not also delineate the many other variables): "Net generating capacity is a function of weather/temperature conditions at the site, which varies throughout the year. Whil e some units may model actual weather239

adjusted capacity by the hour/minute, these data ar e not reported for the fleet. Therefore, the EPA used the nameplate capacity reported for units. "

Commenters said the EPA dismisses a known function of capacity because this data was not reported for the entire fleet; no other justificati on was provided for using nameplate capacity - a number which was inaccurate and over-stated net gen erating capacity; however, EPA references data collected from Form EIA-860 throughout the rul e. "What is the nameplate capacity for this generator; Report the highest value on the generato r nameplate in MW rounded to the nearest tenth, as measured in alternating current (AC). If the nameplate capacity is expressed in kilovolt amperes (kVA), first convert the nameplate capacity to kilowatts by multiplying the corresponding power factor by the kVA and then conv ert to megawatts by dividing by 1,000. Round this value to the nearest tenth. If generator nameplate capacity is less than net summer capacity, provide the reason(s) in SCHEDULE 7."

Commenters said Form EIA-860 also has entries for n et capacity, both in winter and summer; EPA already has at their disposal at least seasonality capacity. The commenters said as well, EPA has at their disposal Section 114 of the CAA to collect additional data for better resolution, and a more accurate assessment, if need ed. The commenters urged EPA to utilize the data and tools readily available to assess the stat e-specific impact of broad, nation-wide assumptions, such as a required 70% capacity factor

.

Commenters stated EPA has made a critical error in its calculations for building block 2. The commenters said although EPA claims that it has app lied building block 2 on a "net" basis EPA's target for increased natural gas generation actuall y reflects a calculation of "gross" generation because EPA developed its gas generation target bas ed on applying a 70 percent capacity factor to the "nameplate" capacity of existing NGCC units. The commenters said "Nameplate" capacity refers to the total "gross" MW because it reflects the maximum amount of electricity that a unit's generator is designed to deliver, not the amount of electricity that eventually may be sold to the grid; therefore, EPA's 70 percent capacity factor c alculation actually reflects "gross MWh," not "net MWh," whereas EPA's calculation of 2012 coal-f ired generation remains based on "net" generation.

Commenters stated EPA's conclusions thus rely on an inconsistent analysis that compares gross MWh of gas generation to net MWh of coal generation ; as a result, coal units must give up more generation than if EPA actually determined what the "net" generation of existing gas units at a 70 percent capacity factor would be. The commenters st ated in the converse, coal units must give up more total "gross" generation because they only rec eive credit in the tradeoff for "net" generation; either way, coal units are held to a mo re stringent standard because EPA's calculation relies on a "gross" nameplate capacity for gas unit s to determine their dispatch of "net" generation from coal units. The commenters said thi s difference is not insignificant - as EPA explains, "the difference between gross and net ele ctricity is the amount of electricity used at the plant to operate components such as pumps, fans, mo tors, and pollution control devices," which "may represent from 4 to 12 percent of gross genera tion at a coal-fired steam EGU." The240

commenters said in other words, EPA's unfair "re-di spatch" comparison of net gas generation to gross coal generation itself may account for as muc h twice the difference in total generation as EPA's entire building block 1 assumption of six per cent.

Commenters asked EPA to recalculate its building bl ock 2 assumptions for the "re-dispatch" of coal generation to natural gas generation using the net dependable capacity, based on the average of the summer and winter capacities, for all of the affected NGCC units. The commenters said in the case of New Mexico, the total nameplate rated c apacity of the NGCC units relied upon by EPA in the building block 2 calculation is 1,662 MW , whereas the blended summer/winter net dependable capacity is actually only 1,448.5. The c ommenters said use of that more representative capacity value in determining New Me xico's goal would thus increase the 2030 goal from 1,048 lb/MWh to 1,104 lb/MWh. The comment ers said relying on the net capacity of New Mexico's NGCC fleet (based on the more represen tative blended summer/winter net dependable capacity) instead of gross capacity woul d raise the goal for New Mexico from EPA's original proposal of 1,048lb/MWh to 1,104 lb/MWh. T he commenters said that new goal would decrease the compliance gap between the "base case" and the new goal from 211 lb/MWh to 155 lb/MWh; in doing so, the new goal would more fairly represent the emission reductions achievable through the re-dispatch of New Mexico's NGCC fleet, and therefore represent a more achievable and appropriate goal for the State.

Commenters stated EPA used an annual average capaci ty factor; this capacity may not be available during peak periods and for operational r easons coal-fired units cannot be used interchangeably with natural gas-fired units for pe aking. The commenters said EPA needs to evaluate capacity on a seasonal, if not hourly basi s to determine how much capacity can effectively be dispatched.

Comment 10: Incorrect use of nameplate capacity, the EPA shoul d use summer capacity.

Response 10: In this final CPP, the EPA has switched from relyin g on nameplate capacity to utilizing net summer capacity for determining BB2 p otential. See Section V.D of the Preamble

for more discussion.

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

Commenters stated for existing NGCC facilities, EPA uses "nameplate capacity" to determine the potential electricity generation capacity facto rs; however for under construction NGCC facilities EPA uses data from the NEEDS database, w hich the Department believes uses expected summer capacity. The commenters asked if EPA has co nsidered in determining the BSER, the effect of using expected summer capacity to select the capacity of under construction NGCC units while using nameplate capacity for existing u nits.241

Commenters added in order to determine the 70% disp atch threshold for NGCC facilities, EPA compared 2012 NGCC facility generation to nameplate capacity and calculated capacity factors for each NGCC facility; using this data, EPA determ ined that the top 10% of highest utilized NGCC plants operated at an annual capacity factor ( in terms of nameplate capacity) at or above

70%. The commenters said in order to validate the f easibility of a 70% NGCC capacity in a compliance scenario, EPA used the Integrated Planni ng Model, which uses the NEEDS database as its primary input for information on generating units. The commenters asked if EPA has

considered the fact that the NEEDS database does no t rely on "nameplate capacity" as its principle data input, but rather summer capacity.

Commenters asked if EPA has considered that discrep ancies may exist between nameplate and summer capacities as a result of repurposed equipme nt; for example, Florida has identified at least one heat recovery unit that was repurposed, a nd, as a result, now operates well below its nameplate capacity because of insufficient waste he at from the combustion turbine. Commenters

asked if EPA has considered whether use of the NEED S database or summer capacity might eliminate such discrepancies.

Commenters stated further compounding the calculati on of the targets for Building Block 2 is EPA's use of nameplate capacity for existing NGCC u nits, instead of net summer capacity; net summer capacity is the tested maximum output of a u nit at the time of summer peak demand and is generally lower than nameplate capacity. The com menters said in some cases, net summer capacity can be significantly lower than nameplate capacity; EPA's use of nameplate capacity instead of net summer capacity in the state goal ca lculations reflects a redispatch of natural gas fired generation that is actually greater than a 70 percent capacity factor for existing units. The commenters said they recommend that EPA utilize net summer capacity in calculating targets for natural gas fired units in building block 2.

Commenters added in projecting a 70% capacity facto r for NGCC units, U.S. EPA used the nameplate capacity of those units. The commenters u nderstand that the nameplate capacity of a unit represents a gross-rating of the generator alo ne, and is not indicative of the net capability of a particular unit as a whole. The commenters believ ed that the "summer capacity" of the units'

should be used instead. The commenters said summer capacity represents the net rating or capability of the generating unit as a whole. The c ommenters said when summer capacity is considered, which the commenters believed to be the most representative and appropriate approach, Ohio's 2012 NGCC capacity is 3,895.3 MW a nd not the 4,342.5 MW of nameplate capacity utilized in the goal-setting calculation f or Ohio.

Commenters stated EPA used nameplate/gross capacity in its calculations rather than actual/rated capacity which results in substantially overstating gas generation potential in each state; nameplate capacity represents the design gross capa city of the generator before any internal plant usage (auxiliary power) is deducted, whereas the ne t capacity represents the value after auxiliary power is deducted. The commenters said there is als o a seasonal component to net capacity with242

summer net capacity being lower than winter net cap acity; the EPA needs to use summer net capacity factors for re-dispatch calculations.

Commenters stated in building block 2 for Alabama's proposed goal, EPA utilizes a 70% capacity factor for NGCC based on statewide total n ameplate capacity for years 2020-2029. The commenters said the NGCC fleet is relied upon more heavily during periods of greater electricity demand, which is primarily during the summer months ; the summer capacity factor is, therefore, a better measure of NGCC capacity. The commenters s aid in Alabama's goal rate computation, EPA used a total nameplate capacity of 10,333 MW fo r NGCC. The commenters recommended that EPA use the total 2012 summer capacity of 9,27 8 MW in Alabama's goal rate calculation; this would result in total NGCC generation at a 70% capacity of 57 million MWHRs rather than the 64 million MWHRs used by EPA. The commenters sa id based on this factor alone, the commenters recommended that Alabama's 2020-2029 goa ls be adjusted; the adjusted 2029 goal for Alabama using this approach would be 1,124 Lbs CO2/MWHr rather than 1,059 proposed by

EPA.

Commenters stated the U.S. EPA used nominal namepla te capacity when determining the capacity for EGUs in this proposed rule; the commen ters believed summer peaking values should be used, as they are a much more accurate me asure of an EGU's capacity.

Commenters stated as detailed in the Technical Conc erns portion of this document, U.S. EPA utilized the nameplate capacity of the nationwide n uclear fleet instead of the more appropriate summer capacity. Commenters said that the nameplate capacity of a unit represents a grossrating of the generator alone, and is not indicativ e of the net capability of a particular unit as a whole. The commenters believed that the "summer cap acity" of the units' should be used instead. The commenters said summer capacity represents the net rating or capability of generating unit

as a whole. The commenters said examination of EIA' s most recent existing generation data (2011), use of nameplate capacity instead of summer capacity would over-represent nationwide nuclear capacity by 5,582 MW; the magnitude of this error is simply too great to ignore.

Commenters analyzed EIA forms 923 and 860 data for years 2008-2012; these data demonstrate that improper use of nameplate capacity in calculat ing capacity factors would result in a 2008- 2012 nationwide nuclear capacity factor of 85%. The commenters said using the more realistic and appropriate summer capacity, the five-year nati onwide average capacity factor is 89%; thus, U.S. EPA's assumption of a 90% capacity factor for the nuclear fleet is only valid if summer capacity is used. The commenters added that they di d not attempt to exclude those nuclear units committed to shutdown, as was the case with U.S. EP A's goal setting calculations.

Commenters stated in the eGRID baseline data for 20 12, EPA used the EIA860 nameplate capacity rating (in MW) by generator as the basis f or any capacity factor or energy production computations. The commenters said nameplate capacit y represents the design gross capacity of the generator before any internal plant usage (auxi liary power) is deducted, and may not correctly reflect a unit's true capacity due to var ious operational restrictions, whereas the net243

capacity represents the value after auxiliary power is deducted. The commenters said there is also a seasonal component to net capacity, with sum mer net capacity being lower than winter net capacity. The commenters said in its calculation, E PA consistently mixes the nameplate capacity rating with the net generation capacity rating when calculating the baseline capacity factors for NGCC units. The commenters said this capacity facto r calculation is the basis for the Building Block 2 NGCC re-dispatch, and EPA's error results i n an overstatement of potential net MWh generation that could be added to the electrical gr id to achieve a 70 percent NGCC capacity factor (or 15 percent capacity factor for units und er construction). The commenters said instead of using nameplate generator capacity, EPA should u se the net summer capacity rating of each generator, which will produce more realistic estima tes of generation NGCC units can supply to the electrical grid, and the differential amount of net generation to be deducted from coal-fired
units.

Commenters stated as with the re-dispatch of natura l gas component of the goal setting, U.S. EPA relied on nameplate capacities in their calcula tions. The commenters said they understand that the nameplate capacity of a unit represents a gross-rating of the generator alone, and is not indicative of the net capability of a particular un it as a whole. The commenters believed that the "summer capacity" of the units is more representati ve. The commenters said summer capacity represents the net rating or capability of a genera ting unit as a whole. The commenters said Ohio has 2,236.8 MW of nameplate nuclear capacity; using the more appropriate summer capacities for these units taken from EIA-860 reporting, this capacity is 2,134 MW. Furthermore, the commenters have identified that U.S. EPA, in the GH G Abatement Measures TSD, used 2,150 MW of capacity for Ohio's nuclear fleet, and has be en unable to resolve this value with available nameplate and summer capacity information.

Commenters stated BB2 and its redispatch of coal-fi red generation to NGCC also ignores problems associated with peak usage by failing to u se net summer capacity in calculating NGCC capacity. The commenters said EPA should have used net summer capacity because it reflects the maximum output that generating equipment can pr ovide to the system at the time of peak summer demand, which is particularly critical in Ar izona and other states with a wide divergence between peak and average demand. The commenters sai d net summer capacity is generally lower than the actual nameplate capacity because it refle cts capacity reductions resulting from efficiency loss and electricity use for station ser vice or auxiliary loads. The commenters said net summer capacity is a much better indicator of exist ing NGCC capacity available for redispatch because it reflects the amount of energy that EGUs will be able to supply to the power grid to replace lost generation from coal- and oil-fired so urces.

Commenters stated EPA's refusal to use net summer c apacity creates a false impression about the availability of existing NGCC generation for redisp atch. The commenters said EPA's refusal to account for net summer capacity further harms state s with severe weather, such as Arizona. The commenters said Arizona has a uniquely high summer peak demand; most of central and southern Arizona, and specifically the cities of Ph oenix and Tucson, have very high ambient temperatures during the summer months, resulting in an annual energy profile that peaks244

significantly during the long summer months; as a r esult, Arizona has the greatest change in capacity utilization of any state on a month-to-mon th basis. The commenters said currently, the existing NGCC capacity in the state of Arizona is d esigned to act as an intermediate capacity resource with the ability to quickly and efficientl y meet peak summer month demands; the State's current NGCC capacity is not sufficient to both redispatch coal generation and meet summer peak demand. The commenters said if Arizona were to redispatch coal with the existing NGCC capacity, the State would need to build out si gnificant additional NGCC capacity and infrastructure and renewable resources or make larg e and likely unsustainable market purchases. The commenters said the Pace Study similarly found that existing NGCC EGUs are inadequate to replace the coal-fired EGUs.

Commenters requested that EPA use "net summer capac ity" when determining a unit's generating capacity. The commenters said the propos al relied on nameplate capacity, which is often much higher than realized capacity, especiall y for older units; in addition, gross generation should have been used to ensure there is no penalty for utilizing air pollution control equipment at the site. The commenters said the following are some examples of the differences in generating capacity between nameplate and net summe r capacity for Lakeland Electric units in
Florida:

Unit 1 - nameplate capacity: 103.5 MW, net summer c apacity: 85 MW

Unit 2 - nameplate capacity: 126 MW, net summer cap acity: 106 MW

Unit 3 - nameplate capacity: 363.8 MW, net summer c apacity: 342 MW

Unit 5 - nameplate capacity: 369 MW, net summer cap acity: 338 MW

Unit 8 - nameplate capacity: 126.5 MW, net summer c apacity: 105 MW

Comment 11: Improperly used nameplate capacity, the EPA should use net capacity

with recommendations.

Response 11: The EPA relies on summer capacity to inform its fi nal rule subcategory-specific

emission rates. See section V.A and V.D of the fin al rule preamble of the CPP for the EPA’s response to this comment. Also see the CO2 Emissio n Performance Rate and Goal Computation
TSD for CPP Final Rule.

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

Commenters stated the EIA860 database provides repo rted summer and winter net capacities in addition to nameplate capacity, so the information is readily available. The commenters said for245

combustion turbine-based generation, including NGCC units, the summer net capacity can be significantly lower than the winter net capacity du e to higher combustion air inlet temperatures.

The commenters said EPA should therefore take seaso nal net capacity variation into consideration as well (the FCG-EC's recommended met hodology for taking seasonal net capacity variations into account is detailed below). The com menters added for many units in the EIA860 database, net capacity data may be listed by unit ( such as for an entire NGCC plant) versus by individual generator (separate capacities for the t urbine(s) and the steam generator); in such instances the FCG-EC recommends that the plant net rating simply be allocated to the generator level by pro-rata share of generator nameplate gros s capacity.

Commenters recommended the following procedure for replacing generator nameplate capacity with net capacity:

-Obtain summer net capacity ratings from EIA860 and append them to the eGRID data, by
generator.

-For multi-generator units with net capacity identi fied at the total unit level only, allocate the summer net capacities to the individual generators via pro-rata share of generator nameplate gross capacity.

-For NGCC under construction, verify source and typ e of capacity rating; confirm that all project values used represent net capacity.

-Use summer net capacity as the annual average net capacity; this will ensure that the net generation potential of NGCCs at a 70 percent capac ity factor will not be overestimated and is most representative of average temperatures in a st ate.

-This net capacity rating methodology is also neede d to calculate coal-fired unit capacity factors
and incremental NGCC emission rates as modification s to other parts of the calculation.

Commenters stated the EPA should have used net gene rating capacity instead of nameplate capacity for natural gas combined cycle units in it s application of Building Block 2. The commenters recommended the following procedure for replacing generator nameplate capacity with net capacity:

-Obtain summer net capacity ratings from EIA860 and append them to the eGRID data, by
generator.

-For multi-generator units with net capacity identi fied at the total unit level only, allocate the summer net capacities to the individual generators via pro-rata share of generator nameplate gross capacity.

-For NGCC under construction, verify source and typ e of capacity rating. Confirm that all project values used represent summer net capacity.246

The commenters said the approach the EPA has taken is clearly erroneous because it is based on the gross generating capacity; the EPA must correct this error and conduct a proper analysis of the net generating capability of NGCC units in the United States and revise the emissions goals accordingly.

Comment 12: The EPA's use of nameplate capacity is incorrect.

Response 12: The EPA relies on net summertime capacity for the building block two in the final rule. Also see section V.A. of the final rule pream ble 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 the use of nominal nameplate capa city rather than the actual demonstrated capacity was incorrect.

Commenters stated with the improper nameplate capac ity assumption for NGCC, in EPA's goal setting methodology for Building Block 2 under Opti on 1, the Agency essentially retires all coal capacity in 11 states, and its generation is replac ed by NGCC generation from existing units; these states are: Alaska, Arizona, California, Conn ecticut, Massachusetts, Mississippi, Nevada, New Hampshire, New Jersey, Oregon and Washington. T he commenters said two of these states (Oregon and Washington) have already announced the retirements of their entire coal fired capacity, as a result of various state agreements; but while the remaining nine states have announced the retirement of some of their existing coal capacity, they still have plans to keep their remaining coal fleet operating into the futur e. The commenters said this is also shown by EPA's parsed IPM modeling files projecting complian ce with the Option 1 state goals in 2025 under a state-focused approach, which indicate that coal-fired capacity is required to meet demand and reliability in Arizona, Massachusetts, M ississippi, Nevada and New Jersey. The commenters said this modeling seems to be supported by the North American Electric Reliability Corporation (NERC), which stated that current and p lanned pipeline infrastructure in both Arizona and Nevada are inadequate to handle increas ed demand due to the Proposed Guidelines.

The commenters said it should be noted that the EPA only made one parsed IPM file available pertaining to Option 1; therefore, we were unable t o ascertain projected unit compliance in 2030, the first year required to meet the Final Goals in the proposed emission guidelines ("Proposed Guidelines") and the year in which compliance with the Interim Goal is assessed.

Commenters added reflecting the impact of adding th is excessive NGCC generation into the state goal calculation, the capacity factors that would a ctually be required to reach these generation levels when applied to summer net capacities in the se seven states are extremely high and well above the 70% capacity factor EPA assumes as the ba sis for its conclusion that its state goals are
achievable.247

Commenters added EPA should recalculate North Carol ina's 2012 existing IOU NGCC nameplate capacity based on the criteria discussed above to more accurately represent the capacity that actually existed in 2012; North Carol ina calculates this revised number to be 1,930

MW.

Commenters stated in the state goal computations, E PA calculated that 34,361,954 MWh were needed to be generated from Arkansas NGCC units to meet a 70% capacity factor; this calculation is based on using the total of the name plate ratings - or 5,588 MW. The commenters said when the total of the actual tested ratings is used, in reality, Arkansas NGCCs must operate at an annual capacity factor of 83.9% to achieve 34 ,361,954 MWh. The commenters believed that it would be very difficult, and in some cases impossible, to meet an annual capacity factor of 70% for some NGCC units; this is due to the fact th at annual capacity factors must include planned and unplanned outages. The commenters said based on historical operations, during years when major maintenance is required on NGCC un its, the planned outage factor alone could approach 15%; in addition, unplanned outages typica lly range from 2%- 5%. The commenters said if 70% is nearly impossible, then operating at a capacity factor of 83.9% is flat out of the question. The commenters said the state goal comput ations need to be recalculated in the final rule using (1) each unit's actual tested NGCC capac ity as opposed to the unrepresentative nameplate capacity; and (2) a lower NGCC capacity f actor than 70% - such as 60% or even lower, based upon industry average performance data

.

Commenters stated the challenge with a nation-wide, blanket assumption in an achievable capacity factor are the many variables that affect realized capacity factor; in just looking at what EPA has already acknowledged, ambient conditions pl ay a large role. The commenters said Florida's average temperatures are much higher than the rest of the nation, and certainly higher during the long heavy electric-demand summers; it i s not congruous to use nameplate capacities across the board and expect that a NGCC in Florida could achieve the same capacity factor as a NGCC in a colder state, even if all other variables were held constant.

Commenters stated beyond the identification of mis- analyzed data points, realized utilization in Florida in 2012 is significantly greater than reali zed capacity factor by almost 20%; looking at the hours of operation of NGCC in Florida from 2012 , 21 of 32 plants that reported operating data were available more than 70% of the hours, man y of the largest capacity units greater than
90%. The commenters said the EPA "assumes that NGCC has a utilization of 87%"; this refers to the cap of available hours of operation, not also t o the generation capacity in each of those hours. The commenters said a closer look at the specific d ata suggest that even those plants that operated for a significant number of hours, were no t over 70% capacity factor; for example, the Treasure Coast Energy Center had a utilization of 9 6%, yet only met a 53% capacity factor; clearly this plant will not be able to achieve 70% capacity factor by simply being dispatched more hours of the day. Commenters stated when opera ting, most turbines in NGCC are operated at high load (many turbines become unstable and/or inefficient at low loads); this suggests that there are other limiting conditions to meeting EPA' s claimed achievable capacity factor besides just tapping into more of the nameplate capacity wh en operating. The commenters said in248

Florida, the high ambient temperatures play a limit ing role; station-specific constraints also should be considered. Commenters suggested that EPA re-evaluate the level of achievable existing NGCC capacity factor based on state-specif ic, and NGCC-specific data (not plant level); by doing so, the analysis will based on data with h igher resolution for each state; however, it should be noted that even when refining the analysi s, there are many other system constraints

that must be taken into consideration that further restrict the possibility of re-dispatching to existing NGCC. The commenters said following the sa me approach as EPA did for defining what was adequately demonstrated with a broad brush of nation-wide, plant-level data, a more appropriate, state-specific peak capacity factor fo r Florida is 65%.

Commenters stated the rule's calculation methodolog y is based on a fundamental misunderstanding of how utilities plan to meet elec tricity demand. The commenters said utilities

must ensure that sufficient resources are available to meet peak demand, not annual average demand. The commenters said for example, their peak hourly load reached its highest value of 557 MW on July 25, 2012; all available generation r esources were being utilized at full capacity to meet that peak demand, and would not be availabl e for re-dispatch. The commenters said it is clear that additional redispatching of the commente rs' fleet of NGCC to support the state wide goal would not be possible at all times. The commen ters said coal and oil steam plants provide vital capacity during those peak periods, and that capacity must remain available to ensure that sufficient resources are available to meet peak dem and. The commenters said the combined nameplate capacity of the commenters' two NGCC unit s is approximately 480 MW; at a 70% capacity factor dispatch, the units provide 336 MW, which equates to approximately 60% of the peak demand for 2012. The commenters said the syste m load was less than that for approximately 70% of the year. Commenters stated co al and oil steam plants cannot be replaced by increasing the utilization of existing NGCC plan ts; the only way to replace coal and oil steam plants is to construct new NGCC power plants to ens ure sufficient capacity is available in peak periods.

Commenters stated in applying building block 2, EPA assumed that underutilized existing and currently under construction NGCC EGUs could be dis patched to a 70 percent capacity factor in replacement of coal-fired EGU generation; the follo wing concerns raise questions regarding the validity of the EPA assumption:

-EPA used name plate capacity to estimate the poten tial underutilized NGCC capacity that could be available for redispatch; the actual capacity of NGCC EGUs is affected by many factors including elevation, temperature, humidity, etc.

-The EPA estimates of underutilized NGCC capacity d id not account for capacity held in reserve to maintain system reliability and provide for anti cipated growth in demand.

-NGCC EGU's located in non-attainment areas for cri teria pollutants such as PM2.5 and ozone may not be redispatched as anticipated by EPA witho ut infringing on permit limitations; in Utah,
the Wasatch Front is a non-attainment area for PM2. 5.249

The commenters said the EPA assumption that increas ed utilization to 70 percent capacity of NGCC can be redispatched in place of coal-fired gen eration needs to be evaluated more rigorously and adjusted to account for actual unit capacity, reserves to maintain system reliability and provide for growth and limitations resulting fr om compliance requirements of other permits.

Comment 13: Errors - nameplate capacity value

Response 13: The EPA continues to list the nameplate capacity r eported on the 2012 EIA-860; however, as explained in preamble section V.D, the EPA is relying on net summer capacity for its building block two assessment. See section V.D . of the final rule preamble of the CPP for the EPA’s response to this comment. See the CO 2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule for summer capac ity rating values used. The nameplate capacity for Riverside Energy Center (ORIS ID Code 55641) was corrected; however, the EPA will use the summer capacity in the goal calculatio ns.

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

Commenters stated the nameplate capacity used by EP A for Deer Creek Station is in error. The commenters sated as described by Basin Electric in its Application for an Energy Facility Siting Permit, its PSD Air Quality Construction Permit App lication, and its April 2013 Integrated Resource Plan, the capacity for Deer Creek Station is 300 MW. The commenters said EPA used an erroneous rating of 324 MW in calculating Deer C reek Station's additional capacity. The commenters said the 300 MW rating can be verified b y examining the gross hourly load data reported to EPA's Clean Air Markets Division by Dee r Creek Station's continuous emission monitoring system. The commenters said an examinati on of the data reveals that the full load achieved on a gross basis is typically 301 - 304 gr oss MW, which aligns with the 300 net MW rating.

Commenters have identified an error in the nameplat e capacity used for WPL's Riverside Energy Center (ORIS ID Code 55641) located in Wisconsin fo r the Block 2 NGCC redispatch calculation. The commenters provided Table 8 that s ummarizes EPA's original data and the revised corrected data; the proposed rule applied a nameplate capacity of 695.7 MW and the
correct value is 674.9 MW. The commenters did not r ecommend use of NGCC nameplate capacities for the Block 2 calculation; rather than use the nameplate rating of NGCCs in EPA's calculation of the energy that would be produced by the operation of NGCCs at a capacity factor of 70%, the EPA should use the demonstrated net cap acity at which the units can actually operate; however, if the EPA does not alter its ori ginal approach, the commenters requested correction of the nameplate rating used for WPL's R iverside Energy Center.

Commenters stated the EPA made an error in their an alysis of the Cheyenne Prairie Generating Station, the sole natural gas combined cycle unit i n Wyoming; the EPA assumed a 220-megawatt250

facility when it is a 95-megawatt unit; this error calls into question the entire component analysis.

Comment 14: The EPA should use gross generation.

Response 14: See section V.C and VI of the final rule preamble of the CPP for the EPA’s response to this comment. The response to this com ment is also addressed in section 3.1.4.

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

Commenters stated EPA requested comment on the use of "net" versus "gross" savings in the context of energy efficiency compliance approaches; one important distinction is that utility ratepayer-funded energy efficiency programs and oth er non-ratepayer programs (e.g., state energy efficiency loan funds, energy savings perfor mance contracting, building energy codes) may not need to be treated in the same manner. The commenters said the net-savings approach is

linked to cost effectiveness issues and not emissio ns issues; non-ratepayer funded energy efficiency programs are developed in a different co ntext. The commenters said if a state wants to leverage a revolving loan fund and the associated e nergy savings that are achieved through retrofits facilitated by the fund for 111(d) compli ance, the state should not have to determine the net energy savings from those projects. The comment ers said the gross energy savings should be sufficient for 111(d) compliance; overall, NASEO re commends that EPA allow gross energy savings from energy efficiency projects to be used for compliance purposes, at least on programs that operate outside of utility ratepayer-funded pr ograms, which may have non-emissions reason to use a net energy savings approach. The commenter s said if individual states wish to use net energy savings on all or a subset of the energy eff iciency programs included in their 111(d) plans, that should be their option.

Commenters added the USEPA requested comment on net energy output (proposed) and gross energy output; the current reporting of CO2 emissio ns from EGUs is required by 40 CFR, Part 75 to be in gross energy output and the proposed EG Us' CO2 emission limits are expressed as net output. The commenters said the USEPA did not p ropose a methodology for how any adjustments in net output would be modified for rep orting in 40 CFR Part 75. The commenters said net output fails to account for broad discrepa ncies of parasitic loads to the EGUs. The commenters said an example of this would be compari ng the gross CO2 lbs/MWh from an EGU with a wet sulphur dioxide control device to one wi th a dry scrubber; if all other things are equal, the EGU with a wet scrubber will have a higher carb on intensity than the dry control device, thereby skewing the net rate. The commenters said t his would be magnified with multiple or very large units in a state's generation mix. The commen ters said the goal calculations should be based on gross output for the EGUs or there should be a provision in 40 CFR, Part 75 for reporting net output if this is what the USEPA dete rmines to be appropriate.

Commenters stated EPA solicits comment on the prosp ect of monitoring and reporting net versus gross generation; the commenters are concerned with EPA's proposed use of net rather than251

gross electricity generation as a basis for the emi ssion rate goals in the proposal. The commenters said the additional monitoring required to accurately determine net generation is burdensome and of little or no benefit beyond the c urrent gross energy monitoring requirements. The commenters said use of net generation penalizes utilities for the electricity that is used to power pollution control systems that are, in fact, mandated by other federal environmental regulations; in addition, EPA's proposed new source CO2 standards under section 111(b) are based on gross generation. The commenters said for consistency and to minimize the monitoring and reporting burden, gross generation should also be used for the section 111(d) standards.

Commenters added Delaware has one coal-fired unit i n the state; Nitrogen oxide (NOx) emissions from this unit are controlled by selectiv e catalytic reduction (SCR) technology, and sulfur dioxide (SO2) emissions by a scrubber. The c ommenters said units equipped with emission control equipment have higher heat rates t han those without, due to the energy needed to operate the control equipment; the NOx and SO2 e mission controls were installed on Delaware's unit after the 2012 base year, so the st ation auxiliary loads associated with those controls were not reflected in the net generation o f the 2012 base year. The commenters said given that EPA 2030 goal calculations are based on net generation States with controlled units appear to be at a disadvantage. The commenters reco mmended EPA consider calculating heat rates on gross generation, instead of net generatio n, for units that are equipped with advanced

emission controls. The commenters said this recomme ndation is only for units that have enforceable requirements to continuously operate su ch emission controls at all times the associated unit operates.

Commenters stated the goals are based on net genera tion which excludes power used to operate air pollution control equipment; using net generati on penalizes sources that have installed good air pollution control equipment. The commenters sai d air pollution control equipment can consume up to 15% of the electricity generated by a n EGU; as such, the commenters believed it would be more equitable to use gross generation for establishing the goals and determining compliance.

Commenters stated any rate, whether in mass tons or otherwise, must be based on gross output rather than net output because each power plant's i nternal load to run pollution control equipment varies and units with more pollution control equipm ent and a greater internal load should not be adversely penalized in the baseline calculation or in any carbon reduction program. The

commenters added EPA should use each unit's maximum energy output rating rather than the nameplate ratings, which are design ratings and do not reflect a unit's true capacity.

Comment 15: The EPA should use gross electrical output rather than net electrical output

Response 15: See response 14 above.252

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

Commenters stated USEPA should reassess the use of net electrical output rather than gross electrical output for calculating heat rate/efficie ncy improvements. The commenters said reporting of gross electrical output is already req uired from EGUs with specific, clear methods for its measurement; this does not appear to be the case for net electrical output. The commenters said any requirements in state rules to implement h eat rate improvements on a net basis would require additional reporting requirements and rules on how net output could be consistently measured and calculated; additionally, emission con trols on EGUs reduce efficiency as internally generated electricity is used to power such control s thereby increasing the parasitic load and reducing net output; consequently, using net electr ical output to calculate efficiency creates an

undesirable incentive for sources to avoid installi ng new or operating existing criteria pollutant emission controls when seeking to improve EGU effic iency. The commenters said use of gross electrical output for heat rate calculations avoids this conflict, although there is still the issue o f the best controlled and least polluting units poten tially being the least efficient. The commenters examined the possible use of net electrical output for its Illinois mercury rule, but opted for gross output for just these reasons.

Comment 16: Net generation appropriate, but there are concerns for units that have installed pollution controls.

Response 16: See section V.C. and VI of the final rule preamble of the CPP for the EPA’s response to this comment. Also, see section 3.1.4 in this RTC document.

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

Commenters stated the proposed rule uses net genera tion as opposed to gross generation in the denominator both in setting the goal and for compli ance purposes under a rate-based approach. The commenters recognized that the use of net gener ation allows for plant-level efficiency improvements to be accounted for; however, the use of net generation does present some concerns. The commenters said if a utility installs controls for a traditional air pollutant (mercury, SO2, or NOx) or for addressing other envi ronmental issues such as clean water regulations, it often requires electricity to opera te the control equipment, reducing the utility's ne t generation. The commenters said if pollution contro ls are installed at an EGU after 2012, in order to meet the 6% heat rate improvement in build ing block 1, the utility would have to make up the lost net generation resulting from operating the controls just to get back to its baseline level and then reduce another 6% on top of that; th is penalizes EGUs for installing traditional pollution controls, which is likely an unintended c onsequence of using net generation. The commenters suggested that the EPA rectify this in t he final rule; one option to alleviate this concern is to allow a utility to include the electr icity used to operate pollution control equipment253

installed after 2012 to meet any state or federal e nvironmental requirement in its net generation for compliance purposes.

Comment 17: Gross vs. Net capacity to set goals; more informat ion required

Response 17: See section VI of the final rule preamble of the C PP for the EPA’s response to this comment. Per commenters’ suggestion, EPA has relie d on net summer capacity to inform its BSER quantification of subcategory-specific emissio n performance rates and state goals in the
final CPP.

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

Commenters stated nameplate capacity represents the design gross capacity of the generator before any internal plant usage (auxiliary power) i s deducted, whereas the net capacity represents the value after auxiliary power is deducted. The co mmenters said net capacity is what a unit can supply to the electrical grid; there is also a seas onal component to net capacity, with summer net capacity being lower than winter net capacity, but both typically are lower than nameplate capacity - and occasionally significantly lower. Th e commenters said EPA is using net generation (in megawatt-hours (MWh) as the input fo r emission rate calculations on a pound of CO2 per net MWh basis. The commenters said more inf ormation is required to understand the most representative value for determination since o ther emission limitations are based on gross

versus net.

Comment 18: Gross CO2 with net generation; inconsistent

Response 18: See section V.C. of the final rule preamble of the CPP for the EPA’s response to

this comment. Also see discussion in section VI A lso, see section 3.1.4 in this RTC document in regards to the interaction between heat rate imp rovements and auxiliary controls. EPA continues to rely on total CO2 emissions when estab lishing emission rates to be consistent with the reporting requirements of the rule.

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

Commenters stated the CPP established state emissio n rates using gross CO2 emissions from 2012 and net generation from the same year. The com menters believed this to be an inconsistent methodology and believes gross emissions and gross generation should be utilized to establish BSER. The commenters said this relevant in light of additional controls and the loss of generation and increased heat rate required for emi ssions controls by other EPA rules including254

the Mercury and Air Toxics Standard (MATS), Cross S tate Air Pollution Rule (CSAPR), and National Ambien t Air Quality Standards (NAAQS).

Commenters stated EPA is not consistent with the us e of gross versus net generation when calculating state level goals. The commenters said EPA calculated unit-specific heat rates using gross generation data from the Continuous Emission Monitoring Systems (CEMS) as the basis for estimating heat rate improvements related GHG r eduction potential. The commenters said the use of gross generation completely overlooks the ne gative impacts to auxiliary load caused by pollution control equipment such as scrubbers, fabr ic filters, selective catalytic reduction technology, dry fly ash handling systems, or waste water treatment systems; however, when calculating individual state CO2 emission rate goal s EPA used net generation. The commenters said while gross generation is not affected by the installation of pollution control, net generation can be affected significantly. The commenters said EPA should be consistent with its use of gross and net generation. The commenters said given the level of new pollution control retrofits necessary to respond to recent and upcoming EPA reg ulations, net generation is the most appropriate value to use throughout the proposed Gu idelines.

Comment 19: Solar data in goal calculation

Response 19: See sections V.A and V.E. of the final rule preamb le 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 the data used by EPA for calculat ing solar energy potential as part of the building block 3 is out of date and incomplete; the refore, the EPA's current proposal does not

reflect the BSER. The commenters said the EPA shoul d update its cost and penetration data for solar when determining state emission reduction tar gets to ensure that the BSER is correctly reflected in state goals.

Commenters added the BSER as proposed by EPA does n ot properly account for solar energy measures because it fails to project accurate emiss ions reduction and cost potential, and it fails to include distributed PV entirely; therefore, the sta te goals as set forth in EPA's proposal are

inaccurate. The commenters stated the EPA should ex clude the technical potential benchmark from the alternative approach and rely on the IPM m odel results with modifications. The
commenters said the EPA should use the Sunshot -62. 5% cost scenario as the cost input for utility PV in the IPM model and as the cost input f or distributed PV from the SolarDS model.

The commenters said the EPA should use the Sunshot -62.5% scenario distributed PV solar capacity projections to hard-wire distributed PV in to the IPM model to include distributed PV. The commenters said the EPA should update the curre nt generation data for solar from EIA data with SEIA's recommended outlined approach. The comm enters said the EPA should update the performance estimates used in the IPM model for sol ar. The commenters said the EPA should use a 2012 or higher baseline year.255

Commenters added use Sunshot -62.5% scenario distri buted PV solar capacity projections to
hard-wire distributed PV into the IPM Model.

Commenters stated distributed PV meets the necessar y requirements to be considered a part of the BSER; distributed PV can be deployed at a reaso nable cost, reduces emissions, is technically feasible, and is also adequately demonstrated. The commenters said as distributed PV is a unique, customer sited generation resource, it may be difficult to represent the technology in a wholesale power model such as IPM; instead, it is m ore accurate to rely on separate modeling that fully accounts for market dynamics at the cust omer level. The commenters said for example, NREL has developed the Solar Deployment System mode l (solarDS), a modeling complement to ReEDS which projects distributed PV installations b y state based on system prices, retail rates,
and consumer economics.

Commenters stated the Solar Deployment System (Sola rDS) model is a geospatially rich, bottom -up, market penetration model that simulates the po tential adoption PV on residential and commercial rooftops in the continental United State s through 2030; SolarDS was developed by the National Renewable Energy Laboratory (NREL) to examine the market competitiveness of PV based on regional solar resources, capital costs , electricity prices, utility rate structures, and

federal and local incentives. The commenters said S olarDS calculations are run at a high level of disaggregation by calculating PV generation in 216 solar resource regions (shown in Figure ES1), and combining PV output with state-based electr icity rate distributions from 3000 utilities. The commenters said Regional PV financial performan ce is used to simulate PV adoption rates for each customer type and building type; SolarDS t hen aggregates regional PV adoption to the
state and national level.

Commenters stated in an analysis of the EPA Clean P ower Plan performed by the NRDC, NRDC utilized the DOE Sunshot distributed solar capacity projections from their -62.5% price scenario for input into the IPM model; to arrive at these di stributed PV capacity projections, the DOE ran the -62.5% price scenario through the SolarDS model . The commenters said the -62.5% cost scenario is reasonable to use, as the cost assumpti ons correspond with the level of prices and projection of prices seen in today's distributed PV markets. (See Appendix C for these solar capacity projections from the Sunshot -62.5% scenar io.) The commenters said NRDC also approximated a growth pathway between 2014 installe d capacity and the Sunshot 2030 distributed PV capacity projections; the Sunshot -6 2.5% distributed PV solar capacity projections

were then hard-wired into IPM to ensure that the ef fects on the grid and other generation options are captured; meaning, the capacity projections wer e forced into the IPM model to build a certain

GW amount of distributed PV in 2020. The commenters said the IPM model then went through the same set of steps as the model would with other technologies (i.e. cost considerations, regulations, etc.).

Commenters stated the analysis by NRDC notes that u sing the -62.5% cost reduction scenario may be a conservative projection, as an October 201 4 notice from the Sunshot program projects that distributed solar prices are still on track to meet the Sunshot goal (a full -75% reduction in256

price) by 2020, which would result in higher demand for distributed PV systems than in the - 62.5% projection. The commenters said NREL's analys is assumes no further price declines after 2020, when in fact many analysts expect that prices will continue to decline. The commenters said the NRDC analysis does not assume any carbon p rice or incentives for renewable energy beyond those already in place in 2012. The commente rs said therefore, an analysis that includes an application of a $30/MWh cost reduction or simil ar incentive for zero-carbon technologies would lead to even higher levels of distributed PV deployment to achieve cost-effective
emissions reductions.

Commenters added use the Sunshot -62.5% Cost Scenar io as the Cost Input for Utility PV in the IPM Model and as the Cost Input for Distributed PV from the SolarDS Model.

Commenters stated the Alternative Approach's streng ths lie in its use of technical and economic data to calculate the state renewable energy potent ial.

Commenters stated the EPA has relied on outdated an d incorrect data from the EIA, which contains several-year old cost and performance data and results in levelized costs for wind and solar which are 46% above current averages for each technology. The commenters said EPA's modeling should use the most reliable and up-to-dat e cost and performance assumptions available, which will provide a more accurate repre sentation of the cost competitiveness of
renewables and demonstrate that more renewables can be deployed at reasonable cost.

Commenters stated based on data from the latest U.S . Solar Market Insight Report (Q2 2014), the costs for utility PV are at $1.81/watt, while t he costs for residential and commercial PV (which together make up the distributed solar marke t) are at $3.92/watt and $2.39/watt, respectively. The commenters said this places solar on track or close to meet the 2030 SunShot goals; therefore, the Sunshot assumptions can be us ed as a trendline for 2030 solar costs. The commenters said he -62.5% Sunshot cost assumptions to use are: $1.50/watt for utility PV as an input directly into the IPM model; $2.25/watt for r esidential distributed PV and $1.88/watt for

commercial distributed PV for use with the -62.5% c apacity projections as inputs directly for the solarDS model, which is then hard-wired into the IP M model.

The commenters stated NRDC compared a variety of so urces to determine an installed cost for utility solar PV.

Commenters stated update the Capital Cost Adders fo r CSP; for CSP cost, the Proposed Rule's 2016 cost and performance numbers are consistent wi th a near-term molten-salt tower, if the location multipliers are accounted for and the doll ars are converted to 2014 dollars; however, the maximum targets for solar thermal provided in the P roposed Rule are too low; in addition, the "short term capital cost adders," intended to accou nt for maxing out the production capacity of any given technology, are too high and their use re sults in unrealistically high costs (we note as well that the steps on the short term cost adders o f 90 MW and 60 MW are unrealistically low). The commenters said these should be corrected; the cost adder should be no more than 10% or257

20%. The commenters said there is significant exces s capacity for the CSP equipment today, including factories for receivers and mirrors all o ver the world; most of the equipment in a CSP plant is conventional power plant equipment or mate rials (steel and concrete); only a small percent is specialty equipment, for example mirrors , receivers, heat transfer fluids and salt. The commenters said in addition, the future cost reduct ion assumptions are too conservative, as costs are predicted to continue to decrease as new CSP pl ants come on line. The commenters said if availability impacts the EPA analysis, it is import ant to note that operating CSP plants in the US have availabilities above 95% after the first coupl e years of operation. The commenters said finally, CSP plants can be adapted to the needs of the utility; they can be designed for peaking, intermediate or baseload. EPA's model only includes the intermediate load plant configuration, but in the future, the baseload and the peaker plan t configurations are likely to be as or more relevant; EPA should model all of the three options

.

Commenters stated update the Current Generation Dat a for Solar from EIA Data; the IPM model base case should accurately depict the solar market today in order to give an accurate forecast for future solar deployment. The commenters said the EP A can source data from a number of publicly available data sources to understand the s olar potential from DG solar, utility PV, and CSP; the EIA collects data on distributed PV, utili ty PV and CSP capacity and generation through 4 separate forms. Those forms are 860, 861, 826, and 923:

-EIA form 860: Annual Electric Generator Report. Th is covers system-level data for all plants larger than 1 MWac; therefore it does not include m ost distributed PV capacity deployed; while detailed data from this form is reported only annua lly, monthly data releases with important
metrics are available from EIA's Electric Power Mon thly table 6.3.146

-EIA form 861: Annual Electric Power Industry Repor t. This form includes data on the number and capacity of solar energy systems deployed under net energy metering. (Note: data for 2012 and 2013 likely does not include plants larger than 2 MWac but a form update recently approved by OMB means new data will include those systems an d capacity.) This form also contains fields related to energy exported to the grid from these s ystems reported in megawatt-hours (MWh) but due to different metering infrastructure and differ ent interpretations of the survey questions, this
data is not consistent or reliable.

-EIA form 826: Monthly Electric Utility Sales and R evenue Report with State Distributions This form includes data on the number and capacity of so lar energy systems deployed under net energy metering. This data is updated monthly and, thus, is more current than form 861 data. However, it covers fewer than 300 of the roughly 3, 000 utilities in the U.S. and excludes a couple utilities with significant amounts of custom er-sited solar. (Note: data for 2012 and 2013 likely does not include plants larger than 2 MWac b ut a form update recently approved by OMB means new data will include those systems and capac ity.) This form also contains fields related to energy exported to the grid from those systems i n megawatt-hours (MWh) but due to different metering infrastructure and different interpretatio ns of the survey questions, this data is not
consistent or reliable.258

-EIA form 923: Power Plant Operations Report. This form gathers data on generation from a sample of power plants larger than 1 MWac. Since th is form does not cover all power plants, EIA uses this data to estimate generation from powe r plants not surveyed; given the variation in solar production from location to location and with different plant configurations that are not readily captured by EIA, estimating total solar gen eration based on data from this form is not a
reliable reference source.

Commenters stated the four EIA forms outlined above contain limited information about current solar capacity deployed; while the EPA relied on da ta from 2012 in the proposed rule, the commenters strongly encourages the EPA to use the l atest available data before setting final targets. The commenters said given the rapid deploy ment of solar energy in recent years, the amount of existing solar capacity is now much highe r than at the end of 2012; further, the EPA failed to account for distributed PV capacity repor ted in forms 826 and 861.

Commenters stated given the shortcomings regarding the timing and limitations of EIA forms utilized, the commenters submitted that a more comp rehensive estimation approach would present a more accurate picture of actual solar gen eration; the commenters suggested the EPA take the latest available data on solar PV capacity (both distributed and utility) from EIA forms 860, 861 and 826 and multiply this capacity by the estimated generation per unit of capacity by state, which is current through the end of Septembe r 2014.

Commenters stated the annual generation data should be used as a direct input into the IPM
model.

Commenters stated update the Performance Estimates used in the IPM Model for Solar; the EPA used EIA data that does not reflect current perform ance estimates within the solar market. The commenters said the solar performance estimates are based on the simple average of performance at each TMY3 weather station in each st ate as modeled using PVWatts in NREL's System Advisor Model (SAM). The commenters recommen ded using the maximum capacity factor in each state, as utility scale developers w ill target the highest resource regions. Commenters said it should be noted that through inn ovation such as oversized inverters, individual projects have reported capacity factors of up to 30%, but the commenters do not currently have publicly available data that capture s this trend at a national level.

Commenters added the EPA should use the highest RPS in a region to set the state targets, not the average RPS, unless a state specific determinat ion shows that a lower RPS would be more appropriate. The commenters said the current approa ch groups states into 6 different regions and takes the average of the 2020 RPS goals for those s tates in that region and multiples this by the total 2012 generation for the region. The commenter s said the EPA chose this RPS approach for two principal reasons: "First, in establishing the requirements, states have already had the opportunity to assess those requirements against a range of policy objectives including both feasibility and costs. ...Second, renewable resourc e development potential varies by region, and the RPS requirements developed by the states necess arily reflect consideration of the states' own259

respective regional contexts." The commenters said the highest RPS goal in the region still fits within the principal reasons the EPA used, as the s tate will have weighed the feasibility and cost of the RPS policy against other policy objectives, yet still arrived at the aggressive RPS goal.

Commenters added there are many instances where sol ar deployment has exceeded RPS deployment schedules, indicating that the RPS goal could have been more aggressive; for example, in New Jersey, Pennsylvania, Arizona, Cali fornia and Massachusetts, solar has already exceeded the RPS goals. The commenters said these a ggressive goals are an indication that higher-levels of renewable energy deployment are vi ewed as possible in each respective region. The commenters added a recent report called "The St ate Clean Energy Cookbook" from former Senator Jeff Bingaman notes that only five of twent y-nine states have fallen below 90 percent of expected annual progress toward RPS targets.

Commenters added the EPA should use 2030 RPS target s, not 2020 targets in setting the state goals; as the compliance period for the Clean Power Plan rule extends out to 2030, not 2020, selecting the RPS goals for 2020 severely limits th e renewable energy potential for an entire decade. The commenters said for example, the RPS go al for HI is set for 40% by 2030, compared to just 25% by 2020. The commenters said M innesota also has a 10% solar target by 2030, in addition to other RPS goals. The commenter s said today, 2020 RPS goals are less than 6 years away, and by the time the rule is made final, less than 5 years away. The commenters said utilities are already planning for these RPS requir ements in 2020 as part of their integrated resource planning processes; selecting a 2030 RPS g oal sends a clear message on the potential for a state to include renewables as part of a bala nced state energy portfolio by 2030.

Commenters stated Florida is the "Sunshine State", but compared to southwestern states such as Arizona, we are really the "Partly-Cloudy State". T he commenters said the NREL shows solar potential in Florida as approximately 5 kWh/m2/day, compared to 7 kWh/m2/day in areas of the

Southwest. The commenters said solar is a viable re source for energy only - it cannot be counted on as capacity, due to the unpredictability of when the solar generation will drop off due to weather. The commenters added given the lack of uti lity-scale electric storage, it is a daytimeonly resource. The commenters are a leader in solar utilization in Florida, and as the price for panels decrease the commenters expected to add more ; however, the nature of solar power and the manner in which it drops off the grid and comes back as a cloud passes, necessarily limits the total amount of solar that can be put on the system without introducing unacceptable instabilities. The commenters provided graphs indicative of the ex isting Jax Solar 12.6 MW plant's daily performance with a) afternoon showers, b) a rainy d ay, and c) a sunny day showing peaks of power (MW) during day light (8am to 7pm). The comme nters said alternate (natural gas-fired) capacity is required to be available to replace the solar generation when it drops off - and to drop

off itself when the solar comes back. The commenter s said this need for system backup is a large component of the overall cost of solar when perform ing evaluations.

Commenters stated the breakdown for where this elec tricity is produced in the Clean Power Plan map for NC shows that NC has no significant solar g eneration capacity. The commenters260

stated other sources show the NC has 550 MW of sola r power; this should produce about 1TWh of electricity per year (1.4% f 71 TWh). The commen ters asked, why this is not included in the calculation for NC power production?

Comment 20: Solar - Technical Potential Benchmark

Response 20: For the EPA’s response to this comment, see sectio ns V.A and V.E. of the final rule preamble of the CPP and the building block thr ee chapter in the GHG Mitigations Measures

TSD.

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

Commenters stated should the EPA choose to include the technical benchmark potential, the EPA must include updated solar data to reflect the current solar industry. The commenters said to establish the technical potential benchmark, the EP A compares each state's renewable energy technical potential against its existing renewable energy generation; the technical potential is measured by NREL in the report "U.S. Renewable Ener gy Technical Potential: a GIS-based analysis" and existing renewable generation as repo rted by the EIA for 2012. The commenters said the EPA notes that for solar, the EPA uses NRE L's technical potential estimates for urban utility-scale PV, rural utility-scale PV, and CSP; should the EPA include the technical potential benchmark, the EPA must include the technical poten tial estimates for distributed solar; this technical potential for rooftop solar can be found here: http://www.nrel.gov/gis/re_potential.html.

Commenters stated to have severe concerns with the existing renewable generation data used for solar as reported by the EIA in 2012; the commenter s recommended the EPA take the latest available data on solar capacity (both DG and utili ty) from EIA forms 860, 861 and 826 and multiply it by the estimated generation per unit of capacity by state that is current through April 2014. The commenters said for CSP facilities in ope ration, the EPA should use production estimates provided by NREL since generation from th ese plants is more project-specific.

Commenters stated the comparison of the renewable t echnical potential to the existing renewable net generation yields the proportion of achieved re newable generation from technical potential, which the EPA represents as the renewable energy de velopment rate. The commenters said the EPA next takes the average renewable energy develop ment rate for the top third of states to use as a benchmark renewable energy development rate fo r each technology; the benchmark rate is applied to each state's technical potential to calc ulate the benchmark generation for each technology type.

Commenters said using their recommended approach fo r accurate solar data in each state and the NREL technical potential figures gives a new benchm ark average solar development rate of 4.74% when looking at the top 16 states as the appr oach calls for; the current EPA proposal has a benchmark average solar development rate of 0.009%.261

Commenters stated the EPA realizes the limits with the technical potential, and therefore pairs the benchmark development rates with an IPM model t o take into account the cost of building the renewable generation; the final target renewabl e generation for each state is achieved by taking the lesser of these two approaches: the tech nology benchmark rate multiplied by the instate technical potential, or the IPM-projected mar ket potential for that specific technology.

Commenters did not support including the technical potential benchmark in the alternative approach; to clarify how the technical potential is not a realistic number to use in setting a benchmark, Texas has enough renewable potential to meet the 111(d) requirements of every state combined several times over; in 2012 (according to EIA form 861 data), Texas consumed 365,000 GWh of electricity; Texas could get 22% of its electricity from rooftop PV, 81% from urban utility PV, more than 10,000% of its electric ity from rural utility PV, etc.; a fraction of any one of these would be more than enough to comply wi th the requirements for Texas under the Clean Power Plan. The commenters provided a table s ummarizing the renewable energy potential relative to annual consumption in Texas ( km2, Acres, GW, GWh, Renewable potential as a fraction of Total Texas Consumption).

Commenters stated the SunShot study also notes that the land area that is potentially suitable for solar deployment is enormous and "thus land, per se , is not a constraint on meeting the SunShot scenario level of deployment." Commenters stated th e study goes on to note:

"However, it is important to make careful selection of sites in order to provide access to available or planned transmission, and to minimize conflicts with environmental, cultural, and aesthetic interests. The land area required to supply all end -use electricity in the United States using PV is only about 0.6% of the country's total land area. S imilarly, the technical potential for CSP is enormous: about 17,500 TWh of annual CSP electricit y generation, which is more than four times the 2010 U.S. annual demand, could be sited i n seven southwestern states on land that has been pre-screened to avoid prominent land-use issue s and to meet technical requirements such as insolation and slope. About 370,000-1,100,000 hecta res (ha) (900,000-2,700,000 acres) are required for utility-scale solar installations in 2 030 under the SunShot scenario, and about 860,000-2,500,000 ha (2,100,000-6,300,000 acres) ar e required in 2050. The required land area is equivalent to about 0.05%-0.14% of the contiguou s U.S. land area in 2030 and about 0.11%- 0.33% in 2050. Solar development in the SunShot sce nario is greatest in the South and Southwest. Often the highest-quality solar resource areas are dry environments that are typically not well suited for cropland or offer little value for forestry and rangeland."

Comment 21: Renewable energy potential - including solar262

Response 21: For the EPA’s response to this comment, see the CO 2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule support ing the final CPP and sections V.A and V.E. of the final rule preamble of the CPP.

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

Commenters stated other approaches to setting the r enewables portion to the state targets, such as the Union of Concerned Scientists' (UCS) demonstrat ed renewables growth approach, show double the amount of renewable energy potential usi ng the correct data for renewable energy. The commenters said the UCS demonstrated growth app roach would improve on the EPA's proposed approach by incorporating the following co re 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 po licies, as set by law, that require certain percentages of electricity to come from renewable s ources

-Accounting for actual and expected renewable energ y growth between 2013 and 2017.

The commenters said the UCS state-level renewable e nergy targets begin in 2017, the proposed start date for state compliance plans, and ramp up through 2030; 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.

Commenters said this demonstrated renewables growth approach results in a total of 923 TWh of total renewables to be deployed nationwide, nearly double the EPA's estimate of 524 TWh in

2030. The commenters said to arrive at this level o f generation, the UCS utilized the ReEDS model and SolarDS; inputs were provided into SolarD S first, with the output then inserted into the ReEDS model; this allows for distributed PV to be included. The commenters said updated solar data and cost assumptions were used in the UC S demonstrated growth approach

Comment 22: Utility plans for nuclear

Response 22: See section V.A. of the final rule preamble of the CPP for the EPA’s response to this comment. This comment is addressed by the fac t that EPA no longer quantifies at-risk nuclear in its final CPP BSER quantification.

The following are summaries of the specific public comments under this comment:263

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. The commenters said this lowers Georgia's emission rate by 29 lbs/MWh or approximately 4 percent of the target reduction. The commenters said EPA's assumption is conservative in light of the utility's most recent resource plan, which shows it retaining all of its current nuclear fleet through

2030.

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; the two units have expected operation dates of December 2017 and Decem ber 2018, respectively. The commenters said assuming, as EPA does, a 90 percent capacity f actor, these units would produce more than 17 million MWh of zero-carbon generation annually.

Comment 23: An Alternative: Accounting for Nuclear Generation That Is Lost.

Response 23: See section V.A. of the final rule preamble of the CPP for the EPA’s response to this comment. This comment is addressed by the fact that EPA no longer quantifies at-risk nuclear in its final CPP BSER quantification.

Although nuclear generation is not factored into th e BSER quantification directly, its presence as a zero emitting generation technology not subject t o the rate creates still provides an additional

incentive for it to remain in service.

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

Commenters stated an alternative clarification in t he final rule could potentially achieve the same incentives as a system-wide rate to maintain existi ng nuclear facilities, although it would be somewhat more complex; without changing EPA's propo sed target rate calculation methodologies, EPA could still ensure that states h ave the appropriate incentive to preserve all existing nuclear capacity by adjusting the state's calculated emissions rate, when assessing a state's compliance, to reflect the full impact of a ny premature nuclear retirement. The commenters said EPA could indicate that, in determi ning whether a state is meeting its goals,

EPA will subtract from the rate denominator the ful l amount of any lost nuclear generation, effectively requiring full replacement with equival ently carbon-free generation; like a systemwide emissions rate, this approach would give each state an incentive to preserve all of its existing nuclear plants that may be at risk of earl y retirement; however, because state plans may differ, and because EPA has expressed an intention to measure compliance with respect to each state's plan, it would be more straightforward to i nclude all megawatt-hours of existing power plant generation in determining a state's target em issions rates, as proposed above. The commenters said regardless of methodology, EPA shou ld require that a state plan include requirements that no nuclear generation assets will be prematurely retired - or, alternatively, that any prematurely retired nuclear generation will be replaced by an equal or greater amount of264

other zero-emissions generation; a plan that failed to satisfy this principle should be deemed noncompliant.

Comment 24: At a Minimum, the EPA Should Use a State-Specific Determination of "At-Risk" Nuclear Capacity.

Response 24: See response 23 above.

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

Commenters stated EPA should not limit the inclusio n of nuclear generation in the calculation of a state's emissions rate goals to those facilities deemed "at risk"; however, to the extent that EPA does retain that general framework, it must replace the use of a six-percent nationwide average - which does not accurately reflect conditions in any particular state - with a state-specific determination of the nuclear capacity at risk of ea rly retirement. The commenters said this solution, while an improvement to the rule as propo sed, does not treat all carbon-free generation the same and is far from preferable; it will not pr ovide states with sufficient incentives to value the carbon-free generation of all existing nuclear facilities, nor will it provide them with sufficient incentives to preserve every cost-effect ive megawatt of existing nuclear power. The commenters said this solution poses administrative challenges that a system-wide emissions rate would avoid; in particular, EPA would be forced to determine which nuclear facilities are "at risk;" EPA would also need to revise that determina tion from time to time, adjusting state goals with each addition to the list of endangered nuclea r plants. The commenters said the difficulty inherent in such judgments will only be compounded by changing market conditions over the
timeframe envisioned in the rule.

Comment 25: Threshold capacity factor for existing nuclear in Building Block 3

Response 25: See section V.A. of the final rule preamble of the CPP for the EPA’s response to this comment. Also, see section VIII for a discuss ion of use of nuclear generation in demonstrating compliance in the state plans.

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

Commenters recommended that EPA allow states in the ir State Plans to establish a threshold capacity factor for existing nuclear plants; to the extent that the nuclear plant is able to operate above that capacity factor, the incremental generat ion would be included as a component of Building Block 3. The commenters said operation bel ow the threshold capacity factor would have no impact on the state's compliance. The comme nters were aware that other parties may be suggesting an approach like this may include specif ic recommendations with respect to the
threshold to be used.265

Comment 26: The EPA Should Expressly Recognize the Ability to Demonstrate Compliance Through Portfolio Standards That Credit Nuclear and Hydropower.

Response 26: See section V.A. of the final rule preamble of the CPP for the EPA’s response to the nuclear portion of this comment and section VII I of the final rule preamble of the CPP for the EPA’s response to the hydropower portion of this co mment.

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

Commenters stated one way that states could choose to help ensure the continued vitality of existing nuclear and hydropower plants is to includ e such generation in their portfolio standard programs through what might be called a "clean ener gy credit;" doing so would place a value on the environmental attributes of nuclear and hydropo wer generation, just as Renewable Portfolio Standard ("RPS") programs place a value on the envi ronmental attributes of wind or solar. The commenters said, few if any state RPS programs enco mpass all forms of zero-carbon electricity and some may even credit carbon-emitting generation such as clean coal and waste coal; that is unsurprising, given that RPS programs ordinarily se ek to achieve state policy goals other than, or in addition to, CO2 emissions reductions. The comme nters said most state RPS programs do not encompass nuclear power, and although many include some types of hydropower, they generally exclude the existing large-scale hydropower that pr ovides the largest source of reliable renewable generation.

Commenters stated if states are given the proper in centives to preserve existing nuclear capacity and hydropower - for instance, if EPA uses a system -wide rate to calculate emissions targets - then states may expand their portfolio standard pro grams to include nuclear and existing largescale hydro by mandating procurement of clean energ y credits. The commenters said such credits, like RECs under existing programs, could a lso be traded, thereby allowing a state to comply by helping to preserve an existing nuclear o r hydropower facility located in another state.

The commenters said EPA should make clear in the fi nal rule that such clean energy credit programs will be recognized as a valid method for s tates to comply and that clean energy credits reflecting nuclear generation will be valued fully, rather than at the six percent factor suggested by EPA's proposed goal-setting methodology.

Commenters stated the reasons for including nuclear and large-scale hydropower in clean energy credit programs are similar to the reasons for full y counting nuclear generation in EPA's goalsetting formula. The commenters said procuring one MWh of electricity from a nuclear generator is at least equivalent to procuring one MWh of elec tricity from a wind generator; moreover, clean energy credit programs would avoid the negati ve consequences for emissions reduction that can result from RPS programs that favor some z ero-emissions generation technologies and not others. The commenters said existing RPS progra ms that favor wind power but exclude nuclear power exacerbate the economic pressures fac ed by nuclear generators; tradable nuclear and hydropower credits would help ensure, particula rly in rate-based states, that nuclear and hydropower facilities are appropriately valued for the zero-carbon attribute of the electricity they
generate.266

Commenters stated current supply to 49 member commu nities consists of over 1200 MWs of nuclear and hydroelectric power capacity; the resul t is that over 50% of the electricity supplied to the communities is produced while creating no emiss ions. The commenters said this proposed rule provides little credit for these carbon free r esources and instead would require these communities to fund new, unneeded renewable energy resources and new energy efficiency programs which raise the cost to electric consumers in the communities unnecessarily. The commenters said looking to invest in the future of their communities, members have not only committed to the construction of new non-emitting r esources in Vogtle Units 3 and 4, but have

also funded 1/2 billion dollars in state-of-the-art emission control improvements for coal generating resources based on recent federal and st ate rules. The commenters said this proposed carbon dioxide rule penalizes the communities for t hese investments by asking for more emission reductions from the State of Georgia, whic h has seen substantial reductions in carbon
dioxide emissions since 2005. The commenters said t he proposal approach does not

consider nuclear investments. The commenters said t he proposal would also require reduced coal unit operation, potentially even requiring shutdown of the units, which strands the cost of the recent environmental investments and again raises t he cost of electricity to consumers in the

communities.

Comment 27: The EPA should use hydroelectric power data in bas eline and state goal

calculations.

Response 27: The EPA only factors generation from affected sour ces and potential replacement generation (which may include incremental hydro) in to the quantification of BSER. See sections VI and VIII of the final rule preamble of the CPP f or the EPA’s response to this comment and

the CO 2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting

the final CPP. See sections V.E for a discussion of RE generation technologies quantified in building block 3.

As discussed in the preamble section VI, EPA has ma de an adjustment to the baseline to normalize baseline data in hydrological generation intensive states to a more typical year.

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

Commenters recommended that U.S. EPA include hydroe lectric power in its baseline and future state goal calculations; excluding hydropower does not encourage utilities to continue to invest in the maintenance and upkeep of existing units; al so, it does not encourage states or utilities to invest in potential new hydropower capacity. The co mmenters said Indiana has five hydropower plants that have the capacity for roughly 73.2 mega watts (MWs) of electric generation, according to the EIA, and these plants are currently not incl uded in Indiana's state goal calculations. The commenters said according to the National Hydropowe r Association, by 2025, the U.S. has the potential to install around 60,000 MW of new hydrop ower capacity; further, according to the EIA, Indiana produced around 34% more electric gene ration from hydropower in July 2014 than in July 2013, meaning there's an uptick in avoided CO2 emissions that the state should get credit267

for in the goal calculation. The commenters said if U.S. EPA intends to encourage the use of renewable energy through this proposed rule, they n eed to promote the use of all types of renewable energy, not just certain ones. The commen ters recognized that U.S. EPA has not ruled out the option for states to include incremental hy dropower generation from existing facilities or later-built facilities and encourages U.S. EPA to i nclude hydropower generation in any revised goal calculations.

Commenters stated EPA arbitrarily excludes hydropow er from its calculation of renewable energy potential. The commenters said this is a par ticularly glaring omission because EPA concedes that "hydropower is America's largest exis ting source of RE, for which generating capacity has remained relative constant over the la st 20 years." The commenters said it attempts to justify this exclusion by claiming that, despite the fact that hydroelectric facilities "provide a large percentage of renewable energy generation in a few states inclusion of this generation in current and projected levels of performance would d istort the proposed approach by presuming future development potential of large hydroelectric capacity in other states." The commenters said EPA's justification is unwarranted; the NREL s tudy that EPA relies upon throughout its renewable energy calculation reveals that the total estimated technical potential from hydropower in the United States is 258,953 GWh; it further reveals that every state in the country has the potential to produce some degree of hydropower - with 42 states having the potential to produce over 1,000 GWh (including 4,88 3 GWh in Illinois) - undermining EPA's distortion argument. The commenters said in failing to consider hydropower, EPA is dismissing the potential for future hydropower. The commenters said acknowledging this fact, EPA states that "the analysis informing regional RE targets do es not explicitly account for the potential of building new hydroelectric facilities as a source u nder RPS policies." The commenters said similar to its decision to simply ignore those stat es with no RPS requirements, EPA's exclusion of hydropower - based on a tenuous distortion argum ent - has no real scientific basis; rather, it appears that EPA is allowing its own desired approa ch to dictate its policy decisions and is only considering those technologies and - indeed those s tates - that expedite the implementation of its chosen approach. The commenters said by incentivizi ng wind, solar and nuclear - specifically building preservation of "at-risk" nuclear into the goal calculation - EPA has weighed into a policy debate regarding which sources of renewable energy states should foster going forward. The commenters said such broad policy choices are n ot the role of EPA under this emissions regulation.

Commenters stated the EPA should adjust the amount of emissions in the goal and those used to measure compliance by normalizing the amount of hyd roelectric generation during both periods. The commenters said this approach is a reasonable s olution that ensures states with significant hydropower resources are treated fairly; this proce ss of "normalizing," or "averaging," hydroelectricity generation across periods and scen arios is a common regulatory practice utilized by the Idaho PUC since 1982. The commenters said no rmalization could be used by the EPA to adapt its goal-setting and compliance requirements to account for the implications of hydropower generation variability without compromising the Pro posed Rule's intent or results.268

Commenters stated normalizing baseline hydro genera tion allows average hydro conditions to be taken into consideration and adjusted in baseline e missions from affected units; similarly, by normalizing hydro generation during compliance meas urement periods using the same method, the effects of consecutive years of poor (or good) hydro conditions are accounted for. The commenters said this will ensure that hydroelectric generation variability is accounted for in the same way in both the goal-setting and compliance ev aluation processes, thus eliminating water year variability as a determining factor for Idaho' s compliance with the Proposed Rule.

Commenters stated the EPA's method of calculating t he Proposed RE Targets is flawed because it is not reasonably tied to the generation and emi ssions of the units that the EPA intends to regulate. Notably, Washington and Idaho are the onl y two states with Proposed RE Targets that exceed their 2012 affected unit generation. The com menters said the EPA's Proposed RE Target for Idaho exceeds Idaho's affected unit generation by almost 200%, while the EPA's Proposed RE Target for Washington exceeds Washington's affec ted unit generation by 168%; this occurs because the EPA calculates the Proposed RE Targets independently of affected unit generation and emissions, which is inconsistent with the main premise of the EPA's BSER method for establishing state goals (i.e., offsetting CO2 emis sions from fossil fueled affected units). The

commenters said the EPA thus forces Idaho to offset more than Idaho's fair share of emissions; this point is illustrated in the November 2014 Tran slation of the Clean Power Plan Emission Rate-Base CO2 Goals to Mass- Based Equivalents tech nical support document, in which the EPA states "Mil two states (Washington and Idaho), the proposal identified incremental generation under building blocks three and four tha t exceed the amount of affected fossil fuelfired generation in 2012. The commenters said the E PA oversteps its CAA authority by requiring states to develop more mitigation than needed to of fset emissions from affected units, which leads to the arbitrary and capricious result of req uiring states to develop RE to displace existing zero-carbon emitting generation. The commenters sai d the EPA could alleviate this disparate treatment with Proposed RE Targets by capping the P roposed RE Targets (existing plus incremental) at the amount of 2012 affected unit ge neration. Commenters provided Table 3 compares the EPA's Proposed RE Target against affec ted unit generation and total generation for each state; as shown, under the EPA's current propo sal, Idaho's targets significantly exceed every other State's targets as a percent of 2012 affected unit generation.

Commenters stated EPA has excluded existing hydropo wer from consideration under the Proposed Rule, ostensibly because it would "distort " calculation of goals. While the commenters agreed that including existing hydropowe r in goal calculations would be distorting because hydropower may not have the same growth cap acity as other renewables, EPA's concern about distortion does not justify eliminating consi deration of existing hydropower for purposes of complying with the Interim and Final Goals. The commenters said just like other renewables, hydropower generates electricity with a considerabl y lower carbon intensity than coal, fuel oil, or even natural-gas; thus, use of hydropower achieves EPA's objective of reduced carbon intensity. The commenters said EPA should explicitly recognize that hydropower generation should be included in calculating a utility's or state's comp liance with the Interim and Final Goals. The commenters said explicitly stating that existing hy dropower can be used for the compliance269

demonstration creates an important incentive to kee p such hydropower available for future use and to avoid replacing it with other, more carbon-i ntensive forms of power generation.

Comment 28: The EPA should exclude hydroelectric power from ca lculation of state goals.

Response 28: See section VI of the final rule preamble of the C PP for the EPA’s response to this

comment and the CO 2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP. Existing hydro pow er is not included in the BSER quantification or the state goals. EPA has also made adjustments to the baseline as discussed in section VI to address concerns about unrepresentative hydro gener ation in the baseline period.

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

Commenters stated as utilities with significant hyd ropower assets, we support the proposed Clean Power Plan's approach to exclude existing hyd ropower resources in the calculation of state goals. The commenters recognized the many benefits of hydropower, including its ability to deliver affordable, reliable and emissions-free pow er; nevertheless, we believe that existing hydropower resources should remain excluded from th e building block calculation due to the nature of EPA's approach. The commenters said state s endowed with large hydropower resources (California, Idaho, Oregon, and Washington) are rec ognized as our country's leaders at moving towards a cleaner grid, with existing policies in p lace to increase the use of hydropower and nonhydro renewable energy and energy efficiency. The c ommenters said these states already have the most stringent final goals in the nation, and i ncluding hydropower in the state goal calculation could further increase the disparity be tween goals in the west coast and those in the rest of the country.

Commenters added moreover, hydropower's year-to-yea r variability already presents a compliance risk and complexity to states with large hydropower assets due to hydropower's impact on fossil plant generation output and emissi ons. The commenters said including hydropower in the goal-setting calculation would ma gnify the difficulty hydropower-rich states will have in demonstrating compliance should hydrop ower decline from baseline levels. The commenters said this is of particular concern given the possibility that changes in hydrology resulting from climate change and regulatory outcom es, include those arising from the FERC relicensing process, could lead to reduced generation from existing hydropower projects in the coming years. The commenters said for these reasons , we strongly encourage EPA to maintain the proposed approach and continue to exclude exist ing hydropower from the state goal calculation; at the same time, we encourage the fin alized Clean Power Plan to clarify that all new and incremental hydropower generation can be used t o demonstrate compliance.

Commenters stated Washington State is the most hydr opower dependent state in the nation; the residents and businesses are served primarily t hrough low-cost, reliable, non-emitting270

hydropower and EPA should recognize the value of th is important non-emitting resource in how hydropower is accounted for in setting emissions go als and as a strategy for achieving carbon emissions reductions in the SIPs. Nonetheless, the commenters support EPA's decision to leave existing hydropower resources out of the building b lock calculation due to the complexity of hydropower's year-to-year variability and the diffi culty hydropower-rich states will have in demonstrating compliance in low water years. The co mmenters' own analysis shows doing so would significantly narrow the carbon emission targ et for Washington and, if there was a poor water year, make compliance very difficult; therefo re, the commenters urged EPA to maintain the approach proposed, and leave existing hydropowe r out of the building block calculation.

Commenters stated as a carbon neutral utility, the commenters have tracked its emissions needed
to serve retail load since 2005 since the commenter s must offset them. The commenters said almost all of the emissions are due to power purcha ses (netted out on a monthly basis) as everything else is very small (vehicles, airplane t ravel, etc.).

Commenters stated while it is appropriate to exclud e existing hydropower from the base year(s) generation for purposes of setting state goals, it is critical to affirm that incremental hydropower and hydropower efficiencies are clearly identified as options for compliance with state goals in the final proposed rule. The commenters said given the role of energy markets and the number of Washington electric utilities selling hydropower on the wholesale energy market, it is important for hydropower to be just as attractive, if not mor e, than switching to NGCC. The commenters added "at risk" hydropower plants should be treated in the same manner as "at risk" nuclear is

treated in the rule. The commenters said both resou rces are non-emitting and the loss of these resources can have significant impacts on the econo my and regional grid reliability.

Comment 29: Use of Biomass for RE GHG Abatement

Response 29: Biomass is included in the IPM baseline projection . Biomass is not considered part of the best system of emission reduction in th is rule and therefore it is not included in goalsetting or compliance evaluations. However, similar to other technologies outside of BSER, biomass may be considered as a part of a state’s pl an to meet the 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.271

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

Commenters stated EPA uses two different values for existing RE in the proposed rule; in the TSD- GHG Abatement Measures (Table 4-1: 2012 RE Per formance by State), the 2012 MWh generated from solar plus biomass is used as the ba seline level of RE generation in each state; however, it is not clear that all biomass projects would be available for inclusion as RE under the proposed rule since EPA has not finalized its posit ion on whether biomass is carbon neutral. The

commenters said EPA should not include RE from biom ass in the GHG abatement measures

until it has made a determination on how it will ac count for biomass as a BSER. The commenters said if EPA chooses to include biomass, it should e stimate how much of a state's biomass generation would not qualify and subtract that amou nt from the total RE generated in 2012.

Commenters stated after reviewing the draft State P lan for South Carolina to comply with the proposed rule; it has become apparent that KapStone 's specific cogeneration source data is

incorrect. The commenters said the basis for these inconsistencies is likely because the states are using the Energy Information Administration (EIA) R eports to obtain the data to perform the calculations necessary for the proposed rule; the d ata in these reports do not provide accurate accounting for cogeneration units and as a result, a cogeneration facility is penalized for its structure and configuration for supplying energy to the grid. The commenters proposed the States should use the data supplied by EPA's Greenhouse Ga s Emissions Inventory Rule; so the CO2

emission calculations will be consistent across all sources and certified by a Responsible Official. The commenters said it is also important to note that the factors for all biomass fuels need to be adjustable based on the moisture content of the fuel; otherwise, emissions from biomass fuels are highly over-estimated because the existing biomass GHG factor for CO2 emissions is based on a dry fuel with a moisture co ntent of 12 percent (The commenters' biomass moisture ranges between 45-55 percent moisture).

Commenters stated overview of biomass energy.

Commenters stated biomass emissions offsetting is a "beyond the fenceline" mitigation measure.

Commenters stated EPA could improve the GHG rule an d responsibly account for net bioenergy

emissions.

Commenters stated biomass energy - the combustion o f wood and other biological materials in power plants - has been promoted extensively at the state level as renewable energy; however, it is well-known that per megawatt-hour (MWh), biomass power plants emit more CO2 than coal plants, and that co-firing biomass at coal plants i ncreases CO2 emissions and decreases facility efficiency. The commenters said given these facts, it is important to determine how the EPA counts bioenergy emissions under the existing sourc e GHG rule, and what role EPA envisions for biomass power in helping states meet target emi ssions rates. The commenters said EPA's rule treats biomass and waste-burning as having zero CO2 emissions, although emissions from272

biomass co-fired at coal plants are counted in stat e-level totals. The commenters said looking forward, the equation that EPA has developed to cal culate state-level power-sector emissions rate goals, in which CO2 emissions are summed in th e numerator, and power generation (as MWh) is summed in the denominator, treats standalon e biomass power plants as contributing to power generation, but again, not to CO2 emissions ( although the CO2 emitted by biomass cofired at coal plants is counted), and again, biogen ic municipal waste combustion is treated as having zero CO2 emissions. The commenters said the one place where biomass (but not waste) emissions are counted is in EPA's going forward mod eling, the model runs that the Agency conducted to determine a least-cost pathway for sta tes to achieve their emissions goals. The commenters said there, emissions from standalone bi omass plants are counted, along with
emissions from biomass that is co-fired at fossil f ueled plants.

Commenters stated bioenergy does not directly provi de "mitigation" of emissions in the GHG

rule. The commenters said while EPA has not offered biomass co-firing as means of reducing greenhouse gas emissions at coal plants, the Agency has stopped short of taking a firm position on bioenergy emissions, and the GHG rule, as curren tly formulated, treats biomass and biogenic waste burned at standalone plants as having zero ca rbon emissions.

Commenters stated EPA's biogenic carbon accounting approach is likely to be science-based.

Commenters stated EPA's baseline and goal rates are skewed by the assumption that biomass is carbon neutral. The commenters said to develop goal emissions rates for states, EPA first

determines each state's baseline emissions rate fro m 2012 power sector data on emissions and generation. The commenters said the "goal computati on" technical support document actually presents two rates: first is the emissions rate fro m just the fossil fueled plants that are initially regulated under the rule, which in the case of Main e is derived from only four plants and is 873 lb CO2/MWh; the second rate adds generation from re newable energy to the denominator of fossil-fueled rate (MWh), but still only counts CO2 from the fossil fueled plants in the numerator, treating all the renewable energy as hav ing zero emissions. The commenters said
Maine's rate in this case is 437 lb CO2/MWh.

Commenters stated in calculating the adjusted rate, EPA counts electricity generated by wind, solar, geothermal, biomass, waste, and landfill gas as reported by Energy Information Administration, but excludes power generated at con ventional hydroelectric facilities; while all these technologies contribute electricity, none con tribute CO2 in the rate equation - all biomass, waste, and landfill gas burning is treated as emitt ing zero CO2. The commenters said the system essentially "runs the CO2 meter backwards" for the portion of fuels provided by biomass and waste-burning at any facility; this means, for inst ance, that while Rumford Cogeneration in Maine is exempted from regulation under the rule, t he portion of electricity that the plant generates burning wood and paper-making wastes is c redited as carbon-free, even as emissions from other fuels burned at the plant (like shredded tires) are unregulated by the rule.

Commenters stated EPA's modeling counts biomass ene rgy emissions.273

Commenters stated EPA has not yet issued final guid ance regarding carbon emissions from biomass, and has treated carbon emissions inconsist ently in the proposed guidelines. The

commenters said EPA assumed that biomass is carbon- neutral for the purpose of setting state goals, and should treat biomass as carbon-neutral f or the purpose of demonstrating compliance with the state plans. The commenters said measures that reduce CO2 (or other GHG) emissions from other sectors should be allowed as compliance measures and assumed to also be carbon neutral. The commenters said it is unclear, however , whether the proposed guidelines would allow the use of such measures. (See e.g. the discu ssion at 79 Fed. Reg. 34910.) The commenters said baseline and goal calculations assume biomass has zero GHG emissions; however, EPA's integrated planning model (IPM) results assume biom ass has GHG emissions that are greater than zero; for example, the CO2 emission rate for W e Energies Rothschild Biomass Cogeneration Facility, which came on-line in 2013, is shown to be 2,632 lbs CO2/MWh in the IPM results. The commenters said the inconsistency between baseline and target calculations and the modeling assumptions should be corrected by ass uming that biomass is carbon neutral for all purposes related to the guidelines, and both existi ng and new biomass should be treated as carbon neutral for compliance purposes.

Comment 30: The EPA calculated unit-specific heat rates using gross generation data from the Continuous Emission Monitoring Systems (CEMSs)

Response 30: See section V.C. 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 the EPA calculated unit-specific heat rates using gross generation data from the Continuous Emission Monitoring Systems (CEMSs); with this approach, the EPA excluded generation-reducing effects from post-combustion en vironmental controls, such as selective catalytic reduction and flue-gas desulfurization co ntrols. The commenters said the EPA then used net generation data, without consideration for these retrofits, for coal-fired EGUs when calculating the state CO2 emission rate goals; thes e retrofits will reduce the net output of these units, as well as their associated net heat rate ef ficiency. The commenters said not considering these reductions creates an inconsistent approach, especially considering that most coal-fired EGUs will require control retrofits to comply with environmental regulations, such as the Mercury Air Toxic Standards (MATS) and Section 316( b) of the Clean Water Act.

Comment 31: Unit specific heat rates274

Response 31: See section V.C. of the final rule preamble of the CPP for the EPA’s response to this comment. The response to this comment is addr essed in section 3.1.4 of this document as
well.

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

Commenters stated heat rates will vary over time de pending on capacity factors, maintenance, season, temperature and other factors, including di spatch; dispatch may also be driven by out-ofstate demand that is outside of Utah's control. The commenters said the EPA should determine appropriate heat rates based on unit-specific calcu lations that allow for reasonable adjustments over time to recognize and reward power plants that have already invested in efficiency upgrades.

Comment 32: BB2 changes/recommendations

Response 32: See section V.D of the preamble and the building b lock two sections for a discussion of building block two potential.

EPA feels that it is both reasonable and conservati ve in its use of NGCC region-wide baseline emission-rate data to estimate the regional NGCC em issions from the fleet at higher utilization levels following building block two adjustments. F irst, NGCC unit-level and fleet-level rates generally decrease rather than increase as NGCC uti lization increases. This is consistent with expectations of increased efficiency from reduced s tart-up and shut-down time. Furthermore, a significant portion of the NGCC capacity is under c onstruction which is, on average, more

efficient than older units on which the state and r egional emission rate is based. These are the units that would conceptually increase most from th eir 2012 levels (0% utilization) to 75% utilization levels. If they are generally more eff icient than the existing NGCC fleet, than their sharp increase in utilization and increased share o f the expected NGCC generation following building block two would put downward pressure on t he NGCC rate. Finally, EPA is not making any unit-level assumptions - that is, there is not the assertion that the least efficient unit
will increase its utilization to 75%. Some of the more efficient units may increase their
utilization to levels above 75% and some of the les s efficient, or otherwise restricted units, may not increase their utilization. The BB2 assumption is a region-wide assumption as described in

the CO 2 Emission Performance and Goal Computations TSD for CPP Final Rule. Therefore, the EPA believes it is being conservative by using the baseline average emission rate to inform the NGCC rate and emissions expectations post building block two.

Using the unit-level emission rate for units that c urrently operate very little would not only be less reasonable for the reasons stated above, but w ould clearly overstate the emission rate for these units on average if they were to increase uti lization. For instance, some units that operated only marginally (e.g., capacity factor less than 2% ) endured significant start-up and shut-down throughout the year. EPA examined the change in em ission rates at units operating at these low275

capacity factors in 2011, but that increased their capacity factor in 2012. On average the units decreased their emission rate significantly, in som e cases cut it in half as they increased generation levels.

Finally, EPA modeling of the 75% capacity factor sc enario suggested a NGCC emission rate of

883 lb/MWh was lower

than the national average in EPA’s 2012 baseline d ata (i.e., low 900s lb/MWh). This further supports EPA’s assertion tha t is approach to estimating NGCC emissions post BB2 is reasonable.

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

Commenters recommended that EPA consider how the sy stem is actually operated in redispatching NGCC generation to displace coal and oil/gas steam; reliance on an annual capacity factor is not appropriate; instead, the co mmenters recommend that the EPA perform an hourly dispatch of the system; however, to be conse rvative, the commenters have used the maximum monthly capacity factor for the NGCC genera tion in performing its analyses. The commenters said for Arizona, this would be 49.4 per cent, which is comparable to the 70 percent maximum capacity factor.

Commenters stated in Building Block 2, EPA assumes that all natural gas combined cycle (NGCC) units in a state will operate a capacity fac tors up to 70%, with a corresponding kWh reduction in generation by coal units; EPA uses mis matched coal and gas generation data to arbitrarily make the state goals more stringent.

Commenters stated EPA should use actual emission ra tes instead of the average. The commenters said when computing the NGCC emissions for the Building Block 2 NGCC redispatch, EPA calculates the additional CO2 emissio ns from baseline NGCC units using the increase in generation from baseline to 70 percent NGCC capacity factor, multiplied by the original baseline-year state average NGCC CO2 emiss ion rate. The commenters said this is inaccurate, inappropriate, and underestimates the a dditional NGCC CO2 emissions due to the redispatch. The commenters said instead of erroneousl y using the state average baseline-year NGCC CO2 emission rate, EPA should use the incremen tal NGCC CO2 emission rate, on a state-average basis; that is because the most effic ient, lowest-emitting units are already generating at or near the baseline 70 percent capac ity factor, whereas the units that would actually be re-dispatched and contribute the greate st increase in net generation are the less efficient, higher-emitting units. The commenters sa id EPA can readily calculate the state average incremental NGCC CO2 emission rates using the gener ator-level data that is included in eGRID; after appropriately determining the generator net c apacity ratings, EPA must calculate and review generator by generator the baseline capacity factor, CO2 emission rate, and potential contribution of each to the redispatch. The comment ers said for Florida, the average incremental NGCC CO2 emission rate is 996 lbs/net MWh, whereas the value EPA used is 864 lbs/net MWh.276

Comment 33: NGCC generation

Response 33: See section V.D. of the final rule preamble of the CPP and the GHG Mitigations Measures TSD for the EPA’s response to this comment and corresponding analysis. The EPA has made changes to the deployment rate, BB2 assump tions, and the start date in this final CPP
rule which address this comment.

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

Commenters stated U.S. EPA notes from 2005 to 2012, NGCC generation increased 80% and they believe it could increase approximately 50% fr om 2012 levels by 2020; the commenters disagree. The commenters collected natio nwide natural gas generation data from the EIA's August 2014 Monthly Energy Report for years 1 993-2013. It should be noted that the commenters were unable to separate NGCC generation from other natural gas-fired generation for this analysis, but estimates from EIA data that combined cycle units provided approximately 81% of natural gas generation in 2012. The commente rs said linear regression analysis of this data indicates that the annual growth of natural ga s net generation is well described by a straight line, with an R2 value of 0.9502. The commenters pr ovided a graph of the Nationwide Natural Gas Generation from 1993-2013, showing a linear inc rease in net generation of NG in the electric power sector. The commenters said using th e results of the linear regression analysis, the net generation from all natural gas EGUs in 2020 wa s projected by the commenters to be 1,263

TW-h. The commenters said U.S. EPA indicates in its GHG Abatement Measures TSD that the re-dispatch of under-construction and existing NGCC units would result in the net generation of 1,444 TW-h beginning in 2020. The commenters have s everal concerns with U.S. EPA's estimate. Comparing the commenters' projection to U .S. EPA's 2020 goal indicates a net generation shortfall of 181 TW-h. The commenters sa id this is even more concerning when it is considered that the commenters' projection represen ts not just NGCC units, but all electricity producing units fired by natural gas. The commenter s said a cursory examination of the historical natural gas generation data demonstrates that 2012 generation data is atypical and well above historically observed trends; elimination of 2012 d ata improves the R2 value of the regression analysis to 0.9719. The commenters said U.S. EPA ef fectively ignored dominant trends in the growth of natural gas generation over the past 21 y ears; examined in this light, U.S. EPA's projection of 1,444 TW-h by 2020, from combined cyc le units alone, would seem to represent a goal far beyond historical precedence and, therefor e, is not adequately demonstrated.

Comment 34: RPS renewable portfolio standard

Response 34: See section V.E. of the final rule preamble of the CPP for the EPA’s response to this comment. Per the commenters suggestion, EPA n o longer relies on benchmark regional RPS to inform the quantification of BSER.277

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

Commenters stated renewables targets for the southe astern states including Florida were based on the Renewable Portfolio Standard (RPS) in North Carolina at 10% by 2030. The commenters said from the Initial Reliability Review released b y NERC in November 2014, "In addition to hydroelectric power, energy efficiency plays an imp ortant role in various states' RPSs. North Carolina's RPS includes a provision that allows up to 25 percent of its target to be met by energy efficiency gains. This provision, if it were proper ly excluded by the EPA, would reduce North Carolina's RPS target to 7.5 percent from 10 percen t, thereby lowering targets for the entire Southeast region..." The commenters said EPA's asse rtion that the North Carolina RPS is 10% is incorrect and its application to Florida is inappro priate and should be withdrawn. The commenters said Florida has a unique geography and thus a unique capability and access to renewable resources; Florida's CO2 reduction goal s hould not be based on any other state's renewable potential. The commenters said CPP should be revised to allow Florida to set the renewable goal for Florida.

Commenters stated in calculating renewable energy g oals for states, EPA should utilize statespecific analysis of RPS and other renewable energy development data to accurately determine the current level of renewable energy in the state and to arrive at a reasonable expectation for potential future development.

Commenters stated the assignment of states into geo graphical regions, and the subsequent use of regional averages for the calculation of state rene wable energy goals, does not give a representative or justifiable outcome, as suggested by EPA. The commenters said when multiple states have either none or relatively large renewab le portfolio energy (RPS) requirements, the "average" of those requirements is not the appropri ate measure. The commenters said a median would be more representative if the geographical ap proach is used, as in EPA's proposal; this would prevent outliers from skewing the results - f or example, in the West, California with an RPS target of 33% or Wyoming with a target of 0%.

Commenters stated RPS requirements are not represen tative of the actual renewable statewide goals. The commenters said in Montana, for instance , public utilities that own generation in Montana but serve out-of-state consumers, merchant utilities, and consumer-owned electric cooperatives are exempt from the state's nominal 15 % RPS; in effect, using the 15% Montana standard (and other states' nominal percentage stan dards) inflates the regional averages on which Building Block 3 relies. The commenters said if an average methodology is used, it should reflect states' true percentage targets. The commen ters said in the case of Montana, renewables are required, in fact, to equal approximately 7.5% of the load, versus the 15% RPS requirement

used in EPA's calculation for Montana's contributio n to the West region. The commenters said applying Montana's 15% RPS requirement and looked a t in the context of total electrical generation in Montana in 2012, renewable energy mak es up 5%, not 15%, of generation in the

state.278

Comment 35: Generation in regional RPS calculation

Response 35: See sections V.A and V.E of the final rule preambl e of the CPP for the EPA’s response to this comment. Per the commenters sugge stion, EPA no longer relies on benchmark regional RPS to inform the quantification of BSER.

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

Commenters stated that U.S. EPA did not adequately consider generation in its regional RPS

calculations. The commenters would like to direct U .S. EPA's attention to several elements of this data; firstly, there is significant variation in the generation amongst the states, with three of the states, Ohio, Pennsylvania, and West Virginia p roducing 70% of the regional total. The commenters said from a RE perspective, two of the s tates in this region, West Virginia and Virginia, have determined that establishment of RE portfolios are not an economically feasible action for their state, yet both have renewable gen eration above New Jersey, Maryland, Delaware, and Washington D.C., which have highly am bitious 2020 RE RPS goals. The commenters said it is concerning that these non-RPS states were not somehow factored into U.S. EPA's averaging in setting RPS goals, thus giving g reat weight to states in the East-Central region with highly ambitious 2020 targets, but litt le or no real renewable generation.

Comment 36: Specific state RE generation % electricity generat ion values differ than RE in 2012 12% electricity generation value from proposal

.
Response 36: See preamble sections V.A. and V.E. Per the commenters suggestion, EPA no longer relies on benchmark regional RPS to inform t he quantification of BSER.

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

The commenters said U.S. EPA states RE in 2012 repr esented 12% electricity generation nationally (including hydropower) which is up from 9% in 2005. The commenters added U.S.

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; howe ver, in Ohio, 2012 RE represented only 2% of generation (including hydropower) and Ohio is expected to have 9% of 2020 generation
from renewables.

Comment 37: Uniform growth rate penalize early investments in RE

Response 37: See preamble sections V.A. and V.E.

The following are summaries of the specific public comments under this comment:279

Commenters stated applying a uniform growth rate to states within a region has the perverse effect of penalizing states that have made the most significant early investments in RE. The commenters said while the growth rate EPA applies t o each state within a given region is uniform, that growth rate is applied to drastically different baseline RE generation capacities; as a result, states that have the highest baseline RE generation capacity within their region are expected to increase their RE generation capacity t he most in absolute MWh. The commenters said for example, New Jersey, Delaware, and Marylan d are all located in the East Central Region, which has a 17% growth rate; under EPA's ap proach, New Jersey is expected to increase its RE generation by 8,866,751 MWh, while Maryland will only have to increase its generation by 5,083,917 MWh; Delaware has an even lower target of 907,300 MWh; New Jersey's high target is a direct consequence of its early investm ents in RE, which led it to have a higher baseline of RE capacity.

Comment 38: BB3; the EPA's assumed land available for developm ent was too high

Response 38: See preamble sections V.A. and V.E and the GHG Miti gation Measures TSD.

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

Commenters stated EPA relied on the U.S. Renewable Energy Technical Potentials: A GISBased Study (Study), which assessed the amount of l and available for RE development. The commenters said the Study detailed that the largest technical potential in Wyoming was for wind energy, and the amount of land available for such d evelopment was 110,415 km2; however, the Study failed to consider high-priority environmenta l conflicts specific to Wyoming that greatly

reduce the actual amount of land available for such development, such as protection of the Greater Sage-Grouse, other designated critical habi tats, and other protected areas of cultural and historical significance. The commenters have determ ined that the land available for wind energy development is remarkably smaller than the amount o utlined in the Study.

Commenters said one of Wyoming's greatest challenge s in siting wind energy and transmission projects is the need to protect the habitat of the Greater Sage-Grouse; this species is under consideration to be listed on the Endangered Specie s List by the FWS. The commenters said Wyoming is dedicated to protecting the Greater Sage -Grouse, which lives in the abundant sagebrush steppes of Wyoming. The commenters said t he State has devoted significant resources towards developing a conservation plan for this spe cies; one of the important safeguards includes protection of its core habitat areas. The commenter s said Wyoming Governor Matthew Mead issued an Executive Order on June 2, 2011 that cont inues support of the State's Core Area Strategy for sage-grouse conservation (EO 2011-5); the Executive Order identifies the species' core habitat areas and effectively removes 15,263,2 10 acres (61,768 km2) of Wyoming land from wind energy development. The commenters said t his impact could grow depending on a280

FWS decision expected in mid-2015 regarding the lis ting of the Greater Sage-Grouse; if the species is listed, then there will be substantially less land available for any development.

Commenters stated when the areas of land restricted from development for designated core habitat areas and other protected areas are compare d to the land identified for wind development, the conflict is evident; specifically, 3,563,040 ac res (14,419 km2) of Wyoming land classified as Wind Potential Class (WPC) 4 or higher cannot be de veloped for environmental reasons. The commenters provided Figure 1 that identifies the la nd with WPC 4 and higher and considered commercially viable for energy generation; the map has no exclusions for protected lands. The commenters provided Figure 2 that illustrates the r eduction in land available for development; the Greater Sage Grouse core area, as well as cultu ral and historical lands that are protected and unavailable for development, have been removed.

Commenters stated the Study identified 110,451 km2 available for wind development; in reality, only 20,158 km2 are potentially available for wind development. The commenters said accounting for the wind farms already built or perm itted in this area (1,888 km2), the total available land is further reduced to 18,270 km2, or 16.5% of the total land available for wind development. The commenters said EPA has relied upo n an incomplete study to determine the technical potential of RE in Wyoming. The commenter s said EPA must adjust the State's goal to account for the realistic technical potential for W yoming. The commenters said Wyoming is receiving conflicting messages regarding RE develop ment from the FWS and EPA; FWS is telling Wyoming not to disturb large areas of land in order to guard against habitat fragmentation; EPA is telling Wyoming to develop as much wind energy as possible. The commenters said wind energy facilities are very lar ge and disturb greater land areas than EGUs, which have much smaller footprints; these two feder al agencies are giving Wyoming directives that are directly at odds with each other.

Comment 39: BB3; the EPA Methodology Fails To Explicitly Recog nize All Of The Tier 1

Sources

Response 39: See response 38

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

Commenters stated in determining the 16% target for the PA BB3 goal, EPA only utilized the Tier I resource targets in each state, but did not specifically identify which resources would be acceptable in meeting the target. The commenters sa id PA's Tier I include resources that are not CO2 neutral, such as biologically-derived methane t hat provide greater than a 1:1 ratio of CO2 reductions. The commenters said EPA should give con sideration to specifically giving credit for

the additional reductions associated with the use o f these non-CO2 neutral resources. The commenters said these specific Tier I resources der ive their benefit from utilizing biologically or other naturally occurring sources of methane (a mor e potent GHG) for the production of281

electricity. The commenters said the PA AEPS progra m recognized the value of deriving energy through utilizing methane emissions as an energy so urce as evidenced by the inclusion of methane-emitting sources in Tier 1; methane has bee n determined to be more than 25 times as environmentally destructive than CO2. The commenter s said EPA should modify its BB3 target for PA and all states to specifically recognize the additional CO2 equivalent emissions
reductions from these RE sources.

