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 goals

................................ ........................ 175 4.4.2 Data used

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

................................ ................................ ................................ ........................ 309 4.4.4 Alte rnative approaches

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

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

................................ ................................ ................................ ................................ . 5552 CHAPTER 4 STATE GOAL COMPUTA TION

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)

, proposed goals ( Section 4.2) , alternate goals (Section 4.3) , computation pro cedure (Section 4.4) , errors in 2012 baseline data (Section 4.5)

, rate

- to

- mass conversion (Section 4.6) , state flexibilities (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

- specific goal computation (4.11) , and other state goal computation related comments (4.12)

.

Commenters also raised issues on topics that are not covered by this chapter. Please refer to the following chapte rs 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 form of the goals including net generation, gross generation, and the form of car bon dioxide.

Commenters have raised a number of issues related to 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 rate

- based state goals in terms of emissions per unit of net generation, as opposed to gross generation.

Response 1: See section V I .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 t his comment:

Several c ommenters support ed EPA's proposal to express 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 preamble 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." C ommenters said using net generat ion 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. C ommenters stated in contrast, a rate

- based standard based on gross genera tion would ignore differences in the efficiency of auxiliary equipment and pollution control systems among EGUs, and thus fail to fully incentivize the efficient generation of electricity. C ommenter s added using net generation to set state goals is feasibl e, as EGUs already collect the necessary data and report net generation data to the Energy Information Administration.

Commenter s added using net generation as the basis for rate

- based standards appropriately incentivizes owners and operators of EGUs to op timize 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. C ommenter s stated under a standard based on net generation, these improvements in efficiency would lower the emission rate and contribute towards bringing a fossil EGU into compliance.

Commenter s added a gross generation

- based standard is inconsistent wi th the overall technology

- forcing purpose of performance standards under section 111, as well as EPA's recognition in building block 1 that improvements in fossil plant efficiency yielding greater useful output while maintaining or reducing emissions

- are an important part of the BSER.

Commenter s added EPA recognizes in the preamble to the proposed rule that "[n]early all EGUs already have in place the equipment necessary to determine and report hourly net generation," indicating that monitoring and repor ting net generation would not be burdensome. C ommenter s added although net generation is currently not reported 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 Informatio n Administration (EIA) through Form 923 submittals. C ommenter s said recent PSD permits for new and modified EGUs also include emission standards based on net generation, providing further support for the feasibility and reasonableness of this approach.

Co mmenter s added every power plant uses a portion of the electricity it generates (which is called the auxiliary or parasitic load) to run internal processes, such as feedwater pumps, cooling4 fans, and pollution reduction systems; a unit's net generation sub tracts 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 contrast, gross generation standard does not factor out the auxiliary load, but simpl y calculates the total amount of electricity produced by the unit's generator. C ommenter s said EPA has properly calculated all of the emission targets in the Clean Power Plan on a net output

- based rather than gross output

- based standard; by considering onl y net generation, EPA's plan encourages states to minimize the auxiliary load of their electric fleet and maximize internal efficiencies. C ommenter s said this will both help curb power plant CO2 emissions and reduce the cost of generating electricity for s ale to the grid, which will, in term, help contain electricity costs to consumers; commenter s therefore

, strongly support ed EPA's decision to use a net rather than gross output

- based standard for its 111(d) rule and urge the agency to maintain the net

- base d standard in the final rule.

Commenter s stated any power plant standard under 111(d) should be in terms of net, rather than gross, generation. C ommenter s support ed the EPA approach of expressing the standard in terms of net generation rather than gross ou tput. The commenters said the goal should be to serve the end users' electric demand with the minimum practicable amount of fuel, and the lowest practicable resulting emissions. C ommenter s said EPA's election to base emissions rate on net rather than gross generation provides utility engineers with more tools in the toolbox to meet the desired goal.

Commenter s stated EPA should be giving consideration to the effects of the installation of pollution control devices on the EGU's heat rate; even though contro ls degrade net heat rate, they provide an environmentally beneficial outcome and should therefore be accounted for. C ommenter s said U.S. EPA should not be making direct comparisons in between net and gross generation when providing justification for the re quirements imposed under this proposal; gross generation is only a representation of the generator itself and that such a value reflects nothing else about the generation system. C ommenter s said if net generation is to be used, then a mechanism must be est ablished to credit those units equipped with pollution control devices; failure to do so penalizes those units that have made significant investments in environmental controls, the costs of which are paid for by electricity rate

- payers.

I n the event that E PA ultimately decides to use net generation, the commenters propose d an alternative reporting approach. C ommenter s said the EPA reporting system used for hourly emissions data submittals includes a component for standalone quality assurance and quality

con trol data submittals; because there is no need for hourly net generation data, commenter s recommend ed that another standalone module be developed for total net generation so that the data already provided to EIA20 is directly submitted to EPA at the same t ime. C ommenter s 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 p rogram 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 sub category

- specific emission performance rates and state wide rate

- based and mass

- based goals based on net generation as explained in

s ection VI of the final rule preamble of the CPP

. See section VI.C. of the final rule preamble of the CPP for the EPA’s response to this comment. Additionally, building blocks two and three in the EPA’s BSER operate under the premise that 1 net MWh of lower emittin g generation can replace 1 net MWh of higher emitting generation. Therefore, measuring BSER emission performance rate s premised on net MWh is more consistent 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:

W ith respect to emissions goals based on gross versus ne t 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. C ommenter s said any emissions goal under Section 111(d) must be based on the BSER determination applicable to the affected source category. C ommenter s said the affected source category under the EPA's proposal is a fossil

fired electrical generating unit. C ommenter s said auxiliary 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 handling facilities are regulated under 40 CFR 60 Subpart Y. C ommen ter s said auxiliary boilers are typically regulated under 40 CFR 60 Subpart Db or Dc, and are clearly distinct from the EGU. C ommenter s said non

- emitting support systems, such as electric

- powered water

- intake structures and associated pumping or general fa cility HVAC systems, are not included in section 111 source definitions; therefore, the emissions goals under the EPA's proposed rule clearly should be based only on what is achievable at the affected source, which would be defined as emissions based on ei ther fuel consumed by the actual emissions source or the gross output (gross MWh) from the emissions

source. C ommenter s said in addition, there are many factors that affect the auxiliary usage requirements at a given power plant; those factors are dependen t on many circumstances beyond the practical control of the operator, including geographical location, size of the facility and number of units, water availability, previous fundamental design choices for the auxiliary support and pollution control equipme nt, etc. C ommenter s 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 will affect each EGU. C ommenter s said selecting a gross, versus net, basis affects the efficiency 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 support its conclusion that a 6 perc ent average improvement in efficiency is achievable, the inclusion of auxiliary equipment is inappropriate.

Commenter s stated EPA is diverging from its practice in other air regulations (e.g., MATS) of using gross not net generation for the calculation of emissions rates. C ommenter s said the net CO2 emissions rate goals are not only more difficult 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 Commen ter s stated the unit of measurement for this proposed rule, pounds of carbon dioxide per net megawatt hours is of particular difficulty for utilities. C ommenter s said by imposing limits based on net megawatt hours instead of the more traditional gross mega watt hours, power plants must deduct the power used to run the facility, also dubbed as parasitic load. C ommenter s said this appears to be the first time emissions are being measured as net, instead of gross. C ommenter s said this change also makes it more difficult for electric utilities to collaborate with their fellow state utilities to meet the state goals, which is another wrinkle in the EPA proposed rule. C ommenter s said by using a net measurement each 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 316B rule that regulates the intake of cooling

-- of water for cooling purposes, which also effects natural gas plants. C ommente r s said under 316B, a power plant would need to limit its impact on aquatic biota after several years of study; the result could be to add a new cooling tower or the like, which in turn would add more parasitic load; this results in higher carbon dioxide e missions from a plant, not because the increased carbon dioxide

-- that carbon dioxide emissions output 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 sid e of the equation.

Commenter s stated the proposed Existing Source Performance 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 (page 34 894) 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 ge neration for consistency with existing reporting requirements and with the proposed requirements under the GHG standards of performance for new EGUs".

Commenter s recommend ed continued use of gross generation rather than switching to net generation. C ommen ter s said Electric Generating facilities 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 Gree nhouse Gas Reporting programs. C ommenter s said significant investment 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 h ardware and software changes to their existing systems.

Commenter s favor ed the use of gross load (i.e., generation) data over net generation for because of consistency and fairness.

Commenter s stated in the document titled "Part of E.O. 12866 and 13563 R eview: EPA Response to Interagency Comments on the EGU GHG Modified/Reconstructed Source NPRM (clean) (2060

- AR88) as part of review of EGU GHG Existing Source NPRM (2060

- AR33) (5/30/2014)" in the docket for the proposed rule, the following text is found: " To the extent that the EPA finalizes modified and reconstructed standards for stationary combustion turbines that are consistent with the standards for newly constructed stationary combustion turbines, the EPA intends to take the same approach with regards to the use of net or gross output in both final actions." C ommenter s said in light of the fact that EPA's proposed new source CO2 standards7 under section 111 (b) are already based on gross generation, for the sake of consistency gross generation should als o be used for the section 111 (d) standards.

Commenter s 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 generation values penalizes utilities for electricity that is used to power pollution control systems

- mandated by other EPA regu lations

- that are installed subsequent to 2012. C ommenter s said in answer to a question KDHE staff asked with regard to affected EGUs using existing EIA forms to report their generation under the proposed rule, EPA Region 7 answered: "Kansas will not be usi ng EIA data for utilities to show compliance with the 111 (d) Plan. The State Plan will need to have monitoring, recordkeeping, and reporting requirements to meet 60.5805. This is also discussed at 79 FR 34910." C ommenter s suggest ed that by using gross gene ration to meet goal performance, affected EGUs, all of which are already Acid Rain sources reporting CEM data to EPA's Air Markets Program, can be relieved of the burden of new reporting requirements by simply allowing them use of Air Markets Program (CEM) data to fulfill their requirements (for CO2 emissions as well as electric generation) under the proposed rule.

Commenters noted that EPA solicited comment on whether the goals and reporting should be conducted on a net or gross basis. Commenters stated t hat while a net generation basis promotes energy efficiency, they believe that the owner or operator of an affected source should not be penalized for station service loads due to the operation of air pollution control devices such as flue gas desulfurizat ion units, selective catalytic reduction devices, and control technology to reduce particulate matter emissions. Commenters therefore stated that a gross output

- based standard is more appropriate than the net output

- based standard because well

- controlled f ossil

fuel fired EGUs consume more energy to operate air pollution control devices than uncontrolled units. Commenters stated that the gross output

- based 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 being produced as proposed. Commenters recommended that regardless of whether th e final rule 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 carbon intensity.

Response 3: The EPA is finalizing the CPP BSER as sub category

- 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 c ommenter s stated the CPP targets carbon emissions, a critical U.S. GHG contributor; the CPP relies on a performance targets based on the carbon intensity of each state 's fuel mix for power generation. While commenter s support ed that reductions in carbon intensity of the U.S. economy should be achieved, performance targets should be defined on the bases if absolute8 carbon emissions. C ommenter s said because the possibility that reductions in carbon intensity can still result in increases in absolute carbon emissions, both goals should be addressed in the rule. C ommenter s support ed a vibrant U.S. economy that meets the needs of all the nation's

r esidents, but economic growth should not sacrifice long

- term public health and environmental sustainability; this requires that economic goals and environmental goals work symbiotically. C ommenter s said EPA should develop guidance and require states demons trate verifiable absolute carbon reductions, and that absolute carbon reductions be achieved in environmental justice communities.

Comment 4: Goals should be based on the total mass of greenhouse gas entering the atmosphere

. Response 4: The EPA is finali zing the CPP sub category

- specific emission rates for BSER and providing states with the flexibility to use an equivalent blended rate or mass goal as an alternative means for demonstrating compliance. Therefore, states have the flexibility to use an absol ute mass limit as illustrated in s ection VII of the final rule preamble of the CPP

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

Several c ommenter s stated the rule does not actually limit total emissions, but rather the "intensity" of emissions; this means that instead of capping the amount of greenhouse gas or even carbon dioxide that power plants are allowed to pump into the atmosphere, the rule establishes a "rate based" emission target for each state, defined as poun ds of carbon dioxide per megawatt

- hour (CO2/MWh). C ommenter s said like a diet that limits calories per serving but not the number of servings, such an approach will ultimately fail if emissions are allowed to rise with increased demand. C ommenter s said tar gets should be based on the total mass of greenhouse gas entering the atmosphere, or at a minimum contain mass

- based backstops, to ensure that aggressive greenhouse gas reductions are achieved.

Commenter s understand that Section 111 of the Clean Air Act p rovides for the consideration of costs, this has been improperly interpreted to preclude necessary and meaningful action. C ommenter s said the consideration of "reasonable" expense must also forthrightly address the much greater financial, economic, and soc ietal costs of inadequate response. C ommenter s 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 achieved to protect health and welfare. C ommenter s said the EPA should use the strongest tools available under the Clean Air Act and other provisions of law to avoid climate ca tastrophe.

Commenter s stated fossil fuel power plants are responsible 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 targ et for improvement ; i n order to demonstrate that the U.S. is serious about climate change, the EPA should 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 later 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 c ommenter s stated the Proposal does not actually 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 each state (or region f or states that elect that option); EPA recognizes that while the Proposal gives states additional room to innovate and find the most effective way to achieve the goals, it could also significantly complicate enforcement.

Commenter s added for example, some of the "Building Blocks" assume that public agencies or private actors will increase the utilization of combined cycle gas units or defer the retirement of nuclear plants or run them at higher capacity factors; EPA and many state environmental agencies ma y lack the jurisdiction to either require or motivate such actions. C ommenter s said the Proposal assumes that EPA will take some enforcement action against a state that fails to achieve the statewide emission rates, but based on past experience, that is po litically unpalatable and it is far more likely that EPA would postpone compliance deadlines.

Commenter s added EPA can resolve this dilemma by requiring all fossil fuel EGU's to meet specific emission limits where state or regional targets are not met by rule's deadline. C ommenter s said these default requirements could require fossil fuel plants to meet emission limits in 2030 based on long term rates already achieved by coal and gas

- fired EGU's between 2008 and 2013. C ommenter s said on the one hand, this approach maintains flexibility

- fossil fuel plants would not have to meet the specific, performance based standards where the rule's statewide goals are met; on the other hand, it would ensure accountability through enforceable standards that would be tri ggered by failure to meet the targets through the more elastic approach that EPA has proposed. C ommenter s said the CO2 emission targets are more likely to be met if the consequences for failing to meet those objectives are clear.

C ommenter s supported setti ng a single emission rate

- based goal determined to be representative of BSER for a typical electric system, along with an equivalent mass

- based goal. C ommenter s 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 mass

based goal. C ommenter s added that states that are meeting the goal cou ld then comply with the proposed rule by submitting a plan to EPA demonstrating how they will achieve either one of the equivalent goals.

Commenter s stated many states, including the RGGI states, have already made substantial progress in reducing emission s from their power sector. C ommenter s said EPA should structure the guidelines in a way that recognizes this progress and provides equitable treatment to those
states. C ommenter s said EPA should avoid any approach that imposes inequitable or disproportiona te burdens on early mover states and fails to recognize their substantial
progress; for example, requiring an equivalent percentage reduction for state A, which has already achieved most cost

- effective reductions, and state B, which has taken little action and10 finds many inexpensive emission reduction opportunities still available, would effectively disadvantage state A for having taken early action. Commenter s stated one approach that EPA should consider is setting a single emission intensity target (e.g., a system

- wide average of 1100 lb/MWh) that would apply to each state, individually or as part of a region. C ommenter s said that approach would require all states to reduce emissions 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 more work to do to meet the target.

Commenter s stated the EPA goals are actually going to be measured based on the "Adjusted Output Weighted Average Pounds of CO2 Per Net Megawatt

- hour From All Affected Fossil Fuel Fired EGU's in the State," or Heat Rate, and is specific for each state. C ommenter s 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 emissions by the total power generation from all sources to come up with an average heat rate from all sources including the avoided generation resulting from energy efficiency projects. C ommenter s said a sim ple CO2 emission target for each state would be a lot simpler.

Commenter s stated early adopters and more responsible states are not getting credit for taking action, the commenters understand this; however, it seems more important to have a level playing f ield now. C ommenter s ask ed if EPA set a cascading limit on carbons per MWh that is the same for every state and that decreases over time.

Commenters stated that EPA arrived at a Proposed State Goal, termed an "adjusted output

weighted

- 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 total of annual MWh generation from the affected EGUs + ann ual MWh generation from renewable and nuclear generation + annual MWH generation avoided by reduced demand. Commenters said a great many assumptions and projections inform the data inputted and the structure of this calculation.

Commenters stated it is ap parent that this is not actually a measure of the average output of CO2 per MWh produced from fossil

- fired EGUs at a specific source. Commenters said it is not something that could be required of, or even derived from data provided from, a particular fossi l

fuel 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 St ate 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 emissions. See section VIII of the final rule preamble of the CPP for a discussion of alternati ve compliance measures

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

Several c ommenter s stated consider recognizing and providing a credit mechanism for reductions of other greenhouse gases in place of CO2 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 for any required CO2 reductions on a CO2e basis. C ommenter s stated Illinois should be allowed to account for such actions in its state plan.

Comment 7: The EPA's Emission Guidelines Establishing Standards for Sta tes are Consistent with the EPA's Past Practice and Regulatory Requirements.

Response 7: The EPA appreciates the comments of support for establishing standards consistently with past practice and regulatory requirements.

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

Several c ommenter s 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 und er section 111, which can include an "allowance system." C ommenter s said for example, in the regulations for large municipal waste combustors, sources subject to section 111(d) can average their emission rates and trade nitrogen oxide emission credits to d emonstrate compliance. C ommenter s said under the current regulations in 40 C.F.R. section 60.22(a), EPA is required to publish standards of performance for the pollutant from the affected sources and then publish a guideline document; the regulations furth er explain that the guideline document provides information to states on the development of state plans. C ommenter s said thus, the proposed rule satisfies the emission guideline requirements in the existing regulations; the proposal and supporting document ation also provide highly detailed and record

- based support for EPA's proposed BSER based on current experiences by the states to reduce emissions; i t includes information for states to develop compliance plans, analysis of the building blocks that compris e BSER, state goals based on BSER, and the time in which compliance can be achieved, as well as other information.

