Statement by 

Kenneth Smith, Polley Director, 

Arkansas Advanced Energy Association {AAEA) 

Public Hearing on Clean Power Plan: Regulation 111 {d) 

Environmental Protection Agency, Atlanta, GA 

July 29-30, 2014 

Introduction 

The Arkansas Advanced Energy Association (AAEA), representing over 80 

Arkansas companies and institutions, supports the proposed 111 (d) rule or Clean 

Power Plan (CPP). AAEA appreciates the rule's flexibility and its approach for 

achieving carbon emission reductions on a state-by-state basis. The rule's 

proposed methodology for carbon reduction, a Best System for Emission 

Reduction or BSER, offers a set of cost-effective, advanced energy technologies 

for reducing carbon emissions through heat rate improvement, energy 

conservation, and greater use of natural gas and renewable energy, 

The proposed Clean Power Plan is consistent with AAEA's principles to guide the 

development of smart, state-led, cost-effective plans for reducing emissions. 

These are: 

• Recognize the Value of Advanced Energy. 

• Provide Business Certainty. 

• Encourage Technology-Neutral and Market-based Solutions. 

EPA's proposed Clean Power Plan, however, underestimates the potential 

Arkansas Advanced Energy Association www.arkansasadvancedenergy.com 

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contribution of renewable energy and energy efficiency technologies to emissions 

reduction and to economic development and jobs. The proposed plan fails to 

account for the continuous improvements in these technologies that will enable 

greater emissions reduction over time, and discourages companies from taking 

early action with advanced energy technologies. 

Specific Issues To Be Considered By EPA 

AAEA believes the proposed carbon emissions reduction target for Arkansas of 

44% by 2030 from 2012 carbon emissions rates is appropriate 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 2005 to 2013 despite retail electric energy sales rising only 1%. 

AAEA encourages consideration of the following issues. 

1) AAEA believes Option 1, carbon reductions over a ten-year horizon is 

preferable over Option 2 --a lower carbon target achieved in half the time. AAEA 

reasons that deploying 8SER in Option 1 will provide the state and its utilities the 

needed time to deploy cost-effective technologies and programs necessary to 

reduce the state's carbon emissions. 

2) Each state's carbon reduction target reflects an emissions level that EPA has 

determined to be "reasonable" based upon application of a 8SER for coalpowered plants. In this case, the 8SER is the combination of four emission 

reduction strategies labeled in the rule as "building blocks (88)." In consideration 

of the building blocks and their potential costs, it appears to AAEA that the 8SER 

will work for Arkansas with the initial and highest carbon emission reductions 

coming from the increased deployment of combined cycle gas turbines (CCGT) -

an emission reduction up to 30% -- or 68% of the carbon target for the state. 

3) AAEA believes that if EPA raised its projections for 88s 3 and 4, Arkansas 
would achieve a higher carbon emissions reduction level and create 

unprecedented economic development and job growth in the state's advanced 

energy industry. The key energy technologies in Arkansas that would lead the 

way would be cost-effective investments in renewable energy (up to 15% or more 

of energy generated); EE with annual savings of 1.5% or more; and full 

deployment of Combined Heat and Power (CHP), a technology that uses waste 

heat to generate electricity at sites like universities, hospitals, and industrial sites. 

During August, the Arkansas Advanced Energy Foundation will release its new 

economic impact analysis of the utility-operated EE programs that will document 

actual employment numbers as well as the economic benefits of EE. This study 

has already found that more than 700 companies are now offering energy saving 

services through the utility-operated EE programs -- in essence, an industry that 

has largely been built in the past seven years. 

CHP systems would help with carbon reduction if increased from the current 497 

megawatts (MW) of capacity to 1230 MW, the projected industrial CHP capacity 

in the state. Full-scale deployment of CHP would provide enough electricity to 

power nearly 600,000 homes and lead to more than $2 billion in investments, For 

renewables, companies such as Clean Line Energy are preparing to deliver 

thousands of MW of wind energy from the Great Plains across the Midwest to 

eastern states. Arkansas could be a significant recipient of this new energy 

source if a planned, 500 MW converter station is built in Central Arkansas. 

4) AAEA recommends that renewable and efficiency programs/projects and other 

lower carbon emitting technology installed between 2014-2020 should be 

credited for 111 (d) compliance. Failure to do so could cause businesses and 

utilities to delay investment in new advanced energy and carbon reducing 

projects until 2020. 

5) AAEA recommends that Integrated Resource Planning (IRP) currently used by 
many electric utilities be incorporated into state carbon reduction plans. 

6) AAEA believes a multi-state approach to carbon reductions may be desirable 

to ensure that states have opportunity to take advantage of low-carbon 

technologies generated outside of their boundaries. 

7) AAEA believes that EPA should authorize the use of current Renewable 

Energy Credit (REC) tracking systems for compliance under 111 (d). Tools and 

processes for these tracking systems, such as the North American Renewables 

Registry, already exist and are in widespread use for supporting development 

and implementation of state 111 (d) plans and ensuring that each REC is counted 

only once. 

8) AAEA is interested in a comparison of rate-based and mass-based carbon 

targets for the states and how a state's regulators and electric utilities could 

implement carbon reductions under each approach. We encourage EPA to 

calculate mass-based targets for the states. 

9) The 2020-2029 averaging period creates compliance uncertainty because the 

electric utilities and the regulatory officials will 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 

measuring progress toward meeting the targets. 

10) As the states develop compliance plans, it would be very helpful if EPA had 

in place a model plan for the states to follow should they choose to do so. The 

benefit of such a plan would be that the states would most likely meet federal 

plan requirements. 
Conclusion 

Finally, AAEA expresses its appreciation to the EPA team including its 

consultants who drafted the proposed Clean Power Plan. The process of 

engaging states and stakeholders, incorporating their comments, and 

incorporating advanced energy technologies for both inside and outside-thefence solutions is exemplary and should become a model for all federal 

regulatory agencies to follow in the future. EPA is to be congratulated for its 

efforts and leadership to reduce global carbon emissions and to protect our 

society and the environment in which it resides.