Comment 40: Incorrect demand side energy efficiency growth rat e used.

Response 40: As explained in preamble section V.A demand-side en ergy efficiency is not part of BSER quantification in the final CPP.

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

Commenters stated EPA set goals for this Building B lock relying on broad inferences from state successes with energy efficiency (EE) programs; usi ng broad inferences to the most recently available Energy Information Administration data, E PA calculated specific goals by tying these together. The commenters said EPA did not actively pursue additional state-specific data to refine their calculations; EPA's overall method has resulted in a goal which is too ambitious for Wyoming. Based upon the commenters' analysis of ann ual growth rates in energy efficiency, a value of 3.77% is more realistic for Wyoming.

Comment 41: IPM incorrect assumptions; NEEDS; errors

Response 41: The EPA does not use IPM projections regarding retireme nts to quantify BSER. The starting point for its baseline is 2012 reporte d data. As explained in the RIA, projections are illustrative of potential compliance scenarios as t he regional and more aggregate levels – the

levels at which EPA assesses the model’s results. Unit-level projects illustrate one potential realization of those regional results, but are not meant to be anticipatory of the individual EGU source compliance decision. IPM is used when evalu ating compliance cost and system-wide impacts. See the final RIA, the EPA power sector modeling documentation, and RTC Chapter 8 for a discussion on IPM assumptions.

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

Commenters requested that EPA update its compliance demonstration IPM input data to remove incorrect assumptions regarding the commenters' EGU s. The commenters reviewed EPA's 2025 "Base Case" modeling results, which predict electri c system operation without the Clean Power Plan, and EPA's 2025 "Policy Case" modeling results , which predict electric system operation

with the Clean Power Plan. The commenters said even though the IPM output is intended to be282

an illustrative example of potential compliance and does not impose any requirements associated with the Clean Power Plan, the commenters believed the modeling should be as accurate as possible since the results are being used to predic t costs and benefits of the rule proposal. The commenters provided Appendix F with the incorrect a ssumptions and corrections.

Commenters stated EPA relied on The National Electr ic Energy Data System or "NEEDS" database for its assessment of the impacts the prop osed Clean Power Plan using the Integrated Planning Model (IPM). The commenters said NEEDS inc ludes basic geographic, operating, air emissions, and other data on electric generating un its affected under the rule. The

commenters have reviewed the information contained in the NEEDS database pertaining to its electric generating fleet and has identified severa l errors and inaccurate assumptions that significantly impact EPA's IPM modeling results and need to be corrected. The commenters provided Appendix B of their comments with correcte d electric generating fleet data.

Commenters stated EPA used Integrated Planning Mode l ("IPM") output files based on EPA Base Case v.5.13, which was "designed and developed for use in analyzing policy scenarios starting in 2016," in its evaluation of the Clean P ower Plan. The commenters have reviewed this data and identified the following data discrepancie s for several of its operating units that need correcting:

1. EPA assumes that George Neal North Unit 3 and Wa lter Scott Energy Center Unit 3 will both retire prior to 2020; as these units have recently been retrofitted with emissions controls including dry scrubbers, baghouses and activated ca rbon injection, MidAmerican will not retire either unit prior to 2020.

2. EPA assumes that Riverside Generating Station Bo iler 9 will retire prior to 2020; however, this unit is dual-fueled (coal and natural gas), an d will be limited to natural gas operations by April 16, 2015; there are no plans to retire the un it prior to 2020.

Commenters stated EPA's modeling runs assume signif icant changes in Arizona's energy position from a net exporter to a net importer of p ower, an assumption and forecast that is shared by none of the Arizona utilities due to the ownersh ip structure of the Arizona power market, where much of the generation is tied to owners from other states who export that power to their
own systems.

Commenters stated EPA's IPM v.5.13 base case contai ns significant errors. The commenters added in May of 2013, EPA released NEEDS database v .5.13, Southern Company reviewed the database and suggested several changes; the EPA rel eased a second version of NEEDS database v.5.13 which incorporated some of Southern Company' s suggested changes. The commenters said Southern Company analyzed a side-by-side compa rison of the most recent NEEDS database v.5.13, which was used by EPA to model the proposed guidelines, to determine which of Southern Company's recommended changes were correct ed. The commenters provided Table 17 (titled: “Southern Company's Suggested Changes to N EEDS Database”) illustrating some of the283

key discrepancies that remain and potentially affec ting EPA's IPM compliance modeling. The commenters said it is apparent that Southern Compan y's recommended changes were not incorporated in the version of IPM used by EPA and, therefore, the error-laden assumptions produced inaccurate results. The commenters said fo r example, the database shows that Gulf Power and Mississippi Power's Plant Daniel Units 1 and 2 do not have a wet scrubber despite Southern Company's recommendation to reflect the un der-construction scrubber that will come

online in 2016. The commenters said EPA must correc t these errors and reanalyze its proposal to more accurately determine compliance costs, which a re likely underestimated due to these assumption errors.

Commenters stated EPA used the Integrated Planning Model (IPM) to estimate the compliance cost and economic and energy impacts associated wit h the proposed rule, as well as likely future electricity market conditions with and without the proposed rule. The commenters said the EPA notes that the assessments regarding the ability of the electricity and natural gas industries to achieve the levels of performance indicated for bui lding block 2 in the state goal computations are supported by analysis that has been conducted u sing the Integrated Planning Model (IPM). The commenters said to fulfill its purpose of produ cing projections related to the electric power sector and its related markets - including least co st capacity expansion and electricity dispatch projections- that reflect industry conditions in as realistic a manner as possible, IPM incorporates representations of constraints related to fuel supp ly, transmission, and unit dispatch. The commenters said at the EGU level, IPM includes deta iled representations of key operational limitations such as tum-down constraints, which are designed to account for the cycling capabilities of EGUs to ensure that the model prope rly reflects the distinct operating characteristics of peaking, cycling, and base load units. The commenters said inputs to IPM for all existing EGU s and those under construction are based on data contained in the National Electric Energy Data System (NEEDS). The commenters said in developing the proposed rule, this data served as the starting point against whic h policy scenarios were compared. The commenters said unit capacity values in NEEDS refle ct an EGU's net summer dependable capacity, not its nameplate capacity. The commenter s said as used here, net summer dependable capacity is the net capability of a generating unit in megawatts (MW) for daily planning and operation purposes during the summer peak season, a fter accounting for station or auxiliary

services. The commenters said consistent with the a gency's use of NEEDS data for IPM analyses, EPA should not rely on MW ratings in exce ss of those listed in the NEEDS database in determining Louisiana's NGCC capacity, especially g iven that electrical demand in usually highest during the hot summer months.

Commenters stated it appears that the Integrated Pl anning Model (IPM) modeling EPA conducted for the 111(d) proposed rule is based on EPA's version 5.13 of the National Electric Energy Data System (NEEDS) database that was also u sed for EPA's 2018 Emissions Modeling

Platform. The commenters said since the NEEDS datab ase supplies many essential electrical generating unit (EGU) parameters to 111(d) IPM mode ling, the NEEDS database must be as accurate as possible if IPM is to provide a useful forecast of power sector emissions and electricity generation.284

Commenters stated a summary of concerns on the IPM (Basecase 5-13) forecast includes incorrect predictions that certain EGUs will:

- continue operating units that have already shutdo wn,

- retire units (with a combined summertime net capa city of ~1,646 MW as reported by IPM) that currently have no plans to shut down and instead ar e expected to utilize controls or burn natural gas to comply with existing air quality regulations

,

- install mercury controls on units converting to ( or permitted to fire only on) natural gas, and

- rely on existing sources despite plans for new wi nd, hydroelectric, and combined-cycle generation with a nominal capacity over 1,600 MW.

Commenters stated it also appears that EPA made upd ates, such as heat-rate improvements, which created some differences in the projected sta tewide total emissions between the 111(d) IPM results and the original NEEDS v5.13 data, but the commenters cannot confirm this because EPA did not provide the unit-level results for the 111(d) modeling; instead, the results are only available in statewide totals or by other aggregate d methods. The commenters seek clarification from EPA on the unit-level results for its 111(d) m odeling.

Comment 42: The EPA should use the capacity provided in NEEDS v.5.13 for each NGCC Unit

Response 42: As explained in preamble section V.D the EPA is rel ying on net summer capacity as for its building block two assessment. NEEDS al so relies on this same metric for its unit-level capacity designations.

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

Commenters stated EPA used the Integrated Planning Model (IPM) to estimate the compliance cost and economic and energy impacts associated wit h the proposed rule, as well as likely future electricity market conditions with and without the proposed rule. The commenters said the EPA notes that the assessments... regarding the ability of the electricity and natural gas industries to achieve the levels of performance indicated for bui lding block 2 in the state goal computations are supported by analysis that has been conducted u sing the Integrated Planning Model (IPM). The commenters said to fulfill its purpose of produ cing projections related to the electric power sector and its related markets - including least co st capacity expansion and electricity dispatch projections -that reflect industry conditions in as realistic a manner as possible, IPM incorporates representations of constraints related to fuel supp ly, transmission, and unit dispatch. The commenters said at the EGU level, IPM includes deta iled representations of key operational limitations such as tum-down constraints, which are designed to account for the cycling capabilities of EGUs to ensure that the model prope rly reflects the distinct operating characteristics of peaking, cycling, and base load units. The commenters said inputs to IPM for285

all existing EGUs and those under construction are based on data contained in the National Electric Energy Data system (NEEDS). The commenters said in developing the proposed rule, this data served as the starting point against whic h policy scenarios were compared.6 Unit capacity values in NEEDS reflect an EGU's net summe r dependable capacity, not its nameplate capacity. The commenters said as used here, net sum mer dependable capacity is the net capability of a generating unit in megawatts (MW) f or daily planning and operation purposes during the summer peak season, after accounting for station or auxiliary services. The commenters said consistent with the agency's use of NEEDS data for IPM analyses, EPA should not rely on MW ratings in excess of those listed in the NEEDS database in determining Louisiana's NGCC capacity, especially given that el ectrical demand in usually highest during the hot summer months. The commenters provided Attachme nt 4 with NEEDS v.5.13 data for
affected NGCC units.

Comment 43: IPM data not robust enough

Response 43: See the final RIA, the EPA power sector modeling do cumentation, and RTC Chapter 8 for a discussion on IPM assumptions.

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

Commenters stated when looking at the proposed guid elines with a view of system reliability, the EPA's analyses using the IPM to evaluate the bu ilding blocks and whether goals are achievable, uses less robust data than data possess ed by and used by the MISO. Commenters stated that for example, MISO has performed studies of potential retirements and resulting resource adequacy due to the implementation of MATS ; these studies have included information about firmness of interstate pipeline deliverabilit y for gas-fired units, plans for replacement of units, and also consider the electrical location an d network deliverability of units expected to be retired. The commenters said in contrast, the IPM m odeling used by EPA does not appear to consider any of these factors. The commenters belie ved there is a role for the RTOs/ISOs such as MISO and NERC to assist in modeling the impacts of the rule on electric reliability. The commenters said the models used by the RTOs, ISOs, and NERC are more sophisticated for assessing electric system reliability than is the I PM model, and these organizations also have planning expertise that could promote a more robust analysis. The commenters said system modeling should also evaluate what reserves are ava ilable under this rule and understand what

resources will be called on to meet those reserves. The commenters said if NGCC units are utilized more as base load resources, as suggested in EPA's Building Block 2, they may not be available to ramp up quickly to fill a need for ene rgy. The commenters said simple cycle units may be required to fill that need because coal-fire d units are not as able to respond quickly to load changes given their base load characteristics.

Commenters stated for a number of years, numerous s tates and organizations have expressed concerns regarding U.S. EPA's IPM modeling and conc erns of its accuracy and appropriateness286

for developing important policy and regulatory prog rams. The commenters have concerns regarding the economic optimization of the IPM mode l specifically with respect to the power system, which is not completely governed by economi cs; reliability, emissions credit trading, and corporate/organizational inertia can all influe nce where companies select to generate power. The commenters said the juxtaposition of these two ideas are best manifested and illustrated in the handling of a single large oil burning unit in Virginia called Possum Point; on peak days Possum Point has significant generation, also the u nit runs during the spring maintenance periods of the nuclear plants in Virginia; this example ill ustrates the inherent problem with using a

national model such as IPM that cannot take into ac count the potential state and local reliability
issues that arise.

Commenters stated to have reservations concerning t he ability of the IPM to accurately predict and demonstrate grid reliability under the proposed rule. The commenters stated they understand that the IPM model is a deterministic linear progra mming model, which, for specified periods of time, determines the least-cost method of meeting e nergy and peak demand requirements; IPM is categorically not a dispatch model, and is limited in multiple ways in its reliability assessment capabilities. The commenters said among these limit ations are seasonal only dispatch, lack of the necessary finely-detailed transmission and distribu tion information required to accurately model intra-regional dispatch, and the treatment of gener ating units as aggregates (as opposed to individual, geographically located entities within the transmission grid), which fails to represent congestion at the local geographic level.

Commenters stated IPM inadequately represents solar , wind, and other forms of intermittent renewable generation which are reliant on favorable meteorological conditions; IPM does not account for meteorology through either past observe d weather data or random meteorological data generation. The commenters said accurate and r eliable transmission modeling of the type conducted routinely by RTOs and other entities conc erned with grid reliability can only be accomplished with sophisticated dispatch models. Th e commenters said models of this type are nonlinear, rely on historical operating data to ach ieve optimal dispatch, correctly treat generating units as specific, geographically located entities, and are capable of identifying congestion at the proper level of detail. The commenters contended th at absent independent, transparent and open dispatch modeling, implementing the proper dispatch modeling tools, reliability under the proposed rule has not been adequately demonstrated by U.S. EPA via IPM modeling results. The commenters said given the impacts of the proposed r ule and the consequences of grid reliability issues, if U.S. EPA insists on moving forward with this proposal, the commenters urged U.S. EPA to engage in outreach with the various RTOs, FE RC, NERC, and other entities capable of adequately modeling dispatch scenarios under the pr oposed rule. The commenters believed that a fully optimized economics based projection tool is an inappropriate mechanism for building future policy frameworks or setting policy budgets.

Commenters questioned how accurate is the forecast demand likely to be; for each rulemaking, the Integrated Planning Model is updated to insure that its assumptions are current. The commenters said because the Integrated Planning Mod el simulates power plants and the287

electricity system but not the economy as a whole, it must be provided with an exogenous estimate of demand for electricity. The commenters said EPA has long used the most current available Annual Energy Outlook forecast for this i nformation.

Commenters stated the first step in assessing predi ctive ability or forecast skill is to develop a reference against which forecasts can be compared. In this case, the obvious reference with which to compare NEMS electricity demand forecasts are the electricity demand data released on a regular basis by the EIA; these data cover all co nsumption of electrical energy connected to the high voltage transmission network in the United Sta tes and are created using the same reporting system used to initialize NEMS. The commenters said not included in EIA estimates of electricity demand are generation from distributed energy resources such as behind the meter rooftop solar installations or small wind power ins tallations; this will serve generally to reduce apparent demand/consumption of electric power; howe ver, since the rule in consideration here is one that acts upon utility scale fossil-fired elect ric power plants, this difference is immaterial.

Commenters stated both the changes in electricity d emand growth and the Forecast Error analysis provide alternative options for projecting future U.S. electricity demand. The commenters said one might assume that the apparentl y linear trend in percentage change of electricity demand continues into the future. The c ommenters said under this scenario, peak demand for electricity has already occurred and dur ing the next 15 years growth in electricity, which has been flat for the last 5 years, gradually becomes negative so that by 2030, demand is falling about 4% per year.

Commenters stated alternatively, one might assume t hat the NEMS forecast used to design the state goals and to initialize the Integrated Planni ng Model for purposes of the Clean Power Plan contains the same level of bias as the previous 14 Annual Energy Outlook reference cases; if so,

then demand would fall below the NEMS forecast used for the Clean Power Plan by about 36 billion kilowatt hours per year. The commenters sai d this is almost exactly equal to forecast growth in the NEMS reference case, thus this bias c orrection implies essentially no load growth during the next 15 years - before any energy effici ency efforts are taken under the Clean Power

Plan.

Commenters stated neither recent history of electri city demand does not suggest that the future will be like the past; indeed the consumption of el ectricity and its relationship to GDP growth has been evolving since at least 1950; likewise, an alysis of the electricity demand forecast used to project future consumption indicates a strong po sitive bias. The commenters said making alternative assumptions consistent with these obser vations, rather than taking the NEMS reference case at face value, suggest very differen t alternative growth trajectories for the U.S. bulk power system, the subject of this rulemaking.

Commenters stated at a minimum, EPA should consider to what degree observed bias in NEMS should be corrected for when setting rate-based goa ls that assume a particular level of future demand; this may well be a minimum estimate of the degree to which NEMS based electricity288

demand forecasts are incorrect for 2030, but it is still of a similar magnitude to the percentage

cuts in carbon dioxide emissions envisioned under t he plan. The commenters said it's worth noting in this context that successful state energy efficiency programs do not typically attempt to forecast future demand beyond 5 years; by contrast, EPA has attempted to set energy efficiency goals in building block 4 for a period more than th ree times longer farther into the future.

Comment 44: NEMS has consistently overestimated national electr icity consumption

Response 44: Demand-side energy efficiency is not part of the BSER quantification in the final CPP as explained in section V of the preamble. Als o, see preamble section VIII for mitigation measures that can be counted in state plans – speci fically VIII.K for EM&V requirements.

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

Commenters stated the EIA has been using NEMS to ge nerate its Annual Energy Outlook report
series since the mid-1990s. The commenters said Ann ual Energy Outlook reports over the past decade have projected that electricity consumption would grow significantly; however, actual electricity consumption has remained consistently b elow the forecasted levels.

The commenters said one reason for the discrepancy is that earlier NEMS projections did not account for the national recession that began in 20 08-09; nevertheless, the recession only explains some of the reduced electricity demand obs erved over the last few years, especially when considered in the context of past model projec tions. The commenters said other factors include the structure of and assumptions in NEMS it self; for example, in the residential and commercial sectors of the model, adoption of energy -efficient technologies is driven primarily by user-specified input parameters describing consu mers' discount rates. The commenters said if consumer preferences change, or if new energy effic iency technologies emerge in the coming two decades, those developments will not be reflect ed in the AEO2013 reference scenario.

The commenters said if the structure and business m odel of the U.S. electricity industry changes in the coming twenty years - as many analysts expec t it will, due to the improvements in distributed and renewable energy technologies - the n the AEO2013 reference scenario would serve as a poor proxy; after all, EIA intends its A nnual Energy Outlook series not as a prediction of future conditions, but as a projection of the st atus quo policy and discernable economic trends

into the future. The commenters said the reference scenarios are, by definition, not intended to project significant changes in the energy industry or macro economy.

The commenters said it is worth considering the his tory of NEMS projections and state-level electricity sales patterns in greater detail.

Commenters’ concerns center on the use of electrici ty consumption forecasts from the reference scenario in the Annual Energy Outlook 2013 ("AEO201 3") from the U.S. Energy Information Administration ("EIA"); this report is based on out put from the National Energy Modeling System ("NEMS"), the EIA's primary national forecas ting and policy analysis model. The289

commenters said as a general matter, energy models are powerful tools that can support informed decision-making; in this case, however, relying on a single forecast to drive critical methodologies used in the Clean Power Plan creates significant risks.

Commenters stated for over a decade, NEMS has signi ficantly overestimated national electricity sales; while no model can perfectly predict future energy markets, the track record with NEMS suggests that further Agency analysis is warranted before finalizing its methodologies. The commenters said indeed, most prominent energy model s have done a relatively poor job anticipating future levels of consumption; this obs ervation counsels adopting a conservative approach to mitigating the risk of forecast error - especially when developing guidance on appropriate methods for constructing their state pl ans.

Commenters made the recommendation of in developing guidance for the evaluation, monitoring, and verification ("EM&V") of demand-sid e energy efficiency programs in state plans, the EPA should explicitly prohibit use of th e methods the Agency used to calculate energy efficiency potential in the context of the Best Sys tem of Emission Reductions ("BSER"). The commenters said while these methods may be defensib le as an approach to evaluating the potential for energy efficiency in the context of t he BSER, they are insufficient as a means of establishing the contribution of energy efficiency towards an individual state target.

Commenters made the recommendation of in the contex t of establishing equivalent mass-based targets for new and existing units, the EPA should evaluate the extent to which relying on the AEO2013 reference scenario to project future electr icity sales risks establishing baseline consumption levels that are artificially high, and therefore would allow states to take credit for energy efficiency improvements that would have happ ened in the absence of the Clean Power Plan. The commenters said the Agency should conside r alternative methods for use in state plans, such as (1) using the actual energy consumpt ion trends observed between 2012 and 2020 in place of forecasts made today, or (2) using fore casts made just prior to implementation of the Clean Power Plan in 2020, which are likely to have smaller errors.

Comment 45: Inappropriate reliance on IPM and EIA

Response 45: See the Appendix of the CO2 Emission Performance Ra te and Goal Computation

TSD for CPP Final Rule on historical baseline data. As described there, the EPA’s baseline relies on Part 75 emissions data from the EPA, when available. When Part 75 emissions data are not available, fuel-specific emission factors from the EPA’s Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2012, and the Greenhouse Gas Reporting Program from 40 CFR Part 98 are used in conjunction with fuel use data. The EPA considers this an accurate data source as the emissions and fuel use data are reported by sou rces themselves who attest to their accuracy.

The following are summaries of the specific public comments under this comment:290

Commenters stated IPM projects, under the state-onl y policy case, 3,001 MW of new wind capacity in Ohio by 2025. The commenters said under the regional compliance plan, this is increased to 4,955 MW of new wind power in 2025. Wh ile the commenters recognized the potential for wind power in the state given recent rapid growth in the wind sector, wind power does not, and cannot, supplement or replace the bas e-load power supplied by coal and natural gas fired power plants. Furthermore, the commenters str ongly urged U.S. EPA to consider the highly-localized nature of wind-power and its abili ty to serve a small portion of the overall grid; these results clearly indicate that location and ba se-load reliability concerns were not considered fully in the IPM projections.

Commenters examined wind capacity projections from EIA's 2014 Annual Energy Outlook. Between years 2012 and 2030, the largest annual cha nge in wind capacity for the RFCW region, of which Ohio is a part, was 37 MW. The commenters said U.S. EPA's projection of 3001 MW of new wind capacity in Ohio by 2025 under the stat e-only scenario represents the addition of 195 MW each year starting in 2012 and concluding in 2025. The commenters said thus, U.S. EPA is projecting a growth rate in wind capacity 5. 3 times greater than that projected by EIA. The commenters found this difficult to comprehend. The commenters said U.S. EPA's reliance on an inaccurate model leads to a large overestimat e of the amount of RE that can be achieved in Ohio and only reinforces the level of inaccuracies in this proposal.

Commenters stated EPA suggests that projections cou ld be based on capacity expansion and dispatch planning model or a dispatch simulation mo del but these models must receive input on how much energy generation will be required. The co mmenters said they cannot reach to the challenge of accurately and reliably translating im provements in energy efficiency and the utilization of renewable energy activities into ene rgy demand reductions.

Commenters stated EPA used the U.S. Energy Informat ion Administration (EIA) 923 and 861 reports to calculate CO2 emissions for each unit; t he CO2 emissions contained in the EIA reports use different calculation methodologies. The commen ters said EPA should only use the wellestablished CO2 emission factors from 40 CFR 98 to ensure consistency.

Comment 46: EIA growth forecast

Response 46: A historical baseline was used for goal setting in both the final and proposed rule. A growth factor was used at proposal in quantifying percent savings under building block four, but as described in preamble section V demand-side energy efficiency is not part of the final rule’s quantification of BSER.

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

Commenters recommended that U.S. EPA use the 2013 E IA growth forecast for goal estimation as opposed to 2010. The commenters said there is a ten-fold difference between the two; as such,291

the most current growth forecast should be used, as this could have a substantial effect on future year goal development.

Comment 47: Historic data

Response 47: When identifying reduction potential for the buildi ng blocks, the EPA does consider cost as discussed in the GHG Mitigation Me asures TSD. The historical baseline is used to quantify the impact these building blocks would have on the likely affected EGUs. The EPA

took comment on the use of a historical baseline an d commenters generally favored the use of a historical baseline over a projected baseline. Mor eover, the EPA tests the resulting quantification of BSER in a power sector modeling t hat observes the system constraints referenced by commenters.

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

Commenters stated establishing performance standard s should be unrelated to state historic data; EPA must establish BSER and the emission stan dard by taking into account cost, non-air and environmental impacts, and energy requirements. The commenters said the statute does not contemplate consideration of historic baselines.

Comment 48: Historical and future emissions reductions

Response 48: See preamble section VIII.

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

Commenters stated EPA should allow states to recogn ize historical emissions reductions from existing energy efficiency programs to the extent t hat energy efficiency program measures continue to provide quantifiable emissions reductio ns.

Commenters stated EPA should allow states to recogn ize future emissions reductions from energy efficiency programs and activities that were initiated after the promulgation of the final rule; EPA should allow states to take credit for al l new activities, programs and installations utilizing EM&V protocols and approaches.

Comment 49: Transmission considerations

Response 49: The EPA’s power sector modeling represents transmission infrastructure constraints. See the EPA power sector modeling bas e case documentation at http://www.epa.gov/powersectormodeling292

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

Commenters were concerned that the modeling efforts supporting the CPP proposed rule did not adequately and accurately account for the electric transmission system, as the EPA's models considered generation and load, but not the transmi ssion infrastructure necessary. The commenters said this approach by the EPA is not an accurate portrayal of how our nation's electrical system works.

Comment 50: Demand response programs

Response 50: See preamble section V.A for a discussion of the EP A’s treatment of demand-side energy efficiency in the BSER quantification. See Section VIII for a discussion of mitigations

measures that can be used to achieve/demonstrate co mpliance.

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

Commenters stated demand response programs can be e ffective programs that reduce carbon emissions, or they can be programs that appear to r educe carbon emissions but actually increase such emissions. The commenters said effective progr ams are based on a reduction in electric usage due to measures such as load curtailment or e mployment of energy efficiency measures. The commenters said the "sham" programs drop load, and replace the load with on-site fossil fuel fired "behind-the-meter" generation. The comme nters recommended that the EPA ensure demand response programs are only allowed for credi t in goal calculations when such programs do not include any on-site "behind the meter" fossi l fuel generation capacity.

Comment 51: DSIRE

Response 51: See preamble section V.E for a discussion of revisi ons to building block 3.

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

Commenters stated in order for U.S. EPA to quantify RPS levels to develop target levels of performance, U.S. EPA relied on a N.C. State Univer sity Database for State Incentives for Renewables and Efficiency (DSIRE, www.dsireusa.org/ ). The commenters said this website provides a disclaimer specifically stating it provi des an "unofficial overview of financial incentives and other policies ... and it should not be used as the only source of information ... when executing other binding agreements." The comme nters said it also warns that "while the DSIRE staff strives to provide the best information possible [they] make no representations or warranties, either express or implied, concerning t he accuracy, completeness, reliability or suitability of the information." The commenters sai d because of the extensive amount of information to review under this proposal and the v ery limited time to complete comments, the

commenters did not have sufficient time to review a ll the data on DSIRE to determine its293

accuracy relative to Ohio's RPS policy. The comment ers questioned why U.S. EPA would use as their only source of information, a database to dev elop BSER for RE that warns of the unsuitability of its information for that purpose. The commenters said for such an important proposal and for the determination of what is techn ically feasible and cost-effective for BSER for RE, why would U.S. EPA not review the actual indivi dual state RPS policies themselves; U.S. EPA's methodology is flawed and the commenters do n ot believe U.S. EPA's use of DSIRE data for goal development is technical sound and must be reconsidered.

Comment 52: The EPA did not distinguish between in-state and o ut-of-state renewable generation; the EPA methodology relies on in-state generation, not sales

Response 52: See preamble section V.E for a discussion of revisi ons to building block 3. See RTC chapter 3 for further response to comment on RE evaluation.

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

Commenters stated that U.S. EPA did not distinguish between in-state and out-of-state renewable generation, when many of the actual renewable portf olios averaged in U.S. EPA's regional goals

do so. The commenters said this further calls into question the rationale behind the regions selected by U.S. EPA according to RE potential, whe n most states have already recognized these potentials and their limitations when designing the ir own renewable portfolios. The commenters said U.S. EPA relied upon the document "Renewables Portfolio Standards in the United States: A Status Update, November 2013" to justify aspects of this proposal; however, even this document discusses how each state's current RPS req uirements can vary substantially; the eligibility of different renewable technologies, wh ether existing projects qualify, the treatment of out-of-state generators, the use of credit multipli ers, methods to enforce compliance, and waivers for compliance are just a few examples.

Commenters said U.S. EPA appears to have ignored th is variability; U.S. EPA's requirements for implementation, will restrict states due to federal enforceability requirements. The commenters said U.S. EPA's best practices and ultimately the s tate goals cannot be based on or computed from the assumption that certain RPS targets can be achieved when under the conditions of this proposal may not even be permitted to be used for c ompliance. The commenters said if U.S. EPA is to rely on current RPS programs in the state s as "best practices" then U.S. EPA must take them at face value and allow those programs, as imp lemented in each state, to fully qualify for implementation under this proposal.

Commenters were concerned that this lack of disting uishing between in-state and out-of-state renewable generation that U.S. EPA did not accurate ly account for could have led to doublecounting in determining the state goals. The commen ters said a state with an RPS that allows for RE to be imported may be considered to have a highe r level of RE potential than is actually generated in the state. The commenters said the sta te(s) it imports from has an RE potential that294

also considers this same level of RE generation; U. S. EPA cannot double count this RE potential in formulating goals. The commenters said this call s into question how credit can be taken in a state plan and then how compliance with a state pla n is determined. The commenters said U.S. EPA has proposed several alternatives to eliminate double-counting in state plans and for compliance purposes; however, U.S. EPA is giving no consideration to this issue with respect to goal setting. The commenters asked if a state's RE is exported to another state and counts towards the importing state's reductions, what happ ens to the exporting state's RE target; should it not be adjusted. The commenters said U.S. EPA mu st use consistent methodologies to eliminate double-counting in goal setting and in pl an development and compliance
determinations.

Commenters stated EPA's BB3 methodology is based on in-state generation rather than sales; this is a particularly polarizing issue for states such as PA that are large net exporters of electricity. The commenters said while in-state gen eration does contribute to GHG production, much of this generation is utilized by consumers ou tside of PA and even outside of the PJM region. The commenters said states should be accoun table for CO2 production only to the extent of what their consumers actually utilize and not be penalized for the electricity use of consumers

in other states. The commenters said EPA has no con trol over the consumption patterns of others outside of their jurisdiction nor does PA have juri sdiction over the dispatching of generation. The

commenters said EPA should revise its BB3 methodolo gy to reflect state sales as opposed to generation.

Commenters tried several ways and could not recreat e the ratios of sales to in-state generation EPA provided in the goals calculation spreadsheet t herefore, commenters would like EPA to explain how this ratio was calculated. Commenters a lso stated that the reference case is based on 0.8 percent per year electricity demand growth and that EPA should demonstrate that end-use efficiency measures are not already incorporated in the EIA/IPM base case.

Comment 53: Projections using Regional versus National Data

Response 53: The EPA did shift to a regional framework for identifyi ng building block potential in this final rule. We also reevaluated the approp riate regions based on comments. See section V of the preamble for more discussion.

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

Commenters stated excluding the carbon reductions t hat EPA projects a state can achieve from renewable electricity under Building Block 4(b), na tional data is used to project the incremental reductions in the other Building Blocks. The commen ters said given regional variations in climate and temperature, EPA should look closely at whether regional data is more suitable for formulating carbon intensity reduction targets from demand side efficiency.

Comment 54: Using national aggregated instead of each states d ata295

Response 54: The quantification of BSER in this final rule is ba sed on a regional assessment of building block potential. The equivalent rate-base d and mass-based state goals described in section VII reflect state-specific baseline data. Moreover, the resulting state goals are evaluated in a comprehensive power sector model to estimate c ompliance impacts. The model reflects competing state-level constraints.

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

Commenters stated in composing each state's emissio n guideline, or standard of performance, EPA has used national aggregated data for each BSER building block that it applies to each state's energy fleet to determine that state's goal . The commenters said because this national data represents EPA's analysis of 48 states total, and n ot any one individual state, EPA is skewing each state goal to the point where it in no way ref lects that state's ability to meet it. The

commenters said these state standards are not at al l a reflection of real-world conditions in a given state, but are merely an amalgam of national projections applied to that state's energy fleet; thus, EPA's standard is purely theoretical.

Comment 55: Discount rate

Response 55: Demand-side management is not a component of final BSER quantification as explained in section V.

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

Commenters stated the USEPA based its calculation u pon an inappropriate discount rate. The

commenters said the USEPA has used what it terms a real discount rate of 3% for its calculations regarding DSM costs; however, the USEPA's real disc ount rate appears to be a customer discount rate rather than a utility discount rate. The commenters believed this is inappropriate for a multitude of reasons. The commenters said it appe ars that the USEPA is using the discount rate more commonly used for the Societal Cost Test in it s analysis. The commenters believed the more appropriate discount rate to use in utility re source planning is the utility discount rate (such as is used for the RIM, PACT, and TRC tests), not t he customer discount rate. The commenters respectfully suggested that the USEPA use a discoun t rate that is reflective of the manner in which DSM costs are actually recovered and consiste nt with its own best practices manual: a blended utility discount rate, somewhere around 8%.

Commenters stated electric utilities rarely request ROEs that are lower than 10%, and when adjusted for the specific capital structure of the utility, end up with a blended rate of around 7-

8%. The commenters said societal discount rates are generally applied to measures such as building code changes, but are not generally used f or utility energy efficiency programs.296

Comment 56: Outdated cost and performance numbers for RE and E E

Response 56: See preamble section V for a discussion on revised RE and EE assumptions based

on comment.

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

Commenters stated the impact of using outdated cost and performance numbers for renewables and energy efficiency in estimating the cost of the Clean Power Plan is substantial. The

commenters said EPA found that under the Clean Powe r Plan, the power sector could reduce its emissions by 30% in 2030 below 2005 levels, costing between $7.5 billion and $8.8 billion; but because EPA used unreasonably high and out-of-date cost assumptions for renewable energy and energy efficiency, EPA substantially overstates the costs of compliance with the standard and underestimates the potential to make these critical carbon reductions. The commenters said a study by the Natural Resources Defense Council foun d that simply by updating the cost and performance parameters for renewable generation and energy efficiency to be consistent with today's technologies, compliance could be achieved at net savings of $1.8 billion in 2020 and $6.6 billion in 2030. The commenters said in the fi nal rule, EPA should update its cost numbers and strengthen the state targets to reflect the emi ssion reductions available based on current data on availability and cost.

Comment 57: Duct burner capacity

Response 57: EPA relies on net summer capacity for quantificati on of building block two potential in this final rule.

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

Commenters stated that EPA has included some units' temporary supplemental generating capacity from the use of power augmentation modes, such as duct burners, in the existing NGCC capacity available for long-term re-dispatch. The c ommenters said duct burners increase power throughput, but at the cost of substantially increa sing heat rate and accelerating component wear. The commenters added that continual operation of duct burner capacity is not a feasible option for displacing coal-fired generation and sho uld not be considered as part of a strategy to

reduce CO2 emissions. The commenters concluded that EPA must examine the NGCC capacity values used in its goal calculation and eliminate a ny duct burner capacity.

Comment 58: Load growth

Response 58: While load growth in a reference case scenario is expected at the fleet-level, load growth among likely affected existing sources is no t expected based on a review of historical data from a fixed set of units over time. In regar ds to comments on load growth considerations297

in the EPA’s compliance modeling, the commenters sh ould review the EPA power sector modeling documentation. In regards to load growth considerations for determining subcategoryspecific rates or state goals, the EPA believes the baseline is a reasonable baseline expectation and does not expect aggregate generation levels fro m these sources to increase during the compliance period beyond what is accounted for thro ugh the EPA adjustments accounting for under construction units and hydro adjustments.

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

Commenters stated as with any model, the inputs use d on the front end greatly influence the results; this is true in the case of EPA's use of I PM for the proposed rule. The commenters said one of the basic and most important inputs in deter mining the resulting power prices is the expected load growth. The commenters said EPA's Bas e Case peak load growth for the SERC Central TVA region is very similar to TVA's interna l forecast for the forecast time horizon; however, EPA's "Option 1" peak load growth for the period 2020 through 2030 is one tenth of

the base case. The commenters said while the dramat ic drop could be attributed to increases in Energy Efficiency (EE) for Option 1, the increase i n EE as proposed in the calculation of the state emission rate goals only gradually increases to about 10% by 2029. The commenters said it appears that the early years of the compliance peri od (2020 thru 2025) have the load growth rate arbitrarily reduced. The commenters said on the "Ge neration and Peak Demand" sheets in the supporting document named: "Option 1 Regional - Apr il 2014 Draft DAT Replacement File.xlsx," the year-by-year generation and peak de mand values for the SERC Central TVA region show a saw-tooth pattern. The commenters sai d the values show a gradual (1%) increase year over year for 4 to 6 years followed by a large (-2% to -4%) cline. The commenters said this pattern of demand growth is not reflected in any of the parameters in the emission rate target calculations; also, the growth rate for the initial years of 2018 and 2019 appear to have been arbitrarily reduced by factors of 2 and 8. The comm enters said except for those years that have the negative growth, the year by year growth rates in the Option 1 case are exactly the same as in
the Base Case.

Commenters added the same observations can be made for the Option 2 case - file named "Option 2 Regional - April 2014 Draft DAT Replaceme nt File.xlsx"; the demand growth for years 2018 and 2019 have been arbitrarily reduced a nd there is a saw-tooth pattern of growth rates with every 4 to 6 years having a large negati ve growth rate. The commenters said the other year's growth rates are the same as the Base Case. The commenters said the use of 2012 data coming out of a recessionary period may not be indi cative of future economic growth; EPA should revise the load growth assumptions in its an alysis basing them on documented reasonable assumptions.

Comment 59: Distribution CO2 emissions and net generation for units that do not report unitlevel values298

Response 59: The EPA disagrees that this methodology is inappropriat e for dealing with missing data. Holding all else equal, generation levels d o typically track with generation capacity for the given units at a plant. Moreover, because the data is aggregated to the regional level, the unitlevel apportionment has no impact on the subcategor y-specific rates or state goals except in the instance where a subset of the plant’s units – for which an aggregate generation is being apportioned - are included in the rule, and a subse t are excluded. Moreover, while the apportionment of plant-data may not match unit-leve l non-reported data, the EPA believes it is a reasonable approach using the best available data t hat does not introduce any bias into the subcategory-specific rates that are informed at the regional level. EPA is using the best available data, and making reasonable assumptions where neces sary. Furthermore, EGUs have the ability to comment on their covered unit status, and EPA ca n also compare the inventory of resulting likely affected EGUs to sources that are covered un der other EPA existing programs as further support for the inventory categorization of a unit.

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

Commenters stated EPA's attempt, to deal with missi ng data is inappropriate. The commenters said for calculating a unit's applicability and sta te emission rate goals, the Agency used data

submitted to EPA and EIA. The commenters said for u nits that reported to EPA under 40 C.F.R. Part 75, reported CO2 emissions were used; if a uni t did not report CO2 emissions under 40 CFR Part 75, then the reported fuel use from the EIA-92 3 dataset and the reported emission factors under EPA's "Inventory of U.S. Greenhouse Gas Emiss ions and Sinks of the Climate Registry

Default Emission Factors" were used to calculate CO 2 emissions. The commenters said if no unit-level fuel use was reported in the EIA-923 dat aset, but the prime mover fuel data existed and more than one unit at a plant had the same prim e mover, then the prime mover fuel level emissions were distributed to each generator in the prime mover proportionally by nameplate capacity. The commenters said this exercise is arbi trary and may inadvertently include units that do not meet EPA's proposed applicability criteria.

Commenters added EPA completed a similar exercise f or net generation data. A unit's net generation was taken from EIA-923; if no unit-level net generation existed in the EIA-923 dataset but the prime mover fuel data existed and m ore than one unit at a plant had the same prime mover, then prime mover fuel level net genera tion was distributed to each generator in the prime mover proportionally by nameplate capacity. T he commenters said this is an arbitrary exercise by EPA that could have unintended conseque nces.

Comment 60: If the EPA uses a savings percentage of sales from energy efficiency, it should be based on estimated actual electricity sales

Response 60: See preamble section V.A. The EPA is not including BB-4 in its quantification of

final BSER.

The following are summaries of the specific public comments under this comment:299

Commenters stated if EPA uses a savings percentage of sales from energy efficiency, it should be based on estimated actual electricity sales. The commenters said the draft rule estimates potential energy savings in the target years and us es that to adjust an emissions rate that is based on 2012 generation levels; the savings potential es timate starts from a BAU sales estimate that is based on 2012 actual sales and estimated growth fro m the AEO 2013 Reference Case (GHG Abatement Measures TSD, 5-40). The commenters said the incremental savings are calculated by taking a percentage of BAU sales minus net cumul ative savings ("sales after net EE" on p. 5- 41); but as the draft rule recognizes elsewhere, th e AEO projections implicitly incorporate some savings that states are achieving that would qualif y under this rule. The commenters said those savings are being double-counted in the sales after net EE, decreasing the estimated sales and thus decreasing the estimated savings potential. Th e commenters said then, in order to add the savings to 2012 generation, the draft rule divides the target year savings by BAU electricity sales in that year (for a percent savings), and multiplie s by 2012 sales (p. 5-43 and Goal Computation TSD, p. 17); however, the savings potential is init ially calculated based on an incremental savings percentage of actual sales after the saving s. The commenters said the cumulative savings percentage should be calculated using the same deno minator, sales after net EE. The commenters said in South Carolina, for example, in 2029 the po tential savings are 10.2% of BAU sales but 11.4% of sales after net EE; using percentage of ac tual sales, the target rate would be 763 rather

than 772. The commenters said the state rate calcul ations to demonstrate compliance will use actual generation and savings for the target years, so this issue does not apply in those cases.

Comment 61: Sales Data

Response 61: See preamble section V.A. The EPA is not includin g BB-4 in its quantification of

final BSER.

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

Commenters stated the sales for Lower Valley Energy Inc. should be excluded because the energy efficiency achieved by LVE was reported by t he Bonneville Power Authority, following
instructions for EIA Form 861: "...Federal Power Ma rketing Administrations should coordinate with the reporting of DSM information with their po wer purchasing utilities to avoid double counting the effects and costs of DSM programs." Th e commenters said BPA confirmed to LVE that "BPA Energy Efficiency already reports all rep ortable savings (both utility and BPA implemented) to the Power Business Line which in tu rn is reported to EIA." The commenters said this is not an instance of "disaggregation of reported data by state for administrators with programs in multiple states," as referenced on p. 5 -16 of the GHG Abatement Measures TSD. The commenters said where efficiency effects have b een reported by an entity other than a utility listed for Wyoming, the goal calculation should not include related Wyoming sales.

Commenters added the sales for Powder River Energy Corp (PRECorp) should be excluded because EPA policy is intended to induce a decline in the economic base of the company's300

Campbell County service territory, which will in tu rn make customary energy efficiency programs infeasible. The commenters said the compan y's service territory includes eight of the ten largest coal mines in the United States, collec tively responsible for over 336 million short tons of coal in 2012. The commenters provided infor mation about a recent study considering the impact of section 111(d).

Commenters added Basin Electric Power Cooperative ( Basin Electric) is one of the largest electric generation and transmission (G&T) cooperat ives in the United States; it is not a local distribution company, and Commission staff confirme d that the only transactions with its two

customers in 2012 were wholesale. The commenters sa id Willwood Light & Power is a local distribution company which reported sales of its ow n on Form 861S, so it would be double counting to include the sales to Willwood under Bas in's auspices. The commenters said F.E. Warren Air Force Base is a federal military install ation over which the state exercises no economic regulatory control; Basin's sales to F. E. Warren Air Force Base ended in 2013.

Commenters added the entry labeled Adjustment is ac tually an assortment of fourteen entities (nine municipal, four cooperative, and one politica l subdivision) small enough to file an EIA Form 861S, which is a short version of the Form 861 . The commenters said Form 861S does not require quantities for energy efficiency; all of th ese entities were individually listed by EIA in 2011. The commenters said as an example of scale, i n 2011 Midvale Irrigation District had total revenues of $3700 and six customers; Southeast Elec tric Coop is actually a Montana coop with 10 Wyoming customers; Willwood Light & Power Compan y had 49 customers, all residential; the largest of the other entities is the Wheatland Rural Electric Association, with 3,717 customers; only four other entities had more than a thousand customers. The commenters said if these entities are too small to have to quantify en ergy efficiency, they should be too small to be included in the basis for the state target; doing s o would take the EPA too far into the depths of rural America, and subject the entities to administ rative and regulatory demands which are unreasonable in light of the benefits to the nation , and which are unreasonable in light of the compliance expectations which EPA has articulated i n its TSD on State Plan Considerations.

Commenters added if these exclusions are made, the cornerstone for intrastate sales is 13,282,366 MWh; adding back 24 gigawatts, the Busin ess As Usual case for Wyoming would be 13,306,366 MWh.; the calculated cumulative savings should be counted against this reduced
base.

Commenters stated the sales numbers (corrected for transmission losses) listed in the data file accompanying EPA's November TSD do not match those used in calculating state goals in the June 2014 proposal. The commenters said for Wiscons in, the data file on state goal calculation accompanying the original proposal listed this numb er as 73,988,479 MWh, whereas in the November TSD data file, this value is listed as 74, 765 GWh (74,765,000 MWh). The commenters said EPA should correct this discrepancy

.301

Commenters stated for EE, the TSD states the EPA us ed a growth factor for electricity sales obtained from the Average Annual Growth Rate from A EO 2013 NERC Region. The

commenters said for SERC this value is stated to be 1.10%; however, in the EPA spreadsheet a

value of 1.10184% was used. The commenters said thi s discrepancy becomes significant over the long time period of this building block. The commen ters added, the spreadsheet also changed this growth factor from 1.011018 to 1.011218 in the year 2041.

Comment 62: Wholesale electricity from multi-use water project s; exclude

Response 62: See preamble section V.A. The EPA is not includin g BB-4 in its quantification of

final BSER.

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

Commenters stated the Western Area Power Administra tion (WAPA) is one of four power marketing administrations within the U.S. Departmen t of Energy whose role is to market and transmit wholesale electricity from multi-use water projects; it sells power to preference customers such as Federal and state agencies, citie s and towns, rural electric cooperatives, public utility districts, irrigation districts and Native American tribes. The commenters said they, in turn, provide retail electric service to consumers in the West. The commenters said as a federal agency over which the state exercises no control, i t should be excluded from setting the state's goal for energy efficiency.

Comment 63: The EPA Should Use a System-Wide Emissions Rate to Set Emissions Rate Targets.

Response 63: See preamble section V for an explanation of the mi tigation measures quantified as BSER, section VI for an explanation of the metri c of the BSER quantification, and section IV.D for an explanation of affected units. The EPA understands the commenters’ suggestion, but as explained in the aforementioned sections, th e EPA is only quantifying BSER for likely affected 111(d) sources (including replacement gene ration for those sources). Additionally, while not subject, the subcategory performance rate s, state goals, and mass equivalents do create

an additional incentive for non-affected zero emitt ing generation to stay on line as they become more competitive relative to the affected fossil so urces as they are not subject to the same compliance obligation as affected EGUs.

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

Commenters stated within the framework of EPA's cur rent proposal, the most straightforward solution is for the Agency to calculate state emiss ions targets by counting in the denominator of302

the rate not only all of a state's existing fossil fuel generation and existing renewable generation, but also all of its existing nuclear and hydropower generation.

Commenters stated use of such a "system-wide" emiss ions rate is consistent with EPA's approach to defining the "best system of emission r eduction," as required by statute; under EPA's rationale, because the statute uses the term "syste m of emissions reduction," it is appropriate to consider emissions reduction opportunities from all parts of the electricity supply and delivery system. The commenters said EPA also recognizes tha t "electricity production ...takes place interchangeably between and among multiple generati on facilities and different types of generation;" for that reason, EPA has included non- emitting resources in calculating initial emissions rates and rate targets. The commenters sa id accordingly, the regulatory approach taken by EPA in the Proposed Rule more logically supports consideration of a state's total electrical generation when calculating its target emissions ra tes.

Commenters stated adopting a true system-wide rate would create an effective incentive for states to keep all existing carbon-free generation online; if a nuclear facility were to retire prematurely, the state's calculated emissions rate would increase by an amount reflecting the full amount of carbon-free generation that has been lost . The commenters said because each nuclear facility is so large, a state could not easily repl ace the lost nuclear generation with other carbonfree resources in the short term, to compensate for the increase in the calculated emissions rate; therefore, a state would have reason to prevent the premature retirement of any of its nuclear generation.

Commenters stated using a system-wide rate to set g oals would require states eventually to replace existing nuclear units with an equal amount of new zero-emissions generation (or energy efficiency) once those units have reached the end o f their useful lives in the coming decades; while it may be challenging for states to do so tod ay, inclusion would give states and industry incentives to speed development of new carbon-free generation technologies.

Commenters stated adopting a technology-forcing sta ndard is entirely consistent with the Clean Air Act and its legislative history; in proposing t he CO2 new source performance standards for new EGUs, EPA referred to the extensive legislative history and case law supporting the proposition that the technology-based standards und er section 111 were intended to be technology-forcing. The commenters said that intent applies equally to standards for existing sources; both section 111(b) and section 111(d) dir ect EPA to adopt a "standard of performance," a term defined in section 111(a) to reflect the app lication of the "best system of emission

reduction." The commenters said as the D.C. Circuit has held, section 111(a)'s "mandated balancing of cost, energy, and nonair quality healt h and environmental factors embraces consideration of technological innovation as part o f that balance. The statutory factors which EPA must weigh are broadly defined and include with in their ambit subfactors such as technological innovation."303

Commenters stated the electricity industry can meet the challenge, in coming decades, of replacing nuclear units that have reached the end o f their useful lives with other zero-emitting generation; technologies that either already exist, or that are currently under development and are likely to be commercialized in the coming decades, include:

-New nuclear facilities. Nuclear units are a demons trated, proven technology for generating zerocarbon electricity. Certainly, it is technically fe asible to replace units that have reached the end of their remaining useful life with new units. As E PA notes, five nuclear EGUs at three plants presently are under construction: Vogtle in Georgia , Watts Bar in Tennessee, and Summer in South Carolina. More are under consideration, such as additional units at Turkey Point in

Florida.

-Innovations that will extend the life of existing nuclear facilities. The nuclear industry continually develops and implements such innovation s, and the Nuclear Regulatory Commission will soon receive applications to extend licenses f or a fourth twenty-year term.

-Next-generation nuclear technology. The nuclear in dustry is currently developing modular small and medium size nuclear reactors that could signifi cantly reduce construction times and costs.113 Although current economic conditions make the development of such reactors in competitive electricity markets challenging, these innovations could be applied within regulated markets, and when the technology is proven, applied more broadly. The International Atomic Energy Agency has also identified developments in f ast reactors and gas-cooled reactors.

-Carbon capture and reuse from existing coal-fired plants. EPA has already found that CCS is technically feasible (though not yet cost-effective ) for many existing coal-fired plants, and a variety of such systems are under development.115 S ome involve the capture and purification of CO2 emissions to compress the CO2 to a super-critic al liquid that can then be reused in industrial processes or injected into geologic form ations for long term, permanent sequestration and removal from the atmosphere. In 2009, Pennsylva nia examined establishing a network of geologic sequestration sites in the Commonwealth an d found it feasible.116 However, in the

absence of market incentives for carbon emissions r eduction from existing fossil fuel-fired plants, the efforts to develop a sequestration site network were abandoned. Other processes under development include capture by genetically enhanced algae to produce new fuels, thus recycling carbon dioxide rather than releasing new carbon fro m long-term carbon sinks.

-CCS from NGCCs. CO2 capture from NGCCs for reuse o r sequestration will be feasible within the next decade, so that retiring nuclear plants co uld be replaced by new NGCCs that produce electricity without emissions. On October 15, 2014, Exelon Generation announced that it had joined a joint venture that would validate that tec hnology at a site in Texas, using supercritical CO2 as a working fluid to drive a combustion turbin e and ultimately to produce pipeline-quality CO2 that can be sequestered or used in industrial p rocesses. The developer is working toward commissioning the plant in 2016.304

-Improved solar generation. Photovoltaic solar is b ecoming dramatically less costly. There have also been new developments in utility-scale thermal projects that can deliver solar-generated electricity with increasing reliability. For exampl e, the 400 MW Solana plant in Arizona, which came online in October 2014, uses molten sodium to store heat generated during the day to produce steam during late afternoon peak hours or w hen the sun is no longer shining to achieve a 40 percent capacity factor.119 The price for Solana 's power falls within the range EPA has determined is cost-effective. Moreover, new technol ogies such as solar shingles and solar films are allowing increasing use of distributed solar ge neration in or at the building sites where the electricity is consumed.

-Improved storage technologies. Battery, fuel cell, and other storage technologies are improving rapidly.120 Although these technologies do not gene rate electricity, they will allow greater and more efficient use of intermittent technologies suc h as wind and solar. Fuel cell technologies will also permit more efficient production of electricit y from natural gas during periods of time that renewable generation is unavailable.

-Smart Grids and improved techniques for distribute d generation. These innovations in electricity

distribution allow demand to be matched more closel y with supply of electricity, allowing intermittent renewable resources to be integrated e fficiently, electric vehicles to provide grid balancing services, demand response to reduce elect ricity consumption at peak times in the most efficient manner, and transmission losses to be red uced through distributed generation.

The commenters said these emerging technologies hol d great promise in reducing the carbon intensity of our electricity system; their advancem ent would be strongly encouraged by a Clean Power Plan that requires states to build on the emi ssions reductions they have already achieved, and that prohibits states from backsliding and incr easing CO2 emissions from historical levels. The commenters said indeed, historically, environme ntal regulation has been a strong driver of innovation in the power sector; moreover, environme ntal regulations have consistently cost substantially less to implement than EPA or industr y originally estimated; thus, the prospect that existing nuclear units will eventually retire shoul d not be a justification for failing to consider th e full effect of that generation in setting state goa ls.

Commenters said including nuclear (or hydropower) u nits in setting emissions rate targets need not negatively affect a state if a nuclear (or hydr opower) facility were forced to retire unexpectedly for reasons beyond reasonable control - for example, due to an unexpected equipment failure (or, for hydropower, a prolonged drought); in that circumstance, EPA's regulations implementing section 111(d) provide a m echanism for a state to amend its plan to provide a different pathway for achieving complianc e. The commenters said the general regulations explicitly allow for the possibility th at a state plan or revision may, under certain circumstances, provide for a longer compliance peri od or establish less stringent emission standards, at least for a time; specifically, a sta te may provide for longer compliance schedules or the application of less stringent emissions standar ds if the state demonstrates with respect to a facility or class of facilities that costs of contr ol are unreasonable because of "plant age, location

,305

or basic process design," installing necessary cont rol equipment is impossible, or "factors specific to the facility (or class of facilities) . ..make application of a less stringent standard or final compliance time significantly more reasonable ." The commenters said such plan submissions would require increments of progress to achieve compliance; moreover, section 111(d)'s authorization for states to consider "the remaining useful life of the existing source" in establishing standards of performance can also be i nterpreted to authorize a revision of systembased standards where the life of an existing zero emissions source is cut short.

Comment 64: CHP Line Loss Credit Should be Revised

Response 64: In the final rule, the EPA acknowledges the value o f measures that increase transmission and distribution (T&D) efficiency or r educe electricity use. It allows that the verified and quantified MWhs of avoided losses or r eduction in end use electricity that result from T&D measures to be used to adjust a CO2 emissi on rate. For more information on the accounting approach for adjusting a CO2 emission ra te and specifics on eligible transmission and distribution measures, see Section VIII.K. For mor e detail on the requirements and criteria for proper quantification and verification of MWhs, see Section VIII.K.

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

Commenters said that the EPA should increase line l oss credit from 5 percent to 6 percent to be consistent with the EIA which says that the nationa l average transmission and distribution line loss is 6 percent. Secondly, commenters said, it is very important that the EPA bring clarity to the applicability of the line loss credit. Commente rs said that it appears that the credit is only applicable to CHP systems that are directly affecte d by the CPP. Commenters urged the EPA to emphasize the benefits of distributed energy in red ucing transmission and distribution costs and increasing reliability to states and extend the 6 p ercent credit to both affected units and nonaffected units.

Commenters said that the proposed 5 % line loss cre dit is inconsistent with the actual average line losses that accompany centralized electricity transmission and distribution, and in the Technical Support Document, the EPA itself refers t o line losses of 7% or higher. Commenters

stated that several studies have found that line lo sses are far greater during peak hours. For example, commenters said, in 2011 the Regulatory As sistance Project found that a grid segment or area with average line losses of 7 percent could have marginal line losses of 20 percent during peak load, and other studies have shown that one MW h of local generation can displace up to 1.47 MWh of central generation. To reflect the actu al energy benefit of distributed generation, commenters said that the EPA should provide a 7.5% credit to distributed generation.

Commenters added that the EPA should consider incre asing the credit for distributed baseload generation operating during peak hours, because thi s would encourage the deployment of CHP Systems that can provide reliable peak baseload pow er to off-set baseload coal plant closings.306

Commenters stated that because the proposed rule on ly addresses line loss credit in the context of affected units, the Final Rule should make it cl ear that a similar line-loss credit should be credited to generation from unaffected units. Comme nters said that selling industrial CHP/WHP carbon credits, should apply against potential futu re industrial GHG reduction obligations. Commenters urged the EPA and states to recognize th at when an industrial company sells its energy efficiency-based GHG reduction, it simultane ously reduces its own GHG baseline. If the company is ever regulated on GHG emissions, comment ers said that early reduction must be credited to any GHG emission reduction required und er any such future regulation. Commenters also urged that when comparing CHP emissions to aff ected EGUs, that you not compare it to a regional rate, but instead, compare it to a more re alistic estimate of the GHG reduction in dispatch of base load/intermediate/peaking (coal an d gas), plus credit for avoided transmission
and distribution losses.

Commenters said that the EPA should provide a full- line loss credit rather than the proposed modest 5 percent line loss credit.

Comment 65: Provide 100 Percent Thermal Credit

Response 65: In the final rule, for affected CHP units, the EPA is providing for the use of the equivalence accounting method which ensures that a CHP unit’s measured electrical and all of its thermal output are factored into the unit’s adjuste d emission rate. For non-affected units, however, the final rule calls for the use of the av oided emissions method to calculate the qualifying ERC generated. For more information reg arding crediting of CHP, see Section

VIII.K.

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

Commenters said that the EPA should provide a full 100 percent thermal credit. Commenters

stated that avoided transmission and distribution l osses associated with CHP are significantly larger, and the rule needs to fully credit these sa vings. Commenters said that by installing CHP systems manufacturers reduce emissions throughout t he air shed, but since they are now producing electricity on site, their own emissions may modestly increase. Commenters

concluded that these facilities need to have assura nces that actions that they take now will not subject them to more demanding requirements down th e road.

Commenters stated that the ability to obtain air pe rmits is a major determinant as to whether

industrial CHP units are built. Commenters noted th at industrial companies' primary business is making manufacturing products, not electricity. As such, and given that air permits are getting harder to get, commenters said that building a CHP unit and any resulting increase in emissions (albeit less emission per MWH than regional EGUs) c an be a significant challenge to a manufacturing company. Commenters said that the EPA should provide a full thermal credit (100%) for CHP units instead of only 75 percent of the useful thermal output as proposed.307

Commenters described the different approaches have been used in federal and state regulations and guidance documents to account for the efficienc y benefits of the thermal output of a CHP system: equivalence approach and avoided emissions approach. Commenters said that the EPA should provide full thermal credit for affected CHP units when using the equivalence approach. While the avoided emissions approach is arguably a more accurate reflection of the emissions benefits of CHP, commenters said that many stakehol ders believe the equivalence approach could be simpler to implement.

Commenters noted that the EPA has historically appl ied a range of credits to CHP thermal output under the equivalence approach, ranging from 75% in EPA's New Source Performance Standard (NSPS) for Electric Utility Steam Generating Units (40 CFR Part 60, Subpart Da) to 100% in the NSPS for Stationary Combustion Turbines. Commenters added that a 100% credit has likewise been applied in several states that have used the e quivalence approach in state regulations. Commenters stated that the actual comparison betwee n the equivalence and avoided emissions approaches is site specific and depends on the over all efficiency of the CHP system, the relative amounts of electricity and thermal energy produced, and the emissions characteristics of the displaced boiler.

Commenters believed that the 100% thermal credit is appropriate under the Clean Power Plan. Commenters stated that, as compared to the 75% cred it in the proposed rule, for typical CHP systems, a 100% thermal credit results in an effect ive emissions rate for CO2 that more closely approximates the emissions rate determined by the a voided emissions method. So long as the rule includes monitoring and a minimum thermal outp ut requirement (to protect against "sham" CHP projects), commenters recommended that 100% of the thermal output be recognized under 111(d) as well. Commenters added that the proposed rule limits eligibility to CHP systems where 20 percent of the total gross useful energy output consists of useful thermal output, which would eliminate the potential for "sham" CHP projects. Co mmenters stated that providing 100 percent of the thermal credit will help the economic viabil ity of the CHP unit be financed and constructed. Commenters agreed that a higher credit for thermal output will encourage the development of more CHP facilities consistent with the president's goals. Commenters supported the EPA's proposal to allow credit for 75% of the u seful thermal output of CHP systems that qualify as EGUs. Commenters also stated that for un affected CHP units, they recommended that the EPA allow both CHP and WHP to be eligible compl iance methods, WHP under Block 3 and
CHP under Block 4 in states that choose the emissio ns rate approach.

Commenters said that the EPA should establish that WHP can contribute to CO2 savings under Building Block 3, Alternative Power Generation. Com menters noted that 15 of the existing

Renewable Portfolio Standards define WHP as a renew able resource. For the purposes of the 111(d) rule, WHP is unequivocally a type of power g eneration, commenters said, and while it does increase the energy productivity of an industr ial process, its purpose is to generate emission-free electricity. Commenters added that th e EPA should allow a 100% credit for every megawatt-hour of useful electrical output, the same as a megawatthour generated from solar or
wind.308

Commenters stated that relative to heat rate improvement oppor tunities at other EGU types in the basis for supporting the BSER, they noted that the rationale for not considering such improvements was the result of analysis that indica ted that the carbon reduction benefits of such improvements were determined to be "relatively smal l." Commenters noted that this analysis did not include a robust analysis of heat rate improvem ents considering improvements not only in electricity output but also thermal energy output i n CHP systems. Commenters noted that some power plants, including oil/gas steam or combustion turbine plants, can be converted to CHP operation, thereby improving the heat rate of affec ted EGUs, with heat distributed to buildings and industry via highly efficient district heating systems. Commenters urged the EPA to include in BSER heat rate improvements achievable through c onversion to CHP or expansion of CHP operations in all affected EGUs including oil/gas s team turbine and combustion turbine plants.

Commenters stated that the EPA is unclear in how Combined Heat and Power (CHP) facilities are treated and asked why didn't EPA provide clarit y. Commenters asked: When is a CHP facility considered "covered"? If this is determine d by sales criteria, at what date is the determination made? Can this determination change? If so, under what criteria?

Comment 66: Tribes & Territories - Use of imports in target em ission rates

Response 66: For the EPA’s response to this comment, see sectio n VIII of the preamble.

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

Commenters stated in regards to the supplemental pr oposal since importing states have minimal formal influence on the energy policies of Canada o r its provinces, we do not recommend that the potential for increasing imports be factored in to states' target emission rates, regardless of how imports are treated for compliance purposes in the final rule.

Comment 67: Tribes & Territories - Data

Response 67: The EPA appreciates the information regarding emis sions data, for the EPA’s response to this comment, see the CO 2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP for a description of the emission data informi ng EPA baseline.

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

Commenters stated in regards to the tribal and terr itories supplementary rule Navajo Mine and FCPP has been burning bituminous coal instead of su b-bituminous resulting in higher output of carbon pollution; FCPP leaking emissions before rel easing from the stacks; bad emissions data.309

4.4.3 Calculation

Section 4.4.3 covers public comments related to the calculation of the proposed emission goals.

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: General recommendations to goal calculation

Response 1: See Section V of the preamble for a discussion of B SER and building blocks.

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

Commenters stated for the definition of state-level goals, considerations should include:

-Reducing the fossil fuel by heat rate improvements (lbs./MWh))

-Reallocating the generation and rate for each fuel due to increased NGCC dispatch to include what % capacity factor level.

Commenters stated, the draft rule builds on the tra nsition to cleaner energy that is already happening. Commenters said, over 178 coal power pla nts are slated for retirement. Commenters said, the trend of coal power plant retirement decr eased carbon pollution significantly ahead of the 2012 baseline year. Commenters said, with low r enewable energy prices, this trend will likely continue, and the final rule should further incorporate this trend in the BSER and within state implementation plans.

Comment 2: General disapproval of goal calculation

Response 2: See Section IV of the preamble for a discussion on legal authority and section V of the preamble for our final BSER determination.

In regards to BB3 and BB4 treatment, the EPA agrees that BB3 should be treated more analogous to BB2 and has incorporated that change i nto the final CPP rule as explained in Sections V and VI of the preamble. BB4 and nuclear generation are not included as part of BSER as explained in Section V of the preamble.

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

Commenters stated EPA lacks authority to regulate e xisting power plants under section 111(d) of the CAA; EPA also may not consider beyond-the-fence measures in determining BSER and setting the state emission targets. The commenters said although these flaws alone require the withdrawal of the CPP, there are additional technic al and legal problems with each of the310

Building Blocks that EPA has proposed to use in set ting state CO2 emissions targets. The commenters said these problems include faulty Build ing Block assumptions and major inconsistencies in the application of those assumpt ions in setting the goals among the states; as a result, in addition to being illegal from a statuto ry perspective, EPA's proposed approach to setting state goals is also arbitrary, capricious, and unreasonable and therefore provides further compelling grounds for EPA withdrawal of the propos ed rule.

Commenters stated the BSER and goal-setting formula should be modified.

Commenters stated EPA bases its proposal on flawed information and assumptions for the four building blocks that are used to calculate each sta te's emissions target.

Comment 3: Data errors in goal calculation

Response 3: See Appendix 1 for the unit-level 2012 data used in the final CPP rule. This data reflects capacity changes for Mankato Energy, Puebl o Airport facility is shown to only be counted once at 200 MW. Ninemile Point and Morgan City Power units mentioned are included

as under construction. Corrections were made to se veral facilities, including Washington Parish and Perryville, based on comment.

Based on comments, the EPA has re-categorized units that commenced operation in 2012 as “under construction” and assumed an annual generati on value for them reflective of typical operation of new units in that technology class. M oreover, we also reviewed under construction sources – adding and removing some units from its i nventory based on comments and a further

review of EIA data.

The EPA revised our assumptions for Cape Canaveral based on comments – it is flagged as an under construction unit and has a generation value applied to it reflective of a full year of operation for units of that technology class. The E PA applies this assumption to the state-level data as explained in Section VI.

Hansel was not removed from the baseline as the EPA relied on 2012 data as a representative year. As explained in the CO2 Emission Performance Rate and Goal Computation TSD for final CPP, the EPA chose to use a historical year data se t instead of a projected year data set that forecasted different generation levels based on ret irements. A significant number of commenters supported the EPA not factoring in announced retire ments to its baseline.

In regards to Cane Island, the EPA’s apportionment methodology is described in the CO2 Emission Performance Rate and Goal Computation TSD for final CPP. The EPA agrees with the commenters’ note that this does not affect system-w ide levels, and therefore does not affect the EPA’s quantification of BSER311

In regards to Mankato Energy Center, EPA relies on net summertime capacity in this final rule for quantifying building block two. This appears t o address the concern raised by commenters as the summertime capacity is significantly lower than nameplate.

The EPA reviewed technical corrections submitted by Colorado EGUs and made changes where appropriate.

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

Commenters said there are data errors in EPA's goal calculation methodology

.

Commenters identified one case where EPA used gener ation data for only two months when the plant actually had operated for 11 months.

Commenters identified another case where EPA attrib uted emissions from a co-located steam

unit to an NGCC.

Commenters stated EPA also included non-NGCC units and other non-affected sources in its analysis.

Commenters stated that Arizona's Department of Envi ronmental Quality (DEQ) already has

informed EPA that the state will not be able to rel y on fuel switching to meet its 2020 interim goal because there is no available NGCC capacity in the summer months, which will hamper its ability to meet the 2030 target.

Commenters stated that Louisiana's environmental re gulator has noted concern about EPA's data regarding NGCCs in the state, such as the inclusion of a plant that has not even been permitted.

Commenters stated that Alabama's environmental regu lator also has expressed concern about the EPA's general approach to reducing emissions from e xisting sources.

Commenters stated EPA has applied its BSER Building Blocks to sources that cannot be regulated under section 111(d) and that EPA's error would force affected NGCC units to operate at capacity factors significantly above 70 percent in order to accommodate the expected generation that states cannot require from non-affe cted EGUs.

Commenters added Colorado encourages EPA to review technical corrections submitted by Colorado EGUs, including Black Hills Energy and Pub lic Service Company of Colorado; it appears that several units may have erroneously bee n included or excluded within the proposed
rule.

Commenters found numerous instances of incorrect da ta and assumptions; the

commenters submitted that the errors in EPA's model ing and analysis are further proof that states312

are in the best position to oversee utility resourc e planning. The commenters requested
the technical flaws be remedied in the final rule.

Commenters stated in the Goal Computation Technical Support Document, EPA states that all

NGCC units under construction that were included in Building Block 2 were obtained from NEEDS v.5.13; the NEEDS spreadsheet includes a NGCC with the description, ""WEC_LADW_CA_Combined Cycle"" with capacity of 560 MW with an on-line year of 2015. The commenters said LADWP's Scattergood 3 repowerin g project will consist of the following permitted generating capacities: a NGCC (318.3 MW) and two simple cycle turbines (103 MW each) with an on-line year of 2015.

Commenters stated the EPA has misapplied the data a vailable; for Cane Island, the station-wide analysis may be appropriate, however, the net gener ation from each of the three NGCC on-site were apportioned based on nameplate capacity alone - giving each the same capacity factor. The commenters said this is not appropriate as the two largest of the three NGCC were operated significantly more hours than the other (6,590 and 5,408 hours for the newer NGCC, and only 1,966 hours for the oldest NGCC). The commenters sa id for Cape Canaveral, the EPA included this plant in all existing NGCC analysis (including lowering the achieved state-capacity factor) even though the facility had yet to begin operation in 2012; instead it should be treated as an "Under Construction NGCC Capacity" so as to not pen alize the redispatching calculation under Building Block 2. The commenters said EPA included the Hansel plant, again penalizing the redispatching calculation, even though this station was permanently shutdown in 2012 (more discussion on this plant later in this letter).

Commenters stated the consequences of EPA's overrea ch are compounded by the technical errors and fundamentally flawed assumptions embedded in EP A's emission rate goal calculations. The

commenters said EPA failed to consider constraints on (1) EGUs' abilities to achieve and sustain heat rate improvements, (2) redispatch from existin g coal-fired EGUs to natural gas combined cycle units (NGCC), and (3) exponentially increasin g investments in renewable generation and energy efficiency measures. The commenters said the resulting rate goals are arbitrary and capricious and, as a practical matter, so stringent that they cannot be met without jeopardizing the reliability and stability of the electric grid. The commenters encourages EPA to amend the Proposed Rule based on emission reductions to measu res that can be undertaken at affected sources and allow states to comply through a portfo lio of measures; failing this, it is imperative that EPA make changes to the Proposed Rule to addre ss the most severe consequences of the
rule.

Commenters stated in the TSD- GHG Abatement Measure s (Table 4-5), EPA states that the Annual Regional RE Growth Factor for the Southeast is 13%; however, in the spreadsheet "20140602tsd-proposedre- approach.xlsx", EPA used 1 3.4%. The commenters are requesting that EPA's recalculation of the "Annual Regional Gr owth Factor'' correction is applied consistently in the final rule making.313

Commenters stated In Table 4-8 of the TSD-GHG Abate ment Measures, the interim target for NC is given as 7%; however from the spreadsheets th e value should be 6.4%.

Commenters stated throughout the CPP, EPA makes cal culation errors that directly impact the proposed goals; for example, substantially more nat ural gas generation will be required to meet the CPP's goals than EPA estimates. The commenters said EPA's calculations assume a 400 TWh/year shift to existing NGCC generation from coa l (376 TWh/year) and older oil-gas steam (64 TWh/year) units; EPA estimates that the NGCC ma rket will increase from 29 percent of the country's energy in 2013 to 33-34 percent of the na tion's energy from 2020-2030. The commenters said for NGCC to be 35 percent of the co untry's total energy in 2020, 39 percent in 2030 and 49 percent 2040, an additional 400-450 TWh /year NGCC generation will be required.

The commenters said with these miscalculations unde restimating needed NGCC, EPA's CPP also underestimates the necessary substantial inves tment in NGCC.

Commenters stated that they believe EPA should corr ect unit level NGCC inaccuracies. The

commenters stated that "in Colorado the Brush 1-3 " GT2" unit was erroneously included while the Brush 4 "GT4" and "GT5" units erroneously exclu ded." This would result in a net increase in NGCC capacity of 25MW. Commenters also stated that for Colorado, EPA may have made a mistake and that there may be a duplicate entry for the Pueblo Airport facility which was included both as an existing and "under constructio n" unit. The Pueblo Airport facility with

200MW was online in 2012. Commenters also believed that the capacity of the Mankato Energy Center in Minnesota was overstated by 230MW because the net summer dependable capacity recorded by the EIA is only 300MW since a second CT is planned for 2018 and not yet built.

Commenters supported comments by LDEQ on several da ta errors that impact the rate-base

calculation for Louisiana. Commenters stated that E PA excluded two NGCC units that are

"under construction" at Ninemile Point Electric Gen erating Plant which would add 559 MW of net summer capacity and a new NGCC unit at the Morg an City Power Plant which would add 64.5MW of net summer capacity. Commenters also said that in EPA's Block 2A calculations a 655 MW capacity NGCC unit at the Washington Parish Energy Center that is listed as "under

construction" should be removed. Commenters also sa id that 4 units at Entergy Gulf States

Louisiana should be removed since 3 are boilers and one does not meet the EGU definition. Commenters further stated that Unit 2-1 at Perryvil le Power Station is a simple cycle and should

not be included. Commenters included a table that s howed the impact of these corrections and said that Louisiana's baseline emissions rate chang es from 883 lbs/MWh to 981 lbs/MWh

Comment 4: Need more detailed explanation of calculations

Response 4: The EPA did not propose or finalize a BSER that require s reductions from other regulatory initiatives. The EPA does base BSER of a n inventory of likely affected units that reflect, indirectly, the power grid and its respons e to those policies by that point in time. Although expected CO2 reductions occurring as a res ult of other regulatory programs are not part of BSER, to the extent that they occur, they r epresent on-the-way reductions that will help314

sources/states meet their CPP compliance obligation s and possible serve as a substitute mitigation measures for other reduction alternative s.

The EPA took comment on whether to use a historical baseline or a projected baseline, and received significant comment in favor a historical baseline. The EPA believes that existing programs already in place expected to deliver post 2012 reductions will make the CPP targets more feasible, not less.

Page 25 and 26 of the Proposed Goal Computation TSD provide a value in column C with existing fossil sources, existing RE sources, and e xisting at-risk nuclear. This was intended to give stakeholders a sense of the state-level starti ng position relevant to their final goal. The data for this rate is found in the Proposed Appendix 1 t o the Goal Computation TSD. This TSD (available online and in the docket) has the existi ng fossil sources provided in column B through

I. The relevant at-risk nuclear data is available in column T (For GA, SC, and TN the under

construction nuclear MWh need to be deducted from t hese totals to get at-risk nuclear values. The existing RE values are in a different spreadshe et available on the website and in the docket titled Data File: Proposed Renewable Energy (RE) Ap proach. Although the EPA disagrees with

the commenters’ assertions that these values were n ot available at proposal, it also points out that these metrics are not germane to the final CPP rule quantification of BSER as explained in Section V of the final rule preamble.

All underlying data necessary to recreate the subca tegory-specific performance rates and the state goals is available in the CO2 Emission Perfor mance Rate and Goal Computation TSD for

CPP Final Rule.

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

Commenters stated with regard to calculating EE for Building Block 4, the commenters requested that U.S. EPA provide a more d etailed explanation of its calculations. The commenters said some states calculate energy effici encies differently than others and in order for each state to get equal credit for various energy e fficiency measures; a standard methodology needs to be set by U.S. EPA. The commenters said fo r instance, the same LED light bulb replacement is credited differently under Michigan' s RPS than under Indiana's renewable portfolio goal. The commenters said U.S. EPA should release a standard for calculating various energy efficiencies prior to the implementation of the rule in order to ensure that each measure is

calculated in a fair and consistent manner. The com menters also requested that U.S. EPA provide detailed spreadsheets that contain formulas, rather than hard numbers, in order for states to have the opportunity to understand just how the EE calcu lations would work going forward, particularly for the calculations used in Building Blocks 3 and 4.

Commenters stated EPA's repeated refusal to answer basic questions about how it formulated the highly technical state BSERs and reduction goals is deeply concerning. The commenters said on June 30, 2014, the news website Climate Central pub lished an article by journalist Bobby Magill entitled "Basis for EPA Clean Power Plan Cuts a 'My stery'". The commenters said the article contained many disturbing revelations, including:315

-"How the U.S. Environmental Protection Agency reac hed the Clean Power Plan's CO2 emissions reduction goal for each state is somewhat mysterious, experts say, with answers buried in a complex formula that doesn't clearly detail wh y each state would have to slash its carbon dioxide emissions to a certain level under the plan ."

-"EPA officials did not answer questions about how the agency arrived at each state's CO2 emissions reduction goal. EPA Media Relations Direc tor George Hull told Climate Central that EPA officials and scientists can speak to journalis ts about technical details of the plan only on 'background,' a practice of providing information t hat cannot be quoted directly or attributed to a specific source."

-"To explain how different states wound up with dif ferent targets, I think it's a little bit of a mystery," said Doug Vine, senior energy fellow with the Center for Climate and Energy
Solutions. Disclose more information on how the sta te-level emission goals were created.

Commenters asked if on pages 25 and 26 of the "Tech nical Support Document: Goal Computation" could EPA explain and provide the data for how column C (2012 Fossil, RE, NuclearAR) was calculated; the commenters are tryin g to create the table in Appendix 5 using the "Technical Support Document: Goal Computation - Appendix 1 and 2" (XLSX) file but

are unable to calculate column C.

Commenters stated EPA states that measures put into place before 2012 have been factored into each state's goal, but EPA's methodology is not tra nsparent. The commenters said EPA appears to rationalize this approach by explaining that the building block emission rate values set forth in the proposal "are purely illustrative and meant to assist in the understanding of the state goals." The commenters said although EPA explains that the values are meant to be illustrative rather than prescriptive, it relies on those same values f or determining state goals; moreover, the 2012 rates EPA relies on in the proposal in many cases n o longer reflect current rates or emission
reductions that will result in the near future due to existing programs or measures.

Commenters stated EPA's proposed state goals should consider factors similar to those it analyzed in determining the economic impact of the proposed rules. The commenters said the base case for EPA's regulatory impact analysis (whi ch uses the Integrated Planning Model ("IPM")) considers state rules that have been final ized and/or approved by a state's legislature or environmental agencies, as well as final federal ru les. The commenters said the model includes the CAIR and MATS, and other state and federal regu lations that contain measures, permits, or other air-related limitations or requirements; addi tional legally binding and enforceable commitments for GHG reductions, as well as energy e fficiency and renewable portfolio standard policies considered in the base case are discussed in the documentation for IPM. The commenters said these state and federal programs an d policies are factored into the cost assumptions of the rule, but do not appear to be fa ctored into each state's goal computation; carbon reductions achieved pursuant to such program s, plans and policies should be taken into account and counted towards each state's goal.316

Comment 5: Inconsistency in calculation of emissions

Response 5: Using the best data available, exact matches betwe en units and generators were not able to be determined. EPA followed the methodology described in Appendix 9 of the CO2 Emission Performance Rate and Goal Computations Tec hnical Support Document for CPP Final Rule. The generator level net generation values we re extracted from EIA-923 and the Part 75 reported emissions from Units 8 and 9 were apportio ned to generators 7, 8, 8A, and 9 using net generation. If apportionment results in unit-level discrepancies, most discrepancies will cancel out at the facility and statewide levels, and any r emaining discrepancies will be negligible. For the Muscatine Plant #1, if the generator 7 emission s were redistributed to generators 8, 8A, and 9, the resulting increase to the state coal steam e mission rate is insignificant (less than 0.1%).

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

Commenters stated the calculated values for MP&W Un its 7, 8, 8A, and 9 in the "Data File: 2012 Unit Level Data Using the EGRID Methodology" ( 2012 Unit Level Spreadsheet) are inconsistent with the methods presented in the "Des cription of 2012 Unit Level Data using the EGRID Methodology". The commenters said MP&W staff discussions with EPA's staff indicate that "ratios" were used to apportion CO2 reported f rom CAMD for Unit 8 and Unit 9, according to the proportion of net generation relative to tot al generation reported for all the units on EIA Form 923. The commenters said this approach does no t match the above referenced method and does not accurately reflect the CO2 emissions from covered MP&W EGUs. The commenters added, it arbitrarily assigns an emission value use d for State goals to Unit 7, which is not a covered unit under the proposed rule. The commenter s requested that EPA clarify the actual

method and associated rationale used for calculatio n of CO2 for MP&W EGUs. The commenters stated they understand that EPA consider s the calculated emission values to be an "exercise" used to develop State goals but, because EPA uses these calculated emission values from the "exercise"" to quantify state goals, the n umbers need to be reliable and accurate as the data will be relied upon when states move forward w ith plan design.

Comment 6: Credit for early coal retirements; don't penalize

Response 6: The EPA did not include announced retirements occurring post 2012 in its baseline. Therefore, the emission reductions (and correspondi ng changes in emission rates) will be incremental to the baseline and help sources/states move towards compliance. Section VIII of the preamble explains how sources can incorporate C O2 reduction measures into state plans.

Both the change to quantifying the Best System of E mission Reductions described in section V and VI of the preamble along with the adjustment to the first year of the interim period should address commenters concern regarding Boardman.

The following are summaries of the specific public comments under this comment:317

Commenters requested that EPA clarify how affected coal-fired facilities retired before the compliance period (pre-2020) will be treated in the compliance calculation. The commenters stated it is important that coal-fired facilities r etired in 2015-2020 do not simply disappear from the equation, but are treated as an emissions reduc tion for the purposes of state compliance; and that states will get credit for early coal retireme nts. The commenters said Minnesota has already been on a path of early coal-fired plant retirement s through its IRP Process and have a list of coal-fired affected facilities under 111(d) that ha ve retirement dates:

-Minnesota Power, Laskin Unit l (2015)

-Minnesota Power, Laskin Unit 2 (2015)

-Minnesota Power, Taconite Harbor Unit 3 (2015)

-Otter Tail Power, Hoot Lake Plant Unit 2 (2020)

-Otter Tail Power, Hoot Lake Plant Unit 3 (2020)

-Xcel Energy, Black Dog Unit 3 (2015)

-Xcel Energy, Black Dog Unit 4 (2015)

Commenters stated that according to EPA's technical support documents, Xcel Energy's Black Dog units 3 and 4 units generated approximately 2,6 80,500 MWh's in 2012; these two units will be retired in April 2015. The commenters requested EPA clarify: ( 1) whether this retirement will be treated as a reduction from 2,680,500 MWh' s to zero for the purposes of 111(d) compliance; or (2) whether the Final Goal will calculate the ca rbon intensity of only those affected units remaining in operation during the 2020-2030 complia nce period.

Commenters stated PGE, state regulators and a group of diverse stakeholders agreed to an innovative plan in 2010 to cease coal use by Decemb er 31, 2020 at Oregon's only coal-fired EGU (Boardman 2020 Plan); the Boardman Plant was no t scheduled to cease operations until at least 2040, so the plan would retire Boardman at le ast twenty years before this would otherwise be expected to occur. The commenters said as propos ed, the Clean Power Plan would penalize Oregon for the timeline of that plan, which was dev eloped through careful analysis and dialogue with stakeholders and the Boardman community (where the plant is the largest local employer and property taxpayer) entirely prior to the releas e of EPA's proposal. The commenters said despite the fact that EPA approved the Boardman 202 0 Plan, the Clean Power Plan's application of the BSER to Oregon creates an unreasonably strin gent interim goal, due to the assumption that Boardman ceases burning coal one year before the cu rrent schedule. The commenters said EPA should amend the Clean Power Plan to avoid penalizi ng Oregon for developing and implementing a plan to end coal-burning at Boardman twenty years ahead of schedule with no knowledge of EPA's timeline.318

Commenters stated under the EPA's proposal, North C arolina will reportedly be required to reduce the CO2 emissions rate of its electric gener ation fleet by 40%. The commenters said the EPA's proposed rules are arbitrary and unfair to st ates like North Carolina who were early adopters for lowering power plant emissions and hav e made subsequent emission reduction investments. The commenters said in 2002, North Car olina enacted The Clean Smokestacks Act in which electric utilities were required to dramat ically lower power plant emissions. The commenters supported the use of a multi-year baseli ne that gives more credit to states that have already been implementing significant emission redu ctions over the past five years. The commenters said in recent years, Duke has invested $9 billion in five new power plants and those new plants have offset 3,400 MW of older coal units that were retired at the end of 2013. The commenters believed that the remaining useful life of a state's generation assets should be given consideration in establishing goals for states. The commenters said because generation

investment decisions were made and rates were estab lished upon reliance that such asset would operate through its useful life, any proposal that would force closure of generation plant before its useful life is reached places an unjust rate bu rden on consumers. The commenters said it is patently unfair that the EPA does not take the afor ementioned measures into consideration; thus will penalize North Carolina's utilities and ultima tely ratepayers throughout the State. The commenters said the EPA's proposed standards will b e harder to achieve and impossible to do without significant economic harm to North Carolina and other states across the United States.

Comment 7: The credit for the retirement of existing fossil-fi red generating units should be
substantial.

Response 7: Section VIII of the preamble provides details on in corporating CO2 emission reductions into state plans. The EPA has provided s tates more alternative metrics in this final rule such as a mass based state goal. If states/so urces feel that one measure better captures reductions through retirements, they have the flexi bility to use that metric for compliance demonstration purposes.

The EPA believes that the flexibility provided for states to craft plans that are appropriate for their circumstances and emission reduction strategi es fully recognizes the role that retirement of affected EGUs can play. Under a rate-based plan, re tirement of a higher-emitting affected EGU will reduce the weighted average CO 2 emission rate of the remaining fleet of affected E GUs, helping a state to achieve its rate-based CO 2 emission goal. States also have the alternative of implementing a mass-based plan, where retirement of an affected EGU will help a state meet its

mass-based CO 2 emission goal. In both cases, retirement of an aff ected EGU is a compliance option for the owner or operator of an affected EGU , as a retired affected EGU will have no compliance obligation under either a rate-based or mass-based CO 2 emission standard. State p lan approaches, and the different types of emission red uction measures that they accommodate, are discussed in section VIII of the preamble to the fi nal rule.

The following are summaries of the specific public comments under this comment:319

Commenters stated the proposed rule allows for stat es to demonstrate compliance with the state goals through either a rate-based or a mass-based a pproach; one difference between these two approaches is the way in which retired units are tr eated. The commenters said under a massbased approach, if future EGU retirements are not k nown, firm, or required, they likely would

not be considered when the state converts to a mass -based goal; in this case, the state receives a significant credit for reducing the mass emissions from the retired unit (assuming the retirement was not considered during the rate-based to mass-ba sed conversion process). The commenters said under a rate-based approach, because the retir ement reduces both emissions and generation in the state, the credit for reducing the CO2 emiss ions is minimal.

Commenters said because the proposed rule aims to r educe CO2 emissions and retiring older EGUs is one of the most significant ways to achieve this, the credit for retirements should be substantial regardless of whether the state elects to go with a rate-based or a mass-based approach. The commenters suggested that EPA develop a method to credit EGU retirements under a rate-based approach, or include flexibility for states to develop such a method for determining compliance with the goals. The commente rs said one approach is to allow states to treat retired EGU generation similarly to the way t hat renewable energy is treated; under this approach, the historical generation from the retire d EGU would remain in the denominator when determining compliance with the state goal after th e unit is retired. The commenters said an alternative approaches include: 1) allowing a perce ntage of the historical generation from retired units to remain in the denominator or 2) keeping hi storical generation in the denominator but reducing it by a percentage each year.

Commenters added despite the CAA granting states ex plicit authority to do so, EPA's proposal unlawfully prohibits states from considering remain ing useful life and other factors on a case-bycase basis to adjust standards of performance for e xisting sources; for example, EPA fails to appropriately account for, at a minimum, the more t han 70,000 MW worth of facilities that either have already been retired (i.e., since the 2012 bas eline), or have already been scheduled for retirement prior to the interim compliance period ( e.g., due to inability to comply with other EPA rules like MATS), or may be scheduled to retire dur ing the interim compliance period or shortly

thereafter. The commenters said the EPA's November 13, 2014 notice providing additional information regarding the conversion of emission ra te-based CO2 state targets to mass-based equivalents states is unlawful and severely distort ed by EPA's failure to exclude capacity with limited remaining useful life. The commenters said while it is certain that EPA has no authority to set statewide emission caps under 111(d), it is even more certain that EPA cannot approve state caps that are based on a methodology that fai ls to exclude, at a minimum, all of the aforementioned 70,000 plus MW of units either alrea dy retired (since 2012) or scheduled to be retired. The commenters said by failing to exclude these units, EPA impermissibly has inflated the number of covered units and is requiring a sign ificantly higher total amount of statewide emission reductions than are allowable under 111(d)

.

Commenters believed the rule will not properly cred it coal plant retirements that are not replaced with new generation under a rate based compliance p rogram. The commenters said it is assumed320

that under a rate based program both the emissions of CO2 and the megawatt hours generated from the retired coal plants are removed from the e mission rate calculation when determining compliance. The commenters said this approach does not properly reflect the emission reduction gained, because it produces only a minor reduction in the overall emission rate. The commenters said in order to properly reflect the benefits of c oal plant retirements, these units should be treated as zero emitting units, whereby the associa ted megawatt hours are left in the denominator, similar to the way energy efficiency i s treated in the rule.

Comment 8: Retirement assumption errors

Response 8: The EPA IPM model is not used directly in quantifyi ng the Best System of Emission Reductions. It is a least-cost linear pro gramming model that EPA relies on for state, region, and system-level impacts assessments. It d oes contain unit-level “parsed” files as an illustrative example of how the power sector may co mply with CPP. While unit-level projections and real world compliance strategies ca n and will differ, this does not impact the EPA’s assessment as the single unit-level projectio ns and differences are not central to the EPA’s projection of system-wide impacts.

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

Commenters stated EPA has made assumptions on unit retirements that do not align with the commenters' current plans. The commenters said EPA has assumed a retirement year of 2016 for Hopkins Unit 1, a boiler and steam turbine that run s primarily on natural gas; the unit is committed to operate until 2020.

Comment 9: Retired voltage support

Response 9: See the Resource Adequacy and Reliability Analysis TSD for CPP Final Rule

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

Commenters stated when EGUs are retired the remaini ng units are necessary to provide voltage support. The commenters said EPA should account for the generation of the volt-ampere reactive power when determining the state-specific goals by subtracting this generation from the goal computation. The commenters added EPA should accoun t for emissions from generating units that will be required to operate because of the tra nsmission constraints by implementing a "safety valve" mechanism, which would deduct the associated emissions generated during must-run
conditions from the units' annual emission levels.

Comment 10: Construction never completed/units don't exist321

Response 10: The EPA agrees, Washington Parish has been removed from its quantification of BSER and is no longer considered a likely affected units in its baseline (see Appendix 1 – CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule).

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

Commenters stated Washington Parish Energy Center w as first permitted on June 25, 2000; however, construction of the facility was never com pleted. The commenters said on June 19, 2009, at the request of Calpine Corporation, LDEQ w ithdrew the facility's application for a Title V renewal, effectively rendering the existing permi ts for the facility null and void. The commenters said the facility remains unpermitted as of today; therefore, Washington Parish Energy Center should be removed from EPA's computat ions.

Commenters stated in calculating state goals and th e related existing NGCC capacity, EPA included NGCC units that do not currently exist, un its that have not yet been fully developed, and units that may never be completed. The commente rs said EPA should revise their calculations to accurately demonstrate generation c apacity that is currently available.

Comment 11: The EPA's treatment of "under construction" units in the goal calculations should

be revised.

Response 11: The EPA agrees with the commenters’ assertions that is should review its inventory of under construction units for the final CPP rule. Based on comment, the EPA has reviewed the inventory using commenters’ data (inco rporating many of the below comments), EIA data, and NEEDs data and internet search of pub lic statements on units. Per the commenters’ suggestion, it has also identified coal steam units that are under construction and reclassified all units that commenced operation in 2012 as under construction. Appendix 2 of the CO2 Emission Performance Rate and Goal Computation TSD provides a list of units that the EPA considered under construction for purposes of q uantifying BSER. The EPA recognizes that these are only likely affected units, and that thei r status may change pending follow through with construction completion and/or applicability determ inations. Section VII of the preamble discuss potential changes to state goals resulting from inv entory changes. However, the EPA believes that by relying on comments and utility-reported da ta to EIA, that it has a representative inventory of likely affected units and potential un it-level reclassifications would not result in a bias to its subcategory rates or state goals.

EPA used best available data for which it could app ly consistently to the inventory of units. EIA 860 data and status codes reported in the 2012 file allowed EPA to incorporate an objective collection of unit status as reported by the source s themselves. Commenters suggested EPA may be missing more than twenty under construction sour ces by ignoring this data. EPA also examined commercial operation dates, scheduled mont h/year of start/operation, and information on construction start dates to further verify consi stency with the reported EIA data. EPA also examined websites and news articles further verifyi ng construction start. EPA recognizes that322

sources could potentially be cancelled, but we risk ed understating a state’s mass goal if we did not include units that were reporting as under cons truction and likely affected by 111(d). Therefore, EPA felt that it was necessary to includ e these sources in the inventory.

EPA believes this reflects an objective assessment of the inventory using best available data. It does not constitute “cherry picking” as described b y commenters. Assuming that the BAU generation from these sources does not replace any operating 2012 generation levels from existing sources is an additional conservative meas ure.

Per commenters’ suggestion, Dan River, Lee Combined Cycle, and Deer Creek units (along with others) have been reclassified to under constructio n units based since they commenced operation

in 2012. This is further discussed in Preamble sec tion VI. Watts Bar is no longer factored into the quantification of BSER, and does not impact Ten nessee’s state goal. Dresden is counted once in the calculation of subcategory-specific emi ssion performance rates and state goals. The

EPA did continue to include units like Hansel in it s Baseline that are scheduled for retirements. We did not selectively removed units that operated in 2012, but at some subsequent point retired

or are scheduled to retire. The EPA relies on 2012 as a representative historical baseline year, not a future inventory of units expected to be onli ne in a compliance year. Moreover, we analyzed the impact of removing the four NGCC units identified as scheduled for retirement and determined that it has an insignificant impact of t he subcategory-specific emission performance

rates.

Upon review, the EPA did not consider the Texas Cle an Energy Project would be a likely affected source under 111(d) and it is therefore no t included in the baseline inventory. Among other things, the EPA found the project’s website t o announced construction to begin in summer of 2015 (well after the 1/08/14 cut-off date for 11 1(d) sources). See http://www.texascleanenergyproject.com/project/ as displayed on June 15, 2015. The EPA’s review of the reported status in EIA 860 also sugge sted it was not likely affected.

Per commenter’s suggestion, Kemper is treated as a coal unit in the CPP final rule calculations, but EPA still relies on its unit-specific assumptio ns proposed for anticipated generation and

emission levels.

EPA believes it is appropriate to include all likel y affected EGUs in its baseline. The building block potential from these units will be fully avai lable and representative for the BSER time frame of interest. EPA disagrees with the commente r that it should ignore the likely affected

EGUs that were not commissioned in 2012. EPA’s cut off for its baseline has been 1/08/14 to best reflect all likely affected EGUs.

EPA notes that these baseline adjustments always re sult in an increase in generation for states. This generally carries over to adjusted emissions a s those are a product of the adjusted generation. The one exception on the emissions si de is the state of Georgia. EPA’s treats the Jack McDonough plant (units 5 and 6) “under constru ction –commenced in 2012” based on its reported online year. In this case, the EPA method ology effectively assumes a 55% capacity factor for the unit, only up slightly from its 2012 value. However, for the under construction323

units, EPA uses the state-level average NGCC emissi on rate to estimate their emissions. EPA

believes this is reasonable and conservative as mos t of the more new NGCC units can generally perform at levels equal to or better than the histo rical fleet average. Because the state average NGCC emission rate was slightly lower in this case than that observed in 2012 by the Jack McDonough unit, the net impact of higher generation and a slightly lower rate was slightly reduced emissions in the Georgia baseline relative to the total reported in 2012 (e.g., 0.008 million tons). EPA determined that it was still ap propriate to make the adjustment as the increase in generation assumed from the 55% capacit y factor results in slightly higher mass goal for the state of Georgia. The small negative emissi ons differential has not impact on the state goal.

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

Commenters, stated the treatment of "under construc tion" units in the goal calculations should be

revised.

Commenters added EPA has included NGCC units that a re under construction in its applications of building block 2; those units, however, are "new " sources under Section 111 and cannot be regulated under the existing source rules.

Commenters added in calculating each state's goal, EPA assumes that NGCC units that were under construction in 2012 have available generatin g capacity that may be utilized to displace coal-fired generation under Building Block 2; speci fically, EPA assumes that each NGCC unit under construction will be completed and that it wo uld operate at a 55 percent annual capacity

factor under a "business as usual" scenario in the absence of the proposed emission guidelines. The commenters stated this 55 percent a nnual capacity factor reflects EPA's calculation of the "average performance of NGCCs th at came online in the past 5 years," although EPA did not provide any data analysis to s upport that calculation. The commenters said the Agency claims it "conservatively designated the generation associated with this 55% capacity factor as unavailable for re-dispatch to reduce CO2 (i.e., not qualifying for building block 2), instead, reserving that amount of generation potent ial to meet other system needs presumed to

have motivated the construction" of those units. Th e commenters said accordingly, EPA assumes that an additional 15 percent of the under - constr uction unit's nameplate capacity will remain available for re-dispatch, bringing the unit to an overall annual capacity factor of 70 percent. The commenters added EPA should not rely on generating capacity from "under construction" units when applying Building Block 2 to calculate the pro posed state goals; EPA has no basis to assume what generating capacity will be available f or re-dispatch from NGCC units that had no operating history during or prior to the 2012 basel ine year. The commenters said EPA should exclude "under construction" NGCC units from its ap plication of Building Block 2 for the purposes of calculating state goals; because these units are technically "existing sources" under section 111, however, they would remain subject to appropriate state plan requirements and would count towards compliance with a state's inter im and final goals if they satisfy the relevant applicability criteria.324

Commenters added in setting state goals based on un its that may never be completed, EPA
distorts its assessment of achievable emission redu ctions.