Comment 8: The Proposed Rule Should Set a Mass

- Based Emission Cap Rather Than a Carbon Intensity Standard

Response 8: The EPA is quantifyin g the BSER with sub category

- specific emission performance rates based on lbs of CO 2 /net MWh as discussed in section VI of the final rule preamble of the CPP

. We also provide state equivalent emission rate

- 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 c ommenter s s aid that allowing states to create carbon efficiency standards may generate "seam conflicts" at the borders of rate

- based states and states with mass

- based, emission cap systems, such as the carbon reduction program s already in existence in California and through the Regional Greenhouse Gas Initiative ("RGGI"). C ommenter s said for example, these conflicts could arise between states with interconnected electricity systems if natural gas units in a mass

based state ope rate 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. C ommenter s said the EGUs operating in the rate

- based system (and earning an economic benefit for eac h MWh produced) could underbid EGUs operating in a mass

- based system without a corresponding economic benefit. C ommenter s said this would be so because increased NGCC generation in the rate

- based state lowers the average state emission rate in that state, allowing the rate

- based state to meet its goal (even while increasing its mass emissions substantially). C ommenter s 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. C ommenter s 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 systems to those with rate

- based systems, while overall emissions increase ; s tate

- specific mass

- based caps would prevent this distortion.

4.2 PROPOSED GOALS

Section 4.2 covers public comments related to the proposed final and interim goals

.

4.2.1 Proposed Final Goals

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

Commenters have raised a number of issue s related to 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

s ection s V, VI, and Section VII of the final rule preamble of the CPP for discussion of changes to the BSER between proposal and final based on comment s , the quantification of the BSER in this final rule, and a description of the state goals

. The EPA agrees with the commenters that the proposed requirements were viable. The final rule quantifies the BSER in a manner using source

- category rates rather than purely relying on state goals. These modifications incorporate commenter feedback in a manner that mak es the expression of the BSER more applicable to source

- categories and units within that source1 3 category. It simultaneously assesses source reduction potential from a regional lens rather than a purely within a state lens as proposed. The resulting sourc e

- category rates and state goal compliance options similarly represent viable and feasible reductions that are consistent with the comments above.

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

Several c ommenters provide d g eneral support for the proposed goals and stated they are fair and technically achievable/feasible.

Commenter s stated that even states with the most significant reduction goals will be able to meet their targets with relative ease given EPA's conservative assumptions and the range of emission reduction options available. C ommenter s said that since the Proposed Rule allows states to deploy these types of "beyond the fence line" solutions to reduce emissions in addition to the on

site options, states will be able to employ the full suite of advanced energy technologies. C ommenter s stated that this flexibility will also allow states to address a major contributing factor to excessive emissions: the inherent inefficiencies of the existing electricity system. C om menter s said that by employing more natural gas and renewable generation, expanding demand

- side energy efficiency, and deploying additional smart grid technologies, states will dramatically decrease their emissions as they displace generation from outmoded , high

- emitting sources and eliminate inefficiency and waste in the system. C ommenter s said that given the availability of the full range of advanced energy technologies, states will be able to meet their goals easily from a technological perspective and at low cost, while at the same time increasing grid reliability and resiliency and prov iding new products and services to consumers. C ommenter s stated that by driving investment in these high

- value emission

- reducing technologies, the Clean Power Plan will accelerate the country's transition to a high

- performing grid that is efficient, reliab le, resilient, flexible, clean, affordable, and consumer

- focused.

Commenter s support ed EPA's proposed 2030 compliance deadline; achieving EPA's proposed final target will require significant shifts in generation as well as additional transmission. C omment er s stated while aggressive, the year 2030 is an achievable compliance deadline, assuming EPA incorporates changes provided by commenter s

.

Commenter s asserted the proposed carbon emissions reduction target for Arkansas of 44% by 2030 from 2012 carbon emiss ions 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 e nergy sales rising only 1%.

Commenter s stated the emission reduction targets outlined 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 d emonstrated at a reasonable cost; the commenters urge d EPA to finalize a 2030 target for Tennessee that is at least as stringent as the proposed target

- particularly because Tennessee's actual emission rate (i.e., one that accounts for decisions already m ade) is much lower than what EPA assumes.14 Commenter s support ed 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. C ommenter s also support ed the EPA's proposed rate

- based 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 energy efficie ncy improvements and deployment of more efficient technologies (e.g., ground source heat pumps) and energy storage could enable the electricity sector to absorb new load sources without a significant increase in total load; however, such an outcome is not certain, and a rate

- based approach would accommodate unforeseen changes in the electricity sector without compromising the effectiveness of the Clean Power Plan framework.

Commenter s applaud ed the EPA for its issuance of its performance standards for exist ing sources of carbon pollution; however has some general concerns.

Commenter s 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

un dertaking underscores the wisdom of EPA's system

- wide approach to reducing carbon emissions. C ommenter s encourage d the EPA to move forward with finalizing these much needed pollution reduction measures. C ommenter s said transitioning to a clean energy futur e in Nevada is already creating jobs and spurring economic development, as well as improving public health through better air quality; deploying these types of solutions across the country is critical if we hope to avoid the damages caused by a warming cli mate.

Commenter s stated with the implementation of existing state law, Nevada is in a strong position to meet the interim and final goals set forth in the Clean Power Plan. C ommenter s said Eighty

five percent of Nevada's electricity load is served by NV E nergy through its operating utilities, Nevada Power Company and Sierra Pacific Power Company. C ommenter s said Senate Bill (SB) 123, enacted in 2013, provides for the retirement over the next five years of 812 MW of NV Energy's coal

- fired generation, and t he replacement of that generation with lower carbon

emitting resources, including significant new renewable energy generation. C ommenter s said a recent analysis, performed by Western Resource Advocates, is based on NV Energy's projection of loads and resou rces under its SB 123 implementation plan for the years 2020

- 2030, and its projection of annual carbon emissions from affected EGUs in its fleet for the same years. C ommenter s said NV Energy with its SB 123 implementation plan is on track to achieve an adj usted 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 compliance period is 678 lbs/MWh, and the company achieves an adjusted emissions rate of 552 lbs/MWh in 2029. C ommente r s 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. C ommenter s note d that these projections do not assume the retirement of all coal

- fired EGUs by 2020. C o mmenter s 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 projected emissions from the coal

- fired TS Power Plant are included through 2030.15 Comme nter s support ed the Proposal's establishment of emission goals for states, including an interim goal, which would apply between 2020 and 2029, and a final goal, which must be achieved starting in 2030. C ommenter s underst ood that state emission goals are no t uniform and that some states will be required to reduce emissions rates more than others; it appears that even states with even the most significant reduction goals will be able to meet their targets with relative ease given EPA's conservative assumption s used in setting emission performance standards and the range of carbon emission reduction options available for compliance, including the range of renewable energy technologies and energy efficiency. C ommenter s 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.

Commenter s stated EPA's target

- setting did not ta ke 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 renew able generation and energy efficiency

- are taken into account, Tennessee will achieve 88 percent of its reduction target merely by staying the course. While the assumptions that the commenter s made in performing these calculations were simplified in
compa rison to the level of detail needed to determine actual compliance, these calculations nevertheless reflect the achievability of Tennessee's target.

Commenter s 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 energy and its ability to meet greenhouse gas emission reduction targets.

Commenter s modeled 3 scenarios: business

- as

- usual ( BAU) scenario against a natural gas fuel switching, scenario, and a 30% Renewable Portfolio Standard (RPS). C ommenter s said this preliminary analysis shows that Wisconsin can meet EPA's CO2 reduction targets by pursuing two compliance options, a 30% by 203 0 RPS, or a statewide shift to displace coal with increased dispatch of existing natural gas units. C ommenter s said while the 30% RPS will require significant construction of new renewable generation, it is cost

- competitive with the natural gas fuel switch ing alternative by 2030 (though actual costs could vary widely depending on many variables that were not tested in this initial analysis). C ommenter s said the 30% RPS scenario will also result in highly diversified generation mix that will insulate Wiscons in's utilities and electric ratepayers against volatile fuel prices and potential CO2 compliance costs.

Commenter s said EPA has stated that its determination of state

- specific emission targets will reflect emission reductions available to or achievable by regulated sources through state plans. C ommenter s said the Proposed Rule evaluates specific alternatives for emission reduction

- both directly at the regulated sources and in manners that may indirectly affect emissions from regulated sources

- among seve ral energy generation scenarios, and also insists that states should be afforded substantial flexibility in devising individual plans to achieve these state goals. C ommenter s said these two principals

- achievability of emission levels and state flexibilit y in devising plans

- are fundamental to the consistency of the regulatory framework with the statutory authority.16 Commenter s request ed that the EPA issue guidelines and approve state

- established performance standards that are based on reductions of carbon dioxide 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 ex pressing 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; recommendations.

Response 2: The EPA appreciates the comments o f support for the proposed goals and recommendations, please see sections V, VI, VII, and V I II 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 comment s on Virginia’s goal on Brunswick and Warren plants

, Dominion Power’s comment confirmed they were under construction by NSPS definition. The EPA determined it was inappropriat e 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 how the EPA is finalizin g 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 s ection V.E. of the final rule preamble and the GHG Mitigation Measures TSD f or further explanation of BB3 in the final rule.

In regards to the Louisiana comment, the EPA has revised some of its baseline Louisiana data per the commenter s ’ note and comment s elsewhere in this document. Notably, the Washington Parish facility was rem oved from the likely affected inventory as commenters pointed out that it was no longer under construction. This change is reflected in the final rule’s BSER quantification of sub category rates, and in the Louisiana state goal s

. The following are summarie s of the specific public comments under this comment:

Commenter s asserted that EPA does not have the authority 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 representative and realistic state goal for Wyoming, as evidenced by WDEQ's and PSC's analysis of the Propose Rule. C ommenter s said
t he state goal of 2,215 is derived by adjusting inputs 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; Correct 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 Commenter s requested EPA implement the following recommendations for Virginia: 1) EPA should remo ve NGCC units under construction from the calculation of the state reduction targets; EPA should recalculate the Virginia targets excluding the emissions and megawatt

- hours from the Warren and Brunswick NGCC facilities. (Although there is no direct impact to Virginia's target, EPA should likewise remove nuclear units under construction in the calculation of state targets.) 2) EPA should eliminate the 6 percent adjustment assumed in the calculation of the state target to reflect "at risk" nuclear and recalcu late the Virginia target accordingly; at this time, there is no existing nuclear generation in Virginia that is economically at risk. 3) EPA should adjust the state target to reflect the state

- specific renewable potential identified under the NREL Alternat ive renewable approach. 4) EPA should adjust the state target based on state

specific energy savings instead of the savings realized by the "best performing" 12 states. 5) EPA should adjust the state target to appropriately recognize and credit unit effici ency improvements and uprates achieved prior to the 2012 baseline.

Commenter s added when EPA's goal calculations are corrected to use NGCC net capacity rather than nameplate capacity, and an incremental NGCC emission rate, Florida's proposed goal in 2030 i s above 900 lb/MWh; EPA must correct its errors related to Florida's goals, recalculate the goals, and provide an opportunity for public review and comment.

Commenter s stated the average emission rate of coal

- fired EGUs depends in part on how often they ar e required to ramp up and down, and the amount 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

- will reduce the average utilizat ion of coal

- fired EGUs, thus increasing their average heat rate and CO2 emissions; therefore, even if additional efficiency improvements are feasible, the implementation 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. C ommenter s said such inefficiencies should be considered by the EPA in its determination of interim and final emissions targets for states.

Commenter s 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. C ommenters said after accounting for discrepancies, Louisiana's final goal should be 1078 lb CO2/MWh, with an alternate goal of 1239 lb CO2/MWh. C ommenters asserted EPA's use of incorrect data calls into question the r ule in its entirety and warrants its abandonment, at the very least EPA should revise Louisiana's goals; however, even if these numbers are revised by EPA

- the results would still cripple the state's economy.

Commenter s stated EPA's use of incorrect data c alls into question the rule in its entirety and warrants its abandonment, at the very least EPA should revise Louisiana's goals.

Commenter s stated following the correction of a number of discrepancies in EPA's data and a revised regional RE target Louisian a's final goal should be set at 1131 lb CO2/MWh, with an alternate goal of 1270 lb CO2/MWh.18 Commenter s 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.

Commenter s support ed EPA's finalization of a 2030 target for Virginia that is at least as stringent as the proposed target

- particularly because Virginia's actual starting point (i.e. one that accounts for decisions already made) is much lower than what EPA assumes. C ommenter s re

- created the state target EPA computed for Virginia using the four BSER building blocks; for Virginia, the baseline carbon emissions rate for fossil

- fuel generation 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 lbs/MWh average for years 2020

- 2029.

Commenter s recommend ed that EPA correct the Arizona goal to exclude the distributed generation portion of the goal.

Comm enter s 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. C ommenter s said even so, t hese incomplete, corrected calculations demonstrate that the recalculated interim CO2 performance goal for Alaska should be no less than 1,261 pounds of CO2 per net megawatt

- hour (lb CO2/net MWh) compared to the proposed EPA interim goal of 1,097 lb CO2/ne t MWh. C ommenter s 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. C ommenter s said the c ompletely corrected calculations will likely result in higher goals.

Commenter s support ed the overall EPA approach of setting a target rate of CO2 emissions for each state. C ommenter s said this performance

- based approach provides the maximum flexibility
t o states to achieve the targets, while ensuring that the essential climate protection goal of significantly reducing greenhouse gas emissions in the electricity sector is achieved ; b ut it is essential to remedy the technical and economic defects 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, are:

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

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

3. The separation between the EPA's functions and those of the Nuclear Regulatory Commission (NRC) needs to be recognized; the EPA should not assume 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 subsidizing existing nuclear pla nts.19 4. States should have flexibility in meeting the target emission rates, which is already the case in the Draft CPP; however, the EPA should make clear that certain approaches like increasing natural gas use may not meet the compliance test under adve rse 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 compliance plans.

5. The trajectory in 2030 should be compatible with long

- term (2050 o nward) need for the elimination of nearly all energy

- related CO2 emissions.

6. The framework should be able to accommodate resilience of the electric grid and economic justice so that low

- and middle

- income households are not disproportionately impacted.

7. The cost criterion should be consistently and realistically applied to determine the best system of emission reduction; the commenters has used a cost criterion of $20 per metric ton pf CO2 emission reduction or less relative to a new coal plant for in clusion in the best system of emission reduction.

8. Non

- air quality impacts need to be considered.

9. Water use should be considered; specifically, low water use should be a consideration for inclusion in the BSER; the EPA should specify that states mus t 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 considerations.

10. The range of natural gas leakage estimates and global warmi ng potential values that are relevant to climate protection need to be taken into 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 potential 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 given the ample opportunities for low

- cost or even negative cost CO2 emission reductions and the need for stronger targets for climate protection.

C ommenter s stated that EPA should evaluate whether and when the level of performance achieved by the RGGI states can be achieved throughout the United States using the various tools at the disposal of the states. C ommenter s stated that EPA should structure the emission guidelines to require that states make significant progress in the next decade t oward achieving the reductions and performance level demonstrated by 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 fi nal 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 defines BSER and what abatement technologies and levels are assumed to be available. See section V I along with the Regulatory Impact Analysis for CPP Final Rule for a description of the annual emission impacts. The following are summaries of the specific public comments under this comment:

Several c ommenters stated EPA should strengthen the targets.

Co mmenter s stated the state

- by

- state targets in the proposal are not based on policies already adopted by each state; the EPA approach underestimates the use of renewables and conservation and, for some states, assumes less use of renewables and conservation in 2030 than is already in place today or less than has already committed to by the state. C ommenter s urge d EPA to more accurately estimate the potential for use of renewable energy and to strengthen the state

- by

- state targets accordingly; the commenters added energy conservation can realistically play a larger role in displacing carbon emissions and that should be recognized in the state estimates as well.

Commenter s stated EPA should strengthen its proposal by calling for more ambitious reductions of car bon emissions from power plants by at least 50% from 2005 levels by 2030.

Commenter s added strengthen the targets for reductions in carbon emissions; the draft rule purports to require that the power sector cut carbon dioxide emissions by approximately 30% from 2005 levels by 2030. C ommenter s said while at first glance a 30% cut seems strong, sector emissions were already 15% below 2005 levels in 2013, so the rule cuts only another 15% over the next 15 years; this contribution from the power sector to econo my

- 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 President 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 change negotiations next year

- both as proof of U.S. action and as a template that others can emulate.

Commenter s stated identifying the "best" system of emi ssion "reduction" must entail a thorough effort to capture feasible and cost

- effective reductions, taking into consideration the goals and standards set by other countries. C ommenter s said a carbon emissions target far greater than the target set by EPA is necessary to protect the climate and is also feasible and cost

- effective. C ommenter s said EPA proposes a target of 30% reduction below 2005 carbon emission levels by 2030; but it is feasible and cost

- effective to reduce carbon emissions from EGUs by 55% below 2005 levels by 2030. C ommenter s said it is also necessary for achieving climate

- related goals; this degree of carbon reduction would be consistent with the European Union's targe t for GHG reductions of 40% below 1990 levels by 2030, putting the United States in a stronger position in the climate negotiations scheduled to take place in Paris in December 2015.

Commenter s suggest ed ways that the EPA can strengthen the targets that EP A 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 change. C ommenter s said given Texas's role as the largest source of carbon pollution em issions from electric generating facilities, the largest burner and importer of coal, and nation's largest consumer of electricity, the commenter s asserted that the CPP correctly recognizes that Texas must play a leading role in the effort to reduce carbon21 emissions. C ommenter s said while the EPA's targeted emissions reductions from power plants are ambitious, commenter s asserted Texas can do even better.