Commenters objects to the inclusion of "under const ruction" NGCC units in the goal setting

calculations. The commenters said these units were not operational in 2012, contributed no CO2 emissions, and produced no electricity; they are cl early not part of the "base year", nor does "under construction" guarantee or even suggest that these units will be operational. The commenters find it very difficult to rationalize wh y under-construction NGCC units were considered in the goal setting, yet coal-fired EGU' s with firm shutdown dates were not credited in any manner. The commenters suggested that the ha nd-picking of some future projects in favor of others is not a consistent approach, and that U. S. EPA should either consider no future project or all future projects, not just those whose inclus ion results in a further lowering of state goals, a s appears to be the case. The commenters believed tha t if units that may or may not be completed can be considered in the goal setting computation, than U.S. EPA must consider past HRI projects, potential and known shutdowns of units (w ith a mechanism to credit the considerable

reduction in CO2 these shutdowns will achieve with respect to the stated goal of achieving a 30% reduction in CO2 from 2005 levels), and potenti al uncertainty in renewable and EE
markets.

Commenters stated EPA should not include NGCC units under construction in the calculation of the state reduction targets, explaining that for pu rposes of BSER and developing the state targets under Building Block 2, the classification of these units with respect to NSPS is irrelevant. Commenters stated, since these units were not opera ting during the baseline year, there is no regulatory or legal requirement for EPA to determin e that future dispatch of these units is BSER

or to include them in the calculation of the state goals. Commenters contended that EPA has no basis to assume what generating capacity will be av ailable for redispatch from NGCC units that had no operating history and no emissions during or prior to the 2012 baseline year, and the inclusion of these units in effect penalizes utilit ies for undertaking these projects whose operation is assumed in the state's baseline even t hough the plants have not yet commenced operation and disadvantages the states and the util ity companies for early actions to reduce the state's emission rate by investments in less carbon -intensive technology. To the extent EPA retains its proposed approach to include NGCC units under construction in the calculation of state goals, commenters remarked, EPA should take i nto account the specific circumstances of these NGCC units to determine the expected extent t o which those units can increase their utilization to displace higher-emitting steam gener ating units. Commenters closed, stating that EPA's assumption that units built for the purpose o f supplying base load generation will run at only 55 percent capacity factor significantly overe stimates the contribution that these units can have in displacing CO2 emissions from existing stea m generating units.

Commenters added the structure of the intensity tar get itself appears to be a means to discount the effects of unit retirements, with no clear guid ance provided to account for the significant mass-reductions already realized; if reduction of a tmospheric CO2 is the aim of this proposal,325

then actions to that end should be fully and fairly credited, even if this credit does not conform to the CO2 intensity targets proposed by U.S. EPA.

Commenters stated EPA should not include NGCC units under construction in the calculation of the state reduction targets, explaining that for pu rposes of BSER and developing the state targets under Building Block 2, the classification of these units with respect to NSPS is irrelevant. Commenters stated, since these units were not opera ting during the baseline year, there is no regulatory or legal requirement for EPA to determin e that future dispatch of these units is BSER

or to include them in the calculation of the state goals. Commenters contended that EPA has no basis to assume what generating capacity will be av ailable for redispatch from NGCC units that had no operating history and no emissions during or prior to the 2012 baseline year, and the inclusion of these units in effect penalizes utilit ies for undertaking these projects whose operation is assumed in the state's baseline even t hough the plants have not yet commenced operation and disadvantages the states and the util ity companies for early actions to reduce the state's emission rate by investments in less carbon -intensive technology. To the extent EPA retains its proposed approach to include NGCC units under construction in the calculation of state goals, commenters remarked, EPA should take i nto account the specific circumstances of these NGCC units to determine the expected extent t o which those units can increase their utilization to displace higher-emitting steam gener ating units. Commenters closed, stating that EPA's assumption that units built for the purpose o f supplying base load generation will run at only 55 percent capacity factor significantly overe stimates the contribution that these units can have in displacing CO2 emissions from existing stea m generating units.

Multiple States

Commenters added EPA has double counted some units in both the existing NGCC capacity and the "under construction" capacity and EPA has ident ified some units as under construction that apparently do not exist. The commenters said in the Goal Computation TSD, EPA indicated that

all NGCC units under construction that were include d in Building Block 2 were obtained from the National Electric Energy Data System (NEEDS v.5 .13); in addition to those NGCC units that are under construction in NEEDS, EPA identified thr ee other NGCC plants and one IGCC plant that were under construction: Dominion Brunswick pl ant (Virginia, 1,358 MW), Cheyenne Generating Station (Wyoming, 220 MW), Cane Run plan t (Kentucky, 640 MW), and the Kemper IGCC plant (Mississippi, 582 MW). The commen ters said EPA is double counting the Dresden Energy Facility, which is an existing unit and can be found in EPA's Plant Level TSD spreadsheet of plants operating in 2012. The commen ters said EPA reports the combined-cycle capacity at Cheyenne to be 220 MW; however, EIA rep orts the facility is to have only 100 MW of combined cycle capacity and four simple-cycle ga s turbines (GTs) that total 120 MW. The commenters said the Kemper IGCC plant should be rem oved from any NGCC under construction calculation because it is a coal plant . The commenters said the fact that many of the

units identified as "under construction" in Califor nia, Colorado, Florida, Mississippi, and North326

Carolina cannot be identified by name suggests that development of those units is uncertain, and that it would be speculative for EPA to include thi s capacity in any goal setting methodology under Building Block 2. The commenters said accordi ng to NEEDS, North Carolina has 2,249 MW under construction, and EPA used this value in i ts Building Block 2; however, in evaluating EIA Form-860 data for North Carolina, the only faci lity that could be found that either was under construction or entered operation after 2012 was th e L.V. Sutton NGCC (622 MW), which entered operation November 2013; this leaves 1,627 MW of unidentifiable generating capacity

"under construction" that EPA has included in calcu lating North Carolina's goals. The commenters said it is possible that this excess "un der construction" capacity may be the result of the Agency double counting the existing Dan River ( nameplate capacity - 691 MW, summer net capacity - 620 MW) and Lee Combined Cycle plants (n ameplate capacity 1,759 MW, summer net capacity 1,540 MW) in its Building Block 2.

Commenters added both the CPV Warren facility in Vi rginia and Cheyenne facility in Wyoming may have incorrect capacity levels assigned to them . The commenters stated according to EIA Form-860, CPV Warren has an expected nameplate capa city of 1,329 MW compared to the NEEDS capacity of 572 MW; the Agency also reports t he combined-cycle capacity at Cheyenne to be 220 MW; however, EIA reports the facility is to have only 100 MW of combined cycle capacity and four gas turbines that total 120 MW.

Commenters added many of the units identified as "u nder construction" in California, Colorado, Florida, Mississippi, and North Carolina cannot be identified by name suggests that development of those units is uncertain, and that it would be s peculative for EPA to rely on those units becoming available for re-dispatch.

Commenters stated in terms of the NGCC capacity tha t EPA classified as "under construction" in the building block two calculations, EPA assumed th at these facilities are being constructed to meet a specific demand that is equivalent to a 55% capacity factor; based on this assumption,
EPA calculated that 15% of this "under construction " capacity would be redispatched under building block two.

Commenters stated EPA determined that nine states h ad NGCC units that were "under

construction" a determination that is incorrect for each of the nine states; for five of these states, the units determined to be "under construction" by EPA represent fictitious "potential" units identified within EPA's NEEDS database and Integrat ed Planning Model. The commenters said NEEDS describes potential units as follows: "Potent ial" units refer to new generating options used in IPM for capacity expansion projections of t he electric industry... whereas potential units are endogenous to the model in the sense that the m odel determines the location and size of all the potential units that end up in the final soluti on for a specific model run.

Commenters stated these "potential" units are nothi ng more that phantom units that do not represent real projects that have been proposed, de signed, permitted, or constructed; to the extent that these "potential" projects come to fruition, t hey would be subject to the new source327

standards under 111(b), not the existing source 111 (d) guidelines; as such, these "potential" units should not be considered in building block two.

Commenters stated for the remaining four states, th e inaccurate inclusion of these units as "under construction" capacity is largely a result of the E PA incorrectly assessing the actual status of these units; for example, the one "under constructi on" facility identified by EPA for Ohio is the Dresden Plant that was actually commissioned in 201 2 and the one "under construction" facility in Kentucky is the Cane Run project, which has yet to receive an air permit and has not yet
commenced construction.

Commenters stated for Virginia, the data source use d by EPA to determine that 1,928 MW of NGCC capacity is "under construction" has not been determined; EPA employed the NEEDS database to determine the under construction capaci ty in other states, but NEEDS lists only 570 MW of capacity related to a plant that has yet to r eceive an air permit or commenced construction. The commenters said a separate review of the 2012 EIA860 report identified 2,801 MW of "proposed" NGCC capacity in Virginia, but onl y 1,472 MW of that capacity represents

units that are known to have commenced construction . The commenters stated EPA identified 220 MW of "under construction" capacity in Wyoming, which is associated with the Cheyenne Prairie Generating Station; this project includes b oth a combined cycle unit and a separate simple cycle unit that together have a nameplate capacity of 220 MW; however, only 100 MW of that capacity is associated with the combined cycle proc ess.

Commenters stated the agency has not recognized oth er proposed NGCC projects that may fall into the under construction category; for example, a review of the spreadsheet tab marked "proposed" in the EIA860 report that has been refer enced by EPA quickly identifies many potential NGCC projects that were simply ignored by EPA in building block two. The commenters said potential NGCC projects have been i dentified for over 20 states, which may
meet the definition of "under construction" as curr ently defined in building block two.

Commenters stated in determining the CO2 emissions associated with the redispatch of "under construction" capacity, EPA used either the average emission rate for existing NGCC units in the state, or a national average if the state did not h ave any existing units. The commenters said based on the significant flaws in how the state ave rage NGCC emission rates were calculated, EPA's approach for determining the future emissions from under construction units is inaccurate and inequitable. The commenters said to highlight t hese differences, consider the emission rates

that were assumed for the NGCC facilities that EPA alleges are "under construction," even though most of these examples are not actual projec ts.

Commenters stated EPA must correct these errors in both the scope of "under construction" units considered and the assumptions for consistently est imating emissions from these units.

Florida (FL)328

Commenters stated in building block 2, EPA not only includes existing NGCC capacity, but NGCC capacity under construction, as elements in se tting a state goal. The commenters added for example in Florida, the Proposed Rule included the Cape Canaveral NGCC (1,295 MW), which did not begin commercial operation until Apri l 2013; the Cape Canaveral NGCC facility should be shifted to units under construction, and based upon EPA's building block 2, only 15 percent of that capacity should be assigned to goal development. Commenters added in Florida, the new construction capacity is incorrect and shou ld include Cape Canaveral (1,210 MW) and Riviera NGCC (1,212 MW), which was expected to ente r operation in June 2014.

Commenters stated EPA did not make any adjustments for plants that have retired since 2012; for example, Kissimmee Utility Authority has retire d the Roy B. Hansel Power Facility. The commenters said the EPA identifies this facility as an included NGCC with a total nameplate capacity of 55.0 MW. The commenters said why 55.0 M W for this unit was included is unknown, as even EPA's data suggests the unit is re tired. The commenters said the Florida DEP modified the facility's Title V Air Operation Permi t No. 097001-011-AV to have already expired as of September 30, 2012; this information was avai lable during EPA's preparation of the proposed rule, and evident in running eGRID and Par t 75 data reports. The commenters said if the EPA is going to use as a key building block red ispatching to existing sources, they must

reevaluate to ensure those sources are still in exi stence prior to suggesting that a state move generation to it and retire other plants that are s till on-line; furthermore, some facilities have physical or permitted operational restrictions (e.g . PSD avoidance limitations). The commenters said the EPA must take into consideration these ope rational constraints on the feasibility of redispatching. As such, the commenters requested th at EPA subtract from the "Under Construction NGCC Capacity" the amount of retired, or to-be-retired existing NGCC units, including unavailable capacity expansions due to pe rmitted operational restrictions, to more accurately identify NGCC availability. The commente rs said form EIA-860 also requires in Line 8 an estimate of whether the generator will be reti red in the next 10 years; these should also be taken into account and subtracted from the nameplat e capacity. The commenters added EPA should remove from the existing NGCC capacity and a dd to the under construction capacity the Cape Canaveral NGCC; this 1,295 MW unit had no oper ation in 2012, as it did not come online until April 24, 2013. The commenters said it should instead be treated as an under construction

NGCC. The commenters said this lowers Florida's exi sting NGCC Capacity from 29,485.1 MW to 28,190.1 MW.

North Carolina (NC)

Commenters added according to NEEDS, North Carolina has 2,249 MW under construction and EPA used this value in its building block 2; howeve r, in evaluating EIA Form-860 data for the state, the only facility that could be found that e ither was under construction or entered operation after 2012 was the L.V. Sutton NGCC (622 MW), which entered operation in November 2013. Commenters added this leaves 1,627 MW of unidentifi able generating capacity "under329

construction" that the Agency has included in calcu lating North Carolina's state goals. The commenters stated in the alternative, this excess " under construction" capacity may be the result of EPA double counting the existing Dan River and L ee Combined Cycle plants (nameplate capacity of 1,759 MW or summer net capacity of 1,54 0 MW) in its building block 2. Commenters added Duke Energy's Dan River NGCC plant started operating in December 2012 and Duke Energy's NGCC Lee facility started reporti ng data in January 2013 but both the Lee and Dan River facilities were assumed by EPA in its North Carolina goal calculations to have been operating for all of 2012. The commenters stat ed these units should more appropriately be

credited as "under construction" units rather than as part of the baseline of fully operational units. The commenters added EPA identified 2,249 MW of new NGCC under construction capacity when in fact only 625 MW of NGCC was under construc tion; that was Duke Energy's Sutton NGCC plant that was under construction but not yet operational by the end of 2012; it began operation in late 2013.

Commenters stated EPA calculates North Carolina's 2 012 under construction NGCC capacity as 2,249 MW; even disregarding the fact that 1,759 MW (H. F. Lee NGCC and Dan River NGCC) of NGCC capacity should be reclassified from existi ng to under construction, EPA's number of 2,249 MW is significantly over-stated. The commente rs said besides those two units, the only non-operational NGCC unit to have received a Certif icate of Public Convenience and Necessity ("CPCN") from the NCUC as of December 31, 2012, was the L. V. Sutton NGCC unit, with a nameplate capacity of 730 MW; no other NGCC capacit y had been identified, no CPCN applications had been filed, and no other filings h ad been made with the NCUC regarding specific NGCC capacity in North Carolina by Decembe r 31, 2012, including the IOUs' annual Integrated Resource Planning documents; thus, no ot her plant could have legally been under

construction at the end of 2012. The commenters sai d EPA has provided no documentation with respect to how it calculated its 2,249 MW under con struction NGCC capacity. It is the commenters' understanding that EPA's IPM modeling p rogram inserted a generic under

construction NGCC unit for North Carolina and that EPA imputed the additional 1,624 MW to North Carolina's calculation despite the fact that no actual construction of such a unit is planned or underway. The commenters said this outcome was e ither the result of invalid inputs or an error within the model and its underlying assumptio ns. The commenters said increasing North Carolina's NGCC under construction value by 1,624 M W when no such unit exists or was planned is arbitrary and erroneous. The commenters said for these reasons, EPA's 2012 calculation for "under construction" NGCC capacity in North Carolina should be corrected to 730 MW. The commenters said after reclassifying the H. F. Lee NGCC capacity and Dan River NGCC capacity from "existing" to "under constructio n," the correct total 2012 "under construction" capacity for North Carolina should be 2,489 MW (nameplate) instead of the EPA's identified 2,249 MW.

Commenters stated Building Block 2 of the EPA's CO2 emission rate goal calculation for North Carolina includes 2,249 MW of NGCC capacity under c onstruction. The commenters had traced this number back to the EPA's NEEDS v5.13 database; this value is in error. The commenters said with the exception of plants entering service late in the baseline year (2012) and early in330

2013, the only NGCC unit in North Carolina that sho uld be considered under construction was the Duke Energy Sutton NGCC plant; this plant was u nder construction in 2012 and came on line

in late 2013. The commenters said there were no oth er NGCC units in North Carolina that meet

the definition the EPA has established for under co nstruction units; that being '...anything that

came on line in 2013 or that was under construction , site prep, or testing by January 8, 2014." The commenters said this is confirmed by a r eview of open construction permits with the NC Department of Environment and Natural Resources. The commenters said the Sutton NGCC plant has a net summer capacity rating of 622 MW; t he EPA should therefore eliminate the erroneous 1,627MW of NGCC under construction capaci ty for North Carolina.

Commenters stated one of Duke Energy's newly constr ucted NGCC facilities in North Carolina entered service very late in 2012 (EPA's selected b aseline year); net generation and CO2 emissions data for the Dan River NGCC facility were first reported to the EPA's Clean Air Markets Division (CAMD) in December 2012; the total 2012 operating time reported to CAMD for the Dan River NGCC facility in 2012 was less th an 10 days. The commenters said the facility appears in the eGRID database for 2012 with net ene rgy output of 135,081 MWh; this translates to an annual capacity factor of 2.4 percent. The co mmenters said despite this exceedingly low capacity factor due entirely to the fact that the f acility was just beginning began operation in late 2012, the EPA took none of this into consideration and treated it as an existing facility for all of 2012; it is not reasonable to treat a facility that was just beginning operation in late 2012 as an existing facility.

Commenters stated the Dan River facility was clearl y more like an under construction facility for 2012 than an existing facility. The commenters reco mmended that for NGCC units that began initial operation in the base year and did not have a capacity factor of at least 55 percent, the

EPA should treat such units as under construction u nits; without such a criterion, a facility with as little as one hour of operation in the base year would be treated as an existing facility. The

commenters did not believe that it was the EPA's in tent to treat a facility like Dan River as an existing facility; treating the Dan River unit as a n existing unit assigns generation for redispatch that is actually needed to meet generation obligati ons from the unit that was not reflected in the very limited partial year data. The commenters said it is clear that under a business-as-usual scenario the Dan River facility was intended to ope rate at least at the 55 percent annual capacity factor the EPA assumed as the baseline capacity fac tor for under construction NGCC facilities.

The commenters believed that the EPA must reclassif y the Dan River facility as an under construction facility for purposes of applying Buil ding Block 2 to the North Carolina goal
calculation.

Commenters stated a second Duke Energy NGCC facilit y located in North Carolina, the Lee NGCC facility, begin operation in January of 2013, yet has been treated as an existing facility by EPA for purposes of applying Building Block 2 to th e North Carolina goal calculation. The commenters said the facility appears in the 2012 eG RID database with zero net generation and emissions; there was also no data reported to CAMD for the Lee (Wayne County) NGCC facility

in 2012. The commenters said it is clear that the E PA erred in treating the Lee NGCC facility as331

an existing facility; the EPA must reclassify the L ee NGCC facility in North Carolina to an under construction facility.

Commenters stated using the summer net capacity rat ings, the North Carolina new NGCC under construction input value should be composed of (1) Sutton NGCC at 622 net MW; (2) Lee NGCC at 920 net MW; and (3) Dan River NGCC at 620 n et MW, for a total of 2,162 net MW; this is very close to the original value of 2,2 49 MW used by the EPA; however, the EPA has effectively double counted this capacity in the North Carolina goal calculation by also including the Dan River and Lee NGCC facilities as existing facilities.

Ohio (OH)

Commenters added the Dresden Energy Facility (Ohio) is an existing unit and can be found in EPA's Plant Level TSD spreadsheet of plants operati ng in 2012. Therefore EPA is double counting this facility.

South Dakota (SD)

Commenters stated in South Dakota, Deer Creek Stati on, the only NGCC plant in the state, was modeled by EPA as operating at a 1 percent capacity factor during 2012; however, Deer Creek

should have been considered "under construction" du ring 2012 because it did not go into commercial operation until late in 2012 and had onl y 190 total run hours for the year. The commenters stated while firing of the Deer Creek un it may have begun in April, it was not commercially operated for the bulk of the year; the 1 percent capacity factor is clearly unrepresentative, and South Dakota was the only sta te that had a less than 10 percent NGCC capacity factor applied in EPA's building block 2 c alculation. The commenters stated EPA's proposed methodology, as currently applied to South Dakota, produces flawed targets that the Agency should adjust. The commenters added applying building block 2 in South Dakota under the proposed methodology results in Big Stone Plant , the state's only coal-fired EGU, having to operate at a 23 percent capacity factor, forcing it to be offline at least half of the year; this also assumes that it is technically feasible for South D akota to re-dispatch resources under building block 2. The commenters stated this assumption is i ncorrect because Deer Creek Station and the Big Stone Plant operate in different RTOs; EPA shou ld recalculate its proposed targets with these plants in their proper categories. Commenters added the one coal-fired plant, Big Stone is owned by Otter Tail Power Company, Montana-Dakota U tility Resources Co., and NorthWestern Energy. The commenters stated Deer Cre ek will be in the SPP as of October 2015, and Big Stone is in MISO; thus, for South Dakota at least, Building Block 2, or any form of redispatch, is not available, because these two plant s have different owners with no contractual relationship, and they are committed and dispatched by two separate entities with unique commitment and dispatch processes. The commenters s aid Building Block 1 is also not an option332

for South Dakota because Big Stone is undergoing a $384 million upgrade to comply with BART Regional Haze Program requirements; the new st ation service required by this upgrade -
estimated to be as much as 8 MW out of 475 MW - wil l cancel out any heat rate improvements that the plant might achieve. (J. Edward Cichanowic z & Michael C. Hein, "Evaluation of Heat Rate Improving Techniques for Coal-Fired Utility Bo ilers as a Response to Section 111(d) Mandates" at 2-7 (Oct. 13, 2014) (Attachment D) ("C ichanowicz Heat Rate Report").

Commenters have concerns about how EPA counted Basi n Electric's combined cycle generation

in South Dakota. The commenters said the Deer Creek station was under construction for the majority of 2012 and went in operation late in the year; it ran just 90 hours; yet EPA assumed this plant had a one percent capacity factor for th e entire year. The commenters said this is highly inaccurate and unfairly penalizes the State of Sout h Dakota in determining that state's emissions target. The commenters said EPA needs to correct So uth Dakota's target to reflect that Deer Creek was under construction during 2012.

Tennessee (TN)

Commenters added in calculating Tennessee's goal, E PA included TVA's Watts Bar Nuclear Unit 2, which is currently under construction; Tenn essee cannot meet its state goal without this unit. The commenters stated because of the many pot ential issues that could delay or otherwise negatively impact the startup and commissioning of nuclear units like this one, EPA should not

include nuclear units under construction in the sta te goal assumptions. The commenters said if the Agency continues to assume completion of nuclea r units in state goals, then it should allow for an off-ramp or other adjustment if nuclear unit s are not completed or do not operate as expected.

Texas (TX)

Commenters stated EPA's list of potentially affecte d EGU facilities appears to omit the Texas Clean Energy Project (TCEP), a 400 MW integrated ga sification combined cycle (IGCC) coalfired power plant that began construction in June 2 012. The commenters said because TCEP began construction before the January 8, 2014 appli cability date, it should be included in the list of affected EGUs, and incorporated into Texas' stat e goal calculation. The commenters said EPA should incorporate this under-construction coal-fir ed facility using reasonable assumptions about how similar facilities operate on the grid at high efficiency levels without the use of carbon capture sequestration technology (CCS). The comment ers said EPA should assume that this new state-of-the-art IGCC facility will operate without CCS at an average 80% capacity factor and at an average emission rate of [1,450 lb. CO2/MWh] bas ed on projected heat levels achievable for the facility. The commenters said any emission redu ctions obtained below this CO2 emission rate at this facility, which is expected to utilize an advanced CCS technology, should also be eligible for compliance credit under the state or f ederal plan. The commenters said as it has done for other under-construction EGUs, EPA should clari fy that the TCEP project is an affected unit for purposes of the proposed rule, and adjust Texas ' state goal accordingly as well as confirm that333

the TCEP project would achieve credit for the CO2 r eductions achieved through the application of CCS technology.

Comment 12: The EPA should include under construction units in goal calculation.

Response 12: The EPA agrees with the commenters that we should inclu de under construction affected EGUs in our BSER quantification for the fi nal CPP (see response 11). We have continued to do so, and a list of units included th at were considered likely affected and under construction can be found in Appendix 2 of the CO2 Emission Performance Rate and Goal Computation Technical Support Document. EPA appreci ates the comment that some of these units are being built specifically to replace fossi l steam sources. EPA discusses in section VI of the preamble the uncertainty in projecting which un it(s) would be offset by this baseline generation. We also acknowledge that some of these units are being built for purposes of replacing existing fossil generation. We have dete rmined that the assumption that 55% of NGCC under construction generation and 60% of coal steam under construction generation will not replace 2012 generation levels is conservative, but reasonable.

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

Commenters supported the inclusion of under constru ction NGCC units in the goal setting calculation; under construction NGCC units will be considered "existing units" because they have commenced construction prior to January 8, 201 4 (the date of the reproposed New Source Performance Standard for EGUs) and the emissions fr om these sources will have to be accounted for in a state's compliance plan under section 111( d).

Commenters stated upon review of EPA's docket, it a ppears that EPA did not include several under construction NGCC units being built in New Je rsey; over the past few years, permits have been issued to three new projects: 1) LS Power's We st Deptford facility, 2) Hess' Newark Energy Center, and 3) CPV's Woodbridge facility. The comme nters said EPA must work with states to ensure all under construction NGCCs are captured.

Commenters added the emission rate for under constr uction NGCC units for the goal setting

calculation should be the New Source Performance St andard (i.e., 1,000 lbs/gross-MWh for large NGCC units); this is because the state-specific ave rage 2012 emission rate for NGCC units may be below the permitted limit for under construction units. The commenters said for example, the average 2012 rate for NGCC units in New Jersey was 889 lbs CO2/MWh. The commenters recently received a permit to construct a new NGCC unit with a 12-month rolling permit limit of 925 lbs CO2/MWh; actual or limited data may not be available for some of the under construction units and the average 2012 rate for NGCC units may be below the permitted limited of the under construction NGCC units; there fore, EPA must use the New Source
Performance Standard for under construction NGCC un its for the goal setting calculation.334

Commenters stated EPA has assumed that under constr uction NGCC plants are being built mostly to meet new electricity demand. The commente rs said assuming those plants operate at 70 percent capacity factor, the agency assumes that a larger portion (a 55 percent capacity factor, meaning 79 percent of a new plant's generation) mee ts new demand, while the remaining 15 percent is available to displace existing fossil; h owever, this overestimates the amount of generation that will be utilized to meet new power demand because many of these plants are being built to replace retiring coal generation dee med uneconomic due to age, lack of pollution controls, and cheaper alternatives.

Commenters stated of the nine states with under con struction NGCC units incorporated into the Building Block 2 target methodology, all except for California have significant planned coal generator retirements scheduled between 2012 and 20 18. The commenters said the total capacity of planned coal retirements in these states outweig hs the capacity of under construction NGCC plants by nearly a factor of 2 to 1 (16,366 MW vs 8 ,938 MW). The commenters said in some case, these under construction NGCC units are being built explicitly to replace the generation from retiring coal plants; for example, the 620 MW NGCC plant that Kentucky Utilities is building at Cane Run will replace the generation fr om coal units the utility is retiring at its Cane Run, Green River, and Tyrone facilities.

Commenters stated while it is difficult to precisel y determine how much generation from new NGCC capacity will go toward displacing retiring co al, it is clear that the EPA's estimate is overly conservative. The commenters recommended rev ersing the EPA's proposed allocation of generation from under construction NGCC units by al locating a capacity factor of 55 percent as available for re-dispatch purposes (and a capacity factor of 15 percent as unavailable), instead of the 15 percent available (versus 55 percent unavail able) that is assumed in the draft proposal.

Comment 13: The EPA should not include units not operating yet in 2012 in the goal

calculation.

Response 13: The EPA has included under construction EGUs in the qua ntification of BSER as they are likely affected EGUs under the 111(d) appl icability requirements. The commenters language on page 109 of comment ending in docket nu mber 24030 suggests that it understands EPA’s intention to only reflect under construction units that were commissioned in 2012. However, EPA’s intent is to identify a baseline of all affected 111(d) sources, which includes any EGUs that commenced construction prior to 1/08/ 14.

The EPA has corrected the generation and emission v alues assumed for Kemper to be consistent with its assumed generation and emission rate.

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

Commenters stated because the Mississippi Power Com pany Kemper County Energy Facility was not yet operating in 2012, EPA assumed an 800 CO2 lb/MWh-net emission rate and335

a 70 percent capacity factor; the operating assumpt ion may present compliance issues. The commenters said the state of Mississippi's interim and final goals are 732 and 692 CO2 lb/MWhnet, respectively, which are less than EPA's emissi on rate assumption of 800 CO2 lb/MWh-net for Kemper County. The commenters said if Kemper Co unty were to operate above EPA's assumed capacity factor of 70 percent, then the sta te of Mississippi's compliance with the proposed guidelines will be made more difficult. Th e commenters hoped that EPA's intent was not to penalize or limit the operation of the natio n's first IGCC facility with carbon capture and storage. The commenters said rather than reward Mis sissippi Power's effort to build and operate a first-of-a-kind, clean power facility, EPA has pr oposed a target more stringent than the country's most state-of-the-art generation technolo gy could achieve and would potentially penalize the facility for operating at capacity fac tors above the assumed 70 percent.

The commenters said Kemper County's generation and emissions are reflected in Mississippi's "other generation" and "other emissions" categories in the goal calculation; using the assumptions provided by EPA, Kemper County's annual generation and emissions should equal 3,568,824 MWh and 2.9 billion CO2 lb; however, EPA' s goal computation worksheet lists 5,836,968 MWh and 4.7 billion CO2 lb as the annual generation and emissions used to calculate Mississippi's state goal. The commenters said it is unclear how these numbers were developed but they should be explained.

Commenters stated in the goal calculations for cert ain states, EPA incorrectly included certain NGCC projects that were not commissioned until afte r 2012 as part of the "existing" NGCC units that were redispatched up to a 70% capacity f actor; in fact, one example was identified for a facility that has not received its air permit or commenced construction, and as such would not be an affected source subject to the proposed secti on 111(d) guidelines. The commenters said

EPA must revise these calculations to exclude such units and to ensure that the existing NGCC units considered have actually been constructed.

Comment 14: The EPA's methodology for accounting for units in partial operation in 2012.

Response 14: The EPA agrees that the calculation for under construct ion NGCC incremental potential merited revisiting. It has done so and c hanged its assumptions for units commencing operation in 2012. See Section VI of the Preamble for more discussion.

The Dresden Energy Plant, Fremont Energy Center, Le e Combined Cycle Plant, and the Dan River facilities have been identified as commencing operation in 2012 and Unit 2 at the Healy plant has been identified as under construction in 2012 (although Alaska and its EGUs are not subject to the final CPP Rule. The Haynes units 11 -16 are not considered likely affected units in the final rule based on revisions to the applicabil ity criteria that make it unlikely that any simplecycle turbines would be subject to the rule.

The following are summaries of the specific public comments under this comment:336

Commenters stated in determining Building Block 2, EPA includes both generation and emissions from NGGC and coal units that entered ope ration in 2012 in its goal setting methodology; many of these units that entered opera tion in 2012 have very low annual capacity factors because they did not operate for a full yea r, resulting in either lower amounts of coalfired generation being reported in the 2012 baselin e or an artificially high amount of NGCC capacity being considered available to be ramped up to displace coal capacity. Commenters provided Table 6, which illustrates those new NGCC facilities that entered commercial operation in 2012, as reported in EIA Form 860, along with th eir 2012 and 2013 generation and capacity factors (CF).

Commenters stated with the exception of two facilit ies (Fremont (OH) and John Sevier (TN)), the capacity factors for these new NGCC facilities all increased between 2012 and 2013; it should be noted that the capacity factor reduction between 2012 and 2013 for John Sevier was attributed to a generator rotor failure on all four generators, as well as a steam system problem on generator four, resulting in a six-month outage.

Commenters added this same trend with regard to cap acity factors also applies to those coal-fired units that entered commercial operation in 2012, wh ich EPA included in its goal calculation for Building Block 2; as can be seen from Table 7, by u sing 2012 generation instead of a full calendar year, EPA is significantly under-reporting how these new coal units will be operating in the future, thereby biasing the state goals in thos e particular states downward.

Commenters believed that U.S. EPA's methodology doe s not appropriately account for units that were not operational for the entirety of 2012 in de termining state-wide capacity factors. The commenters said in the case of Ohio, there were two facilities that were not operational until the end of January 2012; the Dresden Energy Plant did n ot begin operation until January 20, 2012, and the Freemont Energy Center did not begin operat ion until January 31, 2012; thus, the calculated capacity factors for those units, if bas ed on 8,784 hours of operation, do not accurately reflect the operation of those units in 2012. The c ommenters said when partial operation is taken into account and the corrected generation at the Dr esden plant considered, the capacity factor of NGCC units in Ohio is calculated to be ~69%; further more, Ohio EPA believes that the redispatch of NGCC units should be based on this hist oric capacity factor and not historical generation, as historical generation reflects bias concerning units that did not begin operation until after January 1, 2012. The commenters conclud ed that when summer capacities, correct capacity factors, and re-dispatch based on historic al capacity is considered, the anticipated redispatch is nearer to 444,000 MW-h and not the 5,79 3,981 MW-h proposed by U.S. EPA; if order-of-magnitude errors are present in other stat e goals, the commenters would call into question much of U.S. EPA's methodology.

Commenters stated a number of NGCC projects were id entified that could be considered existing 111(d) facilities, but were ignored by EPA in the b uilding block two calculations; these are units that commenced construction after 2012, but before January 8, 2014 - the effective date that the 111(b) standards for new sources were re-proposed b y EPA.337

Commenters added EPA overstates the amount of redis patch available from NGCC units commissioned in 2012 because it does not weigh the commissioning date into its calculation; when calculating redispatch, EPA assum es that all of these units were available to operate throughout 2012 even though some of these u nits were not commissioned until later in the year. The commenters said this assumption means that these new units are calculated to have an artificially low capacity factor, which produces an artificially high amount of NGCC redispatch; the end result is a state emission rate goal that is biased low.

Commenters stated for example, two of the five exis ting NGCC units in Ohio were commissioned in 2012. The commenters provided a tab le that compares baseline capacity factors

for these two facilities if calculated based on the ir in-service date versus EPA's assumption that they were available for the entire year.

Commenters stated in the state goal calculation, EP A uses the following steps to determine the amount of NGCC capacity to be redispatched:

(1) Determine the total net generation from all exi sting NGCC units in 2012

(2) Calculate the "potential" NGCC capacity that co uld be redispatched if the entire NGCC fleet in the state operated at a 70% capacity factor as f ollows: Potential Redispatch Capacity (MWh) = (existing NGCC capacity) * (8784 hours/yr) *70% [th e commenters said note EPA incorrectly uses nameplate capacity in this calculation]

(3) Calculate the amount of NGCC redispatch to be u sed in building block 2 as follows: State NGCC redispatch (MWh) = "Potential" NGCC capacity a t 70% - 2012 NGCC net generation

The commenters said thus, the amount of redispatch that EPA computed for certain states is inflated by the inclusion of the capacity that unit s did not generate (and were not available to generate) prior to being commissioned in 2012; if u nits commissioned during 2012 remain in the calculation of the "existing" category of units, th en the potential redispatch for the existing

NGCC fleet should be derived based on the historic capacity factor, not on the EPA approach of using historic generation. The commenters said usin g the historic capacity factor approach

accounts for the fact that units were commissioned in 2012 and appropriately weighs the inservice date into the redispatch calculation; this calculation would involve the following:

(1) Determine the total net generation from all exi sting NGCC units in 2012

(2) Calculate the potential operating hours for eac h existing NGCC unit in 2012 based on the date that each unit was commissioned Potential oper ating hours for units in-service prior to 2012 = 8,784 hours Potential operating hours for units c ommissioned in 2012 = 8,784 hours - (time prior commissioning)

(3) Calculate the maximum potential 2012 NGCC gener ation for each existing unit: Maximum potential generation = potential operating hours (f rom step 2) * net summer capacity338

(4) Determine the weighted potential net generation from existing NGCC units in 2012

(5) Calculate the weighted 2012 capacity factor for the state NGCC fleet 2012 NGCC capacity factor = 2012 net generation (step 1) / 2012 total potential generation (step 4)

(6) Determine the amount of redispatch as a % capac ity factor: Amount of redispatch (% capacity factor) = 70% capacity factor - 2012 NGCC capacity factor (step 5)

(7) Determine the amount of redispatch in MWh: Amou nt of redispatch (MWh) = redispatch capacity factor (step 6) * net summer capacity * 87 84 hrs.

The commenters said using this approach for the Dre sden and Fremont Plant, along with the correction of other errors noted throughout the com ments would reduce the amount of NGCC redispatch calculated for Ohio from 5,793,981 to 43 9,452 MWh - a 92% reduction from EPA's

calculated amount.

Commenters said consider another example, the H.F. Lee Plant, which is a 920 MW NGCC unit commissioned on December 31, 2012; the unit was ava ilable to operate for only one day in 2012, yet EPA's calculation assumes that the unit was ava ilable for the entire year. The commenters said EPA used the nominal nameplate capacity (1,068 MW) to determine that approximately 6,548,976 MWh (equivalent of a 70% capacity factor) was available to be redispatched from this facility because it would have had a near 0% baseli ne capacity factor in 2012 by EPA's logic. The commenters said these 6,548,976 MWhs represent over 20% of the total redispatch

calculated for the state of North Carolina - even t hough the H.F. Lee plant had not been commissioned until the last day of the year. The co mmenters said the North Carolina goal is made even more unrealistic by the commissioning of another NGCC unit at the Dan River plant on December 10, 2012; if the associated "redispatch " capacity from Dan River is considered as well, then nearly 40% of the redispatch capacity ca lculated for North Carolina was from units that had not been commissioned or available to oper ate for most of the year. The commenters provided other examples of this issue in a table on page 116.

Commenters stated EPA's proposed 111(b) rule for ne w units included a technical support document for combustion turbines that was designed to evaluate potential differences in emission rates due to various unit-specific factors; the eva luation focused on NGCC units that were commissioned from 2000 through 2010; with respect t o new NGCC units that were commissioned after 2010, EPA noted that "Although n ew NGCC units came online in 2011, none are included here as they lacked sufficient da ta to calculate a 12-month rolling average, the basis for determining a standard of performance." T he commenters said EPA should apply this

same rationale and exclude units commissioned in 20 12 from the calculation of existing NGCC units to be redispatched. The commenters said these units could then be separately included in the "under construction" category of units within b uilding block two calculation; at a minimum, EPA must at least revise the state goal calculation s to properly account for the date that new
units were commissioned in 2012.339

Commenters added the Haynes units 11-16 should not be considered existing units as they came online in 2013; in addition, the nameplate capacity of the units is 103 MW each, not 108.2 MW.

Commenters stated any other unit that began commerc ial operation during 2012 will have reported an artificially low capacity factor becaus e it did not accumulate a full year of operating data; therefore, units that came online during 2012 should be classified as "under construction" so that EPA does not assign generation for redispat ch that is needed to meet generation obligations not reflected in the partial year data. Based on the commenters' review of EPA's Goal Computation Technical Support Document Data File, t his change would affect approximately only a dozen units nationwide.

Commenters stated the initial rate-based emission i s derived from 2012 CO2 emissions from Alaska's existing EGUs; emissions from Healy Unit 2 are not considered because the plant was not operational in 2012. The commenters said since Healy 2 would increase the proposed initial fossil fuel rate in lbs/MHh, the initial emission r ate is inaccurately low.

Comment 15: Entered operation during or after 2012 - incorrect state post-redispatch capacity

factors.

Response 15: The EPA has revised building block two calculations to rely on net summertime capacity and treat units that commenced operation i n 2012 as under construction. As described above, to ensure subcategory-specific emission perf ormance rates and state goals that best reflected a representative year’s likely affected u nits – the EPA did continue to include under construction sources in the final rule as they meet the applicability language and do reflect potential generation and emissions. Moreover, as i t relies on 2012 as the basis of its representative year, it does not remove sources tha t are scheduled to retire.

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

Commenters provided Table 8 that illustrates the ef fect that EPA's application of its incorrect state post-redispatch capacity factors have upon th e state generation levels for those NGCC units that entered operation in 2012. The commenters said the column "EPA Post-Redispatch Generation" uses the same approach that EPA employe d in the Building Block 2 calculations (Nameplate Capacity * Post-Redispatch Capacity Fact or = Total Generation); the post-redispatch capacity factors were as follows: (i) California - 49 percent; (ii) Connecticut - 65 percent; (iii) Idaho - 30 percent; (iv) Mississippi - 63 percent; and, (v) Colorado, Georgia, North Carolina, Ohio, South Dakota and Tennessee all 70 percent. Th e commenters said for those states that had post-redispatch capacity factors less than 70 perce nt, this normally represents the NGCC capacity factor that is required to displace all co al-fired generation in that particular state.

The commenters said as Table 8 illustrates, the difference between these new NGCC unit's postredispatch generation and 2012 (partial year operat ion) and 2013 (full year operation) is dramatic340

in some states; more specifically, if one compares the post-redispatch and 2013 generation of these new NGCC units, the new units produced signif icantly higher generation levels during a full year of operation, and in the case of Idaho, G eorgia and North Carolina, exceeded the postredispatch generation levels; therefore, these new NGCC units, which entered operation in 2012 and have only partial year generation levels, shoul d be removed from the Building Block 2 goal calculation as they appear now, because they over-e stimate the amount of available NGCC capacity that would be available in those states to displace coal-fired generation.

The commenters said to correct for this excessive N GCC generation in Building Block 2, EPA should either look at 12 months of operational data or eliminate these units from the goal calculation altogether. The commenters stated for E PA to correct for its underestimation of those state goals in those states that had new coal units enter operation in 2012, the Agency needs to consider a full year of operation.

The commenters stated implications of EPA's methodo logy for Building Block 2 includes excessive NGCC generation in a state's goal calcula tion due to the following:

-EPA use of nameplate capacity;

-EPA including units that did not enter operation i n 2012;

-EPA inclusion of NGCC capacity that has been out-o f-service or has/will be retired;

-and, EPA including low capacity factor NGCC and co al units that entered operation in 2012.

The commenters said this excessive generation artif icially reduces the amount of coal-fired generation included in determining a state's goal; if one corrects for these erroneous calculations and removes this additional gas-fired generation fr om the redispatched NGCC generation level in EPA's methodology, a state's 2030 Final Goal and 20 20-2029 Interim Goal will increase. The commenters said in addition, analysis of other EPA assumptions for Building Block 2 shows that states will not be able to ramp up existing NGCC ca pacity to meet the proposed state goals even if EPA was correct in assuming nameplate capacity r ather than net capacity.

Comment 16: Constructed after 2012 prior 2020

Response 16: See section VIII 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 emission reductions associated wi th natural gas generation units constructed after 2012, including those constructed prior to 20 20, should be included in the calculation of

whether a state has met its interim and final CO2 e mission reduction goals. The commenters341

stated adding new NCGG units to a state's generatio n resource mix is costly and reductions in state CO2 emission rates resulting from constructio n of new natural gas generation units are real.

The commenters concluded reductions from units cons tructed after 2012, but prior to 2020 should not be ignored when calculating whether a state has met its interim and final CO2 emission reduction goals.

Comment 17: Treatment of Merchant NGCC

Response 17: See section V.A. of the final rule preamble of the CPP for the EPA’s response to

this comment and more information about merchant NG CC.

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

Commenters stated the proposed guidelines will requ ire states to mandate in some manner that combined cycle natural gas plants (NGCC) operate at 70% of capacity; while there may be mechanisms existing for a state to require that lev el of operation for a vertically integrated utility

, there appears to be no legal authority to require o peration of a merchant plant if they can meet the emission rates outlined in the proposed guideli nes. The commenters said because utilities with significant coal-fired resources in their port folio are mandated to shift some generation to NGCC, the proposed guidelines will work to create a n unregulated monopoly on electric power from this type of resource which can provide power at premium prices; additionally, even after all this time in crafting this rule EPA still appea rs to miss the most essential details of operation in an RTO market. The commenters said power plants do not operate when their owners decided operate; they operate when they are authorized to o perate by the RTO to maintain adequate supply on the grid. The commenters said under Feder al law RTO's are only authorized to dispatch on an economic basis; in other words, they cannot consider the environmental impact of the emission. The commenters suggested withdraw the rule and reconstruct without requiring use of a shift to NGCC for compliance.

Comment 18: New NGCC under construction; new NGCC

Response 18: See section V.A. of the final rule preamble of the CPP for the EPA’s response to

this comment and more information about new NGCC un its. Consistent with the comment, Morgan City and Nine Mile Point have been added to the inventory of likely affected units. Consistent with the comment, under construction NGC C is included in the rate calculations.

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

Commenters stated EPA's calculations do not conside r several new NGCC units which are currently under construction. The commenters said o n August 16, 2011, LDEQ issued Title V and PSD permits allowing Entergy Louisiana to const ruct and operate two new NGCC units,342

along with a new steam turbine generator, at its Ni nemile Point Electric Generating Plant, located in Westwego, Jefferson Parish. The commente rs said the new NGCC units, identified as 6A and 6B, have a nameplate capacity of 640 MW and a projected net summer capacity of 559 MW; these figures account for the steam turbine gen erator. The commenters added on September 26, 2013, LDEQ issued Title V and PSD permits allow ing Louisiana Energy and Power Authority (LEP A) to construct and operate a new NG CC unit, along with a new steam turbine generator, at its Morgan City Power Plant, located in Morgan City, St Mary Parish; the new NGCC unit, identified as 14-01, has a nameplate cap acity of 84 MW and a projected net summer capacity of 64.5 MW; as before, these figures accou nt for the steam turbine generator.

Commenters stated for the past several years, the c ommenters have been engaged in a planning process with the Purchasers for the repowering of i ts coal-fired units with NGCC. The commenters said these plans require the unanimous a pproval of the Purchasers which has not yet

been obtained. The commenters said if as a result o f the approval of these plans or otherwise, the commenters were to construct NGCC, such NGCC genera tion would be available to displace coal-fired generation. The commenters said it is not clear under the Proposed Rule that such NGCC generation would be included in the rate calculation; the commenters encourage EPA to allow NGCC generation built to replace coal- fired generation to be included in the
calculation of the rate.

Comment 19: Under-construction and at-risk nuclear generation

Response 19: The EPA has removed at risk and under construction nucl ear from its quantification of BSER in the Final CPP Rule. Howe ver, we still include under construction fossil units that likely meet the 111(d) definition of likely affected sources. EPA is establishing a regulatory program for existing units, and it would not be prudent to ignore known or likely existing units when quantifying the expression of B SER. Furthermore, EPA believes that failing to do so could potentially harm a state using a mas s-based equivalent if the EPA had not appropriately accounted for all generation of likel y affected units.

The EPA feels that its basis for assuming a 55% bas eline value as not available for replacement/BB2 consideration is well supported by historical data and conservative. There has been a large volume of NGCC capacity coming online over the five-year and 10-year period leading up to 2012 that constituted a significant s ample size. EPA relied on the 10-year period more heavily for coal to assure it had a sufficient sample size greater than 30 units. Moreover, EPA did not attempt to assign any potential decreas e in fossil steam baseline generation even though a decrease in fossil steam generation has be en associated with historical increased deployment of NGCC. The EPA felt this conservative assumption was necessary to avoid penalizing any particular state by a projection of where the reduced fossil steam generation

would occur.

EPA understands that some under construction units will operate at different level from others. However, its 55% assumption is a reasonable reflect ion of average utilization and estimating the343

incremental impact on a state’s baseline generation and emissions. Moreover, EPA is quantifying BSER at the regional level, so use of t he average utilization rate of 55% used to reflect incremental generation and emission from un der construction sources is not hindered by potential unit-level variations.

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

Commenters urged EPA to exclude both under-construc tion and at-risk nuclear generation from the state goal calculation procedure if and when EP A issues a final rule.

Commenters questioned the methodology used by the E PA in calculating the contribution of nuclear plants to the state goal in Building Block 3; EPA determined that 5.8 percent of the existing nuclear fleet is at-risk, and in calculati ng the state goal assumed that the existing nuclear generation in each state would be reduced by that a mount. The commenters said that at-risk generation was used in the calculation of the goal, but is then awarded to the state without conditions in calculating compliance with the goal. The commenters said at-risk nuclear plants are in danger of a total shut-down, not a curtailme nt in their generation; therefore, existing nuclear plants should not contribute to the state g oal calculation, and only existing nuclear plants that are truly at-risk should be counted for compli ance purposes, provided the approach is lawful under Section 111 (d) of the CAA. The commenters sa id in Pennsylvania, the nuclear portion of Building Block 3 accounts for 7. 8 percent of the s tate goal.

Commenters recommended that EPA remove the 5.8 perc ent at-risk nuclear component from states with nuclear generating facilities whose uni ts are not "at-risk".

Commenters urged EPA give South Carolina equitable treatment in the final Clean Power Plan, especially with regard to the treatment of nuclear units under construction. The commenters said several years ago, Santee Cooper began planning for strategic reduction of CO2 emissions; Santee Cooper devised a measured approac h, one that balances environmental stewardship, reliability and costs. The commenters said since 2005, Santee Cooper has reduced their CO2 emissions by 23 percent. The commenters s aid Santee Cooper previous and current initiatives are projected to reduce their CO2 emiss ions by 44 percent in 2029 and still deliver electricity that is reliable and affordable; Santee Cooper and South Carolina Electric & Gas are currently building two of the first new nuclear uni ts in the country. The commenters said most critical in the terms of the costs of this proposed regulation, is the treatment for new nuclear units already under construction; EPA should not consider these under-construction units as if they are already built.

Commenters stated in calculating each state's goal, the EPA assumes that NGCC units that were under construction in 2012 have available generatin g capacity that may be utilized to displace coal- fired generation under Building Block 2; spec ifically, the EPA assumes that each NGCC unit under construction would operate at a 55 perce nt annual capacity factor under a "business as usual" scenario in the absence of the proposed emis sion guidelines. The commenters said this 55 percent annual capacity factor reflects the EPA's c alculation of the "average performance of344

NGCC units that came online in the past 5 years." T he commenters said the Agency claims it "conservatively designated the generation associate d with this 55 percent capacity factor as unavailable for redispatch to reduce CO2 (i.e., not qualifying for Building Block 2), instead, reserving that amount of generation potential to me et other system needs presumed to have

motivated the construction" of those units. The com menters said accordingly, the EPA assumes that an additional 15 percent of the under-construc tion unit's nameplate capacity will remain available for redispatch, bringing the unit to an o verall annual capacity factor of 70 percent.

Commenters stated the EPA's approach is arbitrary a nd unreasonable; as a general matter, EGUs that commenced construction before January 8, 2014 - even those that were "under construction" during the 2012 baseline year the EPA has proposed to use - would be considered "existing units" for the purposes of section 111(d) once comp leted, and thus could properly be subject to standards of performance contained in a state plan if they meet the relevant applicability criteria; but the EPA should not rely on generating capacity from "under construction" units when applying Building Block 2 to calculate the proposed state goals. The commenters said the EPA has no basis on which to make assumptions about wha t generating capacity will be available for redispatch from NGCC units that had no operating hi story in 2012 or earlier. The commenters said the average annual capacity factor of all rece ntly completed NGCC units, is an inadequate predictor of the future generation performance of t he individual units the EPA includes in the state goals. The commenters said such an average do es not account for the fact that some units are constructed for the purpose of supplying base l oad, while others are constructed as loadfollowing units. The commenters said recent experie nce suggests that the EPA's methodology grossly overestimates the generation capacity avail able from units that were under construction
in 2012.

Commenters stated given the EPA's inability to prov ide a rational justification for predicting the hypothetical operating duty of units that were not operating in the baseline year of 2012, it

should exclude "under construction" NGCC units from its application of Building Block 2 for the purposes of calculating state goals. The commenters said because these units are technically "existing sources" under section 111, however, they would remain subject to appropriate state plan requirements and would count towards complianc e with a state's interim and final goals if they satisfy the relevant applicability criteria. T he commenters added NGCC units classified as

"under construction' should not be included in stat e goal calculations because they do not meet the applicability criteria for stationary combustio n turbines; they would not have supplied onethird or more of their potential electric output to a utility distribution system on a 3-year rolling average basis as of 2012.

Commenters recommended that the EPA remove existing generation resources (renewable energy and nuclear energy) from the denominator of the formula used to calculate state goals. The commenters said the EPA's adjusted emissions ra te formula includes existing renewable energy generation and 6% "at risk" nuclear generati on in the denominator of the formula used to calculate state emission reduction goals. The comme nters said this results in a formula that is not truly measuring the emissions rate reduction. The c ommenters said removing these components345

from the formula would result in a goal that is a b etter representation of the BSER and would
also result in a more consistent treatment of all z ero-carbon emitting generation sources.

Commenters recommended EPA reexamine the state rate -based emissions equation to exclude at risk nuclear and under construction nuclear from go al calculation.

Commenters stated it would be inappropriate to incl ude assumptions about relicensed nuclear facilities in calculating state goals because relic ensing can be costly and uncertain.

Commenters added EPA should treat under-constructio n, 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.

Comment 20: The 6% of nuclear capacity to be "at risk" is insu fficient.

Response 20: At-risk nuclear is not considered part of BSER quan tification in the final CPP Rule. See section V.A of the final rule preamble fo r discussion of nuclear generation and the

BSER. See section VIII for a discussion of how redu ctions stemming from incremental nuclear generation can be considered in state plans.

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

Commenters stated the U.S. EPA identified 6% of nuc lear capacity as "at risk" based on projections of potential retirements presented in t he 2014 EIA Annual Energy Outlook as well as

the announced retirement of six nuclear EGUs. The c ommenters are not aware of any supporting documentation presented by EIA or U.S. EPA to suppo rt these projected retirements, and only a single reference is cited in the TSD; this referenc e, "Implications of accelerated power plant retirements, J. Jones and M. Leff, 2014" presents o nly vague and ambiguous ""economic challenges". The commenters said the EIA study itse lf indicates that these unspecified

retirements would occur in unidentified "vulnerable regions", yet U.S. EPA applied their methodology to all states with nuclear generation. The commenters understand that a BSER is based on adequately demonstrated, economically feas ible measures; in this instance, the commenters believed that the designation of 6% of n uclear capacity as "at risk" based on a single study presented with little to no supporting docume ntation is insufficient to include "at risk" nuclear capacity as part of a BSER.

Comment 21: Include at risk nuclear; nuclear; hydropower

Response 21: The EPA did not include at-risk nuclear or existing ren ewable in the subcategory rates quantifying BSER in the final CPP Rule. See section V for an explanation on why they are346

not included. See section VIII for a discussion on how states can incorporate potential reductions from these generating technologies into their state plans.

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

Commenters stated EPA should allow states to claim compliance credit for that portion of nuclear capacity assumed to be at risk in EPA's goa l calculation at its actual level of generation (i.e., providing credit for operating at a greater capacity factor than the capacity factor EPA assumed in its goal calculation).

Commenters supported the fact that the EPA identifi es the continued operation of existing "atrisk" installed nuclear capacity and under construc tion nuclear capacity; in addition, the construction of new nuclear generating units as wel l as the uprating of existing nuclear units is identified as approvable emission reduction measure s.

Commenters supported a final rule which addresses t he factors that affect carbon intensity, rather than one which tries to define clean power. The com menters believed the proposed rule goes beyond the scope of carbon dioxide, specifically re garding the value of alternatives such as nuclear energy. The commenters said this comment is put forward not to advance nuclear energy, but to encourage a more honest assessment of carbon dioxide as measured by the Plan. The commenters said with respect to individual rate-bas ed goals, the commenters would include all three of the nations largest historic sources of el ectric generation: coal, natural gas and nuclear. The commenters stated they think the inclusion of o nly 6% of each states nuclear energy production fails to accurately observe actual carbo n intensity, and how that intensity will rise or fall, as plants are shut down or introduced; it may also cause potential distortions, where natural gas replaces nuclear energy.

Commenters did not feel it is appropriate to reflec t completion of the five identified nuclear EGUs currently under construction in the state goal s. The commenters believed the 2012 baseline carbon dioxide rate-based intensity values should not be reduced as if these EGUs were already online. The commenters said the proposed ru le would have the effect of ignoring the carbon dioxide reduction these plants will represen t; furthermore, this adjustment is inconsistent with counting the contribution of other future sour ces, as found elsewhere within the rule.

Commenters stated the public policy debate on the r elative risks of nuclear and fossil generation is likely to evolve; with the certainty that both f orms of electric generation will continue to exist, the inclusion of their size and impact upon rate-ba sed CO2 should be captured in full measure.

Commenters stated EPA's BSER analysis does not prov ide meaningful credit for existing nuclear generation and excludes existing hydropower generat ion entirely; this lack of appropriate credit has significant impact on States such as Arizona th at generate a large percentage of their power
from these zero-emission sources.347

Commenters stated the current supply to 49 member c ommunities consists of over 1,200 megawatts of nuclear and hydroelectric power supply ; the result is that over 50 percent of our electricity supplied to communities is produced wit h no emissions. The commenters said the proposed rule provides little credit for these carb on-free resources, and instead will require these communities to fund new unneeded renewable energy r esources and new energy efficiency programs, which raise the cost of electricity to co nsumers unnecessarily.

Commenters stated EPA's supporting documentation in dicates it did not consider the nuclear and hydropower facilities currently operating in Arizon a. The commenters said these facilities help Arizona achieve one of the nation's lowest per MWH GHG rates, which makes the imposition of

further limits on the state seem more unfair and in appropriate. The commenters asked why did EPA ignore these zero-emission resources.

Commenters stated hydropower makes up over half of the portfolio of Northwest generation resources, and is over 80% of BPA resources. The co mmenters said hydroelectric power is a major piece of the Northwest's low-cost, reliable a nd non-emitting resource mix. The commenters said PNGC Power and other public and inv estor-owned utilities in the Northwest

have invested in additional renewable resources and will continue to achieve even higher renewable electricity production from wind and sola r because of the firming support provided by the Northwest hydropower system. The commenters sai d the proposed rule should recognize the value of hydroelectric power as a compliance tool i n meeting greenhouse gas (GHG) emission reduction goals; additionally, new and incremental hydropower should be considered as building blocks in meeting state GHG reduction targets.

Commenters stated it is important for the EPA to ad dress the "5.8%" calculation that limits nuclear energy's full contribution to reducing a st ate's carbon emissions. The commenters said this seeming error, first brought to our attention by Remy Devoe, writing at the American Nuclear Society blog, should be corrected prior to the final rule being published. (Reference page 34870 of the Federal Register). The commenters said as Devoe writes, "We must insist that the EPA considers the total generation from all energy sources in calculating carbon emissions intensity." The commenters agreed, we cannot meet c arbon reduction goals without nuclear energy playing a major role. The commenters said do ing all we can to sustain the nuclear energy facilities currently operating, as well as creating regulatory environments and undertaking power

market reforms to ensure new nuclear can benefit us well into the future, is essential; those goals should help guide the final EPA rule.

Comment 22: Exclude nuclear generation

Response 22: The EPA excluded nuclear generation from BSER in the fi nal CPP. See section V.A of the preamble for further discussion.

The following are summaries of the specific public comments under this comment:348

Commenters stated in New York, particularly, the EP A has not included the generation associated with its existing large hydroelectric fa cilities as part of the zero-emission resource Building Block, reportedly because it "distorts" th e adjusted emission rate for the State. The commenters said in the same manner, emission-free n uclear generation, either in the numerator or the denominator of the adjusted emission rate, d istorts the ability of the State to meet its adjusted emission rate target. The commenters sugge sted that eliminating nuclear generation from the adjusted emission rate calculation across all states would be an equitable way for states to allow power markets to select for emission-free generation technologies in cooperation with the NRC if nuclear generation is a preferred approa ch or in cooperation with other permitting entities if other technologies such as wind or sola r are more cost effective.

Commenters requested that the EPA not include any n uclear as a part of calculation of the goal. The commenters said the 90% capacity factor assumed is difficult to achieve continuously due to years when refueling and maintenance outages are ne eded. The commenters said the 90% capacity factor and 5.8% "at risk" factor add great er risk to companies that have invested in nuclear power as a carbon free source. Although the commenters are requesting that the EPA remove nuclear generation from the goal formula, if EPA elects to keep nuclear in the formula, the commenters were concerned about the 90% capacit y factor used for at risk existing nuclear plants in the EPA formula for computing each state' s emission goal. The commenters said although existing nuclear units are normally used a s base load and have high capacity factors, planned refueling and maintenance outages lower the capacity factor by approximately 11%. The commenters said another important point of referenc e is the fact that the average lifetime capacity factor of the 100 nuclear plants now opera ting is 80.3% (through 2013). The commenters added on a three-year rolling average ba sis (for 2011-2013), the fourth quartile plants operated at an average capacity factor of 70 .8%; this means that one-quarter of U.S. nuclear plants are operating well below 90 percent capacity factors. The commenters said under the proposed rule, when these anticipated outages o ccur and reduce existing nuclear capacity factors below 90%, replacement power would have to be obtained from another CO2 nonemitting generation source. The commenters said the cost of power will be very high to make up the shortfall to meet the 90% capacity factor requi rement; therefore the commenters suggested using 70% as the capacity factor in the goal calcul ation.

Comment 23: The EPA should reconsider the inclusion of existin g nuclear power generation in

the calculations.

Response 23: The EPA excluded nuclear generation from BSER in the fi nal CPP. See section V.A of the preamble for further discussion. See se ction VIII for a discussion of how states can incorporate reductions from nuclear generation into their state plans.

The following are summaries of the specific public comments under this comment:349

Commenters stated it is not clear how existing nucl ear power generation can reduce CO2 emissions, when these units have been operating at near-constant capacity factors for many years. The commenters said any displacement of more carbon intensive generation would have already taken place. The commenters said the approa ch taken by U.S. EPA in including even a fraction of existing nuclear generation is inapprop riate, as these existing units cannot and will not displace generation from more carbon intensive sour ces. The commenters said it is clear that the inclusion of the 6% "at risk" nuclear generation in the goal setting calculations is an artificial and overwrought attempt to drive target rates lower tha n necessary or practical. The commenters urged U.S. EPA to reconsider the inclusi on of existing nuclear generation in all CO2 intensity calculations.

Commenters stated the accounting algorithm chosen t o establish goals for each state gives a

carbon emissions reduction credit to states that ha ve currently operating nuclear power plants and allow them to shut down; though it is perhaps n ot intended to have that effect, the net result

is that a state that shuts down all of its nuclear generation and replaces it with a power source that produces between ten and twenty times more CO2 per unit of electricity produced LOOKS like it has reduced its emissions intensity. The co mmenters said it is also unfair to count carbon intensity based on the amount of power generated in side the state instead of more accurately assessing the carbon intensity of the power that is consumed inside the state. The commenters said the way the current rule is written, Vermont n ever has to take any action as long as it forces power producers to locate their plants somewhere ou tside of the state boundaries. The commenters said the plan also gives no credit to th e consumers in rate regulated states like Tennessee, Georgia and South Carolina that recogniz ed the growing danger of increasing CO2 emissions and took action over a decade ago to make enormous investments in new, reliable, long lived, ultra low emission nuclear power plants . The commenters said according to the plan,

none of that investment counts while all of the inv estments in unreliable wind and solar power that have been made during the same time period cou nt towards the emissions reduction goals. The commenters said please take action to correct t hese aspects of the rule; they are not only unfair, but they are in direct opposition to the go al of reducing the overall carbon intensity of the
United States.

Comment 24: Treatment of new nuclear in setting the EPA goals

Response 24: The EPA has excluded nuclear from building block three in the final CPP rule. See Section V.A of the final rule preamble.

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

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. The

commenters said EPA's treatment of these new nuclea r units has lowered the emission rate goals350

for each of these states, ignoring the practical di fficulties associated with such projects; also, developing a new nuclear power plant could take abo ut 15 years from inception to operation; hence, the 2030 deadline for compliance with the CO2 goal will not likely incentivize any additional nuclear units. The commenters recomm ended:

-New nuclear generation should be excluded from bui lding block 3 when determining state emission rate goals and instead should only be cons idered as an eligible action for compliance

purposes.

-New nuclear generation should remain an eligible a ction.

-Given the long lead time for development and const ruction of a nuclear generation unit, EPA should consider new nuclear generation as an eligib le action if construction has commenced prior to the end of the compliance period; if a nuc lear unit or uprate is under construction prior to 2030, the predicted CO2 reduction or MWh benefits s hould be credited in 2030, as a way to further promote new nuclear generation.

Commenters stated new renewable and nuclear generat ion are not used to decrease fossil fuel generation in setting the EPA's target rates; rathe r the generation numbers are simply used to tighten the allowable rate - that is to reduce the allowable rate of emissions per megawatt-hour of generation compared to the baseline year, 2012. The commenters said the treatment of new

nuclear and new renewables is unlike the treatment of increased natural gas combined cycle generation, where the increase in generation is act ually assumed to reduce fossil fuel generation, with the constraint that total fossil fuel generati on would remain the same. The commenters said this approach favors natural gas over other forms o f generation.

Comment 25: Affected units

Response 25: See section VI of the preamble for an explanation o f the EPA’s output adjusted emission rates. To capture the reduction potential from reduced generation of higher emitting sources, the EPA incorporated some of the replaceme nt generation in subcategory-specific emission performance rates and state goals to captu re this reduction that would not inherently show up in a stack emission rate.

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

Commenters stated U.S. EPA also uses, in setting go als, the CO2 emissions from regulated entities (numerator); however, in the goal setting, they used generation (denominator) from all electric generation in the state, not just from the regulated entities. The commenters said so, in setting renewable goals, they took percentages of t otal generation (including renewables, nuclear, etc.) rather than taking percentages of generation from the regulated entities alone; this artificially lowers the goal placed on the affected units in an arbitrary manner. The commenters said CO2 and generation should be measured and expr essed only if they are produced by an351

affected unit. The commenters said by calculating r enewable goals from this all-inclusive generation value, U.S. EPA is unfairly "double-coun ting" renewable generation.

Comment 26: Affected units - exemptions

Response 26: The EPA has modified the applicability language for 111 (d) in the final CPP rule to better capture likely affected sources. The EPA believes that nearly all non-cogen NGCC EUGs providing electricity to the grid and with a n ameplate capacity greater than 25 MW will be included. As explained in Section VI and the CO2 E mission Performance Rate and Goal Computation TSD for CPP Final Rule, the inventory d oes not constitute an applicability determination, but serves as a reasonable baseline of likely affected units in a historical baseline year (2012). While final applicability determinati ons on all individual units may be necessary after the final rule, the EPA does not believe that unit-level discrepancies, taken collectively, would result in any bias or alter the reasonablenes s of its quantification of BSER subcategoryspecific rates.

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

Commenters stated EPA's goal calculation methodolog y is defective because it applies the

measures identified as BSER to sources that do not qualify as "affected EGUs" for the purposes of the Proposed Guidelines. The commenters said the proposed state goals assume that state plans will constrain emissions from sources that EP A cannot lawfully regulate under section 111(d); this error affects the state goals because it overstates the number of sources that are available to implement the BSER building blocks - p articularly Building Block 2, which is based on shifting generation from higher- to lower-emitti ng affected EGUs.

Commenters added excluding non-affected EGUs from t he state goal calculation is critical because including these units in the 2012 generatio n and emission levels affects the stringency of the state goals as they will eventually be applied to affected EGUs. The commenters said the state goals, as currently calculated, assume that s ome of the burden of achieving the goal will fall on EGUs that do not fit within the regulated source category; because states cannot impose standards of performance on these units, the additi onal burden associated with these units will ultimately fall on affected EGUs that do meet EPA's applicability criteria. The commenters said this is particularly important in implementing Buil ding Block 2, where EPA's purported "system of emission reduction" requires transferring energy generation from coal- and oil/gas-fired steam EGUs to NGCC units with available generating capaci ty.

Commenters added EPA made no effort to exclude from the Proposed Guidelines NGCC units that were not "constructed for the purpose of suppl ying, and suppl[y], one-third or more of [their] potential electric output and more than 219,000 MWh net-electric output to a utility distribution system." The commenters stated EPA can, and must, e xamine historical data for existing EGUs in order to determine which units would be exempt f rom regulation under the one-third sales352

exclusion before calculating each state's goal. The commenters said this historical data is readily available to EPA; EPA included generated data from 2010 and 2011 in the docket for this rulemaking, although it has not performed any analy sis of these data to determine which existing EGUs would be exempt and how this would affect each state's goals.

Commenters added in calculating state goals, EPA sh ould apply the measures identified as BSER to Subpart Da units only if they "combust fossil fu el for more than 10.0 percent of the heat input during any 3 consecutive calendar years" and "suppl [y] more than one-third of [their] potential electric output and more than 219,000 MWh net-elect ric output to a utility power distribution system for sale on an annual basis." 79 Fed. Reg. a t 1502, Proposed 40 C.F.R. section 60.46Da(a). The commenters said the NSPS for new Su bpart Da units applies only to sources that meet these (and several other) criteria; EPA p roposed to eliminate these applicability criteria in its proposed NSPS for modified and reconstructed EGUs and in its definition of "affected EGUs" for these Proposed Guidelines. See 79 Fed. Re g. at 34,954, Proposed 40 C.F.R. section 60.5795(b)(1); 79 Fed. Reg. at 34,979. The commente rs said as noted in Section VI and in UARG's comments on EPA's proposed GHG standards for modified and reconstructed EGUs, however, EPA cannot broaden the scope of the Propos ed Guidelines to include units that, if they were newly constructed, would not be subject to the proposed NSPS for new EGUs; therefore, EPA must exclude such units from its goal calculati on.

Commenters added EPA has further distorted its asse ssment of achievable state goals by inappropriately including units smaller than the Pr oposal's 73 MW applicability threshold in its calculations of the state goals; EPA has provided n o justification for its decision to include these units in setting state goals.

Commenters stated non-affected EGUs are not include d in the numerator of the rate goal calculation; however, they are included in the deno minator of the RE calculation. The commenters asked why is this inconsistent approach used when performing the RE calculations vs. the rate efficiency calculations.

Comment 27: Units mistakenly counted as "affected units" in go al calculations

Response 27: The EPA has changed the status of J.M. Shafer and Rifle to “exclude” based on the reported cogen status and public comment. Base d on the final rule applicability language, the EPA did not exclude non-cogen NGCCs greater tha n 25 MW.

The EPA changed the status of Perryville Power Stat ion unit 2-ct to reflect the comment that it is a simple cycle turbine and hence the unit was exclu ded from BSER calculations.

Based on comment and the baseline cogeneration stat us of Louisiana 1, the EPA has recategorized it as “exclude” in its baseline consist ent with the comment.353

The 150 MW of under construction NGCC in Mississipp i refer to the Moselle units that commenced operation in 2012, but are treated as und er construction as described in Preamble

section VI.

The EPA did not include Southcentral Power Plant Un it 4 in its final CPP rule baseline

consistent with the comment.

Because Beluga 6, 7, and 8 were all considered like ly affected, the sum generation and emission from the three is counted in Alaska’s baseline gene ration at proposal. However, Alaska and its EGUs are not subject to the final CPP. The unit-le vel apportionment does not impact the baseline or the state goal. The EPA recognizes that the facility may report as fewer units than expressed in the baseline accounting, but the EPA u nderstands the comment to suggest this will not impact the totals assumed for the facility. See section VII.F for discussion of Alaska.

The EPA has not made a final applicability determin ation for the CPP inventory, but its baseline constitutes a representative inventory of likely af fected units based of the final CPP applicability provisions.

The EPA believes that non-cogen NGCC facilities gre ater than 25 MW to be likely affected units and are thus included in the baseline (e.g., Nobles ville).

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

Commenters stated J.M. Shafer and Rifle are outside the scope of section 111(d) regulation, EPA nevertheless included them in this Proposal when ap plying Building Block 2 in its state goal calculation for Colorado; by doing so, EPA bases Co lorado's state goal on the assumption that both Tri-State NGCC units would be subject to the P roposal and that Colorado could force these units to operate at a 70 percent annual capacity fa ctor; this is clearly incorrect. The commenters said the mistake results from EPA's flawed goal cal culation methodology, in which the Agency made no attempt to exclude from re-dispatch under B uilding Block 2 EGUs that do not meet the applicability criteria for the January 2014 propose d NSPS. The commenters said if EPA proceeds with this rulemaking, it must remove J.M. Shafer an d Rifle (as well as any other EGUs that do not meet the applicability criteria for the source category) from state goal calculations.

Commenters stated EPA's calculations classify each of the three gas turbines at Entergy Louisiana's Perryville Power Station as NGCC units; however, one of the three is not equipped with a heat recovery steam generator (HRSG) and ope rates in simple cycle mode.

Commenters stated EPA's calculations classify the f ive electric generating units (EGUs) at Entergy Gulf States Louisiana's Louisiana Station N o. 1 Electrical Generating Plant as NGCC turbines; however, three of these units (1A, 2A, an d 3A) are actually boilers, not turbines. The commenters added a large portion of the power gener ated at Louisiana Station 1 is dedicated exclusively to the adjacent ExxonMobil refinery and chemical plant; based on input from ExxonMobil and Entergy, none of the units at Louisi ana Station 1 will meet the definition of354

"affected electric generating unit" because no unit supplies "one-third or more of its potential electric output and more than 219,000 MWh net-elect ric output to a utility distribution system."

Commenters stated Louisiana Station 1 is a co-gener ation facility that was constructed for the purpose of supplying electricity and steam to the E xxon refinery; the units do not supply onethird or more of their potential electric output to a utility distribution system on a three-year rolling average basis, and thus are not defined as "affected units" by the Proposed Rule and should be removed from the state's goal-setting cal culation; additionally, Louisiana Station 1 Units 1A, 2A, and 3A are steam units, not NGCC unit s.

Commenters stated Perryville Unit 2-CT is listed in the goal-setting calculation as an NGCC unit; this is a low-use simple cycle turbine and sh ould be removed from the state's goal-setting

calculation. The commenters said Louisiana has two NGCC units under construction that should be included in the goal setting calculation for the state. The commenters said Entergy's Ninemile Unit 6 has a nameplate capacity of 640 MWs and a su mmer net capacity of 550 MWs; Louisiana Energy and Power Authority's unit 14-01 has a namep late capacity of 84 MWs and a summer net capacity of 64.5 MWs. The commenters said in Missis sippi, EPA calculation for setting the state goal includes 150 MWs of NGCC under construction; t o the best of the commenters' knowledge, there is no NGCC under construction in Mississippi.

Commenters the affected electric generating unit (E GU) inventory that was used to calculate the Alaska rat- based carbon dioxide (CO2) emission per formance goals is inaccurate; the following corrections should be made prior to calculating the final Alaska performance goals:

-Unit 8 at the Chugach Electric Association (Chugac h Electric) Beluga Plant should not be listed as a separate affected EGU; Unit 8 is a non-fired h eat recovery steam generator (HRSG) associated with the natural gas-fired stationary co mbustion turbines that the U.S. Environmental Protection Agency (EPA) has designated Beluga Units 6 and 7; in other words, Beluga Units 6 and 7 are combined-cycle turbines that share the Un it 8 HRSG; the power generated by Unit 8 should be included with the power generated by Belu ga Units 6 and 7 to accurately represent the combined-cycle turbine electrical generation of the se EGUs.

-The Chugach Electric Southcentral Power Project Un it 4 (EPA EU ID 4) has not yet
commenced construction and so should be eliminated from the affected EGU inventory.

Commenters stated it is clear from the Proposed Gui delines, however, that EPA disregarded these applicability criteria and applied the BSER b uilding blocks to units that do not meet the applicability criteria when determining each state' s obligations; in particular, it appears that the EPA made no effort to exclude from the Proposed Gui delines NGCC units that did not "...suppl[y], one-third or more of [their] potentia l electric output and more than 219,000 MWh net-electrical output to a utility distribution sys tem on a 3 year rolling average basis." The commenters said including NGCC units that did not m eet the one-third sales exclusion in the goal calculation artificially inflates the amount o f NGCC generating capacity that is available for355

redispatch, which thus inflates the amount by which coal-fired EGUs must reduce generation under Building Block 2. The commenters said once th is inflated redispatch is incorporated into a state's goal, affected NGCC units will be forced to operate at capacity factors significantly above 70 percent in order to accommodate the expected gen eration that states cannot require from nonaffected EGUs.

Commenters stated with respect to Indiana, using th e summer rated net capacity of the Noblesville NGCC facility of 285 MW, the facility w ould have needed to generate 826,135 net MWh in 2012 to operate at a 33 percent annual capac ity factor; the Noblesville NGCC facility generated 820,513 net MWh in 2012; in 2010, the fac ility generated a total of 227,093 net MWh, and in 2011 the facility generated a total of 350,0 91 net MWh. The commenters said this results in a three year average capacity factor over the pe riod 2010-2012 of 18.6 percent; this unit does not meet the "and supplies, one-third or more of it s potential electric output on a 3 year rolling average basis" criteria for the unit to be a 111(d) affected unit; the EPA should therefore recalculate the Indiana state goal without the Nobl esville facility.

Commenters stated New Mexico is concerned that EPA' s list of affected sources in the spreadsheet accompanying the State Goal Computation Technical Support Document does not include all applicable sources, and may include sou rces that do not meet EPA's applicability

criteria.

Comment 28: Unofficial standby units should be removed from da ta set

Response 28: For the EPA’s response to this comment, see the CO 2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule support ing the final CPP. The EPA did not remove stand-by units if they appeared likely to me et the affected unit-criteria.

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

Commenters stated EPA has proposed state-specific C O2 emission performance goals, and requirements for each state to develop a plan to ac hieve its goal by the year 2030; the proposed

emission rates are based on each state's fossil-fir ed EGUs. The commenters said not unlike many states in its region, Oklahoma can experience extre me weather conditions in any season. The commenters said the electric generators in Oklahoma keep a significant number of older and less cost effective units in reserve capacity, a conditi on where the unit only operates enough to ensure

it could be used if needed in case of extreme weath er or natural disaster. The commenters said generators are hesitant to decommission such units, despite limited use, due to the need to be responsive to extraordinary conditions when peak po wer is needed in a specific location. The commenters said Oklahoma generators maintain thirte en units in reserve capacity; these units should not be considered in calculating Oklahoma's performance goal, since the units are each 40 plus years old, and/or have a capacity utilization factor of less than 0.10.

Comment 29a: CHP units356

Response 29a: In the final CPP, all emissions from likely affecte d CHP plants are included in the baseline. Useful thermal output is not include d in the quantification of BSER in the final rule, so the apportionment of emissions discussed a bove is not relevant to final rule BSER quantification. Affected sources would be responsi ble for all emissions regardless of their useful thermal output activity. However, as described in Section VIII, sources can take credit for their useful thermal output when demonstrating rate compl iance.

EPA identified approximately 2,900 cogeneration uni ts connected to the grid. It “excluded” nearly 85 percent of these as likely non-affected s ources because they reported their primary source category as commercial or industrial. EPA a lso removed some NGCC cogen units from its baseline inventory of likely affected units whe n identified by commenters by name and there was supporting publically available data.

For the CHP units that identified their source cate gory as electric utility or IPP, EPA did

continue to include the units unless the commenters provided unit-specific data supporting their

exclusion.

EPA found no technical reason why the likely affect ed NGCC cogeneration units identifying their primary sector as electric utility would not be able to increase their utilization. It surveyed 2011 and 2012 data and found that collectively thes e sources did increase utilization from yearto-year (potentially as incentives such as fuel pri ces decreases made doing so more attractive). As natural gas fueled electricity bec ame more competitive due to a drop in gas prices, the reported generation data indicates that these sources increased their generation collectively by more than 10%. The approximately 3 20 NGCC cogens that have their source category identified as electric utility or IPP that are considered likely affected, increased their generation from 115 TWh in 2011 to 129 TWh in 2012 given the additional incentive of low natural gas prices. See the 2010, 2011, 2012 unit- level data files.

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

Commenters stated CHP units used in the calculation of state goals should be reconsidered; CHP

errors

Commenters stated based on Federal Energy Regulator y Commission criteria to be a cogeneration facility, the addition of electrical g eneration equipment to an existing industrial

combustion unit makes these facilities CHP units th at can provide new electricity generation

without new emissions. The commenters said EPA shou ld clearly identify in the support documents and preamble that the addition of electri c generation to existing industrial combustion sources can be used as a new generating source in c alculating compliance with the proposed emission standards, even if it does not qualify as a renewable resource under state RPS requirements. The commenters added if the state can demonstrate that there are no new CO2 emissions resulting from adding electrical generati on equipment to these combustion units, they request that a state be able to count this generati on as new megawatt-hours (MWh) with no357

associated CO2. Meaning, commenters stated, that in calculating compliance the industrial CHP produces energy (MWh) to include in the denominator but no CO2 to include in the numerator of
the calculation.

Commenters added given the right incentives and gui dance, CHP can be a cost-effective emission reduction strategy for each state regardle ss of the particular numerical emission rate target. The commenters were concerned with the trea tment of certain CHP units that in 2012 qualified as "affected EGUs." The commenters stated their view is that no CHP facilities should

be considered affected EGUs. The commenters said ho wever, even assuming EPA nevertheless considers some CHP facilities to be affected EGUs, CHPA disagrees with EPA's assumption that re-dispatching the electric generation from these u nits to non-CHP NGCC units is good policy
that will result in emission reductions.

Commenters added natural gas-fired CHP units cannot be dispatched as part of Building Block 2 due to the integral relationship with adjacent cust omers; EPA should not factor natural gas-fired CHP units into state goal calculations. Commenters stated these natural gas-fired CHP units in select states that were included in EPA's goal calc ulations should be removed in order to accurately account for realistic dispatch capabilit ies. The commenters said all other factors in state goal calculations impacted by the removal of CHP units were adjusted accordingly, such as the NGCC emission rate, other emissions and generat ion, historic NGCC generation, and the NGCC nameplate capacity. The commenters provided a table (titled "Table 16: Natural GasFired CHP Units That Should Not be Included in Goal Calculations") showing the names of power plants in three southern states. The commente rs said if EPA chooses incorrectly to include natural gas-fired CHP units in state goal calculati ons, the Agency must evaluate these facilities based on similar applicability criteria to the Agen cy's January 2014 NSPS Proposal. The commenters said in the January 2014 NSPS Proposal C HP units were able to subtract "purchased power of the thermal host facility or facilities" i n determining net-electric output for applicability purposes. The commenters supported EPA's intent to subtract purchased power of adjacent facilities in calculating the 219,000 MWh applicabi lity criteria threshold for CHP facilities. The

commenters also believed it was EPA's intent not to require the direct transmission of electricity to the adjacent facility. The commenters said as pr oposed, CHP units are not afforded the same net energy output definition in the existing source proposal; this treatment inadvertently includes some CHP units in state goal calculations. The comm enters did not believe this was EPA's intent. The commenters said during EPA's webinar series for the proposed guidelines, EPA acknowledged that CHP units, for applicability purp oses, may deduct power used internally or power purchased by an adjacent facility. The commen ters said EPA must remove all CHP units from state goal calculations or, at a minimum, eval uate units using similar applicability criteria to the January 2014 NSPS Proposal.

Commenters stated in its analysis of the NGCC fleet , EPA also inappropriately included industrial Combined Heat and Power (CHP) plants. Th e commenters said in 2012, according to Edison Electric Institute (EEI), almost a third of the NGCCs over 25 MW were CHP plants and accounted for approximately 15 percent of total ele ctric generation analyzed by EPA; although358

these CHP plants contribute to the overall electric production of the nation, their operation is fundamentally different from that of a power plant primarily dedicated to serving electric-only load and the needs of the grid. The commenters said CHP plants tend to have much higher capacity factors than EGUs. The commenters said the ir electric output is typically a by-product of steam production and directly related to their i ndustrial activity and heat production. The commenters said CHP plants are not operated primari ly to serve the demand of the electric sector at large; also, CHP plants cannot typically be disp atched like other power-sector plants. The commenters said EEI reports that approximately half of the plants EPA identified as having utilization rates of 70 percent or more were, in fa ct, CHP plants. The commenters said these CHP plants cannot be taken into account when assessing the potential for increased utilization of the existing NGCC fleet; their inclusion in EPA's analy sis resulted in an overestimate of the potential for fossil fuel-fired EGU redispatch; the redispatch portions of the state targets must be recalculated accordingly.

Commenters stated MP&W's Unit 8A is a combined heat and power (CHP), or cogeneration unit, but is not an EGU covered under the rule. The commenters said EPA's 2012 Unit Level Spreadsheet flags Unit 8A as a cogeneration unit an d as "EXCLUDED". The commenters said the "Goal Computation Technical Support Document" ( GCTSD) provides the following direction concerning CHP units: "For CHP units that are covered under the rule, the emissions and energy output associated with the useful therma l output not used for electricity production are included in the state goal and would be reporte d under the 111 (d) reporting guidelines if the unit meets the 111 (d) applicability criteria. The emissions and energy output associated with the useful thermal output are captured in the "other" c ategory. The emission rates shown reflect total emissions divided by total net energy output (e.g. net electricity generation + useful thermal output). However, only the electricity generation p ortion of CHP is available for redispatch purposes, and therefore only this portion of the co generation operation is reflected in the technology generation totals."

Commenters stated Unit 8A is a small unit that is n ot an affected source and it is noted as "excluded" on the EPA 2012 Unit Level Spreadsheet, but it is not clear how EPA used the data from Unit 8A cogeneration in setting Iowa's state g oals. The commenters said the calculated values for Unit 8A in the 2012 Unit Level Spreadshe et are inconsistent with the methods that EPA states were used in the "Description of 2012 Un it Level Data using the EGRID Methodology". The commenters said MP&W staffs discu ssion with EPA staff indicates that "ratios" were used to apportion reported CO2 report ed from CAMD according to ratios of generation reported on EIA Form 923. The commenters said this approach does not accurately reflect the actual thermal output from the CHP at U nit 8A (nor does it accurately reflect actual CO2 emissions from the individual units). The comme nters said it appears that this approach for a CHP unit may result in double counting of CHP rel ated emissions. The commenters requested

clarification of the actual methods and associated rationale used for calculation of CO2 from CHP units, identification of the calculation(s) use d by EPA to determine what amount, if any, was considered to be the electrical generation port ion of the Unit 8A CHP that was available for dispatch purposes, and what was considered to be in the "other" category. The359

commenters supported CHP-related generation being E XCLUDED from the calculations of generation available for re-dispatch and the heat i nput/output calculations.

Commenters stated EPA has double counted CO2 emissi ons for CHP plants characterized under coal and "Other." The commenters said for example, the total 2012 CO2 emissions for North Carolina's Edgecombe Genco Plant is 416,411 tons; E PA determined that 223,731 tons of these emissions are associated with thermal output; EPA d etermined the baseline rate by assigning 416,411 tons under coal and 2231731 tons under "Oth er". The commenters said this results in a total plant-wide CO2 emissions of 640,142 which is clearly higher than recorded emissions data. The commenters said the correct method for this pla nt would be to assign 192.680 tons for coal (416,411 minus 223,731) and 223,731 tons for "Other '. The commenters said this error correction also applies to North Carolina's other two CHP plan ts: Roanoke Valley Energy Facility I and II. It also applies to all CHP plants nationally.

Comment 29b: Commenters stated that PSEG's three coal units wil l be the only remaining coalfired steam EGUs in the state of New Jersey in 2020 . Commenters stated that only other coalfired steam EGU is owned and operated by Rockland C apital LLC (B.L. England power plant) and is slated to retire or convert to natural gas ( NGCC) by May 2017. Commenters stated that the facility has received a permit to build a new NGCC unit, however challenges remain on whether approval will be granted to build a 22-mile long na tural gas pipeline in southern New Jersey.

Commenters stated that the only other coal-fired un its are combined heat and power ("CHP") facilities owned by Chambers Cogeneration LP and Lo gan Generating Company LP. Commenters stated that CHP facilities are integrate d energy systems that provide: 1) onsite generation of electrical and/or mechanical power to a host, and 2) waste-heat recovery to the host for heating, cooling, dehumidification, or process applications. Commenters stated that CHP facilities are designed to operate more efficiently than traditional EGUs because of the wasteheat recovery and requiring additional heat rate im provements from coal-fired CHP facilities may be counterproductive, leading to an increase in emissions. Commenters stated that if the host's power and waste heat needs are constant, hea t rate improvements will likely result in additional excess power sold to the grid. Commenter s stated that sale of excess power to the grid benefits the facility owner by promoting recovery o f costs to operate and maintain the coal-fired CHP unit(s). Commenters stated that a coal-fired CH P facility may no longer be justified if the opportunity to sell excess power to the grid is eli minated under Building Block 2. Commenters stated that due to the foregoing, PSEG believes tha t coal-fired CHP facilities should be excluded from the goal setting calculations in both Building Blocks 1 and 2.

Response 29b: The EPA did remove the majority of cogeneration u nits from its baseline inventory based on their primary sector was commerc ial and industrial as opposed to electricity360

generation. However, some cogeneration EGUs that h ave a primary sector of electricity generation and appear to meet the prime mover, fuel , and size criteria are still considered likely

affected units and included in the baseline. The EP A makes no unit-level assumptions in BSER quantification that these specific units will condu ct a heat rate improvement or have their generation replaced. Those assumptions are made at the regional level. The EPA believes the added efficiency of cogeneration relative to non-co gen capacity will generally result in a competitive advantage and encourage their continued or increased operation. Moreover, based on comments, the EPA did not include useful thermal output in the quantification of BSER, but as described in section VIII of the preamble they m ay still take credit for useful thermal output in compliance. This creates an additional incentive f or cogeneration units to continue to operate relative to similar technology without cogeneration capability.

Comment 29c: Commenters suggested that the EPA consider four cat egories for CHP to be considered an eligible pathway for states to avoid or reduce affected EGU emissions under Section 111(d): (1) Existing CHP system that is an affected EGU under Section 111(d); for these systems, the determination of the emissions rate sh ould take into consideration the overall efficiency of the system at converting fuel to usef ul energy, and state plans should be able to

value the carbon reductions that result from increa sed dispatch of power from these lower carbon EGUs; (2) New CHP systems that will be regulated un der Section 111(b); for these systems, the

determination of an emissions rate should take into consideration the overall efficiency at converting fuel to useful energy, and a state compl iance plan should be able to recognize the carbon reduction potential of systems that have low er emissions rates than required by the NSPS standard; (3) Existing CHP systems that do not meet the requirements of an affected EGU under Section 111(d); for these systems, the efficiency t o convert fuel to useful energy should be recognized if the systems have the ability to provi de power to the grid and their hours of operation increase or they switch to a lower carbon fuel such as switching from coal to natural gas or from natural gas to a biofuel; and (4) New C HP systems not covered by existing rules; these systems should be treated as energy efficienc y measures, and the energy savings they provide converted into a reduction of generation an d associated emissions from affected EGUs.

Response 29c: The 111(d) rulemaking only regulates existing sou rces. However, the EPA believes that the rule generally favors and incenti vizes more utilization from more efficient units (regardless of whether they are affected), and ther efore CHP units that operate in a manner where useful thermal output is a significant component sh ould enjoy a compliance advantage relative to similar generating technologies that lack the cogen eration capability

Comment 29d: Commenters disagreed that the thermal contribution of CHP should be relied upon in the plan to meet a state goal since it requ ires that the thermal output be used far into the future. Commenters stated that an agreement to gene rate heat for a co-located industrial or manufacturing facility may not last through the int erim period, 2030, and beyond. Commenters361

stated that using the short term agreements to esta blish BSER puts states at risk of not meeting their carbon rate reduction goals.

Commenters stated that the rule should be modified to ensure affected CHP units are adequately treated. Commenters stated the proposed rule includ es several provisions that relate to the subset of existing CHP installations that are treated as E lectric Generating Units. Commenters stated these provisions only apply to the handful of the n ation's 5,408 CHP operating units that are directly affected by the rule.

Response 29d: EPA no longer includes useful thermal output in its rate setting. This helps address the concern about uncertainty in thermal ou tput going forward.

Comment 29e: Commenters stated that CHP units should not be sub ject to emission limits unless the primary purpose of the unit is to sell e lectricity on the grid. Commenters stated that otherwise, units that provide power primarily for o n-site use should be allowed to voluntarily opt in to state reduction plans.

Response 29e: The EPA agrees, it has only included CHP units as likely affected sources if they report in EIA 860 the primary sector is electric ut ility (as opposed to commercial or industrial).

Comment 29f: Commenters disagreed that thermal energy generation with CHP systems should

be included in baseline calculations. Commenters di sagreed that increased thermal efficiency offered by CHP systems can be best utilized as an i ncentive for a state or EGU to reduce its carbon rate as a compliance option. For facilities and states that want to add CHP capacity due to captive market needs, commenters stated that the EP A should require reporting of both electric and useful thermal output (e.g.,lb steam generated) . In these cases, commenters stated that the full 100% credit for useful thermal output should b e allowed.

Commenters stated that CHP facilities should only r eport net electric generation. Commenters stated relying on thermal generation as part of the baseline calculations will put states at risk due to the short term nature of CHP agreements. If a st ate chooses to use CHP activities as part of its state compliance option, commenters stated that a C HP facility should be given credit for any reduction in CO2 from the thermal portion but it sh ould not be part of BSER since it is difficult to enforce and is not permanent.

Response 29f: The EPA agrees, and does not count useful thermal output from likely affected CHP sources in the BSER quantification of the final rule. However, in recognition of the carbon reduction potential of CHP sources, it does allow t he useful thermal output to be converted to a MWh figure and counted towards compliance.

Comment 30: Units with federally enforceable operating limits.362

Response 30: The EPA’s quantification of BSER reflects fleet-wide as sumptions about increases and decreases in utilization. As explained in the CO2 Emission Performance Rate and Goal Computation TSD for Final CPP, the EPA recognizes t hat there will be individual units that have the ability to outperform these fleet-wide levels, and those that do not have the ability to operate

at that level.

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

Commenters stated EPA included several units in Flo rida's goal calculation that have federally enforceable operating limits restricting their oper ation to levels below the proposed applicability thresholds. The commenters said including such unit s in Florida's goal calculation is clearly in error. The commenters provided Table 3-2, entitled: “City of Tallahassee Units Improperly
Included in Goal Calculation”.

Comment 31: Covered Sources vs. Fleet-wide Emissions

Response 31: See Section V of the preamble for a discussion on B SER measures. The EPA has finalized a CPP rule that does capture a framework for evaluating the additional power production made possible by efficiency upgrades. S ection VIII.G of the Preamble discusses actions taken to adjust the CO2 emission rate of an affected EGU. Inherent in the emission rate is the reported emissions and generation of the sou rce itself. As this is a fundamental component of compliance, any improvements in efficiency at a plant would be captured through these metrics and their downward pressure on emission rat e.

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

Commenters stated EPA's proposed approach narrowly targets the existing fossil fuel-fired electric generating fleet, reducing carbon emission s from a 2012 average rate of 1,444 pounds per megawatt hour (lb/MWh) to a 2030 average rate o f 991 lb/MWh; however, the lowest rate achievable with fossil fuels - per EPA calculations - would be a natural gas fleet emitting 1,135 lb/MWh, clearly well above the emissions target. Th e commenters said EPA must measure compliance according to a future fleet-wide emissio ns average; this artificial distinction between existing and future fleet generation creates a numb er of measurement and compliance concerns.

Commenters stated as proposed, this rule ignores al l existing hydropower and 94 percent of existing nuclear generation; together, these source s generated 26 percent of nationwide electricity production in 2012 and represent more t han 80 percent of the carbon-free power supply. The commenters said the result is an emissi ons rate target that is out of step with current

emissions. The commenters said consider the states which would be able to increase actual carbon emissions over the compliance period if actu al emissions from their generation fleet were measured accurately in the baseline.363

Commenters stated EPA's baseline calculations disgu ise the 31.4 percent of the power supply currently generated from carbon-free sources and un dervalue the carbon reduction accomplishments of 11 states that draw more than ha lf their electricity from nuclear and
renewable sources.

Commenters stated as we move into the compliance wi ndow, however, EPA must change its tune; the compliance target is not achievable with even the cleanest of fossil fuels. The commenters said compliance cannot be measured accor ding to the emissions rate of the fossil fleet in isolation, but must include additional pow er sources. The commenters said EPA will measure a state's emissions rate by considering emi ssions from the fossil fleet and additional carbon-free generation from a narrow subsection of the nuclear fleet, existing and new renewable energy (RE), and the avoided production made possib le by energy efficiency investments.

Commenters stated this asymmetric treatment of carb on-free sources, that bolsters production

from variable sources and diminishes the role of ba seload power, inspires an important question for EPA: is it possible to account for all existing power generation in establishing emissions targets and measuring compliance. The commenters sa id such an approach would appropriately credit early-acting states that rely heavily on nuc lear and hydro and create near-term incentives to improve the efficiency of and power production f rom these significant existing sources. The commenters said if the EPA does not capture these e xisting sources in compliance measurement, it must create a framework for evaluating the addit ional power production made possible by efficiency upgrades or be prepared to abandon signi ficant low-cost compliance possibilities.

Comment 32: Application of BB1

Response 32: As described in the Section V.C of the Preamble, th e EPA no longer has a BB1 assumption of 6% nationwide. Also, as described in Goal Computations TSD at Proposal and reiterated in the final rule, the EPA recognizes in dividual units may face limitations that keep it from achieving the fleet-wide building block assump tions. The EPA quantification of BSER and building blocks is premised on the potential of the fleet on average.

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

Commenters stated for step 2 (application of Buildi ng Block 1), U.S. EPA took the total CO2 emissions amount for the coal-fired steam EGU group in each state from Step 1 and reduced it by 6%, reflecting HRIs. The commenters contended th at there is no direct, one-to-one relationship between HRI projections and CO2 intens ity; this represents a gross oversimplification of the true complexity of fossil -fuel-fired generating units.

Commenters stated the use of a standard assumption of 6 percent heat rate improvement applied

to all coal units will not be feasible on some unit s, and results in more stringent goals for states whose coal units have already undertaken heat rate improvement projects than for states whose364

coal units have not undertaken such projects. The c ommenters said many utilities already implement ongoing heat rate improvement programs to capture the efficiency gains that EPA is assuming in the "best practices" portion of its Bui lding Block 1 assumption, making a further 4 percent improvement unlikely. The commenters said t he ability to achieve a 2 percent improvement through equipment upgrades will vary fr om plant to plant; new coal units and coal units that have already implemented heat rate impro vement projects will have more difficulty achieving further heat rate reductions than older u nits and units that have not previously undertaken these projects/programs. The commenters made the recommendation to allow the option for states to replace the assumed 6 percent heat rate improvement in the goal-setting formula with a case-by-case evaluation of the poten tial for, and cost-effectiveness of, further heat rate improvement projects at individual electric ge nerating units (EGUs).

Comment 33: Discrepancy between BB1 goal setting HRI and compl iance scenario

Response 33: The EPA’s BSER quantification is not prescriptive. The refore, in the EPA’s compliance modeling sources/states were free to cho ose the least-cost path towards compliance. There are many retirements scheduled to occur post 2012 even absent a CPP policy case. While these retirements are not part of BSER quantificati on, they represent alternative emissions

reductions that can move a source/state towards com pliance and alleviate the need for sources/states to rely on the building blocks techn ologies.

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

Commenters stated that there is an apparent discrep ancy with EPA's goal setting vs. EPA's compliance modeling (e.g., EPA goal setting has coa l-fired units improving efficiency by 6%, but EPA's "Option 1 - State" compliance scenario sh ows all of Gulf Power Company's coal-fired units retiring, which would completely negate any s uch efficiency improvements).

Comment 34: The EPA double-counts CO2 emissions reductions fro m Block 1 and Block 2

Response 34: The EPA disagrees with the comment. The EPA showed each building block implementation at proposal. In some cases, one bui lding block may have negated the prior. For example if building block two generation replaced a ll fossil steam generation in a state, than the building block one implementation has no impact. B ecause state goals were a product (among other things) of fossil steam generation and fossil steam emission rates, as the building block two decreased fossil steam generation it automatically reduced the significance of BB1 emission rate impacts. The commenters can observe this by going to appendix 1 of the Goal Computations TSD, changing the building block 1 assumption to 0% , and observe that this has no impact on the state goal in states where block 2 had complete ly replaced coal generation. See sections VI and VII of the final rule preamble for discussion o f how subcategory-specific emission performance rates and state goals were calculated f or the final rule.365

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

Commenters stated EPA's model predicts a fleet-wide reduction in CO2 emissions resulting from a heat rate improvement of 6%; EPA then, under Bloc k 2, appears to predict that many of the same coal fired power plants will be retired under Block 2. The commenters said it would be nonsensical, and incredibly economically damaging, to undertake heat rate improvements and then only shortly thereafter shut down those same u nits; but by combining Building Blocks 1 and 2, and using projected emission reductions combined between these two steps, EPA is doing just

that. The commenters said this results in the doubl e-counting of these emissions and inflating the stringency of the emissions reductions targets for each state; this creates an erroneously low value for its final emission guidelines.

Comment 35: Application of BB2

Response 35: Because the 111(b) and 111(d) applicability require ments treat fossil steam sources as one category, the EPA’s replacement assu mptions for building blocks two and three do not prioritize between coal and OG steam. Moreo ver, the EPA observed that nationally the ratio of OG steam generation to coal steam generati on is low, and that in some cases OG steam sources have higher emission rates than coal source s in the baseline. For these reasons, the EPA treats all fossil steam equally for replacement pur poses.

As described in Preamble Section V.A.4.b, the EPA r elies on net summer capacity for quantifying BB2 potential in this final rule. Sect ion V along with the Greenhouse Gas Mitigation TSD also explain the EPA assumptions reg arding incremental NGCC generation potential and the underlying infrastructure comment s.

As explained in the Goal Computations TSD at Propos al, the EPA recognizes that there are individual unit limitations that may not correspond to the fleet-wide building blocks assumption levels. However, the EPA’s BSER at proposal and fi nal rule is premised of regional fleet-wide reduction potential of a building block and the EPA has left states the flexibility to assign reduction responsibility in a manner that it best s ees fit regarding unit-level limitations.

Neither at proposal or final does the EPA expect Ar izona to eliminate all coal steam generation as part of their compliance pathway.

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

Commenters stated for step 3 (application of Buildi ng Block 2), if the generation data for the NGCC group in a state developed in Step 1 showed av erage annual utilization below 70% of those units' maximum possible output, and the gener ation data developed in Step 1 also included generation from the coal-fired steam or oil/gas-fir ed steam EGU groups in that state, the generation and emissions figures for the NGCC group were increased. The commenters said in addition, the generation and emissions figures for the coal-fired and oil/gas-fired steam EGU366

groups from Step 2 were proportionately decreased t o reflect an estimated potential increase in utilization of the NGCC group to a maximum of 70%. The commenters said in this step, the total (across all four groups) of the state's fossil fuel - fired generation was maintained at the amount computed in Step 1; but a portion of the total foss il generation was shifted from the coal-fired and oil/gas-fired steam EGU groups, which have high er CO2 emission rates, to the NGCC group, which has a lower CO2 emission rate, the tot al (across all four groups) of the state's CO2

emissions was reduced. The commenters said U.S. EPA is also requesting comment on an alternative computation procedure; to the extent th at generation from a state's NGCC group was

increased consistent with the NGCC utilization rate target, in order to maximize the resulting emission reductions, U.S. EPA would decrease genera tion from the state's coal-fired steam group first, and then decrease generation from the state' s oil/gas-fired steam group (instead of decreasing generation from the coal-fired steam and oil/gas-fired steam groups proportionately).

The commenters have identified multiple errors and false assumptions in the development and application of Building Block 2, including but not limited to the incorrect use of nameplate capacities, incomplete and overly optimistic analys is of the natural gas infrastructure necessary to maintain these levels of generation, inadequate consideration of the geographic location of existing and under-construction within the power gr id, and an incomplete accounting of the true costs of increased natural gas usage with respect t o manufacturing and residential heating needs.

The commenters wished to reiterate that increased u se of NGCC units was driven in the IPM model by the addition of a "shadow cost" to each to n of CO2, absent a detailed explanation of how U.S. EPA envisions such a cost being applied in a state plan.

Commenters stated EPA assumes that NGCC units can b e "re-dispatched" to a 70 percent capacity factor but fails to recognize several sign ificant impediments to achieving that goal; first, some NGCC units were financed and designed to opera te as a cycling plant at much lower capacity factors than 70 percent; as such, those NG CC units often have permit limits that may preclude operation at a capacity factor of 70 perce nt.

Commenters stated for example, in EPA's goal calcul ation for New Mexico, EPA assumed that Afton Generating Station ("Afton") could operate at a 70 percent capacity factor to generate 1,759,884 MWhr, based on the total capacity of the facility including the duct burner; however, the Afton permit only authorizes operation of the d uct burner- which represents a significant portion of the total capacity of the unit- for 1,92 0 hours per year, which equates to only a 22 percent capacity factor. The commenters said the MW capacity of the unrestricted portion of the facility (i.e., without the duct burner) is only 23 2 MW, which, if operated at a EPA's assumed 70 percent capacity factor, would only generate 1,422, 624 MWhr, or 337,260 MWhr short of EPA's expectation for Afton. The commenters said for the duct burner to make up that difference, based on the 60 MW capacity of the burner indicated in th e Afton permit, it must operate at least 5,621 hours, which is nearly three times the level that t he Afton permit authorizes for duct burner operation. The commenters said conversely, if the d uct burner operated for all 1,920 hours authorized, thus generating 115,200 MWhr, that woul d leave 1,644,684 for the unrestricted367

portion of the facility (232 MW) to meet EPA's 70 p ercent assumption, which would require operation at an 81 percent capacity factor, much hi gher than EPA has proposed.

Commenters said in short, to satisfy the level of g eneration EPA calculated for the re-dispatch of the Afton facility, PNM would have two choices - ei ther operate the facility at an 81 percent capacity factor, or apply for a permit revision to eliminate the duct burner operating hours restriction, which could trigger additional permitt ing and regulatory requirements; because EPA has neither evaluated whether an 81 percent capacit y factor is achievable (at Afton or any other combined cycle facility), nor evaluated the potenti al issues associated with revising the Afton permit to allow increased duct burner operation, EP A's rote application of its building block 2 assumptions to Afton, and New Mexico as a whole, is inappropriate.

Commenters were concerned about the significant imp act of the very recent additional EPA proposal for creating a minimum value of re-dispatc hed coal to non-existent NGCC power plants or to co-firing natural gas in existing coal-fired boilers.

Commenters stated based on the commenters' evaluati on of EPA's documents on development of the state CO2 goal for Arizona, it appears that EPA contemplates the complete replacement of Arizona's coal-fired resources by other existing na tural gas combined cycle, NGCC, generation. The commenters said this is problematic for several reasons; first, it is not clear that this generation capacity actually exists; EPA used gross , not net, generation which overstates

available resource. The commenters said it is also unclear whether EPA reduced the generation account for reserves, transmission constraints, tra nsmission losses, and added related issues.

Commenters stated co-owners of Big Stone are invest ing near $400 million in the regional haze pollution controls; the redispatch assumption is no t feasible in this case and is expected to result in required replacement generation; effectively str anding this asset, including the investment of regional haze controls. The commenters said due to this projected outcome, the commenters believed that the remaining useful life of the unit has not been considered; for these reasons building block two should be eliminated fro m South Dakota's target.

Comment 36: Recommendations for Building Block 2

Response 36: See sections V.A., V.D., and VIII of the final rul e preamble of the CPP for the EPA’s response to this comment and more information about Building Block 2 and the CO 2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final

CPP.

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

Commenters believed it is necessary for EPA to cons ider each affected facility's remaining useful life when setting the state goals, the comme nters also believed it would be appropriate to adjust Arizona's interim and final goals to account for the book life of generation assets and368

major pollution control retrofits, as well as commi tments made by utilities to shut down or convert coal-fired units to natural gas during the interim period. The commenters proposed the following few targeted changes to the final rule:

1. For purposes of goal setting under Building Bloc k 2:

a. Re-dispatch from coal-fired EGUs to natural gas combined cycle (NGCC) EGUs should occur upon the later of any of the following, if re-dispa tch would occur prior to January 1, 2030:

i. January 1, 2020;

ii. 40 years after initial commencement of operatio n; or

iii. 20 years after commencement of operation of ma jor pollution control retrofits, such as selective catalytic reduction (SCR), flue gas desul furization (FGD), or baghouses at any EGU if installation occurred prior to issuance of the fina l 111(d) rule, or after commencement of operation of selective non-catalytic reduction (SNC R) or electrostatic precipitators (ESPs) at an EGU owned by a small utility as defined by the Fede ral Energy Regulatory Commission (FERC) if installation occurred prior to the first year of the compliance period (i.e., 2020).

b. For coal-fired EGUs that either shut down or con vert to natural gas-fired operation, redispatch would occur as specified in an applicable implementation plan or enforceable Title V permit, provided that such commitment is entered pr ior to the effective date of the final rule and the date of shutdown or natural gas conversion is p rior to January 1, 2030.

c. Coal-fired EGUs that do not re-dispatch prior to January 1, 2030 under paragraphs 1.a or 1.b remain coal-fired EGUs for purposes of calculating the interim and final Goals.

2. For purposes of goal setting, when re-dispatchin g to NGCC, a rate of 1,000 lb CO2/MWh should be used, consistent with the most stringent standard in the EPA's proposed New Source
Performance Standard for EGUs.

Commenters supported the Xcel Energy recommended ch anges to the Plan; eliminate the block 2 penalty for NGCC generation displaced by renewables by: Estimating NGCC MWh's displaced by wind in 2012 and add the displaced MWhs to the a ctual NGCC MWh's to calculate a new adjusted capacity factor; then re-calculate a new B lock 2 with the adjusted capacity factor.

Commenters stated one area in which EPA may want to revise its goal computations is the treatment of NGCC emission rates and potential outp ut; the proposed rules treat all NGCCs in a state as being essentially the same, and assume tha t all NGCCs can be operated at 70% capacity factor with the average 2012 emission rate of the s tate's combined-cycle fleet. The commenters said this assumption is problematic, because NGCCs come in at least three varieties:369

-Cogenerating units with significant steam load, wh ich have very low net heat rates and emission rates, and whose output may be limited by the energ y requirements of the steam host; assuming that these units can increase output from 2012 leve ls may not be realistic, and their net emission rates are not representative of the potential perfo rmance on non-cogenerating units.

-Modern NGCCs using frame-type turbines, which can operate at heat rates under 7,500 Btu/kWh and emission rates well under 850 lb/MWh, a t high load; these units can generally operate at capacity factors over 85%, but many oper ated at much lower capacity factors in 2012; at low load levels, or with many starts and stops, the units had much higher 2012 heat rates and emission rates (over 900 lb/MWh in some cases); rat her than assuming that these units will operate at 2012 emission rates at 70% capacity fact or, EPA should assume that they will have a heat rate typical of high-load operation.

-Older NGCCs, from the 1970s and 1980s, and those t hat use less efficient combustion turbines (such as the aero-derivative turbines optimized for fast starts and rapid ramps). In 2012, many of these units operated at very low capacity factors, often under 10%, resulting in very high heat rates and emission rates; for example, the Arkansas Oswald and Fitzhugh plants operated at 7% capacity factors and (respectively) 8,500 and 9,400 Btu/kWh in 2012, while a handful of other plants (Stony Brook and Cleary in Massachusetts, Co olwater in California, Brunot Island in Pennsylvania, Sterlington in Louisiana, Beaver in O regon) ran at capacity factors as low as 1% and heat rates as high as 15,000; while these units will never operate at the efficiency and CO2 emission rates of the high-efficiency plants, their performance would improve remarkably were they operated at higher capacity factors.

The commenters said the EPA should examine the feas ibility of differentiating the NGCCs into these three categories, and using generic (rather t han 2012 state-specific) values for the emission rates of groups 2 and 3 at 70% capacity factor.

Comment 37: BB3; RE in calculation

Response 37: See Section V.E for a discussion of building block three in the final CPP rule.

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

Commenters stated Block 3 assumes that renewable en ergy production can increase to a level above the minimum load in the ERCOT {Electric Relia bility Council of Texas} market. The commenters said it would be extremely difficult for Texas to achieve both a 70 percent capacity factor for NGCC plants and 20 percent renewable ene rgy production without increasing CO2 emissions. The commenters said ERCOT currently has over 11 gigawatts (GW) of wind capacity and 49 GW of gas-fired capacity; during low load pe riods (off-peak hours in the shoulder months of spring and fall), the majority of ERCOT's NGCC f leet would be turned offline and a percentage will be backed down to the unit's Low Su stainable Limit (LSL) to provide ancillary370

services. The commenters said when NGCC are ramping up or down or when those units are not performing at their High Sustainable Limit (HSL), C O2 emissions are increased for those facilities; for example, LCRA's new NGCC unit (one of the most efficient NGCC units on the ERCOT grid) emits 6 percent more CO2 at its LSL com pared to its HSL. The commenters said not only are CO2 emissions higher per MWh, but othe r pollutants increase on a per MWh basis as NGCCs ramp up and down; this scenario provides a nother example of EPA's building blocks working against each other.

Commenters stated New York State must get credit un der the EPA's Plan for its existing renewable energy resources. The commenters said New York power plant developers have been making investments toward meeting the goal of the s tate's RPS of having 30 percent of the electricity consumed by New Yorkers come from renew able energy resources by 2015. The commenters said according to the NYISO's Power Tren ds 2014: Evolution of the Grid, approximately 23 percent of New York's electr icity generation is supplied by renewable energy resources. The commenters said with the assi stance of the RPS program, a diversified generation fleet has continued and been expanded, b ringing the level of renewable resource capacity in the state to over 6,000 megawatts (MW). The commenters said only in-State renewable energy resources are eligible for the RPS . The commenters said in terms of the overall resource supply mix available for New York State an d the associated emissions benefits, the EPA's Plan should account for the value of existing in-State hydro resources. The commenters said imported resources should not be considered fo r emission reductions ahead of reductions that are available from power plant assets in New Y ork State. The commenters said additional renewable energy resources in New York State are ne eded to meet New York's RPS goal and to garner the associated emissions benefits within New York State.

Commenters stated Building Block 3 requires that st ates expand the amount of lower-carbon generating capacity; in the case of Indiana, the in terim goal is an additional 5 percent by 2020 and 7 percent by 2030. The commenters said since th e baseline for this incremental renewable goal is 2012, the approximately 5 percent renewable generation in generation portfolios will not be credited toward this goal; this is a serious dis incentive for future voluntary efforts to reduce GHGs or any other emissions from regulated units. T he commenters said in setting the state-bystate renewable goals under Building Block 3 EPA di d not consider the renewable potential of each state, but EPA instead used a regional methodo logy that does not account for significant differences in the renewable potentials of each sta te. The commenters said for example, for purposes of setting renewable targets EPA placed In diana in the "North Central" region, which includes Illinois, Iowa, Michigan, Minnesota, Misso uri, North Dakota, South Dakota and Wisconsin. The commenters said EPA used a regional average of existing renewable portfolio standards to prescribe state targets within that re gion; this ignores both the political realities tha t existing renewable energy standards are creatures o f the politics of a given state, and not necessarily an accurate reflection of the renewable potential of a region or state, and the simple fact that states within these arbitrary regions do not share the same renewable potentials; for example, Indiana has limited solar resources. The c ommenters said in 2013 the Indiana Utility Forecasting Group issued its report in which it exp lains that Indiana is in a region of the country371

that has the lowest annual average solar radiation. The commenters said in addition, EPA's assumptions about the potential for wind power in I ndiana are erroneous as compared to the wind potential of Iowa and the Dakotas, and the inc lusion of Indiana in a region that includes

these northern states inflates Indiana's renewable targets beyond the potential incremental capacity that may be available to meet the state's goals. The commenters said EPA should allow each state to determine its own potential renewable targets based upon the renewable potential of

that state. The commenters said EPA must also clari fy how states should account for renewable energy that is generated in one state but consumed in another; in the case of Indiana, wind energy produced in four states is delivered across the sta te's borders; approximately 50 percent of the wind secured in purchase power agreements in the st ate is produced out of state.

Commenters stated the existence of emission reducti on policies such as renewable portfolio standards act as a supplemental to the overall aver age emission reduction per Mwh simply by being on the books; but the tangible benefits of su ch policies are so difficult to measure that it is impossible to know how much actual emission reducti on is a direct result of these renewable energy initiatives. The commenters said rather than use an unadjusted method of calculation which would make it easier for energy producers to comply proposed regulations, the EPA chose to use an adjusted formula to calculate emission re duction goals; as a result, states would only be able to meet the new targets if they enacted pro-re newable policies such as renewable portfolio
standards.

Commenters stated in the Proposal, EPA reduces each state's CO2 emission rate goal using renewable energy and nuclear energy factors:

-Renewable energy is factored in by adding potentia l renewable energy growth for each state into

the state's emission factor for affected EGUs calcu lated from a regional renewable energy
benchmark.

-Nuclear energy is factored in by adding "under con struction" generation and 5.8 percent of each state's existing nuclear generation (using a 90-per cent capacity factor) to account for "at risk" generation into the state's emission factor for aff ected EUGs.

The commenters said the EPA should calculate renewa ble energy's contribution to the goal in a way that does not penalize states that have taken s teps to develop renewable energy while creating incentives for the continuation or further ance of such efforts. The commenters believed the EPA satisfied this objective in the Proposal. T he commenters believed the EPA's method of using regional averages is appropriate, as that app roach is more likely to account for variability in the availability of resources across regions of the country. The commenters have not investigated alternative regional boundaries; there fore, does not offer comment on the appropriateness of the specific regions used by the EPA. The commenters also supported the EPA's conclusion that all renewable energy in place as of the compliance date should be counted toward compliance with the states' goals.372

Commenters stated Dairyland is a true leader in ren ewables; over 12 percent of the power Dairyland provided to consumers last year came from a diverse mix of renewable resources. The commenters said Dairyland has access to hydro, biom ass, solar, biogas and wind resources. The commenters were concerned the proposed CPP does not guarantee Dairyland considerable efforts to develop renewable resources will be give n proper credit. The commenters said to diversify the Dairyland generation portfolio and pr otect Dairyland member interests, Dairyland

utilizes renewable resources in all the states that Dairyland serves; yet even though Dairyland serves members in these states, the current rules d o not ensure Dairyland will receive credit for these resources simply because the coal plants are all located in Wisconsin. The commenters recommended the rules should give utilities credit for all their available renewable resources, regardless of the state in which the resource sites are physically located.

Commenters stated EPA must be consistent in the man ner in which it treats renewable energy

that is sold across state lines. The commenters sai d when EPA calculated the goals for each state, all renewable megawatt hours (MWh) generated in the state in 2012 were placed in the denominator; however, with respect to goal achievem ent, if this generation is credited to the power purchaser in a different state, the generatin g state would be required to make up the
shortfall.

Commenters stated the Proposed Power Plant Rule, on ly incorporates 'renewable green power' as a program under a States individual carbon emission s programs, a.k.a. California Cap and Trade and Renewable Energy Portfolios; as such, only the reduction in CO2 emissions achieved by credit offsets at the State level is recognized, an d monetized and not the actual value of the renewable green power generation capacity in terms of Jobs, or ZERO emissions (wind, solar).

Commenters stated EPA's BSER Building Block 3 encom passes both renewable generating capacity and new and preserved nuclear capacity; th e commenters supported the increased development of renewable energy (RE) nation-wide, b ut EPA's approach to quantifying the potential emission reductions that could be achieve d through increased deployment of renewable generating capacity raises a number of methodologic al concerns and may result in individual state emission goals that are not achievable. The c ommenters said EPA should revise the generic approach to quantifying potential reductions from i ncreased deployment of renewables and EPA should adjust state-specific goals to reflect state -specific concerns about the proposed emission rate goals before finalizing these goals; EPA shoul d work with the states to set achievable state goals that reflect in-state conditions.

Commenters stated EPA's proposed primary and altern ate methods for setting RE generation goals raise significant concerns about whether the proposed goals can be achieved by the states; specifically, the primary proposed approach relies on individual state RES targets to set regional goals. The commenters said this regional a pproach inappropriately assumes that individual state RES mandates are proxies for regio n-wide RE potential and that all neighboring states have similar RE potential; further, EPA's us e of RES requirements fails to consider key design features of state RES programs.373

Comment 38: The EPA needs to consider the remaining useful lif e of existing plants when formulating the group of affected generating units.

Response 38: See sections V.A., V.D., and VIII of the final rul e preamble of the CPP for the EPA’s response to this comment. Also see the docket memo titled “Stranded Assets A nalysis”.

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

Commenters stated exclude coal plants from the re-d ispatch calculation if they are 40 or less years old as of 2030. The commenters said this poli cy in conjunction with allowing a glide path on the interim goal will present a more reasonable end target for the state of Arizona and provide enough time to put in place infrastructure to accom modate the transition away from coal based electricity.

Comment 39: The proposed rule does not account for increased d uct firing as NGCC operations

increase.

Response 39: The EPA disagrees with the comment that it should assum e a higher NGCC

emission rate based on increased utilization. Firs t, the EPA surveyed historical state-level data and found it to support a negative correlation betw een emission rate and utilization– suggesting the emission rates are generally lower (not higher as suggested by the commenters) as utilization increases in a state. This is likely due to effici ency gains from less cycling. Therefore, the EPA believes its assumption to use the historical NGCC emission rate to inform BSER calculations is conservative and reasonable. Finally, the EPA’s bu ilding block analysis and assessment of the 75% value is based off historical generation and re ported capacity values that reflect duct burner operation.

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

Commenters stated in its goal-setting calculation, EPA assumes that the CO2 emission rate of the redispatched NGCC units will be equal to their 2012 emission rate; however, this is unlikely to be a reasonable assumption, because EPA failed to c onsider the implications of its building blocks on unit operations. The commenters said all Wisconsin NGCC units have duct-fired peaking capacity that generally comprises at least 10-20 percent of the total capacity of the units. The commenters said the duct-fired capacity has a s ignificantly higher incremental heat rate - and emission rate - than the unfired capacity, so t he duct-fired capacity has historically been operated fairly infrequently; however, in order to achieve a capacity factor of 70 percent, additional duct firing will likely be required at s ome units. The commenters said when determining the appropriate emission rate to use fo r redispatched NGCCs in calculating state goals, EPA must consider the fact that redispatched NGCCs operating under the assumptions in374

Building Block 2 will likely operate with increased duct firing - thus at a higher emission rate - than they did in 2012.

Comment 40: Use a rate no lower than rate proposed for new NGC C

Response 40: See Section V of the Preamble for a discussion of 111(d) BSER rates relative to 111(b) rates.

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

Commenters stated in calculating the emission rate targets for Arizona, EPA assumed that NGCC units would operate in future years at an emis sion rate of 900 lb CO2/MWh; this value is the combined average annual emissions rate for the NGCC units in Arizona during 2012; however, this emission factor is not consistent wit h EPA's analysis regarding emission rate capabilities for new, highly efficient units under section 111(b). The commenters said this single year snapshot could underestimate the emission rate s for these units given that these units could operate differently in the future. The commenters s aid EPA should remain consistent with its analysis regarding the emission rate that is contin uously achievable for NGCC units and use a rate that is no lower than the rate that the agency proposed for new sources under section 111(b).

Comment 41: BB3 clean energy storage must be properly accounte d for

Response 41: See sections V.A and V.E from the Preamble. The EPA has revised its approach to quantifying building block three potential based on comments.

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

Commenters stated the proposed CPP fails to recogni ze the importance of clean energy storage in its compliance equations and BSER analysis. The commenters said Michigan is a prime example of the importance of energy storage via the Ludington Pumped Storage reservoir (LPS or Ludington) co-owned with DTE Electric. The comme nters said Ludington can provide energy at a moment's notice, which is critical for grid st ability and reliability. The commenters said at night, when electric demand is low, Ludington's rev ersible turbines pump water 363 feet uphill from Lake Michigan to the 842-acre reservoir. The c ommenters said during the day, when electric demand is high, the reservoir releases wat er to flow downhill and turns turbines to make carbon-free electricity. The commenters said Luding ton can generate up to 1,872 megawatts, which is enough electricity to serve a community of 1.4 million residential customers; furthermore, over the next 6 years Ludington will r eceive 300 MW in additional efficiency upgrades. The commenters said the output is more th an double the capacity of any single unit on Consumers Energy's system, and is a key piece of Mi chigan's reliable energy infrastructure. The commenters said pumped storage technology enables t he plant to respond quickly to the daily,375

weekly and seasonal highs and lows of Michigan's en ergy demand. The commenters said the plant also provides economic benefit to Michigan ra tepayers by enabling Consumers Energy to avoid expensive spot market prices when customer de mand exceeds the capacity of the company's baseload plants, such as during extreme w eather (e.g. heat waves and polar vortexes). The commenters said nonetheless, EPA's proposed com pliance formula does not include clean energy storage; it penalizes states that have prude ntly invested in energy storage technology because the emissions and megawatt hours from plant s used to charge the storage system are included in the equation, but the megawatt hours di scharged from the storage system are not; thus, Michigan's emissions intensity (as calculated by EPP in the CCP proposal) is actually increased due to our optimization of the grid resou rces with energy storage

Comment 42: Co-firing

Response 42: Co-firing is not part of the final BSER quantificat ion. See section V. of the Preamble and the GHG Mitigation Measures TSD.

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

Commenters stated co-firing should not be included in the calculation of state emission rate goals.

Commenters agreed that co-firing should be an avail able compliance option for coal-fired EGUs, but opposes the inclusion of co-firing in the compu tation of emission rate goals; because the potential applications of co-firing are limited by EPA's current NSR guidance, co-firing is not an "available" control technology.

The commenters stated under the federal NSR regulat ions (which most states have adopted either directly or by issuing their own similar regulation s), EGUs can compare baseline emissions to projected actual emissions to determine whether a p roject will result in a significant increase in emissions. In calculating "projected actual emissio ns," EGUs "shall exclude" any increase in emissions that (1) is unrelated to the project, and (2) could have been accommodated during the baseline period. 40 C.F.R. section 52.21(b)(41)(i)( c); this is commonly referred to as the "demand growth exclusion."

The commenters stated in guidance regarding the Nor thampton Generating Company, EPA Region III made clear that both conditions are requ ired before emissions increases can be excluded from the projection. The commenters said for example, according to the Northampton Guidance, if a company proposed to switch fuels, it may have been able to accommodate the emissions from the new fuel (although not the fuel) during the baseline period but it nonetheless would not be able to exclude any projected emission s from use of the new fuel under the demand growth exclusion because the emissions would be rel ated to the fuel switch. Northampton
Guidance at 4-5.376

The commenters stated this means that, for a coal-f ired unit that proposes to co-fire natural gas,

the unit would be unable to increase its utilizatio n and corresponding emissions over the baseline period without potentially triggering NSR, at least for NOx, CO and particulate matter.

The commenters said this is because, even though in creased utilization and emissions from a unit while it is combusting coal would be unrelated to t he co-firing project, the Northampton Guidance indicates that all post-project emissions increases would be considered to result from the project and would have to be included in calcul ating the projected emissions.

The commenters stated such a consequence will disco urage companies from undertaking natural gas co-firing projects at their coal-fired units.

The commenters said given the risk that co-firing w ill trigger NSR or require units undertaking such projects to limit their future utilization, it is not appropriate to consider co-firing in the computation of the emission rate goals. The comment ers stated at a minimum, before considering this option, EPA would need to evaluate the costs associated with obtaining an NSR permit for co-firing, including the potential insta llation of hundreds of millions of dollars in controls for conventional pollutants.

Commenters stated EPA should account for reductions achievable from increased co-firing of natural gas as part of Building Block 1; co-firing is an "inside the fence" change that will reduce emissions from existing coal-fired EGUs.

Comment 43: The EPA's Use of Average 2012 NGCC Emission Rates When Applying Building Block 2 to State Goal Calculations is Inappropriate

.
Response 43: The EPA assumes the historical NGCC average emission ra te as a reasonable reflection of the NGCC fleet-emission rate going fo rward. In addition to the reasons provided in Response 39, the EPA disagrees with the comment her e on several grounds. First, the significant amount of NGCC fleet expected to come online is exp ected to be more efficient than the historical average. Second, as units increase thei r utilization they improve efficiency by removing the inefficiencies that materialize in uni ts that practice more cycling. Finally, the EPA’s building block two estimates pertain to fleet capability, not the expectation of any particular unit. While the EPA observes that the f leet on average may increase its utilization to 75%, the increases NGCC utilization may be realized through the most efficient units increasing utilization rather than every unit increasing to th e same 75% utilization level. For these reasons,

the EPA feels that its reliance on the historical e mission rate is conservative and reasonable.

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

Commenters stated when computing the NGCC emissions for the Building Block 2 NGCC redispatch, EPA calculates the additional CO2 emiss ions from baseline NGCC units using the increase in generation from baseline to 70 percent NGCC capacity factor, at the original baseline377

year state average NGCC CO2 emission rate. The comm enters said this is inaccurate and inappropriate, and underestimates the additional NG CC CO2 emissions due to the redispatch. The commenters said instead of using the average ba seline year NGCC CO2 emission rate, EPA must compute and use the incremental NGCC CO2 emiss ion rate; that is because most of the most efficient, lowest emitting units are already g enerating at or near the basis 70 percent capacity factor (and have hence significantly influ enced downward the baseline average CO2 emission rate), whereas the units that would actual ly be redispatched and contribute the most increase in net generation are the less efficient, higher emitting units. The commenters said the incremental emission rate of these higher emitting units must be used to estimate the additional CO2 emissions from the redispatch.

Commenters stated to compute the state average incr emental NGCC CO2 emission rate requires an analysis of the eGRID baseline data at the gener ator level; the EPA cannot summarize the data to the state level first, and then perform the calculations. The commenters said after appropriately determining the generator net capacit y ratings the EPA must calculate and review generator-by-generator the baseline capacity factor , CO2 emission rate, and potential contribution of each to the redispatch. The comment ers recommended the following procedure to compute the state average NGCC redispatch increment al CO2 emission rate:

-For each NGCC generator, calculate the baseline ye ar net capacity factor using the eGRID net generation and the summer net capacity rating; subt ract this number from 70 percent to determine the net capacity factor increase (or decr ease) available; if a generator was operating above 70 percent net capacity factor in the baselin e year, it is appropriate to adjust this downward to the 70 percent target.

-For each affected NGCC generator, calculate the ba seline year average CO2 emission rate by dividing the CO2 emission (in tons) by the net gene ration MWh, times 2000 to convert to pounds.

-For each NGCC generator, calculate the number of a nnual net generation MWh available for redispatch using the net capacity factor increase a vailable, and the summer net capacity rating of
the unit.

-For each NGCC generator, calculate the number of a nnual CO2 emissions increased (or decreased) by multiplying the baseline year limited CO2 emission rate by the number of annual net MWh available for redispatch.

-Now for each state, accumulate the total number of annual net generation MWh available for redispatch from all NGCC generators, and the total number of annual CO2 emissions changed from all NGCC generators.

-For each state, divide the accumulated annual CO2 emissions by the accumulated annual generation available; this is the incremental NGCC CO2 emission rate; use this in place of the378

baseline year average NGCC CO2 emission rate when c omputing the CO2 emission increase from NGCC units due to the Building Block 2 redispa tch.

Comment 44: BB2 - New NGCC to substitute for existing NGCC

Response 44: See Section V in the Preamble for a discussion of b uilding block two in the final

CPP Rule.

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

Commenters stated under Block 2, EPA is calling for 70% capacity factor existing NGCC unit operation; EPA is taking comment on whether new nat ural gas combined cycle generation should "count" towards delivery of EPA's existing N GCC 70% capacity factor Block 2 target. The commenters said EPA is also taking comment abou t whether new NGCC should be allowed for displacing existing coal generation. The commen ters said EPA proposed that they will have the new NGCC figured into both target-setting and c ompliance. The commenters recommended that EPA not include new NGCC into Section 111(d) t arget setting or compliance. The commenters supported EPA allowing the segment of ne w NGCC generation that outperforms the Section 111(b) NSPS to "count" towards satisfying S ection 111(d) compliance targets. The

commenters said EPA should leave it to the discreti on of the state about whether the state wishes to opt-in new NGCC for giving relief to EPA's propo sed 70% capacity factor target for existing

NGCC. The commenters noted that EPA should eliminat e the Block 2 target component for Minnesota, giving deference to the Minnesota establ ished Integrated Resource Planning process, which is already giving consideration to fuel diver sity, cost and environmental profile, including CO2 environmental externalities. The commenters sup ported EPA's clarified intention to allow renewable energy and customer energy efficiency to receive treatment in the denominator of emission rate compliance determinations.

Comment 45: RE goal for each state and its 2012 fossil fueled- fired generation

Response 45: As explained in Section VI of the final CPP, the EP A is finalizing building block

three treatment in the a similar manner it finaliz ed building block two treatment in that it will replace historical fossil generation levels.

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

Commenters stated moving forward with the proposal, EPA wishes to receive further comment on whether or not the difference of the target rene wable energy goal for each state and its 2012 counterpart should exceed 2012 fossil fuel-fired ge neration. The commenters said the difference should absolutely surpass the state's reported carb on producing generation level because it will then push the effort of rising renewable energy hig her than fossil fuel-fired energy.379

Comment 46: BB3 - RE data used from 2030-2032

Response 46: Building Block 4 is not part of BSER quantification in this final rule. See Section V of the preamble.

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

Commenters stated the draft rule bases the final ta rget on 2029 energy efficiency and renewable energy potential, but the target is for 2030. The c ommenters said while the state plans are to show how they will meet the target in 2030, actual demonstration of compliance with the final target is over the rolling three-year period of 203 0 - 2032. The commenters stated the targets for 2030 and later should be based on the energy effici ency potential in those years. The commenters added the impact of an extra year or two would be g reater, and this would also increase the
amount of renewables counted.

Comment 47: Application of BB3

Response 47: Thank you for your comment, See Section V.E for a d iscussion of nuclear and RE

treatment in the final rule.

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

Commenters stated for step 4 (application of Buildi ng Block 3), U.S. EPA estimated the total quantities of generation from renewable generating capacity and from under-construction or preserved nuclear capacity for each state; separate estimates of renewable generation were computed for each year of the plan period for each state based on the state's 2012 renewable generation and a regional growth factor. The commen ters said nuclear generation was estimated as the amount of under-construction and preserved n uclear capacity for each state operated at a utilization rate of 90%, consistent with recent ind ustry-wide average utilization rates for nuclear
units. The commenters have several concerns with th e technical approach used by U.S. EPA.

Commenters supported the adjustment of goal formula as fossil plant utilization is reduced over time with increasingly higher penetration of clean energy sources.

Comment 48: RE Potential

Response 48: See response 47 above.

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

Commenters supported EPA's reliance on increased re newable energy generation to achieve significant carbon emissions reductions, but believ es that the EPA significantly underestimated the potential for renewable energy generation, in p art because the proposed rule does not380

explicitly account for distributed solar resources. The commenters said renewable energy, especially wind and solar, have been growing at an astonishing rate and their costs have declined dramatically. The commenters urged the EPA to: (1) remove the "maximum" limits on growth of renewable energy, (2) adjust the renewable energy g oals to account for the gains in renewable energy deployment made between 2012 and 2017; and ( 3) implement the UCS's "Demonstrated Growth" approach for calculating state goals; and ( 4) use more technical potential data and the state's actual and expected rate of deployment to e valuate the quantity of renewable energy that
can be achieved at reasonable cost. The commenters believed the CPP should drive renewable energy development in Texas by accounting for the a ctual and expected rate of deployment, rather than weakening it.

Commenters stated there is a potential difference b etween the options for establishing RE potential for the purpose of goal setting and how E PA will determine compliance. The commenters said in target setting, EPA set the base line for each state based on the amount of renewable energy generation physically occurring in a state; EPA then calculated a current RE performance level by dividing in-state RE generatio n by total in-state generation to yield a percentage. The commenters said EPA's methodology d oes not account for whether that renewable energy had been "implemented" by the stat e, or whether the RECs corresponding to that generation are held in-state; thus, some state s may have a higher or lower baseline of RE generation and RE performance level than they would be able to report for compliance purposes today.

EPA must defer to existing Federal and state-specif ic policies in its calculation of renewable energy potential.

Commenters stated, since 1981, the FPSC has establi shed DSM and energy efficiency goals for the utilities serving 85 percent of Florida's load. Commenters said, the EPA's national application of energy efficiency reductions based on existing a nd new load growth, however, is not an appropriate standard setting strategy. Commenters s aid, likewise, PURPA and Florida law provide the legal framework for the development, in terconnection, and economic parameters of renewable energy. Commenters said, the EPA must def er to existing Federal and state-specific policies in its calculation of renewable energy pot ential for Florida and other states.

Comment 49: The EPA has miscalculated renewable energy availabi lity

Response 49: See response 47 above.

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

Commenters stated EPA miscalculates the availabilit y of RE by the methodologies used to evaluate state and regional resources; in reviewing RE availability to determine 2030 RE regional targets, EPA makes several methodological flaws: excluding existing hydropower when included in existing state program goals, capping t he maximum level of RE generation in any state at the regional average target, assuming that all States within a region will grow at the same rate to reach RE targets, recognizing only RE devel oped within state boarders, including existing and under- construction nuclear units, and applying its 5.8% nuclear "at risk" assumption to381

every state that has existing nuclear capacity. The commenters added most legislation accounts for RE at the point of use, rather than the point o f generation. (See Pace Study Section 3.1, at 16.) The commenters said unless EPA is seeking to s ubstantially disrupt the market in RE, it should clarify that renewables are accounted at the point of use, not generation, consistent with state practice.

Commenters stated in order to determine state RE ta rgets under BB3, EPA used 2012 state performance data demonstrating in-state generation from non-hydropower RE in each State; EPA then used this data to formulate state t argets. The commenters said in setting these targets, EPA did not consider the need for economic development for different business sectors, the cost of renewable resources and other options a vailable within each State, availability of other fuels within the State, availability of trans mission in the State, the costs, benefits and consequences of achieving environmental, economic a nd power goals through alternative means,
and economic conditions of electric consumers and/o r rural electric ratepayers.

Commenters stated EPA complicates its faulty method ologies by using blanket assumptions for all States, both for assuming that all states withi n a region will grow at the same rate to reach RE targets and in applying its 5.8% nuclear "at risk" assumption to every state that has existing nuclear capacity. The commenters said these assumpt ions particularly harm Arizona and its associated RE target as Arizona's nuclear generatio n is not at risk of being retired due to market conditions; therefore, it is inappropriate to apply the 5.8% "at risk" assumption to Arizona and its target. The commenters said EPA's failure to accoun t for the fact that "at risk" facilities are not spread evenly throughout the nuclear fleet and for states that have much lower "at risk" units, substantially affects States', such as Arizona's, R E target.

Comment 50: BSER Block 3 - Use Expanded Amount of Less Carbon- Intensive Generating Capacity

Response 50: See Section V.E of the preamble.

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

Commenters stated EPA's BSER Building Block 3 encom passes both renewable generating capacity and new and preserved nuclear capacity. Th e commenters said EPA's approach to quantifying the potential emission reductions that could be achieved through increased deployment of renewable generating capacity raises a number of methodological concerns and may result in state emission goals that are not ach ievable. The commenters said if EPA does not revise the approach to quantifying potential reduct ions from increased deployment of renewables, EPA should adjust state-specific goals to reflect state-specific concerns.

Comment 51: BB3 & BB4 - RE & EE

Response 51: See Section V.E in the Preamble. The EPA has revise d its BB3 approach to better reflect the comment. Section V also explains why d emand-side energy efficiency is not part of382

the final BSER quantification. Both RE and EE abat ement measures are eligible for demonstrating compliance (See Section VIII of the P reamble).

As described in Section VI and the CO2 Emission Per formance Rate and Goal Computation TSD for CPP Final Rule, the EPA reversed the order of i mplementing the building blocks to be sure it captured the full potential of BB2 per the commente rs suggestion. The EPA also revised the treatment of BB3 potential in the goal computation to be consistent with BB2 in that they replace higher emitting MWhs on a 1-for-1 basis.

As discussed in Sections V and VI, the EPA takes a regional approach to quantifying the BSER, and thus the corresponding subcategory rates and st ate goals reflect the interconnected-nature of the grid and the replacement potential of the regio nal RE potential is distributed across the sources/states in a region instead of being concent rated in the state where they may be eventually
located.

A discussion regarding the use of some biomass feed stocks for compliance purposes can be found in Section VIII of the preamble.

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

Commenters stated EPA must make consideration regar ding the RE & EE calculation in the state goals.

Commenters stated EPA must be consistent in the man ner in which it treats RE that is sold
across state lines. The commenters said when EPA ca lculated the goals for each state, all renewable megawatt hours generated in the state in 2012 were placed in the denominator; however, with respect to goal achievement, if this generation is credited to the power purchaser in a different state, the generating state would be required to make up the shortfall. The commenters stated this points out one more reason t hat RE should not be used in EPA's goal setting but, rather, encouraged as a means of achie ving compliance.

Commenters added EPA should adjust the goal-setting formula for calculating building block
three to reflect the reduced emissions from affecte d EGUs from displacement by renewable energy. The commenters stated the NODA addresses th e issue regarding the calculation of statespecific carbon reduction goals; specifically, it a cknowledges the concerns of some stakeholders that the formula for calculating each state's goal are not consistent across different resources between building blocks 2 and 3, and proposes to ma ke the building block 3 calculation consistent with the building block 2 calculation. T he commenters think that the proposal in the NODA is the correct approach, as it would correctly remove from each state's carbon intensity
numerator emission reductions from the reduction in fossil generation when renewables and energy efficiency increase; affected EGU MWhs shoul d be removed from the denominator and the equivalent number of MWhs should be added back based on low- and zero-carbon generation from block three, and emissions associated with aff ected EGUs should be removed from each state's carbon intensity numerator. The commenters said this approach would also be consistent with the approach in block two for calculating the impacts of block three on the state emission rate goals.383

Commenters added renewable energy and energy should be used to remove emissions from the highest emitting resources first; this is consisten t with how renewable energy would be used under a best system of emissions reductions, as dis placing the highest-emitting resources first would be the most cost-effective option for achievi ng the maximum emissions reductions. The
commenters said if carbon cost were accounted for i n generation dispatch decisions, as it may be in some regions as part of implementation of buildi ng block 2, most gas units would be dispatched lower on the supply curve than many coal units, putting coal units onto the margin where they will be displaced by wind generation.

Commenters added if EPA maintains its Proposed RPS Approach, it should also account for load growth when calculating the MWh required to meet th e future percent-based renewable energy targets. The commenters stated the calculations inc luded in the TSDs that accompany EPA's June 2 release indicate that, under the Proposed RP S Approach, the growth rate calculated from the percent-based renewable target that was derived from the regional RPS average target was multiplied by 2012 electricity consumption to arriv e at the 2030 renewable energy MWh target; in reality, state RPS targets are almost al ways written as a share of future electricity consumption, so the conversion to the 2030 MWh targ et should have used an estimation of future load growth and 2030 load, such as the state and re gional estimates provided in EIA's Annual Energy Outlook.

Commenters added States should be allowed to use R E generation and EE resulting from measures implemented prior to 2020 by adding such g eneration to the denominator in subsequent compliance periods or to allow a state to extend be yond 2030 the impact of the final emission rate goal. The commenters stated a state could accu mulate an RE and EE "bank" between 2012 and 2020 and use it to demonstrate compliance in 20 30 and subsequent years; this would recognize that states which are leaders in RE and E E, and thus already have harvested some of the "lower hanging fruit" of cost-effective opportu nities, may need more time to reach their final goal. The commenters said EPA should clarify that u tility programs and commitments to invest in RE and EE measures constitute "existing measures " that states may count toward compliance.

Commenters added Colorado EGUs and ratepayers have made, and continue to make, significant financial investments; requiring more reductions in states that have already made significant carbon reduction investments may not be as cost eff ective as EPA projects. The commenters stated as proposed, the state goal is derived from extremely complex calculations that are based on numerous technical details and long-range projec tions that confer a high degree of uncertainty in determining whether the state goal is appropriat e, realistic and attainable. The commenters said that states such as Colorado essentially recei ve reduced or little credit for early investments in renewable energy, as the reduced baseline was th en used to calculate a more stringent 2030 goal. The commenters stated EPA should allow states to use an alternative approach in addition to the proposed BSER, whereby a state's baseline is not impacted by pre-2012 renewables.

Commenters suggested the following adjustments when determining state goals to ensure that the EPA's state emission reduction targets reflect appl ication of the BSER to affected EGUs:

1. The EPA should exclude the technical potential b enchmark from the alternative approach and rely on the IPM model results with mod ifications.384

2. The EPA should use the Sunshot -62.5% cost scena rio as the cost input for utility PV in the IPM model and as the cost input for distribu ted PV from the SolarDS model.

3. The EPA should use the Sunshot -62.5% scenario d istributed PV solar capacity projections to hard-wire distributed PV into the IP M model to include distributed PV.

4. The EPA should update the current generation dat a for solar from EIA data with SEIA's recommended outlined approach.

5. The EPA should update the performance estimates used in the IPM model for solar.

6. The EPA should use a 2012 or higher baseline yea r.

Commenters added if EPA were to adopt a formula in which RE and EE displace all existing fossil generation on a pro rata basis, it would hav e to ensure that it maintains the potential emission reductions from building block 2. The comm enters said if RE and EE are assumed to displace NGCC generation, that would lower the capa city factor of NGCC plants and create additional potential reductions from building block 2, when using a 70 percent (or any other) achievable NGCC capacity factor in target setting. The commenters added the correct reductions from NGCC units could be calculated either by displ acing fossil generation with block 3 and 4 resources before calculating the block 2 resources or by doing a true-up to block 2 to restate the achievable reductions by returning NGCC units to th e specified 70 percent capacity factor.

Commenters stated Building block 3 (RE) is calculat ed based on 2012 electricity demand but does not account for load growth; in some states, i f load were to grow, they would basically need to add more renewables than natural gas in order to reach/maintain the goal (because the goal is significantly less than the new source performance standard for new or modified NGCC plants). The commenters asked if EPA has considered adding l oad growth to its equation, and if so, what growth percentage does it believe is reasonable.

Commenters stated existing renewable generation and energy efficiency should not be used in calculating a State's emission rate goal but instea d should only be considered as an eligible action for compliance purposes. The commenters added exist ing renewable generation and energy efficiency should be an eligible action, no matter when installed, and receive full credit for reducing the CO2 emissions intensity (lb /MWh) of a state.

Commenters stated the power sector is moving to cle aner sources of energy like wind and solar at a fast clip, and these clean energy sources are displacing coal and other fossil generation; the formula used to calculate the carbon pollution rate target for each state should incorporate this displacement benefit as other stakeholders have not ed. The commenters said for example, the Silver Lake Power Plant in Rochester, MN is retirin g because it was too expensive to continue running and enough wind power and energy efficiency had come online in the area that the plant was not needed for reliability. The commenters said the goal-setting equation should reflect the myriad of benefits that this transition creates; as other stakeholders have suggested renewable energy and energy efficiency should be added to bot h the numerator and denominator of the goal-setting equation, so that 1 megawatt-hour of r enewable energy displaces 1 megawatt-hour of fossil generation. The commenters said either us ing the pro rata method or replacing coal generation first would not only be more consistent with the treatment of NGCCs in Building385

Block 2 it would reflect the significant benefit of offsetting the marginally more expensive fossil generators.

Commenters stated EPA also contends that some stake holders' believe that the state goals fail to reflect the full potential, under the BSER, for inc remental RE and EE to replace fossil steam generation. The commenters said by adding increment al RE and EE generation, this action actually avoids emissions and does not decrease emi ssions. The commenters said therefore, to subtract equivalent fossil generation from the BSER would be erroneous.

Commenters stated as proposed, the rule is inconsis tent in how it incorporates renewable energy into the calculation of Utah's 2030 goal. The comme nters said the inconsistency is that EPA has established a 2030 emissions goal for Utah by accou nting for all renewable energy located in the state even if some is being dispatched to meet load in another state; at the same time, EPA proposes to allow the state that receives this powe r under a Purchased Power Agreement (PPA)
or some other "enforceable measure" to count the re newable energy towards compliance with that state's goal. The commenters said approximatel y 60 percent of renewable electricity generated in Utah in 2012 was exported, which infla tes Utah's additional renewable energy in EPA 2030 emission rate proportionally. The commente rs said excluding exported renewable electricity from Utah's goal computation would redu ce Utah's compliance gap by 56 lbs CO2/MWH. The commenters said alternatively, keeping exported renewable energy in the goal and allowing Utah to include all renewable energy p rojects located in the state in the calculation of the state's post-2020 emissions rate would reduc e the emissions rate and stringency of the goal by 39 lbs/MWH. The commenters said EPA must ensure that the approach to attributing
emission reductions from renewable resources for co mpliance is consistent with the treatment of these resources when setting state-specific emissio n goals. The commenters said EPA should either eliminate exported renewable energy from Uta h's goal calculation or allow Utah to account for these renewable resources in its post-2 012 emissions rate calculation and recognize PacifiCorp's MSP as an "enforceable measure" with r egards to 111(d) renewable energy credit.

Commenters stated the Proposed Regulation's emissio n rates for Virginia are set unreasonably and unlawfully low is because of EPA's inclusion of significant amounts of new renewable generation and energy efficiency in the denominator of its mathematic formula. The commenters said although the Proposed Regulation sets state-sp ecific Mandatory Goals, the calculation of Virginia's Mandatory Goals disregards real world co nsiderations specific to Virginia. Commenters said in this regard, the Proposed Regula tion arbitrarily and capriciously extrapolates renewable and energy efficiency policy requirements of other States that have not been achieved. The commenters said there is no analysis as to how these aspirational levels of renewable generation and energy efficiency, derived from othe r states that have their own particular geographies, existing infrastructures, and politica l considerations, could reasonably be achieved in Virginia or whether such levels can be achieved in a cost effective manner given Virginia's particular circumstances. The commenters said altho ugh the Proposed Regulation purportedly recognizes that "states differ in important ways," EPA's generic approach to this aspect of its calculation ignores geographic differences that can not be reasonably ignored. The commenters said the end-result of this unrealistic approach is that it deprives Virginia of the flexibility neede d
to achieve carbon reductions at a reasonable cost w hile still maintaining reliable service.386

Commenters stated the Clean Power Plan's goals for states underestimate the capacity to expand clean energy; these goals are, in many cases, lower than pre-existing targets of state renewable portfolios, equal to what seven states have already achieved, and only minimally higher than U.S. Energy Information Administration (EIA) projec tions under a "business as
usual" scenario. The commenters made the recommend ations for inclusion of current state Renewable Energy and Efficiency Standards, which ar e set by law, and determination of future goals based on more recent growth rates of renewabl e energy (2009 to 2013). The commenters said utilization of alternative energy that emits l ittle if any greenhouse gas (unlike natural gas or incineration) should have higher weighting as a bui lding block as it also produces the least harm of other direct pollution from mining, burning or m anagement of waste products.

Commenters stated EPA contends that some stakeholde rs' believe that the state goals fail to reflect the full potential, under the BSER, for inc remental RE and EE to replace fossil steam generation; by adding incremental RE and EE generat ion, this action actually avoids emissions and does not decrease emissions; therefore, to subt ract equivalent fossil generation from the
BSER would be erroneous.

Commenters stated EPA is also soliciting comment on an approach that would revise state goals based on a recalculation of Building Blocks 3 (RE) and 4 (EE) on the assumption that new RE and EE will directly replace or re-dispatch existin g fossil-based generation, under the current approach, the generation from RE and EE is essentia lly added to the 2012 baseline fossil generation - this new approach would assume that so me of that baseline fossil generation would be displaced by new and incremental RE/EE, in the c ontext of the CPP, generation from the two major examples of renewable generation in "GHG Abat ement Measures TSD," photovoltaic (PV) and on-shore wind, appear to be preferred due to the fact they are the "fastest growing technologies" and they are "competitive in many reg ions."

Commenters stated photovoltaic and on-shore wind ge neration is not dispatchable, due to the intermittent nature of the sources; accordingly the se sources must be backed up with dispatchable capacity from fossil-fueled sources. T he commenters said when these intermittent generation sources begin to-be integrated into a sy stem, quick-start simple cycle gas turbines are typically used to compensate for the variability in their generation; however, as they become an increasingly larger part of the generation, it can be expected they will require coal and NGCC units to react to their power production. The comme nters said increased numbers offload swings will increase the CO2 intensity of those units and increased start-ups and shutdowns will increase CO2 emissions without generation. The commenters sa id it is also difficult to determine how to
calculate which fossil-fueled emissions would be di splaced by the RE and EE resources. The commenters asked would it be just coal or NGCC or s ome calculated combination of both; the differences could be significant. The commenters sa id a calculation could be done to simply subtract from the coal generation and emissions, bu t this would not reflect the reality of constantly changing generation into the grid. The c ommenters said the coal units also have minimum load requirements, start-up times and stand -by capabilities that further depart from a such a simple calculation.

Commenters stated although biomass is dispatchable, it is a limited resource. The commenters said four biomass plants as well as the existing co nsumers of wood products in the area will largely consume the economically available and sust ainable wood basket in the region. The387

commenters said these biomass units currently run a t high capacity factors even before the implementation of the CPP; it is also important to the overall business climate that electric utilities avoid crowding out other users of the ava ilable wood basket such as paper manufacturers; therefore very little additional cap acity is available to compensate for a quick drop off of wind or solar generation, a factor Virg inia lawmakers realize in capping the amount of biomass that may count as part of compliance wit h the state's voluntary RPS program. The commenters added the final impact on CO2 emissions is still under review by EPA, although the commenters strongly urged EPA to consider biomass c arbon neutral for purposes of this rule.

Commenters stated energy efficiency measures suffer from similar variability; they may be based on installation of increasingly more efficient equi pment, but the use of that equipment by households, businesses and industries will be varia ble, driven by factors other than energy use alone. The commenters said for example, equipment t hat cuts energy costs may make a product or service more competitive, actually leading to in creased usage that may result in more energy consumption than is saved; it should also be noted that the ultimate successes of energy efficiency programs are generally within the contro l of the customer, not the utility; utilities offer a range of consumer-friendly energy efficiency prog rams but must prepared to still serve their native load should such programs not be as successf ul as they hope.

Commenters stated it should be observed that EPA's assumption of energy efficiency savings by states takes state self-reported savings at face va lue; individual states have varying degrees of rigor in their measurement and verification of ener gy efficiency savings; moreover, the most successful states in energy efficiency, according t o their self-reported data, have dramatically higher rates than what's offered in either Virginia or North Carolina service territory. The commenters said any state and utility would find it challenging trying to comply with a permit
limit based on variable and intermittent renewable and efficiency resources. The commenters said the potential for compensating with the variab ility with the other building blocks is limited, due to the long lead times required. The commenters said to ensure compliance, it is essential that the emissions and generation from existing sou rces be retained as they are and not be reduced by the RE and EE resources.

Commenters stated the formula used by EPA to establ ish the emissions target and standard of each state needs to be adjusted to reflect the fact that additional available cleaning and renewable generation and energy efficiency resources would re place generation from the dirtiest fossil fuel sources and at a faster pace, yielding greater emis sions than the EPA assumed.

Commenters stated in order to set stronger goals, t he commenters urged EPA to greatly increase the assumption for possible increases in renewable energy development used in setting state reduction targets. The commenters said the formula used to set state goals to the plan currently only includes a conservative average of regional re newable energy policies; the commenters believed the EPA should use the assumpti on of at least 30 percent renewable energy deployment in line with more progressive renewable portfolio standards such as New York, which set that goal for 2015, 15 years before the e nd date for the Clean Power Plan.

Commenters added energy efficiency is the cheapest and fastest way to cut carbon emissions and should also be prioritized much more on EPA's plan. The commenters said states have the policies, technology, and workforce available to ac hieve more energy efficiency gains right now;388

accordingly, EPA should increase energy efficiency targets in their goal-setting formula to much more than the 1.5 percent annually after 2017.

Commenters requested that EPA affirm that it will n ot discount reductions from EE measures,
other than to limit reductions to those that occur during the compliance period. The commenters
stated that EE measures should be treated the same as RE measures.

Commenters supported EPA's proposed revision to the goal computation methodology; in reality, fossil EGUs will dispatch less when load i s reduced, and when low-cost, must-take renewable energy generation is available. The comme nters said the combination of adding RE and EE to the denominator of the rate and reducing emissions from fossil units results in a lower
rate overall. The commenters said how much the rate declines is highly sensitive to what assumptions EPA makes about which fossil units are displaced. The commenters said if EPA's emission rate targets do not include this effect, t hen they will be artificially high (less stringent) ; thus, a state could actually do less in all buildin g block categories than EPA anticipates, and still reach its target. The commenters said this possibil ity reveals that the emission rate does not properly reflect the best rate of emission reductio n.

Commenters stated in EPA's June proposal, increment al renewable energy ("RE") and energy efficiency ("EE") was simply added to the denominat or of the state goal formula; an alternative
treatment of this incremental RE and EE would be to assume that it directly replaces 2012 fossil generation levels and the corresponding emissions o n a pro rata basis across generation types (i.e., fossil steam and gas turbine). The commenter s said of these two approaches, the commenters supported the former calculation methodo logy. The commenters said location constraints on the New York system mean that all ge neration is not fungible, and that a wind farm located up-state will not offset the use of st eam units in the New York City metropolitan area; the same is true of energy efficiency program s. The commenters added, NGCC units will
be needed to balance intermittent resources such as wind and solar and provide ancillary services during normal grid operations.

Commenters provided comments on how to properly acc ount for emission reductions of BSER as a system. In their statements, they argued 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. The 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 ca rbon generation, and therefore, the commenters suggested that the final Clean Power Pla n should treat generation from nuclear energy, renewable energy and existing NGCC in the s ame way.

Commenters stated that the energy savings that cons titute Building Block 4 replace MWh that would otherwise be needed from generation sources, these savings should also be treated the same as redispatch to existing NGCC. According to t he commenters, in order to calculate the impacts of Blocks 3 and 4 in a way that is consiste nt with the approach for Block 2, EPA should remove emissions associated with displaced EGUs fro m the numerator of each state's carbon intensity numerator. Affected EGU MWh should also b e removed from the denominator, and the equivalent number of MWh should be added back based on low- and zero-carbon generation from Block 3 and energy savings from Block 4.389

The commenters expanded their discussion by stating , that 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. The commenters clarified that, for nuclear generation, only under-construction nuclear should displace 2012 fossil fuel-fired generation. For renewable generation, the commenters suggested that EPA 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 52: Net generation from RE; avoided generation for EE; non-affected units

Response 52: See Preamble Section V and VI for a discussion of B SER and the form of the emission rates. In order to capture the impact of reduced generation through building block three (and alternative compliance vehicles that sources/s tate may chose) the EPA incorporates the generation from this replacement technology into th e emission rates.

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

Commenters stated U.S. EPA adjusts the goals by est imating annual net generation from RE and avoided generation for EE and adding it to the outp ut from affected units (MW-h). The commenters objected to the inclusion of generation from non-affected units in the denominator, and to the inclusion of all avoided generation and RE beyond those of the affected units. The commenters said generation values should come only from the affected units, and the renewable and EE portions, if included, should represent only what can be directly attributed to an affected entity or entities.

Comment 53: BB3 & BB4 - RE & EE in goal same as for compliance

Response 53: See Sections V, VI, VII, and VIII for a discussion of how RE is quantified and incorporated into goals, and how it can be accounte d for when sources/states are demonstrating compliance. The EPA has revised its building block, formula, and compliance to recognize the regional nature of RECs.

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

Commenters stated EPA must ensure that the equation that states use to calculate their emission rate for compliance with EPA's 111(d) interim and f inal targets is also the same equation EPA
uses to calculate each state's interim and final em ission rate targets. Commenters stated EPA has requested comment in numerous places within the dra ft rule and TSDs about how CO2 emission reductions from renewable electricity generation an d energy efficiency savings should be factored into calculating a state's CO2 emission ra te. Commenters stated the State of Montana390

recommends EPA continue to use the draft rule equat ion, treating each MWh of renewable electricity and energy efficiency savings as one MW h of emission free electricity.

Commenters stated the alternative of requiring stat es to attribute a specific amount of avoided CO2 emissions to each MWh of renewable electricity and energy efficiency, potentially requiring different avoided CO2 emission figures fo r renewable electricity and energy efficiency savings generated at different times of day, month, or year, would place an unreasonable compliance burden on states. Commenters stated mode ling marginal electricity generating units within a state or region is a complicated, time-int ensive, and expensive proposition. Commenters stated that even EPA, which has considerably more r esources than most state environmental departments, does not release its eGRID estimates e very year and only estimates annual, regional marginal emission rates for key pollutants rather t han more detailed state- or time-specific marginal emission rates.

Commenters stated that moreover, accounting for avo ided emissions as a result of renewable electricity and energy efficiency presents a signif icant double counting issue for avoided
emissions that occur in another state. Commenters s tated given the interconnectedness of the electricity grid in the continental U.S., the impac t of renewable electricity generation and energy efficiency savings are likely to be felt across an entire region, not just within the state where the renewable electricity was generated or energy effic iency investments were made. Commenters stated as a result, if a state is to claim avoided emissions and generation that occurred in another state, in order to avoid double counting, the other state must report an increase in its carbon emissions and generation that did not actually occu r within the state. But, commenters added, because every state will be investing in renewable electricity and energy efficiency that will have regional impacts, what will result is an immensely complicated system of carbon emission and electricity generation trading between states in wh ich every state's emissions and generation figures will be augmented in order to account for e very other states' activities. Commenters stated this is a recipe for an accounting, reportin g, and regulatory nightmare that will be grossly inefficient, prone to miscalculations and double co unting, and more likely to create antagonism between states than to foster partnerships. Because of this, commenters stated, EPA should not base state compliance for renewable electricity and energy efficiency on demonstrations of avoided emissions. Commenters stated that instead, EPA should continue to use the accounting methodology used in the draft rule that credits ren ewable electricity and energy efficiency as zero emissions sources of electricity.

Commenters stated however, if EPA determines in its final rule that the equation states must use to demonstrate compliance with their interim and fi nal CO2 emission rate targets needs to be revised from what has been proposed in the draft ru le, then EPA must also use the revised equation to recalculate each states' interim and fi nal CO2 emission rate targets. Commenters stated that to do otherwise would be to potentially require some states to achieve emission rate targets that would necessitate far more investment in carbon reduction strategies than the EPA is assuming through their target-creating building blo cks. Commenters stated if EPA opts to account for renewable electricity generation and en ergy efficiency savings by requiring states to model avoided emissions, EPA must make it clear tha t states are allowed to take credit for
avoided emissions that occur out of state as a resu lt of a state's renewable electricity generation and energy efficiency investments so long as states use reasonable and verifiable methods for determining carbon emission impacts. Commenters sta ted the avoided carbon emissions that391

result from increased renewable electricity generat ion and energy efficiency investments are real but, because of the interconnectedness of regional electricity grids, are likely to occur across many states. Commenters stated that limiting state credit to only in-state avoided emissions under the modeling approach would limit the credit a state receives to only a fraction of the real
avoided emissions that resulted from a state's inve stments in renewable electricity and energy efficiency.

Commenters stated EPA has proposed to base the CO2 reduction goals on generation, while determining whether the goal has been met based onl y on consumption; this approach is essentially "comparing apples to oranges" - it is i nconsistent and will create inaccurate results, because the inputs upon which the goal is calculate d are fundamentally different from the inputs used to measure goal attainment. Commenters said EP A's proposed approach has the potential to result in goals for some states that are unachievab le, and goals that are too easily achievable for
other states. Commenters said in order to minimize this imbalance, a state would have to find willing partner states to engage in regional or eve n national planning efforts or trading, so that its goal is averaged across many other states' goals. T he commenters said the notion that some states would be required to engage in extensive national o r regional planning efforts to achieve compliance (i.e., states which export energy and th erefore have steeper goals), while other states would have little incentive to coordinate (i.e., st ates which primarily purchase energy) is
inconsistent and unfair.

Commenters stated under EPA's proposal, a state tha t exports a large amount of its electric generation, particularly a large amount of its low- carbon electric generation, will be more heavily impacted by this rule's requirements than s tates that do not. The commenters said in its goal calculation, the fact that a state already has a large amount of low-carbon generation is used as the basis for setting a goal that assumes likewi se; however, when calculating whether the state has achieved its goal, the state will not receive c redit for the exported low-carbon electricity. The commenters said further, for those states which are given more easily achievable goals, there is a disincentive to participate in a regional/multi-sta te effort because that goal will be averaged out across the states, making their own goals more stri ngent than they would have been otherwise; however, the states with more difficult-to-achieve goals will only fully benefit from regional/multi-state planning if the states with ea sier-to-achieve goals are also involved.

Commenters stated for example, consider a state tha t has 15 percent wind generation today and half of that generation (7.5 percent) is exported; under the proposal, the goal would be set with an assumption that the state has 15 percent generat ion and could increase to 20 percent generation by 2030 (a 5 percent increase), and woul d be the basis for the state's carbon reduction goal. The commenters said if the state were to demo nstrate compliance today, it would only receive credit for 7.5 percent wind consumption, wh ich would require an increase of 12.5 percent in order to reach that same 20 percent generation g oal; therefore, without taking any actions whatsoever, the state would have moved further from its goal just because the metrics for the goals are different than the metrics for compliance

.
Commenters stated both goals and compliance should be based on the same metric; if the goals are based upon generation, compliance should also b e based on generation. The commenters said alternatively, if compliance is based on consumptio n, the goals should also be based on consumption. The commenters said this will make com pliance more achievable within state392

boundaries and will not discourage states from enga ging in regional planning. The commenters said due to the relative ease and certainty in calc ulating generation compared to calculating consumption, the use of a generation approach may b e preferable in the final rule as a basis for both goal-setting and measuring compliance.

Commenters stated in the Proposed Rule, RE contribu tions are included the state's rate calculation based upon the RE being located within the states geographic boundaries. The
commenters said if the EPA determines in its final rule that out-of-state RE can be included in a state's rate calculation, such RE should be consist ently applied in the rate calculation for both goal setting and compliance purposes.

Comment 54: BB3&4 "backs out" the generation from affected foss il EGUs by the generation from existing renewables twice, since the 2012 foss il EGU data already reflects the presence of 2012 levels of renewable generation

Response 54: The EPA agrees that replacing existing historical f ossil generation with existing historical RE generation would be double-counting t he effects of the RE. However, it did not do this at proposal, and it does not do so at final on ly RE generation incremental to 2012 is quantified and assumed to replace fossil generation

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

Commenters stated some stakeholders' proposal to us e Building Block 3 and 4 impacts in the goal calculation to reduce expected generation from affected EGUs, along with the emissions from those units, is flawed because: 1) it "backs o ut" the generation from affected fossil EGUs by the generation from existing renewables twice, s ince the 2012 fossil EGU data already reflects the presence of 2012 levels of renewable g eneration; 2) it assumes that the system-wide efficiency and renewable investments contemplated a re exclusively associated with reduced generation from the affected units, ignoring load g rowth and any generation in the remainder of the electricity system.

Comment 55: Building Block 4; Energy Efficiency (EE) in goal ca lculation.

Response 55: The proposed building block four is not included in the EPA’s final BSER

determination. See Preamble Section V.A.

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

Commenters stated the cumulative annual EE savings are used as part of the calculation of allowable carbon dioxide emissions under the Propos ed Rule. The commenters said the calculation is expressed as: [(Coal gen. x Coal emi ssion rate) + (OG gen. x OG emission rate) + (NGCC gen. x NGCC emission rate) + "Other" emission s] / [Coal gen. + OG gen. + NGCC gen. + "Other" gen. + Nuclear gen. + RE gen. + EE gen] w here the term "EE gen" represents the annual cumulative EE savings. The commenters said i n North Carolina's case, the Proposed Rule393

sets an interim goal of 1077 by 2020 and a final go al of 992 by 2029 for adjusted outputweighted-average pounds of CO2 per net MWh from all affected fossil fuel-fired electric generating units. The commenters said consequently, any errors in the determination of a 1.5% incremental EE savings rate for North Carolina will cause errors in the cumulative EE savings
rate and further cause error in the achievable leve l of CO2 emissions.

Commenters stated another concern is that EPA has n ot considered the EE savings from many
North Carolina EMCs. The commenters said GreenCo So lutions, Inc., (GreenCo) provides EE program services and REPS compliance to 23 of the 2 6 EMCs in North Carolina; while GreenCo does not report on EIA Form 861, it does provide EE savings data to the NCUC. The omission of EE savings already achieved by GreenCo's EMCs means that EPA has understated the progress
North Carolina has made in EE and toward its CO2 em ission reductions. The commenters provided a table showing annual EE savings includin g GreenCo's EMC of 0.46% of total BAU
NC sales for 2012. The commenters said EPA's calcul ation of the 2012 incremental EE savings
for North Carolina is derived from EIA Form 861 dat a, the commenters provided a table which shows annual EE savings including GreenCo's E MC of 0.37% of total BAU NC sales for
2012.

Commenters stated while the CPP only lists energy e fficiency as an "option", the state goals cannot be achieved by relying only on reductions fr om affected EGUs, or even reductions from affected EGUs and redispatch to natural gas (Buildi ng Blocks 1 & 2). The commenters said according to EPA, "[m]easures that avoid CO2 emissi ons from affected EGUs, such as quantified and verified end-use energy savings and renewable energy generation, could be used to adjust the CO2 emission rate of an affected EGU when demonstrating compliance with a ratebased CO2 emission limit; alternatively, a state co uld use the effect of such measures as a basis for administratively adjusting the average CO2 emis sion rate of affected EGUs when demonstrating achievement of the required emission rate performance level in a state plan." The commenters said to achieve the objectives of Buildi ng Block 4, states will need to implement significant energy efficiency programs; however, th e assumptions and methodology underlying EPA's assessment of energy efficiency in calculatin g individual states' goals is flawed. The commenters said EPA's assumptions are far too aggre ssive and not achievable based on real evidence; first, the proposed rule overestimates th e amount of energy efficiency available; second, each state has methods to determine the cos t-effectiveness of energy efficiency, as well as methods for verifying the levels of reduction th at should be, but are not, respected by the rule; third, companies can offer a full menu of efficienc y programs, but if the end user does not implement them, the efficiency targets will not be reached. The commenters said the proposed rule does not give full effect to the intent of and application of existing state efficiency and demand response rules.

Commenters recommended that EPA revise the calculat ion for energy efficiency and remove the discount imposed on states that are net importers o f electricity. The commenters said the full benefit of ratepayer investment in energy efficienc y projects should accrue to the state implementing the programs. The commenters said as c urrently proposed, the full benefit of energy efficiency projects is not credited in a net importer state, nor is it accounted for in any other state, thereby eliminating a portion of these measures as a compliance mechanism.394

Commenters encouraged EPA to include in its calcula tion of energy efficiency benefits not only additional zero-emission generation capacity, but a lso replacement of baseline fossil fuel generation.

Commenters stated the CPP treats efficiency in its rate calculation in a problematic manner; it adds efficiency to generation in the denominator wh en in physical reality efficiency reduces generation requirements and hence also reduces emis sions. The commenters said in the EPA's rate calculation, it does neither; it just lowers t he allowed rate of emissions. The commenters said overall, the EPA's method favors the increased use of natural gas combined cycle power plants over renewables, which is problematic for more than one reason. The commenters said the EPA should also adopt a consistent approach to estimati ng the emissions target for each year in the
final CPP. The commenters said consistent calculati on of emissions and emission rates: The proper way to calculate CO2 emission rates is to in clude all CO2 emissions from affected generation units and divide that by all generation in a particular state in any year; doing this consistently for each year going forward can create a technology neutral rule that is consistently based on a well-defined best system of emission red uction, which must include technical feasibility, economics, and non-air quality conside rations.

Commenters stated consistent with the CAA's require ment that BSER be "adequately demonstrated" and that the resulting standards be " achievable," the use of the median savings
rate would be a better measure of what the states a ctually achieved in 2012. The commenters stated an analysis conducted by EEI shows that the median savings rate in 2012 was 0.48 percent. The commenters said EPA notes that the nat ional average was 0.58 percent; when data is skewed, however, a median is a better measure of central tendency than a mean. The commenters said in this case, the 2012 data is skew ed, with 14 states reporting incremental savings rates of between 0.50 and .99 percent and 2 5 states reporting rates of less than 0.50 percent. The commenters said regardless of whether the mean or median is used, both figures are considerably less than EPA's proposed 1.5 percent a nnual incremental savings rate, and thus, the 2012 reported savings rates do not support EPA's as sertion that all states can achieve 1.5 percent annual incremental savings. The commenters said Ind iana's performance has not demonstrated 1.5 percent annual savings to be achievable; if the reported data demonstrate anything meaningful about the feasibility of different level s, it would be that the median savings rate
achieved in 2012 is a better measure of achievable annual incremental savings rate and thus more
indicative of a demonstrated and achievable BSER me asure.

Commenters stated in its target-setting formula, EP A assumed that states that are net importers of electricity should receive credit for only a por tion of their energy efficiency investments. The commenters said the portion is represented as the s hare of in-state generation that is not imported. Commenters said as a net electricity impo rting state, Georgia receives credit for 88 percent of its energy efficiency investments, which represents its share of in-state generation in 2012. Commenters stated as a net electricity import ing state, Virginia receives credit for 58 percent of its energy efficiency investments, which represents its share of in-state generation in 2012. Commenters stated as a net electricity import ing state, North Carolina receives credit for 85% of its energy efficiency investments, which rep resents its share of in-state generation in 2012. Commenters said the problem with this assumpt ion is that it discounts the value of energy efficiency programs as a compliance mechanism. Comm enters added it assumes that Georgia is likely to remain a net importer of electricity duri ng the compliance period; with the expected395

completion of Vogtle Units 1 and 2, and the added g eneration they will furnish, this is not likely
to remain true.

Commenters stated EPA should revise its formula so that the full level of energy efficiency
resources that a state invests in will be counted a s a compliance mechanism; this will be especially important if EPA adopts the approach des cribed in its recent NODA and adjusts the emissions rate formula to reflect displacement of f ossil generation by energy efficiency and renewable generation. The commenters said in that e vent, for the displacement assumption to be accurate, energy efficiency resources must be fully credited. The commenters said for states like Georgia, Virginia, and North Carolina that are (at least currently) net importers, it is important that they get full credit for their investments in energy efficiency where such investments are reducing generation from fossil-fired resources. Th e commenters said failing to provide such credit will mean that a significant amount of energ y efficiency is not recognized as a compliance option, even when they are having the practical eff ect of displacing in-state generation.

Commenters stated there should be no reason to exc lude load reductions from more demanding energy efficiency codes and standards; the technica l feasibility of the EPA's proposed energyefficiency-based reductions in electricity sales co uld be significantly increased if the EPA's final regulations allowed a state to include reductions i n energy sales that result from energy efficiency codes and standards towards meeting the state's targets that are accounted for in the utility's load forecast.

Commenters stated AEO inherently has some EE in its forecast. The commenters would like EPA to discuss how this affects EPA's forecasting f or the rule and whether this is the correct value to be using for this building block. The comm enters said if EE savings are inherently accounted for in the AEO forecast, EPA has underest imated the projected MWh of future electricity sales without EE.

Comment 56: BB4 demand side energy efficiency EE- remove from c alculation

Response 56: See Preamble Section V.A. Demand-side energy effic iency is no longer part of the BSER quantification in this final rule.

In regards to heat rate concerns at units retrofitt ing with controls, the response to this comment is addressed in section 3.1.4 of the response to comme nt document. In regards to taking into account scheduled retirements, as explained in the Performance Rate and State Goals TSD for CPP Final Rule, EPA used a historical baseline in p lace of a projected one. Factoring in coal retirements, even scheduled ones, would require pro jections about where the generation would shift in the fleet. EPA took comment on using a pr ojected baseline to inform this type of baseline, but received support for using a historic al baseline as a more representative starting point given the reported nature of its data.

The following are summaries of the specific public comments under this comment:396

Commenters stated EPA should not use demand side EE , an outside the fence line measure, for state goal calculation. The commenters said demand- side EE should be used for compliance purposes only. The commenters said the proposal see ks to incentivize the conversion of coal to natural gas, nuclear, renewables such as wind, and solar, and energy efficiency; while the plan only lists energy efficiency as an "option" not a m andate, the state goals cannot be achieved by relying only on reductions from affected EGUs, or e ven reductions from affected EGUs and conversion to natural gas (Building Blocks 1 & 2). The commenters said EPA admits as much by calculating different, less stringent goals when re lying only on Building Blocks I and 2 as BSER Goal Computation TSD, EPA, App. 4, (June 2014) (cal culating Blocks 1 & 2 only state goals before entering nuclear, renewable, and EE into the denominator). The commenters said according to EPA, "[m]easures that avoid CO2 emissi ons from affected EGUs, such as quantified and verified end-use energy savings and RE generation, could be used to adjust the
CO2 emission rate of an affected EGU when demonstra ting compliance with a rate-based CO2 emission limit. Alternatively, a state could use th e effect of such measures as a basis for administratively adjusting the average CO2 emission rate of affected EGUs when demonstrating achievement of the required emission rate performan ce level in a state plan." The commenters said for several reasons, EPA's assessment of EE is far too aggressive and not achievable based on real evidence; first, the proposed rule overesti mates the amount of energy efficiency available; second, each state has methods to determ ine the cost-effectiveness of energy efficiency, as well as methods for verifying the le vels of reduction that should be, but are not, respected by the rule; third, companies can offer a full menu of efficiency programs, but if the end user does not implement them, the efficiency ta rgets will not be reached. The commenters said the proposed rule does not properly reflect ex isting state efficiency and demand response rules. The commenters suggested that EPA remove dem and-side EE from the state goals and allow owners and operators of affected sources the option to rely on EE measures to demonstrate compliance with rate-based state goals.

Commenters stated that they believe there is an err or with the energy efficiency requirements in Building Block 4 because currently, "Increased ener gy efficiency lowers overall generation, which increases the emissions rate in the complianc e calculation." The commenters suggested that EPA should simplify "how energy efficiency is accounted for in the compliance calculation so that increased energy efficiency is a benefit to the state for compliance."

Comment 57: States should get credit for renewable generation a lready achieved and that will be implemented before compliance is required.

Response 57: See sections V.C., VI, and VIII of the final rule p reamble of the CPP for the EPA’s response to this comment and Chapter 2 of the GHG Mitigation Measures TSD supporting the final CPP.

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

Commenters observed that EPA's methodology does not give compliance credit for renewable generation that comes online before 2020. The comme nters said there is no reason to disincentivize or otherwise fail to recognize the c ontribution of projects that are underway or are397

being planned and will soon be implemented that wil l work toward the goal of decreasing CO2 emissions. The commenters urged EPA to allow states to count for compliance purposes pre2020 renewable generation. The commenters said sinc e the environmental goals of the Clean Power Plan are concerned with aggregate future emis sions of CO2, it is appropriate that any and all actions reducing CO2 emissions from affected EG Us should be credited toward compliance.
The commenters said EPA should establish baseline r eferences for each state by year and allow quantities of renewable generation achieved in exce ss of reference levels prior to 2020 to be carried forward for application in the compliance p eriod.

Commenters encouraged EPA to seek regulatory mechan isms that will recognize and credit early actions and ensure regulatory parity among all stat es. The commenters said New Hampshire has demonstrated, and will continue to demonstrate, lea dership in reducing CO2 emissions. The commenters said in 2002, prior to the regional redu ctions achieved under RGGI, New Hampshire enacted first in-the-nation legislation that addres sed CO2 emissions from power plants. The commenters said in response, several individual New Hampshire facilities made investments that resulted in greater efficiency and lower emissions. The commenters said states that have not achieved equivalent reductions to date should be re quired to do more to achieve results comparable to New Hampshire, and New Hampshire shou ld receive credit for acting early.

Commenters supported the recognition and encouragem ent of early emission reductions. The commenters said the impacts of climate change are d irectly related to cumulative GHG emissions, so early investments to reduce CO2 creat e important and long-lasting environmental benefits. The commenters said the EPA's assumptions in setting each state's emission rate goal include early state actions to reduce emissions pri or to 2020, such as RE and EE measures. The commenters said the EPA also proposes to consider t he post-2019 impacts of most pre-2020 RE investment (which we believe should include RPS-eli gible hydro investments) and of EE investments from mid-2014 onwards (which we believe should be adjusted to the beginning of 2013). The commenters said the EPA also requests co mment on whether emission reductions that existing state requirements, programs, and mea sures achieved prior to January 1, 2020 should be applied toward meeting the required level s of emission performance in a state plan. The commenters believed that reductions prior to 20 20 should not be excluded from the compliance calculation, and support examination of feasible methods to credit such early actions that maintain the stringency and environmental inte grity of the EPA's 2030 goals.

Commenters stated many utilities have invested in e nergy efficiency efforts, making great strides in reducing greenhouse gas emissions; in the Pacifi c Northwest, energy efficiency improvements by electric utilities total 5,600 average megawatts , saving electricity consumers $3.5 billion in electricity costs. The commenters said this achieve ment cost electric utilities $375 million (2006 dollars), making energy efficiency the second large st resource in the Pacific Northwest behind hydroelectric power. The commenters said in this ca se, states through early action have already implemented a good portion of available renewable a nd energy efficiency measures to voluntarily reduce greenhouse gas. The commenters u rged EPA to consider early action achievements in its calculation of state targets; t o fail to do so will unfairly penalize states that made the early effort to reduce greenhouse gas emis sions.

Commenters stated on page 34918 and 34919 of the pr eamble, EPA solicits comments on the option to recognize emission reductions achieved st arting at a specified date which will allow a398

gradual emission improvement trajectory during the interim performance period of 2020 through 2029. The commenters said EPA rationalizes this opt ion because higher carbon dioxide emissions during the interim period would be offset by lower emissions prior to 2020. The commenters said South Dakota's electric cooperative s out of necessity have been promoting and rewarding energy efficiency and conservation for de cades; examples consist of end user incentive programs for energy efficient heat pumps, lighting, and water heaters along with promoting energy efficient appliances, windows, and whole house efficiency upgrades. The commenters said because these programs are currentl y reducing carbon dioxide emissions and will do so in the future, EPA should give the state s the flexibility to account for these existing energy efficiency programs. The commenters recommen ded EPA allow for "banking" carbon dioxide emission reductions beginning in the baseli ne year through 2019 to allow states to take credit for what has already been accomplished and c reate an incentive for states to reduce more carbon dioxide prior to 2020. The commenters said t his incentive will not only give states the flexibility they need to plan for the future and re duce carbon dioxide emissions early, but also help reduce the impacts of this federal rule on ene rgy reliability and affordability. The commenters said specifically, EPA should allow high -renewable states like South Dakota to bank excess renewable generation (above a national threshold) and use the banked megawatthours for post-2020 goal compliance; this would bot h reward these states' leadership in renewable energy investment prior to EPA's base yea r, and strengthen the incentive to continue renewable energy investments prior to 2020.

Commenters stated EPA should provide for early acti on credit to reward those states that have proactively undertaken to reduce carbon emissions f rom their generation fleet, and to encourage states to take actions prior to the start of the in terim compliance period.

Commenters stated sound environmental policy clearl y favors the determination and application of performance standards under the CPP in a manner that recognizes (and certainly does not penalize) states for previously moving forward with actions to combat climate change in the absence of any federal standards. The commenters sa id for a number of years, a portion of the affected stakeholders argued against early state ac tion because of the fear that such proactive measures may merely disadvantage the state when ult imately confronting a federal regulatory regime. The commenters said should EPA's ultimate C PP program confirm such fears, the implication will be to create strong disincentives to future proactive environmental control measures by states; therefore, both to ensure consi stency with the statutory requirements of Section 111, and as a matter of sound public policy , EPA should adjust the state goals to avoid the application of a penalty against the significan t efforts that many states already have undertaken to address GHG emissions from the power sector.

Commenters stated EPA must allow for early action c redit to reward those states that have been actively reducing the carbon emissions from their g eneration fleet and to encourage states to take actions prior to the start of the interim period. T he commenters said companies have undertaken many initiatives to reduce the carbon intensity of the electric generating system, such as: heat rate improvements, nuclear plant uprates, and retir ement of higher emitting units. The commenters said EPA must: (1) allow for adjustments in the heat rate improvement component of the state-specific target to a level lower than six percent for any unit that has completed heat rate improvement projects within five years of the baseline period; (2) EPA must allow for crediting of nuclear uprates and life extensions re gardless of timing of the activity; and (3) EPA399

must credit fossil fuel-fired plant retirements tha t have occurred during and after the baseline period.

Commenters were supportive of an implementation pla n that recognizes and rewards early action; early action that has occurred in the past (prior to 2012) and particularly early action as
defined as action that can be taken between now and the time when the first compliance period begins (2020 as currently proposed). The commenters said it is important to distinguish the setting of a baseline for the purposes of setting a reduction target as opposed to setting a baseline for the purpose of compliance budgets. The commente rs said the level of overall carbon reductions required under the CPP are easily achiev able; it is therefore reasonable, and indeed critically important, that such a level of overall reduction be maintained regardless of considerations or allowances made with respect to e arly actions. The commenters argued that the EPA should, for the purposes of goal setting, recog nize that some states are benefitting from not having existing natural gas EGU infrastructure, est ablished renewable energy policies, or energy efficiency practices. The commenters said the BSER, uniformly applied to all of the states, results in a peculiar scenario where some states ha ve less stringent goals due to their past indifference of BSER practices. The commenters said to correct for this past indifference to BSER practices, the commenters argued that EPA shou ld calculate state goals using a minimum baseline methodology; for instance, if a state has no natural gas infrastructure, emission reductions attributed to Building Block 2 will be n egligible for the purposes of calculating the final AER goal for that state. The commenters said by creating a minimum baseline for the purposes of goal calculation, these states will be required to meet a level of stringency that is more fair relative to other states' AER goal string encies.

Commenters stated over the last ten (10) years, Fli nt, along with all the electric membership cooperatives in Georgia, have led efforts to pursue and secure renewable/green energy. The commenters said through the formation of Green Powe r EMC (GPEMC), the first major green power project in Georgia started in 2003 at the Tay lor County Landfill (Mauk, Georgia) -that doubled capacity to eight megawatts (8MW) in 2012 - not only reduced and made use of severely damaging methane emissions, but also did s o in a way to promote affordability and reliability. The commenters said GPEMC has since se cured additional landfill, biomass, and solar generation projects that were started-up prio r to 2012. The commenters said independently, Flint secured a long-term power purchase agreement for three megawatts (3MW) of landfill gasfueled generation at the Houston County Landfill (K athleen, Georgia). The commenters said in the vein of attempting to maximize opportunities an d resources, Flint has also been among the leading electric utilities to aggressively deploy p eak load management devices on air conditioning and water heater units that have moved approximately fifteen megawatts (15MW) from expensive peak generation to lower load period s and other units that helps lessen the immediacy of building new generation capacity. The commenters said these initiatives have most assuredly contributed to the significant reduction in CO2 between 2005 and 2012. The
commenters said efforts to take the lead and be env ironmentally responsible over the last decade - in a manner that maintains affordability and reli ability - appear to work to the detriment and penalization of Flint members. The commenters said other commenters' comments make the case for the commenters' concern..."by considering the 2 012 benchmark data for determining each state's goals, EPA effectively penalizes states tha t have taken a proactive approach to reducing their emissions of CO2 prior to 2012; for instance, from 2005 to 2012 the State of Georgia reduced CO2 mass emissions by 30%; EPA's proposed r ule, however, requires Georgia to400

achieve an additional 48% reduction in the State's CO2 emission rate by 2030; by comparison, CO2 goals for other states that achieved far fewer CO2 reductions are considerably less stringent."

Commenters stated EPA should reassess the assumptio ns in its four building blocks to reflect the potential for additional reductions in states where cost-effective measures have already been taken; States whose actions were analyzed as part o f developing EPA's BSER should be given some measure of credit in the proposal - instead, s tates like Washington appear to be asked to
redouble their efforts. The commenters said for num erous reasons, they believed EPA needs to look more closely at what potential reductions actu ally remain in states that are already lowcarbon emitters.

Commenters stated Minnesota has long-standing state -level goals and requirements for renewable energy, conservation, efficiency, and gre enhouse gas emissions reductions. The commenters said the Next Generation Energy Act of 2 007, for example, established the state's renewable energy standard (the "RES") and a qualifi ed ban on new carbon emissions from the energy sector; further, significant utility repower ing and emissions reductions projects were completed in recent years or are currently underway ; for example, Xcel Energy's Metro Emissions Reduction Project ("MERP") was completed in stages from 2007-2009. The commenters said these and other efforts, such as Mi nnesota Power's Arrowhead Emissions Reduction Abatement ("AREA") program, have driven s ignificant investments (paid for by Minnesota ratepayers) that have resulted in substan tial carbon dioxide emissions reductions.

Commenters stated specifically, Minnesota's electri city users, and in particular industrial users such as the members of MLIG, have already paid and continue to pay for much of these reductions in the form of increasing electric rates over the past several years; looking at just the amounts two of Minnesota's largest utilities - Xcel Energy and Minnesota Power - have recovered in rate riders for MERP and AREA, respect ively, Minnesota ratepayers paid over $700 million from 2006 to 2012; but it is critical to al so consider other environmental retrofit investments and renewable energy investments. The c ommenters said when these investments are taken into account, costs borne by Minnesota ra tepayers to reduce emissions from 2006-2012 approach $1 billion.

Commenters stated cost recovery for these investmen ts continues and is directly impacting industrial rates in Minnesota; in Minnesota, averag e retail electricity prices for the industrial sector have increased by almost 57% since 2004; for the large industrial customers in Northern Minnesota, the increase has been even more severe; rates for those customers have increased by
over 60% since 2005. The commenters said Minnesota' s industrial electricity rates are therefore becoming increasingly uncompetitive; Minnesota rank s 31st in terms of competiveness for industrial rates as of 2012; and for those industri al customers whose cost of energy is a significant portion of the overall cost of producti on, the recent price increases are putting unsustainable pressure on Minnesota operations; con tinuing rate increases may force these
customers to look to other states and countries for production and expansion opportunities, which
could hurt our local and national economies.

Commenters stated under the Clean Power Plan, forwa rd-looking states like Minnesota should be rewarded for early action (and not penalized) by cr editing Minnesota's existing achievements and401

programs toward compliance with Section 111(d) carb on dioxide goals. In its initial comment letter to EPA last year, the commenters argued that a baseline year of 2005 or earlier would fairly capture the major investments Minnesota ratepayers have made in carbon dioxide emissions reductions; EPA, however, is proposing a baseline y ear of 2012 for purposes of establishing Minnesota's reduction target; as a result, the prop osed target for Minnesota is much more stringent than targets for other states that have d one little to reduce emissions to date.

Commenters stated Minnesota stakeholders have propo sed several options for adjustments to the building block methodology that would better reflec t progress and investments already made in Minnesota; for example, Xcel Energy has proposed se veral adjustments that EPA should consider adopting. The commenters said EPA's curren t method for calculating Minnesota's target ignores the MERP project and the substantial invest ment made by Minnesota ratepayers to achieve significant emissions reductions through th at project. The commenters said to address this problem, Xcel has proposed recalculating EPA's "Building Block 2" to exempt natural gas power plants built after 2005 to replace coal plant s under multi-pollutant programs. The commenters said the MERP project included replacing 652 MW of coal capacity at the High Bridge and Riverside plants with 1,080 MW of natura l gas capacity at the same sites. The commenters said the result, according to Xcel, woul d be an adjustment of Minnesota's 2030 goal
from 873 lbs/MWh to 957 lbs/MWh. The commenters sai d an exemption for projects like MERP makes sense because it is exactly the type of large -scale investment in emissions reduction the Clean Power Plan is designed to promote; Minnesota and its ratepayers should not be punished for having already invested approximately $1 billio n in the most efficient and cost-effective options such as the MERP and AREA projects.

Commenters stated similarly, Minnesota has already made substantial investments in renewable energy and has commitments to continue such investm ent to meet the RES targets; Xcel proposed another potential adjustment to Block 2 th at would account for the fact that variable renewable energy sources are often balanced with na tural gas generation. The commenters said the premise of Block 2 generally is to presume that natural gas plants can and should ramp up to operate with 70% capacity factors; however, this pr emise is problematic for natural gas plants that are significantly displaced by wind generation . The commenters said Xcel recommends calculating the number of natural gas MWh displaced by wind in 2012 and recalculating Block 2 with an adjusted capacity factor that incorporates those displaced MWhs; without an adjustment along these lines, Block 2 penalizes states like Mi nnesota that have already invested heavily in pairing wind power with natural gas, a combination that the Clean Power Plan otherwise would appear to promote.

Commenters stated the plan should provide states wi th credit for prior CO2 reductions as an option towards meeting a reasonable national target for reducing CO2 emissions from the electric power sector.

Commenters stated in finalizing the CPP, EPA must a lso account for the significant initiatives that a number of states have already undertaken to limit GHG emissions from the power sector as the Agency determines BSER. The commenters said Sec tion 111(d) of the CAA mandates that, in determining BSER for a given set of sources, EPA must take into account the performance level achieved by the best performing units within that source category, and set standards of performance based on those achieved performance lev els that can reasonably (and will) be402

enforced by the states. 42 U.S.C. section 7411(d); 40 C.F.R. section 60.22. The commenters said the statutory provision requires national uniformit y in the application of the BSER standard relative to the ultimate compliance level imposed; therefore, the final rule must not penalize states that have previously undertaken proactive me asures to reduce the contribution of their
sources to the nation's GHG load.

Commenters stated with demand-side energy efficienc y, EPA again does not present substantial evidence that its projection in the state goal calc ulations is "reasonably reliable," "reasonably efficient" or will "produce the performance necessa ry to achieve the goal." The commenters said the Agency requires each state to achieve a goal of 1.5% annual savings in electricity generation achieved through demand-side energy efficiency prog rams. The commenters said EPA claims that 12 states have either achieved, or have establ ished requirements that will lead them to achieve, annual incremental savings rates of at lea st 1.5% of the electricity demand that would
otherwise have occurred. The commenters said EPA cl aims that this 1.5% savings rate is inclusive of, not additional to, existing state ene rgy efficiency programs. The commenters said this assertion is false because EPA is counting emi ssion reductions that existing state programs achieve only as a result of actions taken after the date of this proposal. The commenters said EPA cannot claim that this 1.5% savings goal is inc lusive of existing energy efficiency programs when it is not counting emission reductions achieve d from those programs unless some subsequent action is taken after the promulgation o f this rule. Commenters stated by discounting emission reductions achieved by these existing stat e programs, EPA is punishing states that have taken the early initiative to adopt energy efficien cy programs. The commenters said states that have been proactive and adopted programs such as en ergy efficient building codes, energy efficient appliance rebates, or smart meter infrast ructure will see none of the emissions reductions achieved through these programs count to ward its energy efficiency goal. The commenters said EPA is not only punishing states fo r being good actors, but also including a BSER that cannot "produce the improved performance necessary to achieve" the goal.

Commenters stated the EPA failed to recognize the p ast achievements made by TVA by its 30 percent reduction of carbon emission levels between 2005 and 2013 in its generation and transmission of power and energy supplied to the LP Cs; and which the TVPPA member LPCs helped achieve carbon emission reductions from TVA' s generation system through EEDR initiatives actively promoted by the LPCs to the se parate individual ratepayers.

Commenters stated energy efficiency improvements by electric utilities in the Pacific Northwest now total 5,600 average megawatts, making energy ef ficiency the second largest electricity resource in the Pacific Northwest behind hydroelect ric power. The commenters said through early action, Northwest states have implemented a l arge percentage of available renewable and energy efficiency measures; these have led to lower GHG emissions. The commenters encouraged EPA to consider early action achievements in the calculation of state GHG reduction targets.

Commenters stated it is not fair that none of Minne sota's pollution control actions prior to 2012
were taken into consideration when the carbon emiss ion formulas for 2030 were created.

Commenters stated the proposed rule and notice fail s to recognize that states including Arizona are already utilizing significant amount of low or zero carbon generation, such hydro or solar403

power, and as such do not receive any offsets or cr edits for being early actors. The commenters said by not recognizing these early contributions, the EPA is by default setting the compliance bar higher for states such as Arizona. The commente rs believed that states such as Arizona, which have been utilizing a significant amount of l ow carbon generation for some time, should be able to apply those cumulative emission reductio ns towards their 2020 requirements.

Commenters stated as proposed, the CPP takes early action for granted. The commenters said across the board, states that have already achieved substantial reductions in carbon emissions, improved efficiency at coal-fired facilities, or ex ecuted successful demand-side efficiency programs are asked to do more than their less proac tive neighbors. Commenters stated the proposal presumes that states that have renewable c apacity and/or statutory goals to increase carbon-free generation will meet and, in some insta nces, exceed, those goals. The commenters said the RE targets as established in building bloc k 3 assume that states can achieve higher levels of renewable generation by virtue of existing insta lled capacity and the presence of binding or voluntary state targets. The commenters said states may fall short of these goals for a variety of reasons, not least complications over financing, te chnology, reliability, or infrastructure. Commenters stated states that have already improved the efficiency of coal facilities are not
credited for those investments. The commenters said Building block 1 of the CPP proposes that all coal facilities can achieve a 6 percent heat ra te improvement. The commenters said it is clear that facilities that have already undertaken the ch allenge to realize significant efficiency improvements may not be able to achieve further gai ns.

Commenters stated state goals must recognize the si gnificant efforts that states, utilities, and other entities have made over the past ten years to reduce GHG emissions. The commenters said the Proposed Rule unreasonably discriminates agains t states that took early action to invest in cost-effective EE by increasing the stringency of t heir goals and compliance obligations.

• From an equity viewpoint, the EPA should reward sta tes that developed significant cost-effective EE resources before the EPA proposed its rule, because these historically cost-effective EE measures have already reduced the use of fossil fuel generation.

• Since many cost-effective EE resources have a short economic life, states will be incented to wait to implement EE measures until the plan period starts so the full life-cycle amount of a given EE measure can be full y counted toward the goal.