Commenter s stated some utilities in Texas are already moving toward a much higher renewable goal or tar get; 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 years early, while Denton Municipal Utility is already meeting a 40% goal of renewable energy; Pedernales Electric Cooperative set a 30% renewable energy goal for 2030. C ommenter s said a stronger renewable energy target based on what Texas can realistically achieve will promote the type of energy infrastructure that will ultimately be needed to stabilize the climate. C ommenter s said as a policy matter, the EPA should therefore prioritize renewable energy over other building blocks by making renewable energy targets stronger and more realistic; more importantly, the EPA must recalculate Texas's renewable energy targets because there is no support in the record for EPA's arbitrary assumptions that the re will be zero renewable growth before 2017, or after Texas achieves 20% deployment. C ommenter s asserted a target in the 40% range is achievable in Texas.

Commenter s stated both the interim target and the final 2030 target should be more ambitious to
prop erly realize reductions that can be achieved. C ommenter s said we can achieve significant reductions over the next half decade and will not have to backload reductions towards 2030 as much as the current proposal would entail. C ommenter s said overall, EPA's goal of 30 percent reduction by 2030 is too modest; not only does it leave significant achievable reductions on the table, it is also not likely an ambitious enough target to meet the President's new commitment made in last month's agreement with China to achieving U.S. reductions of 26

- 28 percent by 2025; that can likely only be achieved by deeper cuts than the CPP currently calls for along with other carbon cutting policies.

Commenter s stated EPA proposes a target of 30% reduction below 2005 carbon emiss ion levels by 2030; this amounts to only about a 7 percent reduction in emissions relative to 1990. C ommenter s 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 2030 targets makes it even more difficult to achieve higher emissions reductions by 2050. C ommenter s said in any event, EPA's proposed reliance on natural gas is not necessary; it is both feasible and cost

- effective to reduce carbon emissions from EGUs by about 55% below 2005 levels by 2030.

Commenter s 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 ; t his is demonstrated in 48 state

- specific models; states can achieve greater carbon reductions than the targets proposed by EPA, relying primarily on efficiency and renewable energy; this can be done at costs of carbon reduction per metric ton of CO2 equivalent that are generally lower than those in the Clean Power Plan.

Commenter s stated the carbon pollution limit for states and existing stationary sources should be increased to the level necessary to bring atmospheric carbon concentratio n back to 350 ppm by 2100.22 Commenter s stated the proposed target should be greater 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. C ommenter s said the determina tion of state's renewable energy objective should be based off of what it was before and should not go beneath it; renewable energy is too valuable to not to reconsider and the country should remain producing more of the treasured energy, no matter of its source. C ommenter s said by stating the proposed goal higher, it will strengthen this proposed rule and solidify positive outcomes in the future.

Commenter s stated the goal for Nevada should be recalculated; rather than pushing to continue business as usual and refuse to do anything to address climate change and its peril for future generations, Nevadans want to do more to make their planet and their communities livable in the future. C ommenter s said the explosive appetite for rooftop solar, offered at only a small savings from the existing utility bill, shows people's desire for clean energy choices. C ommenter s said cities including Reno, Boulder City and Las Vegas are 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 income to the city. C ommenter s said it's time to build the new energy economy of the 21st century, with 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 for Nevada.

Commenter s stated North Carolina's target is readily achievable; in fact, North Carolina will not need to take any additional action to comply with the Clean Power Plan, beyond the actions its electric utilities have already taken to date and the requirements of Nor th Carolina law. C ommenter s said North Carolina's post

- 2012 coal retirements, its shift to increased natural gas generation, the addition of under

- construction natural gas power plants, and preservation of existing nuclear reduce the State's emission rate to 1,377 lbs/MWh. C ommenter s said when North Carolina's Renewable Energy Portfolio Standard 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. C ommenter s said EPA should requir e greater reductions in North Carolina to reflect the best system of emission reductions.

Commenter s stated because of the clear need for even greater carbon pollution reductions, the final Clean Power Plan carbon pollution limits can and must set stronger limits. C ommenter s said EPA should increase the carbon pollution reduction goal of the Clean Power Plan, which can be achieved by finalizing a rule with 1) recognizes the growth of wind and solar energy and 2) takes full advantage of energy efficiency. C o mmenter s said the EPA should also encourage strong state implementation plans that include significant renewable energy and efficiency measures and support for workers and under

- represented communities.

Commenter s stated the emissions reductions called for 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% reduction in carbon dioxide from a 2005 baseline by 2030 correspon ds to only a 7.7% reduction from 1990 which is the year accepted by the United States Framework Convention on Climate Change. C ommenter s said the emission goals in the proposed rule are not adequate.23 Commenter s support ed a final CPP with stronger CO2 reduc tion goals; EPA should incorporate CO2 emission reduction goals that are consistent with the carbon reduction goals released by the Intergovernmental Panel on Climate Change (IPCC). C ommenter s said the draft CPP essentially penalizes states with lower CO2 emissions by setting higher reduction goals while states with higher CO2 emissions have lower reduction goals. C ommenter s said CO2 reductions can be strengthened by increasing the target reduction goals of higher CO2 emitting
states. C ommenter s said no con sideration should be given to lowering the CO2 reduction targets established in the CPP. C ommenter s said further delaying action on CO2 will make it harder and more expensive to reduce CO2 emissions in the future.

Commenter s stated this rule is important f or reducing carbon dioxide emissions, but it will not achieve the science

- based emissions reduction levels for 2050 discussed by the Intergovernmental Panel on Climate Change. C ommenter s encourage d EPA to carefully review the analysis done by the Union of Concerned Scientists and the Natural Resources Defense Council that shows a path for EPA to boost cost

- effective emissions reductions an additional 10 percent by 2030.

Commenter s stated the U.S. Environmental Protection Agency (EPA) has proposed a goal for Missouri electric utility generating units to reduce their carbon pollution by a scant 21 percent by 2030 relative to 2005 emissions; this goal is insufficient to help counter the increased frequency and intensity of catastrophic weather events already oc curring throughout the U.S. and the world. C ommenter s said the proposed reductions are considerably less than Missouri is capable of achieving, and that 77 percent of Missourians support in the Clean Energy Survey report released November 2014. C ommenter s said 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 combustion of substantially larger quantities of coal for decades, and hi gher carbon emissions, than can and must be achieved. C ommenter s said lowering these goals will prevent the needed protections from being achieved; given the consolidated political power that the investor

- owned electric utilities wield in Missouri, promulg ation of inadequate carbon reductions will enable them to lock in the combustion 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.

Commenter s stated in preparation of comments for this Rule, several major Illinois environmental organizations conducted an analysis that concluded if the State of Illinois did nothing other than what is already being done and what is currently planned in energy efficiency and renewable energy growth, Illinois would be able to meet its EPA target. C ommenter s said they also observe what Illinois has the capacity to do much more than what is currently being planned. C ommenter s said as was recently demonstrate d in a report by the Union of Concerned Scientists, Strengthening the EPA's Clean Power Plan (Oct. 14, 2014)] the contribution for CO2 reduction to be expected from renewable energy sources has been greatly underestimated by both EPA and the EIA. C ommenter s said the UCS reports that, "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 the 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 expectation for CO2 reduction, a prioritization of renewable energy as a CO2 reduction source, or both. C ommenter s sai d give priority to use of24 renewable energy resources and energy efficiency for maximum carbon reduction; place state compliance emphasis on the implementation of renewables and energy efficiency, the more the better.

Commenter s stated EPA documents that 29 states have established RPS goals and other states are using other measures to promote renewables; however, using a bizarre construct or methodology, EPA proposes achieving a national average of 13% renewables by 2029. C ommenter s said the reality is that 21 states will do much less than 13%. C ommenter s recommend ed 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 renewabl e. C ommenter s said a recent article at Think Progress "HOW RENEW ABLES IN DEVELOPING COUNTRIES ARE LEAPFROGGING TRADITIONAL POWER", NOV. 4, 2014, Jeff Spross reports on an analysis by Bloomberg New Energy Finance. C ommenter s said developing nations are out pacing developed ones in installing renewables and jumping past fossil fuels; in 55 developing countries, renewable capacity grew by 143% between 2008 to 2013, 28.6% per year; by contrast the Organization for Economic Cooperation and Development (OECD) nat ions 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. C ommenter s said the Universe or Baseline being addressed is not total Gr eenhouse gas emissions from the electric generation sector, but a subset of these emissions; the rule deals with just CO2 and promises a 30% reduction in CO2 emissions from the power sector only by 2030 from 2005 (not including NGCC plant emissions). C omme nter s said what is critical to halt climate change is effectively dealing with total GHG emissions and achieving 80% reduction by 2050; simply not counting some emissions from this sector harms goal achievement.

Commenter s stated the latest studies require dramatic cuts (35

- 65%) to greenhouse gas emissions by 2030, in order to avoid a 2 degree Celsius rise in temperature. C ommenter s said this proposed rule would only achieve about a 10% reduction; this is not an acceptable goal. C ommenter s said the EPA's go als fall short of the Intergovernmental Panel on Climate Change's recent goals for developed countries, of reductions from 15 to 40 percent below 1990 levels by the year 2020; and 80 percent reductions by 2050. The commenters said the Clean Power Plan shou ld increase its reduction goals to minimize impacts from climate change.

Commenter s stated even though the Clean Power Plan focuses on reducing carbon pollution from power plants 30% by 2030, the EPA estimated states could make these reductions faster. C om menter s said states can go much further than 30% by 2030 because states are already going beyond EPA's proposal by retiring dirty power plants and scaling up renewables and energy efficiency. C ommenter s said for example in Kentucky, the Assistant Secretary for Climate Policy, John Lyons, recently stated that the average carbon emissions of Kentucky's fleet of coal

fired 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 a ir quality regulations. C ommenter s said Kentucky can meet the Clean Power Plan standards simply by continuing their present course, with little incentive for additional innovation. C ommenter s said that the EPA's listening sessions resulted in a desire for flexibility across states; but that flexibility should not override strong incentives for states to "step up their game." C ommenter s said while the new EPA standards call for a 30 percent reduction in the nation's carbon emissions by 2030, Kentucky's25 speci fic goal is a cut of only 18.3 percent. C ommenter s 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. C ommenter s said when the EPA set t he state standards, it did not incorporate the latest information on coal retirements; so the targets given to Kentucky are could be much more stringent and still be totally achievable. C ommenter s underst ood that states like Kentucky have a major challenge , 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 clean power, to protection of human health. C ommenter s said EPA's Clean Power Plan continues the subsidization of obsolete coal

- fired and nuclear power, making it more difficult to move our state forward onto cleaner resources.

Commenter s stated consi dering current analysis on the potential to reduce carbon pollution from the power sector and the urgency of doing so, commenter s recommend ed 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 t his can be accomplished by:

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

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

• Strengthening t he emissions outcome in 2020 (near term 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)

Commenter s ask ed the EPA to respond to a Natural Resources Defense Council model of a similar but more ambitious set of intensity

- based targets illustrating that it is possible to cut CO2 pollution from America's power plants by 21 to 31 percent (relative to 2012 levels) by 20 20, and 25 to 38 percent by 2025. C ommenter s said the estimated 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 costs; this analysis illustrates that EPA can strengthen the CPP at reasonable cost.

Commenter s stated as EPA refines the Rule, it is critical 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 climate change exceed this initial step and for that reason it is important that EPA holds to the reductions in the proposed Plan.

Commenter s stated an analysis of the IPCC5 report shows that the EPA's target of 30 percent reduction in the electricity sector relative to 2005 by 2030 is very inadequate; in fact it amounts to only about a 7 percent reduction in emissions relative to 1990. C omment er s said this target is insufficient and will not put the United States on a path to reductions of about 84 percent by 2050. C ommenter s said the problem is made more serious by the CPP's reliance on increasing natural gas use for a significant portion of i ts reductions; relying on natural gas as a "bridge"26 creates the more arduous and costly problem of subsequently eliminating most of this natural gas along with other fossil fuel infrastructure from the electricity sector by 2050; moreover, the time frame o f EPA's CPP does not discuss issues beyond 2030 or set its target in the needed long

- term
context. Commenters do not disagree with the 2030 time

- limit on the CPP. C ommenter s said the CPP should not undermine or preclude the effectiveness of longer

- term mea sures that may be required in the future.

Commenter s stated in order to meet the challenges posed by a path that would keep the global mean temperature rise below 2 degrees C, the CPP should address the following long

- term lessons that can easily be derive d from the IPCC5 report:

1. Short

- term and medium

- term reductions in CO2eq emissions 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 exi sting power plants "would not represent the BSER [Best System of Emission Reduction]".

2. A corollary of lesson 1 above is that investments in fossil fuel

- related technologies with long payback times, such as new natural gas production and transport infra structure, 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 investments; for instance, increasing the production of natural gas for electricity produc tion 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 energy system and, specifically, in the electricity system will be required, given that significant amounts of variable energy sources (notably wind and solar) will be required to greatly reduce and eventually eliminate fossil fuels; such changes are required in any case to increase the resilience of the electricity system.

4. If the e lectricity 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 any carbon reduction plan, given that the adverse impacts of climate disruption include disruptions in energy production from increased frequency and severity of droughts and storms.

6. Since the cost of CO2 reductions is far lower than 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.

Commenter s said as stated by the EPA, the CPP promises to reduce carbon emissions by 30% by 2030; the EPA's final carbon dioxide emissions projection for 2030 is 3.655x1012 lbs/yr, which corresponds to a 35% reduction in carbo n dioxide emissions from 2005 levels. While this appears to be an ambitious goal, commenter s stated they have found that this results in only an 18% reduction in emissions from 2012 levels; meaning, the U.S. has already achieved half of the 30% goal from 2 005 to 2012. C ommenter s said according to the EIA, carbon dioxide emissions from energy consumption at power plants in 2012 have already decreased by 15% from 2005 levels; therefore, the CPP is actually only requiring a 15% reduction in carbon emissions by 2030. C ommenter s recommend ed that the EPA set its goals based on 2012 levels. C ommenter s27 added the carbon dioxide emissions rate calculation for each state should be corrected to include generation from all sources; in the proposed goal setting calculatio n, only the generation from existing fossil fuel plants is included for an initial carbon intensity value; thus, the adjusted emissions rate will decrease by adding all other generation options in the denominator without changing the current energy mix; in order to determine a reasonable goal, both the initial and final emissions intensity calculations should include all generation sources.

Commenter s stated the proposed rules are strong enough or fast enough to address the scope of the climate crisis; almo st half of the reductions from 2005 levels that are defined in the rules have already been accomplished. C ommenter s said the small scale of reductions that are proposed between 2020 and 2030 are inadequate. C ommenter s requested the EPA to require far

more substantial reductions in the final decade of the plan, with increased emphasis on renewable energy and conservation. C ommenter s urge d the EPA to strengthen the regulations so that more substantial reductions in CO2 emissions will be achieved; commenter s r equested targets

- for both 2020 and 2030

- that shift more generating capacity to renewable energy sources, and that move more strongly in implementing end

- use energy efficiency.

Commenter s stated the Clean Power Plan must set more aggressive emissions re duction targets; emissions reductions must be consistent with what climate science demands. C ommenter s said the emissions targets should be strengthened by increasing energy efficiency and the use of renewables; energy efficiency is the cheapest, most rapi dly deployable solution for reducing carbon emissions. C ommenter s said states can cost

- effectively achieve stronger energy savings than what the EPA is proposing; similarly, states can produce more renewable electricity than the EPA has calculated under it s proposed plan. C ommenter s said strengthening the carbon rule should start with recognizing the full potential and achievable deployment of energy efficiency and renewable energy.

Commenter s urge d EPA to finalize these historic and urgently needed carbon pollution standards by June 1, 2015, as set forth in the Presidential Memorandum on Power Sector Carbon Pollution Standards; and to strengthen the environmental outcome of the standards by:

- Recog nizing 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 emi ssions outcome in 2020

- near term 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

C ommenter s said considering current data on the potential 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.

Commenter s stated even though the Clean Power Plan focuses on reducing carbon pollution from power plants 30 percent by 2030, the EPA estimated that we could make these reductions faster; commenter s said we can go much further than 30 percent by 2030 because states are28 already going beyond EPA's propo sal by retiring dirty power plants and scaling up renewables and energy efficiency; Kentucky, a heavily coal

- dependent state is an example of this. C ommenter s said in Kentucky, the Assistant Secretary for Climate Policy, John Lyons, recently stated that th e average carbon emissions of Kentucky's fleet of coal

- fired 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; in other words, Kentucky can mee t the Clean Power Plan standards simply by continuing their present course, with little incentive for additional innovation. C ommenter s said despite this, Kentucky stakeholders have asked EPA for a longer timeline; yet Kentucky already has lower goals than most states. C ommenter s said it is clear that states must be asked to adhere to strong goals in order to finally initiate the fundamental changes necessary to bring about real improvements. C ommenter s said but that flexibility should not override strong incentives for states to reach their achievable potential. C ommenter s said while the new EPA standards call for 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. C ommenter s added when the EPA set the state standards, it did not incorporate the latest information on coal retirements; so the targets given to Ken tucky could be much more stringent and still be totally achievable. C ommenter s underst ood that states like Kentucky will 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 clean power, to protection of human health. C ommenter s said the EPA's Clean Power Plan continues the subsidizati on of obsolete coal

- fired and nuclear power, making it more difficult to move Kentucky forward onto cleaner resources. C ommenter s said other commenters have shown that the EPA targets are largely modest and that there are alternatives that can result in mu ch deeper carbon cuts; for example, the Union of Concerned Scientists have done an analysis that shows Kentucky can achieve significantly larger reductions than the current EPA plan.

Commenter s stated the proposed rule falls short of the rapid transition t o clean energy that is necessary to prevent a catastrophic increase in global temperature. C ommenter s said the Clean Power Plan's goals for states underestimate our capacity to expand clean energy and energy efficiency; these goals are, in many cases, lowe r than 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 Administration (EIA) projections under a "business as usual" scenario. C o mmenter s recommend ed inclusion of current state Renewable Energy and Efficiency Standards, which are set by law, and determination of future goals based on more recent growth rates (2009 to 2013).