Commenters stated the EPA's proposal penalizes earl y actions already taken with respect to block 1, boiler efficiency improvements. The commen ters said many utilities have already completed the relevant efficiency improvement proje cts outlined by EPA to get these emissions reductions. The commenters said the EPA's goal-sett ing exercise for Florida simply assumes a reduction from efficiency improvements as plausible without due consideration of whether or not potential measures have already been completed; thi s would arbitrarily reward those who delayed maintenance on power plants until after 201 2 and penalize others who have proactively
made reductions. The commenters said states should be afforded the flexibility to work with EPA to adjust the goal if the appropriate efficienc y projects that EPA assumes are feasible and have already been completed or would not achieve th e reduction EPA projects.404

Commenters stated although the goal of the CPP is t o achieve a 30% reduction in 2005 carbon dioxide emissions from the electric utility industr y by 2030, the actual base year for the plan is
2012. The commenters said reductions in CO2 emissio ns achieved by the industry in a particular state during the seven-year period from 2005 to 201 2 are completely ignored by EPA's formula. The commenters said EPA makes some modest assumptio ns about anticipated CO2 reductions during the eight-year period from 2012 to 2020; tho se assumed savings don't count toward achieving the goal; they actually make the goal har der to achieve. The commenters said any actual savings above EPA's assumptions are complete ly ignored by EPA's formula.

Commenters stated under EPA's methodology, states a re assumed to achieve minimal reductions in CO2 emissions from the electric utility industry during the 15-year period from 2005 to 2020; states are then required to achieve their entire as signed reduction (41% for Minnesota) during the 10-year period from 2020 to 2030. The commenters sa id this construct not only flies in the face of reality in early adopter states such as Minnesot a, it also ignores the incremental pace of change that occurs in the highly regulated and capi tal-intensive electric utility industry.

Commenters stated EPA's assumption that all emissio n reductions will occur between 2020 and 2030 severely penalizes early adopter states such a s Minnesota. The commenters said the average mandated percentage reduction in states wit h renewable generation of 10% or greater is 29%, while the average mandated percentage reductio n in states with renewable generation of 5% or less is only 18%. The commenters said the ear ly adopter states have, on average, an 11% higher mandated reduction than the trailing-edge st ates. The commenters said that states with sizeable amounts of renewable energy on line in 201 2 should have a lesser obligation during the 2020-2030 period, since they are already achieving substantial reductions in CO2 emissions. The commenters said at a minimum, states that are doing a good job at reducing CO2 today should be on an equal footing with those that are not; but un der the EPA methodology, states that are making serious efforts to reduce CO2 emissions prio r to 2020 have to make greater reductions between 2020 and 2030 than those that are doing lit tle or nothing today.

Commenters stated the EPA stated in its press relea ses that it gives credit to forward thinking states for their CO2 reductions; however, in practi ce, it does not credit these states; in fact, this approach will actually punish states. The commenter s said the EE measures that will remain in 2020 as options to implement by the early action st ates are more costly than the options available
to states who have not acted on EE. The commenters said these costs will be passed on to the rate payers who have already done their part in meeting EPA's overall 30% reduction goal. The commenters noted that under a mass-based approach, EPA appears to allow a state to give credit to these programs on some level by not including EE programs implemented after 2015 in projections. The commenters said EPA seems to be fo rcing early action states to implement a mass-based approach.

Commenters stated in the emission limit calculation for a given state, credit electric generating units that repowered from coal to natural gas combi ned cycle as if they operated at the coal emission rate levels in the baseline years; since t here are relatively few repowered units, this approach would only slightly increase the calculate d emission rate target but would provide the appropriate means of rewarding early action to redu ce emissions.405

Commenters stated in the emission limit calculation for a given state, do not restrict the dispatch
of coal units that worked with EPA on commitments t o reduce emissions that were memorialized
in consent decrees. The commenters said utilities t hat made these commitments did so at substantial additional costs to customers; appropri ately, these substantial costs were amortized over the remaining useful life of these units to mi nimize the additional cost burden of taking early action. The commenters said these units must operate at a much higher capacity factor than allowed by EPA's proposal in order to allow custome rs to recover their investment; therefore, it is appropriate for EPA to recognize early investmen ts that were made in good faith and reasoned judgment that EPA would not subsequently create new requirements that cause significant
stranded costs.

Commenters stated EPA can recognize reductions made in voluntary, but legally binding CO2
reduction commitments. The commenters said EPA shou ld allow credit for these unused allowances by incorporating accrued early action em ission reductions into the goal setting or by providing an explicit mechanism for states to recog nize them.

Commenters stated that the proposed rule would pena lize units that have already taken steps to come into compliance with other environmental rules , such as the Mercury and Air Toxics Standards Rule ("MATS"). Commenters stated that the proposed rule uses 2012 data, but many coal-fired units have MATS-related projects current ly underway that will increase heat rates
above 2012 levels.

Commenters stated that EPA should consider providin g credit for heat rate improvement projects undertaken by utilities between the baseline year a nd the initial date of compliance. Commenters stated that for example, they recently completed he at rate improvement projects at IPL's Ottumwa Generating Station in November 2014. Commen ters stated that WPL's Columbia Energy Center has heat rate improvement projects sc heduled for completion by the end of 2017 and these projects are expected to improve efficien cy on average by approximately 3 - 5% at these electric generating stations. Commenters stat ed that for the Ottumwa Generating Station project description see Iowa Utilities Board (IUB) Docket No. EPB-2014-0150, filed by IPL on April 1, 2014 available at https://efs.iowa.gov/efs /. For the Columbia Energy Center project description see Public Service Commission of Wiscon sin (PSCW) Docket No. 05-CE-141, application filed on July 31, 2013 available at http://psc.wi.gov/apps40/ERF_public/Default.aspx.

Commenters stated that efficiency improvements repr esent only part of the investment they have made to improve the environmental performance of it s coal-fueled generating fleet. Commenters stated that they have also installed air quality co ntrol equipment to meet environmental requirements under such rules as the Mercury and Ai r Toxics Standards. Commenters stated that this equipment improves the quality of flue gas exi ting the stack, but also requires station power for operation. Commenters stated that the increased station power consumption reduces plant efficiency and increases net plant heat rate. Comme nters stated that coal facilities that placed this406

equipment in service after 2012 will need some amou nt of energy efficiency improvement just to restore plant efficiency to the baseline level used in the EPA's calculations.

Commenters stated some units simply retire and ques tioned why didn't the EPA account for the changing profile of the coal fleet from 2012 forwar d when setting state goals?

Comment 58: Credit for early actions

Response 58: See sections VIII.B., and VIII.C. 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 it is essential that EPA adjust i ts future target reduction goals for RGGI stateparticipants, so they are not asked to achieve high er aggregate emission reduction targets that would place these "early adopter" states at risk of more substantial risks of grid reliability disruptions and higher ratepayer costs. The comment ers concurred with RGGI comments of November 5th that advocate adjustment of future emi ssion targets so as to recognize and not punish earlier achievements in the RGGI region; ove rall, the RGGI comments suggest that a nationwide application of some of the same methods of mass-based emission reductions and regional, rather than merely state-based entity goa ls will be able to more easily meet the EPA goals for year 2030 emissions reductions.

Commenters stated that EPA should consider clarifyi ng that states that go beyond their targets
under the Clean Power Plan would receive credit for those actions under future updating of the carbon pollution standards for power plants, and th e standard only applies to fossil generators, so those states with less fossil generation in their s ystem mix will bear less cost.

Commenters stated Tallahassee has lowered its carbo n intensity to 960 pounds per megawatt hour; this rate represents award-winning early redu ctions, which is approximately 20 percent lower than the current state average for Florida. T he commenters stated based on EPA's goal of a 30 percent reduction, logic would suggest that the city would be very close to meeting the target; however, it still remains over 28 percent g reater than the EPA's proposed standard for
Florida. The commenters have concerns about their a bility to meet the limits in this proposed
rule.

Commenters stated over many years, Otter Tail has t aken major steps, primarily through the following initiatives, to reduce carbon footprint a nd mitigate CO2 emitted in the process of generating electricity for customers: Supply effici ency and reliability, Energy Efficiency/Conservation, Renewable energy, EPA's SF 6 (sulfur hexafluoride) Emission Reduction Partnership for Electric Power Systems.407

Commenters stated that in the October 28, 2014 Noti ce of Data Availability (NODA), the EPA acknowledged stakeholder concerns regarding the rig idity of the 2020 to 2029 glide path, and requested additional stakeholder comments to ensure that the overall framework includes sufficient flexibility. Commenters stated that the EPA presented two suggestions for addressing the glide path implementation in the NODA. Commente rs stated that the first approach the EPA requested comment on was the option to allow credit for early CO2 emission reduction. Commenters stated that in theory, this approach is appropriate and would recognize the steps already taken by those states or EGU's that were en gaged in early-action to reduce CO2. Commenters stated that however, the reality is that the EPA only intends to make this earlyaction credit available to actions that reduce emis sions after 2012 but before the beginning of the 2020 glide path. Commenters stated that this approa ch for eligibility of early-action credits provides no additional benefit, since by the very n ature of the goal-setting and compliance determination calculations proposed in the June 201 4 proposal, a state that reduces emissions after 2012 but prior to 2020 would in fact be "cred ited" for those emissions by default when calculating their emission rates for compliance in 2020. Commenters stated that the only approach that would provide an actual benefit to st ates engaged in early-action, would be a credit for CO2 emission reduction activities performed pri or to 2012. Commenters stated that since the EPA's goal-setting formula applies building blocks to each state's 2012 carbon emission rate, states that took action to reduce CO2 emissions pri or to 2012 are forced to further reduce carbon emissions with the same intensity as states that ha ve not already made investments in carbon reduction. Commenters stated that PSNH urges the EP A to consider early-action credit for those CO2 reductions that occurred prior to the EPA's sel ected baseline year of 2012. Commenters stated that PSNH's early actions include the econom ic-based transition of coal plants to targeted operation during peak demand periods between 2005 a nd 2012, various heat rate improvements including a turbine energy efficiency project at Me rrimack Station's Unit 2 in 2008, and the
conversion of Schiller Station's 50 MW coal-fired E GU to a biomass-fired EGU via the Northern Wood Power Project in 2006.

Commenters stated that the NODA reintroduces the qu estion of crediting for early action, posing early crediting as a potential solution to the conc erns of some stakeholders that meeting the interim targets will be difficult given the BSER de termination that states can implement Building Blocks 1 and 2 by 2020. Commenters suggested that o ne potential response to these concerns
introduced in the NODA would be to reduce the initi al stringency of Building Block 2 by assuming that states would instead increase their n atural gas utilization gradually, along a "glide path." As the commenters explained clearly in its i nitial comments, the targets set by EPA are eminently achievable, and reducing the stringency o f these targets is not necessary given the wide array of advanced energy technologies availabl e to help states meet their goals.

Commenters believed that early action crediting sho uld be allowed. Commenters stated that while EPA identifies early action crediting as anot her potential response to stakeholder concerns regarding Building Blocks 1 and 2, the commenters b elieved that such an approach is justified for reasons beyond smoothing out a "glide path," na mely, as detailed in Section III.G of AEE's initial comments, early crediting for new actions w ill spur states to act earlier, accelerating the expansion of the advanced energy markets, driving e arlier emission reductions, and providing states a longer period for compliance activity. Com menters stated that the policy recommendation made by AEE regarding early action c rediting achieves all of this without weakening the stringency of the emission targets an d that conversely, providing no credit for408

early action threatens to counterproductively stall continued expansion of advanced energy markets, and their associated emission reductions, until after 2020 when "full credit" would be
available.

Commenters stated that in addition to phasing in Bu ilding Blocks 1 and 2 over the full interim period, MidAmerican supports the proposal contained in the October 2014 NODA that would allow states to take credit for early actions which achieved emission reductions. The commenters stated that providing full credit for these early a ctions recognizes the important emissions reductions states have already achieved and it cont inues to incent incremental reductions between the date of the proposal and the date of co mpliance. Commenters stated that MidAmerican supports an outcome whereby the final r ule clearly states that early emission reductions occurring prior to 2020 can be credited towards compliance with the 2030 target.
Commenters stated that such reductions should not n eed to relate directly to the proposed building blocks so long as they contribute to achie ving a state's emissions target. Commenters stated that for example, development of renewable e nergy and implementation of energy efficiency programs, as identified in Building Bloc ks 3 and 4, will certainly continue prior to 2020 and should be credited towards compliance with the 2030 targets. Commenters stated that other actions, such as retirement of fossil-fueled EGUs, will also occur prior to 2020.
Commenters stated that unit retirement is not tied directly to EPA's proposed building blocks, but
states should be able to credit the emissions reduc tions following such retirements, regardless of their reasons, towards compliance with their 2030 e mission goals.

Commenters stated that as much as Minnesota wants t o do its part to reduce CO2 emissions, we have to acknowledge that every CO2 reduction carrie s a cost with it. Commenters stated that Minnesota's electric ratepayers are currently beari ng the cost of an aggressive greenhouse gas reduction program, which is on track to produce red uctions of 30% or more from 2005 levels by 2020. Commenters stated that then they will have to assume the additional burden of meeting the very high reduction under the Proposed Rule of 41% between 2020 and 2030. Commenters stated that when all the low-hanging fruit has been picked, further reductions in CO2 emissions become technically more difficult to achieve, as we ll as more expensive. Commenters stated that
there has to be a reasonable limit to how much one state can be required to achieve.

Commenters stated that despite EPA's logic, every r eduction in CO2 which occurs between 2005 and 2030 is equally important, no matter when it oc curs. Commenters stated that early adopter states should not be penalized for moving ahead wit h greenhouse gas reductions in the absence
of a federal mandate. Commenters believed that the only fair way to design the program is to use 2005 as the base year and allow all reductions achi eved by states from that year forward to count toward achieving the state's goal.

Commenters stated that if EPA does not wish to rede sign the entire program to accommodate early adopters, we offer the following suggestions as a means of providing fair treatment to early adopters while retaining the existing overall progr am design. Commenters stated that in developing their state plans, early adopter states should be given the option of choosing an onset date for the phase-in period that correlates with t he state's ongoing greenhouse gas reduction
efforts. Commenters stated that States should have the option to choose a phase-in period onset409

date of 2015, 2010, or 2005, depending on when its greenhouse gas reduction efforts began to
show results. Commenters stated that this will allo w early adopter states to receive credit for the very real CO2 emissions reductions that they will a chieve prior to 2020 and greatly enhance the overall fairness of the program.

Commenters did not believe that there should be any insurmountable issues with allowing states to opt for a phase-in period that begins prior to t he EPA's de facto baseline year of 2012. Commenters recognized that, however, that there may be reasons that EPA would not want a state's phase-in period to begin prior to 2012. Com menters stated that if that is the case, then early adopter states should be permitted to choose any year as the onset date for the phase-in period from 2012 through 2019.

Commenters stated that in Minnesota's case an onset date of 2012 for the phase-in period would
miss the 20% reduction in CO2 emissions that we ach ieved from 2005 to 2012, but at least it
would allow us to receive credit for reductions fro m our ongoing and effective program from
2012 forward.

Commenters stated that EPA proposed that the flexib ility provided in the state plan development process adequately allows for consideration of the remaining useful life of the affected facilities and other source-specific factors and, therefore, s eparate application of the remaining useful life provision by states in the course of developing and implementing their CAA section 111(d) plans is unnecessary. Commenters disagreed that the flexi bility in the state plan development process sufficiently allows for addressing remaining useful life considerations.

Commenters stated that Kansas is in the midst of a period of great transition for its large coalfired electrical generating units. Commenters state d that the six largest coal fired units in Kansas have made and continue to make significant investme nts in criteria pollutant emission reduction equipment in the last three to four years to comply with the regional haze program. Commenters stated that in addition, the Cross State Air Pollut ion Rule, Kansas City ozone maintenance plan rules, and the Mercury and Air Toxics rule have als o contributed to massive investments in pollution control equipment at Kansas' largest coal plants in recent years. Commenters stated
that more than three billion dollars is earmarked f or these projects that have either just been completed or are still under construction. Commente rs stated that paying off the bonds and other
credit instruments used to fund controls installed in 2015 cannot be expected to be completed by the early compliance period starting in 2020. Comme nters stated that investments of such magnitude are typically financed for much longer pe riods of time. Commenters stated that the result is a large potential for stranded investment s in the State of Kansas as a result of re-dispatch to non-coal generating units. Commenters stated tha t although not new facilities, the investments made in pollution control equipment are significant and should be allowed to be amortized over a greater time period than allowed under the proposal

.410

Commenters stated that this is a fundamental issue that EPA must address at the front end of the 111(d) process by incorporating adjustments for pla nts with recently installed or to be installed controls into the state goal calculations or in the compliance periods. Commenters stated that the
solution should take into consideration the amount of funds spent on controls as a proportion of the value of the generating unit and the generally accepted time frame used by utilities to retire
the financial instruments used to fund the control devices installed. Commenters stated that facilities that have recently installed or are inst alling new scrubbers comprise 84% of Kansas' 2012 generation. Commenters stated that this is a f ar greater impact than the flexibility contained in the 111(d) process can reasonably be expected to account for in the short time between the plan submittal deadline and the first year of the c ompliance period.

Credit for early action should not be given

Commenters believed stronger and earlier emission reduction ta rgets are required. Commenters believed that the introduction of early credits, ba nking and trading can easily defer or displace emission reductions that are achievable, cost effec tive and adequately demonstrated and that would otherwise be implemented. Commenters urged EP A to refrain from introducing any of these methods to NSPS rulemakings, however, should EPA proceed, then early credits must be cabined by the following principles: commenters sta ted that first, credit should not be given for any action taken before the date of the Proposed Ru le (June 2, 2014). Commenters stated that the purpose of section 111, and of the Clean Air Act, i s to reduce emissions below business as usual, not simply to mimic that outcome. Commenters stated that Section 111 standards must reflect "emission limitation[s]" achievable through the "be st system of emission reduction . . . adequately demonstrated." Commenters stated that a standard that fails to reduce emissions from business as usual plainly violates that requirement . Commenters stated that second, as EPA notes, total emissions would be greater if early ac tion credits were allowed to permit higher emission targets during the 2020-2030 period, "unle ss the pre-2020 emission reductions that can be counted toward the state goal are limited to red uctions that would not have occurred in the absence" of the Proposed Rule. Commenters agreed th at a credit limited in this fashion would be an incentive for earlier emission reductions, an im portant goal because early reductions avoid additional costs of delay; therefore, we would supp ort such credits if actually so restricted.

Commenters stated that EPA states concern that with out allowing credits for early action, the Proposed Rule might create disincentives for pre-20 20 emission reductions. Commenters stated that EPA can avoid such disincentives if the target s it allocates for each individual state go beyond actions to which a state had already committ ed when the Proposed Rule was proposed. Commenters stated that if so, credits for additiona l and/or speedier emission reduction efforts would incentivize, rather than discourage, such con duct.

Comment 59: Beyond-the-unit approach - penalizes early actors

Response 59: See Preamble sections V.A and V.E. The EPA has remo ved block 4 from BSER quantification and has revised its treatment of bui lding block 3.411

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

Commenters stated in addition to making state goals more stringent, EPA's beyond-the-unit approach also leads to severe discrepancies in the amount of emission reductions EPA assumes
different states can achieve. The commenters said b ecause EPA's proposal assumes that states will start implementing future emission reductions from RE and EE at the levels they had achieved by 2012, states that invested early in the se emission reductions are assigned more stringent interim goals than are states that failed to invest early; thus, EPA's approach effectively penalizes early actors by requiring utilities in th ose states to achieve deeper reductions than they would be required to achieve had they decided not t o invest in zero-carbon electricity and EE.

Commenters said that, by looking beyond the fence l ine at emission reductions that can be achieved through renewable energy generation and de mand-side energy efficiency, EPA is, in effect, punishing early adopters by imposing more s tringent emission reduction targets. Commenters said EPA's emission reduction targets fo r both renewable energy and energy efficiency are based on regional or national target s, but also include growth projections that begin in 2017 and continue through 2030. Commenters said for States that have already adopted and implemented such renewable and demand-side ener gy efficiency programs, the ramp up period is short, and their emission reduction targe ts are based on EPA's maximum values within a few years. Commenters said in contrast, other Sta tes that have not yet implemented such programs will not be required to demonstrate full c ompliance with EPA's maximum values until much later, if at all. Commenters said for example, both Missouri and Illinois are located in the North Central region and are assigned renewable ene rgy targets of 15%. Commenters said Missouri is only obligated to increase its renewabl e capacity from 1% to 3% of Statewide generation, while Illinois must increase its renewa ble capacity by 5% (from 4% to 9%). Commenters said that EPA is requiring more aggressi ve renewable energy expansion for States that have already shown leadership in promoting ren ewable energy.

Comment 60: Disadvantages and Disproportionate Burdens Imposed for early actions

Response 60: See sections VI and VIII 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 the rule disadvantages the proact ive states by exactly what has been done in calculating the state goals; states that have alrea dy planned to reduce CO2 emissions by building new nuclear units are at a disadvantage. The commen ters said South Carolina, Tennessee, and Georgia are the only three states that have nuclear units under construction; the goal for these states is lowered substantially by including under construction nuclear in of the state goal calculation. The commenters said this is inequitabl e to customers in those states who are already paying for the nuclear units under construction. Th e commenters said EPA also mentions that it recognizes that state that have already shifted tow ard lower carbon-intensity generation are better412

positioned to meet state-specific goals; this is no t true if the state goal has been lowered by including this under construction generation. The c ommenters said this creates a disproportionate
burden to those states to the detriment of their ci tizens; this also creates an inequity between utilities that have invested in different types of low-carbon generation. The commenters said
utilities that have invested in nuclear as their lo w-carbon generation are being further burdened since the reductions are already assumed in the sta te goal; on the contrary, utilities that have invested in wind and solar as their low-carbon gene ration are rewarded since their investments do not further reduce a state goal.

Commenters added EPA's proposal directly penalizes our customers; in addition to paying for the substantial emission reductions, they have been participating in EE programs the
commenters have incentivized since 1979. The commen ters said participation in the programs has been diminishing as the energy efficiency oppor tunities have been depleted in the 35 years of this already successful program. The commenters sai d the EPA proposal penalizes these proactive customers who are now benefitting from a lower power bill; however, these customers would undoubtedly see a substantially higher bill d ue to the additional costs this proposal would bring. The commenters said EPA should recognize tha t the decades of early action as well as new appliance and building codes are already reduci ng load demand; EPA should work with Florida to adjust the goal since any reductions bey ond the current commitment have been shown to be too expensive or simply not practicable durin g the current Florida energy efficiency goalsetting process.

Commenters stated the CPP is based on building bloc ks to reach goals; the methodology of measuring the success of those building blocks does not adequately recognize the substantial progress already made by some states. The commenter s said states should get credit for their actions prior to the CPP and should not feel disadv antaged as an early adopter of programs to reduce greenhouse gas emissions. The commenters bel ieved that with changes to the building block methodology, state emission rate target calcu lations could more accurately reflect substantial progress made by a state or region in t he last few years prior to the CPP issuance. The commenters said by refining this part of the buildi ng block methodology, states would see more equity in the targets established for each state.

Comment 61: Regions; states don't fit into regions; overestimat es RE goals for some states.

Response 61: The EPA has revised its block three quantification based on comment. See

Section V of the Preamble.

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

EPA's adoption of North Carolina's renewable energy and energy efficiency portfolio standard (REPS) for Florida does not realistically reflect t he available renewable resources or policy
framework in Florida. Commenters stated that "EPA's adoption of North Carolina's renewable energy and energy efficiency portfolio standard (RE PS) for Florida does not realistically reflect the available renewable resources or policy framewo rk in Florida." The commenters further
stated that Florida does not have viable wind resou rces and limited biomass. The commenters413

also contended that EPA overestimated the potential renewable energy generation assumption for the southeast region by misinterpreting North Carol ina's REPS. Furthermore, the commenters stated that "by using North Carolina's REPS as a co mponent of the BSER, EPA has doublecounted the use of energy efficiency, given the int eraction between Building Blocks 3 and 4."

Commenters stated EPA assigned states to "regions" for purposes of identifying best practices and calculating the portion of the state goals attr ibutable to development of renewable resources; however, based on the in-state resources available for development, certain regional average targets appear overly aggressive for certain states . The commenters investigated the impact of "re-assigning" states to regions with more similar resource bases, and discovered that such reassignments would actually increase the amount of r enewable generation included in the calculation of the interim and final goals. The com menters found (see Appendix C of their comment) that if Arkansas and Louisiana were assign ed to the Southeast region, which has a regional average target of 10 percent, instead of b eing included in the South Central Region, which has a regional average target of 20 percent, the amount of renewable energy included in the calculation of the interim goal would increase from 3,370,253 MWh to 4,848,761 MWh for Arkansas, and from 4,932,549 MWh to 7,282,579 MWh f or Louisiana.

Commenters stated EPA acknowledges that there are r egional differences throughout the country that may result in differing capabilities and resou rces for increasing RE generation and encourages states to work together on regional comp liance plans to address these. The commenters said EPA fails to recognize that signifi cant differences often remain between states within a given region, and what may have been demon strated to be achievable in one state, may
not be achievable in another state. The commenters said energy pricing, 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. The commenters said this calls into question EPA's decision to group states regionally when calculating state RE goals.

Commenters stated the South Central region is calcu lated incorrectly. The commenters said EPA used state RPS data to establish regional RE target s, and each region's RE target was calculated by assuming all states in the region could, by 2030 , achieve the average of the calendar year 2020 RPS requirements of the states in that region; importantly, in deriving regional targets, EPA "did not include [RPS] targets that were capacity-b ased."

Commenters stated EPA derived the RE target for the South Central region (Louisiana, Arkansas, Kansas, Nebraska, Oklahoma, and Texas) ba sed on the RPS of a single state - Kansas; however Kansas' RPS is based on gross gener ation capacity rather than total retail sales. The commenters said consequently, it should have be en discounted per EPA's stated protocol. The commenters said Texas also has a RPS, but like that of Kansas, it is also based on capacity.

Commenters stated given the lack of a germane RPS s tandard within the South Central region, EPA must establish the regional RE generation targe t at 1 0%, consistent with its treatment of Alaska and Hawaii (and equivalent to that for the S outheast region).

Commenters stated in order to increase the South Ce ntral region's RE generation by 22,249,199 MWh by 2030, the annual RE growth factor for the re gion should be set at 2.7 percent.414

Commenters stated EPA's regional approach to renewa ble energy does not work well; first, EPA divided the country into six regions based on NERC regions; second, a renewable energy generation target was calculated for each region, b ased upon averaging all 2020 renewable portfolio standards ("RPS") requirements in that re gion; third, an annual growth factor was calculated that would allow the region as a whole t o reach the regional renewable energy target in 2029 assuming that renewable energy generation w ould increase from 2012 levels beginning in 2017; fourth, the annual growth factor for a giv en region was applied to individual states' 2012 renewable energy generation to calculate future ren ewable energy generation in that state from 2017 through 2029, not to exceed a maximum renewabl e energy generation level equivalent to the regional renewable energy target; finally, thes e annual renewable energy generation levels
for each state were used to calculate interim and f inal renewable energy targets for the state. The
commenters said EPA claims that "states within each region exhibit similar profiles of renewable energy potential or have similar levels of renewabl e resources." The commenters said this assumption is off-base because the regions are larg e and encompass states with drastically
different renewable resources. The commenters said given the sizeable areas spanned by the six NERC regions, there are clearly differing levels of renewable energy resource adequacy and availability across these proposed regions. The com menters added the EPA assumption that existing RPS targets are feasible across all states within a defined region does not adequately consider differing RPS requirements, including the varying definitions of "renewable" across the states. The commenters said renewable resources phy sically located in one state are often used to satisfy RPS requirements in other states. The comme nters said since these benefits are not allocated to the buyer's state, RPS quantification is an inefficient method to determine renewable energy potential.

Commenters stated EPA assigned each state renewable -energy growth rates for 2020-2030 based on its review of the existing Renewable Portfolio S tandards (RPS) after it grouped states on a regional basis; thus, EPA assumed that states withi n a region could meet the same RPS targets, and it made this assumption without considering eac h state's definition of "renewable," what
each state has available to it in terms of renewabl e resources, and the costs associated with those resources, all of which are unique by state and reg ion. The commenters said in fact, Arkansas has not enacted an RPS to date, due in large part to th e fact that Arkansas has few cost-effective renewable resources for electric power generation.

Commenters stated EPA acknowledges that there are r egional differences throughout the country that may result in differing capabilities and resou rces for increasing RE generation and encourages states to work together on regional comp liance plans to address these; however, EPA fails to recognize that significant differences rem ain between states within a given region. The commenters said energy pricing, geography, topology , transmission, load, seasonality, congestion and existing energy mix are just a sampl e of the many factors that play a role in RE deployment; this calls into question EPA's decision to arbitrarily group states regionally when calculating state RE goals.

Commenters stated EPA grouped states together into six regions for determining state RE goals. The commenters said EPA provides no rationale for w hy certain states are grouped together, other than proximity; proximity may not be an appro priate proxy for similarity of RE resource deployment potential. The commenters said neighbori ng states can have very different solar or wind potential; for example, AR and KS have dramati cally different wind resource potential, but415

are included in the same region. The commenters sai d it is not reasonable to assign AR the same RE goal as KS, given the known differences in their wind resource potential; instead, it would be more appropriate for EPA to calculate state RE goal s based on, among other factors, statespecific resource availability. The commenters said if EPA chooses to retain a regional approach to developing state RE goals, the Agency should all ow states to change regions if they can demonstrate that another region is more representat ive of their RE potential.

Commenters stated utilities that operate in multipl e states will meet challenges in complying with this proposed regulation. The commenters said the feasibility of implementing Building Block #3 is different for every state; the EPA made generalizations that may or may not be applicable for a particular state. The commenters s aid further complicating this issue while operating in multiple states is how each state will deal with RE resources. The commenters said there are unanswered questions regarding how RE res ources produced in one state will be treated when sold to utilities, delivered into regional RTO 's and consumed in other states. The commenters said this issue greatly affects how, whe n and if companies comply with the rule in each state. The commenters fully support the wind e nergy it purchases from KS to be used for compliance in other states, especially those states where its customers are paying for said energy.

Commenters stated EPA set the South Central regiona l growth rate at 8%, using the Kansas RPS
established in 2010 as the benchmark. The commenter s said while the RPS requirements of most other states are based on retail electric sales, Ka nsas' standard is based on generation capacity. The commenters said EPA mistakenly applied the Kans as RPS requirements as if they were 20% of retail electricity sales instead of 20% of gener ating capacity. The commenters estimated that this overstates the benchmark growth rate for the r egion by approximately 9%.

Commenters stated under the proposed guidelines' pr imary approach to determining RE baseline and target goals, EPA relies on state RES requireme nts to create regional RE targets that are then applied to individual states. The commenters said t his approach may overestimate what is achievable in some states, particularly those that do not have existing RES mandates, and ignores contrary decisions made in those states. The commen ters added, EPA misuses state RES programs by failing to recognize RES design element s that can have the effect of reducing the amount of in-state generation necessary for complia nce. The commenters said EPA fails to adjust state RES goals to reflect the fact that generation from existing hydropower generation cannot be used for compliance under the proposed 111(d) guide lines. The commenters said EPA also delays a decision on the eligibility of biomass res ources for compliance, adding further uncertainty to the RE assumptions in the proposed g uidelines.

Commenters supported EPA's consumption based approa ch to renewable energy crediting in state compliance plans. Commenters also supported t he alternative method for renewable BSER calculation, but with a modification to use regiona l technical and economic potential for each technology. Commenters contended that EPA used an a rbitrary and unjustifiable methodology for determining each state's renewable energy (RE) generating capacity under block 3 of the
BSER. Commenters stated that EPA failed to offer an adequate justification for two components of the RE targets in the BSER: 1) its determination that the average regional RPS reflects an adequately demonstrated and feasible system of emis sion reduction; and 2) its application of a416

uniform RE growth rate to all states within a regio n, regardless of their baseline RE generation capacity. Commenters concluded that EPA failed to p rove that the standards in block 3 of its BSER have been adequately demonstrated. Commenters explained that RPSs are not an inherently accurate reflection of a system of emiss ion reduction that is demonstrated or feasible. Commenters stated that while some RPSs may realisti cally reflect a state's RE growth potential, others may be no more than an aspirational goal tha t does not account for the costs or practicalities of achieving the goal. Commenters al so objected that in two of EPA's designated regions there was only one state with an RPS and in those states, the lone state with a RPS set the RE growth rate for the entire region.

Comment 62: RE potential; based on regional growth; need to bas e upon specific states ability.

Response 62: The EPA has revised its block three quantification based on comment. See

Section V.E.

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

Commenters stated in determining the proposed and a lternate RE generation level goals, U.S. EPA first quantified the amount of RE in 2012 in ea ch state scenario, excluding hydropower; Ohio's 2012 RE performance level is ide ntified as 1% by U.S. EPA; then, as a starting level, U.S. EPA summed these amounts for a ll states in each of six regions (based on North American Electric Reliability Corporation (NE RC) and RTOs with adjustments to align borders with state borders accounting for "similar power system characterizes as well as geographic similarities in RE potential." The comme nters said then U.S. EPA estimated the aggregate target level of RE generation in each of the six regions assuming that all states within each region can achieve the RE performance represen ted by an average of RPS requirements in states within that region; specifically, U.S. EPA a veraged the existing RPS percentage requirements that will be applicable in 2020 and mu ltiplied that average percentage by the total 2012 generation for the region. The commenters are raising numerous concerns with the various aspects of this approach.

Commenters stated based on DSIRE, U.S. EPA determin ed that Ohio's 2020 effective RE level is 9%; this is the second lowest in our region: PA, 8% ; NJ, 22%; MD, 18%; DE 19% and DC 20%. The commenters said then U.S. EPA assumes RE genera tion will begin increasing in 2017 until in 2029 the regional RE generation target, which is the average of the 2020 effective RE levels,
is reached in each state. The commenters said for O hio's region, East Central, our target is 16%. The commenters said then for each region they compu ted the regional growth factor necessary to increase regional RE generation from the 2012 level to the regional. The commenters said this regional growth factor is the growth factor used fo r each state in that region to develop the best practices scenario. The commenters wish to note tha t although four of the six states in our region have effective RE levels predicted for 2020 of 18 t o 22%, in 2012 the six states in our region had RE performance levels of 0 to 3%; and the state tha t performed at 3%, Virginia, is not even considered as part of our regional generation targe t because they do not have an RPS policy. The commenters said the remaining five states in our re gion achieved anywhere from 0 to 2% in 2012; this acts to drive our annual growth factor s tarting in 2017 to be 17%. The commenters417

said the U.S. EPA developed the annual RE generatio n levels for each state by applying the regional growth factor to that state's initial RE g eneration level, starting in 2017, but stopping at the point when additional growth would cause total RE generation for the state to exceed the state's maximum RE generation target (2012 generati on multiplied by 2020 effective RE level, 16% for Ohio's region). The commenters said the int erim goal is then based on the average achieved between 2020 and 2029 and the final goal i s the 2029 level; for Ohio, the interim goal is 6% and the final goal is 11%16 of RE generation in the state. The commenters said Ohio is to grow RE within the state from 1% to 11% under this proposal; because Ohio is a large generator of electricity, this represents 13,776 GW-hs. The c ommenters said while states in our region that are small generators, such as Delaware, will only b e required to achieve 1,038 GW-hs; the commenters find this expectation unreasonable. The commenters said the only way to accurately determine RE potential that is technically and econ omically feasible is to determine it based upon the specific states ability.

Commenters stated supporting data could not be foun d to allow for replication of the EPA calculations used to determine the Alaska 2012 RE g eneration of 39,958 MWh. The commenters said per EPA explanation, the annual RE generation growth factor of 11.426 percent is based on the growth of RE generation between 2002 and 2012 i n Alaska, but no additional detail is provided. The commenters said this supporting data should be clearly identified in the record so that the public has the opportunity to verify the E PA calculations. The commenters said sustaining this high level of RE generation growth in Alaska through 2030, as EPA assumed, does not seem likely. The commenters said retaining this conservative growth rate results in lower goals than a more realistic RE generation gro wth rate; in correcting the Alaska CO2 Performance Goals calculations, EPA should identify a more representative RE generation growth rate.

Commenters stated EPA used statewide RE generation as a factor in calculating the Alaska CO2 Performance Goals, regardless of whether that RE ge neration offsets generation from existing
affected EGUs. The commenters said Alaska has numer ous RE generation projects in remote
communities that are not connected to the affected EGU electrical grid; in contrast, EPA allowed only RE generation that offsets generation from exi sting affected EGUs to be used to determine whether actual CO2 emission are compliant with the goals. The commenters said this inconsistency results in the Alaska CO2 Performance Goals being artificially low because RE credit taken in calculating the goals cannot be use d for demonstrating compliance with the goals. The commenters said the calculation methodology and compliance methodology should be
consistent to increase the likelihood that the calc ulated goals can actually be attained.

Comment 63: RE targets on regional basis

Response 63: The EPA has revised its block three quantification based on comment. See

Section V.E of the Preamble.

The following are summaries of the specific public comments under this comment:418

Commenters stated the proposed rule's calculation o f renewable energy targets on a regional basis - the average in a particular region - often minimizes renewable energy's potential, whether or not a state currently has an RPS in place. Comme nters said the rule should be improved by setting state-specific goals based on the highest R PS in the region or recognizes the potential for renewable energy unique to each state.

Commenters stated the proposed rule assumes a low g rowth rate for renewable energy; the rule should be improved by adopting a growth rate for re newable energy that reflects renewable energy's demonstrated and accelerating growth over the past ten years, which is the market reality. The commenters said this growth is proof o f renewable energy's ability to scale up and provides a substantial amount of new generation to meet low-carbon power demands.

Commenters stated the rule should be improved by re vising the 2020 interim compliance goal; the modification of the interim compliance goals wo uld allow states to implement a more flexible compliance glide path taking into account their generation mix, reliability needs, emission target, renewable resources, and other fac tors. The commenters said states would still be required to comply with the 2030 limits but woul d do so at a rate that is appropriate for each state; as an alternative, the USEPA could set a str aight-line compliance target that requires states to meet a steadily decreasing emission target but s moothes out reductions over the ten-year period rather than front-loading the reductions as in the present, proposed rule. The commenters said such an approach allows time for the adoption of effective, thoughtful renewable energy integration policies, as well as the construction o f grid infrastructure, adaptation of technology and business processes and renewable energy facilit ies at a scale that can provide generation to more effectively address all reliability concerns c reated by the retirement of existing coal-fired
EGUs.

Commenters stated a more effective approach is to c alculate a renewable energy target for each non-RPS state based upon its present renewable ener gy deployment levels, the recent growth rates for renewable energy in each state, and, impo rtantly, each state's actual renewable energy potential. Commenters stated such an approach ought to take into account the recent growth rates of renewable energy deployment in states with simil ar potential renewable energy resources.

Comment 64: Regional goals should be revised.

Response 64: The EPA has revised the way it quantifies BSER base d on comments. Subcategory-specific emission performance rates now apply to all units nationwide. See

Preamble Sections V and VI.

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

Commenters recommended that EPA revise the calculat ion of the Western regional goal so that all states, even those with no established state RE rules and hence a zero target now, are included

at zero.

Commenters stated the way that the various state go als are calculated is unfair and pits states against states, creating further barriers to the de velopment of renewable energy and jeopardizing419

the ability of states to cooperate on a regional ba sis to try to achieve the overall goals of the proposal.

Comment 65: Correct calculations for RES - renewable energy st andard

Response 65: The EPA has revised its block three quantification based on comment. See
Section V.E of the Preamble.

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

Commenters stated the Colorado Renewable Energy Sta ndard (CO RES) is, as implemented, approximately 20 percent by 2020, not, as shown in Chapter 4 of the GHG Abatement Measures, 30 percent by 2020. The commenters said please make the following corrections:

1. The CO RES includes multipliers to incent specif ic technologies, early renewable investment, and community-based renewable energy; w ithout multipliers, most Colorado utilities' actual renewable capacity will be lower than the RES goals; please reduce the RE targets in the proposed rule to reflect these mu ltipliers.

2. The CO RES varies by type of utility: investor-o wned utilities have a goal of 30 percent, cooperatives have a goal of 20 percent and municipal utilities have a goal of 10 percent; please weight the goal to reflect these st andards.

The commenters said considering the above and the E PA's approach to determining achievable renewable targets, the commenters recommended that EPA utilize an effective Colorado RE level of approximately 20% for determining the West region and corresponding Colorado compliance targets.

Comment 66: Regional RE target; RES Design Elements

Response 66: The EPA has revised its block three quantification based on comment. See

Section V.E of the Preamble.

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

Commenters stated in setting a regional RE target a s the first step in setting state goal, EPA appears to assume that there will be regional or mu lti-state compliance efforts. The commenters said multi-state compliance planning may be valuabl e in resolving compliance challenges identified by some states and utilities; however, E PA cannot set targets assuming that this will occur. The commenters said this approach could resu lt in inflated RE goals for states that are not able to engage in multi-state compliance plans. The commenters said EPA cannot argue that targets predicated on regional efficiencies, or the trading of RE credits from regional partners for compliance, are achievable by individual states.420

Commenters stated EPA's regional RE goal calculatio ns do not recognize important elements of individual state RES programs, such as the use of o ut-of-state RECs for compliance, alternative compliance payments and credit multipliers for cert ain resources. The commenters said these
mechanisms serve to reduce the actual levels of in- state RE generation needed to satisfy RES
mandates. The commenters said EPA's failure to cons ider these factors results in inflated state RE goals that may not be achievable in certain stat es.

Commenters said state RES mandates are not proxies for a state's potential to deploy more RE generation, but rather reflect policy choices made in each state with regard to how much and what type of renewable resources they want to encou rage and at what cost and in what
timeframe. The commenters said this is underscored by the fact that at least 23 of the 29 states with a RES allow compliance deviations due to cost impacts, supply constraints or reliability concerns; eleven states allow compliance deviations based on a force majeure finding or if utilities have made good faith efforts to comply bu t cannot because of factors beyond their
control.

Commenters said further, 24 states (of the 29 state s with a RES) and the District of Columbia allow the use of out-of-state power and RECs for co mpliance. The commenters said the use of these important compliance mechanisms enables criti cal flexibility in achieving the mandates, and serves to recognize that, in some cases, resour ces are more widely available or can be more economically developed in other states (and Canada and Mexico), which helps keep RES costs
lower for customers. The commenters said some state RES programs also allow compliance through alternative compliance payments; if EPA use s state RES mandates as the basis for setting regional or state RE goals, EPA must adjust RES goals to reflect these design elements in recognition of the fact that the RES mandates typic ally require a lesser amount of in-state generation than full compliance amounts.

Commenters said EPA must take into account that sta tes have not established RES percentage targets in isolation, but have thoughtfully and int entionally determined the targeted levels of renewable generation for each state in the context of, and in conjunction with, determining the resources that are available to meet the target lev el, the cost of meeting the target level and other policy objectives. The commenters said if EPA uses state RES mandates as the basis for setting regional or state RE goals, EPA must adjust RES goa ls to reflect these design elements or enable additional compliance mechanisms consistent with ex isting state RES programs.

Commenters stated EPA also fails to recognize the c redit multipliers that some states apply to certain resources to further encourage development of these RE resources; twelve states and the District of Columbia have some type of resource-spe cific credit multiplier. The commenters said failure to adjust state RES requirements to reflect these credit multipliers results in overestimated RE goals; for example, if a state RES requirement i s 20 percent by 2020, and that state provides an extra multiplier for solar generation, the actua l requirement is less than 20 percent because
solar resources are double counted. The commenters said any use of state RES mandates used by EPA in setting regional or state RE goals should re flect this double counting.

Commenters stated it is critical to allow the curre nt tracking system utilized for compliance in
MO and KS to be utilized in other states. The comme nters said systems such as the North American Renewables Registry are currently recogniz ed by some states to track RECs for421

compliance and sale. The commenters said KS wind RE Cs are exported to other states and tracked through this avenue to prevent double count ing. The commenters said EPA's regulation recognizes these avenues for tracking and applying RECs for state compliance but is not clear on the outcome of the REC under the Proposed Rule. The commenters said during EPA outreach meetings and calls staffers have presented confusin g material on this subject matter. The commenters said since natural conditions in every s tate are not conducive for RE production, it
will be essential for the RE and/or RE credits crea ted in one state to be utilized for compliance in another state. The commenters said allowing this is critical for the success of the Proposed Rule and the commenters strongly support this concept; t his will lower utility compliance costs and be
a valuable asset for states in terms of economic de velopment.

Commenters stated EPA's approach to calculating sta tes' renewable development potential also presents challenges; first, EPA's proposal to take a regional average of state Renewable Portfolio Standard ("RPS") targets and apply the average to a ll states in the region imposes the policies in one state on its neighbors. The commenters said it also in effect rewards states who have not adopted RPS targets, as their regional average is l ower; indeed, regions of the country with the highest technical potential for developing renewabl e resources have some of the lowest targets for bringing those resources online, while states w ith relatively lower technical potential are faced with the highest targets in the country. The commenters said in New York, for example, the NREL study cited by EPA in its Alternate Approa ch finds New York has a technical potential to meet up to 5 percent of its electricit y demand with renewable energy, while its target under EPA's proposed rule is five times that (at 25 percent).

Commenters stated EPA uses a "best practice" approa ch to set state renewable energy targets, but the methodology is flawed; EPA's proposal divides t he country into regions and sets the target level for all states within a region based upon an average of the 2020 RPS requirements from the states within each region that have enacted an RPS. The commenters said in the South Central region, only one state, Kansas, has adopted an RPS; as a result, EPA has effectively assumed that one state's particular policy decision to adopt an RPS represents a meaningful estimate of the "feasibility and cost of the best practices scenari o" for Texas and all the other states in the region

. The commenters said EPA's approach is arbitrary and unreasonable for at least two reasons:

The commenters said first, EPA's "best practice" me thod relies on the belief that an individual state-passed RPS was based on an assessment of the actual feasibility of generating that level of renewable energy within the state; individual state decisions to enact an RPS could have been due to a combination of factors, including the pres ence of renewable energy manufacturers within the state, the state's politics, trade-offs with other initiatives on electricity policy, the income level of electricity consumers, and other fa ctors combined with the availability of resources. The commenters said EPA provides no evid ence to support its assertion that state legislatures adequately considered whether the leve ls of renewable energy prescribed by the state's RPS would be achievable given cost and reso urce constraints. The commenters said state RPS programs also embrace a wide range of generatio n technologies that can vary dramatically from state to state, and some RPS programs provide increased credit levels for certain types of generation; these differences mean that standards - even within a single region - may not be comparable. The commenters said Kansas has only 2,7 13 MW of wind generation compared to 12,214 MW in Texas; EPA did not take into account t he amount of renewable energy produced Texas has compared to other states. The commenters said Texas ranks number one in the nation422

for wind energy capacity and if Texas were a countr y, it would rate number six globally for installed wind energy capacity.

The commenters said therefore, energy production in Texas required by the EPA proposal is exponentially greater than other states; in 2030, T exas must achieve over 85 million MWh in renewable energy to reach the goals in Block 3 - th is is a 153 percent increased from the 2012
baseline for Texas of 34 million MWh. The commenter s said this requirement should be compared to the state with the next highest renewab le energy increase under the proposed rule, which is California with a 37 percent increase to 4 1 million MWh. The commenters said the renewable energy generation goals the EPA has calcu lated for Texas are unachievable and impractical.

The commenters said second, EPA does not appropriat ely set the regional RPS targets; EPA's RPS-based approach arbitrarily includes the anticip ated level of renewable energy for states that have adopted a RPS, while ignoring the fact that ot her state legislatures have considered and rejected any level of RPS commitment for their stat es. The commenters said EPA's approach to setting regional "best practice" targets cherry-pic ks from a single policy decision in Kansas and skews the results in the region's five other states , Texas, Oklahoma, Louisiana, Arkansas, and Nebraska. The commenters said EPA ignores the judgm ent of these five other states in the South Central region, some of which have not adopted an R PS. The commenters said if EPA continues the use of the RPS-based approach in the final rule , it should, at the very least, include in its regional averages the RPS levels of all states in a region, including those with a state renewable energy goal of 0 percent.

Commenters stated EPA's reliance on historic RE dev elopment in only the top 16 states skews the resulting benchmark RE development rate. The co mmenters said those states have typically been the most successful in developing RE resources because they have the greatest RE generation potential, often at lower development co sts for a given RE resource. The commenters said they are also likely to have socioeconomic cha racteristics and electric rates that make RE comparatively less costly. The commenters said othe r states may not have sufficient resource potential and/or ability to deliver the energy at a given penetration level to achieve the benchmark development rate set by the top 16 states . The commenters said EPA has not explained why it is appropriate to assume that the development achieved to date in a select group of states is replicable and represents what is achi evable in all states; nor has EPA provided any rationale for the use of prior growth rates as an i ndication of achievable future growth, particularly given the technical challenges associa ted with increased penetration of RE on the electricity system.

Commenters said as recognized by EPA, the potential for expansion of hydro and geothermal resources in the future is minimal; past developmen t of these resources, therefore, have no relationship to the future development of different RE generation sources.

Commenters said in order to realistically account f or differences in RE resource potential among states, at a minimum, EPA should use all states to develop an average RE benchmark development rate, not just the top 16 states. The c ommenters said this would provide a better estimate of what may be achievable across the count ry, grounded in what has been demonstrated as achievable in the past. The commenters said EPA should exclude data related to the rate of423

development of both geothermal and hydropower resou rces, as given the limited potential for additional development of these resources.

Commenters said specifically, under the Proposed Ru le, MO would be expected to develop RE generation within the state, or accomplish this thr ough partnering with other states; currently there are new or proposed wind farms, solar farms, and biomass facilities within the state of MO, but modeling indicates that MO is not the optimum l ocation for wind or solar installations.

Commenters stated EPA's regionalized RPS approach t o setting projected state RE generation
levels in 2030 should be corrected for several reas ons:

1) EPA applies its regional growth factor to a stat e's historic 2012 RE generation starting in 2017, this approach ignores existing and planned RE development that has occurred or
will occur between 2013 and 2016.

2) EPA assumes that existing state RPS programs rep resent "a level of renewable resource development for individual states... that [is] consistent with policies that a majority of states have already adopted based on th eir own policy objectives and assessments of feasibility and cost." The commenter s said for many states, this assumption is not correct, and, even if it were, EP A's methodology often results in state level RE targets that are lower than the targets se t by state law. The commenters said this is true for 17 of 29 states with existing RPS polic ies; for example, for Illinois, part of the North Central Region, EPA sets a projected 2030 RE generation level (9%) that is sixteen percentage points lower than Illinois' 2025 RE targ et of 25%. The commenters said in fact, EPA projects that only one state in the entir e North Central region (Wisconsin) will actually meet or exceed its state level RPS target by 2030, and even then, by just 0.5% above its modest 10% target. The commenters said th is is not consistent with EPA's acknowledgement in the proposed rule that, on avera ge, states have achieved a 95% RPS compliance rate. 75 Fed. Reg. 34869. The commenters said a 95% compliance rate for Illinois means that, by 2025, the state should have at least 23.8% RE penetration. The commenters said this dwarfs EPA's 9% RE projection for Illinois in 2030.

3) Five states already have equal or higher RE gene ration in 2012 than EPA's projected 2030 target for that state. The commenters said fou r of those states (IA, MN, ND and SD) are clustered in the North Central Region. The comm enters said in Iowa, RE currently accounts for 25% of its electricity generation; in Minnesota, RE currently accounts for 18% of its electricity generation; in North Dakota, RE currently accounts for 15% of its electricity generation; in South Dakota, RE current ly accounts for 24% of its electricity generation. The commenters said of those four state s, only one, Minnesota, has a state level RPS that sets an RE target for 2020 or beyond : 25% by 2025.

4) EPA does not project any state in the North Cent ral Region, except for the above four states that already meet or exceed EPA's 2030 targe ts, to achieve EPA's regional average maximum RE generation target of 15% by 2030.

The commenters said this misalignment of EPA's RE t arget setting methodology with actual state level RPS goals and actual RE development, deployme nt and historical growth rates thereby424

greatly underestimates the potential of RE generati on to displace fossil-fuel generation and carbon emissions across the North Central Region an d the United States. The commenters said the result of EPA's proposed methodology would be w eaker state goals that do not reflect BSER; in fact, EPA's approach results in national RE gene ration levels in 2020 that are below current Energy Information Administration (EIA) forecasts a nd RE generation levels in 2030 that are only moderately higher than EIA's 2030 Business as Usual projections.

Commenters stated EPA's use of state Renewable Port folio Standards (RPS) to determine regional renewable energy goals is fundamentally fl awed. The commenters said these standards are end products of discussions within each state a bout the need for increased renewable generation and decreased emissions from each indivi dual state's power sector. The commenters said RPS is a policy-based mechanism for increasing renewable generation but does not necessarily represent actual market dynamics for re newable generation within states.

Comment 67: Regions - inadequate consideration of RE generation

Response 67: The EPA has revised its block three quantification based on comment. See

Section V.E of the Preamble.

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

Commenters found fault with the setting of renewabl e goals as a percentage of total generation, inclusive of generation not subject to the proposed rule. The commenters believed that if the CO2 emissions of the units to be regulated under th e proposed rule are the only emission included in the numerator of the goal setting calcu lations, then generation from renewables and avoided generation resulting from EE measures shoul d reflect only what is attributable to those regulated units, as well; thus, rather than using 1 29,745,731 MW-h of net generation in Ohio as the basis for renewable goals, a more appropriate a nd representative 2012 generation value would be 110,505,950 MW-h, derived by subtraction o f wind, biomass, nuclear, hydro, and solar generation (Note that commenters did not separate n atural gas combustion from simple cycle turbines, which would decrease this value further). The commenters strongly believed that using total generation from all sources, including those not to be regulated by the proposed rule and indeed considered desired and environmentally benef icial generation, unfairly impacts those states who were early adopters of renewable and zer o carbon generation technologies, and who maintain a robust and multi-faceted generation mix that the commenters believed is an essential component of grid stability.

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. The commenters said Washington D. C. has a highly ambitious renewable target, yet contributed no renewable generation to the grid in 2012. The commenters said despite what U.S. EPA describes as similar RE potentials 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. The commenters said if U.S. EPA is to pursue regional averaging in setting425

renewable goals (which the commenters did not agree with), a weighted average that takes into account the total generation contribution of each s tate, the renewable contribution of each state,
and accounts for the fact that several states found the creation of a renewable portfolio to be uneconomical must be developed; absent this, the cu rrent proposed methodology places great burden on those states which generate far more elec tricity, discounts those states with no renewable portfolios, and requires very little of t hose states with little generation capacity.

Commenters stated the Nevada Agencies reviewed the State's 2020 RPS to determine an effective RPS consisting of components that could p otentially be counted as RE for compliance with the emission rate goal in the proposed rule an d excluding those compliance measures that are not contemplated by the proposed rule. The comm enters said the results of this analysis
identified that Nevada's 2020 effective RPS was 14% , not the 22% that was used to calculate the regional and state RE goals; additionally, there re mains considerable uncertainty that the entirety of the effective RPS could be credited because 1) N evada utilities rely on the flexibility to bank, utilize, or sell credits and then bank any surplus credits each year (i.e. retention of all previously earned carryover credits is assumed) for future RPS compliance; and 2) the Goodsprings Recovered Energy Generation Station does not count toward RE in the USEPA proposal. The commenters said given the differences between Nevad a's RPS program and the proposed rule and the underlying assumptions it is based on, the calculated RE target for the western region does not reflect a realistic potential for future R E generation under existing state requirements. The commenters contended that the proposed method o f averaging regional RPS values to establish RE generation goal is problematic and doe s not represent a defensible method of achieving a Best System of Emission Reduction.

Comment 68: States with no RES Requirements

Response 68: The EPA has revised its block three quantification based on comment. See

Section V.E of the Preamble.

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

Commenters stated EPA's calculation of regional RE goals does not recognize that some states do not have existing RES requirements. The commente rs said for each region, EPA averaged the existing state RES requirements for 2020; if a stat e in the region did not have an RES, EPA ignored that state by excluding it from the denomin ator of the averaging calculation; EPA then applied this skewed "average" RES requirement to al l states in the region. The commenters said this has the effect of making the renewable goal in some regions more stringent than it would be if it were an average of all states in the region. The commenters said EPA provided no reasoned explanation as to why it ignored states without 202 0 RES requirements when calculating regional and RE goals.

Commenters added EPA's BSER goal calculation approa ch 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); in ad dition the Kansas RES applies only to426

investor-owned utilities and cooperatives in the st ate and includes a factor for installations in
Kansas.

Commenters stated applying one state's RES mandate to an entire region, or allowing one state's mandate to dramatically increase the regional goal, is inappropriate. The commenters said states in the same region do not necessarily have the same RE potential; it is unreasonable to assume that one state can achieve the same level of RE dep loyment as a neighboring state.

Commenters said RES targets are goals to be met in the future; in many cases, therefore, the state with the existing RES target has not yet achieved t he goal, yet it is assumed that neighboring
states will be able to.

Commenters said EPA inappropriately assumes that st ate RES requirements are a proxy for RE technical potential.

Commenters said a state's RES requirements not only reflect that state's own policy decisions and assessment of the potential to deploy RE genera tion, but also reflect a range of policy choices that have nothing to do with technical RE p otential.

Commenters said if EPA continues to average state R ES mandates to derive regional RE generation goals, the Agency should include all sta tes in calculating the average, even those states with no RES requirements; this would provide an actual average of the state requirements in the region and would ensure that one state's RES is not imposed on all other states in the region. Commenters said similarly, EPA should contr ol for states with significantly more aggressive RES requirements when determining region al RE goals.

Commenters stated in its proposed approach for dete rmining renewable energy potential in the "North Central Region," EPA used the average RPS re quirement of the five states with an RPS requirement in the nine-state region to arrive at a 15 percent "effective renewable level". The
commenters said EPA concludes that states in the sa me region have similar renewable energy potential, as measured by existing renewable energy standards adopted by some states in the region. The commenters said in this process, EPA ha s not considered that some states do not have RPS programs in-place. The commenters said if EPA's final guidelines continue to apply regional RPS levels to determine renewable potentia l, this assessment should factor in a zero into the regional calculation for states without an RES or RPS; this would result in the North Central Region's effective renewable level being 8.4 percen t as opposed to 15 percent. The commenters did not support the alternative approach to renewable energy as published along with the proposed rule or, without additional infor mation, the regionalized approach in the
NODA.

Commenters stated EPA's approach to averaging state RES mandates to develop a regional RE goal is particularly problematic in the Southeast a nd South Central regions, where many states do not currently have RES requirements. The commenters said in the Southeast region, only one of the eight states has an RES; in the South Central r egion, only one of the six states has an RES. The commenters said as a result, one state's standa rd becomes the standard for an entire region; this approach ignores whether states have the same potential to deploy an increased amount of RE generation. The commenters said further complica ting this issue is that the region a state was427

grouped in for the purposes of calculating the RE b uilding block may not, and most likely will not, be part of the same multi-state approach for c ompliance.

Comment 69: Apply regional renewable targets to retail electric sales rather than total electric generation

Response 69: See Section V.E of the Preamble for an explanation of how renewable energy is

treated in the final BSER determination.

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

Commenters stated the proposal's approach to settin g state goals using renewable energy introduces several problems that could make complia nce unduly difficult and that may in certain cases under or over-estimate the impact of RPS goal s on renewable generation. The commenters said EPA can improve the proposal's approach to est ablishing goals based on renewable energy in several ways. The commenters said the final rule could apply regional renewable targets to retail electric sales rather than total electric ge neration, which would solve compliance controversies and more closely align with the RPS p olicies the EPA uses to justify its approach; or, EPA could recalculate the renewable e nergy assumptions with better data, or adopt the Alternative Renewable Energy Approach detailed in the proposal.

Comment 70: Credit for regional investments

Response 70: See Section VIII of the final rule preamble.

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

Commenters stated whether or not states choose join t implementation strategies, credit under Section 111(d) for cross-border investments in low- carbon generation should be properly attributed. The commenters said EPA has requested c omments on this issue in the context of the methodology for Building Block 3 and how Building B lock 3 targets relate to compliance options. The commenters stated are particularly con cerned with ensuring that credit for renewable energy development be allocated to those who have paid for it; in particular, Minnesota ratepayers have invested substantially in renewable energy generation to comply with Minnesota's RES, including investments in wind ener gy outside Minnesota (e.g., Minnesota Power's Bison Wind Projects in North Dakota). The c ommenters said the Minnesota Public Utilities Commission has approved these investments as well as recovery of the associated costs from ratepayers; it is vitally important that Minne sota receive compliance credit under the regulations for these CO2 reduction investments tha t have been paid for by Minnesota ratepayers. The commenters urged the EPA to protect the investments of ratepayers in forwardlooking states like Minnesota.

Commenters stated the compliance system for the Min nesota RES would be compromised if Minnesota ratepayer investments in renewable energy were credited outside of Minnesota. The428

commenters said to demonstrate how these investment s achieve compliance with the RES, Minnesota utilities are required to participate in the Midwest Renewable Energy Tracking System (M-RETS); compliance with the RES requires t hat Renewable Energy Certificates ("RECs"), each of which represent the environmental attributes of one megawatt-hour of renewable generation, be retired and transferred to a designated Minnesota RES M-RETS
account. The commenters said M-RETS Certificates ar e "Whole Certificates" meaning "none of the renewable attributes have been separately sold, given, or otherwise transferred to another party by a deliberate act of the Certificate owner. "

Commenters stated the Minnesota RES statute require s that RECs only be used once and that eligible technologies be treated equally with no mo re or less credit to energy based on the state where the energy was generated. The commenters said the purpose of requiring registration of a "whole certificate" with M-RETS, "is to help ensure compliance with the statutory prohibition against double counting of the environmental benefi ts, and to ensure that ratepayers receive the benefits of the renewable energy for which they are paying through their rates."

Commenters stated the purpose of the Minnesota RES is, in part, to address climate change-it was adopted in the Next Generation Energy Act of 20 07 alongside greenhouse gas emissions goals; thus, to respect and make most efficient use of the investments already made by ratepayers toward reducing carbon dioxide emissions from the p ower sector via RES compliance, existing and future RES investments should be given credit u nder Section 111(d); and since RES compliance allows for utilizing out-of-state resour ces and all of the environmental attributesincluding carbon-from such resources have been allo cated to Minnesota utilities for the benefit (and at the expense of) Minnesota ratepayers, any S ection 111(d) "credit" attributed to such
resources should also be allocated for the benefit of Minnesota ratepayers. The commenters said it would be counter-productive for the Clean Power Plan to undermine the RES or the robust or the well-developed system of using RECs to track th e environmental benefits of renewable resources in the energy industry.

Commenters stated as EPA is aware, carbon emissions know no border; emissions on the East
Coast have the same effect as those in the Midwest or the West Coast; similarly, emission
reductions on the East Coast have the same effect a s those in the Midwest or the West Coast. The commenters said Quad, like many larger American com panies has operations in states throughout the country. The commenters said Quad is "doing the right thing" from a carbon perspective by working to consolidate its operation s in its most efficient facilities, so that it can continue to produce product and provide job opportu nities, while achieving significant energyefficiency improvements. The commenters said in the final rule, it is critical that EPA recognize the significant benefit of nation-wide energy-effic iency initiatives, such as those of Quad, and allow national companies to receive credit for thei r nation-wide energy efficiency initiatives. The commenters said this could be accomplished by allow ing entities with multiple operations throughout the country to group or "bubble" operati ons together to demonstrate the energyefficiency gains achieved by switching operations t o more energy-efficient platforms. The commenters said likewise, the EPA should make clear that energy consumers that creates demand-side savings have the right to transfer thos e savings anywhere throughout the country'
this would create the most efficient market for the transfer and use of those demand-side and other carbon savings.429

Comment 71: Interconnected states

Response 71: The EPA agrees. It has calculated subcategory-spec ific emission performance rates and state goals in this final rule that asses ses building block mitigation potential on a regional basis. See Sections V and VI of the Prea mble for more explanation.

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

Commenters stated the EPA should calculate state em issions goals in a manner that reflects states' ability to comply by relying on lower-emitt ing sources located in interconnected states, that recognizes that new renewable generation and e nergy efficiency should displace existing fossil fuel generation rather than simply add to to tal generation, and that reflects states' ability t o reduce coal-plant emissions through co-firing with natural gas.

Comment 72: Purchasing power from another state

Response 72: See Sections VII and VIII of the Preamble for furth er discussion.

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

Commenters urged U.S. EPA to consider allowing stat es to obtain credit towards the determination of the state rate goal when purchasin g power from NGCCs from another state. The commenters said this would be similar in implementa tion as proposed in Building Block 3 for renewable energy.

Commenters stated in 2012, 20% of City Water, Light and Power (CWLP)'s energy was from wind generated at two Iowa farms, pursuant to two p ower purchase agreements (PPAs); yet, the GHG Rule neither gives CWLP credit for the wind pow er it has already purchased, nor for the wind power it may purchase from these farms in the future. The commenters said this aspect of the GHG Rule may violate the Commerce Clause of the U.S. Constitution, according to at least one judge of the 7th Circuit Court of Appeals, cove ring appeals from federal courts in Illinois
and several other Midwest states.

Comment 73: Importing electricity

Response 73: See Section V of the Final CPP Rule Preamble. The E PA is not including BB4 in the final rule’s quantification of BSER. See Secti on VIII of the Preamble for a discussion of how demand-side energy efficiency measures may stil l be folded into compliance demonstrations and state plans.

The following are summaries of the specific public comments under this comment:430

Commenters stated for importer states, EPA adjusts EE savings requirement in Building Block 4 by the import amount which seems like a reasonable approach; however, the commenters did not believe that North Carolina's generation will actua lly decrease by this amount. The commenters
said EPA AVERT model runs indicate that most of the avoided generation from EE and RE will take place outside of North Carolina. The commenter s said imported electricity is more expensive and will be one of the first resources to be displaced. The commenters said EIA 2013 data confirms this assumption since North Carolina' s imports went down from 18% in 2012 to 9% in 2013; this drop in imports may be due in part to North Carolina's existing EE programs.

Commenters stated allowing a state to only take cre dit for in-state CO2 reductions occurring as a result of EE programs creates a disincentive for im porting states. The commenters said electricity imports are generally more expensive and this resou rce will be displaced first before displacement occurs within the state's own sources. The commenters said as an importing state, North Carolina EGUs may never achieve a reduction i n generation because as additional EE measures are implemented, the EE savings would simp ly come off the electricity imported to the

state.

Commenters stated if EPA establishes the same cumul ative percent reduction goal in 2030 for each state, EPA may be able to avoid adjusting goal s for importing and exporting states; for instance, if all states must cumulatively reduce el ectricity sales by 10% by 2030, all states would be reducing GHG emissions at power plants fairly fr om an end user standpoint. The commenters said states that import electricity would have to s hare in the cost of reducing GHGs from EGUs
located in other states.

Commenters stated this type of CO2 reduction would not have to be accounted for in the state reduction goals as lbs/MWh; it could be implemented more like the best management practices under the boiler MACT, which requires tune-ups and energy assessments. The commenters said this proposed process could still require EM-V and tracking to ensure actual savings are
achieved.

Commenters said this approach would make the cost t o reduce CO2 emissions from EE fair to all states regardless of whether they are importing or exporting; it simplifies calculating BSER goals for each state. The commenters said it simplifies t racking of EE and does not require complex negotiations between states to account for importin g/exporting and avoided generation. The commenters said if states wanted to implement addit ional EE reductions beyond those required by best practices, the additional savings could be counted as avoided generation in a state carbon
emissions rate.

Comment 74: Imported electricity from Canada

Response 74: See Section VIII of the Preamble.

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

Commenters stated EPA appears to have neglected to account for the significant amount of electricity that is imported to the United States f rom Canada; the overwhelming majority of this431

power is generated by non-renewable sources, supply that helps to meet U.S. load at emission
rates lower than that which would be achieved witho ut the imports. The commenters said several U.S. states have formally recognized the significan t role this imported power plays in reducing state electricity sector emissions. Vermont, Minnes ota, Wisconsin, and Connecticut all credit Canadian imported hydropower for compliance in stat e renewable portfolio standards. The commenters said if EPA fails to recognize the posit ive role imported Canadian power plays in the United States by allowing for such power to be used to meet state goals, the Agency runs the risk of instituting a non-tariff barrier or other t rade distortion by dis-incentivizing the current fr ee trade of electricity that occurs across the U.S.-Ca nada border.

The commenters added under Chapter 9 of the North A merican Free Trade Agreement ("NAFTA"), technical regulations and standards must be structured to avoid serving as obstacles to trade. (North American Free Trade Agreement, U.S .-Can.-Mex. art. 904(4), Dec. 17, 1992, 32 I.L.M. 289, 387 (1993) ("No Party may prepare, adop t, maintain or apply any standards-related
measure with a view to or with the effect of creati ng an unnecessary obstacle to trade between the Parties.")). The commenters stated if the final guidelines essentially mandate a significant ramp-up of natural gas-fired generation, without pr operly recognizing or crediting Canadian power imports, it is possible that zero-emitting ge neration from Canada will be displaced in favor of higher-emitting gas-fired generating in th e U.S., thus resulting in higher emissions, lower imports from Canada, and greater difficulty f or a state in complying with its state targets. The commenters said If EPA finalizes the Proposed G uidelines, it must explicitly address the issue of Canadian imported power.

Comment 75: Interstate nature of electricity system; electric grid

Response 75: The EPA does not regulate the grid through the fina l CPP, it simply lays out a Best System of Emission Reduction that recognizes t he reduction opportunities from shifting from reducing generation at given technologies and replacing with generation from other gridconnected sources. The EPA also assesses the cost, viability, and reliability impacts of its final

rule in a manner that accounts for the interstate n ature of the electricity system. See section V of the final rule preamble and the Resource Adequacy a nd Reliability Analysis TSD for CPP Final

Rule.

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

Commenters stated the EPA goal-setting formula does not adequately account for the interstate nature of electricity system operations, or for the closely related disparity in compliance burdens that affects small states that export a significant share of power generated within the State; wholesale transactions within this federally- regul ated marketplace are outside of state jurisdiction.

Commenters stated EPA's "building blocks" analysis of the "best system of emission reduction" is not based on accurate or reasonably demonstrated circumstances in North Dakota and is not consistent with the realities of the electric grid. The commenters said regulating the electric grid rests with the Federal Energy Regulatory Commission ("FERC") as to wholesale transactions432

and the North Dakota Public Service Commission as t o retail transactions. The commenters said determining the proper balancing of electric resour ces to meet the needs of electric consumers consistent with the public interest is therefore a state function.

Commenters stated EPA's "building blocks" analysis of the "best system of emission reduction" is not based on accurate or reasonably demonstrated assumptions in Montana and is not consistent with the realities of the electric grid.

Comment 76: RE goals for net exporter states, adverse effects.

Response 76: See Section V of the Preamble for a discussion on b uilding block three and RE assumptions for the Best System of Emission Reducti ons. The subcategory-specific emission performance rates calculated in this Final CPP Rule reflect a regional assumption regarding RE potential that is allocated to fossil steam and NGC C sources on a pro-rata basis.

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

Commenters stated EPA bases its RE goals on generat ion in a state, but state RPS programs are based on consumption in the state; a certain percen tage of electricity sales, not generation, must
come from RE sources. The commenters said for a sta te that is a net exporter of electricity, its RPS reflects, at most, the amount of in-state consu mption that must be supplied by RE; therefore basing the RE goal on in state generation has a pro found adverse effect in states like West Virginia or Wyoming which consume in-state less tha n half of their generation.

Comment 77: Exporting States

Response 77: See the EPA Resource Adequacy and Reliability Analy sis TSD for CPP Final

rule.

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

Commenters stated a number of states cannot meet th eir electricity demands without substantial imports of power; indeed, many states host electric utilities that have existing contracts with distribution companies outside their borders; accor dingly, the shutdown of coal plants in an exporting state could also constrain power supply i n an importing state. The commenters said it
is evident that EPA failed to consider this "offsho ring" of power requirements, and the corresponding carbon footprint, when it assigned re duction targets to the states.

a. The commenters asked why would EPA unfairly pena lize those states that have made adequate power generation investments, which allow them to help other states achieve secure electricity supply.

b. The commenters said under the proposal, when exp orting states must shut down coal plants, they could face serious constraints on gene ration resources, particularly during433

extreme weather; these constraints could create a d ifficult choice for states: allow their utilities to fulfill existing contracts with entiti es outside the state or service the citizens of
the home state first. The commenters asked has EPA' s Administration considered the potential negative impact this proposal could have on commerce within the United States; and if so, please explain how EPA proposes to addre ss this issue.

c. The commenters asked has EPA adequately consulte d with the entities charged with developing and enforcing reliability standards and with monitoring the bulk power system (e.g., Federal Energy Regulatory Commission (FERC) and the North American Electric Reliability Corporation (NERC)) on the pro posal; if so, what did FERC, NERC, and/or other such agencies and departments have to say about how the rule will impact (i) variable energy resource integration; (ii) baseload generation; and (iii) grid reliability.

Comment 78: Historical generation and exports

Response 78: In this final CPP rule, the EPA is finalizing a hig her state goal for Arizona (along with subcategory-specific emission performance rate s). The impacts of these rates on the generation level and profile of the Arizona Fleet a re discussed in the Regulatory Impact Analysis and the EPA power-sector modeling for the final CPP Rule

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

Commenters stated in 2012, Arizona exported a large portion (30 million MWhs, or 27%) of its in-state generation to the neighboring regions. The commenters said using EIA and EPA data, total generation in Arizona was 111 million MWh com pared to 81 million MWh of consumption
within the state. The commenters said Arizona's his torical net-exporter status is in stark contrast to EPA's IPM projections for Arizona to become heav ily dependent on imported energy and capacity in both the Base Case (without the rule) a nd under the proposed rule in the future. The commenters said EPA has not performed the required studies to support this major shift in power flows on the system. The commenters said in a recen t study, NERC has raised concerns about the sufficiency of the time frame to build necessary in frastructure for transmission and gas pipelines (in various regions including Arizona) to accommoda te the shift in generation from coal to gas.

Comment 79: The EPA's Guidelines should achieve meaningful nati onwide emission

reductions.

Response 79: See Section V of the Preamble for a discussion of t he EPA quantified the Best System of Emission Reductions in a manner that reco gnizes the interconnected-nature of the grid.

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

Commenters stated in structuring its guidelines, EP A should take account of the emission reductions that are being achieved from the electri city system nationwide through a variety of434

programs, including RGGI and California's similar p rogram, investments in energy efficiency, renewable energy programs, and switching to lower-c arbon fuels, and also consider the potential for contributions from available technologies that are not yet widely deployed in the United States, such as offshore wind and carbon capture an d sequestration technology. The commenters said EPA should recognize that the best system of e mission reduction considers the electricity system as a whole, and utilizes all the opportuniti es for reducing emissions from this system.

The commenters stated the methods of reducing emiss ions from the fossil fuel-fired electricity system can be grouped into two categories; the firs t category consists of systems of emission reduction that reduce the amount of electricity nee ded from fossil fuel-fired power plants, such as energy efficiency programs that reduce the deman d for electricity, demand-side management, and investments in renewable energy that displace f ossil fuel-generated electricity. The commenters said second, emissions can be reduced by lowering the carbon intensity of the electricity generated by fossil fuel-fired power pl ants. The commenters said this is done through shifting generation from high emitting plants to ne w or under-utilized lower-emitting plants, and using the latest technology to reduce emissions at existing plants.

The commenters said combined, these two categories, or wedges, of emission reductions can be
substantial. The commenters said the RGGI states' 4 0% emission reduction is due to a suite of actions that address both wedges, including the RGG I mechanism, investments in energy efficiency and other demand-side programs, support for renewable energy, and regulatory programs directed at criteria air pollutants and ai r toxics that have reduced the amount of electricity generated by higher emitting plants. Th e commenters said these programs have combined with market forces that have supported a m ajor shift in electricity generation from coal-fired to natural gas-fired plants to transform the regional electricity system in the past eight

years.

The commenters said by investing in energy efficien cy and renewable energy and shifting generation to more efficient plants, other states a nd regions should be able to approach the level of performance that the RGGI states are already dem onstrating. The commenters said EPA should evaluate whether and when this level of perf ormance can be achieved throughout the United States using the various tools at the dispos al of the states; while it may take longer for some regions of the nation to achieve comparable le vels of performance, EPA should structure the emission guidelines to require that states make significant progress in the next decade toward achieving the reductions and performance level demo nstrated by RGGI to be readily achievable by the best systems of emission reduction.

Comment 80: Application of emissions savings resulting from re- dispatch and increased renewable generation

Response 80: See Section VI of the Preamble for an explanation o f the EPA’s treatment of increased renewable generation.

The following are summaries of the specific public comments under this comment:435

Commenters stated EPA also requests comment on the application of the emission savings resulting from re-dispatch and increased renewable generation; specifically, the Agency asks if the displaced MWs should be applied solely to the h igher generating sources or instead applied across all generation assets in a manner weighted t o the current mix of generation. The commenters generally supported the goal calculation s as initially proposed by EPA; and defers to the states to further comment on the implications o f these tweaks in the goal setting definition on
their individual state criteria.

Comment 81: Account for the reduction in fossil plant efficienc y due to additional renewables.

Response 81: As described in the CO2 Emission Performance Rate a nd Goal Computation TSD for CPP Final Rule, the EPA does not make unit-leve l assumptions regarding utilization. The calculation for determining subcategory-specific em ission performance rates and state goals anticipates a reduction in fleet generation levels for particular source categories, but the EPA does not expect units remaining in operation to red uce utilization by this identical percentage.

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

Commenters stated the CPP did not take into conside ration the impacts of low carbon generation on the CO2 emission rates of other fossil generatio n; renewable low carbon electricity generation such as wind, although cleaner has much lower capac ity factors and more frequent cycles (starts and stops) due to the uncertainty of wind duration and speed. The commenters said the unpredictability of renewable low carbon wind gener ation requires more frequent cycling of coal and natural gas generation reducing the efficiency of the plants as they cannot maintain optimal loads which require additional fuel and additional CO2 emissions. The commenters said the CPP
in their model did not take into consideration the reduced efficiency of fossil plants to accommodate low carbon generation when setting thei r renewable low carbon targets. The commenters said larger units in the coal fleet have CO2 emission rates between 1,818 - 1,929 lbs./MWh when operated at full load; to accommodate renewables that rate climbs to 1,962 - 1,994 lbs./MWh at mid-load and 2,035 - 2,171 lbs./M Wh during minimum loads; likewise the
smaller units show increases in emission rates as t hey reduce load to accommodate renewable generation increasing their emission rates from 1,9 49 lbs./MWh to as high as 2,406 lbs./MWh.
The commenters said the additions of renewables und er the CPP plan will only increase the amount of time the fossil units operate at minimum loads. The commenters said the CPP should adjust their model and state rates to account for t he reduction in fossil plant efficiency due to
additional renewables.

Comment 82: Appliance standards

Response 82: Demand-side energy efficiency measures are not incl uded in the quantification of

BSER in the Final CPP Rule. See Section V of the Pr eamble. Section VIII of the final rule preamble discusses how states may incorporate deman d-side energy efficiency into their state plans.436

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

Commenters stated that several states have their ow n appliance and equipment efficiency standards for products not covered by federal effic iency standards and that EPA should provide guidance on how savings from these standards can be calculated. The commenters said savings from standards can be estimated using the following formula: Savings = Product sales in the state x Energy savings per product x Compliance rate; whe re: Product sales in the state can be estimated from data compiled by trade associations, data compiled by DOE, or data from commercial sources; National data can be used with a reasonable way of estimating a state's share of national sales (e.g., number of households for residential products or commercial square feet for commercial products); energy savings per p roduct can be estimated by comparing the average required level of product efficiency to the estimated baseline level of efficiency, e.g., one that occurred in the state prior to the standar d, or one that is currently occurring in nearby or similar states that do not have the standard; compl iance rate can be determined by periodic surveys of products being offered for sale (for ret ail products) or products that have recently been installed (for contractor products such as hea ting and cooling systems).

Comment 83: CO2 emission rate assumptions

Response 83: See Section V of the Preamble and Chapter 3 of the RTC for a discussion on heat rate improvements. The EPA does not make unit-level operating assumptions when quantifying the Best System of Emission Reductions. The buildi ng blocks are assessed on the regional-level,

and the fleet is assumed to reduce its emission rat e by a given percentage below 2012 levels – not each particular unit. The EPA power sector mode ling suggest it is more likely that some units

increase/maintain utilization while others decrease well below the amount associated with the heat rate-improvement. Therefore, the operating fl eet will not inherently have a lower utilization rate as suggested by the commenters.

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

Commenters stated in calculating the state goals, E PA assumes that each state's coal-fired units will emit CO2 at an average rate that is 6 percent lower than their average rate in 2012, and that NGCC units will emit CO2 at an average rate that is the same as 2012, even after generation from those affected EGUs is re-dispatched under Bui lding Block 2; this assumption is unreasonable and implausible.

The commenters stated in practice, implementation o f EPA's proposed BSER will increase the average CO2 emission rate of coal-fired EGUs and ma y also increase the average emission rate
of NGCC units.

The commenters stated for coal-fired EGUs, operatio n at low loads increases a unit's heat rate and thus its CO2 emission rate; as discussed in the Cichanowicz Heat Rate Report, operating a unit at 50 percent load can negatively impact a uni t's heat rate compared to full load by an amount greater than EPA claims units can improve he at rate through operating practices and equipment upgrades. Cichanowicz Heat Rate Report at 2-1, 2-6.437

The commenters stated EPA itself acknowledges that EGUs have higher heat rates (and thus a higher rate of CO2 emissions) when operating as loa d following units and during periods of startup and shutdown. GHG Abatement Measures TSD at 2-5, 2-21.

The commenters stated in the related NSPS rulemakin g for reconstructed coal-fired EGUs, EPA observed that subcritical units experience a 10 per cent increase in heat rate when operating at 50 percent load. Memorandum from EPA OAQPS to EGU NSPS Docket, ""Best System of Emissions Reduction (BSER) For Reconstructed Steam Generating Units and Integrated Gasification Combined Cycle (IGCC) Facilities" at 4 Fig. 2 (June 2014), Docket ID No. EPAHQ-OAR-2013-0603-0046 ("2014 Reconstructed EGU TSD" ).

The commenters stated a primary component of EPA's proposed BSER in the Proposed
Guidelines is to reduce utilization of coal-fired E GUs directly through re-dispatch to NGCC units under Building Block 2 and indirectly by incr easing renewable energy and decreasing demand under Building Blocks 3 and 4; as a result, more coal-fired EGUs will convert from base load to load-following units and operate at lower l oads, increasing their heat rates and counteracting any steps those units take to lower h eat rate under Building Block 1. The commenters stated therefore, each state's average C O2 emission rate for coal-fired EGUs in the state goal calculations should be higher - not lowe r - than its 2012 level.

Commenters added EPA must consider the possibility that CO2 emissions will increase from load shifting; the state goals as proposed heavily rely on the re-dispatching of baseload units from coal-fired EGUs to natural gas units. The comm enters stated this shift could in effect force coal-fired EGUs to serve as "peaking units" and thu s increase the net output rate of CO2
emissions.

Commenters added there is great risk to double coun ting in a Section 111(d) plan using the Renewable Energy Certificates (RECs) trading system currently in place, and therefore reported
emissions would be lower than actual emissions. The commenters stated EPA should specify that Power Purchase Agreements (PPAs), where RECs are ti ed to electricity consumed, be included as a compliance option for Section 111(d) state com pliance plans; these RECs would then be
retired.

Comment 84: Economic growth of electricity demand

Response 84: When quantifying BSER, the EPA examines the cost an d feasibility of the aggregate system-wide impact through testing the po licy emission-rate requirements in a detailed power-sector model that accounts for future demand growth. See EPA Regulatory Impact Analysis.

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

Commenters stated the EPA did not allow for economi c growth of electricity demand when calculating state goals; that could force the needl ess building of new generation plants, a cost which would again be borne by consumers, when exist ing plants still have spare capacity. The438

commenters said the EPA should revisit this aspect of the CPP; the need for electricity will continue to grow as the economy expands. To meet th is demand in the most effective and economic way, none of our fuel options should be ar bitrarily restricted or eliminated.

Comment 85: Calculation of Net Energy Output and Useful Thermal Energy

Response 85: As explained in Preamble Sections VI and VIII, Usef ul thermal output is not factored into BSER quantification, but sources are still permitted to convert it to a MWh equivalent for compliance purposes. This conversio n is explained in Section VIII of the final rule preamble.

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

Commenters stated in the January 8, 2014 proposal f or NSPS, EPA included equations for the calculation of net energy output and useful thermal energy [see proposed rule at Section 60.46Da(g)(iii)]. The commenters believed EPA shoul d provide similar equations in the Proposed Rule to provide clarity on how such calcul ations should be made.

Comment 86: Remove technology-specific calculations from state carbon reduction goals.

Response 86: See Sections IV and V of the final rule preamble fo r an explanation of the EPA’s legal authority and how it translates that into a B SER. The EPA notes that while its method for quantifying BSER is determined through an assessmen t of regional reduction potential determined to be cost-effective, it is not prescrip tive. States have the flexibility to implement reductions through alternative compliance pathways that they view as most appropriate.

BB1, BB2, and BB3 are all discussed in Section V of the preamble. BB4 is not part of BSER quantification in this final rule, as is also discu ssed in section V.A of the final rule preamble.

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

Commenters recognized that emissions based regulati ons are most effective when they remain technology-neutral. The commenters said as it is cu rrently written, the CPP proposed state goals are oriented towards specific technology requiremen ts and provide uneven emissions regulations
across all states. The commenters said this method of setting emissions goals is more difficult and less effective than a technology-neutral soluti on. The commenters recommended removing these technology requirements included in state goa l calculations and replacing them with evenly applied carbon intensity reduction goals based on t he EPA's intended 2030 target of reducing the nation's carbon emissions by 30%.

Natural gas capacity factor

Commenters stated the CPP predicts capacity factor for natural gas in many states is expected to shift from peak generation to baseload generation; this requires plants to increase their operating439

capacity to 70% on average. The commenters said eve n though this value is achievable with Natural Gas Combined Cycle (NGCC) plants and will r educe average emissions intensity across a state, this scenario would likely have several ne gative implications, including a decrease in peak generation.

Commenters stated the cost of natural gas has been volatile at the Henry Hub due to seasonal demand for heating; if natural gas is to be used fo r primary baseload generation, seasonal changes could be expected to cause considerable con sumer electricity price volatility. The commenters said natural gas has historically been u sed by utilities for power peaking; if renewables are employed more widely, as projected i n the CPP, the need for demand response power peaking will become even more critical than i t is today. The commenters said by requiring an increase in average capacity factor, the CPP les sens states' abilities to keep natural gas plants on standby for power peaking purposes. The commente rs said including increases in natural gas capacity factor creates an uneven landscape for sta te carbon reduction goals; a technologyneutral plan would not include this requirement.

Coal heat rate improvement

Commenters stated there is a range of coal plant ef ficiencies throughout the U.S.; according to the EIA, in 2012 the average coal plant heat rate w as 10,107 Btu, with the top five plants ranging from 8,888 Btu to 9,174 Btu. The commenters said th e EPA currently suggests a heat rate reduction of 4-6%, with 6% corresponding to the pro posed plan. The commenters said this would require the national average to be decreased to a v alue of 9,500 Btu; although this is higher than the top five plants in the nation, it will be diffi cult for plants that are already at an optimal heat rate to make any further improvement. The commenter s said by using a blanket approach to require all coal power plants to improve their heat rates by 6%, the CPP is disadvantaging states that already have very efficient coal plants; these states will not be able to reduce their emissions through efficiency improvements and will therefore be required to meet the CPP reduction by other means. The commenters said if this type of ca rbon regulation were technology-neutral, it would not demand specific requirements that would u nfairly disadvantage some states, such as coal heat rate improvements.

Renewable increases

Commenters stated the CPP proposes a nationwide goa l of achieving 13% of total electricity generation from renewable sources by 2030; the comm enters supported the development and installment of renewable power generation; however, this technology-specific requirement creates an unfair landscape for some states.

Commenters stated according to the EPA's Greenhouse Gas Abatement Measures Technical Support Document, renewable energy projections were based on existing Renewable Portfolio Standards (RPS) in specified regions. The commenter s said renewable generation targets were calculated as averages of all 2020 RPS requirements in a region; because states' RPS timelines did not necessarily align to that of the CPP, the E PA had to interpolate its results to the reference year. The commenters said this creates a landscape that is not only unrepresentative of any existing RPS, but also sets a much different timeli ne than an individual state would historically anticipate.440

Commenters stated due to the effects from interpola ting dates and averaging regions, the CPP requires 4 states to reduce their renewable generat ion between 2012 and 2030; a carbon emissions reduction plan should not recommend this action. The commenters said this clearly reveals the inconsistency in setting state goals us ing specific technology requirements.

Energy efficiency

Commenters stated many states are currently impleme nting policies to improve energy efficiency (EE); according to the EPA, state improvements in E E have ranged from 0% to 2.19% with cumulative improvements of up to 15.77%. The commen ters said the EPA suggests using three different tiers of required EE improvements: over 1 .5%, 1.0-1.5%, and less than 1%. The
commenters said the states that have shown the most initiative in EE will be required to make further improvements of over 1.5%. The commenters s aid while these states have proven their commitment to EE, it will be more challenging for t hem to further increase EE compared to states that have made few efficiency enhancements. The commenters said to require certain states to make larger increases in EE than others i s a disadvantage to those states that are expected to achieve a higher level of improvement. In a technology-neutral plan, states would have the freedom to decide the necessary level of E E implementation towards attainment of the emissions goals.

Commenters stated EE does not affect the carbon emi ssions from a power plant directly; although EE will help lower the energy demand and t hus potentially lower net carbon emissions, it does not improve the actual carbon intensity of energy produced. The commenters said the proposed version of the CPP focuses on carbon inten sity and existing plant emissions, but EE only affects the amount of power demanded. The comm enters said although EE has its place reducing overall emissions, it should not be includ ed in state goal emission calculations; rather, EE improvements affecting a state's total energy ge neration will be credited, by default, as a total
emissions reduction in the CPP.

Comment 87: Adjust goals if shift in emissions from one sector to another

Response 87: See Section VIII of the Preamble for a discussion o n state plans and demonstrating compliance. The EPA provides a multitude of complia nce options to states – including ratebased metrics – that can accommodate growth in gene ration from existing sources.

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

Commenters stated the impact of electrification of the transportation sector and solar technology in the future cannot be known at this point in time ; the manufacture of polycrystalline silicon for photovoltaics requires huge amounts of electricity, and one such company is one of the state's biggest electricity consumers using approximately 4 00 MW. The commenters said there should be a mechanism to adjust the goals if GHG measures such as vehicle electrification and solar panel production cause a shift in emissions from on e sector to another.441

Comment 88: Cooperatives burden; rework goals

Response 88: For the EPA’s response to this comment, see the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule support ing the final CPP.

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

Commenters stated should a state choose to reduce t he burden on cooperatives, under EPA's approach a state would need to increase the burden on other utility providers, since the state still must meet the EPA's goal. The commenters said the s olution is for EPA to rework their assumptions and set reasonable and achievable state goals as to not provide relief for cooperatives at the expense of others.

Comment 89: Account for demand response by allowing the MWh sav ings to be incorporated

into the denominator

Response 89: See Preamble Section V for a discussion of the bui lding blocks. Demand-side energy efficiency is not one of the building blocks informing BSER in this final rule.

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

Commenters stated EPA should allow the use of deman d response programs such as air conditioning cycling for purposes of compliance wit h a rate-based standard; these programs are designed to reduce customer electric usage during p eak demand time periods and allow utilities an additional option to demonstrate compliance. The commenters said if a state elects an emission rate compliance approach, demand response will reduce overall emissions, but could actually result in an increase in the state rate; f or example, if demand response displaces natural gas fired peaking units in a state such as Indiana, the overall rate would go up, but the emissions would go down. The commenters said to account for t his when a state elects an emission rate approach, EPA should allow states to account for de mand response by allowing the MWh savings to be incorporated into the denominator. Th e commenters said for states that select massbased programs, the reductions are achieved at the stack and thus no adjustment is necessary.

Comment 90: Recommendations for displacing fossil generation

Response 90: See Preamble Section VI for a discussion of how th e EPA is treating replacement generation from building block three.

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

Commenters stated EPA seeks comment on the assumpti ons it should make in displacing fossil generation in the emission rate; EPA proposes sever al options, including: proportional displacement of all fossil, displacement of highest -emitting units first, or displacement of coalfired EGUs first. The commenters believed that EPA should first remove steam EGUs from the442

formula the generation by the highest-emitting unit s, which are typically coal-fired. The commenters said this environmental dispatch constra int will yield the lowest target and is therefore the best system of emission reduction. Th e commenters recognized that EPA's proposed rule would allow states to take credit for renewable energy generation attributable to measures in the state's plan even when it does not result in displacement of in-state EGUs; the
commenters have advocated that EPA allow states to take credit for energy efficiency savings directly attributable to their EE programs, regardl ess of where the emission reductions actually occur. The commenters said once fossil displacement is factored into the state's target, the state will have some incentive to design RE and EE measur es in a way that causes displacement of instate high-emitting units, so that the state also r eceives that emission reduction benefit. The commenters said designing RE and EE measures in a w ay that avoids the need for operation of baseload coal-fired plants will also reduce the dif ference between the environmental dispatch required to implement the rule, and economic dispat ch practices.

Commenters stated the final rule should use the sam e total generation that was used to determine the final state emission rate goals in the conversi on equation. The commenters said the TSD proposes to use a lower generation total to determi ne a state's final mass-based goal than the generation total to determine a state's final rate- based goal. The commenters said this artificially lowers the overall mass-based goal, which makes the mass-based goal more stringent. The commenters said the more appropriate conversion met hod is the use of the total generation that was used to compute the final rate-based state goal s, since EPA used that generation in the denominator of the final rate-based goal calculatio n. The commenters said in determining the state goals, EPA does not displace any fossil gener ation with renewable energy generation and energy efficiency, so to be consistent with how the rate-based state goal is calculated one should use the same generation used determine the rate-bas ed state goal. The commenters said the method the TSD uses in this latest proposal is enti rely different from the method used to compute the rate-based state goals and it depresses fossil generation to such a degree that the mass-based emission level is more stringent than the rate-base d state goal.

Comment 91: Improving the EPA analysis and proposal - efficienc y and non-hydro renewables potential

Response 91: See section V.E. of the final rule preamble of the CPP for the EPA’s response to this comment and more information about Building Bl ock 3 and the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule su pporting the final CPP.

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

Commenters identified the resource mix base case an d the policy case (Option 1); there are several key points about the scenario.

The commenters said first, contrary to the claims o f some, all low carbon resources play a part in reducing emissions.

• Nuclear power and hydro are essentially flat in the base case and the policy case.443

The commenters said all nuclear power, currently op erating and under construction, is assumed to continue to produce electricity, with the except ion of a small number of normal retirements (2.5% of total output) in the policy period (2020 - 2025).

• All currently operating hydro power is assumed to c ontinue to do so.

• Natural gas increases significantly and steadily in the base case through 2030 (26%); in the policy case it drops slightly (3%); e ven in the policy case, the output of natural gas-fired generation is more than one fi fth higher than the base year (2012).

• Renewables grow by over 80% in the base case; howev er, the additional increase in renewables under the policy case is minuscule, l ess than .5%.

• Efficiency is the key to the carbon reduction.

• Output from coal-fired generators is projected to g row slightly in the base case (11%); in the policy case, it declines by 27%.

• The total output in the policy is projected to be 1 1% lower than the base case; this is the effect of efficiency improvements.

• The efficiency improvement decreases the rate of gr owth of output from just under 1% in the base case to .25% in the policy cas e; the base case demand embodies some efficiency improvement as a result of the kinds of utility programs
the EPA rule models.

The commenters said looking at the policy scenario from the point of view of physical quantities,
80% of the reduction in carbon emissions is due to the reduction in output, even assuming that the coal output is 6% more efficient with respect t o carbon emissions; thus, in the policy case the electricity sector carbon footprint will be defined by:

• strong growth in renewables as a result of the econ omic fundamentals in the base
cases and

• a much larger reduction in emissions as a result of efficiency stimulated by policy. Leaving aside efficiency improvements in the base c ase, efficiency accounts for
almost three times as much reduction as renewables.

The commenters said even looking at the total chang e in emissions (base case plus policy) the reduction of consumption, which must be considered efficiency driven (since the economy is assumed to grow), accounts for over 50% of the tota l reduction in emissions.

The commenters said it is important to emphasize in the strongest terms possible that EPA has set out in the right direction; efficiency is the l east cost option. The commenters said the base case pattern of changes in the generation mix and l evel of output are consistent with the
economic fundamentals discussed earlier. The commen ters said wind is the next lowest in cost,444

followed by solar as the cost trends continue to de velop. The commenters said the potential contribution of these three resources is quite larg e and other advanced industrial nations have achieved much higher levels of carbon reduction uti lizing these three resources, while transforming their electricity systems to deliver r eliable power.

The commenters said while the contribution of effic iency and renewable to the reduction of
carbon emissions that results from the combination of the base case trends and the policy case in the EPA analysis is impressive, it is well below wh at the literature reviewed above deems
economic and achievable. The commenters said accord ing to the Citi projection of base case growth, which includes only existing state RPS prog rams, at least 60% more could be achieved
with renewables. The commenters said since two-fift hs of the states have not adopted RPS programs, it is reasonable to assume that a policy case in which the remaining states sought to increase renewable energy to roughly the same level , the amount of renewables would double.

The commenters said the contribution of efficiency could also double, based on the estimates of the national experts discussed earlier; in both cas es the projected costs are competitive with the current cost of natural gas, so these carbon reduct ions impose very little increase in the cost of electricity; this outcome results from the fact tha t policy helps to overcome the efficiency and innovation gaps.

The commenters said one of the primary sources of u ntapped carbon reduction from efficiency involves appliance efficiency standards, building e nergy codes and combined heat and power; while appliance efficiency standards are frequently adopted at the federal level, states do have the ability to adopt their own standards. The comme nters said building energy codes are a state and local matter; combined heat and power is a loca l and state regulatory arena. The commenters said EPA should adopt a methodology to account and provide incentives for the states to adopt higher appliance efficiency standards and building energy codes.

The commenters said the large potential for additio nal carbon emissions reductions from low cost efficiency and renewables has a major implicat ion for the EPA analysis; capturing just one quarter of the potential additional reduction in ca rbon emissions would offset the loss of generation from all of the reactors identified as v ulnerable to early retirement plus the abandonment of the reactors under construction, whi ch have shown uneconomic. The commenters said thus, fixing these two aspects of t he EPA analysis results in more carbon reduction at a lower cost; this would move the EPA standard in the direction of a "better" system
of emissions reduction.

The commenters said as large as the benefit cost ra tio is in the EPA analysis of Option 1, the
commenters believed that when these modifications a re made to the economic analysis, the potential benefits of a well-designed, least cost p erformance standard will exceed the costs by a much greater margin than EPA's Option 1 analysis su ggests. The commenters said when the economic analysis is corrected and a third, "high" reduction rule analyzed, the higher standard will be very attractive. The commenters said given that so much potential for low cost carbon reduction has been left on the table, it appears th at a doubling of the contribution of efficiency and renewables, as some have suggested, would be re adily achievable and yield a substantially positive benefit cost ratio. The commenters said wh ether or not EPA adopts the higher standard, having the more rigorous analysis of a higher stand ard available would serve to expand the range445

of options considered by the states, laying the bas is for higher levels of reduction of carbon
emissions in the future.

The commenters said in the past month, the U.S. and China made important commitments on carbon reduction and the European Union put forward a much more aggressive proposal; these announcements help to place the EPA proposal in per spective. The commenters said EPA Option 1 is consistent with the U.S. China announcement; a t the same time, a doubling of the carbon reduction would still be considerably less than the target set by the European Union, in spite of
the fact that the U.S. emissions are more than twic e those of the EU per capita and three times
those of China.

The commenters said it is critically important at t his turning point in global climate change policy for EPA and the U.S. to lay a strong foundat ion for a century of policy; a well-crafted performance standard that looks to the future by hi ghlighting the role of efficiency, renewables and transformation of the system is an ideal place to start.

Comment 92: Tribal & Territories - correct assumptions for redu ctions

Response 92: For the EPA’s response to this comment, see the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule support ing the final CPP.

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

Commenters stated EPA's Supplemental Proposal conta ins several elements that are critical to
the successful reduction of carbon emissions from t he units located in Indian country; accordingly, these elements should remain in the final rule. The commenters supported EPA's recognition that APS's closure of three units at the Four Corners Power Plant ("FCPP") and SRP's expected shutdown or curtailment of gener ation at the Navajo Generating Station ("NGS") by 2019 represent approximately a 30 percen t reduction of total 2012 carbon emissions on the Navajo Nation.

4.4.4 Alternative approaches

Section 4.4.4 covers public comments related to alt ernative approaches to the proposed emission goals.

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: NODA - Support the alternative BSER formulation pro posed in the NODA.446

Response 1: The EPA is adopting the alternative approach from t he proposal, modified as described in the NODA. See sections V.A., V.D., V. E and VI of the final rule preamble of the

CPP and the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP for more information.

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

Commenters supported the alternative BSER formulati on proposed in the NODA.

Commenters added measures from building block 3 and 4 should explicitly reduce the generation from the covered sources in the goal-setting equati on; to achieve the maximum emissions reductions practicable using the best system of emi ssion reduction, the equation should prioritize real reductions from high-intensity carbon emitters . The commenters said the generation from building blocks 3 and 4 should be modeled as replac ing replace generation from existing affected units first. The commenters stated we urge EPA to f inalize a goal setting computation that simply
takes the sum of a state's incremental renewable en ergy and energy efficiency megawatt hours, and subtracts it from the affected coal generation megawatt hours. The commenters added if EPA made the adjustment and accounted for the resul ting reduced utilization at coal-fired power plants by totaling the amount of increased renewabl e energy and energy efficiency, this minor adjustment to the goal-setting equation more accura tely reflects how states will comply, treats the building blocks consistently, and ensures that the emissions reductions associated with the building blocks lead to CO2 reductions from the des ignated facilities.

Commenters added when EPA sets final state targets, it should use the corrected formula proposed in the Notice of Data Availability. The co mmenters supported both of these NODA alternative approaches, and believes both are valid for BSER state goal setting. The commenters encouraged EPA to adopt the first approa ch, revising the target-setting formula so that incremental RE and EE (beyond 2012 levels) dir ectly replace fossil generation and the corresponding emissions in proportion to the 2012 f ossil generation mix, which could be seen as reflecting the potential for states to substitute z ero carbon resources and energy efficiency for the highest-polluting generation. The commenters stated however, we also support the alternative approach, noting that it acknowledges that the addi tion of incremental RE and EE could replace various fossil resource types without strictly repl acing fossil in order of decreasing carbon intensity. The commenters said if EPA adopts a form ula in which renewables and energy efficiency displace NGCC and coal- fired generation on a pro rata basis, it must also ensure that it corrects the potential emission reductions from building block 2; when renewables and energy efficiency displace NGCC generation, this will lowe r the capacity factor of NGCC plants and create additional potential reductions from buildin g block 2. The commenters said these additional reductions can be achieved either by dis placing fossil generation from blocks 3 and 4 before calculating block 2 or by doing a true-up to block two to ensure that NGCC plants remain at a 70 percent capacity; the formula adjustment wi ll ensure that the Clean Power Plan fully reflects the potential for emission reductions achi evable under the best system of emission
reduction.

Commenters added SEIA supports the second proposal outlined within the NODA that assumes renewables and energy efficiency would replace dirt ier fossil generation first; this would correctly remove from each state's carbon intensity numerator emission reductions to express the447

drawdown in fossil fuel resources when renewables a nd energy efficiency increase. The commenters stated that is, affected EGU MWhs should be removed from the denominator and the equivalent number of MWhs should be added back based on low- and zero-carbon generation from building block 3, and emissions associated wit h affected EGUs should be removed from
each state's carbon emissions numerator. The commen ters said this second proposal for setting the state goals under building block 3 as outlined in the NODA is consistent with how renewable energy would be used under a best system of emissio ns reductions, as displacing the highestemitting resources first would be the most cost-eff ective option; to expand upon this, if carbon cost were accounted for in generation dispatch deci sions, as it may be in some regions as part of implementation of BB2, many gas units would be disp atched lower on the supply curve than many coal units, putting coal units onto the margin where they will be displaced by renewable

energy.

Commenters added in setting state goals, the Propos ed Rule treated incremental renewable energy (in Building Block 3) and energy efficiency (in Building Block 4) as additional megawatt-hours that would be added to the denominat or of the rate formula; the Proposed Rule would count new renewable generation and energy eff iciency as though they will result in more total generation, but with the same overall total c arbon emissions. The commenters said the Goal-Setting NODA invites comment on an alternative and more logical way to account for incremental renewable energy and energy efficiency: as replacing existing fossil fuel-fired generation, and thus reducing CO2 emissions from th e numerator. The commenters said EPA should adopt this alternative approach.

Commenters added valuing incremental renewable ener gy and energy efficiency as avoided emissions, rather than as additional generation, be tter aligns both with EPA's rationale for the "best system of emission reduction" and with how th e interconnected electricity system works. The commenters said as EPA recognized, increased re newable electricity "provides electricity that can be substituted for generation from more ca rbon-intensive EGUs" and ideally reduces CO2 emissions because it "replaces predominantly fo ssil fuel-fired generation." The commenters said similarly, additional energy efficiency progra ms are intended to reduce generation from existing fossil fuel generation, and therefore shou ld reduce overall CO2 emissions. The commenters said in most cases, when states add rene wable generation and energy efficiency, the electric system dispatches less fossil generation a nd thus reduces the mass of emissions; thus, in setting state emissions rate goals, EPA should valu e these measures as emissions avoided, rather than simply treat them as additional generation wit hout a corresponding adjustment to emissions in the numerator. The commenters said this approach also is more consistent with EPA's approach to Building Block 2, in which existing NGC Cs are assumed to replace existing fossil generation that is more carbon-intensive, and the n umerator of the goal-setting formula is adjusted correspondingly. The commenters said in bo th cases, a reduction in emissions rate occurs because higher-emitting sources are dispatch ed less frequently, not solely because lower emitting generation is added; moreover, EPA should be promoting zero-carbon electricity
sources and demand side reductions not as ends in t hemselves, but as means to achieve emissions reductions; EPA should value these components of Bu ilding Blocks 3 and 4 in the way that is most consistent with that ultimate goal.

Commenters stated as noted in EPA's Notice of Data Availability Released on October 27, 2014 (79 FR 63882-01) EPA must fix the formula for calcu lating state targets to properly account for448

reductions from renewable energy and energy efficie ncy. The commenters said making needed adjustments to building blocks 3 and 4 will not onl y achieve reductions, but lead to stronger state implementation plans that will encourage the growth of clean, renewable energy sources.

Commenters stated in order to accurately and fully realize carbon reduction gains that can be achieved through the advancement of renewable energ y and energy efficiency, EPA must properly calculate state targets to completely acco unt for the emissions reductions from these sources. The commenters said EPA correctly acknowle dges in its October 27, 2014 Notice of Data Availability that its original formula used in the proposed does not properly account for the emission reductions generated by renewable energy a nd energy efficiency.

Commenters stated in the original formula, EPA adds new MWhs of renewable energy generation and efficiency savings to the formula, b ut then fails to reduce corresponding carbon pollution that will be avoided from displaced fossi l fuel based generation; the formula does not account for the reduction in generation at coal and gas power plants that will occur when additional renewable energy sources are added to th e grid and when demand reductions occur as a result of energy efficiency measures. The comment ers said EPA should use the corrected formula proposed in the Notice of Data Availability so that the CPP and each state's target accurately and fully accounts for the potential for emission reductions achievable under the
BSER.

Commenters urged EPA to adopt the Alternative Goal- setting Equation Approach for renewable energy, outlined in the October 28, 2014 Notice of Data Availability. The commenters said specifically, EPA should displace fossil fuel-fired generation in order of emissions rate when calculating state targets to reflect increases in r enewable energy & energy efficiency. The commenters said doing so would help to strengthen I owa's targets, according to analysis by the commenters: Using the M.J. Bradley & Associates' Cl ean Power Plan Evaluation Tool and selecting the "Alternate Goal Setting Equation (BB3 &4) Approach , Option 3 (RE/EE Replaces Fossil Sources in Order of Emissions Rate, coal->o/ g->ngcc)," Iowa's interim target would change from 1,341 lbs/MWh to 1,265 lbs/MWh and the state's final target in 2030 would change from 1,301 lbs/MWh to 1,194 lbs/MWh. The commenters said this strengthening is necessary and significant to ensure Iowa is required to make meaningful carbon reductions under the proposed rule.

Commenters agreed that EPA's methodology of setting targets for Block 2, on the one hand, and Blocks 3 and 4, on the other, built in an assumptio n that total fossil-fuel generation would shift from coal- to natural gas-fired plants but overall remain constant, and failed to assume a reduction of total fossil fuel-generated power as t he result of increased RE and EE. The commenters further agreed that EPA should remedy th is oversight by adopting a formula that replaces historical fossil generation on a pro rata basis with emission reductions achieved through RE and EE, which will render the targets mo re stringent.

Commenters stated the power sector is moving to cle aner sources of energy like wind and solar at a fast clip, and these clean energy sources are displacing coal and other fossil generation; the formula used to calculate the carbon pollution rate target for each state should incorporate this displacement benefit as other stakeholders have not ed [in reference to the NODA]. The commenters said for example, the Silver Lake Power Plant in Rochester, MN is retiring because449

it was too expensive to continue running and enough wind power and energy efficiency had come online in the area that the plant was not need ed for reliability. The commenters said the goal-setting equation should reflect the myriad of benefits that this transition creates. The commenters said as other stakeholders have suggeste d renewable energy and energy efficiency
should be added to both the numerator and denominat or of the goal-setting equation, so that 1 megawatt-hour of renewable energy displaces 1 megaw att-hour of fossil generation. The commenters said either using the pro rata method or replacing coal generation first would not only be more consistent with the treatment of NGCCs in Building Block 2 it would reflect the significant benefit of offsetting the marginally mo re expensive fossil generators.

Commenters supported the Notice of Data Availabilit y (NODA) alternative target emission rate method whereby any incremental renewable energy and / or energy efficiency would not only displace fossil generation beyond the baseline year (s) but could replace historical fossil generation below that baseline level. The commenter s said this method puts renewables and demand-side efficiency on equal footing with re-dis patching to natural gas combined cycle (NGCC) and the commenters believed this method shou ld be utilized to achieve 40% reductions by 2030.

Commenters stated EPA should ensure that the calcul ation of state targets fully reflects the role of renewable energy and energy efficiency in reduci ng carbon pollution. The commenters said the original formula used in the proposed rule fail ed to account for the reduction in generation at coal and gas power plants that will occur when addi tional renewables are added to the grid and when we improve energy efficiency. The commenters s aid when EPA sets final state targets, it should use the corrected formula proposed in its Oc tober 27, 2014 Notice of Data Availability.

Commenters stated the proposed goal-setting formula treats additional natural gas generation as replacing coal-fired generation, but treats energy efficiency and renewable energy as merely adding to the overall pool of electricity generatio n rather than displacing anything. The commenters said the EPA requested comment on whethe r it should change how energy efficiency and renewables are counted in calculatin g state targets [NODA]; the commenters said, it should; renewables and efficiency should be trea ted as replacing fossil-fuels, in the order of carbon-intensity.

Commenters stated this modification is one of the m ost important steps the agency should take before finalizing the rule; treating efficiency and renewables as adding to the generation pool rather than displacing carbon-intensive fuels resul ts in targets that are far too modest, vastly understating the potential of the two policies that should be the centerpieces of the rule. The commenters said reducing carbon emissions is the en tire point of the rule; the most sensible model for calculating carbon-reduction goals, then, is to assume that states will use carbon-free sources of electricity to displace carbon-emitting sources. The commenters said failing to treat efficiency and renewables as replacing fossil fuels in most instances is at odds with the agency's own analysis of the merits of the two strategies fo r reducing emissions. The commenters said the agency rightly includes renewable energy and effici ency in the Clean Power Plan precisely because they can displace electricity generation fr om fossil fuels; moreover, as the agency recognizes, that is typically what happens at prese nt; fossil-fuel generation is usually displaced first because it has higher variable costs than oth er forms of generation.450

Commenters stated this change in calculating state goals would significantly strengthen the Clean Power Plan; as proposed, the Plan would reduc e cumulative U.S. emissions from 2012 to 2029 from 21.5 billion short tons to 18.2, a differ ence of 3.3. The commenters said if the targets are calculated by assuming that efficiency and rene wables will displace fossil fuels, beginning with the most carbon-intensive, the Plan would redu ce cumulative CO2 emissions by more than twice as much-by 7.2 billion short tons, to 14.3; s imilarly, the proposal would reduce annual CO2 emissions by 330 million short tons in 2029 com pared to 2030 (from 2,153 to 1,823). The
commenters said the alternative formula would reduc e annual emissions nearly three times as much, or 919 million short tons; the difference in annual emissions is a 15.3 percent reduction versus a 42.7 percent reduction.

Commenters stated on October 30, 2014, EPA released a Notice of Data Availability (NODA) that addressed a concern expressed by several stake holders - both net renewable energy exporters and importers - that there is a tension between set ting state renewable energy targets based on instate renewable assets while also allowing states t o count imported renewable energy towards compliance. The commenters said to address the conc ern, stakeholders have proposed an alternate approach whereby a state's goal would be adjusted to consider its relative opportunities for developing out-of-state RE resources; this woul d "better align RE targets with the proposal to
allow the use of certain out-of-state renewables fo r compliance." The commenters said in the NODA, EPA solicits comments on this alternate appro ach. The commenters supported the stakeholders' proposed approach, and in general app lauds EPA's efforts to consider the best mechanisms for including interstate renewable energ y generation in states' compliance schemes.

Commenters stated a careful analysis of the emissio n reduction opportunities in each of the four blocks identified by EPA demonstrates that even gre ater savings are available from each of the four blocks; as discussed in detail in EPA's Notice of Data Availability Released on October 27, 2014, EPA must also fix the formula for calculating state targets to properly account for reductions from renewable energy and energy efficie ncy.

Commenters stated in its October 27, 2014 Notice of Data Availability, EPA explains that the original formula used in its proposed rule failed t o correctly account for the emission reductions generated by renewables and energy efficiency; as E PA explains, the formula used in the proposed rule failed to account for the reduction i n generation at coal and gas power plants that
will occur when additional renewables are added to the grid and when we improve energy efficiency. The commenters said when EPA sets final state targets, it should use the corrected formula proposed in the Notice of Data Availability ; this is particularly important because it will ensure that the Clean Power Plan fully reflects the potential for emission reductions achievable under the best system of emission reduction.

Commenters stated it is important that the final r ule reflect a formula that adequately counts the effects of renewable generation and energy efficien cy on fossil generation, as proposed in the October 27, 2014 Notice of Data Availability.

Commenters stated the EPA should adjust its formula for calculating state targets to fully reflect
the emissions reductions achievable in a cost-effec tive way through renewable energy and demand-side energy efficiency measures. The comment ers said the EPA explained in its October 27, 2014 Notice of Data Availability that the formu la used in its initial proposed rule failed to451

correctly account for emissions reductions that can be achieved through use of renewables and energy efficiency programs. The commenters said EPA explained that the formula used in the proposed rule failed to accurately account for redu ctions in generation at coal and gas plants that energy efficiency and renewables will cause, and in its Notice of Data Availability EPA proposed a corrected formula. The commenters said i n issuing its final rule EPA should use that corrected formula; doing so will ensure that the ta rgets each state must meet fully reflect the potential for reductions in emissions that can be c ost-effectively achieved through the use of renewables and improved demand-side energy efficien cy.

Commenters stated EPA failed to properly account fo r energy efficiency and renewable energy resources in the goal-setting formula; rather than backing out the equivalent level of existing fossil-fired generation that these resources would displace, EPA simply added the generation
from these resources into the denominator of the lb s/MWh emissions rate. The commenters said EPA should adopt the methodology set forth in the N ODA to fully capture the emissionsreduction benefits of these resources.

Comment 2: NODA; support; reduce the NGCC generation of states with existing higher amounts of NGCC capacity; won't work in tribal

Response 2: The EPA is adopting the alternative approach from t he proposal, modified as described in the NODA. See sections V.A., V.D., V. E, and VI of the final rule preamble of the

CPP and the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP for more information.

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

Commenters stated the approach in EPA's NODA could help mitigate the significant disparity between state goals as proposed in the rule, but on ly if EPA reduces the NGCC generation of states with existing higher amounts of NGCC capacit y. The commenters said this may not be
true for tribal lands. The commenters said EPA shou ld not increase the total amount of NGCC generation assumed in the goal calculation, as this would not provide any relief to states with existing high amounts of NGCC; this approach would distribute the burden of switching to more natural gas generation to all states, and allow sta tes to maintain a more appropriate resource mix. The commenters also believed making the corrections to the goal calculations would accomplish a more realistic and balanced approach.

Comment 3: NODA - Further refinements

Response 3: The EPA is adopting the alternative approach from t he proposal, modified as described in the NODA. See sections V.A., V.D., V. E, and VI of the final rule preamble of the

CPP and the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP for more information.

The following are summaries of the specific public comments under this comment:452

Commenters strongly opposed the suggestion by certa in commenters described in the NODA that further refinements to the analysis of the pot entially interrelated, cumulative, theoretical impacts of the four building blocks must be fully r eflected in the determination of the state targets. The commenters said instead, in order to s atisfy Section 111(d), such targets must reflect the degree of emission reduction that has been reas onably determined to be available by the affected sources, must fully address the complexiti es of any interrelated system-based elements of an emission reduction profile that can lawfully be considered under Section 111(d), and must preserve to the states sufficient flexibility to de vise Emission Guidelines that are not fully prescribed in every detail by the state targets est ablished by EPA.

Comment 4: NODA - short term relief for states

Response 4: The EPA has adopted different interim goal dates, a nd revised its approach to incorporating Building Block 3 in a manner more lik e Building Block 2. See sections I.A., V.A., V.D., V.E, and VI of the final rule preamble of the CPP and the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule support ing the final CPP for more information.

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

Commenters stated the NODA released in late-October represents the most significant change to EPA's proposal; the NODA raises numerous issues, in cluding potential changes to the 2020-2029 glide path, revisions to the CO2 performance goal-s etting formula, and regional and/or "holistic" approaches to calculating the Building Block 2 and Building Block 3 assumptions. The commenters said in short, the NODA could result in some short-term relief for the states, but with ultimately lower rate-based goals through "pot ential renewables" and "holistic gas" analysis.

Comment 5: NODA; formula for goal calculation issue; goal sett ing equation

Response 5: The EPA is adopting the alternative approach from t he proposal, modified as described in the NODA. See sections V.A., V.D., V. E, and VI of the final rule preamble of the

CPP and the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP for more information.

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

Commenters stated EPA is additionally seeking comme nt on changes to the goal calculation formula. The commenters said presently, for Buildin g Block 2 (shift production to NGCC), the proposed formula offsets 1 MWh of fossil steam gene ration and corresponding emissions from the 2012 baseline levels for every 1 MWh of increme ntal NGCC generation (subtracting emissions from the numerator and generation from th e denominator), reflecting the assumption that the shift to NGCC generation will replace foss il steam generation; however for Building453

Blocks 3 and 4, the formula adds Renewable Energy a nd Energy Efficiency to 2012 baseline generation in the denominator, but does not subtrac t or off set emissions in the numerator. The commenters said EPA is requesting comments on two a lternatives:

1. Replace all historical fossil generation on a pr o rata basis by assuming Renewable Energy and Energy Efficiency generation directly re places 2012 fossil generation in proportion (i.e., pro rata coal and gas) to their h istorical generation; or

2. Prioritize replacement of historical fossil stea m generation similarly as (1) above, but by first replacing fossil steam generation to below 2012 levels and then applying the remaining incremental Renewable Energy and Energy E fficiency to gas turbine generation and emissions.

Commenters stated their concerns with either of the se methodologies are similar. The
commenters said the EPA assumes that all Renewable Energy and Energy Efficiency generation will displace existing fossil emissions, which woul d not necessarily be the case; in the triennial Integrated Resource Plan (IRP) filing process requi red by the Kentucky Public Service Commission, the commenters include Energy Efficienc y and DSM program as resources to meet future energy requirements from consumers. The comm enters said for IRP purposes, these
resources serve to avoid the construction of new el ectric generating resources rather than reduce utilization of existing fossil generation. The comm enters said the proposed formula changes for the goal calculation therefore would penalize the s tate's existing Energy Efficiency programs.

Commenters stated the NODA also requests comment on two additional and more stringent methods for calculating the state goals; both appro aches would ratchet down state goals even beyond the amounts originally proposed; however, EP A does not recalculate state goals under these new methods or propose any specific changes t o the proposed standards. Commenters stated these new approaches only make a bad proposa l worse and compound the errors in EPA's methodology. The commenters said under them, EPA wo uld use additional renewable generation under building block 3 and avoided generation under building block 4 to reduce fossil generation below the 2012 levels; this reduction in fossil gen eration would be in addition to that amount mandated under building block 2. Commenters stated EPA does not give any examples of how this would work in any particular state or demonstr ate that such an approach could work; given that building block 2 is a significant driver of Te xas's goal, EPA's proposal in the NODA that would require additional ratcheting under building blocks 3 and 4 would only ensure that no coal generation is left to dispatch; nor would such an a pproach address growth in the system and the economy, and one could expect that grid stability i ssues would be even further exacerbated.

Commenters stated neither of the two options to fur ther remove fossil generation from the goalsetting calculation is appropriate or reasonable. T he commenters said in the June proposal, the renewable generation and energy consumption reducti ons were simply added to the denominator of the state goal formula. The commenters said the first option for an alternative treatment of this incremental increase in renewable generation and en ergy consumption reductions would be to assume that it directly replaces the 2012 fossil ge neration levels and the corresponding emissions on a pro rata basis across generation types. The co mmenters said EPA fails to provide actual calculations demonstrating what the effect of this change would be; the commenters said this change would yield more stringent state goals. The commenters said given that Texas's454

renewable goals are disproportionately higher than other states, the Texas emission goals would be weighted even more heavily by this change.

Commenters stated EPA suggests the calculation coul d be revised by prioritizing the replacement of historical fossil steam generation; incremental increases in renewable generation and energy consumption reductions would first replace coal-fue led steam generation below 2012 levels rather than all fossil generation on a proportional basis. The commenters said any remaining increase in renewable generation and energy consump tion reductions would replace gas turbine generation and the corresponding emissions. The com menters said such an approach would only make explicit EPA's apparent goal in this exercise: establish a hard deadline beyond which no coal-fueled units could operate. The commenters sai d mandating shutdown of the very existing units for which EPA is supposed to be demonstrating a technology that can reduce emissions is ludicrous and well outside EPA's authority under Se ction 111. The commenters said with only 66.7 terawatt hours of coal generation left after t he re-dispatch under building block 2, the removal of coal from the goal setting equation woul d occur by 2026 with greater than 90% gone by 2025. The commenters said EPA has no authority t o mandate the shutdown of EGUs under the guise of an emission standard.

Commenters stated the NODA seeks comment on whether EPA should alter its goal computation methodology by reducing generation more dramaticall y from existing fossil fuel-fired EGUs (as compared to the Proposal). The commenters said in t he Proposal, Building Block 2 re-dispatch - from coal to natural gas - is computed in the goal calculation by subtracting 1 MWh of fossil steam generation (in the denominator) and correspon ding emissions (in the numerator) from the 2012 baseline levels for every 1 MWh of incremental NGCC generation. The commenters said
that calculation leaves the total level of overall generation in a state unchanged after implementation of Building Block 2. The commenters said for Building Blocks 3 and 4, incremental RE and EE in the Proposal does not redu ce the 2012 baseline levels of fossil generation or remove the corresponding emissions; i nstead, incremental RE or EE is added to the denominator of the goal formula. The commenters sai d now, in the NODA, EPA solicits comment on an alternative approach where incrementa l RE and EE would replace generation from fossil fuel-fired sources in the goal calculat ion. The commenters said this would be accomplished by backing out 1 MWh of fossil generat ion for every incremental MWh of RE (generation) or EE (savings) in the denominator of the goal formula, and removing the corresponding emissions for the fossil generation i n the numerator. The commenters said two different approaches for revising the state goal fo rmula are discussed: (i) a pro-rata replacement across all types of fossil generation (fossil steam and gas turbine); or (ii) a prioritization of replaced fossil generation, starting with fossil st eam rather than all fossil; if there were any remaining RE or EE after replacing all fossil steam , then replacement of gas turbine generation would begin.

Commenters stated EPA correctly recognizes that ado pting this alternative approach would necessarily increase the stringency of the state go als (approach (ii) is even more stringent than approach (i)) and costs of the proposed guidelines. The commenters said the approach would necessarily further reduce the share of a state's g eneration that could come from existing fossil fuel-fired EGUs; in states where that generation wo uld already be significantly reduced under the Proposal, this alternative approach could eliminate coal-fired generation completely.455

Commenters opposed this alternative approach. The c ommenters said EPA utterly lacks the authority to establish section111 performance stand ards based on reduced utilization or
retirement of a source. The commenters said if EPA desires to pursue this change in the Proposal - it has not proposed in the NODA to pursue such ch ange - it must undertake a thorough evaluation of the costs and other implications - pa rticularly reliability - pursuant to sections 111 and 307(d)(3) of the CAA, and allow for proper noti ce and comment on the proposed change and its ramifications. The commenters said at this poin t, one cannot meaningfully evaluate these issues without such additional analyses on the part of EPA; beyond the likely very high additional costs, the approach may actually encoura ge further development of additional fossil generation, which might be needed if incremental RE and EE are used to retire existing fossil generation. The commenters said doubtless, this is not the consequence intended by EPA. The commenters said EPA should not pursue such an aggre ssive - and under the CAA, unjustified - strategy.

Commenters stated EPA's Notice of Data Availability ("NODA") provided additional information on several topics raised by stakeholder s. The commenters said the NODA provides alternative methodologies for calculating the state goals by applying incremental RE and EE reductions to lower fossil generation below 2012 le vels in the goal calculation. The commenters said the EPA proposed two different approaches for revising the state goal-setting formula using this methodology: the first option would replace al l historical fossil generation on a pro rata basis; the second option would prioritize replaceme nt of historical fossil steam generation. The commenters said although the EPA describes the meth odology for recalculating the state goals under the options, it provided no technical support documents or spreadsheets showing what the resulting state goals under the options should be. The commenters said it appears, however, that either option will result in more stringent state g oals. The commenters said the lack of supporting documents showing what results would be, along with the short time available between release of the NODA and filing deadline for comments makes it extremely difficult, if not impossible, for commenters to analyze the options properly so t hat it might comment intelligently on them. Accordingly, the commenters urged EPA not to adopt either option as part of the final rule, unless more information and time is provided to add ress adequately any issues that these new options present as to the application and results.

Commenters stated U.S. EPA proposes two alternative s in the NODA:

1) Replace all Historical Fossil Generation on a Pr o Rata Basis. The state goal formula assumes a constant level of fossil generati on equivalent to 2012 levels; instead of adding incremental EE/RE to the denomina tor, U.S. EPA proposes to assume it directly replaces 2012 fossil generation and the corresponding emissions on a pro rata basis across all generation types; US. E PA acknowledges this does not change the incremental generation levels for Buildi ng Blocks 3 and 4 but it will yield a more stringent state goal by replacing fossil ste am and NGCC generation in proportion. The commenters disagreed with this appr oach.

− U.S. EPA acknowledges that the approach under the J une 18, 2014 proposal and this alternative both replace generation; howev er in the June 18, 2014 proposal, new generation is replaced while under th is alternative, existing generation is replaced. The commenters said this ap proach would assume456 generation remains constant with 2012 levels indefi nitely into the future and that will not be the case; this acts to artificiall y lower state goals based upon a false presumption. The commenters said U.S. EPA sta tes the June 18, 2014 proposal scenario implicitly assumes significant in creases in existing fossil generation beyond 2012 levels absent Building Block 3 and 4; the commenters disagreed with the basic premise.

− -U.S. EPA is proposing under Building Block 2 that existing NGCC must be utilized at 70%. The commenters said it is improper to then require EE/RE displace that NGCC capacity; U.S. EPA cannot create a system that will put owners of NGCC at risk for noncompliance and possib le citizen suit because they cannot or do not operate at 70% capacity. The commenters said this alternative presumes that owners of existing NGCC w ould be placed in that exact situation; by lowering the rate with this typ e of assumption, the only method states will have to meet the overly stringen t state goal rate would be to decrease utilization of coal power plants even furt her as well as NGCC. The commenters said U.S. EPA should not be discouraging the use of existing or new NGCC and this alternative will do just that; in addition, the issues stakeholders raised with respect to stranded assets and the ability for states to consider remaining useful life will be further comp ounded with such an
alternative.

2) Prioritize Replacement of Historical Fossil Stea m Generation

− As a second alternative, U.S. EPA proposes to first replace fossil steam generation with EE/RE below 2012 levels rather than all fossil generation on a pro rata basis; after all fossil steam generation i s replaced, any remaining incremental EE/RE would replace gas turbine generat ion levels. The
commenters said U.S. EPA cannot assume EE/RE will r eplace generation in a manner which U.S. EPA proposes in this alternative; the commenters cannot contemplate the method in which c ompliance with such a requirement would be accomplished and U.S. EPA has offered no information regarding how it would be implemented in a plan. Th e commenters said U.S. EPA is attempting to control the electricity genera tion system in a manner that will lead to severe reliability issues. The comment ers stressed the need for a diversified and reliable generation system. The com menters said while theoretically this may appear to have merit, practi cally this approach cannot work; U.S. EPA cannot have evaluated the ramificati ons of such an irrational alternative. The commenters said U.S. EPA cannot pr opose such an alternative when Building Block 2 relies on NGCC to be utilized at 70%; stranded assets and the ability for states to consider remaining useful life will be even further compounded under this proposal as it appears in some cases, all coal-fired generation will become obsole te quickly under this proposal.

The commenters said U.S. EPA's language detailing t hese alternate EE/RE approaches, wherein higher intensity generation would be displaced by i ncremental RE and EE generation or demand457

reduction, is incredibly vague. Based on this vague language, the commenters were able to assemble at least four separate alternative goal-se tting scenarios based on particular interpretations of this language. The commenters sa id depending on the interpretation, state goals in Ohio ranged from situations similar to the June 2014 proposal, to situations in which all fossil fuel-fired generation in the state of Ohio was elim inated by 2026. The commenters said this proposal is not practical and U.S. EPA cannot possi bly demonstrate that this concept is feasible; such results clearly call for more detailed languag e regarding these alternate approaches, accompanied by detailed calculations from U.S. EPA demonstrating how these alternate goals might be applied in each state. The commenters said absent that, the language provided is far too vague for the commenters to make meaningful comment , except to point out the impracticality of meeting the goal.

Commenters stated the final mass-based goal is comp uted by multiplying the rate-based goal by the mass equivalent generation calculated for each of the two approaches; under the first approach (existing EGUs only), Ohio's illustrative mass-based goals (in thousand metric tons) are 74,614 (interim) and 68,751 (final); under the second approach (existing EGUs and future demand), Ohio's illustrative mass-based goals (in t housand metric tons) are 79,112 (interim) and 75,116 (final).

Commenters analyzed both methodologies proposed by U.S. EPA; the commenters contended that both approaches are flawed, first and foremost , by the reliance of setting mass-based targets using CO2 intensity goals from the June 18, 2014 pr oposal; those CO2 intensity goals were derived using flawed datasets, incorrect capacity d ata, unreasonable regional averaging in the development of RE and EE goals, amongst other error s and flawed assumptions. The commenters said these concerns overlay and exacerba te any and all other issues identified with U.S. EPA's rate-to-mass conversion methodologies.

Commenters stated the primary concern with the firs t methodology is the static nature of fossil generation coupled with the annually decreasing int ensity targets. The commenters said under this approach, states would still need to implement demand-side EE measures and other components of U.S. EPA's BSER to achieve the interi m and final goals; thus, states would gain almost no flexibility in choosing a mass-based comp liance plan following this methodology. The
commenters also identified that under-construction natural gas generation was included in U.S. EPA's calculations, but dispatched at a 55% capacit y factor. The commenters said this is markedly different than the approach taken under th e original rate-based methodology, wherein under-construction NGCC units were dispatch at 70% capacity factor; 15% as re-dispatched NGCC, and 55% as "other" generation. The commenters said this would imply that U.S. EPA's mass target under this approach is not equivalent t o a comparable rate-based target. The
commenters noted that U.S. EPA accounted for existi ng 2012 renewable generation, but did not do so for existing 2012 EE measures; this was not d escribed in U.S. EPA's most recent TSD. The commenters can only speculate that existing EE meas ures were not accounted for in U.S. EPA's calculations due to the significant difficulty in m easuring and verifying EE measures.

Commenters stated the second methodology proposed b y U.S. EPA is similar to the first approach, but includes an incremental demand-growth factor that informs both the interim and final mass-based targets. While it is encouraging t hat U.S. EPA recognizes the need to account for demand growth in the development of a mass-base d compliance path, the commenters did not458

believe, as stated previously, that a regional grow th-rate should be applied. The commenters also identified that Ohio's 2012 MW-h sales in the TSD, 153,780,262 MW-h, is not the same value used in the original June 18, 2014 proposal; the co mmenters could find no additional information to verify this new 2012 sales figure. Commenters ad ded that the adjusted fossil generation value used as part of the second methodology suffers from the same flaws as in the first proposed methodology; it appears from U.S. EPA's calculation s that after 2030, any additional demand growth would need to be met by zero-carbon sources.

Comment 6: NODA - oppose alternate approaches

Response 6: The EPA is adopting the alternative approach from t he proposal, modified as described in the NODA. See sections V.A., V.D., V. E, and VI of the final rule preamble of the

CPP and the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP for more information.

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

Commenters did not support the alternate approaches presented in Section III.C.1 of the Notice of Data Availability (NODA) issued on October 30, 2 014.

Commenters stated these approaches make the ambitio us goals of the original proposal even more stringent and much more difficult to achieve, and they do not reflect expected demand growth in Georgia and other southeastern states. Th e commenters said for GA, the approach proposed in the NODA: Reduces the final goal; in co mbination with Building Block 2 redispatch, reduces fossil steam generation (an 83% reduction); also Georgia EPD has estimated
2030 state-wide demand based on EIA's 2014 Annual E nergy Outlook (AEO) projections for the southeast (see Table 4 of this comment letter); com menters believe that all of the 2012 fossilfired generation will be needed to meet demand in 2 030 and that the new approaches described in the NODA are unrealistic for Georgia. The commen ters said in summary, the alternative approaches presented in the NODA make Georgia's goa l much more stringent and they assume a reduction in fossil steam generation that would ser iously compromise the state's dispatch flexibility. The commenters added they do not refle ct expected demand growth in Georgia and
other southeastern states and the need to retain a fossil-fired fleet that is adequate to meet the demand growth; EPD does not support the alternative approaches for calculating states' goals presented in Section III.C.1 of the NODA.

Commenters added EPA should not adopt either approa ch presented in the NODA, as both would overestimate the potential emissions reductio ns from RE and EE because they erroneously assume that RE and EE can replace dispatchable foss il generation. The commenters said adding RE and EE to a utility system does not directly dis place existing fossil generation; variable energy resources are inherently different than trad itional resources like coal and gas generation. The commenters said coal and gas resources provide value across all dispatch categories (baseload, intermediate and peaking), but variable energy resources are only available at certain times and are operationally inflexible. The comment ers said these renewable resources need to459

be backed-up when they are not operating, but EPA d oes not address how this can be accomplished without reliance on some fossil genera tion.

Commenters added regarding the consistent calculati on of all Building Blocks, it is altogether appropriate to assume that existing NGCCs could rep lace generation from coal units in the proposed goal-setting calculation; however, because RE and EE are inherently different in their operating characteristics, EPA should not assume th at these measures can replace coal generation
on a one-for-one basis. The commenters said renewab le energy and EE serve to meet or avoid a portion of load growth to reduce future emissions, not to reduce historic demand and emissions. The commenters said revising the state goal formula in this manner would significantly increase the stringency of the rule under the NODA approache s. The commenters said for these reasons, EPA should not adopt either approach for RE and EE to replace existing fossil generation.

Commenters added the NODA solicits comment on EPA's goal-setting methodology but does not actually propose this change in the NODA, and E PA cannot finalize it as part of any final emission guidelines. The commenters opposed this ap proach for three reasons: (1) EPA has no authority to establish a standard of performance ba sed on reduced utilization or retirement of a source; (2) if EPA wants to pursue such a dramatic change, it must undertake a thorough evaluation of costs and other implications, as requ ired by section 307(d)(3), and allow
commenters sufficient time to evaluate and comment on those studies; and (3) this is a nonsensical approach to EPA's overarching goal of r educing fossil fuel-fired generation because
it would have the counterintuitive effect of encour aging the construction of new fossil fuel-fired
EGUs.

Commenters added this displacement of emissions fro m fossil fuel generation by the renewables and efficiency in the NODA would make each state's emissions rate more stringent; for states with a high ratio of renewables to fossil fuel fire d generation, the increased stringency is very significant to the point of being infeasible.

Commenters recommended a modification to the NODA d isplacement assumption so that the final targets reflect what is reasonably achievable by the states; specifically, while the displacement concept is contemplated by both the NO DA and by the rate-to-mass translation TSD, Maine strongly recommends that EPA adopt the d isplacement methodology in only one context so as to prevent a duplicative counting of fossil fuel displacement. The commenters said in order to maintain consistency across rate-based and mass-based approaches, EPA should provide states opting to pursue a mass-based approa ch with the opportunity to justify the appropriate amount of fossil generation that should be displaced (rather than apply an assumption that all incremental EE and RE will disp lace existing fossil fuel-fired generation); such an approach is appropriate given that modeling used to convert a rate-based target into a mass-based emissions cap will provide fuel mix proj ections, thereby alleviating the need to include a calculation-based displacement assumption as part of those states' respective targets. The commenters said to implement this approach, EPA could publish a final rate target for all states, which is inclusive of the displacement assu mption; a second set of rates, non-inclusive of the displacement assumption, could be published as approved inputs for use by states in converting to a mass-based emissions cap.460

Commenters added the NODA, while addressing desired transparency, also introduced undesirable new options not contained in the origin al proposal, which have stimulated additional uncertainty, potential flux regarding reliability a ssurance and the risk of even higher consumer electricity prices; in order to avoid potential due process implications, EPA should not adopt the "cumulative worst case impact" option that could re sult if the NODA options were included in
the final rule.

Commenters added further reducing coal-fired electr icity generation in such a manner would make the emission reduction targets even less achie vable and would exacerbate the grid reliability challenges identified above; such an ap proach fails to account for important differences between the Building Blocks. The commen ters said EPA provides no basis to support an argument that electricity could be shifted away from existing coal-fired EGUs by adding renewable energy capacity or reducing demand pursua nt to Building Blocks 3 and 4. The commenters said first, EPA includes each State's ex isting renewable energy capacity in Building Block 3; those facilities are already producing ele ctricity alongside coal-fired EGUs and, as a result, cannot be called upon to displace coal-fire d electricity generation. The commenters said second, by incorporating new renewable energy gener ation and energy efficiency measures into its BSER analysis, EPA necessarily accounts for new electricity demand that will occur over the same time period. The commenters said EPA cannot si mply assign all new electricity generating capacity (and efficiency-induced demand reductions) toward the displacement of coal-fired electricity generation without considering how Stat es will meet new demand; this is particularly true for States that already have RPS and EERS prog rams in place and are relying on them to meet at least a portion of the growth in electricit y demand.

Commenters added EPA's NODA proposes to use increme ntal renewable energy generation and DSEE savings from Building Blocks 3 and 4 to displa ce 2012 generation from affected fossil fuel-fired EGUs in state goal calculations, acknowl edging that this approach would make state goals even more stringent; this alternative approac h is based on erroneous assumptions and a misunderstanding of the purpose and roles of the ty pes of generation in Building Blocks 3 and 4. The commenters said renewable energy generation and DSEE energy savings do not serve the same purpose as existing fossil fuel-fired generati on and thus cannot reliably or cost-effectively replace that generation; for these reasons, it is i mperative that EPA not incorporate this newly proposed goal setting methodology into its final ru le.

Commenters stated EPA requested comment on whether the goal-setting calculation should "back-off" fossil generation in response to the add ition of the renewable energy and energy efficiency building blocks. The commenters strongly disagreed with this modification as this change would artificially place additional emission reductions on many states and thus result in further stress to the electrical system. The commen ters said while renewable energy and energy efficiency have some implications for the utilizati on of existing sources they also play a key role in offsetting the need for new generating sources, and thus a determination that these building blocks would solely displace existing fossil genera tion is not practical.

Commenters added EPA has not attempted to evaluate how such an approach would affect the operation and reliability of the grid as dispatchab le fossil resources are needed to support voltage, frequency, capacity needs and enable renew able technologies to be deployed. The commenters said under the proposed revision to the state goal calculation, some states (e.g.461

Washington, Idaho, Oregon, Maine) would be left wit h zero fossil fuel-based generation, which significantly impairs the ability of operators to m aintain reliability. The commenters said if this proposal was expanded further as contemplated withi n the NODA, and building blocks 3 and 4 were applied to reduce fossil-steam generation pref erentially, such as is done with building block 2, all fossil-steam generation would be lost in 21 states - even while existing NGCC capacity would be assumed to run at a fixed capacity factor. The commenters said EPA has not performed any analysis to suggest that the grid could functio n without these critical capacity resources; as such, this potential alternative goal calculation a pproach should be rejected.

Commenters added EPA's NODA, published on October 3 0, 2014, increased, rather than decreased, the confusion and uncertainty regarding the goal calculation methodology, and added data to the record but failed to provide any insigh t on the impacts of using alternative base years, multi-year averaging, or changing the goal calculat ion by reducing fossil generation rates as renewable and energy efficiency measures are implem ented during 2020-2029. The commenters provided Appendix D containing a list of the issues upon which EPA requested comments in the initial proposal, as expanded by the NODA; most of these requests propose alternative approaches or changes that affect the stringency of the state goals, but EPA provided no insight into what those impacts would be. The commenters sa id the two exceptions to this general rule are the Option 2 state goals, and the goal calculat ions provided that rely solely on implementation of blocks 1 and 2, both of which wer e provided in the initial proposal; none of
the alternatives described in the NODA have been us ed to calculate new state goals. The commenters said there are multiple combinations of the alternatives proposed by EPA, and the outcome of each combination can result in unpredict able impacts on the ultimate obligations of the states - obligations that EPA says represent im mutable standards against which any plan submitted by the state will be judged.

Commenters stated the EPA's possible approaches to adjust the state goal calculation methodology for Blocks 3 and 4 discussed in the Oct ober 30 NODA would result in severe impacts on states, in particular the prioritized ad justment approach in which EPA would take generation and CO2 emissions out of the calculation for coal-fired EGUs first before other sources. The commenters said the prioritized adjust ment approach would zero-out all of Texas' coal-fired EGU generation for purposes of calculati ng the state goal, further restricting the state's ability to consider the remaining useful life of th e facilities and result in substantially more
retirements of coal-fired EGUs.

Commenters stated in the proposed rule, the EPA's s tate goal calculation applies Block 2 differently from Blocks 3 and 4; in Block 2, the EP A shifted generation from coal-fired EGUs and other higher emitting sources to NGCC units wit hout changing the total generation in the state; under Block 3, EPA added renewable generatio n without taking away generation or the corresponding CO2 emissions, increasing the total g eneration in the denominator; similarly, under Block 4, the EPA added the energy savings to the denominator without removing generation or the corresponding CO2 emissions. The commenters said in the October 30 NODA, the EPA takes comment on ways to change the state g oal calculation to make the adjustments for Blocks 3 and 4 similar to Block 2; specifically, th e EPA would remove the amount of generation
from fossil fuel-fired EGUs in the denominator of t he equation, and the corresponding CO2 emissions in the numerator, that is equivalent to t he incremental renewable energy generation under Block 3 and incremental energy savings from B lock 4.462

Commenters stated the TCEQ opposes any such adjustm ent, and in particular, the prioritized approached being considered by the EPA in which the adjustment would take away generation
and CO2 emissions from coal-fired EGUs first. The c ommenters said because the incremental increase in renewable energy and energy efficiency savings assumed by the EPA under Blocks 3 and 4 for Texas is greater than the residual coal-fired EGU generation assumed after redispatching under Block 2, the effect of the priori tized adjustment approach would be to zero-out all Texas' coal-fired EGU generation for state goal calculation purposes. The commenters said all oil and natural gas steam EGU generation would also zero-out under this approach. The commenters estimated that such an adjustment would result in a final state goal for Texas of approximately 540 - 550 lb/MWh; additionally, the c ommenters estimated that 21 other states would be similarly impacted by having all coal-fire d EGU generation assumed to be removed by the prioritized adjustment approach discussed by th e EPA in the October 30 NODA. The commenters said nationally, applying this adjustmen t would result in the state goals being based on an assumed reduction in coal-fired EGU generatio n across the country of approximately 60%, substantially more than the 26% that the proposed s tate goals are based on; such a radical reduction in coal-fired EGU generation would result in substantially more retirements in the coal-fired EGU fleet and further endanger grid reli ability; furthermore, building such an assumption into the state goal would virtually elim inate Texas' ability to consider the remaining useful life of coal-fired EGUs because the state go al would be founded on an assumption that all
coal-fired EGUs in the state would out-of-service b y 2029, including EGUs which have only recently come online.

The commenters also opposed the proportional adjust ment approach being considered by the EPA for adjusting the state goal calculations for B locks 3 and 4; if based on a post-Block 2 redispatched generation mix, the TCEQ estimates the p roportional approach would reduce the state goal for Texas to approximately 720 lb/MWh; while t he proportional approach is expected to have a lesser impact on the state goal than the pri oritized approach, the effect still makes the state goal more stringent and the TCEQ maintains the fina l state goal proposed for Texas is already
infeasible.

Commenters stated that the CO2 emission rate target proposed for Pennsylvania is already too stringent; therefore, any proposed methodology chan ges in the NODA that result in more stringent goals should not be considered.

Commenters added in the Notice of Data Availability (NODA) published on October 30, 2014, a radically different target methodology was proposed by EPA in which the energy attributed to building blocks three and four would be substituted , in a one for one manner, with reductions in fossil fuel usage. The commenters said for Washingt on this would reduce the state's final target from 215 lbs/MWh to an estimated 27 lbs/MWh; in ess ence, this would set Washington's target to zero. The commenters did not support this altern ative methodology; and notes that the proposed approaches for building blocks three and f our already "zero out" the emissions from all fossil fuel generation in the state, even if a one- for-one substitution does not occur. The commenters continued because renewable energy is de pendent on some load-following fossil resources to shape and firm intermittent resources, the conceptual foundation for this approach is lacking. The commenters said EPA has been clear to date that the "building block" approach is a methodological approach to generate a fair and equi table implementation of the BSER for setting emission rate goals for states; it is not a rigorou s modeling approach, which seems to be the463

direction of this suggested modification. The comme nters said the "building block" approach meets its purpose of balancing simplicity, fairness , and policy neutrality, and should not be stretched to cover compliance approaches.

Commenters opposed the adjustments for making Block s 3 and 4 similar to Block 2 in the state goal calculations presented in the NODA. The commen ters said the prioritized adjustment would have the effect of zeroing out all coal-fired as we ll as oil and natural gas steam generation for state goal calculation purposes. The commenters est imated this adjustment would drastically alter Texas's final goal to approximately 540-550 l bs/MWh. The commenters said this outcome
would have an even more detrimental effect on relia bility than the 791 lbs/MWh emissions goal proposed in the original rule; the commenters stron gly urge EPA to reject this modification to the state goal calculation.

Commenters stated in the alternative methods outlin ed in the NODA, the underlying goal-setting algorithm governing building blocks 3 and 4 provide emissions reductions through displacement of all of New Jersey's coal and oil-fired generatio n along with a significant amount of existing NGCC generation. The commenters said this is not a realistic or a reasonable outcome. The commenters said to highlight the extreme nature of the emissions reductions associated by this alternative goal-setting algorithm, only 6,755,875 kWh is satisfied by the affected fossil EGU generation. The commenters said this is equivalent to 26% of the generation supplied by the
affected fossil EGUs in 2012. The commenters said a ll of the coal and oil-fired units would be replaced and the existing NGCC fleet would be opera ting at a 13% capacity factor. The commenters said as suggested by EPA, this amount of generation could be satisfied by only 20% of New Jersey's existing NGCC operating at a 70% ca pacity factor; this could result in the shutdown of many NGCC units in New Jersey, resultin g in greater reliance on out-of-state coal units, resulting in higher CO2 and NOx emissions; t his is not a reasonable outcome.

Commenters stated EPA has further expanded the pote ntial to target Texas' coal-fired generation in its NODA, with requests for comment on proposed plans to require reductions in fossil-fuel generation at a prorate rate as new renewable energ y resources are developed and end-user efficiency gains are achieved. The commenters said one of these proposals includes requiring coal-fired generation to be offset first, then othe r forms of fossil-fuel generation would be targeted; this is an unacceptable approach; it woul d drive even greater reductions in coal generation, and associated mining, leading to addit ional economic harm and impacts to electric reliability; it would also lead to greater risks to reliability, as less electricity would be availabl e to meet rising demand.

Commenters stated regarding the Notice of Data Avai lability on October 28, 2014, the commenters did not believe that any of the adjustme nts to the timing of the "glide path," nor the use of 2012 as the baseline year, nor changes to th e rate-based computation methodology are necessary. The commenters said the proposed CPP in its original form represents a bold yet viable pathway for achieving the nation’s, and our state’s, energy, economic and environmental goals. The commenters supported the original propos ed Plan as it stands without the need for significant changes as represented in the Notice of Data Availability.

Commenters stated EPA should not consider changing the goal setting formula as suggested in the NODA; the suggested changes make the goal calcu lations more complicated by allocating464

emission reductions to particular generators but do not address the effect of where emissions will actually be reduced.

Commenters added in the Notice of Data Availability (NODA) published on October 30, 2014, EPA solicited comment on stakeholder feedback sugge sting changes to the proposed formula to establish state goals; according to the NODA, some stakeholders have argued that incremental renewable energy and energy efficiency displaces ex isting fossil generation rather than incremental generation from existing sources. The c ommenters said if the finalized Clean Power Plan agreed with stakeholders on this point, state goals would become significantly more stringent in all states, including Oregon. The comm enters stated their experience with renewable energy and energy efficiency demonstrates that the formula EPA initially proposed more accurately accounts for emissions reductions. The c ommenters said energy efficiency and renewable energy in the commenters' system serve to meet load growth and hence avoid new generation and emissions. Commenters stated that in 2014, the commenters forecast weathernormalized net load growth of approximately 1%, aft er accounting for 1.5% in annual incremental energy efficiency on the commenters' sy stem; in other words, this year the commenters' load has grown by 1% even after achievi ng an impressive amount of energy efficiency. The commenters used renewable energy ad ded to the commenters' system to comply with Oregon's RPS to meet the load growth the comme nters experienced after energy efficiency. The commenters' experience suggests that stakeholde r arguments on the goal-setting equation are unfounded. The commenters said EPA's proposed goal- setting equation, in which incremental renewable energy and energy efficiency serves to av oid future emissions rather than reduce historic baseline emissions, is the correct approac h.

Commenters stated the approach to applying building blocks 3 and 4 to state goals in the NODA would result in targets that are in some cases less than zero and that arguably cannot be met by feasible state compliance actions; therefore , the commenters did not support the change to the state goal calculation described in the NODA

.

Commenters stated EPA's October 28 Notice of Data A vailability (NODA) seeks comment on whether each state's goal should reflect displaced fossil generation from assumed levels of increased renewable energy generation and demand si de savings. The commenters said the NODA mentioned four options for treating displaced fossil generation; the commenters supported the original approach proposed in June in which increased renewable energy generation and demand side savings would not displace existing fossil generation.

Commenters stated EPA should not consider changing the goal setting formula as suggested in the NODA. The commenters said the suggested changes make the goal calculations more complicated by allocating emission reductions to pa rticular generators but do not address the effect of where emissions will actually be reduced.

Commenters stated a pro rata, direct replacement me thodology represents a significant change from the initial goal-setting formula. Commenters s tated EPA concedes that "[a]lthough the incremental generation levels assumed for building blocks 3 and 4 would not change under this approach, this adjustment to the goal-setting formu la would yield more stringent state goals." The commenters said this may well offset, or even e xceed, any interim benefit obtained from potential changes to the glide path calculation; mo reover, it places utilities in a difficult and465

unprecedented situation. The commenters said a util ity must conduct, evaluate and approve longterm resource planning in a world driven by a CO2 p erformance goal predicated on a formula that directly interchanges baseload generation for intermittent generation or potential reductions through energy efficiency.

Commenters stated from an institutional standpoint, the potential one-for-one tradeout of baseload resources for renewable and energy efficie ncy resources taxes the ability of state air regulators beyond the breaking point. The commenter s said while a state air regulator has primary jurisdiction in the first instances over a Section 111(d) plan, that same regulator has no experience or competency with electric reliability or rate impact; a state, therefore, will have the institutional choice to make, whether it wants to t ask its air regulator with becoming a totalistic electric resource planner, or not. The commenters s aid further, as state-specific legal analysis shows, in most cases the air regulator does not hav e state law authority to author and enforce a plan using Building Blocks 2, 3 and 4 in any event.

Commenters stated a CO2 performance goal calculated under the NODA tilts toward greater involvement of PUCs with their relative expertise w ith regard to system reliability, cost recovery issues and resource planning in evaluating state pl ans. The commenters said it further underscore the need for some type of adjudicatory process or c ontested case proceeding for state plans that allows these types of issues to be fully- and publi cly-vetted. The commenters said, the political economy of state regulation may not admit the PUC/a ir meta-regulator from coming into being; traditionally, non-jurisdictional municipal and coo perative utilities have an abiding allergy to PUC regulation; investor-owned utilities may prefer PUC primacy because of experience and the ability to ensure rate recovery. The commenters sai d for restructured markets, the NODA continues to push toward a multi-state plan (the NO DA pushes vertically-integrated states to multi-state solutions too, see infra.). The comment ers said multi-state solutions suffer from many of the same political economy infirmities between t he states; state interests for a Section 111(d) plan are rivalries; not cooperative. The commenters said to be enforceable, Compact Clause
issues must be addressed.

Commenters stated there are several problems with t his approach; first, the EPA has no authority to establish a standard of performance under sectio n 111 based on reduced utilization (or retirement) of a source; second, if the EPA wishes to pursue such a dramatic change in its Proposed Guidelines, it must undertake a thorough e valuation of costs and other implications, as required by section 307(d)(3) of the CAA, and allow the public a sufficient period of time to
evaluate and comment on those studies. The commente rs said it is highly likely that here will be significant costs, including additional stranded as sets, as well as additional threats to the reliable supply of electricity, and added it is not possible to evaluate these issues without the additional analyses that EPA has failed to undertake. The comm enters said third, beyond the likely very high additional costs, this alternative approach se ems at odds with the EPA's apparent overarching goal of reducing generation from all fo ssil fuel-fired EGUs because it would have the counterintuitive effect of encouraging the cons truction of additional new fossil fuel-fired EGUs relative to the EPA's June 2014 Proposed Guide lines. The commenters said according to the EPA, the rationale for its proposed goal comput ation approach was that the additional RE and EE would replace expected generation increases from fossil sources that otherwise occur after 2012; in other words, RE and EE would be used to me et future generation needs, while leaving the existing fossil EGUs to continue serving existi ng (i.e., pre- 2012) load demand. The466

commenters said the alternative approach described in the NODA would require that incremental RE and EE be used first to satisfy existing (i.e., pre-2012) demand by displacing generation from existing fossil EGUs; if the incremental RE and EE encouraged by the Proposed Guidelines is dedicated to meeting historical demand, any post-20 12 increases in demand will need to be met by other sources, most likely fossil fuel-fired EGU s because the proposed goals for RE and EE under Building Blocks 3 and 4 are already extremely aggressive. The commenters said therefore, a likely outcome of the alternative approach discus sed in the NODA would be to encourage the use of new fossil generation to satisfy future dema nd rather than RE - a policy outcome that seems to be at odds with the EPA's overall goals.

Commenters stated the revised approaches would make state goals significantly more stringent; both proposals are unsound and should not be adopte d. The commenters said in reality, the effect that additional generation from existing or new NGC C units, nuclear reactors, or RE and EE
sources will have on emissions from affected fossil fuel EGUs will depend on at least two factors: demand for electricity and the attributes (including dispatchability) of the new generation source. The commenters said although electricity de mand growth has been slow in recent years,
demand could well increase if state or national eco nomies improve, if weather patterns change, or if new technologies (such as electric vehicles) lead to increased demand in the future; for example, EIA's baseline projection - which makes co nservative assumptions about economic growth and other factors leading to increased deman d - predicts an annual increase in demand growth of 1% through 2040, which will require the a ddition of 351 GW of new electric generating capacity nationwide; moreover, existing generating units whose capital costs have already been recovered and whose only going-forward costs are fuel, maintenance, and operating costs are usually the lowest-cost source of electri city; therefore, it is reasonable to expect that th e addition of some incremental generation will displa ce future generation increases from existing sources, rather than reducing existing sources' gen eration levels below historic levels. The commenters said however, in cases where the require d increase in NGCC, RE, nuclear, and EE generation exceeds demand growth, it is reasonable to assume that some existing generation will be "dialed back" relative to historic levels (note that because of the interstate nature of the electric grid, the generation that will be dialed b ack may not be located in state that implemented the increase in NGCC, RE, nuclear, or EE generation or savings).

Commenters stated the ability of any given source o f generation to displace generation from another source will depend in large part on the att ributes of the incremental generation source and the characteristics of the existing system; thu s, for example, incremental resources such as wind and solar power - as well as some EE measures - will preferentially displace natural gas generation (including generation at simple cycle tu rbines that are generally excluded from the Proposed Rule). The commenters said the reason for this is that natural gas turbines are uniquely capable of quickly ramping up and down to coordinat e with fluctuating generation from intermittent renewables; coal and nuclear generatio n, on the other hand, are less likely to be displaced by the addition of new non-dispatchable r esources. The commenters said increases in NGCC generation are likely to displace either other NGCC generation or generation from baseload units such as coal and nuclear, as well as some geothermal and biomass facilities, because each of these facilities also is capable of operating on a baseload basis. The commenters said the location and timing of the incremental gen eration will also affect the kind of generation it displaces, if any; for example, incremental RE o r EE that is located in an area that is mostly served by NGCCs is far more likely to displace that NGCC generation than it is to displace far-467

away coal fired generation. The commenters said by the same token, wind or EE measures that operate at night or during periods when natural gas prices are low, are likely to reduce the need for baseload generation such as coal, nuclear or hy droelectric generation rather than NGCC generation.

Commenters stated if EPA persists in computing stat e goals based on an assumption that states can implement the four-block BSER, the agency shoul d, at a minimum, base state goals on a realistic evaluation of each building block's poten tial for reducing emissions in each state (in light of projected demand and the generation and co nsumption profile of the state); this evaluation must be supported by detailed modeling a nalyses or other data in support of the agency's conclusions. The commenters stated if EPA fails to conduct such an analysis to justify the achievability of the state goals, EPA should as sume that all additions of incremental generation or EE displace future demand in the stat e. The commenters said because EPA cannot show with any certainty that increased NGCC, RE, nu clear, or EE generation will necessarily displace generation from affected EGUs (as opposed to displacing generation from future
increases in demand or from unaffected sources such as simple cycle combustion turbines), EPA should not reduce generation from any affected unit s when adding in generation from additional NGCC, RE, nuclear, or EE measures in the goal-setti ng calculation. The commenters said therefore, EPA should not implement the proposal di scussed in the October 2014 NODA. The commenters added EPA should revise its initial prop osal to conform its approach to building block two with its approach to building blocks thre e and four; EPA can do so by adding generation and emissions from increases in redispat ch to the numerator and denominator without reducing historic generation from coal-fired units in step two of the goal computation method.

Commenters found the NODA approach problematic beca use, data about technical potential does not factor in many restrictions, which could lead t o RE targets that may not be feasible to
achieve.

Commenters stated in its Notice of Data Availabilit y, EPA proposes various goal computation methods that would directly replace existing fossil generation with new renewable energy generation or energy efficiency savings. The commen ters disagreed with these methods that would make the current unattainable targets even mo re stringent, and therefore EPA should decline to adopt these goal-setting formula adjustm ents. The commenters asked if States are
forced to eliminate a MWh of fossil fuel-fired base load generation for each MWh of intermittent renewable generation or each increase in energy eff iciency, then what will States do when the wind fails to blow or the sun does not shine; what will States do if energy efficiency improvements are offset by growth in demand for ele ctricity. The commenters said worse than failing to respond to reliability concerns raised b y the proposed rule, these methods would exacerbate them by replacing reliable baseload gene ration with intermittent renewables or unpredictable energy efficiency improvements.

Commenters stated this revised approach, which woul d make state goals significantly more stringent, should not be adopted because it does no t represent (or even approximate) the emission reductions that are achievable through application of BSER. The commenters said EPA's regulations require that state emission guidelines "reflect" the application of BSER; this means that EPA's calculation of state emission goals must accurately reflect the degree to which application of the BSER building blocks can reduce the emissions of affected EGUs. The468

commenters said contrary to the assumptions that un derlie the alternative goal-computation methodology described in the NODA, the addition of one MWh of incremental zero-carbon generation (or avoided generation) is unlikely to d irectly displace one MWh of generation from an existing affected EGU in the same state; for exa mple, if electricity demand increases in the future (as it is expected to do under a business-as -usual scenario), the addition of incremental zero-carbon generation or EE could instead be used to meet the additional demand, rather than allowing existing EGU s to reduce their generation below baseline. The commenters said similarly, incremental RE or EE could displace the need to import power from neighboring states, to construct new NGCC capacity, or to opera te non-covered units such as peaking cycle simple cycle combustion turbines or hydroelectric e nergy facilities. The commenters said under each of these scenarios, the addition of new, incre mental RE and EE would not allow a state to
reduce the emissions of affected units in the state . The commenters said were EPA to calculate state goals based on the erroneous assumption that addition of new zero-carbon generation or EE always reduces a state's affected unit generation b elow baseline, EPA would violate the requirement that state emission guidelines must ref lect the application of BSER.

Commenters stated adopting the NODA goal computatio n methodology would lead to unreasonable goals for states like Washington and I daho, which would be expected to achieve statewide CO2 emission rates of 0 lbs. CO2/MWh by 2 030; in other words, this approach would completely tie the hands of regulators and utilitie s in Idaho, Washington, and perhaps other states: no matter how much RE, EE, or nuclear energ y these states are able to add in the future, it will be mathematically impossible to achieve a 0 lb s./MWh emission rate without closing all of their existing fossil EGUs. The commenters said for these states, and perhaps others, the Proposed Rule's much-touted "compliance flexibility " would be a total fiction. The commenters said such an approach would violate the spirit, if not the letter, of the cooperative federalism approach laid out in section 111 (d) of the CAA. Th e commenters said EPA should not adopt the NODA's alternative approach to computing each state 's emission rate goal.

Commenters stated EPA should not adopt either appro ach to change the proposed numeric formula; both approaches would overestimate the pot ential emission reductions from RE and EE because they incorrectly assume that RE and EE can replace baseload fossil generation. The commenters said at this time, neither EPA nor other stakeholders can demonstrated that this would be technically feasible, as neither RE nor EE can provide the full range of essential grid services that are fundamental to ensuring the relia ble delivery of electricity to consumers.

Commenters stated [Replacing all Fossil Generation Prevents the Reliable Operation of the Interconnected Power System] the two revised approa ches for calculating the state goals forwarded in the NODA are predicated on the incorre ct assumption that all historic fossil generation could be replaced by renewable generatio n and decreased consumption. The commenters said while not discussed explicitly in t he NODA, replacing all 2012 fossil generation in the numeric formula used to calculate the state goals likely would result in some state goals that are 0 lb CO2/MWh, meaning that the se states would have to cease all operation of existing base load fossil generation. The commen ters said neither EPA nor any stakeholder can demonstrate that, at present, the interconnecte d power system can be operated reliably without these critical base load resources; moreove r, new renewable wind and solar resources are variable in nature and need to be backed-up when th ey are not operating. The commenters said EPA does not address how such back-up can be accomp lished without reliance on at least some469

fossil generation. The commenters said fossil-based baseload units play a critical role in ensuring the reliable operation of the bulk power system; at present, this role cannot be replaced by either renewable generation or EE measures; all electrons are not fungible. The commenters said RE and EE cannot provide key services provided by base load resources that are essential for maintaining reliability, including frequency respon se, voltage support, load and resource balancing and inertia. The commenters said the NODA does not address how the alternate approaches to the numeric goal setting calculation would take into consideration these reliability considerations or how the interconnected power syst em could operate without fossil-based base
load resources. The commenters said EPA cannot use a numeric formula that creates state goals that are inherently at odds with the reliable opera tion of the interconnected power system.

Commenters stated the proposed state goals - which would be less stringent than goals calculated using either approach discussed in the NODA - will result in a dramatically changed electricity generation mix that has significant implications fo r reliability. The commenters said as NERC notes, the proposed guidelines "introduce potential reliability concerns that are more impactful than prior environmental compliance programs due to the extensive impact to fossil-fired generation... the ongoing transformation to the res ource mix and corresponding impacts on [essential reliability services [ERS]] required to maintain a reliable [bulk power system]. The commenters said NERC identified two categories of r eliability implications for the proposed state-specific emission rate goals: 1) direct impac ts to resource adequacy and electric infrastructure; and 2) impacts resulting from the c hanging resource mix that occur as a result of replacing retiring generation, accommodating operat ing characteristics of new generation, integrating new technologies and imposing greater u ncertainty in demand forecasts. The commenters said if the proposed goals, which would allow for some continued operation of existing fossil-based generation, create potential reliability concerns, goals that are predicated on the replacement of all existing fossil generation w ith RE and EE sources must raise more significant concerns. The commenters said EPA has n ot addressed how the alternative approaches to calculating the state goals are consi stent with the reliable operation of the interconnected power system; the potential reductio ns achievable by Building Blocks 3 and 4
cannot be measured in a vacuum. The commenters said EPA's approach to calculating the state goals must consider the potential impact the result ing goals would have on the interconnected power system.

Commenters stated [Limiting the Reliable Integratio n of New RE Generation into the Grid] RE and EE not only cannot replace base load fossil gen eration in providing essential reliability services, but also place additional reliability dem ands on the interconnected power system and system planners. The commenters said as NERC notes, the proposed guidelines seek to more than double the energy capacity that currently is p rovided by variable energy resources, like wind and solar. "[W]ind projects will significantly increase the demand for reactive power and ramping flexibility"; further, "as the penetration of variable generation increases, maintaining voltage stability can be more challenging." The com menters said these demands, which must be met to ensure the reliable integration of variable renewable resources into the grid, are met only by fossil-based resources. The commenters said the proposed guidelines could prohibit the building of new natural gas-based units in some sta tes because the emission rate goals are less than the emission rate to permit these units under CAA section 111(b). The commenters said under the alternate approaches to calculating state goals, many state goals would become470

increasingly more stringent, further limiting the f uture construction of new units to support renewables integration.

Commenters stated [Building Block 2 Reductions Comp ared to Reductions Achieved by Building Blocks 3 and 4] while these comments raise significant concerns about the level of redispatch that is possible under Building Block 2, t o the extent that NGCC units are able to provide the same essential reliability services tha t are provided by existing coal-based units, it is appropriate to assume that generation from existing NGCCs could replace generation from coalbased steam EGUs in the proposed goal computation e quation. The commenters said because RE and EE cannot provide the same services, EPA should not use a goal-setting calculation that assumes that these measures can replace fossil MWh on a one-for-one basis; for example, NGCC units do not have the same level of reliability as coal-fired units because onsite fuel storage is not available. The commenters said it is appropriate to have different approaches to the different Building Blocks when calculating the state goals, a s this recognizes the role that different measures can play in the reliable operation of the interconnected power system.

Commenters stated the proposed approach to the nume ric goal calculation is inconsistent with how utilities forecast load; as in the proposed num eric calculation, incremental RE and EE serve to meet (or avoid) load growth, avoiding new genera tion and the related emissions. The
commenters said incremental RE and EE are used to r educe future demand and emissions, not typically reduce historic demand and emissions.

Commenters stated essentially, U.S. EPA describes a calculation procedure that sums 2012 fossil generation (coal, natural gas combined cycled (NGCC ), under construction NGCC, oil/gas steam and other), then subtracts from that the generation expected in 2029 from RE, EE and under construction nuclear, and then adds to that total 2 029 generation from Building Block 3 (RE, nuclear) and Building Block 4 (EE). [TSD, Page 5, 6 ] This approach does not account for growth of any kind (with the exception of U.S. EPA's overl y ambitious RE and EE mandates). The commenters said it is apparent that this approach i gnores the multitude of projections by experts in the field, including the Energy Information Admi nistration (EIA), the North American Electric Reliability Corporation (NERC), and the various Reg ional Transmission Organizations (RTO); electricity demand will increase, and generation wi ll necessarily increase to meet this growing demand. The commenters said this TSD suggests that U.S. EPA is placing a limit on generation. Indeed, the document itself states, "the first conc ept is to recognize that the deployment of BSER measures will reduce generation from affected fossi l fuel fired sources." The commenters said U.S. EPA cannot legally limit electricity generatio n and usage under a Section 111(d) regulation.

Commenters stated EPA issued a Notice of Data Avail ability ("NODA") on October 28, 2014; the NODA seeks comment on a variety of proposed cha nges to the states "goal" setting without providing a revised rule or the associated time to fully comment on the proposed changes. The commenters said in the case of Wyoming, these poten tial "changes" may result in a significant further increase in the stringency of any final Wyo ming and Montana compliance obligation, and with any increase to the stringency of the standard comes the incremental and unavoidable costs of compliance.

Commenters were concerned about the significant imp act of the very recent additional EPA proposal for creating a minimum value of re-dispatc hed coal to non-existent NGCC power plants471

or to co-firing natural gas in existing coal-fueled boilers; further, EPA is proposing another potential means for increasing the stringency of a state "goal" by adding incremental renewable energy and energy efficiency to the "goal" which re places coal-fueled generation pro-rata or prioritizes the re-dispatch of coal-fueled generati on based on historic emissions. Commenters
said in addition to the issues noted above as to th e fundamental concerns associated with the Proposed Rule, EPA's NODA also discusses that the a nticipated emission rate reductions calculated under building block 2 are inconsistent from state to state because certain states have
little or no NGCC affected EGUs. Commenters said EP A then asserts that one way to address this discrepancy would be to require a floor on the amount of re-dispatch in each state; finally, EPA argues that for states with little or no existi ng NGCC units this floor could be achieved through the construction and utilization of new NGC C units. Commenters said there is nothing in the text of CAA 111(d) that even remotely suggests that EPA has the authority to set limits or require emission reductions for existing sources pr emised on the construction of new sources nor does EPA have the authority to require re-dispatch; accordingly, EPA is precluded from applying this approach in any final rule.

Commenters stated in the NODA, EPA briefly discusse s the concept of using a regional approach to the redispatch of coal generation to na tural gas generation under Building Block 2; EPA provides absolutely no specifics on how such a regional approach would work, what the regions would be, how the approach would impact ind ividual state goals, or how regional NGCC
resources would be allocated in the context of indi vidual state compliance determinations. The commenters said given the lack of detail (or suppor t) in the NODA, the commenters cannot meaningfully comment on this concept; because EPA l acks the authority to require re-dispatch, it is precluded from setting standards in any final ru le utilizing this approach.

Commenters objected to the lateness of the NODA-rai sed issues in the comment period for the Proposed Rule. The commenters said it is especially concerning that EPA would seek comment on changing the goal without providing a new propos ed rule; instead, EPA merely states "this adjustment to goal-setting formula would yield more stringent state goals."

Commenters stated to modify the calculations to fur ther reduce existing generation in the manner suggested by the NODA would be tantamount to dedica ting all assumed incremental renewable generation and assumed incremental energy efficienc y to displace generation from EGUs identified by EPA; thus, to the extent that load gr owth continues, emissions would simply increase from new generation resources and existing generation that the EPA has not identified as affected EGUs; however, the June 2014 proposed e quation for establishing Mandatory Goals results in a megawatt-hour denominator for each Sta te that is greater than the associated 2012 baseline generation from the EGUs; as such, the Jun e 2014 approach effectively assumes that the resources reflected in the building blocks are serv ing existing load as well as some level of load growth.

Commenters stated further reducing generation from EGUs in the manner suggested by the NODA would, as a practical matter, result in cuts t o existing generation much more drastic than anything contemplated by the Proposed Regulation. T he commenters said this scenario would greatly exacerbate cost and reliability concerns. T he commenters said in Virginia's case, the adjustment suggested by the NODA would produce Mand atory Goals that effectively represent 52% (interim) and 75% (final) reductions in the 201 2 levels of EGU 9 generation. The472

commenters said such reductions obviously were not evaluated in any reliability analysis comparable to what federal law requires because the y would undoubtedly produce capacity
reserve deficiencies and the need for substantial t ransmission reinforcements, among other reliability concerns. Indeed, reductions of this ma gnitude are not contemplated in any of the analyses, technical support documents, or other inf ormation accompanying the Proposed Regulation. The commenters said such reductions wou ld cut into the combined-cycle generation fleet in Virginia that EPA assumes would increase - not decrease - production as a result of the Clean Power Plan. The commenters urged the EPA to n ot modify its goal-setting formula in such
a manner to effect further reductions in the Mandat ory Goals.

Commenters stated under this NODA, U.S. EPA is taki ng it a step further by now suggesting that co-firing of natural gas might be a practical optio n for consideration in goal setting. The
commenters said U.S. EPA bases this new considerati on on stakeholder's identifying the cobenefits of: reducing NOx, SO2, particulate and haz ardous air pollutant emissions; providing additional operational flexibility for coal-fired u nits regularly used at less than full load or that cycle; allowing quick ramp-up and down providing an opportunity to take advantage of low fuel prices; allowing additional time for implementation of other building blocks that take more time; and low capital investment. The commenters said thi s suggestion faces the same problem as this entire proposal in that it is not practical, feasib le or technically achievable to require coal-fired EGUs to use natural gas when there may not even be sufficient supply. The commenters said this
cannot be a serious consideration when U.S. EPA has not even performed an analysis of technical feasibility or subsequent impacts on syst em reliability and natural gas costs. The
commenters said U.S. EPA cannot use the co-benefit of reducing pollutants unrelated to the pollutant addressed by this proposed regulation, CO 2, as justification for establishing a BSER. The commenters said if U.S. EPA is going to serious ly consider a co-firing approach, it must abide by the APA and conduct a detailed analysis an d re-propose this element.

Commenters stated any further downward adjustment i n the emissions rate goals will intensify reliability and excessive cost impacts of the CPP; EPA cannot legally lower emissions rate goals any further.

Commenters stated the EPA offers several alternativ es in establishing the BSER for each state
and solicits comments on all of them. The commenter s said the EPA lays out several options for establishing the BSER using combinations of the bui lding blocks. The commenters strongly opposed the option of setting the BSER as only the first two building blocks55 (p.34836), because it would exclude the potential for renewabl es and efficiency to deliver significantly greater emissions reductions at reasonable cost.

Commenters stated the impact of the NODA's two prop osed calculations-both of which require states to reduce coal-based generation in proportio n to incremental gains in renewable energybased generation and incremental emission avoidance supplied by increased energy efficiencywould be to reduce the amount of coal-fired generat ion states can rely on to meet electricity demand. Commenters said as with its proposed modifi cation to Building Block 2, the NODA broadens the reach of its compulsory CO2 emission r eduction provisions in a way that compels a fundamental redesign of the electric generation sys tem in North Dakota. Commenters said in a state experiencing significant power demand growth, a compulsory reduction in any fossil-fueled power generation, whether it be coal or natural gas , will necessarily assure decreased system473

reliability. Commenters said the tremendous amount of development taking place in western North Dakota Bakken oil fields is expected to incre ase power demand by more than 2,000 MW over the next several years. See Kadrmas, Lee and J ackson, Inc., Power Forecast 2012: Williston
Basin Oil and Gas Related Electrical Load Growth Fo recast 18-19 (October 2012). Commenters said reducing power generation, as proposed by EPA, is exactly the wrong thing to do and would place a severe stress on growth and development in the state.

Comment 7: NODA; adds more confusion; The Public Cannot Reason ably Comment on

Response 7: The EPA appreciates the public comments received on the NODA. The EPA is adopting the alternative approach from the proposal , modified as described in the NODA. See sections V.A., V.D., V.E, and VI of the final rule preamble of the CPP and the CO2 Emission Performance Rate and Goal Computation TSD for CPP F inal Rule supporting the final CPP for

more information.

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

Commenters stated EPA has frustrated any ability of states to make an informed choice in response to the Proposed Rule; on October 28, 2014, EPA released a Notice of Data Availability (NODA) for the Proposed Rule, which introduces subs tantial amounts of uncertainty into the Proposed Rule. The commenters said the press releas e accompanying the document states that such notices "do not change a proposal." The commen ters said the NODA opens up the possibility of measuring attainment regionally rath er than statewide. The commenters said the Proposed Rule itself was quite clear that emissions would be measured statewide; such lastminute shifts only worsen the situation for states, which cannot even plan ahead to know whether they will be measured on their own or, for example, combined with their neighbors. The commenters said indeed, the NODA acknowledges this dilemma and explains that EPA has no good answer for the problem of states isolated by r egional pacts. The commenters said EPA
solicits comments on how the BSER is calculated for each state, tacitly acknowledging that its numbers were calculated badly, but remains notably silent on the mandatory nature of the BSER; now state goals are left uncertain until the final rule is promulgated - at which point they will be
set in stone.

Commenters stated in a belated response to widespre ad criticism for the flaws in the Proposed Rule, EPA released a Notice of Data Availability (N ODA) for the Proposed Rule (Docket No. EPA-HQOAR- 2013-0602; FRL-9918-53-OAR; RIN 2060-AR3 3) on October 28, 2014, soliciting comments on additional matters included in the Proposed Rule. The commenters said the press release accompanying the document states that such notices "do not change a proposal."
The commenters said the NODA introduces substantial amounts of uncertainty into the Proposed Rules, for example opening up the possibility of me asuring attainment regionally rather than statewide.175 The Proposed Rule itself was quite cl ear that emissions would be measured statewide.176 Such last-minute shifts only worsen t he situation for states, who cannot even plan ahead to know whether they will be measured on thei r own or, for example, combined with their neighbors. The commenters said indeed, the NODA ack nowledges this dilemma and explains that EPA has no good answer for the problem of "Bal kanization": the prospect of states isolated474

by regional pacts. The commenters said an individua l state would be forced into a pact with other states or regulated on its own while other states c ombine with neighbors to average out their
emissions. The commenters said the NODA does not at any point change the binding nature of the state goal determined by EPA. The commenters sa id EPA solicits comments on how the BSER is calculated for each state, tacitly acknowle dging that its numbers were calculated poorly, but remains notably silent on the mandatory nature of the BSER; now state goals are left uncertain until the final rule is promulgated - at which point they will be set in stone.

Commenters stated EPA has requested comment on nume rous alternative approaches to setting BSER, computing state goals, and implementing state plans in both the October 2014 NODA and the Proposed Rule itself. The commenters said the s heer number of alternatives and the uncertainty involved in predicting how each alterna tive - both alone and in combination with
other alternatives - would affect states and EGU ow ners is more reminiscent of an advanced notice of proposed rulemaking than a proposed rule. The commenters said more importantly, the proposal of all of these alternatives - some of whi ch could significantly affect state goals and EGU obligations - fails to provide sufficient notic e to the public to enable commenters to provide meaningful comments. The commenters said unless EPA provides additional notice of the potential impact of these alternatives and their ef fect on stakeholders, EPA should not adopt these alternatives; to do so would violate the spir it of CAA section 307(d), which requires EPA to specify the basis of its decisions in order to p rovide the public with sufficient notice and opportunity to comment.

Commenters stated in the event the NODA approach is pursued, the commenters urged the EPA to provide stakeholders the opportunity to comment on this issue.

Commenters stated the issues presented in the NODA have far ranging implications; in fact, EPA acknowledges that the various alternative approache s the Agency is now contemplating in the NODA could fundamentally alter the proposed emissio n guidelines and lead to more stringent goals for all or some states. The commenters said E PA also recognizes that many issues in the NODA - and the four Building Blocks generally - "in teract with each other." The commenters said until EPA provides greater certainty on its pr eferred approach, states and impacted stakeholders cannot determine the ultimate stringen cy of a state's final goal; because of this fundamental ambiguity, EPA cannot finalize any of t he changes discussed in this NODA without issuing a supplemental regulatory proposal that cla rifies the Agency's position and provides the basis and purpose for its approach as required by S ection 307(d)(3) and the APA. The commenters added in addition, the myriad of questio ns contained in the NODA confirms that
EPA has not collected sufficient technical data to analyze the impact of the proposed guidelines; it is improper for stakeholders to comment on incom plete concepts that are devoid of contextual background and contain vague set of criteria.

Commenters acknowledged and appreciated the issuanc e of the Notice of Data Availability (NODA) issued October 28, 2014, and the Notice of A dditional Information Regarding the
translation of Emission Rate-Based CO2 Goals to Mas s-Based Equivalents issued November 6, 2014. While the commenters will be addressing some of the recently-released information, given the late issuance of the new information against th e comment deadline of December 1, 2014,
commenters stated the comments on this additional i nformation should be considered only preliminary since it is not feasible to understand all of the potential impacts of this latest475

information on the State of Nevada's goal or how it may impact companies' resource plans going forward. The commenters further noted that subseque nt notices issued after the initial proposal seem to indicate that the Agency may be considering recalculation of state baselines and reduction targets, based in part on the outcome of stakeholder discussions conducted during the initial public comment period and/or other consider ations; if the Clean Power Plan proposal were to be altered in any significant way and/or the sta te goals were to be materially different than the original proposal, then the commenters respectfully requested a subsequent review and public comment period be offered after such changes are in corporated.

Commenters stated EPA's last-minute NODA only adds to the confusion and fails to remedy the flaws in EPA's original proposal. The commenters sa id in the NODA, published October 30, 2014, EPA describes some selected stakeholder feedb ack it has received on the original proposal and solicits additional comment on selected topics; in fact, the NODA is not simply a "notice" of available data; it suggests substantive changes to EPA's approach. The commenters said indeed, EPA acknowledges that many of the concepts in the N ODA would affect the stringency of the rule; however, EPA does not provide a quantificatio n of how the state goals would change nor does it provide information indicating that EPA has evaluated the feasibility of the revisions, such as through modeling.

Commenters stated EPA is coming to grips with the m any infirmities and fundamental flaws in its original existing source proposal and attemptin g to shore up its rule before finalizing; but the NODA only scratches the surface of EPA's errors and fails to address at all the fundamental
flaws in the rule. The commenters said to make matt ers worse, the NODA suggests substantive changes but does not provide any new proposal or ch anges to its original proposal - only a series of questions about topics that EPA apparently did n ot consider before and has no coherent view on how to proceed now. The commenters said the timi ng of the NODA is also prejudicial to the vast majority of stakeholders other than perhaps th e selected stakeholders that EPA is choosing to address. The commenters said EPA is suggesting s ubstantive changes to the rule but only providing 32 days to comment, a clearly insufficien t time to fully review and develop thoughtful and meaningful responses to the new concepts and da ta. The commenters said the NODA also
necessitates a further extension of the comment dea dline on the original proposal so that commenters can attempt to understand how the NODA w ould affect the comments already under development.

Commenters stated even in the limited time availabl e, EPA's misconceptions are apparent in the NODA. The commenters said the NODA provides discuss ion and requests comment around three specific areas: the 2020-2029 glide path, cer tain aspects of the building blocks, and implementation of the goal-setting equation; but wi thout sufficient information about the how EPA would revise its goal calculation and any analy sis of how these undefined changes would affect electricity generation, grid reliability, an d cost, the commenters can only provide limited general comments regarding these options. The comme nters said should EPA decide to alter its original proposal in any way based on information i n the NODA, it is required by the CAA to issue a new proposal and seek public comment.

Commenters stated U.S. EPA has yet to provide stake holders with a legitimate and workable approach that stakeholders can provide meaningful c omment on regarding a rate-to-mass476

conversion. The commenters said U.S. EPA must re-pr opose an approach that addresses stakeholder concerns and questions including the le gality of the entire approach.

Commenters expected that EPA will make substantial changes to the proposal as necessary based on data and technical corrections and in response t o public comments. The commenters said states and other stakeholders deserve the opportuni ty for further review and comment after significant changes, such as adjusted goals and fun damental changes to the building blocks methodology and framework of the rule. The commente rs strongly suggested that EPA issue a Notice of Data Availability (NODA), or multiple not ices as needed, that provides any corrections and the adjusted goals for review and comment sever al months prior to rule finalization.

Commenters stated EPA's NODA seeks comment on a var iety of proposed changes to the states "goal" setting without providing a revised rule or the associated time to fully comment on the proposed changes; in the case of Colorado, these po tential "changes" may result in a significant further increase in the stringency of any final Col orado compliance obligation, and with any increase to the stringency of the standard comes th e incremental and unavoidable costs of compliance.

Commenters were concerned about the significant imp act of the very recent additional EPA proposal for creating a minimum value of re-dispatc hed coal to non-existent NGCC power plants or to co-firing natural gas in existing coal-fired boilers. The commenters said further, EPA is proposing another potential means for increasing th e stringency of a state "goal" by adding incremental renewable energy and EE to the "goal" w hich replaces fossil generation pro-rata or prioritizes the re-dispatch of fossil generation ba sed on historic emissions; in addition to these substantive infirmities in the NODA, the commenters objected to the lateness of the NODAraised issues in the comment period for the Propose d Rule. The commenters said it is especially concerning that EPA would seek comment on changing the goal without providing a new proposed rule; instead, EPA merely states "this adj ustment to goal-setting formula would yield more stringent state goals."

Comment 8: NODA; EPA solicited comments; responses

Response 8: The EPA is revising the interim goal dates and adop ting the alternative approach from the proposal, modified as described in the NOD A. See sections I.A., V.A., V.D., V.E, and VI of the final rule preamble of the CPP and the CO 2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the f inal CPP for more information.

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

Commenters stated in the NODA published on October 28, 2014, EPA solicited comment on a variety of issues in addition to commenting on the June 18, 2014 proposal regarding carbon emission guidelines for EGU units. The commenters p rovided comment in the paragraphs below on issues brought forth in the NODA.477

Commenters stated regarding Building Block 2 and NG CC re-distribution, EPA solicited
comment on whether to establish some minimum value as a floor for the amount of generation shift for purposes of Building Block 2; EPA also so licited comment on what this value should be, and how this approach (to add a minimum require ment for states that currently have little or no NGCC capacity) should relate to the proposed app roach in the June 18, 2014 proposal. The
commenters did not believe there should be a minimu m value as a floor regarding a generation shift of current fossil fuel generation to NGCC; th is obstructs flexibility that EPA has championed in the June proposal, and establishing a NGCC minimum for Wyoming is beyond the scope and jurisdiction of any regulatory author ity under Section 111(d) of the CAA. The commenters believed if EPA is going to continue wit h the methodology of Building Block 2, EPA should only use the output of CPGS (95 MW) in t his step of the proposal.

Commenters stated EPA requested comment on various issues regarding the costs and potential benefits of co-firing natural gas at existing coal plants. The commenters believed requiring any co-firing at any existing coal plants is another ob struction to both innovation and flexibility in meeting the proposed requirements of this rule.

Commenters stated EPA also requested comment and ju stification on several assumptions regarding a new, regionalized approach for RE gener ation that has been suggested in other comments. The commenters believed it is impractical to justify a change to regional groupings when the data used for individual states is in ques tion; additionally, the commenters were not able to comment on other stakeholder proposals that involve Wyoming, as such proposals will not be available until after the comment period. Th erefore, the commenters did not have the best available data to accurately determine any potentia l regional groupings in just over a month, when EPA has had over a year to develop and hone th e regional groupings utilized in this proposal. The commenters said to further comment on other potential groupings that EPA is seeking comment on, the commenters believed that an y state which becomes "isolated," if a new regional grouping is accepted, should be allowed to stay isolated given the unique characteristics and challenges that led the state to not be grouped in the first place. The commenters said in continuing the regional grouping of states, the com menter believe Wyoming should not be grouped with other states for purposes of NGCC, RE development, or a combination thereof, due to Wyoming's unique energy portfolio, current infra structure, and land ownership issues. The commenters believed any change to the regional grou ping of states is inappropriate and only adds further obstacles to state flexibility. The co mmenters said EPA should focus on ensuring the NGCC and RE potential in each individual state is c orrect.

Commenters believed any changes to the current BSER structure in the original proposal requires this proposal to be re-proposed for additi onal comment; EPA may not ask for additional comments on alternate methodologies so late in the commenting period without allowing additional time for a thorough evaluation. The comm enters believed there should be more time to respond to these additional requests for comment, w hich stem from earlier comments by other stakeholders responding to this proposed rule; to a sk for this quantity of comments on alternate proposals at this time, for both the Proposed Rule and the NODA, suggest that EPA has not adequately defined BSER; thus, EPA must re-propose this rule after reviewing all the comments received by December 1, 2014 for this rule and the supporting literature therein.478

Commenters stated EPA issued a Notice of Data Avail ability ("NODA") on October 28, 2014; the NODA seeks comment on a variety of proposed cha nges to the states "goal" setting without providing a revised rule or the associated time to fully comment on the proposed changes. The commenters said in the case of North Dakota, these potential "changes" may result in a significant further increase in the stringency of a ny final North Dakota compliance obligation, and with any increase to the stringency of the stan dard comes the incremental and unavoidable costs of compliance.

The commenters were concerned about the significant impact of the very recent additional EPA proposal for creating a minimum value of redispatch ed coal to non-existent NGCC power plants or to co-firing natural gas in existing coal-fired boilers. The commenters said EPA is proposing another potential means for increasing the stringen cy of a state "goal" by adding incremental renewable energy and energy efficiency to the "goal " which replaces fossil generation pro rata or prioritizes the re-dispatch of fossil generation ba sed on historic emissions. In addition to these substantive infirmities in the NODA, the commenters objected to the lateness of the NODAraised issues in the comment period for the Propose d Rule. The commenters said it is especially concerning that EPA would seek comment on changing the goal without providing a new proposed rule. Instead, EPA merely states "this adj ustment to goal-setting formula would yield more stringent state goals."

The commenters stated their position on issues rais ed by the NODA are:

1. EPA should eliminate the interim goal.

2. lf EPA retains an interim goal, EPA should allow North Dakota credit for early adoption of renewable energy in demonstrating compl iance with the interim goal.

3. EPA should adjust the interim goal to account fo r the realities associated with increased utilization of natural gas generation.

4. Any final rule must allow states to consider rem aining useful life and other factors in applying standards of performance to any particular source.

5. EPA has not undertaken the technical or economic analyses required to adjust the Building Block 3 and 4 methodologies.

6. EPA cannot reply on an unidentified "regional ap proach" to calculating renewable energy requirements in any final rule.

7. EPA lacks the legal authority to establish emiss ion rate requirements premised on the redispatch of coal-fired generation to new natural gas combined cycle EGUs.

8. EPA has failed to adequately demonstrate that co -firing with natural gas at existing coal-fired EGUs represents BSER; the fact that no l ignite-fired units in North Dakota have co-fired with natural gas, and, to our knowled ge, no lignite-fired plants anywhere in the U.S. have co-fired with natural gas, indicates that for the significant subcategory of lignite-fired plants, co-firing with natural gas ha s particularly not been "adequately
demonstrated" to be considered BSER.479

9. EPA cannot proceed with utilizing a regional app roach for Building Block 2 without providing greater specificity and undertaking the r equired technical and economic analyses.

10. The commenters believed EPA must provide greate r specificity regarding the impacts of utilizing baseline data from 2010 and 2011 on in dividual state requirements

Comment 9: NODA - BB 3 & 4 Calculation

Response 9: The EPA is adopting the alternative approach from t he proposal, modified as described in the NODA. See sections V.A., V.D., V. E, and VI of the final rule preamble of the

CPP and the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP for more information.

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

Commenters stated the NODA requests comment on how the goal-setting calculation should be implemented with respect to the application of buil ding blocks 3 and 4; the USEPA proposes either replacing 2012 fossil generation on a pro ra ta basis or prioritizing replacement of 2012 coal-fired generation for goal setting. The comment ers said both approaches assume that incremental renewable energy generation and generat ion avoided through energy efficiency measures are equivalent to fossil generation; howev er, neither RE nor EE can be used to meet baseload requirements because of their variable nat ure and can only supplement existing fossil fuel-fired generation. Therefore, the commenters su pported the use of a goal-setting equation that applies RE and EE to the denominator.

Commenters did not recommend that EPA change the ap proach used to estimate a state's RE for goal setting, other than making the refinements in the methodology described previously in these

comments.

Commenters added EPA's approach to including Buildi ng Blocks 3 and 4 in the goal calculation as proposed on June 18, 2014, is more appropriate t han the alternatives proposed in the NODA. The commenters said as EPA indicates, its original approach allows states to use EE and RE to offset load growth that may result in increased usa ge of the affected EGUs. The commenters said in Arizona, which is a growing state with populatio n expected to grow by 36 percent from 2012 to 2030, accounting for such growth is important. T he commenters said since EPA has not provided for any other allowance for load growth in the goal calculation, the commenters believed that EPA's original approach at least provides for some level of growth in the goal setting.

Commenters stated it would be inappropriate to adju st the EPA's proposed goal calculation to assume the displacement of fossil generation with e nergy provided by Blocks 3 and 4. The commenters said first, EPA cannot assume that varia ble renewable generation and energy efficiency have equal capability in replacing base load power resources; second, this poses480

significant risk to reliability because of the role that fossil-fuel generation supports in the interconnected bulk power system including: resourc e adequacy; load balancing, and supporting ancillary grid services for voltage and frequency r esponse; third, the EPA has not demonstrated that this qualifies as BSER, let alone is technical ly feasible. The commenters said for these reasons, it would not be appropriate to treat Block 2 the same as Blocks 3 and 4; therefore, EPA's proposed approach in the NODA to calculate state go als should not assume incremental renewables and energy efficiency replace fossil gen eration using either methodology (pro-rata or prioritization).

Commenters stated in the October 2014 NODA, the EP A requests comment on an alternative approach to calculating state goals in which genera tion from incremental EE and RE (in Building Blocks Three and Four) would be assumed to displace historic fossil-fueled generation. The commenters said this revised approach would make st ate goals significantly more stringent; the EPA should not adopt this approach because it would not reflect the emission reductions that are actually achievable through application of the BSER

.
Commenters stated under the EPA's regulations, stat e emission guidelines must "reflect" the application of the BSER. The commenters interpreted this requirement to mean that the quantification of state emission goals must accurat ely reflect the degree of emission reductions from existing EGUs that can be achieved in reality through application of the BSER Building Blocks. The commenters said in practice, the degree to which Building Blocks Two, Three, and Four can reduce emissions at existing fossil-fueled generating units will depend on a number of factors, including regional load growth, the attrib utes of the existing electricity generation and transmission system, and the attributes of each par ticular Building Block measure.

Commenters stated for example, if electric load inc reases significantly in the future due to economic growth or new technologies (such as electr ic vehicles), the addition of incremental NGCC or RE generation or implementation of addition al EE savings could have little or no effect on emissions from existing EGUs-especially i f load growth equals or exceeds the additional expected generation from the BSER Buildi ng Blocks; on the other hand, where the proposed increases in NGCC, RE, nuclear, and EE gen eration exceed expected system-wide electrical demand, it is reasonable to assume that some existing fossil generation will be reduced below historic levels so that electrical supply and demand remain in balance.

Commenters stated the system's attributes will also have a significant effect on the ability of the Building Blocks to reduce emissions; for example, b ecause electricity markets operate across numerous states, the addition of NGCC or RE generat ion in one state may lead to reduced generation in a neighboring state, while having no impact on generation in the "home" state; similarly, the addition of new wind or solar genera tion or EE could displace the need for additional generation from simple cycle combustion turbines (which generally are not regulated by the Proposed Rule), rather than affected coal-fi red or NGCC EGUs.

Commenters stated thus, the ability of each Buildin g Block to reduce emissions from affected EGUs is highly dependent on the attributes of the s ystem in which it operates, the timing, location, and characteristics of the Building Block measure, and other factors such as weather, technology, and economic growth; rather than attemp ting to project or quantify each of these variables, the EPA's initial approach to quantifyin g what emission reductions may be achievable481

reflects a reasonable assumption that future increa ses in NGCC generation will tend to reduce coal-fired emissions below baseline, whereas increm ental RE and EE will, on average, enable the generating system to meet future increases in elect ricity demand, but will not significantly reduce the emissions of existing EGUs below historic level s. The commenters said in contrast, EPA's proposal to change the goal computation methodology in the October 2014 NODA would reflect the unrealistic assumption that every MWh of added RE or EE can displace an equivalent amount of existing fossil generation in the state. The commenters said this assumption is unlikely to be reflected in states' actual emission performa nce. The commenters added it would lead to the arguably undesirable result that states like Washin gton and Idaho would be expected to achieve an emission rate of 0 lbs. CO2/MWh by 2030. The com menters said the EPA should retain its original proposal for quantifying the expected emis sion reductions from application of the four Building Blocks, and should not adopt the alternati ve discussed in the October 2014 NODA.

Commenters stated EPA should not implement either of the alternative proposals for changing the accounting of building blocks #3 and #4 mention ed in Sections III.C.1.a and III.C.1.b of the October NODA. The commenters said EPA's primary pro posal in the June draft rule is an oversimplification of the electricity sector becaus e it implicitly assumed that increased renewable electricity and energy efficiency generation are us ed to offset future increases in electricity generation from existing fossil generating units; h owever, it's a superior option to the alternatives proposed in Section III.C.1 of the October NODA.

Commenters stated it would be a mistake for EPA to interpret increases in renewable energy and energy efficiency generation as decreases in genera tion from existing fossil generation for the setting of state carbon emission rate targets witho ut also incorporating electricity generation growth into the model; there is little proof that e ither renewable electricity generation or energy efficiency reduces generation from existing power p lants; instead, both resources are more likely to avoid increases in electricity generation from f ossil fuel-fired power plants.