Commenter s stated EPA based the reductions on the agency'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. C ommenter s said EPA needs to set standards that encourage states to do more even if they are alrea dy meeting targets.

Commenter s stated the Clean Power Plan proposes a target of a 30 percent reduction below 2005 carbon emission levels by 2030; the Intergovernmental Panel on Climate Change (IPCC) has29 said that carbon emissions should be reduced globally by 41 percent to 72 percent from 2010 levels in order to limit global average temperature rise to 2 degrees Celsius. C ommenter s said research by the Institute for Energy and Environmental Research has found that "it is feasible and cost

- effective to reduc e carbon emissions from EGUs by 55 percent below 2005 levels by 2030. This degree of carbon reduction would be consistent with the European Union's target for GHG reductions of 40 percent below 1990 levels by 2030." C ommenter s 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. C ommenter s said the proposed EPS target amounts to about a 7 percent reduction in emissions from 1990 levels; this low target would make it alm ost impossible to play catch

- up later and get an 84 percent reduction by 2050, and adding in heavy reliance on natural gas worsens the scenario. C ommenter s sai d while the Clean Power Plan counts on natural gas for reducing carbon emissions, methane emissio ns are not accounted for and natural gas venting over the next three decades could negate most, if not all, of the gains made by the Clean Power Plan.

Commenter s stated it is both feasible and cost

- effective to reduce carbon emission to much lower levels w ithout relying on new natural gas or nuclear 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 percent below 2005 l evels by 2030. This is demonstrated in 48 state

- specific models, which are described in the IEER Comments."

Commenter s stated if the interim targets are loosened, commenter s recommend ed that EPA consider ways to tighten the final targets such that there is no net increase to cumulative emissions between 2020 and 2030 relative to the Proposal.

Commenter s stated the proposed regulations are not at all ambitious, and set targets that, even when they are met, will accomplish far too little. C ommenter s said c limate 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 o f climate change cannot be avoided. C ommenter s said the proposed regulations, which the EPA predicts could reduce carbon dioxide emissions from power plants up to 30% from 2005 levels by 2030, fail to adequately respond to this threat.

Commenter s stated t he state

- level targets in the CPP are much too lenient; in fact, the EPA's goals for many states are weaker than the targets those states have already set for themselves and expect to meet without any additional action. C ommenter s 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 ommen ter s said another problem is that, even looking just at CO2, the CPP does not actually limit total emissions, but instead limits the carbon "intensity" of emissions (pounds of CO2/MWh). C ommenter s said targets should be based on the total amount of greenhouse gas entering the atmosphere, or at a minimum should include mass

based backstops, to ensure that aggressive greenhouse gas reduction targets are met.30 Commenter s stated this rule does not go f ar enough to ensure adequate carbon emissions reductions; a concerted effort to rein in carbon pollution requires emission targets that are more ambitious, that result in renewable energy and energy efficiency potential being more widely realized throughou t the country. C ommenter s said more ambitious reductions will allow this rule to do more to stave off the dire consequences of climate change for rural communities.

Commenter s stated the final rule should go beyond the 30% reduction now contemplated. C omm enter s 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. C ommenter s said as one of the highest per

- capita emitters, th e 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. C ommenter s said this is particularly true because it risks attracting investments that will lead to stranded costs before 2050; accordingly, EPA should strengthen the rule to require 40%

- 50% reduction by 2030 with clear guidance that additional cuts will be required in the following two decades.

Commenter s stated with Americans already facing worsening risks of climate impacts, the EPA's Clean Power Plan is an important step forward in the effort to limit those risks. C ommenter s said the Union of Concerned Scientists offer a systematic and consistent methodology for calculating more aggressive targets fo r renewable energy generation 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. C ommenter s said the methodology is a logical outgrowth of the EPA's approa ches but does not rely on applying state renewable electricity standards (RES) to states without such policies, and it achieves greater reductions in emissions in all regions and in all but four states.

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

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 existing 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 generation, because there are technologies available to f

acilitate generation while lowering emissions.

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

.

Demand

- side energy efficiency and nuclear energy are no longer p art of BSER quantification in this final rule as discussed in section V of the preamble.

The following are summaries of the specific public comments under this comment:31 Commenter s stated there are a number of legal, technical, and practical concerns and uncertainties that make implementation of the proposed rule unworkable; many of these unknowns relate to the assumptions underlying each building block, regulatory strategies that are unproven, levels of implementation that are technically and practically unachievable, or interactions that are not feasible to design or enforce within the existing statutory and regulatory authorities of the states.

Commenter s added EPA acknowledges that some of these issues "introduce practical enforceability considerations under a state plan." C ommenter s said there is no way for states to assure that individual generating units will achieve the emission reductions associated with block 1, and no technical basis upon which EPA can conclude 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 account for the heat rate increases associated with recent control equipment installations. C ommenter s said there is no way for states to control system dispatch decisions that are entrusted to regional authorities, and simply attempting to "freeze" emissions from design ated facilities in 2020 based on projected emissions and generation that accommodate the effects EPA hopes to achieve through building blocks 1 and 2 does not adequately account for the many factors that introduce variability into existing units' utilizati on and emissions, including weather patterns, unanticipated equipment problems, and changes in local load conditions. C ommenter s said the output of renewable resources similarly is heavily influenced by weather conditions, equipment condition, and other fa ctors that are neither controlled nor controllable by the designated facilities 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 m arkets, the extent to which they are satisfied in whole or part through energy efficiency measures or alternative payments, and the extent to which they rely on unique resources whose status as "renewable" energy sources in any future section 111(d) plan i s uncertain. C ommenter s said these errors make EPA's cumulative targets unreasonable and arbitrary.

Commenter s stated some of the largest work

- producing 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; Pennsylvania, the third

- largest contributo r of NMA utility hours, by 31 percent; and New Jersey, ranking ninth, must cut CO2 by 43 percent. C ommenter s added equally instructive is how these states rank nationally in terms of the reduction percentages; Ohio's 28 percent reduction goal is only the t hirty

- second highest goal nationwide, meaning 17 other states face more challenges; 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). C ommenter s said under any r easonable scenario, an 11 percent reduction in carbon emissions by 2030 (around a decade and a half) would be hailed as a monumental achievement but in the scheme put forth by the agency, it is the bare minimum

- the lowest emissions reduction goal in the entire country; this speaks volumes about the unrealistic goals set by the EPA.

Commenter s stated in conjunction with the implementation issues related to enforceability, U.S. EPA has set a goal that is not practically achievable by Ohio. C ommenter s said u ntil a state

specific analysis is conducted to determine the feasibility of these goals, with the added understanding of U.S. EPA expectations related to how they must be quantifiable, non

-32 duplicative, permanent, verifiable, and enforceable, Ohio EPA canno t support adoption of either of the proposed options.

Commenter s 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 d ue to the fact that EPA's methodology does not take into account coal

- fired generation that already was displaced by RE and EE prior to 2012. C ommenter s said existing (i.e., pre

- 2012) RE and EE therefore negatively impacts early

- acting states by making the baseline emissions rate artificially low; for example, RE displaced a significant amount of coal

fired generation in Minnesota prior to 2012; Xcel Energy 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. C ommenter s said these coal retirements resulted in significant reductions in CO2 emissions and the state's average emissions rate; further, in 2008, Xcel Ener gy brought the Grand Meadow Wind Farm online, followed in 2010 by the Nobles Wind Farm as well as large amounts of purchased wind power. C ommenter s said this wind power, which required support from the NGCCs that Xcel Energy built to replace the retired co al

- fired units, also resulted in reduced 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. C ommenter s said applying EPA's goal calculation methodology to this higher baseline emission rate would have resulted in less stringent CO2 emission goals for Minnesota.

Commenter s stated several of EPA's State

- Specific Emissions Reductions Targets Are Arbitrary

an d Capricious. C ommenter s said for Arizona: EPA's BSER analysis ignores 94% of all existing nuclear generation and all existing hydropower; this has a profound impact on States such as Arizona that generate a large percentage of their power from these zero

- emission sources. C ommenter s said for Arkansas: EPA failed to consider potential challenges for States who are members of multiple RTOs; for such States, electricity generation and use cannot be shifted between the four building blocks on a State

- wide basi s as EPA assumed in the proposal. C ommenter s said for Pennsylvania: EPA failed to account 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 lowe r emissions reduction targets as a result. C ommenter s 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
gen erates 11% of the nation's electricity.

Commenter s stated requiring New York to seek dramatic reductions in the electricity generation sector may also have unintended consequences in broader GHG emission reduction policy and strategy. C ommenter s said one p otential undesired consequence 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 load sector, eroding progress towards overall GHG emission reductions; in addition, New York is initiating new policies and strategies that are designed to look at all fuel inputs to a building or industri al facility, and provide energy efficiency or renewable energy alternatives that will improve the emissions profile of the entire structure without isolating electric energy efficiency. C ommenter s said it is anticipated that these initiatives will provide a model for other states on how to achieve greater levels of scale for all

-33 fuels energy efficiency and renewable energy alternatives, in the pursuit of realizing emission reduction levels that create a path to an 80% reduction by 2050 across the entire eco nomy. C ommenter s said for these reasons, particularly given the progress the State has already made in reducing emissions from its electric sector, the proposal's 2030 target CO2 emission rate of 549 lbs/MWh for New York's power sector is unduly ambitious and does not account for State

specific electric system constraints; because of the unintended implications of the proposal and the potential for economic and competitive disadvantages to result for the State, EPA should revise the proposal to create more equity in the CPP while simultaneously increasing emission reductions overall.

Commenter s stated none of the options for reducing carbon intensity from AEPCO's Apache Station (heat rate improvements and redispatch) will approach either the 735 lb/MWh Inter im Goal or the 702 lb/MWh Final Goal; additional measures will be required.

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

Commenter s stated EPA assumes that Florida can meet a supposed national average of 13% increase in Renewable Energy, with 22,109,614 MWh coming from that sector in 2029, and that's 11.5% of current generation. C ommenter s 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 alternative energy. C ommenter s said only five states currently h ave a projected renewable portfolio standard this high

- and note that we are referring to projections, not actualizations. C ommenter s said the 985.77 lbs/MWh already reflects sizeable reductions in energy demand from renewable energy projects. C ommenter s said City of Tallahassee has been one of the more aggressive in regard of CO2 reduction and even their nationally recognized and award winning utilities are unable to meet even the interim goal. C ommenter s said the real impact of the final goal of 740 lb/M Wh is that a sustainability

- award winning, zero

- coal municipality would need to obtain approximately 25% of its current energy needs from non

- CO2 emitting sources. C ommenter s said this is a very aggressive goal;
commenter s suggest ed that this goal does not reflect a feasible emissions standard that reflects what is already adequately demonstrated.

Commenter s stated through aggressive unit replacements, fuel switching and efficiency improvements, the commenter s ha d successfully reduced its carbon intensity o ver the past 2.5 decades by approximately 40%, despite a corresponding 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 only two hydroelectric power plants in the state of Florida, and which has received international and national recognition, still remains well above the EPA interim and final limit of 794 and 740 pounds per megawatt

- hour, respectively. C ommenter s stated the propos ed limits established for Florida will potentially result in the early adopters, being at a disadvantage in meeting the new goals.

Commenter s stated there are significant policy and technical impediments that make implementation of this proposal impractic al and likely impossible; starting with the exclusive role of the Federal Energy Regulatory Commission (FERC) in determining how energy is dispatched, the proposed rule impermissibly requires States to regulate dispatch in contravention34 of FERC authority; next is the inability of the States to regulate based upon environmental rather than economic dispatch when such decisions are controlled by regional transmission organizations and independent system operators whose boundaries are not contiguous with state borders. C ommenter s added there is the potential impact of the rule on the reliability of the supply of electricity; there are numerous faulty assumptions on which each of the Building Blocks is based. C ommenter s said these faulty assumptions include such critical issues as limitations on source efficiency improvements, natural gas availability and existing natural gas generation capacity, shortages of transmission infrastructure for required additional renewable generation, arbitrary treatment of nuclear power, and the unrealistic assumptions regarding future potential reduction in electricity demand based on energy efficiency programs.

Commenter s stated that EPA should retain compliance flexibility in the final rule. C ommenter s encouraged the EPA to ma intain in the final rule the compliance flexibility provided to states. C ommenter s also encouraged EPA to add additional compliance options, such as the use of combined heat and power (CHP) systems, which are highly efficient and clean approaches to
genera ting power and thermal energy from a single fuel source. C ommenter s stated that the goals EPA set for states are too stringent, which leaves states with few options to comply with the regulation. C ommenter s stated that if EPA were to finalize the proposed goals without further modification, many states would in fact have very little actual flexibility in how to comply with their goal, if in fact they could comply at all.

Commenter s stated "EPA does have authority to hold the industry to a standard of improv ed design and operational advances, so long as there is substantial evidence that such improvements are feasible and will produce the improved performance necessary to meet the standard." Sierra Club v. Costle, 657 F.2d 298, 364 (D.C. Cir. 1981). C ommenter s said EPA's proposed BSER simply does not meet this standard because EPA cannot provide "substantial evidence" that the state goals are feasible. C ommenter s said the Agency has used national aggregated data for each step in establishing BSER; EPA then app lies the aggregated data to each state's energy fleet to determine that state's goal. C ommenter s said because this national data represents EPA's analysis of 48 states total, and not any one individual state, EPA is skewing each state goal to the point whe re it is in no way a reflection of that state's ability to meet it. C ommenter s added the assumptions underlying the individual building blocks 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 that the BSER is reasonably reliable, efficient,
or cost

- effective.

Commenter s stated a problem is that reduction targets for each state are measured per unit of energy meaning pounds of CO2 per megawatt hour' like a diet that limits calories per cookie, but35 not the number of cookies, this won't work in the long run because it allows emissions to rise as the demand for power goes up.

Commenter s stated the do not support the proposed targets; goals

are unreasonable/unachievable/arbitrary and capricious/unfeasible/too stringent.

Commenter s stated EPA has asserted that each of the individual targets assigned to states under the proposal are based on reasonably achievable rather than maximum performan ce levels;
commenter s were concerned that, as with its proposed rule for new power plants, EPA is basing enormously impactful mandates on technological or technology assumptions that have yet to be demonstrated as achievable at a reasonable cost, and in some cases achievable at any cost.

Commenter s stated there are not sufficient "compensating" reductions that would allow states to both consider potential adjustments for remaining useful life and the cost of compliance to meet their emission standards on schedule. C ommenter s said 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 Block 1.

Commenter s stated EPA underestimates the overwhelming hurdles to installing the inf rastructure needed to effectuate this proposal. C ommenter s said converting existing coal units to natural gas operation would require a multiple of over 2.5 times the gas currently used by the local distribution system. C ommenter s said unlike most power pl ants in the U.S., the commenter s 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 year

- round gas demand. C ommenter s said a new pipeline and associated costs not considered in the proposal would be unavoidable. C ommenter s said with few exceptions, electric utilities are not empowered to construct natural gas pipelines. C ommenter s said given the competing demand that would inevitably ensue following promulgatio n of this rule, there is no guarantee that the commenter s could persuade a pipeline company to undertake a project on behalf of a small municipal entity, let alone to complete it under the time constraints in the rule.

Commenter s stated the EPA proposes t wo mandatory emission rate goals for affected fossil

- fuel generation units located in the Commonwealth of Virginia (collectively, "Mandatory Goals"). C ommenter s said affected Virginia units

- that is, those that are already producing power or are under con struction 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"). C om menter s said EPA asserts that the Mandatory Goals for Virginia are a lawful "standard of performance," which the Clean Air Act defines as follows: "a standard for emissions of air pollutants which reflects the degree of emission limitation achievable throu gh the application of the best system of emission reduction which (taking into account the cost of achieving such reduction and any nonair quality health and environmental impact and energy requirements) the Administrator determines has been adequately dem onstrated." C ommenter s 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, substantially 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 level of base load generation that must be replaced at a cost that is unreasonable and in a timeframe that compromises reliability;

(C) fail to recognize significant and recent investments that (1) have substantially reduced carbon dioxide and other emissions in Virginia; and (2) if stran ded, will also contribute to higher costs and higher bills for Virginia residents and businesses;

(D) fail to recognize Virginia's significant investment in and utilization of zero

- carbon nuclear generation and, in fact, effectively penalize Virginia by i ncluding "at risk" nuclear generation in the calculation of Virginia's goals;

(E) incorporate generic and unsupported expectations of levels of renewable generation and energy efficiency that, when applied to Virginia, are extremely ambitious, almost cert ainly unachievable, and uneconomic under traditional standards

Commenters stated, EPA has failed to conduct the necessary feasibility or cost analysis on a unit

by

- unit basis or state

- by

- state analyses of costs, infrastructure requirements for BBs #2 and # 3, permit limitations to re

- dispatch, impact on electric 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 results in inequitable regulation of states and affected EGUs. Commenters said, in calculating state goals, the EPA applied all four Building Blocks to each state's 2012 electric generation to determine the ext ent to which the state could reduce its CO2 emissions rate by 2030. Commenters said, the EPA's methodology in setting the goals is based on its conclusion that the four Building Blocks are part of an integrated "system" of operation of affected EGUs. Comme nters said, however, 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 aside the fact that a BSER that extends beyond the definition of the affected source is not legal). Commenters 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 said, the EPA's analysis relies to o heavily on modeling scenarios and assumptions rather than on the hard technical analysis required by the regulations in setting BSER, with the consequence that the EPA fails to address real concerns that individual states will face serious hurdles to imp lementing the Proposed Guidelines. Commenters said, the EPA simply concludes that there will not be a problem because the rule provides the states with so much flexibility. Commenters 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 lower or no use of another Building Block

. Commenters said, in fact, the EPA's proposal is neither reasonable nor flexible, and will result in significant inequities among states. Commenters said, there are a number of issues which create37 these inequities that include inappropriate reliance on a single baseline year: unrealistic and flawed assessment of the capability of achieving heat rate improvement targets; renewable energy growth, and demand

- side efficiency goals; failure to account for differences among the states across the nation; and fail ure to appropriately credit or account for efforts many EGU sources and states have already taken that have reduced 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 achieve 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 demonstr ated as achievable. Commenters said, here, the EPA is proposing 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 ex ercising the flexibility afforded under section 111(d) but because the severity of the EPA's required emissions reductions will require a level of control that is simply not feasible or technically achievable within those states. Commenters said, as such, the proposed rule is beyond the EPA's authority under the CAA.