Commenters stated it would be a gross oversimplific ation of the electricity sector to assume that new renewable energy and energy efficiency generati on can offset fossil generation on a one-toone basis because of the different characteristics of the resources; for instance, most renewable energy generation is variable depending upon the na tural resource being utilized and is not dispatchable, limiting its ability to completely re place most coal and natural gas combined cycle generation that operates as baseload electricity ge neration. The commenters said similarly, the impacts of energy efficiency are typically felt dif ferently throughout the day, depending upon the type of efficiency measure implemented and when dur ing the day and year it has the most impact on electricity consumption.

Commenters stated using either alternative proposal from Section III.C.1 would require EPA to tailor assumptions for each state to anticipate wha t percentage of future electricity consumption growth would be met from existing electricity gener ating units in a business as usual scenario, which would vary from state to state depending upon a number of factors; EPA would also need to develop state-specific assumptions for how much renewable energy and energy efficiency generation would be able to offset fossil generatio n in the state and/or region. The commenters said the end result would be a significantly more c omplex methodology for determining a state's interim and final emission rate targets that would likely not be significantly different from the draft rule targets nor would they be any better an approximation of the impact of the proposed482

Clean Power Plan for existing generating units than the draft rule. The commenters said EPA should stick to the simple methodology used in the draft rule for how to treat building blocks 3
and 4.

Commenters stated in the October 28 NODA, EPA reque sts comments on approaches for revising the state goal-setting formula to address the concern that incremental renewable energy and energy efficiency do not replace existing fossi l generation in the building block calculation; some EPA stakeholders claim that this approach woul d more closely align incremental renewable energy and energy efficiency with increas ed natural gas dispatch under Building Block 2 that replaces existing coal generation. The commenters said in other words, EPA is requesting comments on approaches that would not ju st add incremental renewable energy and energy efficiency to the denominator of the state g oal-setting formula, but that would simultaneously offset fossil steam generation and e missions from the denominator of the formula. The commenters said this proposed approach would reduce emissions in the numerator without adding (or adding only a portion) of the in cremental renewable energy or energy efficiency to the denominator. Commenters opposed t his type of approach to calculating state goals for incremental renewable energy, because new renewable energy sources (and energy efficiency) compete against new generation to accom modate load growth (i.e. incremental generation) and belongs only in the denominator of the goal-setting equation without a corresponding reduction in the emissions from the n umerator. The commenters said if there were emissions associated with new incremental generatio n from one of the building blocks, then these would be included in the numerator; however, emissions from new fossil generation (i.e. from new natural gas plants) would be subject to th e Clean Air Act Section 111(b) standards for
new sources and would therefore fall outside the ca lculation methodology for determining a state's emission reduction goal using the best syst em of emission reduction for existing sources. The commenters said essentially, incremental renewa ble energy and energy efficiency offset incremental load growth and emissions that would ot herwise be addressed by new fossil generation plants, whose emissions standards would fall outside the authority of the proposed rule for existing sources. The commenters said appl ying this rationale would allow only the increased utilization of existing natural gas gener ation to displace other existing fossil generation in the building block formula, which is how EPA has constructed the goal-setting building blocks in the June 2014 proposed rule.

Commenters stated EPA should assume that incrementa l RE and EE first displace growth in fossil generation and then replace generation from either NGCC units or from the fossil fleet on a pro rata basis, if EPA assumes these incremental me asures displace fossil generation at all. The commenters said EPA solicits comment on approaches to apply generation from building blocks 3 and 4 to reduce fossil generation in the goal cal culation; they discuss approaches to displace either historical fossil generation on a pro rata b asis or prioritizing fossil steam generation and
also ask whether incremental RE and EE should first be assumed to displace future growth in fossil generation. The commenters said if EPA assum es that incremental RE and EE displaces fossil generation in the goal calculation formula, they must assume that this incremental generation would first displace growth in fossil en ergy sources (i.e., new fossil generation) before displacing any existing generation. The comm enters said an alternative means of determining how RE and EE displaces generation is t o model these actions along with the other building blocks; a modeling exercise will show how actions offset generation though the entire electric supply system. The commenters said if EPA assumes that these incremental measures483

(RE and EE) displace fossil generation, they should be assumed to do so in a pro rata (i.e., proportional) manner or be assumed to replace NGCC generation. The commenters said it is completely unrealistic to assume these measures wou ld preferentially displace coal steam generation; RE generation is inherently intermitten t and tends to displace other, more easily dispatchable electricity sources such as NGCC units instead of baseload coal power. The
commenters said EPA often assumes that NGCC units a re the marginal units on the grid, so it is more likely that incremental RE and EE would displa ce these units; at the very least, EPA should assume that incremental RE and EE displace fossil g eneration on a pro rata basis. The commenters added if EPA uses any calculations of fu ture growth rates in its goal-setting methodology, they should use growth rates that are derived from the ISOs and RTOs, rather than the regional estimates from EIA. The commenters sai d MISO, the Midcontinent ISO that includes Wisconsin, uses a growth rate of 0.8% per year for states in the ISO, whereas EPA used a much lower estimate of 0.40% per year based on EI A's estimates for the MRO East region. The commenters said the ISOs and RTOs are in the best p osition to forecast future growth, and EPA should rely on them for any growth rates used. The commenters said this question also highlights the importance of EPA conducting a system-wide anal ysis of the impacts of applying all of the building blocks together rather than the piecemeal analysis they have done.

Commenters stated EPA seeks comment is how Building Blocks 3 and 4 are treated in setting the state emission goals in the NODA. The commenters sa id Building Block 3 involves EPA's treatment and assumptions regarding RE and nuclear energy generation; in particular, EPA projects that states can achieve a certain level of RE over the 2020-2030 time frame. The commenters said in the Proposed Rule, electricity g enerated by RE is added to a state's baseline (2012) generation level; this number is then divide d into the state's GHG emissions to produce an emission rate goal, expressed in lbs CO2/MWh. The c ommenters said as more RE generation is added to the generation (denominator), with no chan ge to the emissions (numerator), the effect is to make the emission rate goal more stringent. The commenters said under Building Block 4, EE is treated similarly; as energy efficiency measures are installed, EPA projects that the measures reduce electric consumption by some amount; that re duced consumption (MWh) similarly is added to the denominator, making the emission rate goal more stringent.

Commenters stated EPA notes that it had received co mment from some stakeholders suggesting that EPA should adjust the numerator and denominato r downward based on the assumption that the proposed RE and EE activities will result in a decrease in generation and emissions from existing fossil units; EPA also seeks comment on wh ether EPA should (1) presume that coalfired generation is displaced first, or (2) use an average emission level based on all fossil generation; the effect of either would be to make b oth interim and final state emission rate goals substantially more stringent.

Commenters objected to this approach; the approach simply is not based in reality, over estimates the effect of EE and RE on emissions, and completely ignores load growth on electric systems. The commenters said EPA has set unrealisti c RE goals; EPA projects an RE growth rate for Mississippi, Louisiana, and Arkansas based on a regional average that ignores the lack of RE potential in these states. The commenters said in t he Proposed Rule, EPA incorrectly has stated that it expects there to be no increase in electric demand as a result of the EE programs that EPA effectively is mandating. The commenters have been implementing EE programs in some of its states for many years and, contrary to EPA's assump tion, load and electric demand continue to484

increase. The commenters said assuming that the EE programs will reduce existing fossil generation is simply wrong; at most, EE will slow t he growth in electricity demand over the next decades. The commenters said as for RE, EPA's proje ctions of RE potential are dramatically overstated. The commenters stated simply do not hav e such RE potential; thus, for EPA to presume that hypothetical (but unattainable) RE gen eration will reduce existing fossil generation would be arbitrary and capricious.

Commenters stated EPA seeks comment on whether it s hould presume that emissions from coalfired generation should be preferentially used when adjusting the numerator or whether some weighted average of all fossil emissions should be used. The commenters said EPA should do neither; however, if EPA elects to adjust the numer ator, EPA must recognize that electric systems (whether a utility, ISO, or other balancing authority) will reduce generation from the highest variable cost units first and not, as EPA s uggests, based on the fact that "because fossil steam generation has higher carbon intensity, it sh ould be replaced before NGCC generation." The commenters said thus, as RE comes online, the units that will be backed off generally will be legacy oil and gas steam units, p eaking combustion turbine units, NGCCs, and then baseload coal units; in some cases, where few peaking and NGCC units are available, loadfollowing coal units may be used to reduce generati on.

Commenters stated EPA's NODA published on October 3 0, provides another approach to the goal setting calculation that would include account ing for displacement of fossil generation by renewable generation (Block 3) and energy efficienc y (Block 4); the NODA (79 Fed. Reg. at 64,552) seeks comment on alternative approaches whe reby incremental renewables and energy efficiency would (1) be assumed to replace 2012 ste am generation and NGCC generation levels on a pro rata basis (i.e., in proportion to each ge neration type's historical generation) or (2) be assumed to displace fossil steam generation below 2 012 levels first and then replace all fossil generation pro rata. Commenters believed it would b e inappropriate to adjust the EPA's proposed goal calculation to assume the displacement of foss il generation with energy provided by Blocks 3 and 4. The commenters said little, if any, of the Block 3 and 4 energy would be available to displace fossil generation, as most or all of the e nergy would likely be required to meet the growth in electrical load after 2012. The commenter s said this can be demonstrated using EPA's goal calculation spreadsheet and the data file prov ided with EPA's Technical Support Document
"Translation of the Clean Power Plan Emission Rate- Based CO2 Goals to Mass-Based Equivalents," published on November 6, 2014.

Commenters stated as of 2029, the EPA's goal calcul ation spreadsheet shows a nationwide total of approximately 313.6 million MWh of incremental R E generation and 380.6 million MWh of EE avoided generation, for a total of 694.2 million MWh of energy from Blocks 3 and 4. Commenters stated the analysis in the EPA's rate-to -mass translation data file shows an increase in the need for annual generation of approximately 577.1 million MWh between 2012 and 2029; this is equivalent to over 83 percent of the energy assumed to be provided by Blocks 3 and 4. The commenters said however, this comparison unders tates the amount of additional generation that would actually be required, since the Annual E nergy Outlook (AEO) forecast on which it is based is net of the effect of energy efficiency mea sures. Commenters stated since the Block 4 calculation determines the total, rather than incre mental, potential for energy efficiency, existing energy efficiency measures must be removed from the AEO forecast, resulting in higher load growth than assumed by EPA; therefore, it is likely that most or all of the energy from Blocks 3485

and 4 will be required to serve new load, leaving l ittle or no energy available to displace existing fossil generation. The commenters said as a result, EPA should retain its treatment of Block 3 and 4 energy, as originally proposed.

Commenters stated in the event that EPA nonetheless determines that some or all of the energy from Blocks 3 and 4 should displace fossil generati on in the goal-setting calculation, EPA's spreadsheet analysis is too simplistic to accuratel y account for the interaction between the four blocks used to achieve the CO2 rate goal. The comme nters said it is one thing to simulate redispatch from coal and oil/gas steam EGUs to NGCCs in a simple spreadsheet, since these are dispatchable resources which can operate at interme diate or baseload duty cycles; however, it is entirely different to include renewables and energy efficiency, which are typically nondispatchable.

Commenters stated the alternative approach that th e Agency presents in the NODA - to apply generation from building blocks 3 and 4 to reduce f ossil generation below 2012 levels in the goal calculations - would only serve to exacerbate the i nfeasibility and inflexibility of the currently proposed performance goals, and should therefore no t be incorporated. The commenters said while fossil fuel generation is a steady source of base load power, renewable energy generation is
intermittent and there are not sufficient EE reduct ion opportunities to make up for loss of base load power, taking into account the projected incre ase in electricity demand.

Commenters stated both proposals [2 options for rev ising the goal calculation methodology presented in NODA] are unsound and should not be ad opted. The commenters said in reality, the effect that additional generation from existing or new NGCC units, nuclear reactors, or RE and
EE sources will have on emissions from affected fos sil fuel EGUs will depend on at least two factors: demand for electricity and the attributes (including dispatchability) of the new generation source. The commenters said first, although electri city demand growth has been slow in recent years, demand could well increase if state or natio nal economies improve, if weather patterns change, or if new technologies (such as electric ve hicles) lead to increased demand in the future; for example, EIA's baseline projection-which makes conservative assumptions about economic growth and other factors leading to increased deman d - predicts an annual increase in demand growth of 1% through 2040, which will require the a ddition of 351 GW of new electric generating capacity nationwide. The commenters said existing generating units whose capital costs have already been recovered and whose only go ing-forward costs are fuel, maintenance, and operating costs are usually the lowest-cost sou rce of electricity; therefore, it is reasonable to expect that the addition of some incremental genera tion will displace future generation increases from existing sources, rather than reducing existin g sources' generation levels below historic levels; however, in cases where the required increa se in NGCC, RE, nuclear, and EE generation exceeds demand growth, it is reasonable to assume t hat some existing generation will be "dialed back" relative to historic levels (note that becaus e of the interstate nature of the electric grid, th e generation that will be dialed back may not be loca ted in state that implemented the increase in NGCC, RE, nuclear, or EE generation or savings).

Commenters stated second, the ability of any given source of generation to displace generation from another source will depend in large part on th e attributes of the incremental generation source and the characteristics of the existing syst em; thus, for example, incremental resources such as wind and solar power - as well as some EE m easures - will preferentially displace natural486

gas generation (including generation at simple cycl e turbines that are generally excluded from the Proposed Rule). The commenters said the reason for this is that natural gas turbines are uniquely capable of quickly ramping up and down to coordinate with fluctuating generation from
intermittent renewables. The commenters said coal a nd nuclear generation, on the other hand, are less likely to be displaced by the addition of new non-dispatchable resources; on the other hand, increases in NGCC generation are likely to displace either other NGCC generation or generation from baseload units such as coal and nuclear, as we ll as some geothermal and biomass facilities, because each of these facilities also is capable of operating on a baseload basis. The commenters said the location and timing of the incremental gen eration will also affect the kind of generation it displaces, if any; for example, incremental RE o r EE that is located in an area that is mostly served by NGCCs is far more likely to displace that NGCC generation than it is to displace faraway coal fired generation. The commenters said by the same token, wind or EE measures that operate at night or during periods when natural gas prices are low, are likely to reduce the need for baseload generation such as coal, nuclear or hy droelectric generation rather than NGCC generation.

Commenters stated as a general matter, the Proposed Rule fails to justify any of the methods of calculating state goals that EPA proposes; although all approaches make implicit assumptions about future changes in demand, neither approach at tempts to quantify or predict the level of increased demand states will face in the future, or to evaluate whether the implicit assumptions
about demand are accurate. The commenters said simi larly, both approaches fail to quantify the likely impact of implementing each particular BSER measure in light of the existing characteristics of the power grid and the projected characteristics of the incremental generation
source or EE measure. The commenters said EPA's fai lure to examine the actual impacts of implementing the BSER as proposed renders this aspe ct of the rule arbitrary and capricious given
that there is no factual foundation established in the record for the alternative methodology for the goal calculation. The commenters said if EPA pe rsists in computing state goals based on an assumption that states can implement the four-block BSER, the agency should, at a minimum, base state goals on a realistic evaluation of each building block's potential for reducing emissions in each state (in light of projected demand and the generation and consumption profile of the state). The commenters said this evaluation must be supported by detailed modeling analyses or other data in support of the agency's conclusions.

Commenters stated if EPA fails to conduct such an a nalysis to justify the achievability of the state goals, EPA should assume that all additions o f incremental generation or EE displace future demand in the state; because EPA cannot show with a ny certainty that increased NGCC, RE, nuclear, or EE generation will necessarily displace generation from affected EGUs (as opposed to displacing generation from future increases in d emand or from unaffected sources such as simple cycle combustion turbines), EPA should not r educe generation from any affected units when adding in generation from additional NGCC, RE, nuclear, or EE measures in the goalsetting calculation; therefore, EPA should not impl ement the proposal discussed in the NODA.
The commenters added EPA should revise its initial proposal to conform its approach to building block two with its approach to building blocks thre e and four; EPA can do so by adding generation and emissions from increases in redispat ch to the numerator and denominator without reducing historic generation from coal-fired units in step two of the goal computation method.487

Commenters stated it would be inappropriate to adju st the EPA's proposed goal calculation to assume the displacement of fossil generation with e nergy provided by Blocks 3 and 4. The commenters said little, if any, of the Block 3 and 4 energy would be available to displace fossil generation, as most or all of the energy would like ly be required to meet the growth in electrical
load after 2012. The commenters said this can be de monstrated using EPA's goal calculation spreadsheet and the data file provided with EPA's T echnical Support Document "Translation of
the Clean Power Plan Emission Rate-Based CO2 Goals to Mass-Based Equivalents," published on November 6, 2014.

• As of 2029, the EPA's goal calculation spreadsheet shows a nationwide total of approximately 313.6 million MWh of incremental RE g eneration and 380.6 million MWh of EE avoided generation, for a total o f 694.2 million MWh of energy from Blocks 3 and 4.

• The analysis in the EPA's rate-to-mass translation data file shows an increase in the need for annual generation of approximately 577 .1 million MWh between 2012 and 2029; this is equivalent to over 83 percen t of the energy assumed to be provided by Blocks 3 and 4.

• However, this comparison understates the amount of additional generation that would actually be required, since the Annual Energy Outlook forecast on which it is based is net of the effect of energy efficiency measures.

The commenters said since the Block 4 calculation d etermines the total, rather than incremental, potential for energy efficiency, existing energy ef ficiency measures must be removed from the AEO forecast, resulting in higher load growth than assumed by EPA; therefore, it is likely that most or all of the energy from Blocks 3 and 4 will be required to serve new load, leaving little or no energy available to displace existing fossil gen eration. As a result, EPA should retain its treatment of Block 3 and 4 energy as originally pro posed.

The commenters said in the event that EPA nonethele ss determines that some or all of the energy from Blocks 3 and 4 should displace fossil generati on in the goal-setting calculation, EPA's spreadsheet analysis is too simplistic to accuratel y account for the interaction between the four blocks used to achieve the CO2 rate goal; it is one thing to simulate "redispatch" from coal and oil/gas steam EGUs to NGCCs in a simple spreadsheet , since these are dispatchable resources which can operate at intermediate or baseload duty cycles; however, it is entirely different to include renewables and energy efficiency, which are typically non-dispatchable.

Commenters stated in its original Proposal, EPA det ermined that states should be able to reduce their carbon intensity by "re-dispatching" coal and natural gas units in favor of more gas generation and less coal generation; with respect t o building blocks 3 and 4, addressing renewable, nuclear, and energy efficiency resources , EPA did not require any increases to displace the use of fossil resources in its goal ca lculations. The commenters said EPA recently released a Notice of Data Availability that asks wh ether that displacement should be required. The commenters opposed that approach; due to EPA's aggressive assumptions in its building block analysis, the goals are already far more stri ngent than necessary or appropriate, and applying a displacement approach to building blocks 3 and 4 would only increase that stringency488

even further. The commenters said if EPA does decid e to require the improvements expected under building blocks 3 and 4 to displace fossil ge neration, EPA should also provide some other means for addressing load growth; otherwise, EPA's proposal will essentially assume load growth will not occur, which is an unreasonable ass umption, despite the requirements likely to be imposed under EPA's Proposal.

Commenters stated in its NODA, EPA acknowledges wid espread concern with the goal-setting calculations from blocks 3 and 4, and seeks comment on whether it should revise its computations. The commenters said under EPA's origi nal proposal, addition of one MWh of natural gas generation would "back off" a MWh of co al generation, as well as the emissions from that generation; however, the addition of a MWh of renewable energy or energy efficiency (blocks 3 and 4) is not assumed to "back off" gener ation from fossil resources. The commenters said EPA is requesting comment on whether it should change the way it calculates state goals such that EPA would "back off" additional fossil ge neration as additional MWh of new renewable energy and energy efficiency are added to the system; such a change will have the effect of making all state goals more stringent tha n they already are, and will exacerbate the inherent unfairness of the goal computations.

Commenters stated EPA should adopt the alternative (technical and economic) renewable energy Building Block 3 approach included in a June 2nd Te chnical Supporting Document, with the
modification detailed in the October 28th Notice of Data Availability (NODA) to calculate the economic renewable resource potential on a regional instead of a state-by-state basis. The commenters said the regionalized NODA technical and economic approach is vastly superior to the other proposed methods for calculating renewabl e energy's contribution for state targets'; however, EPA should make improvements to this appro ach to make it more accurately reflect the cost-effective level of renewable energy deployment that can be achieved under the BSER, including the following modifications:

1. Remove the "technical resource" step in which it imposes an arbitrary cap on the percentage of the technical renewable resource that can be developed in a state or region;

2. In quantifying which renewable energy resources are economic, EPA should begin with current, real-world data on the cost of renewa ble energy technologies;

3. For projecting changes in the economics and perf ormance of renewable energy through the year 2030, EPA should rely on the detailed and thoroughly peer-reviewed cost and performance projections developed through the Depar tment of Energy and the National Renewable Energy Laboratory;

4. In its economic modeling, EPA should not impose a firm cap on the percentage of variable (wind and solar) renewable energy that can be deployed in a state or region, but rather should economically model the cost of renewa ble curtailment that could occur at extremely high renewable energy penetrations;

5. Changes to the generation mix and other power sy stem changes that are expected to occur between now and 2030, including those that ar e triggered by the provisions of489

111(d) itself, should also be included in the analy sis of the economics of higher renewable penetrations; and,

6. Because many planned transmission lines will hav e been placed in service by 2020, they should also be included in EPA's analysis.

Commenters stated EPA's NODA provides another appro ach to the goal setting calculation that would further include accounting for displacement o f fossil generation by renewable energy ("RE") generation (Building Block 3) and energy eff iciency ("EE") (Building Block 4). The
commenters said the NODA seeks comment on alternati ve approaches whereby incremental renewables and energy efficiency would (1) be assum ed to displace 2012 fossil steam generation and NGCC generation levels on a pro-rata basis (i.e ., in proportion to each generation type's historical generation) or (2) be assumed to displac e fossil steam generation below 2012 levels first and then utilize any remaining RE and EE to d isplace NGCC generation. The commenters believed it would be inappropriate to ad just the EPA's proposed goal calculation to assume the displacement of fossil fuel generation w ith energy provided by Building Blocks 3 and 4. The commenters said little, if any, of the Build ing Block 3 and 4 energy would be available to displace fossil fuel generation, as most or all of the energy would likely be required to meet the growth in electrical load after 2012. The commenter s said this can be demonstrated using EPA's goal calculation spreadsheet and the data file prov ided with EPA's Technical Support Document
"Translation of the Clean Power Plan Emission Rate- Based CO2 Goals to Mass-Based Equivalents," released on November 6, 2014.17 As of 2029, the EPA's goal calculation spreadsheet shows a nationwide total of approximate ly 313.6 million MWh of incremental RE generation and 380.6 million MWh of EE avoided gene ration, for a total of 694.2 million MWh of energy from Building Blocks 3 and 4. The comment ers said the analysis in the EPA's rate-tomass translation data file shows an increase in the need for annual generation of approximately 577.1 million MWh between 2012 and 2029; this is eq uivalent to over 83 percent of the energy assumed to be provided by Building Blocks 3 and 4; however, this comparison understates the amount of additional generation that would actually be required, since the Annual Energy Outlook ("AEO") forecast on which it is based is ne t of the effect of energy efficiency measures. The commenters said since the Building Block 4 calc ulation determines the total, rather than incremental, potential for energy efficiency, exist ing energy efficiency measures must be removed from the AEO forecast, resulting in higher load growth than assumed by EPA; as a result, it is likely that most or all of the energy from Building Blocks 3 and 4 will be required to serve new load, leaving little or no energy availab le to displace existing fossil fuel generation.

Commenters stated EPA should revise its target-sett ing formula to correctly account for emissions reductions from energy efficiency resourc es. The commenters said EPA failed to properly account for energy efficiency in the targe t-setting formula; rather than backing out the equivalent level of existing fossil-fired generatio n that energy efficiency measures would displace, EPA simply added the MWh of generation or energy savings from these resources into
the denominator of the lbs/MWh emissions rate. The commenters said EPA should revise its methodology in line with the information released i n its NODA to capture the emissionsreduction benefits of efficiency programs.490

Commenters stated EPA failed to properly account fo r energy efficiency and renewable energy resources in the goal-setting formula; rather than backing out the equivalent level of existing fossil-fired generation that these resources would displace, EPA simply added the generation
from these resources into the denominator of the lb s/MWh emission rate. The commenters said EPA should adopt the methodology set forth in the N ODA to capture the emission-reduction benefits of these resources fully.

Commenters stated in the Proposed Rule EPA calculat es a reduction in states' overall CO2 emission rates premised on increased renewable ener gy usage and energy efficiency measures; as part of this calculation, EPA maintained fossil fue l generation levels constant at 2012 levels. The
commenters said in the NODA EPA states that certain commentators have argued that EPA should have assumed a corresponding reduction in fo ssil fuel generation similar to the methodology used in Building Block 2, and requests comments on whether this alternative methodology should be used in calculating state req uirements in the final rule. The commenters said this methodology would result in significantly more stringent emission limits for states; this in tum would necessitate additional premature retir ements of fossil fuel-based EGUs resulting in substantial economic costs and further degradation of the reliability of the electric grid as a result of the replacement of dependable base-load units wi th variable energy resources. The commenters said to date, EPA has not undertaken any technical or economic analysis of the impact of these more stringent emission requirement s; accordingly, EPA has not in any sense "adequately demonstrated" that these new limits, an d the alternative Building Block 3 and 4 methodologies on which they are based, represent th e "best system of emission reduction" as required under the Act. The commenters said therefo re, EPA is precluded from using these methodologies to impose more stringent requirements in the final rule. See 42 U.S.C. Section 7607(d)(6)(C) ("promulgated rule may not be based ( in part or whole) on any information which has not been placed in the docket"); Solite Corp. v . EPA, 952 F.2d 473, 484 (D.C. Cir. 1991) ("An agency commits serious procedural error when i t fails to reveal portions of the technical basis for a proposed rule in time to allow for mean ingful commentary.") (quoting Connecticut Light and Power Company v. Nuclear Regulatory Commi ssion, 673 F.2d 525, 530 (D.C. Cir. 1982).

Commenters provided comments that are somewhat outs ide the scope of this section. The commenters stated they think that the goal setting formula should correctly account for emission
reductions.

Commenters commented that the EPA failed to properl y account for energy efficiency and renewable energy resources in the goal-setting form ula. The commenters explained that, rather than backing out the equivalent level of existing f ossil-fired generation that these resources would displace, the EPA simply added the MWh of gen eration or energy savings from these
resources into the denominator of the lbs/MWh emiss ions rate. The commenters stated that the EPA should adopt the methodology in line with the i nformation released in its NODA to fully capture the emissions-reduction benefits of these r esources.491

Commenters stated that in the NODA, EPA proposes to adjust state goals to incorporate reductions in fossil generation as a result of incr eased utilization of renewable energy and energy efficiency as a way to "reflect the full potential, under BSER, for incremental RE and EE to replace fossil steam generation." Commenters said E PA thus proposes two ways to calculate a generation shift resulting from the application of Building Blocks 3 and 4, either by replacing all historical fossil generation on a pro rata basis or by replacing historical fossil generation on a prioritized basis. Commenters said that EPA request s comment on which approach better reflects the BSER. Commenters said that in their view, neith er approach reflects the BSER and EPA should not adopt either one. Commenters said that B SER is a system of emissions reduction - it is not a system of generating-source elimination, n or is it a system of maximum emissions reductions. Commenters said that they believe that the approach EPA used in the June 2014 proposal is appropriate and should not be changed i n the final rule. Commenters said that EPA explains that the change in methodology proposed in the NODA may be warranted in order to ensure consistency in application among the various building blocks. Commenters said that such an understanding assumes that incremental renewable generation and incremental generation avoided through energy efficiency are equivalent to fossil generation. Commenters said in reality, incremental renewable energy and energy ef ficiency cannot meet baseload requirements
due to the variable nature of these resources. Comm enters said the best system of emission reduction is most appropriately based on a system t hat augments - not replaces - historical fossil generation. Commenters said this allows states to a chieve meaningful emissions reductions by prioritizing operation of less carbon-intensive res ources while using baseload fossil generation to backstop functionality and reliability of the natio nal electric system.

Commenters stated that to strengthen overall state targets, EPA should amend its goal-setting methodology under building blocks 3 and 4 to offset fossil fuel generation. Commenters said in the Notice of Data Availability issued October 28, 2014 ("NODA"), EPA identified stakeholder concerns regarding disparate treatment of changes i n generation under building blocks 2 and under blocks 3 and 4. Commenters said as currently proposed, the state goal-setting formula assumes a constant level of generation from fossil- fuel sources even as incremental renewable energy and energy efficiency are added to the syste m. Commenters said in contrast, as fuel is redispatched from coal-fired EGUs to Natural Gas Comb ined Cycle EGUs, generation is assumed
to be offset. Commenters said that Minnesota's Clea n Energy Organizations agree with other stakeholders that offsetting fossil fuel generation as incremental renewable energy and energy efficiency are added to the system better reflects the reality of what will happen as the Clean Power Plan is implemented. Commenters said to truly reflect the Best System of Emissions Reduction, generation should be presumed to be offs et first from those sources with the highest carbon intensity rather than on a pro rata basis. C ommenters said only after those sources have been completely offset with renewable energy and en ergy efficiency would offsets move to less intense sources such as gas turbines.

Commenters stated that these amendments to the way EPA calculates goals under building blocks 3 and 4 would result in more stringent targe ts, which, as discussed above, are necessary to achieve more meaningful emissions reductions.492

Commenters argued that regarding EPA's NODA proposa l to tie renewable energy and energy efficiency directly back to emission reductions for the purposes of meeting BSER, the information used by EPA to estimate Blocks 3 & 4 an d calculate the resulting state goal under the CPP did not assume that all renewable energy an d energy efficiency displaced fossil-fueled generation. Commenters said instead EPA simply adde d all renewable energy and energy efficiency to the denominator, regardless of whethe r it displaced fossil sources, to come up with the state emissions goals. Commenters suggested, if EPA is proposing to change the formulas, or what renewable energy and energy efficiency count t owards compliance, the state goals must be revised accordingly.

Comment 10: NODA - 2nd Approach Concerns

Response 10: The EPA is adopting the alternative approach from t he proposal, modified as described in the NODA. See sections V.A., V.D., V. E, and VI of the final rule preamble of the

CPP and the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP for more information.

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

Commenters stated EPA notes in the NODA that some s takeholders have suggested that EPA should revise the goal-setting equation to reflect a consistent approach to accounting for incremental generation from existing NGCC, incremen tal renewable generation, and energy efficiency savings; specifically, some stakeholders have suggested that state goals should reflect the potential for renewable and energy efficiency t o displace existing fossil steam generation.
The commenters said in their discussion of the alte rnative goal-setting methodology, EPA includes two options for revising the formula: (1) assume that renewable and energy efficiency directly replace all historic fossil generation on a pro rata basis; or (2) assume that renewable and energy efficiency first replace fossil steam genera tion below 2012 levels and then replace gas turbine generation if any incremental renewable and energy efficiency remain.

Commenters stated concern with the second approach is that the electric system does not function by selectively replacing one type of fuel over another as renewable MWhs are added to the grid or demand-side energy efficiency measures are implemented. The commenters said renewable generation and energy efficiency may disp lace fossil MWhs or other zero-carbon sources. Therefore, the commenters would oppose alt ering the building block formula to first replace fossil steam generation below 2012 levels a nd then replace gas turbine generation if any incremental renewable and energy efficiency remain. The commenters said regardless of the formula used in the final rule, it is essential tha t EPA ensure that each state target is achievable, and ensures a states, companies, and grid operators can maintain a reliable electric system and the necessary voltage support; for example, if EPA were to pursue the alternative goal-setting methodology discussed in the NODA, it may want to c onsider limits to the amount of renewable generation and energy efficiency relative to the am ounts in the proposed rule to account for the increased stringency. The commenters said under the proposed or alternative goal-setting methodology, we encourage EPA to consider reliabili ty impacts given the interactions among the building blocks.493

Commenters stated the second approach suggested in the NODA would set a minimum level of re-dispatch for states with little or no NGCC capac ity, regardless of the currently available NGCC capacity in each state. The commenters said al though EPA asks for comment on a wide range from zero to 55 percent, the NODA specificall y identifies a level of 12 percent, the value of the lowest quartile from EPA's prior analysis on how much each state's generation would shift from higher-emitting generation to lower-emitting g eneration under the proposed Building Block 2 methodology. The commenters generally supported t he concept of applying a minimum level of re-dispatch; however, the commenters have many i ssues related to EPA's assumed dispatch to natural gas potential under BSER Building Block 2. The commenters said for those reasons, if EPA were to set a minimum dispatch level across all states for purposes of mitigating concerns regarding the disparity of dispatch requirements ac ross different states, this approach should not be additive to the amount of dispatch EPA has alrea dy assumed in states above this minimum
threshold. The commenters said to the extent EPA ad opts this approach, the commenters requested that EPA reduce the coal-to-ga s shift in state goals for states that currently have higher amounts of NGCC capacity and set more m oderate dispatch goals in those states so that the total nationwide amount of dispatch requir ed as currently proposed is not increased.

Comment 11: NODA - BB 3 & 4 - state-by-state

Response 11: The EPA is adopting the alternative approach from t he proposal, modified as described in the NODA. See sections V.A, V.E, and VI of the final rule preamble of the CPP and the CO2 Emission Performance Rate and Goal Comp utation TSD for CPP Final Rule supporting the final CPP for more information.

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

Commenters stated EPA has asked for comments on an alternative approach to setting renewable energy targets that is based on each state's renewa ble energy technical potential and realistic development rates and that takes into consideration market and economic factors. The commenters said the alternate method for Building B lock 3 is a two-step process; the method uses each state's "technical potential" for utility scale solar, on-shore wind, geothermal, and hydro renewable, as determined by the 2012 NREL stu dy, multiplied by a benchmark development rate percentage equal to the average de velopment rate for each renewable technology in the top one-third performing states; then, the method conducts an IPM model run to identify how much renewable generation would be built with a defined savings or avoided cost of 530/MWh; the target is then set as the less er of the two. The commenters said EPA's alternate proposed approach addresses some of the k ey flaws in the proposed approach, at least in concept. The commenters supported a state-by-sta te assessment of RE technical and market potential.

Commenters stated EPA should tabulate the renewable energy already developed in a state for purposes of carbon reduction and allow the emission -reduction effects of those facilities to be utilized in complying with the rule. The commenters said just as EPA should evaluate the scope and net effect of a state's RPS, it should also ack nowledge that, in a state that has already taken494

steps to develop renewable energy, it is a mistake to believe that future increases in the renewable portion of an energy portfolio will occuralong a linear, each-step-is-the-same-as-thelast, path. The commenters said because of the vari able, weather-dependent, and unpredictable generation patterns of wind and solar facilities (t he most common and scalable renewable technologies), the growth of renewables in a portfo lio is accompanied by an ever-intensifying set of operational, dispatch, and transmission challeng es; whereas one or two wind farms in a traditional fossil- or hydro-based portfolio may be incorporated into that portfolio with relative ease, a 20%, 30%, or 40% level of renewables in a p ortfolio brings new operational demands and sizeable investments in ancillary support, such as for energy imbalance and regulation and frequency response. The commenters said EPA should drop its proposed general and formulaic approach, i.e., using a regional average of current renewable portfolio levels in its emission goal calculation, in favor of an approach that recognize s previous renewable development on a stateby-state basis.

Comment 12: NODA; BB 3&4 - Support

Response 12: The EPA appreciates the comments of support and is adopting the alternative approach from the proposal, modified as described i n the NODA. See sections V.A., V.D., V.E., and VI of the final rule preamble of the CPP and th e CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the f inal CPP for more information.

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

Commenters stated EPA released a Notice of Data Ava ilability (NODA) on October 27, 2014 in which EPA requested comments on the issue of whethe r some or all of the energy efficiency credits and renewable energy generation that states add to the denominator in their CO2 emissions rate calculation would reduce fossil gene ration from existing power plants, and whether and how this should be incorporated into th e numeric calculation of state targets. The
commenters believed it is reasonable for the EPA to assume that a portion of the generation provided by incremental energy efficiency and renew able generation will be used in the future to displace new fossil generation (either from new or existing power plants) that would otherwise be necessary to serve population and economic growt h (i.e., growth in the demand for energy services), and a portion will be used to displace h istorical generation from existing power plants.

Commenters suggested a methodology where it is firs t assumed that incremental energy efficiency and renewable generation offsets new fos sil generation, with any remainder displacing historical generation from existing power plants. T he commenters supported the option presented in Section C(a) of the NODA where remaining energy efficiency and renewable generation replaces historical fossil generation on a pro rata basis; this is most consistent with what is likely to take place in the real world in our view where d ecisions about displaced generation are made
for both economic and environmental reasons.

Commenters stated EPA should ensure the calculation of state targets fully reflects the ability of renewable energy and energy efficiency to reduce ca rbon pollution. The commenters said while the EPA proposal correctly finds that efficiency an d renewable energy directly reduce fossil495

generation, the formula used to set state targets d oes not reflect this reality. The commenters said when EPA adds new renewables generation and efficie ncy savings to the formula it does not reduce tons of carbon pollution from fossil generat ion; this minimizes the impact of renewables and efficiency on emissions and leads to weaker emi ssions goals, particularly in the later years of the plan. The commenters said altering the formula would deliver better emissions reductions
and create more incentives for investment in sustai nable energy technologies. The
commenters noted that EPA has discussed this issue in the notice of data availability and under a revised formula the target in the out-years becomes stronger; the commenters hoped that the revised approach will be adopted in the final rule. The commenters believed that these improvements to the Clean Power Plan will strengthe n the plan and deliver better longer term results to the economy. The commenters said as evid enced over the last ten years, renewable energy and energy efficiency not only provide more predictable and lower energy costs to the industrial, commercial and residential sectors, but they also provide great amounts of new, wellpaying jobs for Americans. The commenters said with better incentives for renewable energy and energy efficiency as a compliance pathway, the Clea n Power Plan will help ensure U.S. leadership in the growing dollar 250 billion global clean energy market.

Comment 13: Oppose alternative RE approach, support NODA method ology

Response 13: The EPA is adopting the alternative approach from t he proposal, modified as described in the NODA. See sections V.A., V.D., V. E., and VI of the final rule preamble of the

CPP and the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP for more information.

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

Commenters stated EPA should not use the alternativ e method for calculating building block #3 that it is outlined in the Alternative RE Approach Technical Support Document (TSD). The commenters said the alternative approach, which rel ies on estimating building block #3 based on the technical and market potential for renewable el ectricity in each state, is flawed because it does not take into consideration transmission and g rid balancing constraints. The commenters said many regions of the country with significant t echnical potential for renewable energy generation lack the necessary transmission capacity necessary to deliver the renewable electricity generation to areas of significant electric load; a s a result, EPA's alternative approach overestimates the economic potential for developing more remote areas of significant renewable energy potential. The commenters said under the alt ernative approach, Montana would have a goal of generating eight times as much renewable el ectricity in 2029 as it did in 2012, which would be equivalent to generating enough renewable electricity to meet 74% of Montana's 2012 retail electricity sales; such a result is impracti cal, both technologically and economically, especially if EPA decides to require renewable elec tricity to be consumed in the state in order to demonstrate compliance. The commenters said given t hat a large percentage of Montana's electricity generation and consumption comes from h ydroelectricity, EPA's alternative renewable electricity goal would actually exceed the percenta ge of the state's retail electricity consumption that is generated from fossil fuels. The commenters said if EPA is to use technical and market potential to estimate a state's renewable electrici ty generation potential, it should use a496

regionalized approach, like the one described in th e October 28th Notice of Data Availability (NODA); however, in-state electricity demand and ou t-of-state transmission capacity will still need to be factored into a regionalized technical a nd market potential target in order to avoid the mistakes made in the Alternative RE Approach TSD.

Comment 14: NODA - Replace Fossil Generation

Response 14: The EPA is adopting the alternative approach from t he proposal, modified as

described in the NODA. See sections V.D. and VI of the final rule preamble of the CPP and the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the
final CPP for more information.

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

Commenters recommended EPA should allow states to c redit end use efficiency measures that reduce demand on the carbon-free hydroelectric powe r system and subsequently offset fossil fuel generated power as emission reduction measures in a state compliance plan. Commenters stated energy efficiency reduces the need to generate elec tricity. Commenters stated economic dispatch of generating resources generally means that resour ces with incremental fuel costs, primarily fossil-fuel generation, will be the first resources to curtail generation in response to lower demand as a result of energy efficiency measures. C ommenters stated even when energy efficiency is acquired in an Oregon utility territo ry served by the carbon emission-free FCRPS, that reduction in demand will reduce output from fo ssil-fuel generation throughout region. Commenters stated EPA should allow Oregon to credit these energy efficiency investments in its compliance plan.

Commenters stated EPA's methodology for calculating Oregon's building Block Four goal sends the correct signal to customers served by Oregon's consumer-owned utilities using the hydroelectric power system because their energy eff iciency measures result in reduce emissions from fossil generation within the entire WECC regio n. Commenters stated for parity between this appropriate construction of Block Four in the BSER and a state compliance plan, Oregon must take full credit for its energy efficiency inv estments on the hydroelectric power system regardless of whether the emission reductions are d irectly attributable to in-state fossil-fuel generation resources. Commenters stated this approa ch allows for continued recognition of energy efficiency measures' influence on the carbon intensity resource mix within the WECC region and signals that energy efficiency, investme nts that affect demand on the hydroelectric power system should continue in Oregon.

Commenters stated that the October 30, 2014 NODA de scribes comments EPA has received that propose calculating building blocks three and four by assuming incremental renewable energy and energy efficiency would displace existing level s of fossil generation rather than growth in demand for fossil generation. Commenters did not su pport this approach. Commenters stated this alternative method would result in rate targets wit h unrealistic compliance expectations, for example, a state could have a zero or even a negati ve rate-based target, and yet serve load with a substantial amount of fossil-fuel generation. Comme nters stated the approach to calculating497

building blocks three and four in EPA's June 2, 201 4 proposal of the Clean Power Plan appropriately accounts for incremental RE and energ y efficiency.

Commenters stated EPA's proposed numeric approach t o calculating state goals should not assume that incremental RE and EE replace fossil ge neration below 2012 levels because this approach ignores the role of base load generation i n ensuring the reliable operation of the power system. Commenters stated EPA should not adopt eith er approach, pro rata replacement or prioritization replacement, to change the proposed numeric formula when calculating final state goals. Commenters stated both approaches overestima te the potential emission reductions from RE and EE because they incorrectly assume that RE a nd EE can replace base load fossil generation. Commenters stated that at this time, n either EPA nor other stakeholders can demonstrate that this would be technically feasible or adequately demonstrated, as RE nor EE cannot provide the full range of essential grid ser vices that are fundamental to ensuring the reliable delivery of electricity to consumers.

Commenters stated EPA cannot assume that renewable generation and energy efficiency can replace all fossil generation because this will pre vent the reliable operation of the interconnected power system. Commenters stated the two revised ap proaches for calculating the state goals forwarded in the NODA are predicated on the incorre ct assumption that all historic fossil generation could be replaced by renewable generatio n and decreased consumption. While not discussed explicitly in the NODA, commenters indica ted replacing all 2012 fossil generation in the numeric formula used to calculate the state goa ls likely would result in some state goals that are 0 lb CO2/MWh or even lower, meaning that these states would have to cease all operation of existing base load fossil generation. Commenters st ated neither EPA nor any stakeholder can demonstrate that, at present, the interconnected po wer system can be operated reliably without these critical base load resources. Moreover, comme nters noted that renewable wind and solar
resources are variable in nature and need to be bac ked-up by dispatchable resources when they are not operating. Commenters stated EPA does not address how such back-up can be accomplished without reliance on at least some foss il generation.

Commenters stated fossil-based base load units play a critical role in ensuring the reliable operation of the bulk power system and cannot be re placed on a MW for MW basis by either renewable generation or EE measures. Commenters st ated RE and EE cannot provide key services provided by base load resources that are e ssential for maintaining reliability, including frequency response, voltage support, load and resou rce balancing and inertia. See generally ERS Report; see also Initial Reliability Review at 13.

Commenters stated the proposed state goals, which w ould be less stringent than goals calculated using either approach discussed in the NODA, will r esult in a dramatically changed electricity generation mix that has significant implications fo r reliability. Commenters stated NERC identified two categories of reliability implicatio ns for the proposed state-specific emission rate goals: (1) direct impacts to resource adequacy and electric infrastructure; and (2) impacts resulting from the changing resource mix that occur as a result of replacing retiring generation,498

accommodating operating characteristics of new gene ration, integrating new technologies and imposing greater uncertainty in demand forecasts. S ee Id. Commenters stated EPA has not addressed how the alternative approaches to calcula ting the state goals are consistent with the reliable operation of the interconnected power syst em. Commenters indicated the potential reductions achievable by Building Blocks 3 and 4 ca nnot be measured in a vacuum. Commenters stated EPA's approach to calculating the state goal s must consider the potential impact the resulting goals would have on the interconnected po wer system.

Commenters stated, for example, while EE provides b enefits to the grid, the services EE provides are different and have very different perf ormance parameters. Commenters stated EE cannot provide reliable operation services and, the refore, are not a perfect substitute for "steel in the ground" generation resources. Commenters noted PJM has attempted to address performance limitations inherent in demand response (DR) produc ts by setting limits on the amount of DR procured in its forward capacity market (see PJM In terconnection, L.L.C., Order Accepting Tariff Revisions, 146 FERC 61,052 (Jan. 30, 2014)) , and PJM's action is a direct response to the reality that the deployment of large amounts of EE, including DR, can create operational discontinuities that may challenge ongoing reliable system operations. Commenters stated the impacts of DR and EE modeling practices and assumpt ions on reliability planning studies are still evolving, but it is widely recognized that th ey cannot be treated as direct replacement for generation resources.

Commenters stated the NODA does not address how th e alternate approaches to the numeric goal setting calculation would take into considerat ion these reliability considerations or how the interconnected power system could operate without f ossil-based base load resources.
Commenters stated EPA cannot use a numeric formula that creates state goals that are inherently at odds with the reliable operation of the intercon nected power system.

Commenters noted that with respect to whether EE d isplaces coal vs. natural gas, nuclear or renewable energy generation, EPA seeks comment on h ow to account for the fact that EE programs may displace emissions from non-affected E GUs such as nuclear, gas or renewable units. Commenters stated that implementation of ef fective EE programs that actually reduce demand for electricity results in a reduction of wh atever generation provides their power. Commenters stated that this means EE programs indis criminately displace generation of any type, including EPA's preferred non-CO2 emitting ge neration. Commenters stated as we mentioned earlier, EPA seems to ignore that impact when setting the state goals.

Commenters stated that EPA incorrectly assumes savi ngs from energy efficiency programs displace fossil generation and CO2 emissions and, r ather, EPA would assess the impact of efficiency programs through reduction in electricit y sales and estimate the impact of efficiency programs at the statewide-level, rather than at the plant-level because it is impossible to determine whether a particular generator's electric ity sales were reduced due to energy efficiency. Commenters noted that EPA cannot assess whether the megawatts from energy efficiency displace fossil generation or renewable generation. Consequently, commenters stated that it is uncertain whether energy efficiency actu ally reduces CO2 emissions-which is the basis for including efficiency a best system of emission reduction measure in the proposed rule.499

Commenters noted the state goal setting formula cur rently assumes a constant level of generation
from fossil-fuel sources even as incremental renewa ble energy and energy efficiency is added to the system, but in contrast as fuel is re-dispatche d from coal-fired EGUs to Natural Gas Combined Cycle EGUs, generation is assumed to be of fset. Commenters agreed that EPA must offset fossil fuel generation as incremental renewa ble energy and energy efficiency added to the system to accurately reflect the reality of what wi ll happen as the CPP is implemented. Commenters believed that generation should be presu med to be offset first from those sources with the highest carbon intensity rather than on a pro rata basis and only after those sources have been completely offset with renewable energy and en ergy efficiency would offsets move to less intense sources such as gas turbines.

Comment 15: Adjust the goal-setting formula for calculating bu ilding block three of the BSER

to reflect the reduced utilization of affected foss il fuel-fired units through displacement by renewable energy; make BB2 and BB3 consistent.

Response 15: The EPA is adopting the alternative approach from t he proposal, modified as

described in the NODA. See sections V.D. and VI of the final rule preamble of the CPP and the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the

final CPP for more information.

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

Commenters stated when incorporating increased util ization of existing natural gas combined cycle (NGCC) facilities into building block 2, in t he draft rule, EPA assumed that NGCC units back down coal units, thus changing numbers in both the numerator and denominator used to calculate individual state targets. The commenters said in contrast, for building block 3 related to renewable energy, despite the fact that adding rene wable energy to the grid also backs down fossil units, EPA proposed only adding the MWhs of renewable energy into the denominator and not changing the fossil generation emissions rate n umbers in the numerator, which has the effect of artificially weakening the proposed emission per formance standards. The commenters said as discussed in the NODA, and consistent with EPA's ap proach in block two, in calculating building block three of the BSER, emissions and MWh s associated with affected fossil fuel-fired
units should be removed from the numerator and the denominator and the equivalent number of MWhs should be added back based on displacement of those units by zero-carbon generation.

Commenters encouraged EPA to review the numeric for mula for calculating each state's ratebased goal to ensure consistency in the application of BSER for building block 2 compared with building blocks 3 and 4. The commenters said this a pproach is identified in the Notice of Data Availability and would better reflect likely reduct ions from fossil steam generation than the proposed approach. The commenters said modifying th e rate-based calculation in this way would also provide consistency with the treatment of buil ding blocks 2, 3 and 4 as proposed by EPA in the Translation of the State-Specific Rate-Based CO 2 Goals to Mass-Based Equivalents technical support document.500

Commenters stated in the NODA, EPA noted that its o riginal proposal treated renewable energy resources (BB3) differently from redispatch to natu ral gas generators (BB2) when building the target. The commenters said as the NODA suggests, r enewable energy actually operates to reduce dispatch from other generators, just as shif ting to gas generators would; therefore, the two building blocks should be calculated in the same wa y - by reducing tons of carbon dioxide from the numerator, not only adding megawatt - hours to the denominator.

Commenters stated when incorporating increased util ization of existing natural gas combined cycle (NGCC) facilities into building block 2, in t he draft rule, EPA assumed that NGCC units back down coal units, thus changing numbers in both the numerator and denominator used to calculate individual state targets; in contrast, fo r building block 3 related to renewable energy, despite the fact that adding renewable energy to th e grid also backs down fossil units, EPA proposed only adding the MWhs of renewable energy i nto the denominator and not changing the fossil generation emissions rate numbers in the num erator, which has the effect of artificially weakening the proposed emission performance standar ds. The commenters said as discussed in the NODA, and consistent with EPA's approach in blo ck two, in calculating building block three of the BSER, emissions and MWhs associated with aff ected fossil fuel-fired units should be
removed from the numerator and the denominator and the equivalent number of MWhs should be added back based on displacement of those units by zero-carbon generation.

Commenters stated when incorporating increased util ization of existing natural gas combined cycle (NGCC) facilities into building block 2, in t he draft rule, EPA assumed that NGCC units back down coal units, thus changing numbers in both the numerator and denominator used to calculate individual state targets; in contrast, fo r building block 3 related to renewable energy, despite the fact that adding renewable energy to th e grid also backs down fossil units, EPA proposed only adding the MWhs of renewable energy i nto the denominator and not changing the fossil generation emissions rate numbers in the num erator, which has the effect of artificially weakening the proposed emission performance standar ds. The commenters said as discussed in the NODA, and consistent with EPA's approach in blo ck two, in calculating building block three of the BSER, emissions and MWhs associated with aff ected fossil fuel-fired units should be
removed from the numerator and the denominator and the equivalent number of MWhs should be added back based on displacement of those units by zero-carbon generation.

Commenters stated the formula the EPA developed for calculating the adjusted emissions rate is inconsistent in its treatment of zero-carbon genera ting sources and does not adequately account for expected emissions reductions from developing t hose resources. The commenters recommended that the EPA improve the consistency in the emissions rate formula by treating Building Blocks 3 and 4 similar to Building Block 2

.
Commenters stated the EPA also requested comment in the NODA on whether Building Blocks
3 and 4 should be treated in the same manner as nat ural gas fuel switching in Building Block 2 by counting the emission reductions for renewables, nuclear, and efficiency in the numerator of the emission rate formula rather than just the gene ration in the denominator. The commenters agreed with this approach as these techn ologies are clearly reducing CO2 by displacing fossil generation and it's a more consis tent and equitable approach with how natural gas fuel switching is treated; however, only the CO 2 reductions from new and incremental renewables (including hydro), nuclear and efficienc y should be counted, as the CO2 reductions501

from existing renewables (including hydro),nuclear and efficiency are already embedded in the baseline emissions and generation mix. The commente rs believed that the incremental generation from zero carbon options should be assumed to displ ace fossil fuels (and the associated CO2 emissions) on a pro-rata basis, which is a better r epresentation of the BSER and consistent with
the treatment of incremental NGCC.

Comment 16: NODA - load and resource balance requirements

Response 16: The EPA is adopting the alternative approach from t he proposal, modified as

described in the NODA. See sections V.A. and V.E. of the final rule preamble of the CPP and the CO2 Emission Performance Rate and Goal Computat ion TSD for CPP Final Rule supporting

the final CPP for more information.

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

Commenters stated contrary to the fundamental elect ric system planning principle that supply and demand must be matched across state borders, in applying building blocks 3 and 4 EPA assumes an increased amount of in-state generation from renewable energy and energy efficiency
at rates that are not linked to increases in demand or load growth. The commenters said for some states, the result is that strict application of bu ilding blocks 3 and 4 would require the development of significantly greater amounts of ene rgy than what is projected to be needed to serve load in that state; as a consequence, this su rplus energy would need to be exported to other states where the energy could be consumed. The comm enters said even though EPA proposes to allow renewable energy to be credited from out of s tate resources for compliance purposes, the result of the BSER assumptions is that a state like Wyoming, with little retail load and significant generation, is severely limited in its ability to u tilize building blocks 3 and 4 as a way of reducing the state's emission rate. The commenters said even if Wyoming were to aggressively pursue new renewable development that it may claim for compliance purposes, the instate
demand would not be sufficient to consume this incr emental energy, unless there was a significant reduction in output from existing coal resources within the state; as a result, the flexibility that EPA believes is inherent in its BS ER formulation is simply not available for Wyoming or similarly situated states. Commenters st ated EPA has recognized this issue in the NODA and proposes two different approaches for revi sing the state goal-setting formula to address this concern; however, EPA's options do not effectively address the load and resource balance requirement issues. The commenters said EPA proposes to either assume the replacement of all historical fossil generation on a pro rata basis or prioritize replacement of historical fossil steam generation with renewable a nd energy efficiency resources; both of the solutions proposed in the NODA will exacerbate the problem because they over-simplify the operational realities that will ultimately influenc e the energy displaced by additional renewables and energy efficiency. The commenters said to devel op a realistic and achievable emissions reduction goal that incorporates energy displaced b y additional renewables and energy efficiency, EPA would need to consider the generati on resources that would actually be displaced as a result of additional deployment of r enewables and energy efficiency, as may be determined via utility resource planning and system operations modeling. The commenters said this would necessarily include the assessment of re sources across state borders. The commenters502

said the actual result of EPA's proposed additional layer of specificity in calculating the goal (assuming, unrealistically, that energy will be dis placed from a limited type of resources located inside the borders of a particular state) would mak e the state goals less achievable; it would also severely limit the compliance flexibility that EPA has stated it intends to provide. Commenters
stated to address the issues related to the mismatc h between resources and load, EPA should not develop more prescriptive and aggressive emission r eduction goals, but rather should allow states and operators the flexibility, for complianc e purposes, to credit renewables and energy efficiency across their system(s) via resource plan ning and compliance reporting mechanisms to be developed under state 111(d) compliance plans.

Comment 17: NODA - Displacement of Fossil Fuel-Fired Generation by the RE and EE Components

Response 17: The EPA is adopting the alternative approach from t he proposal, modified as described in the NODA. See sections V.A., V.D., V. E., and VI of the final rule preamble of the

CPP and the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP for more information.

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

Commenters stated goal setting using the simplistic methodology of replacing the in-state fossil fuel-fired generation with incremental RE and EE in each state's goal setting calculation leads to absurd results. The commenters said EPA improperly assumes that RE and EE directly replaces in-state "affected" fossil fuel-fired generation. T he commenters are seriously concerned about the potential displacement of fossil generation with th e RE and EE components of the BSER evaluation. The commenters said Building Block 2 in the CPP completely eliminates the small portion of fossil fuel-fired steam generation withi n the state of New Jersey; the redispatch of existing NGCC capacity only brings the state averag e NGCC capacity factor to approximately 44%. The commenters said the displacement of any ad ditional fossil fuel-fired generation by the RE and EE components would decrease the operation o f the state's NGCC existing capacity and, dependent on the RE methodology selected by EPA, th is decrease could be significant.

Commenters stated the RPS methodology results in th e displacement of 10,147,466 MWhrs in 2030; the majority of the renewable energy credits ("RECs") to meet New Jersey's RPS comes from out-of-state sources; most of the out-of-state RE capacity comes from wind; therefore, in reality the true displacement of fossil generation would occur in another state. The commenters said wind is more likely to be located in the Midwe st, Central and South Central regions - areas with significant amounts of coal-fired generation. The commenters said due to its production characteristics, wind is more likely to displace ba se load and load following plants; the marginal plants during off-peak hours are most vulnerable to being displaced by wind - in the Midwest this would be mostly coal, but may also impact nucl ear and NGCCs during some hours. The commenters said in general wind is less reliable th an solar, and ramping (variations across hours) can be significant - causing a need for spinning re serves / fast response resources to maintain grid reliability.503

Commenters stated the regional potential methodolog y outlined in the NODA results in the displacement of approximately 5,559,000 MWhrs in 20 30. The commenters said a large portion of the RE generation to satisfy this target would b e from out-of-state sources (including wind capacity); this causes the displacement of fossil g eneration to occur in another state.

Commenters stated the in-state potential methodolog y (Alternative) results in the displacement of 1,372,000 MWhrs in 2030; this consists solely of solar resources. The commenters said solar has a different production profile than onshore win d (PJM summer capacity value of 38%); solar production is highest during summer and shoulder mo nths and least during winter months. The commenters said fixed tilt solar photovoltaic ("PV" ), if optimized for annual production (facing south), will peak at noon; if optimized for peak de mand (facing west) it can have an increased impact on mid-to-late afternoon peak demand; solar PV with single-axis trackers can optimize annual production and also increase its ability to meet peak demand periods. The commenters said solar is more likely to be located in eastern PJM because eastern PJM states have the largest solar mandates / subsidies, with New Jersey, Maryla nd, and Pennsylvania all having solar carve outs (stipulation that a portion of the required RE percentage or overall retail sales be derived from solar resources) in their RPS regulations. The commenters said due to its production characteristics, solar would impact both load follo wing and peaking plants - mostly gas-fired generation. EPA's assumption that RE generation cou ld directly impact "affected" fossil unit generation is incorrect.

Commenters stated regarding the displacement of fos sil fuel-fired generation through EE programs, EPA's assumption is flawed in two ways; f irst, similar to RE, EPA cannot assume that EE programs will directly displace "affected" fossi l unit generation under the CPP. The commenters said EE programs could potentially displ ace generation from simple cycle combustion turbines or new plants not covered by th e rule, especially during the summer season; second, for those states that are net importers of electricity, the displaced generation may come
from out-of-state sources. The commenters said unde r EPA's BSER analysis, implementation of Building Block 4 would result in an additional disp lacement of 5,889,520 MWhrs in New Jersey.

Commenters stated in New Jersey, implementation of BSER along with displacement through RE and EE could lead to absurd results; in total, t he displacement of NGCC generation in New Jersey could range from a high of 14,756,271 MWhrs to 5,980,805 MWhrs. The commenters said based on EPA's target equation, existing NGCC generation in 2030 in New Jersey is expected to cap at 22,762,692 MWhrs in 2030; the di splacement through RE and EE could result in up to a 65% reduction in EPA's projected generat ion from existing NGCC generation in New Jersey. The commenters said a reduction of this mag nitude could result in the retirement of the majority of existing NGCC EGUs in New Jersey becaus e it can be assumed that NGCC CHP plants would continue to operate. The commenters sa id this raises significant concerns regarding reliability because all of the baseload and load fo llowing fossil fuel-fired EGUs could be eliminated in the state of New Jersey. The commente rs said EEI describes the critical role fossilbased units play in ensuring the reliable operation of the bulk power system because "RE and EE cannot provide key services that baseload resources can provide which are essential for maintaining reliability, including frequency respon se, voltage support, load and resource balancing and inertia."504

Commenters stated under the NODA approach, it is as sumed new sources contribute an amount of incremental generation that is equivalent to pro jected demand growth; note that it is assumed under both approaches that incremental resources un der Building Blocks 3 and 4 replace historical generation from affected fossil fuel-fir ed sources so those incremental resources are
unavailable to meet new demand. The commenters said to calculate future demand, U.S. EPA uses the EIA 2013 Annual Energy Outlook (AEO2013) g rowth rates based on regional demand projections. The commenters said U.S. EPA calculate s projected sales for future years by multiplying 2012 historical sales by the regional a nnual growth rate for that year. The commenters said projected sales are then converted to incremental generation, giving
consideration to under construction NGCC and transm ission losses. The commenters said this generation is then added to the generation level fo r existing affected sources quantified. While the commenters believed that accounting for demand growth will be a critical factor in developing mass-based compliance approaches, this c o-proposed approach is flawed. The commenters did not agree with the application of re gional average growth rates. The commenters said U.S. EPA must allow states the flexibility to determine their individual state's potential growth; furthermore, U.S. EPA must include the flex ibility for states to alter their goals if
circumstances warrant.

Commenters stated that while EPA considers the disp lacement of coal and steam generation by re-dispatched NGCC generation in building block 2, EPA does not take into account the displacement of NGCC and other fossil generation by new renewables and energy efficiency per Building Blocks 3 and 4. The commenters stated that in practice, these measures, which have zero fuel costs, would indeed displace fossil gener ation, which does have fuel costs. The commenters noted EPA has requested comment on this issue in its recent Notice of Data Availability ("NODA") released on October 27, 2014. [79 Fed. Reg. 64,543]

Comment 18: NODA 100% RE and EE displacement of fossil generat ion.

Response 18: The EPA is adopting the alternative approach from t he proposal, modified as described in the NODA. See sections V.A., V.D., V. E., and VI of the final rule preamble of the

CPP and the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP for more information.

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

Commenters stated in the NODA, EPA discusses some s takeholders' desire to have EPA set state goals by requiring 100% of the EE and RE building b locks to replace existing fossil generation; in the NODA, EPA acknowledges that this methodology will be significantly more stringent and less cost effective than the original proposal.

Commenters stated experience does not demonstrate t hat 100% of EE and RE measures are displacing existing fossil generation. Significantl y, Connecticut is a net exporter of electricity in a deregulated regional power market; accordingly, m arket forces and energy demand outside of Connecticut determine the amount of generation - in cluding fossil generation - that operates in505

Connecticut. The commenters said in 2012, approxima tely 17% of Connecticut's generation
served load outside the state's borders.

Commenters stated conceivably, Connecticut could re duce its in-state demand to zero but its generation fleet could still run to serve load in o ther states. The commenters said requiring 100% of EE and RE to displace existing generation would necessarily require states like Connecticut to deploy greater amounts of EE and RE than contemplat ed in the rule. The commenters said the two methods proposed to establish RE targets are ba sed upon state potential and regional RPS requirements. The commenters said proposed EE goals were developed based on the level of efficiency achieved by leading states; requiring al l states to implement RE and EE to 100% offset existing fossil generation would necessarily require states to go beyond what has been adequately demonstrated; this is particularly true for leading states such as Connecticut. The commenters said for these reasons, Connecticut beli eves that the presumption that 100% of EE and RE directly replace existing fossil generation has not been adequately demonstrated and should not be the basis for state goal setting as d iscussed in the NODA.

Commenters added to the extent that EPA includes a requirement that EE and RE displace existing fossil generation, EPA must work with the states to accurately reflect the extent such replacement actually occurs in that state and consi der factors such as growth in energy demand and net imports and exports.

Commenters added Connecticut objects to the assumpt ion found in the Rate to Mass Technical Support Document, that100% of incremental RE and EE will supplant existing fossil fuel generation; Connecticut does not believe that this has been adequately demonstrated.

Comment 19: NODA; It is unlikely that Building Blocks 3 and 4 w ill meaningfully displace existing fossil fuel-fired generation.

Response 19: The EPA is adopting the alternative approach from t he proposal, modified as described in the NODA. See sections V.A., V.D., V. E., and VI of the final rule preamble of the

CPP and the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP for more information.

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

Commenters stated EPA's NODA provides another appro ach to the goal setting calculation that would further include accounting for displacement o f fossil generation by renewable energy ("RE") generation (Building Block 3) and energy eff iciency ("EE") (Building Block 4). The
commenters said the NODA seeks comment on alternati ve approaches whereby incremental renewables and energy efficiency would (1) be assum ed to displace 2012 fossil steam generation and NGCC generation levels on a pro-rata basis (i.e ., in proportion to each generation type's historical generation) or (2) be assumed to displac e fossil steam generation below 2012 levels first and then utilize any remaining RE and EE to d isplace NGCC generation.506

Commenters believed it would be inappropriate to ad just the EPA's proposed goal calculation to assume the displacement of fossil fuel generation w ith energy provided by Building Blocks 3 and 4; little, if any, of the Building Block 3 and 4 en ergy would be available to displace fossil fuel generation, as most or all of the energy would like ly be required to meet the growth in electrical
load after 2012. The commenters said this can be de monstrated using EPA's goal calculation spreadsheet and the data file provided with EPA's T echnical Support Document "Translation of
the Clean Power Plan Emission Rate-Based CO2 Goals to Mass-Based Equivalents," released on November 6, 2014. The commenters said as of 2029, t he EPA's goal calculation spreadsheet shows a nationwide total of approximately 313.6 mil lion MWh of incremental RE generation and 380.6 million MWh of EE avoided generation, for a t otal of 694.2 million MWh of energy from Building Blocks 3 and 4. The commenters said the an alysis in the EPA's rate-to-mass translation
data file shows an increase in the need for annual generation of approximately 577.1 million MWh between 2012 and 2029; this is equivalent to ov er 83 percent of the energy assumed to be provided by Building Blocks 3 and 4; however, this comparison understates the amount of additional generation that would actually be requir ed, since the Annual Energy Outlook ("AEO")
forecast on which it is based is net of the effect of energy efficiency measures. The commenters said since the Building Block 4 calculation determi nes the total, rather than incremental, potential for energy efficiency, existing energy ef ficiency measures must be removed from the AEO forecast, resulting in higher load growth than assumed by EPA. The commenters said as a result, it is likely that most or all of the energy from Building Blocks 3 and 4 will be required to serve new load, leaving little or no energy availab le to displace existing fossil fuel generation.

Comment 20: NODA - regions approach

Response 20: The EPA is adopting the alternative approach from t he proposal, modified as

described in the NODA. See sections V.A. and V.E. of the final rule preamble of the CPP and the CO2 Emission Performance Rate and Goal Computat ion TSD for CPP Final Rule supporting
the final CPP for more information.

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

Commenters stated EPA attempts to address some of t hese disparity issues in its very recently released Notice of Data Availability (NODA) through which it solicits comment on two potential changes to its assumptions regarding re-dispatch to natural gas as applied in BSER Building Block 2. The commenters said one approach would be to apply there-dispatch from coal to NGCC on a regional basis rather than a state-by-sta te basis. The commenters said EPA asks for comment on the appropriate regional framework and h ow to allocate the regional goals to individual state; (EPA is also soliciting comment o n an alternative approach to set regional renewable targets under BSER Building Block 3 based on regional renewable potential that would then be allocated among individual states in the region.) The commenters said these regional concepts may better address the interstate and regional structure of the electric generation and electricity markets but there is not sufficient time to comment thoroughly on the NODA. The commenters said these concepts are compli cated and will require more than the mere 45 days EPA has allotted for response to the N ODA. The commenters said if EPA is507

considering a more regional approach to setting the emission reduction targets, it should either withdraw the current proposal and solicit comment o n these alternative regional approaches (and other changes EPA has discussed in the NODA) throug h an ANPR or extend the conm1ent period on the current proposal to allow additional time to respond to the NODA.

Commenters stated the NODA requests comment on two variations to EPA's proposed approach to quantifying the level of reductions that are ach ievable from building block two and the RE component of building block three, in which EPA wou ld calculate the amount of additional NGCC or RE generation on a regional basis and then allocate shares of the emission reductions from this generation among states within the region ; however, EPA has not specified what regions it would use or how it would allocate expec ted emission reductions from these building blocks among the states in the region. The commente rs said without additional details on these alternative proposals, it is impossible to comment on whether these approaches would be legal or in the public interest. The commenters suggested th at the EPA provide additional details about these proposals, and solicit additional comment, be fore selecting these alternatives in the final
rule.

Commenters were unable to take a position in favor or against EPA's alternative proposal raised in Section III.B.2 of the October NODA regarding a regionalized approach to setting state renewable energy targets without first understandin g what the potential renewable energy targets are for Montana between 2017 and 2030; however, if EPA opts to use the alternative approach
outlined in Section III.B.2 of the October NODA in conjunction with a compliance methodology based on renewable energy consumption and RECs inst ead of renewable electricity generation, then each states' share of the regional renewable e nergy target should be based on retail sales in the state rather than generation. The commenters sa id to set the goals based on total generation would fail to address the concern expressed by many states, and recognized by EPA, that the draft rule could potentially saddle renewable elect ricity exporting states with more aggressive renewable energy targets than renewable electricity importing states.

Commenters stated if EPA opts to use the regionaliz ed renewable energy target methodology outlined in Section III.B.2 of the October NODA, EP A should favor the creation of larger regions, such as North American Electric Reliabilit y Corporation (NERC) regions, for setting regional renewable energy targets to better capture the significant amounts of electricity, and in particular renewable electricity, that travel long distances from their generating source to their eventual purchaser and consumer. The commenters sai d if selected, the regionalized approach to setting state renewable electricity targets should be applied to all renewable electricity generation, both existing and new, in order to refl ect that purchasers of existing renewable energy generation are often not in the same state t hat the electricity is generated in and that this i s likely to continue to be the case going forward wit h future renewable energy developments.

Commenters stated EPA should not incorporate existi ng hydropower generation into the alternative regionalized renewable electricity targ et methodology outlined in Section III.B.2 of the October NODA; the inclusion of existing hydropo wer will only add further complexity or variability to the renewable energy targets, partic ularly in any smaller geographic regions where good and bad hydro years could create boom and bust renewable electricity years for the entire region.508

Commenters were concerned about the lack of detail on the reallocation criterion for apportioning target RE generation to states within a region.

Commenters stated in its October 28, 2014, NODA, EP A requests feedback on third option for setting RE targets, a proposed "regionalized approa ch". The commenters said EPA requested comment on three key methodological assumptions to this new approach:

1. What would the regional structure be, as well as a justification for that structure.

2. Criteria to be used for reapportioning state RE targets within given regions and justification for those criteria.

3. What components of state RE targets should be re gionalized under such an approach.

Commenters stated EPA requested comment on the conc ept of aggregating RE generation potential across states within regions, and then re apportioning the aggregate identified RE generation to individual states. The commenters sai d it is hard to imagine a scenario where the states in EPA's proposed North Central Region could agree to such a complex and potentially
contentious scheme in time to meet the 2017 multi-s tate plan deadline. The commenters said EPA suggests in its NODA that regional structures c ould be informed by existing regional constructs such as NERC regions or the Federal Ener gy Regulatory Commission (FERC) Planning Regions, RTOs and current regional renewab le energy credit tracking systems. The commenters said the idea of using an existing organ izational footprint established on some other technical, economic, or political basis to determin e RE potential for goal setting purposes should
be dismissed out of hand. The commenters said if on e accepts the premise that a state's RE potential should be used for RE goal setting, the n umber of regions (and within those regions, sub-zones), would need to be much greater than curr ently proposed.

Commenters stated in the Midwest, RE technical pote ntial is primarily a function of wind resources; in fact, EPA's own alternative RE techni cal potential approach reported very little, if any, contribution from Solar PV to Wisconsin's RE g oal achievement. The commenters said in reviewing the National Renewable Energy Laboratory' s Wind Resource Map, it is readily apparent that wind resources in EPA's proposed Nort h Central Region are starkly different both East to West and North to South. The commenters sug gested that EPA's North Central Region
should be divided into three to four sub-zones for RE goal setting purposes. The commenters proposed that Wisconsin and Michigan wou ld comprise one of those sub-zones; this is not to say that Wisconsin would not consider acq uiring or supplying RE resources to states in the region for state plan development purposes, for to do so may trigger a violation of the Dormant Commerce Clause. The commenters also sugges ted that state RE goals be informed by current state renewable portfolio standards in that they reflect a feet on the ground technical and economic assessment of RE development potential.

Commenters stated Maine already produces more than half of its electricity from renewables - much of which is exported to the rest of the region , which has helped the Northeast be a leader in
carbon reduction. The commenters said the final 111 (d) rule, accordingly, must use a metric that regionalizes state goals, with hydro and biomass co rrection; any renewable goals must be regionalized to be fair to states with existing ren ewables that serve regional needs.509

Commenters stated relative to Building Blocks 2, 3, and 4, the original proposed rule utilized inputs and assumptions for existing and potential r esources for reduction of CO2 from affected electric generating units on a state-specific basis to develop a state-specific target emission rate. The commenters said the concepts of the NODA do not change the inputs and assumptions for each state; however, the NODA applies them on a reg ional basis instead of a state-specific basis. The commenters said the shift from a state implemen tation plan to more of a "regional implementation plan" is to "levelize" the emission targets both regionally and nationally. The commenters said one of the proposed regional option s in which Kentucky is listed is in the SERC Region along with Illinois, Tennessee, Missouri, Al abama, Georgia, North Carolina, South Carolina, and parts of Louisiana, Virginia, and Ark ansas. The commenters said this inflates the average amount of NGCC and renewable energy that co uld be applied to the state's 2030 goal
calculation.

Commenters stated the regional considerations offer ed in the NODA relative to renewable energy (Building Block 3) would change the original renewable energy target for Kentucky. The
commenters said the NODA would increase the renewab le energy component from Building Block 3's target calculation from 2% up to 13% for the state. The commenters said in comments filed by EPRI in the docket for this rule, EPRI acc urately points out that assuming state equivalency for regional calculations of renewable resources is problematic. The commenters said each state has drastically different renewable resource potential. The commenters added the concerns regarding transmission capacity and double counting for importing renewable energy from the original proposal is clearly exacerbated b y the regional approach in the NODA. The commenters said EPA should not adopt a regional app roach in the calculation of Building Block 3 effects on Kentucky.

Commenters stated a regional concept of reductions associated with energy efficiency programs (Building Block 4) would increase EPA's calculation component of avoided MWs under Building Block 4 for Kentucky from 10% to 13%. The commenters believed the energy efficiency component was overstated by at least 75% based on Kentucky's energy efficiency potential identified by the Cadmus study; increasin g the calculation for Kentucky to 13% will be even more problematic for the state. The commenters urged EPA to avoid utilizing a regional approach for Building Block 4.

Comment 21: Regionalization: Building Blocks 2 and 3

Response 21: The EPA is adopting the alternative approach from t he proposal, modified as described in the NODA. See sections V.A., V.D., V. E., and VI of the final rule preamble of the

CPP and the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP for more information.

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

Commenters stated EPA seeks comment overall on an a ppropriate regional structure to use in determining the frameworks and the appropriate mann er in which goals can be derived under510

building block 2 and allocated to states; apparentl y, some stakeholders have expressed concerns that disparate impacts could create distortions in the electricity markets. The commenters said as an initial matter, the rule is unclear as to whethe r this proposal would replace the existing proposal or would be an additional option available to states; the NODA simply does not provide adequate detail upon which a regional alternative c an be evaluated.

Commenters believed that states should have the opt ion of participating in a multi-state or regional program to comply with the CPP; however, m aking such an approach mandatory introduces a host of legal issues and other impedim ents that would need to be addressed. The commenters said for example, the proposal contempla tes an allocation of responsibility for the revised targets; such an approach will necessarily create winners and losers and thus is likely to be unworkable. The commenters said in any event, FE RC has responsibility over both the electricity markets via the RTOs and the reliabilit y of the grid.

Commenters stated EPA seeks comment on whether and how "book life" might be used as a part of the basis for the development of an alternative emission glide path for Building Block 2 or to evaluate alternative glide path approaches to addre ss stakeholders' stranded investment concerns. The commenters said "Book life" is a regulatory acc ounting concept tied to depreciation tables and cannot be a substitute to the CAA's requirement that consideration under Section 111(d) be given to "useful life". The commenters believed tha t remaining useful life is the appropriate
measure to determine the timeline for retirement of coal facilities and the ramping up of natural gas combined cycle units for base load type operati on. The commenters said EPA correctly recognizes the CAA's requirement to develop guideli nes based on the remaining useful life of affected units; however, in imposing interim target s, the proposal ignores this statutory requirement and will result in the retirement of co al units prior to the end of their remaining useful life in order to achieve such interim target s. The commenters said the only ways to properly incorporate the remaining useful life of a ffected units is to eliminate the interim targets altogether and allow states to address remaining us eful life in their individual state plans.

Commenters stated in the NODA, EPA explores setting state level renewable energy (RE) targets based on regional potentials for RE; EPA reports th at stakeholders are interested in target setting methodologies that take into account interstate exc hanges of RE. The commenters said one proposed method involves setting regional RE target s which would then be apportioned to each state. The commenters said EPA specifically request s comment on different methods for apportioning RE targets to states such as proportio nal to total state electricity sales; however, the methodology used to set renewable energy targets un der a so-called "regionalization" approach
fails to contain sufficient detail or information t o evaluate the regulatory, financial and achievability implications of such an approach.

Commenters stated there are a number of legal and t echnical infirmities associated with the concept of using RE to set targets under the rule a nd a regionalization approach merely compounds those problems; specifically, based on an analysis of the example provided by the EPA, the renewable responsibility for Missouri woul d nearly double under this alternative and be
about 8 times more than what is included in the cur rent goal setting for Missouri; thus, this proposal will unnecessarily increase the cost of th e rule.511

Commenters stated while EPA attempts to address con cerns arising from its originally proffered approach, it raises an entirely new set of problems and exacerbates problems with the originally proposed approach; for example, any allocation meth od chosen will simply create new sets of winners and losers, and thus merely shift grievance s rather than eliminate them.

Commenters stated the third general area of interes t in the NODA is alternatives for calculating goals under building blocks 3 and 4; stakeholders o n this topic are critical that EPA's method for calculating goals under blocks 3 and 4 are differen t from those under block 2. The commenters said specifically, that under block 2, EPA assumes that NGCC generation offsets coal-fired generation; this is accomplished under block 2 by d iscounting CO2 and megawatt-hours (MWh) from coal generation and adding in CO2 and MWh from NGCC unit increased utilization. The commenters said in building blocks 3 and 4, EPA doe s not assume that RE and EE replace coal generation and only adds MWh into the denominator o f the goal setting calculus.

Commenters believed this proposal is flawed on mult iple levels: first, it incorrectly assumes that RE will replace fossil generation MWh for MWh; in r eality, such replacement does not occur due to the intermittent nature of RE generation and as a consequence fossil generation is needed to back up RE; further, the offset approach envisio ned by EPA incorrectly assumes that the value to the system of each MWh of RE is equal to fossil fired generation - but it is not. The commenters said that RE and fossil generation are n ot equal is demonstrated by how RE is counted when determining capacity value in RTOs; sp ecifically, wind generation in MISO is valued at only 14% of its nameplate capacity while coal-fired generation is valued at what is known as its Unforced-Capacity (UCAP or its net dep endable capacity) which varies by plant but is in the range of 80-95% of its nameplate capacity . The commenters added since RE is intermittent and less reliable than fossil-fired ge neration, it cannot provide ancillary services such as load following and operating reserves; thus , the proposal to treat RE and fossil generation as if they are interchangeable is clearl y flawed; moreover, such an approach would serve to only increase the cost of the rule for bot h Missouri and Illinois.

Comment 22: NODA - Computation of Energy Savings Credits

Response 22: The EPA is not including Building Block 4 in the go al calculations for the final CPP rule. See section V.A of the final rule preambl e for more information.

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

Commenters supported the proposed approach of addin g energy efficiency savings to the denominator if a state chooses to comply through th e rate based approach; this approach is simpler and likely to be more accurate than estimat ing the CO2 emissions reductions from energy efficiency policies and programs and subtrac ting this from the numerator, given the uncertainties regarding the actual time of energy s avings and defining which specific power plants cut their generation as a result of end-use energy savings. The commenters said moreover, it is essential to provide such credits under a CO2 emissions rate approach so that states are not discouraged and penalized for implementing energy e fficiency initiatives that tend to reduce the operation of cleaner power plants.512

Commenters stated in applying energy savings credit s to the denominator in the emissions rate calculation, end-use energy savings should be adjus ted upwards to account for electricity losses in the transmission and distribution grid (i.e., to represent electricity savings at the point of generation). The commenters said this should be all owed for electricity savings from both utility and non-utility energy efficiency programs; further more, these T&D loss adjustments should be based on actual values for a utility or a state.

Commenters stated in the Notice of Data Availabilit y (NODA) issued on October 27, EPA requested comments on the issue of whether some or all of the energy efficiency credits and renewable energy generation that states add to the denominator in their CO2 emissions rate calculation would reduce fossil generation from exi sting power plants, and whether and how this should be incorporated into the numeric calculation of state emissions rate targets. The
commenters believed it is reasonable for the EPA to assume that a portion of the generation provided by incremental energy efficiency and renew able generation will be used in the future to displace new fossil generation (either from new or existing power plants) that would otherwise be necessary to serve population and economic growt h (i.e., growth in the demand for energy services), and a portion will be used to displace h istorical generation from existing power plants. The commenters suggested a methodology where it is first assumed that incremental energy efficiency and renewable generation offsets new fos sil generation, with any remainder displacing historical generation from existing power plants. A nd regarding the latter, the commenters supported the option presented in Sectio n C(a) of the NODA where remaining energy efficiency and renewable generation replaces historical fossil generation on a pro rata basis; this is most consistent with what is likely to take place in the real world in where decisions about displaced generation are made for both econom ic and environmental reasons.

Commenters stated for the determination of energy s avings credits, it is essential that the EPA define whether utilities and other energy efficienc y program implementers are supposed to use gross energy savings or net energy savings in deter mining energy savings credits; without such direction, there will be confusion about which type of savings to use among states and utilities and in all likelihood a lack of consistency among s tates. The commenters said the EPA has proposed using net savings to calculate credit towa rds state emissions rate targets; net savings include estimates of and adjustments for free rider s and in some cases spillover effects; gross savings exclude these factors. The commenters said gross savings are simpler to calculate and are a more appropriate methodology for both setting state goals and determining credit towards the realization of those goals. The commenters reco mmended that the EPA base the computation and credit on gross energy savings rather than net energy savings for the following reasons:

• Actual CO2 emissions reductions result from gross e nergy savings, not net savings; the attribution of savings is not relevant to the issue of providing fair credit to energy efficiency measures for the role t hey play in reducing emissions, when the emissions rate approach is used; States an d utilities will benefit from the CO2 emissions reductions due to gross energy saving s under a mass-based approach, and the same basis for savings should be used under a rate-based approach.

• Some utilities only calculate gross savings, and no t net savings, at this time; this is particularly true for municipal utilities and rural electric cooperatives that are not513 subject to PUC regulation; in addition some IOUs re port gross savings in response to energy savings standards or goals based on gross savings.

• Net-to-gross savings ratios are imprecise and not c onsistent from utility-to-utility; furthermore, net-to-gross savings ratios are rarely estimated or applied to nonutility efficiency policies and programs including building energy codes, state appliance standards or public sector energy efficie ncy programs.

• Gross savings are easier to determine than net savi ngs and will facilitate states implementing, and receiving credit for, a wide rang e of energy efficiency policies and programs; States will not have to deal with the challenging question of estimating net savings resulting from building code s, state financing or financial incentive programs, public sector energy efficiency programs, and the like-a question they have no experience or interest in add ressing; requiring states to estimate and report net savings from non-utility pr ograms would increase EM&V costs and lead to greater uncertainty and inconsist ency in savings claims and credits, compared to using gross savings.

• If states and utilities are provided energy savings credits based on net rather than gross savings, they have the opportunity to claim s ubstantial "spillover effects" (i.e., energy savings stimulated by a policy or pro gram outside of direct participation in the policy or program) that may be uncertain or of questionable validity; by definition spillover effects are exclu ded from the determination of gross energy savings.

• Many states define their energy efficiency standard s or goals in terms of net savings; it will not be difficult for utilities or states to report gross energy savings to the EPA while at the same time determining net s avings for the purpose of complying with state standards or goals; in general net savings are determined by first estimating gross savings for a program, and t hen applying a net-to-gross energy savings ratio to this value.

Commenters stated it should be acknowledged that th ere are a limited number of efficiency programs where commonplace savings evaluation techn iques yield net rather than gross energy savings; in particular, this is the case for behavi or change programs where savings from a treatment group is compared to savings from a contr ol group. The commenters recommended that the energy savings for programs where savings is evaluated in this manner be treated as gross savings for the purpose of calculating energy savings credits under the Clean Power Plan.

Commenters stated in calculating gross energy savin gs, the EPA should clarify that states and utilities are not allowed to count savings from and receive credits for efficiency measures installed outside of participation in those energy efficiency policies and programs included in state plans, except in the specific case of market transformation programs; market transformation programs are by definition designed to have broad m arket impacts by increasing the availability of certain energy efficiency measures, educating co nsumers, influencing codes and standards, and other techniques such as those practiced by the Northwest Energy Efficiency Alliance (NEEA). The commenters said the impacts of market t ransformation programs often extend in514

time beyond the program implementation period. The commenters said the EPA should allow states to implement and receive energy savings cred its for market transformation programs, and should issue a specific protocol for evaluating the energy savings impacts of such efforts; this protocol can and should be based on existing impact evaluation methodologies such as those used by NEEA.

Commenters stated if the EPA agrees to use gross sa vings, gross savings should be used consistently in the Building Block 4 input to the e missions rate reduction goals, state plans for achieving the Clean Power Plan targets, and the ene rgy efficiency credits claimed during the implementation period. The commenters said utilizin g gross savings will increase the credit utilities and states receive for Building Block 4 s avings by 10-15% relative to utilizing net savings; in other words, 1.5% savings on a net savi ngs basis is equivalent to about 1.65-1.7% savings on a gross savings basis. The commenters sa id thus, if the EPA accepts the recommendation to move from net energy savings to g ross energy savings, it should modify its Building Block 4 calculation, using a ramp up to 1. 7% savings per year for utility programs only and preferably a ramp up to 2.2% savings per year f rom the combination of utility and non-utility

programs.

Commenters stated it is also important for utilitie s, other program implementers, and those conducting energy efficiency program evaluations to establish an accurate baseline to measure savings against. The commenters said the EPA shoul d ensure that states and utilities utilize best practices in determining baselines, and in this reg ard we recommend that the EPA endorse the guidance regarding selecting baselines in the SEE A ction Network's Energy Efficiency Program Impact Evaluation Guide. The commenters said this G uide was developed by leading energy efficiency impact evaluation experts, is highly cre dible, and is widely used and referred to in the energy savings evaluation work. The commenters said providing guidance concerning baselines that differs from these well-established best pract ices would cause confusion for utilities and other non-utility program implementers, as well as those responsible for energy efficiency program evaluation.

Comment 23: NODA - correctly does not include nuclear

Response 23: The EPA is not including Nuclear in the goal calcul ations for the final CPP rule, please see section V.E. of the final rule preamble of the CPP for more information about Building Block 3.

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

Commenters stated the EPA addressed the inconsisten t treatment of renewable energy and energy efficiency when it published a Notice of Dat a Availability (NODA) in October 2014; it noted that renewable energy and energy efficiency c an be used to reduce fossil generation and hence also emissions; and the NODA also provides a second option for using RE and EE to displace fossil fuels. The commenters recommended a variant that would use energy efficiency to displace generation on a pro rata basis and rene wable energy to displace fossil fuel generation starting with coal and then oil and gas boilers, wi th any remaining RE to be used for displacing515

NGCC generation. The commenters said the calculatio n methods published for comment in the NODA deal only with RE and EE to displace fossil ge neration; they do not explicitly deal with nuclear energy. The commenters said this omission o f nuclear is appropriate since the CPP has noted that "nuclear generating capacity is also rel atively expensive to build compared to other types of generating capacity, and little new nuclea r capacity has been constructed in the U.S. in recent years." The commenters said nuclear should n ot be part of the best system of emission
reductions.

Commenters stated so far as nuclear energy is conce rned, the EPA should estimate generation in each year based on the reactors that are expected a t the time of publication of the final CPP to have licenses the year for which the target rate is being calculated; for instance, this means a reduction in nuclear generation by about 30 percent in the year 2030 compared to 2012. The commenters said nuclear energy should not be part o f the best system of emission reduction.

Comment 24: NODA - BB1 HRI

Response 24: See section V.A and V.C of the preamble for furth er discussion of building block one and the GHG Mitigation Measures TSD.

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

Commenters stated the NODA also requests comment on whether EPA should phase in Block 1 heat rate improvements for coal-fired units; this a pproach does not address the issue that heat rate improvements are best addressed on a unit-by-u nit basis, thereby making any assumed approach by EPA to phase-in these reductions arbitr ary and generic. The commenters said to appropriately phase-in heat rate improvement projec ts EPA should allow for state plans to develop this schedule by conducting case-specific a nalyses. The commenters provided Appendix D that includes supporting information related to t hese technical issues including work practices conducted by Alliant Energy and summaries describin g the potential impacts of load, cycling and degradation.

Comment 25: NODA - EPA Should Incorporate Co-Firing With Natura l Gas and Other Types of Fuel Switching in Building Block 1.

Response 25: See sections V.C. and V.D. of the final rule preamb le of the CPP for the EPA’s response to this comment and more information about Building Blocks 1 and 2.

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

Commenters stated in the Goal-Setting NODA, EPA als o requests comments on whether it should consider re-dispatch from steam generation t o existing NGCC units, re-dispatch to new NGCC units, or co-firing natural gas in existing co al-fired boilers in calculating the emissions reduction goals for Building Block 2; companies may also convert coal-fired steam boilers to natural gas, as EPA notes in the NODA. The commente rs said EPA suggests that this could be516

accomplished by establishing a minimum percentage f or dispatch switching from coal-fired generation for Building Block 2, which would increa se the emissions reductions required in states with existing coal-fired units but little or no excess existing NGCC capacity. The comment said as part of the proposal, EPA requests comment on the issue of whether co-firing with natural gas and other forms of fuel switching (e.g., to hig her ranked coal or biomass), as well as conversion, should be considered as part of the BSE R, generally, including in Building Block 1.

Commenters agreed that co-firing with natural gas a nd converting coal units to natural gas units
are feasible mechanisms to reduce CO2 emissions tha t are frequently being implemented today even without a price on carbon emissions; therefore , EPA should consider these mechanisms for
emissions reduction in the BSER and increase the st ringency of state emissions reduction goals accordingly; however, co-firing with natural gas is best applied as an element of Building Block 1 to increase the percentage reduction of emissions from coal-fired power plants attributable to measures that can be implemented at those plants.

Commenters stated as EPA notes, industry is current ly rapidly converting or replacing the existing coal-fired fleet to utilize natural gas or to allow co-firing of existing boilers with natura l gas; as of January 2013, well before the proposal o f the Clean Power Plan, plants representing 5,384 MW of coal-fired capacity located in five NER C regions were involved in conversion projects; since that time, additional conversion pl ans have been announced; likewise, a number of existing coal-fired power plants have made chang es or announced plans to accommodate cofiring so that they can run on natural gas, coal, o r both.

Commenters stated repowering and co-firing projects are occurring today without regard to a specific federal requirement to reduce CO2 emission s from existing sources; dramatically lower natural gas prices and increased development of sha le gas resources arising from directional drilling capability have made these projects more f easible; co-firing also reduces maintenance requirements and increases operational flexibility by allowing the coal-fired plants to increase and decrease their output more readily to respond t o changes in load demand. The commenters said many companies initiating these projects have indicated that they are using natural gas conversion or co-firing as low-cost mechanisms to r educe emissions of conventional and hazardous air pollutants to comply with the require ments of MATS, CSAPR, the regional haze program, and other state and federal environmental requirements. Indeed, some of these projects have allowed companies to continue to rely on coal- fired facilities that would otherwise have retired; therefore, EPA has a reasonable basis to i nclude increased natural gas use through cofiring and conversion as cost-effective mechanisms in determining BSER.

Commenters said the widespread availability of shal e gas means that co-firing and conversion is available, or could be available, at coal-fired uni ts located across the continental U.S.

Commenters said the availability of nearby existing pipelines should not be considered a
limitation on use of these mechanisms to reduce CO2 emissions; many new pipelines have recently been built, are under construction, or hav e been announced, including FERC-regulated interstate pipelines, intrastate public utility com mission-regulated pipelines, and unregulated pipelines characterized as "gathering lines."; in a ddition, FERC certificates pipelines relatively quickly - based on data other commenters have amass ed, we understand pipelines generally proceed from application to in-service in under 16 months.517

Commenters added temporary changes in natural gas d emand such as that created by last winter's polar vortex should not exclude co-firing as a basi s for setting multi-decade average emission reduction goals; because units equipped to co-fire natural gas and coal can readily switch fuels, adjusting goals to call for a minimum percentage of co-firing would not impair reliability during limited extreme weather events like the polar vorte x; indeed, the additional flexibility provided by dual-fuel units can enhance reliability.

Commenters stated although EPA has suggested that c o-firing could be considered as a part of the goal-setting for Building Block 2, the better a pproach is to consider natural gas co-firing, like other available forms of fuel switching, as part of Building Block 1. The commenters said fuel switching and materials separation are well-establi shed mechanisms that must be considered under other Clean Air Act provisions in establishin g technology-based, unit level emissions limitations; like heat rate improvements, fuel swit ching occurs "inside the fence" through modification of the existing individual unit. The c ommenters said co-firing involves modifying existing steam boilers solely to accommodate a less carbon-intensive fuel rather than switching the type of unit altogether; by contrast, Building Block 2 relies upon the system response of changing dispatch from one type of facility (coal s team) to another type (NGCC).

Commenters added because efficiency improvements an d co-firing can occur on the same unit, employing both measures will produce greater emissi ons reductions than applying either measure alone; while emission reductions from these two methods will overlap to some degree, considering both techniques will still lead to more reductions at the unit than six percent on average, and thus will result in more stringent sta te goals. The commenters said while EPA will need to assess the degree of additional emissions r eduction that can be achieved through cofiring, there are many coal-fired plants located ov er shale plays, and these units could use natural gas for 20 percent to 100 percent of their operatio n in less than two years, based on the pipeline
construction timeframe discussed above and more tho roughly in other organizations' comments. The commenters said this revision to Building Block 1 would also help address the disparity in emissions reduction goals between states with littl e existing NGCC capacity but significant coalfired capacity, since it would have a proportionate ly larger impact on the emissions goals for the states with limited excess NGCC capacity.

Commenters stated EPA should consider co-firing and other fuel switching strategies as one of the mechanisms that it might employ in determining what emissions reductions can be achieved under Building Block 1, and it should calculate rev ised goals reflecting these strategies.

Comment 26: NODA; reliability concerns

Response 26: See section I.A. of the final rule preamble of the CPP for the EPA’s response to

this comment and the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP.

The following are summaries of the specific public comments under this comment:518

Commenters stated regarding the proposed glide path for emission reductions, the EPA asks for comments on ways to adjust interim goals that inclu de a phase-in of block one and two specific approaches for a phase-in of block two: (1) develop ing a phase-in schedule on the basis of whether and to what extent any additional infrastru cture improvements are needed, and (2) using book life of the original generation assets and any upgrades to those assets in the development of a glide path. Commenters appreciated the EPA's cons ideration of reliability implications associated with the currently proposed glide path a nd willingness to consider ways to adjust the glide path. The commenters did not believe that the approaches for which the EPA seeks comments in its NODA do enough to address reliabili ty concerns; the commenters remain concerned with the timing of the EPA's proposed sch edule. The commenters said the current schedule of issuing a final rule by June 2015, allo wing state plans to be developed by as late as 2018, and interim goals that begin in 2020 does not allow sufficient time to evaluate, design, and construct infrastructure needed to allow compliance in a reliable fashion. The commenters said it takes about eighteen months to evaluate transmissio n needs for a set of modeled assumptions and it has taken as much as eight and a half years to study, plan for and construct transmission facilities. The commenters said while adjusting int erim goals such that the proposed glide path is less stringent could reduce the need for additional infrastructure at the onset of the compliance period, it is not possible to determine the appropr iate infrastructure needed before the issuance of the final CPP by June 2015. The commenters said rel iability can only be maintained if the EPA takes into consideration the length of time it will take to plan for and construct both generation and transmission infrastructure; without such consi deration, reliability will be at risk for interim goals established to begin in 2020. The commenters continued to believe that the best way to address the reliability concerns expressed in its i nitial comments and those expressed by others is to extend the imposition of interim goals from 2020 to at least 2025.

Commenters added a reliability safety valve would a llow system operators and planners to maintain reliability by evaluating and addressing r eliability issues on a state-by-state basis both during and after the development of state plans; in clusion of a reliability safety valve in the final rule would better ensure that all reliability risks , not just those being considered by the NODA, be addressed before the implementation of state pla ns.

Commenters stated EPA's proposals to reduce fossil- fuel generation by the pro-rata amount of new renewable energy generation violates the CAA an d would trigger serious reliability
concerns. The commenters said stakeholders have all egedly "raised concerns that the proposed numeric formula for calculating each state's goal i s not consistent in its application of the BSER for incremental generation from existing NGCC units under building block 2, as compared with incremental RE generation and [energy efficiency] g eneration avoidance under building blocks 3 and 4," and therefore, have "suggested an alternati ve approach of applying generation from building blocks 3 and 4 to reduce fossil generation below 2012 levels in the goal
calculation." The commenters said to address these "concerns," EPA has outlined two proposals where "incremental RE and EE explicitly replaces ge neration from fossil fuel-fired sources in the goal calculation;" one proposal includes replacing all historical fossil-generation on a pro rata basis and the other proposal includes replacing his torical fossil-generation, but prioritizing the replacement of historical fossil-steam generation. The commenters said the underlying "concerns," and EPA's proposals to address them, ar e fundamentally flawed, legally invalid, and would create significant reliability concerns in nu merous states. The commenters said for example, under Block 3 of EPA's existing Rule Propo sal methodology, Texas is expected to519

increase renewable generation by a staggering appro ximately 52 million MWh, comparing 2012 to 2030 totals; this is after Block 2 is supposed t o leave only -67 million MWh of coal generation in 2020. The commenters said either of EPA's two pr o-rata proposals would leave very little existing coal generation in Texas. The commenters s aid this is especially true under the proposal where coal-generation is targeted first. The commen ters said while EPA admits that these changes would reduce emissions targets, precise red uctions are unclear; this makes it impossible for stakeholders to effectively comment on EPA's pr oposals. The commenters said though, it appears that only roughly 15 million MWh of coal ge neration - and likely even less - would remain if EPA implemented these pro-rata proposals; this would create extreme reliability concerns. The commenters said netting out coal-gene ration with RE generation would generate incredible shortfalls in electricity supply, as the Rule Proposal's model is predicated on coal (and other fossil generation) being available as the Rul e Proposal's requirements are implemented. The commenters said already, the Southwest Power Po ol ("SPP") and ERCOT are predicting electric shortfalls under the Clean Power Plan as p roposed. The commenters said losing an
additional 52 million MWh of base-line and affordab le coal would severely exacerbate these reliability concerns. The commenters said either pr o-rata proposal would effectuate the apparent underlying goal of EPA's Rule Proposal and BSER met hodology - the shutdown of coal generation in the U.S. and in states with diverse e nergy supplies, such as Texas, Louisiana and Mississippi; however, EPA has no basis or right to take these actions. The commenters said EPA does not have the authority to require even 1 MW of coal-generation to shut down as a means of emission control, let alone an entire state's coal fleet; EPA's attempt to curtail natural gas generation would suffer the same legal flaws; just as with coal, EPA does not have the authority to force the shutdown of natural gas generating uni ts - or any existing source - under the CAA.

Commenters stated throughout the Section 111(d) pro posal and NODA, it is apparent that the proposals have been designed as though the electric generation system and both short and longterm electricity demand can be predicted and contro lled to a very small degree of variation. The commenters said these additional proposals and alte rnatives do not consider the actual dynamic infrastructure that is needed to keep electricity r eliable and affordable. The commenters said the best energy forecasters at the Energy Information A gency consistently err in their forecasts despite their immense technical expertise; U.S. EPA has not demonstrated its predictions (in a field outside U.S. EPA's primary area of expertise) will be any better than the experts in the field and therefore this overall proposal is flawed.

Comment 27: NODA; BB2 concerns

Response 27: The EPA is adopting interim goal dates of 2022-2029 , with illustrative phase-in emission values for 2022-2024, 2025-2027, and 2028- 2029 and a phase-in approach for Building

Block 2. See sections I.A. and V.D. of the final r ule preamble of the CPP and the CO2 Emission Performance Rate and Goal Computation TSD for CPP F inal Rule supporting the final CPP for

more information.

Commenters do not appear to disagree with EPA propo sed categorization of Cane Run unit 7 as an existing unit. EPA maintains this likely affect ed EGU categorization for the unit in the final

rule.520

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

Commenters stated in the NODA, EPA requests comment on whether it should change the proposed goal computation methodology to address st akeholder concerns about the feasibility of implementing all of building block two by 2020. The commenters said if EPA decides to set interim 10-year goals in addition to final 2030 tar gets (as currently proposed), the agency should, at a minimum, provide for a longer phase-in period for implementing emission reductions from all of the building blocks, including reductions fr om heat rate improvements, redispatch, and "under-construction" nuclear energy. The commenters said EPA's assumption that all emission reductions from building blocks one and two and und er construction nuclear can be implemented by 2020 is not adequately supported by the record; moreover, the use of this assumption in EPA's goal-setting computation will lead to overly string ent front-loaded interim goals. The commenters said meeting these overly stringent goal s will require a significant number of early retirements of coal-fired EGUs, will increase the c ost of natural gas, and will lead to negative impacts on jobs and electric reliability; therefore , if EPA declines to eliminate the interim goal, EPA should mitigate the potential for such impacts by including a longer phase-in period for obtaining emission reductions from these components of BSER, as it has already proposed to do for other BSER components such as RE and EE. The co mmenters said as with RE and EE, EPA should gradually phase in the emission reductions i t projects for building blocks one and two and under-construction nuclear over the 10-year interim compliance period. The commenters said a gradual phase-in of these emission reductions would give states, utilities, and EGU operators more time to make the investments in new equipment, transmission, and pipeline capacity that will be necessary to achieve EPA's projected reduct ion targets without compromising reliability and with fewer shocks to electricity related jobs. The commenters said a longer phase-in period during the interim period would still allow states to reach EPA's target 2030 emission rates; thus, this adjustment would neither fundamentally alter t he basic purposes of the Proposed Rule nor compromise its environmental integrity.

Commenters stated Building Block 2 that EPA utilize d in the original proposal implements a shift of generation to existing natural gas combine d cycles assuming an increase from a national average utilization factor of 55% to 70%. The comme nters said Cane Run 7 is the only affected unit in Kentucky under Building Block 2, the genera tion shift is only assumed to be 2% of total fossil fired generation for the state. The commente rs said the concepts for consideration in the NODA expand the utilization of natural gas to inclu de co-firing natural gas, in addition to eliminating more existing coal-fired generation to be replaced by new NGCC. The commenters said the NODA discusses increasing the gas re-dispa tch/utilization for Kentucky's goal calculation and considers a range for a regional sh ift of between 12% and 55%. The commenters said at the minimum value, which EPA discusses in t he NODA, Building Block 2 for Kentucky's calculation would increase the loss of existing coa l generation from about 2% up to 12% and potentially as high as 45%. In addition the comment ers were concerned about the capacity of the existing natural gas infrastructure to accommodate such an increase in use and the lack of such infrastructure at all the coal plant locations nece ssary for co-firing. The commenters said the increased utilization of natural gas posited in the NODA significantly aggravates the NERC concerns expressed in their November 2014 report, " Potential Reliability Impacts of EPA's Proposed Clean Power Plan," which stated: "... the EPA concludes that the power industry in aggregate can support higher gas consumption withou t the need for any major investments in pipeline infrastructure. However, here are a few cr itical areas that likely will need additional521

capital investments." The commenters said further, NERC states: ""Timing of these investments is also critical as it [can] take three to five yea rs to plan, permit, sign contract capacity, finance

, and build additional pipeline capacity, in addition to placing replacement capacity (e.g., NGCC/CT units) in service. The proposed CPP timelin es would provide little time to add required pipeline or related resource capacity by 2 020."

Commenters stated the interim rates are based on th e assumption that, while increased renewable energy and energy efficiency will be gradually phas ed in during the interim period, affected EGU s will be able to fully implement Building Bloc ks 1 and 2 by 2020. The commenters said in the NODA, however, EPA acknowledges that full imple mentation of Building Block 2 by 2020 may not be technically achievable. The commenters s aid, re-dispatching from coal to existing NGCC is not simply a matter of turning down one res ource and turning up another; significant infrastructure development both in terms of new gas lines and new transmission lines must occur in order to accomplish this strategy; this infrastr ucture development is costly and takes significant time, particularly in light of the poli tical and legal barriers to building new gas pipelines and electricity transmission lines. Comme nters stated in the Proposed Rule, EPA fails to account for the challenges associated with build ing all of this new infrastructure. The commenters said to rectify this shortcoming, EPA ne eds to re-assess whether the 70% NGCC utilization assumption is realistic. The commenters said at the very least, EPA needs to build
additional time into the rule to account for the ne ed to build new pipelines and transmission capabilities. The commenters said the simplest and most prudent way to address this issue is to remove the interim limits altogether; short of this , EPA should utilize a phase-in period for Building Block 2 similar to the one used for Buildi ng Block 3 that realistically accounts for the
time that it will take to build additional infrastr ucture needed to meet the 70% assumption set forth in the Proposed Rule.

Commenters stated that, EPA's NODA recognized a num ber of issues with its building block methodology and did not address the key problems of the building blocks. Commenters said EPA's NODA seeks comments on the disparate treatmen t in the state goals it has proposed that exists between states with significant amounts of N GCC capacity and states with little or no NGCC capacity. Commenters agreed with EPA that shou ld not decide how much coal generation
should be reduced in a state based on how much NGCC generation.

Commenters stated that, the Proposed Rule requires state goals to include a minimal generation shift from higher-emitting to lower-emitting source s for states containing some fossil steam generation. Commenters said that this approach veer s off into illegal territory because the Proposed rule dictates how existing generation is d ispatched and direct some states to build certain types of generation that presently do not e xist. Commenters said this type of "system" has not been "adequately demonstrated".

Commenters stated, in the Notice of Data Availabili ty (NODA) issued on October 30, 2014, EPA requests comment on using NGCC to reduce CO2 em issions from the power sector as a whole - either through new generation or co-firing - and just for re-dispatch from fossil fuel-fired generation. Commenters said, it is blatantly unlawf ul for EPA to require the construction of new generation assets as part of BSER for existing sour ces. Commenters said, additionally, requiring522

co-firing is tantamount to fuel switching, which EP A has stated is not BSER. Commenters said, at the very least, requiring facilities to build co -firing capacity would result in a modification to or reconstruction of an existing source. Commenters said, it is absurd to think that Section 111(d) authorizes EPA to require facilities to make such d ramatic changes that the facility then becomes subject to double-regulation under Section 111(b).

Commenters stated, EPA also seeks comment on whethe r and how NGCC targets should be established regionally. Commenters said, nothing in Section 111(d) gives EPA any authority to set regional generation or emission targets. Commen ters said, section 111(d) only provides authority for the establishment of state-specific s tandards of performance, and it expressly reserves to the individual States the authority to set those standards. Commenters said, specifying targeted levels of generation shift under Building Block 2 for multi-state regions would thus be
unlawful.

Comment 28: NODA - Phasing in the Increased Utilization of Exis ting NGCC Units

Response 28: The EPA is adopting interim goal dates of for 2022- 2029 and illustrative phase-in emission values for 2022-2024, 2025-2027, and 2028- 2029 and a phase-in approach for Building

Block 2. See sections I.A. and V.D. of the final r ule preamble of the CPP and the CO2 Emission Performance Rate and Goal Computation TSD for CPP F inal Rule supporting the final CPP for

more information.

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

Commenters stated despite the fact that the interim goals are average goals that can be met on an average basis for the 2020-2029 period, the structu re of the numeric calculation for establishing the state goals assumes that all changes in dispatc h between existing coal- and gas-based units has occurred by 2020; this front-loads reductions r elated to Building Block 2, creates significant technical challenges and limits state flexibility i n designing compliance plans. The commenters said to address these concerns, EPA suggests that B uilding Block 2 reductions could be phased in; in the NODA, EPA seeks comment on two approache s for creating a phase-in schedule for Building Block 2. The commenters said the first wou ld examine whether, and to what extent, any additional natural gas pipeline infrastructure is n eeded to support increased use of existing natural-gas based generation; the second would cons ider the book life of existing generation assets, including any major upgrades to the assets, like pollution control retrofits.

Commenters stated as a preliminary matter, phasing in reductions under Building Block 2, similar to the phase-in of reductions under Buildin g Blocks 3 and 4, could address some of the near-term compliance challenges discussed in these comments for some states. The commenters said in general, phasing in these reductions is mor e reasonable than assuming that all changes in dispatch between coal- and gas-based occur before 2 020. The commenters said as EPA recognizes in establishing the Building Block 3 and 4 goals, it is appropriate to give states and electric utilities sufficient time to make system c hanges or create new programs; a phase-in of Building Block 2 reductions could allow for the nec essary expansion of natural gas infrastructure523

to support increased utilization of existing NGCC u nits and could provide competitive markets time to review and adjust market rules, if needed.

Commenters stated it is not clear from the NODA exa ctly how EPA would structure a phase-in schedule for Building Block 2. The commenters said under the first option, EPA would account for the needed expansion in natural gas pipeline in frastructure, but the Agency has not provided any details as to how the Agency would determine wh ich states need new capacity and how quickly it could be built; at minimum, EPA should r ecognize that it takes three to five years to plan, permit, sign contract capacity, finance and b uild additional pipeline capacity; however, in general, it is difficult to see how the Agency coul d determine a phase-in rate for new pipeline capacity that would make sense for each state or ac curately reflect state-specific infrastructure circumstances. The commenters said eliminating the interim goal so that states can determine the most appropriate phase-in schedule for Building Blo ck 2 reductions would be simpler and better address state-specific concerns.

Commenters stated EPA's second approach, which woul d focus on the remaining book life of existing coal-based units, also could be a useful w ay to address glide path concerns in some states and would, as EPA notes, avoid stranding inv estments recently made in pollution control
retrofits for coal-based units. The commenters said while not clearly stated in the NODA, it appears that EPA would consider the remaining book life of certain coal-based units when calculating the re-dispatch potential available in a state. The commenters said consistent with the requirements of section 111(d), EPA should recogniz e the remaining useful life of units, including recent upgrades and major pollution contr ol installations, when setting standards; however, while this approach may be very important in some states as a way of providing a smoother glide path that does not strand investment s, it would not address the 2020-2029 concerns of many other states with respect to the a ssumed changes in dispatch between coal- and gas-based units. The commenters said in particular, it would not address any of the natural gas infrastructure concerns identified by electric util ities and states. The commenters said if EPA determines to recognize remaining useful life when calculating state goals under Building Block 2, it should be coupled with other approaches to ad dress the full range of near-term compliance

concerns.

Comment 29: NODA; timing and glide path; interim goals

Response 29: The EPA is adopting interim goal dates for 2022-202 9 and illustrative phase-in emission values for 2022-2024, 2025-2027, and 2028- 2029. See section I.A. of the final rule preamble of the CPP and the CO2 Emission Performanc e Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP for more in formation.

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

Commenters stated in the October 28, 2014 Notice of Data Availability (NODA), the EPA acknowledged stakeholder concerns regarding the rig idity of the 2020 to 2029 glide path, and requested additional stakeholder comments to ensure that the overall framework includes sufficient flexibility. The commenters said the EPA presented two suggestions for addressing the524

glide path implementation in the NODA; the first ap proach the EPA requested comment on was the option to allow credit for early CO2 emission r eduction. The commenters said in theory, this approach is appropriate and would recognize the ste ps already taken by those states or EGU's that were engaged in early-action to reduce CO2; ho wever, the reality is that the EPA only intends to make this early-action credit available to actions that reduce emissions after 2012 but before the beginning of the 2020 glide path. The co mmenters said this approach for eligibility of early-action credits provides no additional benefit , since by the very nature of the goal-setting and compliance determination calculations proposed in the June 2014 proposal, a state that reduces emissions after 2012 but prior to 2020 woul d in fact be "credited" for those emissions by default when calculating their emission rates for c ompliance in 2020. The commenters said the only approach that would provide an actual benefit to states engaged in early-action, would be a credit for CO2 emission reduction activities perfor med prior to 2012; since the EPA's goalsetting formula applies building blocks to each sta te's 2012 carbon emission rate, states that took action to reduce CO2 emissions prior to 2012 are fo rced to further reduce carbon emissions with the same intensity as states that have not already made investments in carbon reduction. The commenters urged the EPA to consider early-action c redit for those CO2 reductions that occurred prior to the EPA's selected baseline year of 2012. The commenters said their early
actions include the economic-based transition of co al plants to targeted operation during peak demand periods between 2005 and 2012, various heat rate improvements including a turbine energy efficiency project at Merrimack Station's Un it 2 in 2008, and the conversion of Schiller
Station's 50 MW coal-fired EGU to a biomass-fired E GU via the Northern Wood Power Project
in 2006.

Commenters stated U.S. EPA states the intent of the June 18, 2014 proposal was to provide states with a ten-year averaging period and other f lexibility so states could have a reasonable glide path to compliance with final goals. The comm enters said to have several concerns regarding this perceived flexibility, or l ack thereof; U.S. EPA states there is flexibility to include certain pre-2020 reductions or states co uld implement goal requirements early to reduce the amount of reductions needed during the i nterim period. The commenters raised several concerns regarding the use of pre-2020 redu ctions that include inconsistencies and confusion over which reductions are applicable and with respect to U.S. EPA's overestimation of the availability of early reductions to be achieved . The commenters said stakeholders expressed concerns specifically with respect to the difficult y in creating significant shifts from coal to NGCC by 2020 and that higher levels of utilization of existing NGCC units are not feasible in the early years of the 2020-2029 compliance period due to infrastructure constraints and recent significant capital investments at some existing co al-fired units; the commenters shared these concerns. The commenters said therefore, U.S. EPA i s seeking comment on two additional adjustments to the interim goal calculations to all ow a more gradual phase-in of Building Block
2. The commenters said to have concerns over infras tructure capabilities and reliability considerations. The commenters said U.S. EPA propos es the methodology could be adjusted to account for how quickly additional infrastructure c ould be developed; U.S. EPA is proposing two parameters for consideration. The commenters sa id defining the amount of utilization shift that can occur by 2020 and defining how quickly tha t amount could grow until full utilization could be achieved; yet, U.S. EPA did not provide an y indication of who would determine an adjustment due to reliability concerns was warrante d, how the adjustment would be determined, and when would this process occur. The commenters s aid such an analysis is beyond the scope of U.S. EPA or the state's ability. The commenters added while it is obvious that there is a525

necessity for such a consideration, this further re inforces the notion that U.S. EPA is attempting to control the entire electricity generation, trans mission, and distribution system through a Section 111(d) proposal.

Commenters appreciated that EPA's NODA has sought c omment on the potential to alter the glide path and provide a "more gradual phase-in" of building blocks, evidencing its recognition of the widespread concern over this issue; however, EPA's response suggests accommodation primarily by permitting states to begin the glide p ath earlier which serves only to make the goals more stringent and impracticable by requiring actio n in an even shorter time frame. The
commenters said for each state with an affected EGU , EPA mandates that states begin meeting the interim goals in 2020 and meet the targeted red uction goal for the state by 2030; additionally, beginning in 2030, the targeted greenhouse gas emis sion standard must continue to be met continuously and indefinitely, regardless of growth or other outside impacts. The commenters said this glide path does not allow sufficient time for the states with affected EGUs to implement and begin meeting the demands or targets of a state program; the BSER measures that are to be used to achieve the interim goals of the glide path demonstrate this shortcoming.

Commenters stated the recently-released NODA recogn izes that many stakeholders have concerns about the near-term compliance challenges created by the proposed guidelines; in particular, EPA notes, consistent with the concerns raised in these comments, that "calculating the interim goals on the basis of achieving the shi ft in generation assumed under building block 2 by 2020...requires states to achieve such a signifi cant portion of the required CO2 emission reductions early in the interim period that it defe ats the intended purpose of providing states flexibility in how they may achieve the required em ission reductions. In additional, we have heard that there may be technical challenges associ ated with achieving all of the reductions that state would be required to make as early as 2020, w hen the interim period commences."

Commenters stated because of these concerns, EPA is interested in considering additional stakeholder ideas, such as those regarding the 2020 -2029 glide path, to ensure that the final guidelines provide states with flexibility to addre ss concerns about the timing of reductions, can develop cost-effective compliance plans and can res pond to unexpected demands on the power system. The commenters said eliminating the interim compliance goal and allowing states to choose a reasonable glide path to achieve the 2030 goals would provide states the flexibility needed to design cost-effective strategies to reduc e emissions and would eliminate the significant technical challenges associated with requiring the majority of the reductions to be achieved on or
before 2020. The commenters said it also would allo w states, electric utilities and system operators to plan for and implement changes to the interconnected power system in a way that would support reliability in the case of unexpected demands on the power system, such as
extreme weather events.

Commenters stated in the NODA, EPA discusses two wa ys of addressing concerns raised by stakeholders about the glide path: 1) allowing stat es to credit early CO2 emission reductions; and 2) phasing in the increased utilization of existing NGCC units under Building Block 2 over time, similar to the phase in of reductions under Buildin g Blocks 3 and 4. The commenters said each of these options, could address some of the concern s about the 2020-2029 glide path that have been raised by states and electric utilities; howev er, neither provides states the same flexibility to design cost-effective compliance plans that are con sistent with the technical realities of shifting526

generation between existing coal- and gas-based uni ts that would be provided by eliminating the interim goals.

Commenters stated in the Proposed Rule EPA Sets int erim CO2 emission rate requirements for each of the states for the period from 2020-2029. T he commenters said in most instances these interim requirements are nearly as stringent as the proposed final requirements that are set to take
effect in 2030. The commenters said in the NODA EPA recognizes that there are a number of questions as to whether these interim goals can be achieved and requests comment on whether they should be adjusted. The commenters agreed with these concerns and requests that EPA eliminate the interim goals so that states, compani es, and entities overseeing the operation of the country's electric generation and transmission syst em have adequate time to assess the massive changes to the system that EPA is proposing and ens ure that consumers continue to have access to reliable, affordable power.

Comment 30: NODA; Use of 2012 as a single data year for baselin e; releasing data for 2010

and 2011.

Response 30: See section VI of the final rule preamble of the CP P for the EPA’s response to this

comment.

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

Commenters stated in its recent NODA, EPA seeks to address stakeholder concerns over the use of 2012 as a single data year for calculating inter im and final goals by releasing data for 2010 and 2011 and asking if a different single year or c ombination of years should be used. The commenters said while, in general, the use of addit ional years in the baseline may in some cases reflect reductions that have already been made, pro viding this conceptual alternative does not
resolve the concerns stated above. The commenters s aid given the multi-year projections EPA is trying to make, using only three years of historica l data is not sufficient to capture recent reductions; however, meaningful comment on this con cept is practically impossible to develop with only a thirty-day comment period left to evalu ate and no specific numeric proposal on which to comment. The commenters said EPA should pr ovide a more thorough explanation of how the goals would be modified and extend the comm ent period for the NODA.

Comment 31: NODA and Mass Based Calculations

Response 31: See section VII of the final rule preamble of the C PP and the CO2 Emission Performance Rate and Goal Computation TSD for CPP F inal Rule supporting the final CPP for the EPA’s response to this comment.

The following are summaries of the specific public comments under this comment:527

Commenters stated EPA has issued a NODA and Mass Ba sed Calculation supplements to the CPP. The commenters said in the NODA, EPA is taking comments on the "Implement of Goal - Setting Equation" which questions the proposed nume ric formula for calculating each state's goal. The commenters stated EPA states that for bui lding block 2, the formula subtracts 1 MWh of fossil steam generation and corresponding emissi ons from the 2012 baseline levels for every 1 MWh of incremental NGCC generation; however, from r enewable energy (RE) and energy efficiency (EE), the formula adds incremental RE an d EE to the baseline generation levels in the
denominator of the formula but does not reduce the 2012 baseline levels of fossil generation in the denominator. The commenters said by implementin g this change, it will make the standard more stringent (lower) than the original lb/MWhr ra te stated in the proposed rule. Commenters stated EPA then developed mass based calculations f or the state as an alternative to the rate based standard which included this approach in the NODA which has yet to be commented on and considered by EPA. The commenters said it appea rs that EPA has accepted this comment prematurely without comments on the NODA's change t o the calculations. The commenters said
when the mass based limit is calculated for Louisia na, it is a 52% reduction in CO2 emissions
based on 2013 data and a 54% reduction from 2012 ba seline emissions; the rate based reduction is 40% from 2012 to 2030; thus, EPA has required th e state to make even further reductions compared to the rate based equation, if the mass ba sed calculations are used. The commenters said in regards to the NOD A's Implementation of Go al-Setting Equation, it is uncertain to the commenters if EPA's intended goal is to be consiste nt, as there are a number of major assumptions that are inconsistent in this proposed rule. Commenters said for example:

• The IPM does not provide an hourly dispatch model, which is how the real world of electric utilities works' therefore, the additio nal infrastructure and generation sources that would be required to simultaneously me et reliability standards and
the CPP are not included.

• The IPM shows a natural gas usage of 14 trillion cu bic feet in 2030 at a 70% NGCC factor; the EIA data shows 9 trillion cubic fe et. It is unknown how, or if, the natural gas cost could be impacted.

• For Building Block 1, the heat rate improvements we re based on gross heat rate; however, the rate based calculation was based on th e net heat rate.

• In the rate based equation, renewables are allowed to use another state's generation for their goal; however, for example, if a fossil fuel fired unit in Louisiana provides energy to Arkansas, then it is c harged against the state of Louisiana, not the receiving state of Arkansas.

• New NGCC is not included in the rate equation yet n ew renewables and Energy Efficiency are used.

• No hydro generation is included, yet almost all oth er sources of fossil fuel and
renewables are included.528 • There is a mis-match between EPA's 19% nationwide r eduction from this rule from 2012 to 2030, yet EPA's mass based approach is closer to 40% reduction
nationwide.

• A comparison of the mass based calculations (using CAMD 2012 data for the CO2 baseline) is more stringent than the rate based reductions

• EPA assumes that states will be able to develop RPS , Energy Efficiency goals and switch fuels even though many states will have to g o through a legislative, regulatory, and/or legal process to accomplish the goal, which is not at all a certainty.

Commenters stated in the recently released technica l support document [NODA] in which EPA calculated potential total mass CO2 emissions for e ach state, EPA also calculated total mass CO2 emissions for each state assuming that new NGCC can be counted for mass emissions approach compliance. The commenters stated that there is no place in a mass-based approach for new units of any kind, but particularly not new NGCC. The com menters said as EPA has consistently explained, the mass-based approach allocates mass e missions limits to existing fossil units only; new units must only meet the 111(b) New Source Perf ormance Standards (NSPS) if applicable. The commenters supported keeping new NGCC and all o ther forms of new generation separate from existing fossil generation subject to the tota l mass limits.

Comment 32: NODA - results in goals more stringent than NSPS

Response 32: The EPA is adopting the alternative approach from t he proposal, modified as described in the NODA. See sections V.A., V.D., V. E., and VI of the final rule preamble of the
CPP and the CO 2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP for more information

.
The EPA disagrees with the comparison between strin gency of state goals and NSPS rates as the two metrics are not apples-to-apples. The metric f or the NSPS limits are different than the metric for the Existing source limits and should no t be compared to each other.

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

Commenters stated in the alternative methods outlin ed in the NODA, the underlying algorithm that combines all four building blocks provides a s tate-wide emission rate target that is even more stringent than EPA proposed for existing and n ew power plants; that is not a realistic or reasonable outcome. The commenters said to highligh t the extreme nature of this final result, New Jersey has calculated a final goal of 336 lb/MW h under this alternative approach, which is significantly more stringent than the 531 lb/MWh fi nal goal set by EPA in the proposed rule. The commenters said when viewed from a statewide perfor mance perspective, as appropriate with CO2, EPA is requiring more stringent emission reduc tions from existing sources than new sources; specifically, EPA is subjecting existing s ources to a standard that is 66% to 69% more stringent than it is proposing for new sources; thi s is not a reasonable outcome.529

Comment 33: NODA - Bank early emission credits for use during t he interim compliance period; credit for energy efficiency

Response 33: See sections VI and VIII 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 another way that EPA could provid e credit for early action would be to allow
emission reductions that occur before 2020 to be "b anked" and counted toward compliance with state goals. The commenters said as EPA recognizes in the NODA, stakeholders have suggested that allowing states to bank early emission credits for use during the interim compliance period could mitigate the negative impacts of EPA's propos ed assumption that all emission reductions from heat rate improvements, redispatch to NGCC uni ts, and under-construction nuclear can be implemented by 2020. Although the commenters recomm ended that EPA revise its unreasonable assumptions about the timing of these building bloc k measures to allow for a more gradual implementation period, the commenters also supporte d allowing states to count early reductions toward compliance with the interim goal.

Commenters supported the proposal contained in the October 2014 NODA that would allow states to take credit for early actions that achiev ed emission reductions. The commenters said providing full credit for these early actions recog nizes the important emissions reductions states have already achieved and it continues to incent in cremental reductions between the date of the proposal and the date of compliance. The commenters supported an outcome whereby the final rule clearly states that early emission reductions occurring prior to 2020 can be credited towards compliance with the 2030 target; such reductions sh ould not need to relate directly to the proposed building blocks so long as they contribute to achieving a state's emissions target. The commenters said for example, development of renewab le energy and implementation of energy efficiency programs, as identified in Building Bloc ks 3 and 4, will certainly continue prior to 2020 and should be credited towards compliance with the 2030 targets.

Commenters stated EPA should also ensure that state s receive full credit for their current energy efficiency savings under the proposed rule. The com menters said like renewable generation, energy efficiency savings do not displace fossil fu el-fired generation demand under the EPA's proposed goal-setting calculations. The commenters said in order to capture the true potential of cost effective, energy efficiency measures, the com menters encouraged EPA to adopt the method for calculating energy efficiency savings outlined by EPA in the recent, October 28, 2014 Notice of Data Availability, which displaces fossil fuel e nergy demand with added energy efficiency.

Commenters stated in the NODA, EPA notes that some stakeholders have suggested that "early reductions could be used as a way to ease the 2020- 2029 glide path." The commenters said EPA also notes that the proposed guidelines seek commen t on whether credit for certain pre-2020
reductions could be used to reduce the overall amou nt of reductions that need to be achieved during the interim period; the NODA also seek comme nt on whether states could choose early530

implementation of state compliance plans, which wou ld allow states to achieve the interim goals by making some reductions earlier. The commenters s aid EPA asserts that either of these approaches would allow states to phase in reduction s.

Commenters stated allowing states to recognize earl y action that reduces emissions between 2012 and the start of the interim compliance period is an important tool that could be useful to some states when designing compliance plans. The co mmenters said as EPA notes, it is important to recognize early reductions so as not t o create disincentives for pre-2020 reductions; the final guidelines should recognize t hat states have the flexibility to recognize early reductions. Commenters stated this flexibility does not address fully the concerns about the interim compliance goal and the magnitude of reduct ions that are required before 2020. The commenters said EPA notes that allowing states to c redit some early reductions or state compliance periods earlier than 2020 would make it possible for "at least some states to take advantage...of RE and demand-side [EE] projects alr eady under development and scheduled to be implemented prior to 2020 or by expediting other projects." The commenters said while states may be able to use some reductions from RE and EE m easures, it is unlikely that these reductions would be significant enough to offset th e need to increase significantly utilization of existing NGCC units to meet the interim goals. The commenters said credit for early RE and EE
reductions also does not address infrastructure con cerns or other technical challenges associated with increasing the utilization of existing NGCC un its. The commenters added given the timing challenges states face in submitting timely complia nce plans for EPA approval, it is unlikely that states would be able to begin compliance plans earl y in order to take advantage of pre-2020
reductions. The commenters said if states would lik e to do so, the final guidelines should make it clear that this is an option; providing this flexib ility, however, does not obviate the need to eliminate the interim compliance goals.

Comment 34: NODA - way BSER applied in calculation of goals

Response 34: The EPA is adopting the alternative approach from t he proposal, modified as described in the NODA. See sections V.A., V.D., V. E., and VI of the final rule preamble of the

CPP and the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP for more information.

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

Commenters said the NODA explored the possibility o f changes to the manner in which the BSER is applied during the calculation of the state performance goals. The commenters urged the Agency to ensure the application of the BSER to calculate state performance standards does not exacerbate existing problems with the rule as o riginally proposed. The commenters said any changes to the formula that would be premised on th e capacity for energy efficiency programs to replace existing capacity are not realistic in rela tion to the best practices model EPA has established. The commenters said the programs and m easures covered by Building Blocks 2, 3, and 4 are sufficiently different from one another, and the presumption that each should be531

applied in the exact same manner when calculating s tate performance goals is illogical. The commenters said any changes that result in a more s tringent energy efficiency requirement would only intensify the underlying challenges of the pro posal. The commenters said the existing formula already raises concerns that a more holisti c policy structure, which supports innovation
and assures cost effective solutions will be elusiv e under the Clean Power Plan. The commenters said state capacity to implement sufficient measure s to comply with state performance goals will be stretched to the limit and these measures, regar dless of their cost effectiveness, will be viewed as necessary. The commenters said a more stringent energy efficiency requirement and subsequently a more stringent performance standard will exacerbate rather than mitigate implementation issues.

Comment 35: NODA - Tribes & Territories oppose approach

Response 35: The EPA is adopting the alternative approach from t he proposal, modified as described in the NODA. See sections V.D., and VI o f the final rule preamble of the CPP and the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the
final CPP for more information.

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

Commenters opposed the alternative approach for the goal-setting equation that would treat RE and energy efficiency ("EE") in Building Blocks 3 a nd 4 in a similar manner to the transfer of coal-based load to natural gas in Building Block 2. The commenters said RE and EE should not
be treated in a similar fashion for two main reason s. The commenters said first, both coal and natural gas generation are dispatchable, which is n ot the case with RE or EE; therefore, absent widespread use of energy storage that is not envisi oned, RE and EE are not comparable to NGCC. The commenters said second, for those jurisdi ctions with available NGCC, a transfer from coal to existing NGCC could potentially be imp lemented quickly; those locations could
achieve reductions from 2012 emission levels in a t ime frame where CO2 emission reductions can be directly tied to the reduced coal generation . The commenters said deployment of RE and particularly EE, on the other hand, require much lo nger time frames to develop.

Comment 36: General recommendations to equation

Response 36: The EPA appreciates the recommendations to the goal calculation equation. Please see sections VI and VII of the final rule pr eamble of the CPP and the CO2 Emission Performance Rate and Goal Computation TSD for CPP F inal Rule supporting the final CPP for more information about the final goals and how they were calculated.532

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

Commenters stated that it can be reasonable to assi gn states different starting and ending points for emission rate reductions, particularly during a n initial period of carbon regulation; such an approach takes into account the diverse characteris tics of geography, policy and existing generation portfolios in the different states; over the longer term, however, all costs are variable costs. The commenters said to the degree that state s transition away from carbon-intensive generation, states should move towards a lower mean carbon emissions rate, and disparities reflected in historic policy differences also shoul d narrow. The commenters said a rule taking into account (indeed, promoting) this longer-term s hift in technology should not permanently establish very high allowed emissions rates for som e states, and low ones for others; from the start, it should be designed to mitigate extremes, and to include mechanisms for adjustment
towards a reasonable lower mean. The commenters sai d the narrowing of real-world disparities in emissions rates under rule implementation is its elf a reasonable basis to mitigate the extreme state-by-state differences in emissions rate goals under the Proposed Rule.

Commenters stated it is reasonable and necessary fo r EPA to adjust its goal-setting formula in ways that tend to bring "outlier" state goals towar ds the mean, that provide more time and/or flexibility for those states with large goals to co mply, and that establish clear and definite pathways for multistate cooperation or interstate c ompliance. The commenters thus provided the following general recommendations regarding the goa l-setting formula:

• EPA should consider setting upper (and possibly low er) limits on the size of the goal any particular state must meet that will bring individual state goals closer to the average goal.

• For states with a more stringent goal, EPA should c onsider establishing a longer compliance period, and particularly a less stringen t interim goal, thereby allowing states a reasonable opportunity to plan for major c hanges; alternatively, or in addition, EPA could establish a ramp-rate for its a ssumptions about redispatch from coal to gas, as further detailed below, to all ow a more realistic timeframe for public utility planning.

• EPA should establish a suite of "safe- harbor" comp liance strategies, including particularly multistate or national compliance stra tegies (such as standard recognition of a Purchased Power Agreement for RE a nd a recognized RE credit market strategy) to help avoid conflict between sta tes and to promote compliance generally.

Comment 37: Alternative approaches - RGGI Program Example

Response 37: The EPA appreciates the RGGI Program as an example for changes to the goal calculation equation. Please see sections VI and V II of the final rule preamble of the CPP and the CO2 Emission Performance Rate and Goal Computat ion TSD for CPP Final Rule supporting

the final CPP for more information about the final goals and how they were calculated.533

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

Commenters stated in response to the release of a N otice of Data Availability (NODA) from EPA on October 28, 2014, the commenters recommend t hat EPA "follow the RGGI example". The commenters said the RGGI Program was amended by :

1. Lowering the regional 2014 cap to 91 million ton s (2012 baseline);

2. Maintaining the original 2.5 percent per year re duction to the regional RGGI cap for the years 2015 through 2020;

3. Applying budget adjustments to draw down the pri vate bank of allowances that were allowed to be carried forward into the program in 2 014 (representing early reductions from the former, higher original baseline); and

4. Retaining a 3-year compliance period, although i nterim compliance periods were
added.

Commenters stated from 2010 to 2011 to 2012, RGGI t otal emissions declined each year; for the amended 2014 regional cap, RGGI States chose 2012 a s a baseline, resulting in the most stringent (lowest) cap level. The commenters said E PA's NODA provides data for 2010 and 2011; if EPA were to allow states to choose an alte rnative baseline (either 2010 or 2011 or a 3- year average), then the proposed Clean Power Plan ( CPP) would be less stringent than it otherwise would have been using the originally prop osed 2012 baseline. The commenters said also, an alternative baseline would create an inequ ity between RGGI States, all of which would continue to implement the RGGI Program based on a 2 012 baseline, and non-RGGI States, all of which could choose a less stringent baseline. The c ommenters recommended that EPA retain the originally proposed 2012 baseline; some stakeholder s have expressed concern that goals based on a single year baseline do not account for year-t o-year variability in emissions. The commenters said the RGGI Program provides complianc e flexibility by implementation of a 3- year compliance period, rather than basing the regi onal cap on a 3-year average. The commenters recommended that EPA also implement a 3-year compli ance period in order to address
stakeholder concerns.

Comment 38: Alternative approaches - PA Whitepaper

Response 38: The EPA appreciates the PA Whitepaper recommendatio ns to the goal calculation equation. Please see sections VI and VII of the fi nal rule preamble of the CPP and the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP for more information about the final goals and how they were calculated.

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

Commenters stated EPA's draft rule proposes a numbe r of approaches for Pennsylvania to achieve a very aggressive reduction target of 32% b elow 2012 levels, based on a number of assumptions, including that existing plants can (an d will) become significantly more efficient,534

that existing and new natural gas plants can (and w ill) run significantly more often, and that Pennsylvania can (and will) deploy considerable ren ewable assets and energy-efficiency measures beyond those already required by law. The commenters said each of these "building blocks" will come with a cost; there remain signifi cant questions as to the ability of Pennsylvania to comply with this target without additional shutd owns of coal-fired facilities. The commenters said the proposal put forward by EPA is unlike any other emissions reduction strategy ever developed, and we believe the sort of approach envi sioned in a recent Pennsylvania DEP whitepaper [Recommended Framework for the Section 1 11 (d) Emissions Guidelines Addressing Carbon Dioxide Standards for Existing Fossil Fuel-F ired Power Plants. Pennsylvania Department of Environmental Protection, April 10, 2 014. http://www.elibrary.dep.state.pa.us/dsweb/Get/Docum ent-100322/2700-UKDEP4446%20combined.pdf ], where achievable reductions at fossil-fuel gener ating plants are identified, with so-called "outside the fence" meas ures made available - but not required- to achieve compliance, is a more appropriate strategy.

Comment 39: Alternative approach - general

Response 39: The EPA appreciates the recommendations to the goal calculation equation. Please see sections VI and VII of the final rule pr eamble of the CPP and the CO2 Emission Performance Rate and Goal Computation TSD for CPP F inal Rule supporting the final CPP for more information about the final goals and how they were calculated.

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

Commenters recommended that EPA consider other opti ons that states could choose as an
alternative.

Commenters stated one approach would be to eliminat e the renewable energy "penalty" for early (pre-2012) movers that EPA effectively uses when ca lculating states' 2012 emissions rates. The commenters said under this approach, early moving s tates would receive appropriate credit for renewable energy sources installed before 2012, and would not have their early actions drive final goals that require them to do comparatively m ore than other states.

Commenters added another approach would be to allow states to meet an alternative goal that reflects significant investments in renewable energ y, which could be voluntarily utilized in lieu
of the cited BSER. The commenters said it is obviou s to look at renewable energy, as these sources are truly carbon neutral, and investments i n these sources result in significant carbon reductions; this compliance option could be based o n the idea that a certain percent of the electric generating fleet must be carbon neutral. The commen ters said this simple alternative emissions cap would reward early actions by setting a reasona ble carbon pollution standard that broadly requires a percentage of renewable generation based on a baseline year; for example, 25% from 2012 baseline levels by 2030. The commenters said t his simple approach would focus exclusively on zero carbon resources and allow stat es to simply and efficiently meet their goal by demonstrating a certain percentage of renewable ene rgy; and, because natural gas combined cycle turbines are needed to support high penetrati ons of variable renewable sources, such an535

approach would have the added effect of automatical ly promoting re-dispatch to natural gas, and
other efforts that reflect the state's commitment t o addressing greenhouse gases. The commenters said in Colorado's experience, efforts that willing ly and intentionally go beyond federal regulatory requirements are often more likely to su cceed, achieve real reductions and do so earlier than mandated requirements; ultimately, suc h efforts can be more beneficial for the environment and public health.

Commenters added EPA's final rule should appropriat ely include an alternative compliance demonstration that is simpler than the proposed BSE R, while still arriving at the policy goals set forth in EPA's proposal. The commenters believed th at such alternatives could provide flexibility and simplicity, reward early movers, level the play ing field, and address technical feasibility and cost issues, all while signaling support for other early emission reduction efforts.

Commenters added in finalizing the Clean Power Plan , when applying a corrected, consistent displacement approach for calculating state goals, EPA may also consider whether adjustments to any other building block parameters are appropri ate; for example, EPA could consider inclusion of new NGCC units in calculating state ta rgets, as well as alternatives to the assumption of 70% NGCC utilization in 2020; however , as EPA considers these kinds of adjustments, it must bear in mind the importance of strengthening the near-term environmental outcome in 2020 and the goal of significantly stren gthening the emissions outcome between 2020 and the final compliance date.

Comment 40: Alternative approach - mass-based allowance trading system.

Response 40: The EPA appreciates the mass-based allowance tradin g system recommendations to the goal calculation equation. Please see secti on VII of the final rule preamble of the CPP and the CO2 Emission Performance Rate and Goal Computat ion TSD for CPP Final Rule supporting

the final CPP for more information about the mass b ased final goals and how they were

calculated.

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

Commenters stated a mass-based allowance trading sy stem provides the most effective, efficient, and affordable approach to implementing EPA's state goals for this industry. The commenters stated EPA should provide states with incentives to adopt mass-based allowance trading systems with a cap.

The commenters proposed a simple and transparent ap proach for calculating state mass goals
that are consistent with EPA's reduced utilization approach to BSER and that builds on the Agency's goal data computation methodology ("GDC"). The commenters said this methodology was developed for CATF by NorthBridge, and is more fully described in its whitepaper Bruce Phillips, "Translating Emission Rate Goals into Mas s Goals under the Clean Power Plan," dated December 1, 2014. The commenters said specifically, under the CATF/Northbridge suggested approach, 2012 retail sales are grossed up to accou nt for lines losses, reflecting total 2012 generation, to which a [business-as-usual] BAU load growth rate (between 2012 and 2030) is536

applied; this produces an estimate of total state g eneration needs for 2030. The commenters said the 2012 retail sales assumptions in these calculat ions are taken from the GDC and the load growth data are taken from the EPA's Integrated Pla nning Model cases issued as part of its June 2014 Regulatory Impact Analysis. The commenters sai d this approach to incorporating load growth factors in the goal development process is a nalogous to the EPA's approach taken in the
NOx SIP call.

Commenters added next, demand and supply resources are deployed sequentially to meet total state generation needs; all four building blocks, a long with generating resources not covered under the CPP, are represented in this analytical p rocess; in this way, working back through the application of the building blocks, total resources are balanced with total energy demands, and the utilization of existing affected sources is red uced.

Commenters added finally, to create the state's emi ssion budget, the amount of energy produced by each fossil source covered under the rule is mul tiplied by the average state emissions rate for
that fossil source in 2012. The commenters said the one exception to this process is the coal emission rate, which is assumed to be 6 percent low er than 2012 levels consistent with building
block 1 of the GDC.

Commenters said this methodology is a "first princi ples" approach to mass-based calculation; it starts with fundamental generation demand and resou rce data, along with the building block assumptions used by EPA in the GDC process, using t hem to determine the EPA's proposed emission rate goals. The commenters said because it is based on complete and balanced estimates of electric demand, energy efficiency and generation in future policy years, it is simple, intuitive, and fully transparent; and, because it r elies on the same assumptions and calculation process used by the EPA, the resulting annual CO2 m ass goals are consistent with the EPA's definition of BSER and equivalent to the proposed r ate goals.

Comment 41: Alternative approaches - include federally enforcea ble shutdowns into goals

Response 41: The EPA appreciates the recommendation to include f ederally enforceable shutdowns into the goals. Please see sections VI a nd VII of the final rule preamble of the CPP and the CO2 Emission Performance Rate and Goal Comp utation TSD for CPP Final Rule supporting the final CPP for more information about the final goals and how they were

calculated.

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

Commenters stated EPA assumes that in-state natural gas combined cycle (NGCC) units will be preferentially dispatched before in-state coal unit s; this approach is not a concern for Washington as part of the final goal in 2030, as long as Washi ngton has a mechanism to address changes to in-state emissions caused by out of state coal plan t closures; however, EPA's dispatch assumption creates challenges for meeting Washingto n's interim goal for 2020-2029.

Commenters stated Washington's only coal power plan t, the Centralia Power Plant, is required, by terms of state law, binding agreements, and the Washington State Implementation Plan (SIP),537

to cease operation by the end of 2025; as a consequ ence of the law and other binding documents (including the SIP), the plant has full legal autho rity and a contractual obligation to operate and provide power to in-state utilities through the end of 2025. The commenters stated the law requires one unit to cease operation by the end of calendar year 2020 and the other unit by the end of 2025; the requirements of the state law have been incorporated into a BART decision that has been included as part of the existing Washingto n SIP; as part of the SIP, this closure schedule is also directly enforceable by EPA and pr ivate citizens.

The commenters said based on the BART FIPs and SIPs approved by EPA across the country, there are a number of other coal power plants where individual coal units or whole power plants will be ceasing operation between now and 2029; EPA has made all of these unit/plant shutdowns federally enforceable by their inclusion in state SIPs, as a result, these federally enforceable closures should be incorporated by EPA when finalizing the interim goals for the
various states.

The commenters added specific to Washington, we hav e evaluated the effects of including the operation of the Centralia Power Plan on the interi m goal; using the EPA goal setting spreadsheet (including EPA's proposed NGCC emission rate), we have estimated that Washington's interim goal would increase from 264 l bs/MWh to 3411bs/MWh; the final goal would remain unchanged as a result of this request.

The commenters stated the operation of this coal pl ant, whether at the capacity factor achieved in 2012, the levels in other years, or the company's e xpected 84-percent capacity factor, will tend to
increase the CO2 emissions used to calculate the in terim emission standard for Washington. The commenters said with the 2025 closure of this plant , Washington will eliminate its in-state coal based emissions, which supports the goal of the pro posed rule. The commenters said their requested modification would only affect the interi m goal setting process; we will still expect to be held accountable to achieve the final 2030 goal regardless of how the Centralia plant's
emissions are addressed.

The commenters added EPA could adjust the interim e mission standards of other states in a similar manner to what we have suggested; we would suggest that such an adjustment be based on the same type of legally binding, federally enfo rceable requirements that Centralia has; such an adjusted approach should still achieve the 2030 goal, even if the interim goal is modified.

The commenters added as a preferred alternative to adjusting the interim standard as proposed above, EPA could instead use an average based on no adjustments to the dispatch order in 2020 and to full preferential dispatch of natural gas ge neration in 2029. The commenters said in the NODA published October 30, 2014, EPA has asked for input on ramping the NGCC/coal redispatch in a manner similar to that proposed for renewable energy. The commenters said they advocate that the interim goal be based on such an approach starting with no NGCC redispatch in 2020 and ramping to full NGCC red is patch no later than 2029; this would accommodate the adjustments suggested above.

Comment 42: Alternative approach - "Small Public and Cooperativ e Utility" Category538

Response 42: The EPA appreciates the recommendations to the goal calculation equation for a small public and cooperative utility category. Ple ase see sections VI and VII of the final rule preamble of the CPP and the CO2 Emission Performanc e Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP for more in formation about the final goals and how they were calculated.

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

Commenters stated if EPA creates an alternative cat egory for small public or cooperative than utilities meeting the qualifications for that category would quantify for an alternative, utility specific goal in the state plan, rather than partic ipating in the general state plan.

The commenters said the alternative state plan woul d require the qualifying small public or cooperative utility to undertake the following duri ng the Interim Goal period:

• Achieve all reasonably cost effective heat rate imp rovements on any nonachieving unit(s) (not just coal-fired ones);

• Redispatch any NGCC units it owns until 70% annual capacity is achieved;

• Install renewable energy or obtain RECs equal to 10 % of the non-achieving unit(s) capacity within 5 years of plan approval or 2025, whichever is earlier;

• Meet one-half of the general state plan energy effi ciency goal, if the small public or cooperative utility has local distribution; and

• Achieve reductions equal to the lesser of the state Final Goal or 15% of total carbon emissions across the small public or coopera tive utility's portfolio by 2030, with at least 33% of that reduction to occur by 2020 or within three years of plan approval, whichever is earlier.

Comment 43: EPA should prepare a third option for consideration on the high side of the two presented

Response 43: The EPA appreciates the comments on the goal calcul ation equation. Please see sections VI and VII of the final rule preamble of t he CPP and the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule su pporting the final CPP for more information about the final goals and how they were calculated.

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

Commenters stated as large as the benefit cost rati o is in the EPA analysis of Option 1, when these modifications are made to the economic analys is, the potential benefits of a well-designed, least cost performance standard will exceed the cos ts by a much greater margin than EPA's Option 1 analysis suggests. The commenters said whe n the economic analysis is corrected and a539

third, "high" reduction rule analyzed, the higher s tandard will be very attractive. The commenters said whether or not EPA adopts the higher standard, having the more rigorous analysis of a higher standard available would serve to expand the range of options considered by the states, laying the basis for higher levels of reduction of carbon emissions in the future.

Comment 44: Alternative approach - to set tighter emission targ ets

Response 44: The EPA appreciates the recommendations to the goal calculation equation to set tighter emission targets. Please see sections VI a nd VII of the final rule preamble of the CPP and the CO2 Emission Performance Rate and Goal Computat ion TSD for CPP Final Rule supporting

the final CPP for more information about the final goals and how they were calculated.

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

Commenters constructed a Climate Protection Scenari o in order to illustrate that the EPA can set much tighter emission targets using only resources that have low-cost or negative cost resources (like efficiency) for reducing CO2 emissions; using the following principles and incorporated the following features in constructing the IEER Climate Protection Scenario:

• AEO 2014 projection for fossil-fuel-based electrici ty generation and also the overall national total for affected generation in 2 030.

• Examined state efficiency goals and selected a 1.5 percent rate of efficiency improvement per year, starting in 2017, and assumed a ramp up by 0.5 percent per year between 2015 and 2017.

• Chose utility solar PV (urban and rural) and land-b ased wind since these have low CO2 costs that are much lower than new nuclear; ass ume that in the near-term distributed solar will also be part of the implemen tation of the plan.

• Maintained the groupings of the states chosen by th e EPA for renewable target setting; selected the highest renewable portfolio s tandard in each group as the target for each state.

• Adopted the goal set out in the 2012 Executive Orde r by President Obama that called for "a national goal of deploying 40 gigawat ts of new, cost effective industrial CHP in the United States by the end of 2 020."

• Reduced nuclear power according to the present lice nse expiry dates.

• Kept overall natural gas use a little below 2012 le vels.

• In calculating the target rates, adopted a variant of the approaches published by
the EPA in its October 2014 Notice of Data Availabi lity.540

Commenters stated in the IEER Climate Protection Sc enario, renewable energy targets were set through a stepwise process:

1) using the EIA generation data from all renewable energy sources (wind, solar thermal and photovoltaic, geothermal, wood and wood derived fuels, and other biomass) for the period from 2008 to 2012, derived a trend line for renewable energy generation.

2) from 2013 to 2016, extrapolated the trend but ca p the growth at 10 percent; from 2017, followed the EPA's method of assigning states to regions (East Central, Northeast, North Central, South Central, Southeast, and West) and, based on the maximum target among the states falling into that region, set a re newable energy target for each of the regions; these percentages are: East Central - 20%, Northeast - 40%, North Central - 30%, South Central - 20%, Southeast - 20%, West - 3 3% and a note that Maine target includes hydropower.

3) applied these fractions to the projected sales f or 2030 after adjusting for the projected efficiency improvements to obtain a target for rene wable energy generation in each state; then calculated a growth rate for renewable energy generation by assuming that the target is met in 15 years starting from the 2012 level (av ailable in the EIA's 2014 Annual Energy Outlook).

4) starting from 2017, assumed that RE generation i n each state grows at this calculated rate until the target is met, at which point it is assumed to grow linearly, i.e., at the same rate as the previous year.

Comment 45: EPA hould adopt UAMPS' Retirement Calculation Metho dology for Coal Plants

Retired Before 2030

Response 45: The EPA appreciates the recommendations to adopt th e UAMPS’ retirement calculation methodology for coal plants retired bef ore 2030. Please see sections VI and VII of the final rule preamble of the CPP and the CO2 Emis sion Performance Rate and Goal Computation TSD for CPP Final Rule supporting the f inal CPP for more information about the final goals and how they were calculated.

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

Commenters stated The CPP acknowledges the need to provide compliance credit for the retirement of affected EGUs subject to the Proposal , but the Proposal lacks definition on how compliance credit will be recognized by EPA in its approval process of State plans. The commenters requested that EPA adopt UAMPS Retiremen t Calculation Methodology as described below; adoption of UAMPS' Retirement Calc ulation Methodology will provide States with the guidance necessary for States to compile a n approvable State plan and help reduce the likelihood of disapproval actions. The commenters s aid the UAMPS Retirement Calculation541

Methodology strives to more accurately reflect the actual reductions achieved from affected EGUs while achieving the primary goal of reduced CO 2 emissions set forth in the CPP. The commenters said for example, assume power plant X ( 1,640 MW), Utah's largest single source of CO2 emissions, and another power plant Y (189 MW) a re shut down; Utah's affected EGU CO2 emissions in 2012 totaled 30.8 million tons; after plants X and Y are shutdown, Utah's CO2 emissions will drop to a total 19.5 million tons; P ower plant X is replaced with a new 1,200 MW NGCC, but because new units are not affected EGUs, these emissions are not included in Utah's compliance calculation; by utilizing Utah's affecte d EGU MWh from 2012 (including MWh from Plant X and Y), Utah achieves an emissions rat e of 1,189.97 lb/MWh, surpassing EPA's set target by 132.07 lb/MWh. The commenters believed th is methodology appropriately accounts for
the reduction in CO2 emissions from affected EGUs - the goal and legal scope of the CPP - by
retention of the MWh associated with the retirement of Plants X & Y in the compliance calculation. The commenters said removing the MWh a ssociated with these plant retirements fails to accurately reflect the CO2 emission reduct ions under a rate-based approach; removing
these MWh and associated CO2 emissions results in a emission rate for the State of 1518 lbs of CO2/MWh, which is substantially above Utah's propos ed target of 1322 lbs of CO2/MWh. The commenters said it should be noted that these plant retirements would result in Utah achieving its State goal under a mass-based approach assuming a t arget of 21,747,459 tons of CO2 (applying the conversion calculation proposed by EPA in June 2014) or 20, 384,000 tons of CO2 under EPA's newly minted November approach to doing the c onversion from rate-based to mass based; EPA needs to reconcile how a State's decisio n to adopt a rate-based versus a mass-based approach may result in the State being deemed not t o be in compliance with its proposed goal.

Comment 46: Subsequent NODA needed to evaluate alternative scen arios

Response 46: The EPA appreciates the recommendation to publish a n additional NODA in regards to how a Federal Implementation Plan might be structured and implemented. For more information please see section II.G of the final ru le preamble of the CPP.

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

Commenters stated the proposal did not include any information on how a Federal Implementation Plan (FIP) might be structured and i mplemented. The commenters said it is appropriate to include language in a subsequent Not ice of Data Availability (NODA) regarding
this issue so that states can take this into consid eration in evaluating alternative scenarios for states to comply with the final rule.

Comment 47: The EPA should allow states to utilize non-BSER mec hanisms in compliance plans.

Response 47: The EPA appreciates the recommendations to the goal calculation equation. Please see sections VI, VII, and VIII of the final rule preamble of the CPP and the CO2 Emission542

Performance Rate and Goal Computation TSD for CPP F inal Rule supporting the final CPP for more information about the final goals, how they we re calculate, and state compliance plans.

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

Commenters stated EPA's 111(d) proposal allows stat es to "include measures in their plans beyond those that the EPA included in its determina tion of the BSER." The commenters said for example, non-BSER compliance options could include affected unit-specific measures to further
reduce emissions and/or measures that would result in reductions at non-affected units. The commenters supported this flexibility and agrees th ese types of measures may be appropriate to include in a state plan to achieve CO2 emission red uctions from affected EGUs.

Comment 48: Alternatives approaches - to several of BB

Response 48: The EPA appreciates the recommendations to the goal calculation equation regarding the building blocks. Please see sections VI and VII of the final rule preamble of the

CPP and the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP for more information about the final goals and how they were

calculated.

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

Commenters stated an alternative approach to settin g the goal for Build Block 1 would be to allow states to demonstrate pre-base-year heat rate improvements secured through specific plant upgrades, technologies, or new plant construction, and provide data on other plant changes that have affected net heat rates, so that EPA can use t his information in determining improvement potential for that state and use this potential for calculating the state goal. The commenters said in some states, this may result in an even higher h eat rate improvement then calculated, as some coal-fired EGUs may be able to exceed the estimated six percent increase in heat rate. The commenters said if this type of approach based on m ore in-depth analysis is used however, it should also account for other opportunities to incr ease efficiency in goal setting (e.g. environmental dispatch of existing units, or increa sed co-firing of natural gas); ultimately, this could result in greater emission reductions from th is Building Block, especially for states who have not taken any actions prior to 2012 to improve or upgrade their coal-fired EGUs. The commenters said this may also be an opportunity for the EPA to recognize the early action of some states that many utilities and state regulator s are concerned with.

Commenters stated EPA has invited comment on whethe r they should consider re-dispatch to new NGCC resources (as opposed to existing, under-u tilized NGCC resources), the potential to co-fire with natural gas at existing coal-fired EGU s, or convert coal to natural gas at existing
coal-fired EGUs. The commenters recommended that th e EPA recognize these pathways as compliance measures explicitly, and to consider the m in setting carbon reduction goals, as they are already being deployed across the country. Whil e the commenters took the position that the existing proposal allows states to pursue these com pliance measures as options, and EPA should consider these three pathways as part of the BSER f or Building Blocks 1.543

Commenters’ analysis has shown that an environmenta l dispatch, that is, the re-dispatch of generation from less-efficient to more efficient co al-fired EGUs, could alone account for a 5% improvement in Wisconsin overall emissions per unit output for coal-fired EGUs in Wisconsin; there is no reason to believe that this strategy is unique to Wisconsin and could easily be replicated by other states.

Commenters stated the method employed by the EPA to calculate the renewable energy goal for each state is based on a regional average of existi ng state renewable energy portfolio standards (RPS); RPS are a widely used and understood policy mechanism used by states to meaningfully develop renewable energy resources in their respect ive states. The commenters said that a technical potential analysis would be more appropri ate in setting the renewable energy goal for each state, as it does a better job at accounting f or the specific circumstances for each state and better illustrates the enormous potential that Wisc onsin and states have to develop their own renewable energy resources.

Commenters stated as a baseline, endorses the Union of Concerned Scientists' "Demonstrated Growth Approach" to the renewable energy aspect of Building Block 3. The commenters said this entails: (1) setting a national benchmark rene wable energy growth rate of 1% of electricity sales/year based on demonstrated growth in the stat es from 2009 to 2013; (2) full compliance with existing RPS standards; and (3) accounting for actual and expected renewable energy growth between 2013 and 2017. The commenters said s tates below the benchmark ramp-up to 1% by 2020, and states at or above benchmark growth ramp-up to a maximum rate of 1.5%; this approach is stronger than the EPA's proposal, but i s still easily achievable by the states. The commenters would at least like to see this approach adopted by EPA in setting Building Block 3.

Commenters stated that EPA is undervaluing the pote ntial of renewable energy as a compliance
measure. The commenters said EPA's technical-econom ic analysis of renewable energy potential does not use the most recently available data, whic h suggests that the costs of renewable energy are decreasing and are less than the estimates used in EPA's analysis; by using the most recent cost and economic data, the value of renewable ener gy as a compliance measure will increase and greater emissions reductions can be achieved.

Commenters stated other approaches to setting the r enewables portion to the state targets, such as the Union of Concerned Scientists' (UCS) demonstrat ed renewables growth approach, show double the amount of renewable energy potential usi ng the correct data for renewable energy. The commenters said the UCS demonstrated growth app roach would improve on the EPA's proposed approach by incorporating the following co re components:

• Setting a national renewable energy growth rate ben chmark 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 sources

• Accounting for actual and expected renewable energy growth between 2013 and
2017.544

The commenters said the UCS state-level renewable e nergy targets begin in 2017, the proposed start date for state implementation plans, and ramp up through 2030; to determine each state's 2017 generation levels, the UCS uses actual generat ion data from 2013 (the EPA's approach uses 2012 data) and adds projected generation from wind and utility-scale solar projects known to be under construction through 2016.

Comment 49: Alternative approach - BB1 - if no additional HRI i s technically feasible

Response 49: The EPA appreciates the recommendations to the goal calculation equation in regards to Building Block 1. Please see sections V .C., VI and VII of the final rule preamble of

the CPP and the CO2 Emission Performance Rate and G oal Computation TSD for CPP Final Rule supporting the final CPP for more information about Building Block 1, the final goals, and how they were calculated.

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

Commenters stated Building Block 1 focuses on heat rate improvement ("HRI") at coal-fired EGUs; more specifically, EPA has proposed an across -the-board 6% HRI for all coal-fired generation as a BSER. The commenters suggested if n o additional HRI is technically feasible at a unit, the Final Rule should recognize such unit a s having already met BSER, and such unit should be excluded from the state reduction goal ca lculation as is currently the case with nuclear generation.

Comment 50: Alternative approach - BB1 - modified and reconstru cted consideration in 111(d) approach

Response 50: The EPA appreciates the recommendations to the goal calculation equation in regards to Building Block 1. Please see sections V .C., VI and VII of the final rule preamble of

the CPP and the CO2 Emission Performance Rate and G oal Computation TSD for CPP Final Rule supporting the final CPP for more information about Building Block 1, the final goals, and how they were calculated.

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

Commenters stated U.S. EPA took a different approac h under the modified and reconstructed proposal to at least acknowledge unit specifics sho uld be considered; specifically, U.S. EPA proposed two options, both considering unit specifi cs. The commenters said first, U.S. EPA proposed to use a unit-specific rate, either the si ngle best annual emission rate or the best three consecutive year average emission rate, based on un it-specific data from the 2002 to the point of modification. [79 FR 34987, 34974] The commenters s aid U.S. EPA then proposed a 2% HRI be added to that rate. While the commenters did not ag ree with this approach, it is a step in the right direction of considering unit-specifics that U.S. E PA has not taken under this proposal. The commenters said second, U.S. EPA proposed the emiss ion limit for modified sources would be545

determined by the Section 111(d) implementing autho rity based on the sources expected performance after implementing unit-specific EE imp rovements taking into account what is technically feasible. [79 FR 34965, 34988] Commente rs asserted this is the exact provision that should be occurring under this Section 111(d) plan. The commenters believed this type of flexibility is what is necessary in order to addres s issues that will arise as states develop and implement Section 111(d) plans. The commenters said the only method that should be used for determining emission limits under Section 111(d) is through the states determination (such as an energy audit) of what is technically and economical ly feasible at a particular unit given the history of what efficiency improvements have alread y been completed. The commenters said approaches under the modified and reconstructed pro posal, of setting a limit and requiring an additional 2%, or approaches under this Section 111 (d) proposal of assuming 6% can be achieved on average, based upon inappropriate appli cation of studies and averaging historical rates without any consideration for unit-specific f easibility is wrong, unworkable and can lead to individual facilities in some cases being imposed w ith requirements that are beyond the BSERs.

Comment 51: Alternative approach - BB2 EPA should impose a mini mum gas generation share target by state

Response 51: See Preamble Section V.A for a discussion of BB2 in the final rule. Section VI explains the regional application of the building b locks. The EPA’s calculations of subcategory rates does assume that fossil steam generation will continue to operate in all Interconnections as the least stringent region used to set the subcateg ory-specific rates has a significant amount of fossil steam generation.

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

Commenters believed that several of the issues with the redispatch step may be addressed by requiring a minimum share of gas by state, and then adjusting other state requirements to provide actual flexibility in developing compliance plans. The commenters said this would allow states such as Mississippi the ability to preserve some co al-fired generation. The commenters said a modified goal setting methodology with minimum stat e gas generation shares - or alternatively, maximum coal generation shares or maximum average e missions rates - would also provide real flexibility to states such as Mississippi to mainta in some generation diversity and would help to minimize overall compliance costs because states wo uld not be forced into potentially irreversible actions to ensure compliance on a sing le-state basis. The commenters have not evaluated what minimum share level could be appropr iate, but believes such modification could increase true flexibility, enhance opportunities fo r coordinated state action, and decrease the overall economic burden of the Clean Power Plan, wh ile maintaining overall emissions reduction goals.

Comment 52: Alternative approach - Use of NSPS NGCC Rate in Goa l Setting546

Response 52: The EPA’s use of historical NGCC emission rate is a ppropriate for estimating future annual NGCC emission rates. It disagrees th at using a higher emission rate than reported is consistent with the notion of a Best System of E mission Reductions. Moreover, see section V for a discussion of why 111(b) and 111(d) rates are not apples-to-apples metrics. Finally, while the 111(b) NGCC rate references reflects a maximum allowable amount, the emission rate assumed in quantifying BSER for 111(d) is an annual average.
The following are summaries of the specific public comments under this comment:

Commenters noted that in places EPA has used an NGC C emission rate, in lb/MWh, in calculating the Interim and Final Goals for some st ates that is lower than the rate specified in EPA's pending NSPS for EGUs. The commenters said in Arizona, EPA used an NGCC emission rate of 900 lb/MWh, based on the average performanc e of Arizona's NGCC units in 2012; the
commenters believed that this is unreasonable. The commenters said for purposes of goal setting, an existing NGCC unit should not be expected to per form at a better level than a new, post-NSPS unit with newer technology; even if the existing NG CC unit is temporarily exhibiting a better level of performance, it is not clear that such per formance would continue over the life of the NGCC unit or would survive the change in operating regime from an intermediate or peaking load unit to baseload usage (as contemplated by EPA 's proposed redispatch). While the commenters believed that use of the graduated NSPS rates would be best, for purposes of simplicity in goal setting, the commenters believed that use of the 1,000 lb/MWh in the proposed NSPS would be an acceptable solution given that mos t NGCC units would be subject to the 1,000 lb/MWh limit if they had been constructed pos t-NSPS proposal.

Comment 53: RE alternatives - use Union of Concerned Scientist approach

Response 53: See Preamble Section V.A of the final rule preamble

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

Commenters have reviewed the Union of Concerned Sci entists' (UCS) "Demonstrated Growth Approach," and recommends for determining the BSER in the EPA's renewable energy building block; the UCS approach: 1) addresses inadequacies of EPA's Proposed and Alternative approaches as discussed previously; 2) better refle cts the current and projected market development trends for renewable energy (nationally and in the southeast); and, 3) is technically and economically feasible for southeastern utilitie s. The commenters said UCS viewed the EPA Proposed and Alternative RE approaches as an undere stimation of the actual potential RE can and should play in reducing U.S. carbon emissions f rom the electric power sector; as a result, UCS developed and proposed a more realistic method which relies on several core components, including:

• Setting a national renewable energy growth rate ben chmark based on

demonstrated growth in the states from 2009 to 2013 ;547 • Assuming full compliance with current state renewab le electricity standard (RES) policies, as set by law, that require certain perce ntages of electricity to come from renewable sources; and

• Accounting for actual and expected renewable energy growth between 2013 and
2017.

The commenters said UCS found that the national ave rage annual increase for state renewable energy growth from 2007-2013 was about 1% of electr icity sales per year, and therefore set that rate as the minimum growth rate that would be requi red starting in 2020. The commenters said states below the 1% historic growth rate would have from 2017-2020 to achieve the rate, and states above the 1% would have to maintain their gr owth rates from 2017-2030, up to 1.5%; further, states would have to meet the greater of t wo goals - the UCS growth rate or their individual RES target (if they have one), with an o verall cap of 40% of any single state's electricity sales. The commenters said another key difference in the UCS Approach compared to EPA's Approaches is that UCS used actual 2013 data (including distributed generation) plus projected generation from utility-scale solar and w ind projects under construction through 2016, to determine each state' 2017 baseline generation l evels.

Commenters stated the U.S. has experienced a boom i n renewable (particularly solar and wind) energy development over the past several years; thi s has been driven in part by policies, and largely by technology advancements and declining co sts. The commenters said a critical component to the UCS approach is in being more cons istent with actual market trends; where the EPA uses 2012 RE generation as a baseline for 2017, UCS uses actual 2013 data (which includes distributed generation), and expected RE generation for wind and solar projects under construction through 2016. The commenters said furt her, RE growth rates are state-specific (within the 1-1.5% range or based on existing RPS c ompliance rules), and are therefore not limited to any one state or region's RPS rules; thi s is particularly true for the Southeast, where there is only one state with an RPS, yet several ot her states are pursuing renewable energy independent of RPS mandates.

The commenters said in the Southeast, the UCS Appro ach results in 14% of electricity sales being met with renewable energy by 2030, as opposed to 7% under EPA's Proposed Approach; the Southeast has more than enough techni cal potential from renewable resources to meet this level of penetration, and current market growth is already occurring.

The commenters said solar energy development is boo ming across several Southeastern states and this is anticipated to increase with continued price declines and the approaching roll back of
the federal ITC at the end of 2016. The commenters said some examples of minimum expected solar development in southeastern states - note tha t North Carolina is the only state listed here with an RPS: North Carolina, the only of these stat es with a mandatory RPS, is already anticipated to install 300 MW-ac in 2014, and Duke Energy alone is already planning to add nearly as much in 2015; North Carolina will have cl ose to, if not exceeding, 1000 MW-ac of solar installed by the end of 2015; Georgia will go from less than 20 MW-ac of installed PV capacity in 2012 to nearly 900 MW-ac by the end of 2016; The Tennessee Valley Authority (TVA) has over 260 MW-ac of solar installed or unde r contract, and assuming that solar programs remain at 2014 levels, TVA will have nearl y 500 MW-ac total by the end of548

2016; South Carolina recently passed the Distribute d Energy Resource Program Act, which is expected to bring at least 300 MW-ac of additional solar online in the state by 2021; further the
commenters were aware of substantial commercial sol ar development activities in Mississippi, Alabama, and Florida. The commenters said the oppor tunity for solar energy in the Southeast is so great, as demonstrated by the DOE SunShot Vision Study, that if solar prices achieve analyst projections by 2020, nearly all of the UCS's 2030 R E generation level for the Southeast could be
met with solar.

The commenters said wind technology is already capa ble of meeting significant levels of the Southeastern electricity generation, due to current ly available "Class III" turbines, and in fact developers have been prospecting these states over the past couple years; southern utilities are already purchasing over 2,500 MW of wind capacity f rom out-of-state projects, and transmission lines are in the process of being developed to tran smit several gigawatts of wind to several
southeastern territories.

The commenters said biomass also represents a uniqu e opportunity to leverage low-emitting and dispatchable power production resources in the Sout heast.

Commenters stated EPA should amend the renewable en ergy goal-setting methodology in the
final rule so that the Clean Power Plan drives rene wable energy growth in all states; Minnesota's RES requires 25% of retail sales for all but the st ate's largest utility to come from renewable energy sources by 2025; the state's largest utility , Xcel Energy, has a more aggressive goal of 30%; in contrast, the Clean Power Plan sets Minneso ta's renewable energy penetration goal at an unreasonable level of 15% by 2030; in other words, the Clean Power Plan does nothing to drive renewable energy development in Minnesota and inste ad acts to weaken Minnesota's overall target. Minnesota is not the only state in this pos ition.

Commenters urged EPA to consider a renewable energy goal under building block 3 that considers historical performances and also drives f uture change. The commenters said as stated by the Union of Concerned Scientists ("UCS"), "the Clean Power Plan could deliver much deeper reductions in emissions, especially by takin g greater advantage of cost-effective renewable energy options." The commenters said the UCS's "Demonstrated Growth" approach uses "the latest available market data, demonstrate d rates of growth in renewable energy, and existing state commitments to deploy renewables."

Commenters stated the UCS analysis showed that the levels of renewables reached through compliance with the Clean Power Plan are lower in 2 020 than what the U.S. Energy Information Administration ("EIA") predicts would occur under a business-as-usual approach. The commenters said this circumstance highlights the ne ed for a more robust renewable energy goal under the Clean Power Plan; moreover, the Clean Pow er Plan's 2030 estimated reductions are only marginally higher than the EIA's projections. The commenters said trends prove that we can do better; in particular, Minnesota can do better a nd has proven so; for example, Minnesota's actual renewable energy generation in 2013 already exceeds the Clean Power Plan's goal for renewable energy generation in 2030.

Commenters stated although EPA included an alternat ive approach to calculating the renewable energy portion of building block 3, EPA's alternati ve approach does not reach even the EIA's549

business-as-usual level of renewable energy generat ion in 2020 and results in a similar level of renewable energy generation in 2030. The commenters said in contrast, the UCS "Demonstrated Growth" approach uses current figures to calculate a baseline renewable energy generation for
each state and adds reasonable incremental levels o f growth. The commenters said this results in a renewable energy target under building block 3 th at can drive states in the right direction. The commenters said a stronger renewable energy target based on what states can realistically achieve will demonstrate a state implementation pat hway that promotes the type of energy infrastructure that will ultimately be needed to st abilize our climate; EPA should therefore prioritize renewable energy by making renewable ene rgy targets stronger and more realistic.

Comment 54: Alternative approaches - BB3 RE

Response 54: See Preamble Section V.A and V.E of the final rule preamble for discussion of building block three.

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

Commenters stated in setting rate targets, EPA shou ld subtract emissions reductions due to energy efficiency (and renewable energy) from emiss ions in the numerator of the rate; when states are calculating rates from actual generation and emissions, electricity savings due to energy efficiency (and renewable energy) should be added to generation in the denominator of
the rate. The commenters said to the extent efficie ncy and renewables reduce use of the covered plants, adding them to the denominator of the rate undercounts them. The commenters said in setting the targets, the emissions reduction due to efficiency and renewables (beyond renewables in 2012) could be subtracted from the numerator. Th e commenters said when calculating the emissions after redispatch (the numerator of the ta rget rate), the generation would be reduced by the amount of efficiency and renewables available; as the calculation in the draft rule maximizes use of natural gas, this will first reduce the assu med use of coal generation. The commenters said the efficiency and renewables cannot result in negative covered generation, and one could assume a minimum amount of covered fossil generatio n will remain to help ensure grid reliability.

Commenters stated a simpler alternative might be to calculate the emissions reduction from efficiency and renewables using the emissions rate after Blocks 1 and 2 have been applied; this will in effect assume the reduced covered generatio n is from the mix of coal and natural gas after redispatch. The commenters said, one would prevent emissions from being reduced below zero
or another minimum.

Comment 55: Alternative approaches - BB3 RE

Response 55: See Preamble Section V.A and V.E of the final rule preamble for discussion of building block three.550

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

Commenters stated the following three alternative m ethods, all of which are as equally valid as EPA's, show just how unrealistic EPA's renewable go al is for South Dakota.

• The first method would be for EPA to sum the renewa ble energy portfolios in the North Central Region and divide by the total number of states within the region; using this method, the average renewable generation target would be approximately 8.4 percent for each state.

• The second method is to average the actual renewabl e energy production of the five states with renewable portfolios based on thei r actual renewable energy production in 2012; the average percentage of renew able energy production for the five states is 5.1 percent; a third of what EPA proposed for all of the states within the region.

• The third method would be to average the renewable energy production in 2012 for all of the states within the North Central Regi on; this results in an average state goal of approximately 7.1 percent.

The commenters said all three alternative methods p roduce a renewable goal for South Dakota that is far less than 15 percent and therefore allo w for a greater likelihood of successful implementation; therefore, South Dakota suggests th at EPA's calculation for renewable energy for South Dakota is seriously flawed and should be withdrawn. The commenters said if EPA decides not to withdraw their renewable energy goal , South Dakota recommends EPA use one of the above three methods for calculating renewable e nergy goals.

Comment 56: Alternative approach - BB3 RE

Response 56: See Preamble Section V.A and V.E of the final rule preamble for discussion of building block three.

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

Commenters see two potential ways to improve the pr oposal's approach to renewable energy.

1) Apply renewable targets to retail electric sales . The commenters said EPA already used retail sales data in the application of Building Block 4; changing Building Block 3 to a load-based
calculation would not dilute national emission redu ctions and would more closely align with existing RPS policies upon which the renewable assu mptions are based. The commenters recommended keeping the regional renewab le energy targets the same - 21% in the west, 25% in the northeast, etc. - but the proposal would apply those targets to 2012 retail
electric sales data for each state. The commenters said 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. The commenters said such a "stair-step" approach aligns with many RPS policies in the country and reflects the fact that new551

renewable energy typically enters the grid in sizea ble chunks as a result of utility-scale projects. The commenters said this approach would not assign existing renewable resources to any particular state for purposes of goal-setting; as a result there would be no disruption of the existing REC trading system if states wanted to use it for compliance purposes and no concerns about data errors in determining the physical locat ion of the generating units.

2) Recalculate Building Block 3 goals with proper d ata and attribute renewable resources consistently. The commenters said Building Block 3 could also be improved by changing two data sets; first, the hydropower on the Oregon/Wash ington and Oregon/Idaho border should be evenly split between the border states; this approa ch would be most consistent with EPA's proposed approach of applying regional targets base d on the physical location of generation. The commenters said second, the 2012 stock of non-hydro renewables in each state should be adjusted to be consistent with existing RPS policie s; for example, renewable projects located in Oregon that serve California load should be used to set California's target; renewable projects located in Washington to serve Oregon load should b e used to set Oregon's target. The
commenters said data from the Northwest Power and C onservation Council on the recipient of non-hydro renewable energy generated in the Northwe st is available. The commenters said moreover, FERC Form 1 and FERC's Electric Quarterly Report contain the information needed
to make most or all of the data corrections needed. The commenters said alternatively, if the final rule retains the current approach of including all renewables physically within a state in the calculation of each state's goal, then EPA should i ssue clear guidance that any such renewables included in a state's baseline and goal calculation shall be available to that state for compliance

purposes.

Comment 57: Alternative approach - BB43- exported renewables

Response 57: See Preamble Section V.A and V.E of the final rule preamble for discussion of building block three.

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

Commenters stated one way to address the exported r enewables included in the 2012 state total is to simply count them in the calculation of Wyomi ng's goal compliance going forward, but without applying a growth factor; in other words, t he starting point for the calculations leading to the glide path would remain 4,369,107 MWh, but the 3,702,895 MWh would not be escalated; the goal in 2029 would then be 3,702,895 MWh plus 6 66,212 MWh escalated by 1% annually.

The commenters said Wyoming would be indifferent to use of the second approach as long as variations in the exported renewables did not add t o Wyoming's burden to increase renewables to meet the EPA goal. The commenters said this could o ccur through fluctuations in output, through expiration of contracts, and through transfers of i nterests, among other possibilities; for example, if an existing purchase agreement expired and right s to the production were acquired by a purchaser out of state, the result may be to credit those renewables to a different state. The commenters said one way to address these possibilit ies would be by State-proposed adjustments in filings demonstrating compliance; transfers coul d simply be retroactively eliminated from the552

state goal and increases in production could be ret roactively added; the common thread in these adjustments would be the state's absence of control over the exported renewables.

The commenters said without an adjustment to the co mpliance goal, Wyoming's original goal would be too high; we also anticipate EPA's ground rule for new renewable projects will eventually apply to existing projects as the realit y of Section 111(d) compliance begins to press
on utilities and states.

Comment 58: Alternative approach - RE calculation that relies o n a state-by-state evaluation

Response 58: See Preamble Section V.A.4.c for a discussion of th e building block three quantification in the Final CPP. This final method ology estimates the regional potential based on the aggregate state-level potential. Section VI of the Preamble then explains how the replacement potential of this regional generation i s assigned to different generating technologies.

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

Commenters stated if U.S. EPA keeps building block 3, the commenters preferred the incorporation of an alternative RE calculation that relies on a state-by-state evaluation which considers each state's capacity for various types o f RE measures. The commenters said a stateby-state approach, rather than a calculation that f ocuses on regional goals which may overestimate RE capacity in some states, would ensu re that RE targets are more tailored to each state's unique circumstances; however, the commente rs insisted that state RE goals must be both attainable and realistic, both from a capacity and cost-effectiveness standpoint.

The commenters did not support the RE approach sugg ested in U.S. EPA's Alternative RE Approach TSD; the calculation used in the alternati ve RE approach measures technical potential by using the NREL database, which doesn't take into account important variables like cost or grid limitations; further, this calculation include s a benchmark calculation based on the top third of states in a given type of renewable electricity. The commenters said this is problematic because it may lead to unrealistic and unachievable RE goals. The commenters said in Indiana's case, the alternative RE calculation sets a goal of 19% RE by 2025 and 2030, which is highly unlikely; the BSER calculation for Building Block 3 has a final goal of 7% RE by 2030. The commenters said the final goal in the alternative R E approach is more than twice the RE number in the original calculation. The commenters did not believe this goal is at all realistic, especially since Indiana currently has no way to mandate RE me asures; further, due to the timing of the proposed rule and proposed date for state plan subm ittal, Indiana does not have the time to pursue legislative action in order to obtain proper authority to implement this Building Block. The commenters stated they would prefer an alternat ive RE calculation that specifically focuses on each state's unique characteristics, rather than one that includes benchmarks or calculations based off of regional characteristics, to be incorp orated into the state rate.

Comment 59: Alternative approach - BB4 EE553

Response 59: EPA did not include BB4 in its quantification of BS ER for the final CPP. See section V.A. of the preamble for further discussion

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

Commenters stated on page 34873 and 34875 of the pr eamble, EPA is taking comments on alternative approaches for setting state goals conc erning demand-side energy efficiency. The commenters disagreed with the use of building block 4 because neither EPA nor the states have the authority to make it enforceable; however, if E PA decides to implement building block 4, the 1.5 percent goal needs to be lowered because existi ng programs in South Dakota have shown that even 0.7 percent over a period of years is overly o ptimistic.

4.4.5 Treatment of data years

Section 4.4.5 covers public comments related to the treatment of data years in the proposed emission goals computation procedure.

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: eGRID Data

Response 1: The EPA has made some unit-level and methodological changes based on comment. In addition to unit-level changes, the EPA updated the methodology to gap-fill generation data at plants where EIA data listed the net electricity generation as negative; performed additional quality assurance checks to ex amine units with unusually high or low CO2 emission rates (i.e., greater than 10,000 or less t han 500 lbs. CO2 per MWh); added categories indicating units that were under construction or co mmenced operations in 2012; and used updated Part 75 emissions data. As described in App endix 9 of the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule, c ombined cycle units are considered a single system and emissions from all components are summed and distributed to the generators (the steam parts and turbine parts) based on the pr oportion of nameplate capacity. This approach was chosen given the best available data at the tim e, because the generator-specific and the prime-mover-specific generation and emissions data are not always available from EIA-923 and

Part 75.

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

Commenters stated in EPA's "Data File: 2012 Unit-Le vel Data using the eGRID Methodology" dataset, EPA used aggregate data rather than genera tor-specific data for NGCC units, which may deviate from the methodology described in the "Desc ription of 2012 Unit-Level Data using eGRID Methodology" Technical Support Document (here inafter "TSD").554

Commenters stated in analyzing EPA's "Data File: 20 12 Unit-Level Data using the eGRID Methodology" dataset, the commenters noted that cer tain data elements appear to be derived without following the methodology (including the me thodology for data priority) described in EPA's "Description of 2012 Unit-Level Data Using eG RID Methodology" TSD.

Commenters stated EPA aggregated Combined Cycle Ste am Part (hereinafter "CA") and Combined Cycle Combustion Turbine Part (hereinafter "CT") data before performing calculations instead of using available generator-s pecific data or performing prime-moverspecific calculations; this resulted in loss of gen erator- specific accuracy and misapplication of data priority as described in the TSD at the follow ing facilities:

• Dell Power Station generator units CTG1, CTG2, and STG

• Harry L. Oswald generator units 1-9

• Hot Spring Generating Facility CT1, CT2, and Steam Turbine (hereinafter "ST")1

• Magnet Cove Gas Combustion Turbine (hereinafter "GC T")1, GT2, and ST1

• Pine Bluff Energy Center generator units CT01 and C T02

• Thomas Fitzhugh generator units 1 and 2

• Union Power Partners LP generator units CTG1 - CTG7 and STG1 - STG4 52

Commenters stated while this treatment of NGCC data may seem negligible at a facility level,
the cumulative effect would have a 26 lb/MWh differ ence in Arkansas's final goal.

Commenters sought clarification on the rationale be hind EPA's departures in the methodology used to derive generation and emissions data for th ese units from the methodology as described in the "Data File: 2012 Unit-Level Data using the e GRID Methodology" TSD. The commenters said any necessary corrections to the dataset shoul d be made before this data is used in the final goal computation for Arkansas.

Commenters stated some units in the eGrid database have CO2 emissions rates well beyond 3,000 lbs/MWh, given the CO2 emissions and net ener gy output data provided in the file. The
commenters asked what circumstances would result in such high CO2 emissions rates.

Comment 2: 2010 and 2011 data

Response 2: See Section VI of the Preamble for the EPA’s discus sion why we relied on 2012 data as the starting point for forming its baseline . We did make some adjustments to reflect commenters’ concerns, and in the case of hydro – th ese adjustments reflect data going back to 1990. However, in general, the EPA believed the ra te-based nature and the regional nature of the subcategory rate derivation make recent year data r obust to random annual unit-level variation. The EPA believes starting with 2012 data and only m aking limited adjustments uses the best555

available historical data and most accurately refle cts an appropriate baseline from which to evaluate BSER potential.

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

Commenters asserted EPA must provide greater speci ficity regarding the impacts of utilizing
baseline data from 2010 and 2011 on individual stat e requirements.

Commenters stated EPA has provided 2010 and 2011 op erating data as a supplement to the 2012 year data used to establish the baseline in the Rul e Proposal. The commenters said this is an insufficient amount of data, particularly for state s like Texas, Louisiana and Mississippi with such large and diverse generation fleets. The comme nters said in EPA's other recent rulemaking, far more data was provided regarding historical ope rations - at least five years. The commenters said for a rule of this significance, operational a nd emissions data should cover many more years, in order to properly assess and determine a baselin e; importantly, if EPA does desire to amend its baseline - which affects every substantive requirem ent of the Rule Proposal - it can only do so by issuing a new proposal and seeking full public comm ent on any changes.

4.4.6 Other

Section 4.4.6 covers all other public comments rela ted to the proposed emission goals computation procedure.

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 perform periodic reevaluation of the BSER

Response 1: The EPA agrees with the commenters that under secti on 111(b)(1)(B), the EPA must review standards of performance for new source s every eight years. While there is no requirement that the EPA review standards of perfor mance for existing sources under section 111(d), the EPA anticipates that changes to perform ance standards for new sources may prompt the EPA to review standards of performance for exis ting sources as well. Whether such coordination is warranted, however, will depend upo n the nature of any changes proposed for new sources when the EPA conducts its periodic revi ew.

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

Commenters stated EPA should consider developing a time line and approach for periodically reevaluating this regulation; similar to the 8-year r eevaluations done for New Source Performance556

Standards, EPA could periodically reassess the BSER to ensure it continues to reflect the range of measures that have been adequately demonstrated to reduce carbon dioxide emissions from power plants. The commenters said this reevaluation might also provide a mechanism for updating the fleet of facilities subject to the reg ulation so that it does not gradually decline into irrelevance but instead continues to achieve signif icant emission reductions from fossil-fuel power plants.

Commenters stated a regular review of the "best sys tem of emission reduction" should be conducted to ensure that EPA's plan prioritizes cos t-effective solutions that bring maximum pollution reductions while maintaining reliable ele ctric service and minimizing harm to and costs of human health and the environmental impacts. The commenters said this analysis will be
critical as EPA establishes the next set of reducti on targets post 2030.

Commenters stated the Proposal would be strengthene d by a commitment from EPA to periodically reevaluate the state targets; while 11 1(d) of the Clean Air Act does not explicitly require this, other sections of the Clean Air Act d o (111(b)(1)(B)) and there is nothing prohibiting EPA from regularly updating performance standards for new sources as advances provide technologies that are cleaner or less costl y. The commenters said updating the BSER would support a "no backsliding" to ensure the stan dards sustain or increase the stringency of the goals. The commenters added the impressive pace of technological advancement in renewable energy, clean distributed energy technologies, ener gy efficiency, and grid technologies provide another reason for reviewing and revising the BSER and state targets.

Commenters stated based on the experience of the Re gional Greenhouse Gas Initiative (RGGI) program, periodic reviews of progress and targets a re important to keep the program on track. The commenters said this is especially true when, a s here, the CPP relies on assumptions about evolving energy market and technologies that can be subject to unforeseen changes and outside forcing agents. Therefore, the commenters urged EPA to have a required review of the overall program target and each building block target four years after the 2018 regional SIPs are submitted, and at the time updated SIPs submitted a re submitted in 2023.

Comment 2: Adjustments to goals to address errors in the EPA a ssumptions or new information/ Mid-term review process

Response 2 : See Section VIII of the preamble and the discussi on of the reliability safety valve.

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

Commenters stated EPA should allow that, upon a de monstration that significant transmission upgrades are reasonably necessary for a state to op erate its NGCC fleet at the average annual capacity utilization rate within the Final Rule, an d that no reasonably sufficient alternative is available to gain the same carbon reductions, its g oal or interim goal should be adjusted to account for the time needed for such upgrades.

Commenters stated the final goals need to include t he flexibility necessary to adjust for any deviations that may occur between forecasted assump tions and actual conditions; the557

commenters recommended EPA allow for interim and fi nal goals to be adjusted as states work through developing a state implementation plan that the state determines to be the most cost
effective for its citizens.

Commenters stated EPA's final rule should expressly permit a state to seek an adjustment of its 2030 emission performance target at any time to acc ount for either late discovery of errors in EPA assumptions or material new information that be comes available to the state after the close of the comment period on the CPP. The commenters sa id EPA stated in the preamble to the CPP that "[o]nce the final goals have been promulgated, a state would no longer have an opportunity to request that the EPA adjust its CO2 goal." The c ommenters said EPA's position is flawed for a
number of reasons.

Commenters stated on a fundamental level, EPA's pro posal sets standards that are dependent not an a specific unit's control options, which are rel atively ascertainable, but on the wide range of evolving energy system components, which require va rious energy supply and demand assumptions and are much less predictable. The comm enters said when asked by Congress about the possibility of an independent reliability study of the CPP, Federal Energy Regulatory Commission (FERC) Chair, Cheryl LaFleur, noted that such a study would require "making many assumptions on key factors, such as the extent and distribution of load reductions from energy efficiency, the number and location of new N GCC generation, and economic conditions such as fuel prices" and ""could be more speculativ e than informative, especially for later years." The commenters said accordingly, EPA cannot "fix" a state's future target because it cannot predict the future; either an overly aggressive ass umption or a change in circumstances affecting the availability of emission reduction opportunitie s could render the performance goal unachievable for a state; in that way, EPA's propos ed refusal to allow later adjustments to the 2030 state goals could directly harm the affected E GUs subject to emission standards within a state and it could indirectly harm major consumers of electricity within a state, including NCC
members.

Commenters stated precluding later adjustments to a standard that is based on future projections has both policy and legal implications; it would be harmful, from a policy perspective, to preclude updates to the state-specific predictions and assumptions upon which EPA based the state goals because it may render the CPP targets u nachievable (either by the state or by EPA exercising its federal implementation plan (FIP) au thority).

Commenters stated from a legal perspective, EPA has the initial burden of demonstrating that its standards under section 111 are achievable; to the extent that the standards are based on projections that are later found to be inaccurate, this undermines EPA's BSER determination and the achievability of its standards. The commenters said the data collection and analysis conducted for EPA's proposal is massive in scope an d far more complex than prior 111 rulemakings, given EPA's attempts to predict energy supply and demand. The commenters said for these reasons, EPA must allow the states to wor k with EPA to regularly track and test the assumptions and to update the targets, accordingly.

Commenters added on page 34893 of the preamble, EPA indicates a state goal will not be changed unless a state can demonstrate one building block cannot be achieved plus demonstrate the other building blocks cannot make up the differ ence. The commenters said Section 111(d) of558

the Clean Air Act requires EPA to determine best sy stem of emission reductions based on the best available data; Best available data does not i nclude correcting errors in one building block by making up the difference using other building bl ocks. The commenters said if a state can adequately demonstrate a building block used to est ablish the state's goal is in error, there is no authority in the Clean Air Act for EPA to require t he states to demonstrate it can or cannot be made up by the other building blocks. The commenter s said EPA should recalculate the state's goal if the state or others can demonstrate the dat a or assumptions made by EPA are in error.

Commenters stated the final rule should include a m id-term review process to ensure the target state goals and time line remains realistic and ach ievable without sacrificing the reliability, affordability, flexibility, and sustainability of t he electricity market. The commenters supported including a process similar to what was adopted in the 2011 CAFE agreement, to ensure policy is based on accurate data and not outdated projections and estimates. The commenters said EPA has made clear that the rule aims to provide flexib ility to states and the commenters believed a mid-term review of the goals is important to ensure that the rule works as intended.

Commenters stated it most prudent for EPA to provid e itself and all complying entities, including states, with the flexibility to adjust, o r suspend those standards going forward if circumstances jeopardizing reliability so warrant. The commenters said in order to preserve this flexibility, EPA should clarify in the Final Rule t hat the "binding nature" of the targets does not foreclose the potential for suspension or modificat ion of the requirement to meet that target (such as the interim targets and the related "glide-path" trajectory) should reliability issues which cannot be addressed during the compliance period in terfere with strict achievement of an average emissions rate or total mass determination for a gi ven state during the compliance period.

Comment 3: Fly ash

Response 3: See Section VIII of the Preamble for a discussion o f State Plan components relying on alternative compliance mechanisms.

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

Commenters stated the amount of greenhouse gas gen erated by the combustion of coal for generation of electricity represents a gross quanti ty which must be reduced by the amount of fly ash used in cement production and concrete mixtures . The commenters said the computation of greenhouse gas reduction is a result of calculating the following. 1) Avoided production of Portland cement (including avoided mining of virgin materials to produce Portland cement). 2) Reduction of greenhouse gas due to avoided landfill activities. The commenters said according to the Waste Reduction Model (WARM) of the US Environm ental Protection Agency, the
calculated values above result in a reduction of 25 MTCE (metric tons of carbon equivalent) for every 100 tons of fly ash recycled into cement prod uction and concrete mixtures.

Comment 4: Reducing water usage/ coal ash559

Response 4: While water usage optimization is not a component o f BSER quantification, the EPA believes the Clean Power Plan will encourage bo th energy efficiency and renewable generation technologies which put downward pressure on the water-intensity of electricity generation.

While not part of the Best System of Emission Reduc tion (BSER) under 111(d), the EPA does consider the coal combustion residual requirements from other EPA regulations in its power sector modeling. Therefore, these constraints are factored into the EPA’s estimate of systemwide impacts and least cost compliance modeling.

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

Commenters stated one key factor seems to be lackin g sufficient coverage in the EPA Clean Power proposal; there is no attempt in the proposal to minimize the usage of water and simultaneously balance the sources of energy genera tion to best reduce CO2; but this could be done as part of determining the best system for emi ssions reduction. The commenters said in a
state like New Mexico it would make sense to use mo re renewable zero emission to NOx contribution and thus less fossil fuel generation o f electricity, thereby reducing the use of water.

Commenters stated another key factor in determining the cost of the power plant is the final requirement for disposal of coal ash; new regulatio ns for coal combustion residuals could force further new investments in New Mexico to support co al fired plants.

Comment 5: Startup, Shutdown, or Malfunction (SSM)

Response 5: The periods of startup, shutdown, or malfunction ar e not exempted from the final goals.

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

Commenters stated the proposed rule does not provid e for exclusions from the CO2 emissions limit for periods of startup, shutdown, or malfunct ion (SSM). The commenters said the CO2 emissions from an EGU during SSM events could be mu ch higher than during normal operations, if the emissions are measured on a lb/M Wh basis, because there may be little or no electricity generated during such events. The comme nters recognized that such events may be limited and ultimately may not have much effect upo n a 3-year rolling CO2 standard; however, there appears to be no overriding reason to include emissions during startup, shutdown, or malfunction events in the compliance determination, particularly considering that CO2 mass emissions would likely be small during these events . The commenters said given the risk of elevated CO2 emissions (when measured on a lb/MWh b asis) during SSM events, if EPA chooses to include such events in determining lb/MW h emissions, then the state goals that EPA promulgates should also reflect the impact of SSM e vents on lb/MWh emissions.

Comment 6: Use of Significant Digits in the EPA Calculations560

Response 6: The Excel spreadsheets demonstrating the calculatio ns provided as an appendix to the Goals Computation TSD at Proposal and the CO2 E mission Performance Rate and Goal Computation TSD for CPP Final Rule show the exact c alculations and numbers if a stakeholder wishes to follow the math through. The EPA does not round calculations until it arrives at the final subcategory-specific interim and final emissi on rates. The nuclear assumption referenced is no longer included in BSER quantification as explai ned in Section V of the Preamble.

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

Commenters stated EPA's calculations of the state- specific CO2 emission goals would be more transparent and easier to follow if EPA were more c onsistent in the use of significant digits in the proposed rule, technical support documents, and dat a files. The commenters said for example, in many documents, EPA refers to an "at-risk" nuclear capacity of 6%, but in some documents EPA refers to a capacity of 5.8%. After several weeks o f being unable to recreate EPA's calculations,
the commenters discovered that EPA used a value of 5.84264%, not 6%. The commenters said had the percentage been used more consistently thro ughout the documents or more clearly noted, significant time and confusion could have been avoi ded. The commenters said the same can be
said of EPA's use of a North Central renewable ener gy goal of 15.114% in its calculations, when it is referred to in the proposed rule and technica l support documents as 15%. The commenters encouraged EPA to revise the preamble an d its technical support documents to make the calculations and percentages used as clear as possible.

Comment 7: Concomitant Research

Response 7: The EPA will work closely with the states in develo ping state plans that are appropriate for each state.

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

Commenters said that, the nontraditional nature of the rule in calculating the CO2 performance goal requires concomitant research into the regulat ory institutional arrangements in states. Commenters said, a traditional state-level regulato ry approach, with an environmental regulator issuing an emission limit permit will no longer suf fice, or will only suffice with the most
draconian outcomes.

Comment 8: Cross-subsidies

Response 8: See section VIII.C. of the final rule preamble of t he CPP for the EPA’s response to
this comment and more information about multi-state plans and compliance costs.

The following are summaries of the specific public comments under this comment:561

Commenters said that, in ensuring utility rates are set according to the "cost-causer, cost-payer principle that costs are assigned to each class of customer (e.g., residential, commercial, and industrial) in accordance with costs incurred to pr ovide service to the class. Commenters said, anytime one class of customer pays more than its re spective allocated costs, the class is crosssubsidizing other classes. Commenters said, the Pr oposed Rule sets an emission rate for all "affected EGUs" in the state, rather than the speci fic affected EGUs, cross-subsidies may occur amongst ratepayers of the various utilities in the state. Commenters said while cross-subsidies may be sorted out in context of setting rates for a single utility that sorting out the allocation of compliance costs amongst several utilities may prov e challenging.