Commenters stated, the proposed rule also will create inequity by forcing many EGU owners and operators to abandon or significantly curtail operation of generating units where significant inves tments 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 Smokestacks Act. Commen ters said, for regulated utilities, these costs are typically borne by customers in accordance with rates approved by state regulatory commissions. Commenters said, where the EPA's stringent and unjustified state emissions goals force retirement or signifi cantly 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 increases through implementation of the Proposed Guidelines requ irements. Commenters said, in fact, Duke Energy has already taken actions in North Carolina through upgrade of its coal

- fired fleet, retirement of older generating units, and installation of new natural gas combined cycle facilities 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 credit 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 g oals that are unduly strict and that are not equitable across the states. Commenters said, EPA has effectively created 50 subcategories of sources and tailor

made BSER by using each state's emission rates as the starting point for the application of its Bu ilding Blocks. Commenters said, never before has EPA taken this sort of approach to establishing any limit or guideline under section 111. Commenters said, EPA's actions, which result in setting 50 different BSER limits for the same types of sources, is ar bitrary and capricious.

Commenter s state d t he 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 ret ail customers. Commenters added i t is, in effect, a resource38 planning rule. Commenters stated u tilities have different means of resource planning, both from a legal structure and economic perspective. Commenters stated b ecause the utility is vertically int egrated 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 subcategory

- specific emission performance rate.

Comment 5: The EPA's proposed state goals and analysis are flawed

. Response 5: Based on comments and our further consideration, the EPA is modifying the expression of the BSER from a state goal to subcategory

- 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 performance rates are consistent with the proposal expression of the BSER which took comment on the impa ct to different subcategories. Whereas the proposal blended the BSER adjusted generation and emissions from all affected fossil sources together to provide states flexibility through a state goal, this final rule provides subcategory

- specific emission per formance rates as the expression of the BSER while also including rate

- based and mass

- based goals to provide flexibility to states and sources. By simply segmenting the steps it proposed, these subcategory

- specific emission performance rates are a clear l ogical outgrowth of the proposal. The concepts and underlying data were available at proposal, and the EPA can accommodate the commenters’ suggestion of subcategory

- specific rates without providing new material or concepts.

In regards to comments on VT an d DC, section 111(d) of the Clean Air Act requires the EPA to establish the BSER for affected sources. Because these states/districts have no affected sources

– the EPA did not establish a BSER for these areas.

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

The EPA’s building blocks are informed by historical data, deployment patterns, and established cost and performance criteria as described in Section V of the preamble and the GHG Mitigation Measures TSD. The EPA believes the BSER is cost

- effective and feasible. Subsequent to establishing the BSER, the EPA used the IPM power sector model to further test the cost and viability of the BSER. States have the flexibility to determine the best aggregate pathway to

c ompliance among its affected sources and distribute that reduction burden in the most appropriate manner. Therefore, there is no unit

- level 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 and analysis are flawed.39 Commenter s said the analysis generally overestimates the possible reductions available from the Building Blocks, resulting in state goals that may not reflect the reductions that are achievable.

Commenter s stated the goals are flawed due to EPA's failure to apply it s definition of BSER only to the source category subject to regulation. C ommenter s said because this defect pervades EPA's entire methodology for calculating state emission goals, EPA must withdraw the Proposed Guidelines.

Commenter s added EPA has no auth ority to regulate the behavior of consumers, and its simplistic evaluation of the potential for future energy efficiency measures ignores fundamental aspects of program design and achievability. C ommenter s said there are errors in each and every one of the blocks upon which the state goal calculation is based that make the final result arbitrary and capricious; all of these errors inflate the prospects for future emission reductions, and simply shift the search for effective ways to meet the arbitrary goals from one building block to another and beyond, to measures EPA admits are not cost

- effective, in a continuous loop of legally, technically, and practically flawed options that impairs the development of any workable compliance solution.

Commenter s stated the assumption of a nationwide 6% HRI across the coal

- fired fleet is technically infeasible and impractical and should not be used without further research and validation to form state CO2 intensity goals.

Commenter s stated challenges under the Proposed Ru le and "Generation

- based" State Goals since the proposed rule regulates in

- state generation only, it:

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

2. Favors states that consume their own in

- state emitting 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 ex port renewable generation, which may be able to claim reductions without paying for them; and

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

C ommenter s said the Proposed Rule will potentially disincentivize policies and measures that affect reductions anywhere but at in

- state generation 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 c aused by demand

- side efforts at the importing state will not be counted. C ommenter s said states that are net importers, for example, see little reason to enact policies and pursue activities that reduce emissions from those generators; the result leaves lo w

- cost, demonstrated reductions on the table.40 Commenter s stated U.S. EPA's proposal, while legally dubious, is also factually deficient. C ommenter s said the reductions proposed under building block 1 are grossly overstated and the reductions proposed under building blocks 2 through 4 are impractical under state law. C ommenter s 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

re ductions as required by 111(d).

Commenter s appreciate d the effort the EPA has taken in an attempt to create what they believe is an achievable, yet challenging, requirement to reduce carbon intensity from the nation's power sector; however, EPA's interim a nd final budget goals need to be adjusted to reflect the corrections in the technical data to reflect the achievable CO2 emission goals while still having a reliable electric network. C ommenter s said these adjustments also need to take into account the tim ing required to implement the significant changes that would be required by the electric industry. C ommenter s said the interim and final budget is unachievable for utilities as a key component of the State of Florida's goal. C ommenter s said the proposed ru le avoids limiting emissions from individual emissions units; instead, it implements a state

- wide emissions cap; the resulting numerical limit is unique to each state. C ommenter s said how the cap is met remains partially in the discretion of each state, bu t 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 efficiency practices or else purchase offsets from othe r states. C ommenter s said it remains to be seen whether such offsets will even be available.

Commenter s stated the proposed rule does not include adequate specifics to determine whether the Alaska CO2 Performance Goals can actually be achieved; EPA should determine whether the performance goals can, as a practical matter, be achieved before promulgating this rule.

Commenter s stated the Proposed Rule specifically prohibits states from making any "case

- by

case" exceptions based on factors such as: (1) unreasonable costs of control resulting from plant age, location, or basic process design; (2) the physical impossibility of ins talling 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 compliance time significantly more reasonable. C ommenter s said the Proposed Rule rejects the possibility of a "less stringent standard" or final compliance time; instead, the Proposed Rule requires that any state CAA section 111(d) Plan must show "achievement of emission performance equivalent to the goals established by the EPA, on a timelin e equivalent to that in the Proposed Rule."

Commenter s stated EPA must redo its energy efficiency assumptions and state targets. C ommenter s said the EPA assumed that without the CPP, incremental energy efficiency does not occur; this is an incorrect assum ption and has led to a much higher target for energy efficiency by state. C ommenter s said the EPA assumption grossly overstates the benefits of the CPP; according to the EIA, for example, the industrial sector has reduced its energy intensity by 41 percent since 1987. C ommenter s said this has been achieved largely through voluntary energy efficiency improvements; the industrial sector has demonstrated that it does not need a regulatory framework to improve energy efficiency. C ommenter s said the EPA should rethink its approach to energy efficiency; industrial companies have firsthand experience nationwide on electric utility delivered energy efficiency programs; a better way forward is to drive energy efficiency41 through the residential s ector 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 incompatible with the BSER required under section 111(d) for two reasons. Comment er s gave the reason that Building Blocks 2, 3 and 4 impose reduction goals that cannot be achi eved by individual sources.

See section V of the preamble. The EPA believes that all affected EGUs have compliance options available to them to meet the subcategory

- specific emission performance rates.

Comment 6: The EPA should work with states to set g oals/let states set goals.

Response 6: The EPA is expressing the BSER as sub category

- specific emission performance rates for this final rule. Per commenters’ suggestions, states have the flexibility to establish unit

level requirements within the state a nd demonstrate that those requirements will result in a rate or mass outcome that complies with values put forth in section s VI and VII of the preamble. The EPA supports the commenters’ suggestion that states be allowed to customize program targets and ti melines for sources in the state. Section 111(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 long as they still de monstrate compliance as discussed in section VIII of the preamble

.

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

. The EPA engage d in significant stakeholder outreach during the comment p eriod. Feedback received through that notice

- and

- comment process inform ed the final rule BSER quantification.

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

Commenter s stated that EPA should address state

- specific concerns about the proposed emission rate goals. C ommenter s said that EPA should work with the states and RTOs to set achievable state goals that reflect future in

- state conditions.

Commenter s stated that EPA should revise the Proposed Rule to allow States to set the standards of performance, and to determine the extent to which, and the timing for applying those standards individually for each unit in its jurisdiction.

Commenter s stated the EPA should allow Pennsylvania and other states to set less stringent perfo rmance standards and longer compliance schedules for power plants within their jurisdiction, and Pennsylvania and other states should be given maximum flexibility by the EPA to implement carbon dioxide performance standards for fossil

- fueled power plants w ithin their jurisdiction.42 Commenter s stated when determining the need for new electric generating facilities, the
commenters always considers the utilization of renewable energy resources and, by Florida law, cost effectiveness must be considered. C ommenter s said the Florida Statutes require consideration of electric system reliability and integrity, reasonable cost, fuel diversity, and reasonably available renewable and conservation measures. C ommenter s said based on the FCG analysis, the cost of ac hieving the proposed CO2 emissions reductions using a proposed 10 percent renewable energy component for calculating the 2030 goal is not reasonable; accordingly, c ommenter s request ed that EPA withdraw the proposed state goals and work with states to adjus t renewable energy generation targets to achievable levels within a reasonable time

- frame.

Commenter s added by establishing state limits the CPP has limited the state environmental agencies flexibility to establish unit by unit limits under section 111(d). C ommenter s support ed allowing states to conduct unit by unit evaluations to establish emission limits and the flexibility to use building blocks 2

- 4 to calculate compliance.

Commenter s stated because of the calculation errors and incorrect assumptions und erlying the EE savings goal of the Proposed Rule, EPA should withdraw 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 feasible for North Carolina based on North Carolina

specific facts.

Commenter s stated EPA incorporates concepts for CO2 emission reductions that states currently have no authority to enforce such as energy efficiency programs and renewable energy initiatives. C ommenter s sai d much consideration should be given to allow states to develop their own methods for including these efforts to meet the final state goals. C ommenter s said this proposal essentially requires the incorporation of renewables and energy efficiency programs t o meet the required reductions. C ommenter s said this is unchartered territory for many states and should therefore not be presented as requirements but as potential compliance options.

Commenter s stated EPA should allow each state to customize its own prog ram targets and timelines after taking account of its generation portfolio, history of CO2 reduction measures, potential for renewable generation, and local economy. C ommenter s said providing states with this small measure of input will go a long way to en suring EPA targets and timelines are practically achievable. C ommenter s said in this effort, EPA should allow credit to regulated entities for emission

- reduction steps already taken.

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

Response 7: The EPA disagrees with the comparison between stringency of state goals and NSPS rates as the two metrics are not apples

- to

- apples. First, the EPA has modified our approach to quantifying the BSER from state goals to 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 different 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 emission rate) at a source. The 111(d) rates may reflect additional inputs and thus a nominal comparison 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, where 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 location.

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

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

Commenter s added that Texas' interim 853 lbs/CO2 MWh and final 791 lbs/CO2/MWh goals are lower than the standards for new units under Section 111(b).

Co mmenter s added EPA has set emission guidelines for 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. C ommenter s stated it i s 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 standard 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 regional governmental entities such as TVA that have been in the forefront developing and promoting nuclear power.

Commenter s stated the Existing Source Proposal i mposes unreasonable and unlawful burdens on the states because the final emission goals set forth thereunder are unattainable; indeed, many of the states' final emission goals are significantly lower than the emission standards for new sources under the Ne w Source Proposal and modified/reconstructed sources under the Modified Source Proposal. C ommenter s said it is manifestly unreasonable to require existing sources to emit at a fraction of what is required of new and modified/reconstructed units; the inhere nt differences between new and modified/reconstructed sources on one hand and existing plants on the other justify a higher emission standard for existing plants. C ommenter s said for example, the costs associated with installing emission controls at existi ng plants is generally much higher than installing the same emission controls at new and modified/reconstructed plants; this is one reason why EPA has historically imposed stricter emission controls on new and modified/reconstructed plants.

Commenter s add ed for many states, including South Carolina, the goals under the proposed Section 111(d) rule are more stringent than those in the Section 111(b) rule for new sources. C ommenter s said South Carolina's goal in the proposed rule is 772 lbs CO2/MWh and the E PA 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

- fired electric generating units under Section 111(b). C ommenter s asserted that the intent of Section 111 of the CAA is to allow existing sources to achieve less stringent standards than new sources; in addition, because of this discrepancy, the replacement of the South Carolina's current generating capacity with new fossil fuel ed capacity would result in an allowance for higher CO2 emissions.

Commenter s stated the Proposed Regulation requires existing fossil fuel units located in Virginia to achieve a carbon emission rate that is as much as 26% lower than the carbon emission rate that the EPA recently determined can be achieved by new units using the bes t available control technology. Cs said compared to Virginia's Mandatory 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 Virginia

- which can only be constructed using the absolute best control technology and without physical and other engineering limitations attendant to existing infrastructure

- faces a far less stringent compliance requirement than existing units. C ommenter s said such a topsy

- turvy result for Virginia could seem a mere oddity to the general public when considered in the context of electric generation units; however, it would be hard to imagine the EPA advancing such a proposal in areas that are more familiar to

ev eryday life. C ommenter s ask ed would it be rational 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 production of new cars or lawnmowe rs that must use the best available technology. C ommenter s said turning 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 recipe for stranding prior investments and requiring significant additional investment, both of which will likely be paid for in large part, if not entirely, by consumers. C ommenter s said in finalizing its Proposed Regulation, the EPA should correct this irration al and inequitable result, consistent with the logic found elsewhere in the Proposed Regulation. C ommenter s said when considering carbon capture and sequestration, for example, the Proposed Regulation recognizes that 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," and that "some existing EGUs might have space limitations and thus might not be able to accommodate... expans ion." C ommenter s said existing generating units cannot rationally be expected to achieve more than new units of the same type; there is no legal or rational basis to set Virginia's Mandatory Goals for existing units below the standards required for new uni ts.

Commenter s stated EPA's CO2 emission rate target for existing EGUs in Virginia in 2030 is very aggressive, and is set at a level that is more stringent than EPA's proposed rule for new sources. C ommenter s said as proposed, EPA has determined that CO2 e missions 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 850MMBtu/h heat input could locate in Virginia and only be required to meet a 1,000 lbs/MWh rate. C ommenter s said it has been longstanding CAA policy to consider new sources as presenting an opportunity to install the most advanced air pollution cont rol equipment; for example, the NSR program requires consideration of the "best available control technology" on a case

- by

- case basis before construction can commence on a new major source; similarly, the CAA has provided less stringent requirements for ex isting

sources. C ommenter s said EPA specifically recognized that costs are considered under CAA45 section 111 (d). EPA explained: "Such a consideration is inherently different than for new sources, because controls cannot be included in the design of an exis ting facility and because physical limitations may make installation of a particular control systems impossible or unreasonably expensive in some cases." C ommenter s said 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 EPA's Proposed Rule stands this established procedure on its head. C o mmenter s 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: "Sectio n 111(d) guidelines, like NSPS standards, must reflect the emission reduction achievable through the application of BDT. However, both the statute and EPA's regulations implementing section 111(d) recognize that existing sources may not always have the cap ability 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 co nsidering cost of control, useful life of facilities; location or process design at a particular facility; physical impossibility of installing necessary control equipment; or other factors making less stringent limits or longer compliance schedules
approp riate." C ommenter s said EPA previously understood that CAA section 111(d) is based on the best technology that might be applied to an existing source and that existing sources may not have the capability to achieve the same levels of control as new sources

. C ommenter s said in the Proposed Rule, EPA offers no explanation why it departs from this established methodology, or the general expectation that existing source controls should be less onerous than those applied to

new sources. C ommenter s said Virginia is also at a significant disadvantage vis

- a

- vis its neighboring states, which all have 2030 emission rate goals that are substantially higher than Virginia's goal of 810 lbs/MWh; the Proposed Rule would require greater CO2 emission reductions on a pound pe r megawatt hour basis for affected units in Virginia than from similar units in Kentucky or West Virginia.

Commenter s stated EPA's algorithm that combines all four building blocks provides a state

- wide emission rate goal for existing power plants in many states that is more stringent than EPA is proposing for new power plants; this is not a realistic or a reasonable outcome. C ommenter s said GHGs are well

- mixed, and take many years to leave the atmosphere; their effect is long

- term and global and, generally speaking, the atmosphere is unconcerned where the CO2 molecule originated. C ommenter s said it is appropriate to compare the proposed Section 111(d) statewide goal for existing EGU sources with the proposed Section 111(b) unit standard for new EGU

sources; EPA has proposed for state

- based CO2 emission performance interim and final goals of 647 lb/MWh and 531 lb/MWh, respectively. C ommenter s said EPA has proposed emission rates for new EGUs ranging from 1,000 lb/MWh /MWh to 1,100 lb/MWh, depending on the typ e and size of the unit. C ommenter s said according to EPA's Technical Support Document: Goal Computation, New Jersey's existing EGUs are achieving an emission rate of 1,035 lb/MWh. The
commenters said if the existing EGUs were to be replaced by new EGUs, th e 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. C ommenter s said it is not reasonable to expect deeper emissions reductions from existing EGUs than what is require d 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.

Commenter s stated EPA has proposed to set the Interim 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 ommenter s said even modern NGCC units

m ay 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 steps to achieve a rate that is below their native emission rate.

Commenter s said in states, such as Arizona, where the NGCC units are owned primarily by "merchant" facilities and the population is served by traditional utilities (whether IOU, public or cooperative), this dispar ity creates significant problems. C ommenter s said in order to the NGCC units to run, they must reduce their emissions; however, the merchant NGCC operators likely have no renewables and no opportunity, as generation facilities only, to develop substantial energy efficiency improvements that would have the effect of reducing the NGCC EGU's carbon emission rate. Commenters said i n order for merchant NGCC units to run in states with Interim and Final Goals below the carbon emission rate achieved by an NGCC uni t, the State must either require the merchant plants to install RE (which may or may not be within their financial means), purchase RE or energy efficiency credits from a traditional utility or other entity that has such credits (if any such EE credits exi st or are allowed by the Proposed Rule, which is unclear), or else order the in

- state utilities to achieve additional reductions to offset the "excess" emissions of the merchant NGCC units. C ommenter s said if, as is the case in Arizona, a sizeable portion of the merchant NGCC power is directed to the export market, it is not clear that the State will be willing to impose additional costs upon its citizens and taxpayers for the sole benefit of a foreign state's citizens and taxpayers. C ommenter s said the net effect may be that these units either shut down, resulting in an increase in the overall carbon 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 hea vily upon such interstate movement of electricity to meet the Proposed Rule's Interim and Final Goals at reasonable costs, may prove illusory. C ommenter s said the practical solution to this problem is to set the Proposed Rule's goal no lower than the event ual NSPS rate and allow use of the Building Blocks as an alternative to meeting the NSPS goal.

Commenter s stated the EPA's methodology for setting state goals for CO2 emissions is flawed and results in unrealistic and unfair targets that states are mandate d to achieve. C ommenter s said the BSER scheme that EPA has developed imposes extreme CO2 reduction mandates on many states, far beyond what can be realistically achieved. C ommenter s said whether measured in terms of the percentage reduction over the status quo or the tonnage reduction, imposing actual CO2 emission goals below 1,000 lbs CO2/MWh is unrealistic. 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 Washingto n. C ommenter s said it virtually forces states to shift to entirely renewable generation to meet their electricity needs, without consideration of the specific circumstances of each individual state, the reliability of the electric grid or the cost of elect ricity to consumers. C ommenter s said such stringent target

- setting is regulatory overreach, and is so disconnected from the facts that it constitutes arbitrary and capricious decision making. See, e.g., Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. In s. Co., 463 U.S. 29, 43, 10347 S.Ct. 2856, 2866, 77 L.Ed.2d 443, 458 (1983) (agency 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'") (quoti ng Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168 (1962)).

Commenter s stated for example, South Dakota, which in 2012 emitted less carbon dioxide than 46 other states, was saddled with a 35% reduction requirement, bringing its target in at 741 lbs CO2/MWh

- in a state that has only one coal plant and one NGCC plant. C ommenter s said the targets force extreme reductions in states where renewable 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 percent from fossil fuels. C ommenter s 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. C ommenter s added the Clean Air Act, Section 111(d)(1)(A) states that the Administrator may establish standards of performance for any existing source of an air pollutant. C ommenter s said i n South Dakota, only two units are considered affected EG Us; rather than looking at the actual emissions of the affected EGU, and looking at the BSER available to those particular EGUs to come up with an appropriate target, the EPA looked "outside the fence" resulting in extrapolations on renewables and energy

e fficiency that have little to do with the actual affected units.

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

Response 8: The metric s for the NSPS limits are different than the metric for the exi sting source limits and should not be compared to each other. The 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:

Commenter s 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). C ommenter s asser ted 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 establishing the proposed emissions rate limit for new units. C ommenter s said in the proposed section 111(b) rule, EPA's proposed CO2 emissions rate for new units is 1,000 lbs./MWh

- gross (approximately 1,031 lbs./net MWh) for NGCC units with a capacity greater than 850 MMBtu/hour. C ommenter s said EPA asserts that these emission

rates c an be met over the lifetime of a modern high efficiency NGCC unit and are representative of the emission rates of the best performing NGCC units in the country. C ommenter s 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, the EPA took a subca tegory

specific approach in this final rule meaning that every 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 narrow ran ge of emissions rates. See the CO2 Emission Performance Rate and Goal Computations TSD for CPP final rule.

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

The EPA agrees with com menters that a BSER quantification 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 have lower emitting generation or other abateme nt 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 proposal. 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 emission performance rate as every other affected NGCC unit. Moreover, the regionalization approach 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, Arkansas, 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 performance rates. However, the EPA is providing compliance flexibility, and in many of these states, the final CPP state goals are different than the proposed valu es that the commenters expressed concern with.

As described in preamble Section V, demand

- side energy efficiency is not part of the final rule’s BSER quantification.

See the Regulatory Impact Analysis for CPP Final Rule and the Resource Adequacy and Relia bility 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 state goals.

Commenters stated there is disparity between the goals between the early action states and other states that have been less proactive.49 Commenter s stated some states can do more to reduce their emissions at lower cost, and do so cost effectively (e.g., greater deployment of energy efficiency programs).

Commenter s stated the 2030 CO2 emissions goal or carbon dioxide emissions goal for many states is lower than the beginning baseline for several of the states; EPA appears to be picking winning and losing states for economic developmen t.

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

Commenter s stated that MA, NY, and RI, have advanced energy efficiency and renewable
programs, are members of RGGI, have already significantly reduced their emissions, but the proposed rule does not recognize these achievements.

Commenter s stated the Northeastern states that participate in RGGI have been national leaders in carbon dioxide reduction; yet, the draft rule appears to ask more of those states than of other states across the country. C ommenter s said it would be extremely unfortunate if the result of 111(d) were that the Northeast was disadvantaged for being an early leader on carbon emission reductions.

Commenter s added the rule largely relies on clean energy leaders like Minnesota to make further reductions in carbon emissions to provide an overall level of national rule stringen cy 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 aggressive r eductions from states well

- into their clean energy transition.

Commenter s added the necessary CO2 reductions and resulting compliance costs will be distributed unfairly amongst the states; residents and businesses in states bearing higher compliance costs will also be disproportionately impacted economically as electricity prices increase as a result of the rule. C ommenter s said future economic development may also be impacted as potential future businesses weigh operating costs of locating a facility in o ne state versus another; additionally, the disparate state goals will, by extension, necessarily result in comparative disparate treatment of EGUs depending on the state in which the EGUs are located.

Commenter s added for example, instead of all coal

- fire d EGUs being required to meet BSER in a similar manner across the country, the emission limit 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

- based (e.g., Kentucky, North Dakota, and West Virginia), the state goals are significantly less stringent than in states that have diversified generation mixes including coal and other fossil fuel

- fired sources (e.g., Texas and Florid a). C ommenter s said a state with a much more stringent goal, such as Texas, would be forced to require more CO2 reductions from coal

- fired EGUs within its jurisdiction than a state with coal

fired EGUs that has a much less stringent state goal. C ommenter s said the EPA provides no justification for why EGUs within the same source and fuel category should be subject to wildly varying standards of performance and thereby varying costs and controls, including shutdowns,50 depending only upon the state in which th ey operate; the EPA also has no legal basis for establishing state

- specific standards of performance.

Commenter s added the goals are set in a way that creates inconsistencies between states; this offers neighboring states a competitive advantage over Michi gan. C ommenter s said given that Michigan was an early adopter of a renewable portfolio standard (RPS) and energy efficiency (EE) programs and other states were not, Michigan is tasked under the proposal with a greater level of renewable energy (RE) and EE goals. C ommenter s 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 over another in attracting industry" when setting new source performanc e standards.

Commenter s stated other Midwestern states do not have to reduce at such a high percentage as Minnesota; also, emission reduction efforts taken prior to 2012 should count toward any such emission reduction percentage calculation.

Commenter s add ed 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 percent.

Commenter s added of greatest concern is the imposition of greater and unreasonable emission reduction requirements upon some states, such as Virginia and North Carolina, which already have reduced their carbon intensity, diversified their generation portfolios and achieved emission reductions , while providing much less stringent requirements on states that have been less forward

- looking. C ommenter s said this dichotomy creates an economic and competitive advantage to those states that have done the least and a disadvantage to those who have don e the most; EPA essentially penalizes early action and rewards inaction, and incorrectly assumes these states can do significantly more simply because they have access to multiple sources of electricity generation.

Commenter s added in Virginia, the State Corporation Commission (SCC) has been responsible for oversight of utility rates for more than 100 years; the SCC was established by the Constitution of Virginia and has broad regulatory oversight of utilities, telecommunications, banking and insurance. C o mmenter s said with regard to electric utilities, Virginia's successful application of the regulatory compact concept has led to reliable service and stable, competitive rates when compared to national or regional averages; at the same time, Virginia ratepa yers have made substantial investments in clean energy, as demonstrated by Dominion's consistent ranking in the lowest one third of carbon emitters by intensity among major power producers. C ommenter s said the draft rule has the unintended consequence of p enalizing states that took aggressive, early action to produce energy in a more environmentally responsible manner, such as Dominion's closure or conversion of coal units at seven of its Virginia power stations within its regulated generation fleet.

Commen ter s added the proposed rule does not give appropriate 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 source s such as highly efficient natural gas combined cycle units (NGCC), non

- emitting nuclear units, and growing use of renewable resources. C ommenter s said this balanced generation fleet, which also includes coal

- powered units, provides Virginians with a relia ble, affordable and environmentally

- responsible supply of electricity.

Commenter s added the EPA rule will affect Virginia and North Carolina disproportionately, compared to the reduction goals assigned to other nearby states; for example, West Virginia's 2 030 carbon intensity goal of 1,620 pounds per megawatt

- hour of generation is twice the level set for Virginia at 810 pounds per megawatt

- hour; Kentucky's 2030 goal is more than twice as high; Maryland's 2030 goal of 1,187 pounds per megawatt

- hour is more t han 46 percent higher than Virginia's. C ommenter s said targets in these and many other states are above the level EPA has proposed for new sources; this allows these states the option of using NGCC build to achieve compliance; for states like Virginia and North Carolina, with emission rate goals lower than the standard proposed for new sources, incorporating these units into state compliance plans would create significant compliance challenges; assuming it could be accomplished, a compliance strategy in Vir ginia that replaces all existing coal

- 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.

Commenter s added this disparity actually in centivizes new NGCC build in states with higher targets and emissions than in states with lower targets and less emissions; the fact that EPA proposes existing source standards are more stringent 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 constru cted 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 Vi rginia would be expected to remain under 111(b) rules because its permitted emissions rate would be above the statewide Virginia target. C ommenter s said although the actual impact to the environment would be the same, whether the units are located in eithe r state, the accounting with respect to the existing source rule as proposed would be substantially different.

Commenter s added this disparity is further exacerbated in Virginia by the inclusion of NGCC units that were under construction as of January 8, 2 014 in the calculation of the state goals; Dominion Virginia Power's (DVP) Warren and Brunswick power generating facilities are captured by this inequitable and unfair policy which results in an increase in the stringency of the Virginia state target by al most 40 lb/MWh; this methodology disadvantages states, such as Virginia, that are meeting future energy needs proactively with lower

- carbon emitting combined

cycle natural gas

- fired base load generation. C ommenter s said furthermore, including an "at risk" nuclear component in the computation of the state target for states, such as Virginia, with existing zero

- emitting nuclear generation further reduces the proposed reduction targets without accomplishing its intended purpose of preserving existing nuclear u nits; as a result, states such as Virginia for which nuclear generation provides a significant amount of the state's electric generation are neither recognized nor credited for investments in tins carbon

- free nuclear generation.52 Commenter s stated the issue of state

- by

- state equity 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 national level under this proposal. C ommenter s 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 gas and relying on nuclear for 40 percent of its generation

- twice the national average; yet its emissions reduction target is proportionally stringent compared to those of states that have done less. While commenter s acknowledge d that

a one

- size

- fits

- all emissions target is impractical among states with vastly different power sectors, commenter s also asserted it is good policy to reward states that have taken steps to reduce the carbon intensity of their power sectors.

Commenter s stated one key way to address this equity issue and properly reward states with balanced electricity portfolios is to include all ze ro

- emitting capacity in the 2012 compliance baseline; nuclear accounts for 40 percent of Virginia's electricity portfolio, yet only 6 percent is factored into the state's target in the draft standard. C ommenter s said not including one third of Virginia's c urrent overall generation significantly skews the picture of its electric sector.

Commenter s were concerned that North Carolina might be unable to achieve these objectives under the methodology and assumptions EPA used to determine proposed state carbon
pe rformance standards. C ommenter s said unlike other states in the Southeast, elected officials in North Carolina previously took forward

- thinking actions that reduced carbon emissions, spurred renewable electricity generation, and improved energy efficiency. C ommenter s said rather than reward North Carolina for these actions, the proposed rule could impose higher compliance burdens on North Carolina than it would have had it not taken early action. C ommenter s said any final rule must not result in higher comp liance burdens for North Carolina than for neighboring states that chose not to take similar bold actions.

Commenter s 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

. C ommenter s 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 commenting on this rule proposal. C ommenter s said these numbers are based upon what EPA thinks it knows best about every aspect of every state power generation sector, developing fuel source infrastructure, dispatch, energy markets, energy usage demands of businesses now and in the future, energy us age demands and habits of citizens, and the weather. C ommenter s said the inequities of this proposal are clear from the numbers alone; but the basis and background for such numbers are weak and depend upon too many assumptions about too many unknowns.

Comm enter s added EPA's proposed goals create inequity among states, and specifically result in a disproportionate impact on Florida. C ommenter s said EPA has proposed different interim and final goals for each state; such an approach is arbitrary 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. C ommenter s said for example, EPA proposed final goals of 1,783; 1,771; 1,763; and 1,714 lb /MWh

- 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 the national average.53 Commenter s added the disproportionate impac t on Florida is illustrated by comparing states' percent reduction requirement, as well as the percentage of coal

- fired capacity EPA projects will retire. C ommenter s said for example, EPA's modeling projects over 90 percent of Florida's coal

fired capacity to be prematurely retired while projecting that none of North Dakota or Montana's coal

- fired capacity will be prematurely retired, and it actually projects a delay in retirement of 1,379 MW of coal fired capacity in Kentucky compared to the Base Case. C om menter s said EPA's methodology unfairly penalizes states like Florida 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 wi th higher interim and final goals. C ommenter s said EPA cannot reasonably justify such different treatment among states, and its approach is thus arbitrary and capricious.

Commenter s stated the USEPA's goal computation methodology may lead to inequitable re sults. C ommenter s stated that the Clean Power Plan proposes a methodology to calculate state goals that is applied uniformly to the states; however the methodology results in some states having much more stringent goals than others. C ommenter s said general ly 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 renewable energy sources, such as Nevada, are being asked to lower their emissions the most. C ommenter s said this disparate treatment objectionable.

Commenter s stated the Clean Power Plan's proposed methodology for setting goals on a state

- by

state basis is fundamentally unfair to states like Oregon, where the carbon profile of the electric sector is significantly lower than the national average; the proposal's methodology and the assumptions it uses to calculate goals punish states and electric power customers like ours that have already made significant investments to address climate change

. C ommenter s said that disproportionate burden potentially puts our state and region at an economic disadvantage relative to the rest of the nation.

Commenter s added EPA can take several steps to better align emission reduction targets with states responsi bilities 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 states in Building Block 4.

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

Commenter s stated the Proposed Carbon Rule may accomplish 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 state emission levels. C omment er s 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 portfolio 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. C ommenter s said the result is that states like Arizona are being forced to carry a more significant burden than other states because of its diverse energy mix and early implementation of RE and EE. C ommenter s said the EPA goal calculation methodology leads to disproportionate and unequal results among the states. The commenter s said states with large coal fleets and little or no NGCC or nuclear generation contribute significantly more to the national CO2 emissions than states with balanced portfolios and aggressive RE and EE
programs; yet, based upon EPA goal calculation methodology, those states contribute significantly less to the overall 2030 reduction established by EPA. C ommenter s recomm end ed that the EPA revise its goal calculation methodology to establish a balanced reduction strategy among the states that at least has some relationship to the state's contribution to nationwide CO2 emissions.

Commenter s stated the proposed rule has a di sproportionate impact on Arizona relative to other states, even though Arizona has a more balanced portfolio and has put in place aggressive energy efficiency and renewable energy standards to reduce greenhouse gas (GHG) emissions. C ommenter s said Arizona was among the first states to adopt renewable portfolio requirements in 1994, which were replaced in 2006 with the current Renewable Energy Standard and Tariff (REST). C ommenter s said the REST calls for TEP, UNSE and other regulated utilities to supply 15 percent of their retail load through renewable resources by 2025. C ommenter s said in 2010, the ACC adopted the Energy Efficiency Standard, which calls for TEP and UNSE to increase the savings realized through approved energy efficiency programs each year u ntil the cumulative savings reach 22 percent by 2020. C ommenter s said the EPA seems to imply [79 FR 34833, 34834, 34853, 34865, 34897] that these aggressive programs provide Arizona with an ability to achieve the second highest emission rate reduction of all states.

Commenter s were concern ed about the equity of the p roposed rule; states with less than 5% coal

fired generation have an average percent reduction obligation (35.6%) significantly higher than those with more than 70% coal

- fired generation (20.3%). C ommenter s said 24 states with more coal

- fired generation th an Louisiana (on a percent basis) have lower percent reduction goals. C ommenter s said per EPA's data, Louisiana's 2012 CO2 emission rate was 1466 pounds per megawatt hour (lb/MWh); therefore, Louisiana's goal of 883 lb CO 2/MWh represents a 40% reduction. C ommenter s said Arizona, Arkansas, Georgia, Minnesota, and South Carolina are the only states with more coal

- fired generation than Louisiana for which EPA's proposal imposes more stringent obligations (on a percent reduction basis).

Commenter s stated per se ction 111 (d) of the Act, the BSER must reflect the "degree of emission limitation achievable" by an existing EGU and cannot be dependent on any other unrelated aspect of a state's generation profile, including its existing NGCC fleet or its perceived poten tial to develop new RE resources. Commenter s added proposing a unique goal for each state does not comport with how the electrical grid is operated; the "movement" of electricity is coordinated by regional transmission organizations, most of which service multiple states and dispatch without regard to political boundaries.55 Commenter s stated EPA demonstrates that many states are moving quickly to adopt the most promising clean and sustainable energy options

- energy efficiency and nonfuel renewables like solar and wind. C ommenter s applaud ed the use of these clean and least cost options for compliance with the Carbon rule; however, EPA set very low targets for those states that have done the least thus far on energy efficiency and renewables; apparently the less you have done already, the less you are asked to do.

Commenter s stated by forcing Minnesota to reduce its carbon emissions 41 percent by 2030 will jeopardizes Minnesota's economic vitality by reducing our market competitiveness. C ommenter s advocate d for a nd encourage d the EPA to pursue a well 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 environmental responsibility. C ommente r s ask ed the EPA to better balance Minnesota's mandate to reduce its carbon emissions the by 41 percent. C ommenter s 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 par ticipate at higher levels. C ommenter s ask ed the EPA to reconsider Minnesota's mandate for a 41 percent carbon emission reduction in favor of additional participation by states with lower mandates; by maintaining a fair and equitable mandate utilities will continue to utilize a well diversified fuel source mix while maintaining affordable energy for rate payers and remaining competitive.

Commenter s underst ood that different states will have different targets based on feasibility, electrical systems, and othe r variables; however as written, it seems that the proposal requires more of states that have already made substantial carbon reductions

- like Delaware

- than of states that have not yet acted. C ommenter s were concerned that as proposed, the Clean Power P lan will place early action states at a competitive disadvantage; the commenter s ask ed that the EPA consider adjusting the state targets to address these inequities.

Commenter s stated the inadequacies of the EPA's calculation can be seen by the striking di fferences in each state's final reduction requirement, caused primarily by the assumptions that underlie the building blocks. C ommenter s said while Idaho currently does not generate electricity from coal plants within its borders, it consumes coal

- generate d energy from at least five other states that export it to Idaho; if CPP compliance forces the exporting states to decrease their coal generation, such will force Idaho to compensate by increasing its CO2 generation from its own in

- state existing natural g as plants in order to make up for the states no longer able to export coal

- generated energy to Idaho because of their own EPA imposed regulations. C ommenter s 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 requirements going forward have been erroneously calculated. C ommenter s 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 power source rather than the location of the user will be a primary example of the CPP's inequity and inherent inefficiencies.

Commenter s stated the proposed rule imposes a higher 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 regulated source category located in states t hat have taken no or less aggressive measures to reduce GHG emissions. C ommenter s 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 le vel of performance, regardless of the measures a state has already taken. C ommenter s said such an approach ultimately corresponds to the imposition of varying, rather than uniform, performance obligations on sources within the same source category, and can not qualify as a BSER

- derived standard; thus, the state goals that EPA has developed would disparately impact EGUs in states that are "ahead of the curve" in planning for climate change because the relative stringency of the goals in these states is signif icantly greater than in less proactive states; in other words, the state goals in the proposed rule would require states that have already achieved meaningful GHG reductions to impose measures on affected entities that exceed corresponding measures that mu st be applied in states that have previously achieved less significant GHG reductions. C ommenter s said such inconsistent application of performance standards to sources within the same source category is contrary to the clear language of Section 111(d) of the CAA, and the concept of BSER.

Commenter s stated despite having been proactive in reducing CO2 emissions from the State's electric generating fleet, the electric cooperatives and other electricity providers in South Carolina are disproportionally impact ed by the proposed EPA rule. C ommenter s 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. C ommenter s said EPA assigned one st ate 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. C ommenter s said EPA should be consistent in its rules so that it doesn't penalize states that have be en early investors in carbon

- free technology and those who have limited access to additional natural gas

resources. C ommenter s said EPA's proposal should not place additional burdens on particular states as to other generation options due to inconsistent r esults when applying EPA's model.

Commenter s 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, OH, UT, WV, WY). C ommenter s added the proposal would require TX to account for 18

- 25% of the country's total CO2 reductions.

Commenter s stated the disparate impacts of the proposed guidelines across states illustrate the arbitrary and capricious nature of the proposed guidelines. C ommenter s said there is clearly no relationship b etween 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. C ommenter s said requiring states with initially lower emi ssion rates to make larger emission rate reductions relative to their base line rate makes no sense. C ommenter s said the results of the EPA's IPM modeling of the Proposed Guidelines further confirm the inequitable and arbitrary impact of the Proposed Guide lines. C ommenter s said the Proposed Guidelines would result in significant stranded investments in some states while essentially leaving the coal

- fired EGUs in other states virtually untouched, and the more a state has done to lower its CO2 emissions by de veloping NGCC and new nuclear generation, the more impacted they are by the Proposed Guidelines. C ommenter s said this is further illustrated by the multiplier effect that values the same MWh of RE or energy efficiency very differently across
states.

Comme nters stated that the goals are unfair to some states and that there needs to be uniform state reductions from baseline CO2 emissions levels.57 Commenter s stated Section 111(d) requires EPA to establish uniform performance standards for regulated sources bas ed on a consistent baseline; therefore, the final rule must fully account for the efforts that states and/or regulated sources have already undertaken to limit CO2 emissions from existing EGUs in determining BSER and setting state goals. C ommenter s said as proposed, the CPP penalizes states that have undertaken to achieve GHG emission reductions by imposing a higher standard of performance on existing EGUs in states that have already required or achieved GHG reductions. C ommenter s said EPA must adjust the s tate goals to adhere to the mandate of Section 111(d) to impose state goals that are reflective of uniform BSER

- derived performance standards.

Commenter s added EPA should do more to ensure that the emission reductions obligations under the final guidelines more accurately reflect the comparable emissions reduction potential in all
states.

Commenter s stated the effect of EPA's proposed rule is that the performance goals are not equitable across the States. C ommenter s said some States, 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 already reduced CO2 mass emissions by approximately 30%. C ommenter s said despite this, EPA's CPP Propos al requires Georgia to achieve an additional 48% reduction in the State's CO2 emission rate. C ommenter s said goals for other states who have previously achieved far fewer CO2 reductions are considerably less stringent; if anything, the opposite should be t rue.

Commenter s stated EPA should ensure that the reductions 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 increased because the a ctual experience of the RGGI states amply demonstrates that substantial reductions readily can be achieved from the "low hanging fruit." C ommenter s said to prevent geographic inequities and unequal burdens, all states equally should be required to undertak e further efforts in order to further reduce emissions.

Commenter s stated the state

- by

- state differences present a unique challenge in formulating state

by

- state existing source performance standards for electric generating units under section 111(d) of the Clean Air Act. C ommenter s said the CO2/MWh "state goals" propose d by U.S. EPA under section 111(d), however, do not take into account the 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 generation can be shifted to existing natural gas combined cycle combustion turbines or renewable energy (RE) generation. (The energy efficiency (EE) assumptions underlying the "state goals" are the same for all states, and the nuclear generation assumpti on is the same for all states with existing nuclear generating capacity.) C ommenter s said these overly simplistic assumptions threaten to significantly and disproportionately increase the cost of electricity to Ohio businesses and households, and to decrea se the reliability of electric service in Ohio.

Commenter s stated the purported flexibility provided to the states in U.S. EPA's section 111(d) proposal all relates to how mandatory CO2/MWh "state goals" are met, not to what the goals should be, or what p erformance standard is most appropriate for a given existing source in the source category. C ommenter s 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." C ommenter s said not only are the states given zero flexibility or discretion in setting the overall level of performance existing generating units must meet, but the state flexibility EPA says it intends for meeting the "state goals" also is illusory. C ommenter s said a state like Ohio does not have multiple ways to reduce coal

- fired electric generation to the extent, and on the schedule, that U.S. EPA's proposed "state goals" require. C ommenter s said the relatively abrupt decrease in c oal

- fired generation required, and abrupt increase in other forms of generation required, raise serious concerns about the impact of the proposed "state goals" on electricity costs and reliability in Ohio. C ommenter s said U.S. EPA's proposal, moreover, pla ces 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 any contingency plan or safety valve to assure the reliability and security of electricity and natural gas supplies. C ommenter s 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.

Commenter s stated the imposition of an inviolate statewide limit on CO 2/MWh emissions from fossil fuel

- fired electric generating units, no matter how costly (to consumers or taxpayers or both) it turns out to be, violates U.S. EPA's statutory duty to take into account cost in determining the best system of emission reduction

. C ommenter s 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 reliability of electric service, violates U.S. EPA's statutory duty to tak e into account energy requirements in determining the best system of emission reduction. C ommenter s said U.S. EPA's emission guidelines for CO2 emissions from fossil fuel

- fired electric generating units must have a cost cap and a reliability assurance mech anism.

Commenter s stated that there is a wide range of state

- specific 2030 targets that appear to place some states at a competitive disadvantage by requiring more from states that have already made substantial progress, while requiring less from states 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 Kansas is only required to reduce their demand by 9.5, despite Maine havi ng much lower emissions.

Commenter s stated just because a certain level of energy efficiency has been reached in one state does not mean it can be repeated in another state with a different mix of residential, commercial, and industrial electricity cust omers; EPA 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 and assume they can be repeated either regionally in the cas e 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

- spec ific 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 points for many sources within a category, the BSER rates expressed r eflect subcategory

- specific emission 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 granular 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 best to do so.

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

Commenter s stated the USEPA requested comment on nationally uniform emission rates for particular types of affected EGUs. C ommenter s said uniform emission rates are not feasible for existing sources; unlike end

- of

- pipe controls of criteria pollutants, there is no te chnological solution that would lead to a uniform emission rate given the myriad of boiler designs, ages (vintage), and efficiencies. C ommenter s said it would be impracticable and unrealistic to establish one emission rate for a given class or size of exis ting EGUs.

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

Response 11: The timing of the final goals is 2030. The EPA disagrees with the commenters’ suggestion that the final goals should be moved to 2025. The EP A carefully analyzed cost and performance capabilities of building block three potential and the accompanying annual assumptions regarding potential are based on historical deployment levels and determined to be

cost

- effective. Moving the final goals to 2 025 would not be consistent with the building block three assumptions discussed in the GHG Mitigation Measures TSD.

The EPA appreciates the commenters’ concerns regarding the amount of time necessary to design, permit, and install new technologies associat ed 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:

Commenter s stated EPA has set up goals for 2030, and has asked the states to develop average interim goals for the 2020

- 2029 period; EPA establishes elongated deadlines for states to provide f inal plans: June 30th 2017 or June 30th 2018, 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 average. C ommenter s said this mea ns 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 climate of investment in solutions anytime soon, especially given the numerous political changes that may b e perceived to be possible in Washington during that period. C ommenter s 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 capacit y at least 30 years old and with significant portions even older; nearly one

- quarter of the U.S. coal fleet could retire by the end of this decade, necessitating significant new investment to replace these plants. C ommenter s said EPA should consider a

more explicit "ratcheting up" method within shorter time intervals, to reflect technology evolution driving down the cost of solutions.

Commenter s recommended that the final targets be set for 2025 rather than 2030 and at levels reflecting a pace of reduction through 2025 comparable to that proposed in the draft rule through 2020. C ommenter s 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 b e completed by EPA in 2023.

Commenter s asserted that EPA has vastly underestimated the amount of time that it takes utilities to design, permit, construct, and start up new generation units; the long period required to make generation changes must also con sider the long delays in building support infrastructure such as pipelines and electrical transmission lines ; b oth of these items are difficult if not impossible to achieve under the Purposed Rules. C ommenter s said the emission reductions expected under th e terms of the Proposed Rule will require new generation resources; commenter s recommend ed EPA extend the time table and back

- load reductions rather than front load.

Commenter s stated the Proposed Carbon Rule defines the final performance period as 2030 an d thereafter, when the state must meet the final emission performance level specified in Section 60.5740(a)(3) on a 3 year calendar year rolling average starting January 1, 2030. C ommenter s 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 necessary or appropriate.

Commenter s stated the final compliance date should be extended.

Com menter s added efforts to negotiate and implement interstate plans, or to convert a rate

- based emission reduction goal to a mass

- based reduction goal, are likely to be even more time

consuming, as action will be required by multiple States, as well as by RT Os that do not follow state boundaries; given limited legislative calendars and the burdens already placed on regulators, each of these steps will take considerable time

- far more than EPA has allowed even with extensions. C ommenter s stated that the final compliance deadline must be extended, from 2030 to at least 2035, to account for the more realistic timeframes.

Commenter s stated the final compliance date should be 2035.61 Commenter s stated under the EPA's proposed guidelines, each state must meet the fi nal goal on a three calendar year rolling average starting January 1, 2030. C ommenter s said while emissions averaging periods do not alleviate potential issues with or guarantee electrical reliability, this does provide some degree of flexibility for affected utilities to achieve the Clean Power Plan compliance requirements. C ommenter s said there are many reasons that utilities experience fluctuations in operations due to the inherent nature of electricity production and consequently variations in annual emissions quantities; numerous factors could cause emissions to be higher or lower durin g a given year including, but not limited to weather conditions, source and availability of fuel supply, customer energy demand, generation dispatch and outages. C ommenter s recommend ed that EPA's final guidelines maintain at least the three

- year averaging period for determination of compliance with the final goal.

Commenter s stated 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; as a result, the rule is likel y to threaten reliability and accelerate the "lock

- in" of large amounts of new natural gas generation, particularly in some regions, while generally delaying the deployment of tomorrow's cleaner and cheaper renewable energy and emerging competitive distrib uted energy resources.

Commenter s 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 c ircumstances of the 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 in clude 1) source

- level acquisition of reduction credits that a source can count towards compliance with the subcategory

- specific emission performance rate, 2) state plans that also provide a broad platform from which a state can further distinguish requirem ents for sources in its state and thus accommodate special 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 remained 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:

Commenter s stated that while EPA acknowledged America's not

- for

- profit, member

- owned Electric Cooperatives a re different than most utilities, EPA's proposal doesn't provide a workable solution to address cooperatives' unique circumstances. C ommenter s 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 since the state still must meet the EPA's goal. C ommenter s stated that the solution is for EPA to rework their assumptions and set reasonable and achievable state goals.

Commenter s stated in the Final Goal period (e.g., 2030 and thereafter period), the qualifying small public or cooperative utility would need to achieve the following:

- Shutdown the non

achieving unit(s) at the start of the final goal period; or

- If any non

- achieving unit(s) will remain in o peration beyond 2029, then

-- continue any measures 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 recognizing such cred its) equal to at least 10% of the non

- achieving unit(s)' capacity prior to the start 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 corrections 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 final unit

- level assumptions used f or 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 quantifying 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 t his comment:

Commenter s stated the proposed interim and final goals calculations by EPA for Puerto Rico contain inaccurate information that must be corrected; c ommenter s ma de the following recommendations:

a. The heat rate values (cHRCoal, cHROil and cHRN GCC) used by EPA were verified and found to be different from the actual values for the affected generating units; as specified by EPA, the heat rates selected were based on 2012 data from the EIA, Electric Power Annual, Table 8.2: Average tested heat rate s by prime mover and energy source 2007

- 2012. the

commenters proved the 2012 real values in a table with 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 genera tion63 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 generation 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 commenter s recommend ed using this value, instead of using sales.

c. Some of the values used by EPA for th e Generation 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 corrected generation capacity for units in Puerto Rico Page 8.

d. As expressed by EPA on the TSD, CO2 emission data for 2012 were available at the unit level for Puerto Rico, but information was not available for unit

- level net elect ricity generation in 2012; EPA estimated 2012 net electricity generation by multiplying each unit's ratio of maximum net electricity generation to maximum CO2 emissions by the unit's reported CO2 emissions in 2012; the commenter s ha d more accurate data in relation to the real historical values for each generating unit for such period, the commenters provided a table of net electricity generation in 2012 on page 9.

Commenter s stated the targets for the power plants in Indian Country should be revised: 1)

correct the formula, 2) adopt the annual two percent minimum shift from higher

- emitting to lower

- emitting sources, and 3) adopt and re

- allocate a regional version of the alternative renewable approach based on each areas share of regional emissions. C ommenter s said these revised targets only represent a portion of the opportunity for strengthening and balancing state targets, and do not include the corrections to the available quantity of cost

- effective energy efficiency and renewable energy.

Commenter s state d in regards to the tribal & territories supplementary rule; as a result of deep financial difficulty arising during the 1990's, Deseret is party to existing long

- term debt restructuring arrangements with its creditors. C ommenter s said while the terms of t hese debt restructures remain in effect, Deseret is prohibited from, among other things, diversifying its holdings, acquiring (through ownership, construction, acquisition, generation purchase or otherwise) additional or different generating resources. C om menter s said the terms of these arrangements are set to continue through 2030. C ommenter s 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 form ulate compliance strategy without directly resulting in abrogation or default under its pre

- existing contractual 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 timing.64 Commenters have raised a number of issues related to 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 for interim goals.

Response 1: The EPA appreciates the comments in support of the interim goals. See section s V and V I 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:

Several c ommenter s support ed the interim goals.

Commenter s added EPA's proposed interim goals are reasonable and EPA's approach reflects the operation of the electric system. C ommenter s support ed EPA's basic premise th at the integrated electric generation, transmission, and distribution system itself plays an important role in determining the BSER. C ommenter s said electricity itself is a fungible commodity, and the lower 48 states are served by three interconnected elec tric grids through which electricity flows without regard to political boundaries; whether a particular generation unit operates at any given time depends upon whether the unit will be paid the price it requires to operate; if other plants in the same inte rconnected grid are willing to supply that electricity for a lower price, those will be dispatched instead. C ommenter s said to the extent that environmental regulations raise the cost of generation at higher

- emitting facilities, they tend to shift generati on away from those facilities toward lower

- emitting sources; thus, as EPA has recognized in CSAPR and other rules affecting the electricity sector, the most cost

- effective approach to emissions reductions leverages the integrated nature of the electricity market to shift production from higher

- emitting sources to lower

- emitting sources.

Commenter s added accordingly, it is appropriate for EPA to base standards of performance for affected sources on reductions that could be achieved from so

- called "outside th e fence" actions

- that is, those that exploit the interconnected nature of the electric system as a whole

- while, of course, giving states the flexibility to achieve those standards of performance through the policies of their choice. C ommenter s stated b ecause 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 the electric system as a whole in order to achieve t he meaningful reductions in carbon emissions from affected units that the Clean Air Act requires. C ommenter s said the BSER should not be handicapped by artificially restricting CO2 reduction potential to inside

- the

- fence actions; while the displacement of CO2 emissions by outside

- the

- fence options must be subject to verification, redispatch to lower

- carbon resources, renewable energy and improved end

- use energy efficiency undeniably have the potential to reduce CO2 emissions by reducing fossil generation.

C ommenter s stated EPA's proposed interim target is an essential component of the rule. C ommenter s said the interim target ensures states and utilities begin reducing emissions in the65 near term. C ommenter s said these emissions reductions are critical to addr essing climate change, protecting the West's valuable natural resources and avoiding the most severe impacts on western water supplies, forests and agricultural lands, and rural and urban communities. C ommenter s said requiring compliance with a final targe t and not an interim target will lead many states and utilities to delay these important emissions reductions, and will make mitigating the impacts of climate change in the West difficult, if not impossible. C ommenter s said climate change is driven by the atmospheric loading of greenhouse gases; removing or delaying the interim targets would dramatically increase the tonnage of atmospheric CO2, and jeopardize the ability of EPA's proposal to meaningfully reduce GHGs. C ommenter s said as part of its effort to address climate change, EPA should commit to regularly review the best system of emission reduction to ensure that it continues to reflect the system that can maximize reductions in carbon pollution.

Commenter s urge d EPA to ensure that a robust requiremen t remains for interim carbon reductions in the 2020

- 2029 timeframe. C ommenter s appreciate d the need for flexibility for states to choose the appropriate glide path for emissions reductions over the 10

- year time horizon, but the proposal already strikes an appropriate balance by allowing a state to set its own glide path so long as the average r ate achieved over that time horizon hits the "interim target." C ommenter s said the State Agencies' comments suggest 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 between 2020 and 2029 hits the interim target rate required by EPA. C ommenter s 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 h orizon could result in substantially decreasing the emissions reductions achieved through the program, as well as potentially undermining the short and medium

- term opportunities for investment in cleaner energy strategies

- and the economic benefits that f low from those opportunities for states such as Nevada.

Commenter s recommend ed the following with respect to 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 enforceability of the rule; EPA should not consider the elimination of interim targets.

- Neither should the inter im targets should be relaxed; the commenter s urge d the EPA to look at strengthening the interim targets established in the Clean Power Plan as consistent with both the findings of fact and with the purposes of the rule; five year compliance targets would b etter 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 the Plan; failures to meet early targets should

serve as triggers for further EPA review and recommendations for corrective action.66 - It will also be important that emissions reductions are credited at the time they will actually occur; compliance actions that yield deferred benefits should not be credited w ith carbon reductions prior to the year in which they produce the reductions.

Commenter s stated EPA's proposed interim goals are achievable and should not be relaxed.

Commenter s added the proposed interim goals reflect the reality that some emission reduct ion techniques must be deployed over a longer period of time than others; therefore, the interim goals are based primarily on emission reductions from Building Block 1 (heat rate improvements at coal plants) and Building Block 2 (redispatch of generation f rom coal plants to under

- utilized NGCC plants), as well as preservation of some existing nuclear generation, that EPA has determined can be accomplished between the rule's finalization in 2015 and the beginning of interim compliance in 2020. C ommenter s sai d additional reductions from new renewable energy facilities and energy efficiency projects will be phased in over the course of the interim period, and the interim goals reflect the average of the achievable emissions rates for each of the interim

years; thus, EPA proposed a ten

- year averaging period for compliance with the interim goals to provide sufficient time for states to implement all of the reductions necessary to meet these goals. C ommenter s said the phase

- in of Building Blocks 3 and 4 and the ten

- year averaging period, not to mention the five years between finalization and the beginning of the compliance period, combine to provide the electric industry with a gradual "glide path" to the final goals.

Commenter s added as a starting point, it is clea r that significant reductions in CO2 emissions can be achieved by 2020 and sustained thereafter by maximizing the redispatch of coal

- fired generation to existing NGCCs; recent PJM modeling proves as much and other modeling efforts have produced comparable results. C ommenter s said while concerns about electric or natural gas transmission capacity may be real in specific instances, 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 existing grid

- management system on which Smart System Dispatch relies.

Commenter s added if a NGCC plant becomes unavailable due to a natural gas curtailment, a different plant will be dispatched to take up its load, even if that plant is a higher

- cost, higher

emissions coal plant; by relying on existing mechanisms of reliability

- driven least

- cost dispatch, Smart System Dispatch would render moot the potential concerns raised by the North American Electric Relia bility Corporation ("NERC") with regard to resource adequacy and essential reliability services. C ommenter s said NERC's preliminary qualitative analysis assumed that the Building Blocks were implemented literally, without regard to reliability

- driven least

- cost dispatch across states, which necessarily would increase costs and reduce reliability margins beyond what would actually be expected to occur.

Commenter s stated that U.S. EPA has received comments stating that the interim targets may create implement ation 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 targets, and the rule should contin ue to require states to deliver those reductions as quickly as possible.

Commenter s stated some Agencies' claim that the interim targets are infeasible is not supportable except for a plan that makes no changes to business as usual. C ommenter s said this is

, unfortunately, the crux of the comments by the Agencies: 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 building blocks. C ommenter s said in the years prior to 2025, modest fuel switching to more efficient gas units along with incremental energy efficiency and new renewables already in development are likely to allow Nevada to meet the targets; it is also highly likely that di stributed generation will continue to grow at a geometric pace to help fill the gap. C ommenter s said in three months this year, SolarCity

- one company

signed up 5,000 new solar roof customers in southern Nevada; there is an enormous appetite for solar as its price continues to plummet.

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

Response 2: See section s I.A. and VII 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 has proposed a ten

- year averaging period between 2020 and 2029 for states to achieve the interim emission rate target. C ommenters said strong interim targ ets 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. C ommenters said in order to ensure that states are making appropriate progress towards the interim target, EPA should divide the ten

- year period into two five

- year compliance periods;

Commenter s stated EPA should commit to regular review of the best system of emission reduction to ensure that it continues to refl ect the system that can maximize reductions in carbon pollution considering cost, energy requirements, and impacts on other health and environmental outcomes, as required by the CAA.

Commenter s support ed the Interim Goals that assure an early ramp up and d emonstrable, continuous progress toward compliance with the 2030 target for reduction of carbon emissions; because states may not be able to begin implementing their plans until 2017, it may be advisable to replace the 2020 interim goal with a series of In terim Goals, such as three 4

- year periods.

Commenter s stated states should not be allowed to average 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. C ommenter s said should EPA decide to allow a longer averaging period, the agency should at least set "backstops" that function 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 section s I.A. and VII 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:

Commenter s 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 many of the issues Oregon face s with regard to the Boardman Plant. C ommenter s said in particular, beginning the interim period on January 1, 2021 or thereafter would resolve the issue and align the rule with the EPA

- approved Boardman 2020 plan; applying block 2 incrementally

- as the p roposal does for blocks 3 and 4

- may or may not correct the Boardman issue; to address the problem, 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

.

Commenter s stated in addition to the overall reduction requirement, infrastructure limitations, and lack of flexibility for Arizona, the interim deadline timeframe is overly aggressive and currently not achievable; the interim deadline of 2020 does not p rovide adequate time to construct the necessary infrastructure and convert all coal generation to natural gas; the citizens of Arizona will continue to require power generation, and a shift of this magnitude is simply not possible. C ommenter s said thus, at a minimum, the interim goal must be revised in order to provide any possibility of Arizona being able to comply with the mandated carbon emission reductions.

Commenter s added apply a regulatory adjustment to the interim goals to account for coal plants th at committed to enforceable retirement dates prior to the 111(d) proposal. C ommenter s said the proposal treats several types of EGUs uniquely, including hydropower, nuclear power, and under

- construction NGCC units; to hold Oregon and the few other states t hat have acted early to retire coal plants during the 2020

- 2029 timeframe harmless, the final rule could uniquely treat such coal plants. C ommenter s said the rule could stipulate 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.

Commenter s stated the EPA should adopt one or more of the following changes to the Rule, which will strengthen support for the Clean Power Plan, reduce its costs and lead to greater emission reductions prior to 2050: 1) Maintain strong 2030 goals for states, but all ow 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, smooth and more thorough transition to truly clean power technologies. 2) Modify the 10 year compliance 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 fro m 2020 to 2029, while also meeting the 2030 goal; this would allow each state to set a straight diagonal line glide path from 2020 to 2030, or a number of other trajectories that might better suit the state

- including dramatic early reductions in any stat e that deems them prudent. 3) Modify the BSER and its timing 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 enough 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 gradual 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. C ommenter s said these changes will allow states to develop plans that ensure a smooth transition from high to low power sector CO2 emissions, while limiting the reliability r isks, price shocks, and other significant problems the proposed rule will create, and achieving greater overall CO2 reductions at a lower cost.

Commenter s suggested modifications to the EPA's building block approach include specific adjustments to building blocks 2 and 4 that would impact 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 2020 to 2030 time p eriod rather than assuming that this re

- dispatch could occur by 2020.

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

C ommenter s said these building block adjustments would make compliance feasible under more extended timelines and would be more consistent with the emission trajectory of the Arizona Glide Path scenario. C omme nter s said the adjusted goals 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 that proposed in the CPP at 942 lb CO2/MWh versus the p roposed 702 lb CO2/MWh.

Commenter s stated some utility commentators treat the 2020 targets in the Plan as requirements, and suggested that utilities would not have enough time to fully comply by 2020; the

commenter s said in fact, the only requirements in the Plan are the 2030 annual emissions and the70 average emissions in 2020

- 2030. C ommenter s said if Arkansas misses the target for 2020, it can make it up any time before 2030.

Comment 4: The EPA should eliminate the interim goals; Interim goals unnecessary.
Response 4: See section s I.A. and VII 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:

Commenter s stated EPA should remove the inter im goals (2020

- 2029)

.

Commenter s added it is impossible for States to determine during the timeline provided what infrastructure will be required and how long it will take to plan, site, and build it; therefore, it is impossible for States to determine now what phase

- in schedule will be needed to meet EPA's targets. C ommenter s 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 statute, the States are supposed to set and are supposed to apply on a source

- by source basis.

Commenter s added the changes to individual plants, transmission and pipeline infrastructure, and the function of state and regional pow er markets will all necessitate much more time than EPA allocates by imposing 2020 as the interim compliance goal.

Commenter s stated EPA prescribes aggressive interim emission reductions starting in 2020; to reduce the cost of the rule, EPA should eliminat e the interim targets and give states, who possess intimate knowledge of their system needs, the flexibility to adopt interim milestones as appropriate.

Commenter s stated the time allowed to develop a multi

- state plan is not adequate to address the obstacl es associated with this approach ; therefore, commenter s recommend ed the EPA remove the interim goal and allow more time for the development of the most effective plan (state or multi

- state).

Commenter s added EPA can eliminate the need for separating Block 2 into two segments reflecting gas infrastructure constraints by establishing 2030 as the earliest CPP compliance date, eliminating the interim targets between 2020 and 2029. C ommenter s note d that EPA should not compel states to study their natural gas inf rastructure 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. C ommenter s said the siting of natural gas pipeline infrast r ucture is done on a national level by the Federal Energy Regulatory Commission (FERC) and development71 requires cooperation between multiple states and across large regions that require considerations beyond the boundaries of energy decisions being addresse d within a single state's planning.

Commenter s recommend ed eliminating the interim goals; the beginning interim year of 2020 is very aggressive, when considering the final rule will be issued in June 2016, with most states expected to take the allowed two years to develop an individual state plan or three years to develop a multi

- state plan. C ommenter s said this would mean EPA review of the plan would not be completed until 2019 or 2020 for a multi

- state plan; there is little time for compliance with the in terim goal by 2020.

Commenter s recommend ed that after removing the unlawful reductions associated with natural gas dispatching, renewable energy generation, and energy efficiency/demand side management offsets, EPA only requires states to meet the final al ternate state goals for 2025 or the final state goals for 2030; further, commenter s recommend ed that EPA allow each state to decide whether to plan for the 2025 alternate final state mandate or the 2030 final state mandate.

Commenter s 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

- term and long

- term. C ommenter s stated EPRI has determined that any shortfalls within Building Blocks #3 or #4 would require decreases in fossil generation; the "fossil leverage factor" highlights that the algebra of the compliance equation results in a multiplier effect; 1 MWhr shortfall of nonemitting resources must be made up by more than a factor of 2 MWhrs of fossil generation in 20 states across the United States. C ommenter s said this leverage factor is significantly increased if nonemitting resources are not met by the 2020 interim goal. C ommenter s said th is "fossil leverage factor" underscores the reason why the interim goals must be set aside.

Commenter s stated the ultimate objective of EPA's proposed CPP is for states to obtain their specified emissions intensity in 2030; however, EPA has established int erim 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. C ommenter s said complicating this matter is the fact that EPA set interim goals that are front

- loaded, and state plan appr oval timelines leave insufficient time for action; furthermore, the U.S. Energy Information Administration (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). C omm enter s said the interim goal progress, established by each state or multi

state compact, should not be over

- ruled by EPA for a mere 10% deviation; such enforcement discretion should solely be with state regulators who are more familiar with state specific circumstances and planning. C ommenter s 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 that EPA eliminate t he interim federal goals and enforcement mechanisms, and allow states or multi

- state compacts to develop their own emissions reduction trajectory within their individual plans. C ommenter s ' request maintains the72 concept of the 2030 long

- term federal goals, while supporting state specific planning scenarios and infrastructure development.

Commenter s urge d EPA to eliminate the proposed interim goals or allow states to demonstrate compliance with the goals on a voluntary basis. C ommenter s said the interim goals are too stringent due predominantly to the requirement to make reductions from all Building Blocks by 2020, or even beginning earlier in the case of Building Block 3 and Building Block 4. C ommenter s do not agree with EPA that phasing in Building Block 2 w ould solve the issues and allow compliance with an interim target.

Commenter s stated numerous factors support the need to eliminate the interim compliance period. C ommenter s said EPA has not demonstrated that every state can increase utilization of existin g natural gas combined cycle (NGCC) units to 70 % by 2020. C ommenter s said EPA incorrectly assumes that current natural gas and electric 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 upgrades and expansions. C ommenter s said as NERC recently has noted, these projects can take ten to fifteen years to plan, design, site, permit and

construct. C ommenter s added further, the proposed interim compliance period does not allow sufficient time for regional transmission organizati ons (RTOs) and independent system operators (ISOs) to evaluate and potentially alter market rules to accommodate changes in dispatch.

Commenter s said EPA's proposed final 2029 goal for Alabama is an emission rate of 1,059 pounds of CO2 per Megawatt Hour (L bs CO2/MWHr), which represents a decrease of 27% relative to the 2012 baseline of 1,444 Lbs CO2/MWHr. C ommenter s said in order to meet Alabama's interim goal, over half of the proposed 27% emissions rate decrease must occur by 2020; this is less than three years after individual state plans are due and is an unrealistic goal. C ommenter s said EPA should either adjust the interim goal to reflect more realistic goals in the 2020

- 2024 time frame, or preferably, eliminate the interim goals.

Commenter s stated man y of EPA's BSER assumptions are 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 retirement of significant megawatts of existing

n uclear capacity could further disprove the assumptions on which EPA has based state targets. C ommenter s said the unexpected early retirement of numerous baseload nuclear facilities could require significant, long

- term increases in natural gas and coal

- fire d 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. C ommenter s were skeptical that the proposed interim goals can be met on

time, at reasonable cost, without significant disruptions in electric reliability. C ommenter s urge d EPA to eliminate the interim compliance target; such a target is neither required by the CAA nor necessary to achieve the Proposed Rule's emission reduction goals. C ommenter s said eliminati on of the interim target would allow states and utilities to implement emission reductions on a schedule and through mechanisms that will reduce costs as much as possible for consumers73 while still meeting EPA's 2030 targets. C ommenter s said if EPA is conce rned that states will fail to meet the 2030 targets, the agency could institute a mid

- term review process in 2025 to consider states' progress and ensure that they are making adequate progress toward meeting the final targets. C ommenter s said such an appro ach is preferable to EPA's current proposal because it would significantly reduce the near

- term reliability and implementation concerns that we and others have raised, while still maintaining the environmental integrity of the Proposed Rule.

Commenter s sta ted :

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 the interim goal.

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

Commenter s stated EPA's proposed rule assumes that emission reductions can be obtained on a steady path beginning in 2020; it therefore proposes binding interim emis sion reduction goals based on a 10

- year average emission rate from 2020 to 2029. C ommenter s said meeting those interim emission goals requires unreasonably extreme 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 below the average emission rate that EPA has set; as a result, Iowa might be required to achieve emission rates in later years of the interim period that

are ev en lower than the final emission rate that EPA proposes would apply beginning in the final compliance year. C ommenter s said this is unrealistic; EPA should thus abandon the interim emission reduction goals and the interim emission rates and, if the other d eficiencies in the proposed rule can be corrected, promulgate final emission guidelines that contain only a final emission reduction target. C ommenter s said emissions reductions are already being obtained in Iowa, and those reductions will continue to incr ease as new technologies develop and as older generation is replaced by newer, more efficient, lower

- emitting, or non

- emitting generation. C ommenter s said the final emission guidelines should be designed to ensure that the States are

on a glide path toward compliance by the final compliance deadline. C ommenter s said interim emission reduction goals are not only unnecessary to achieve this, but are likely to prove impossible to implement.

Commenter s stated the proposed interim goals create unfair schedules a nd 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

- level legislation and rulemaking that could easily extent to nearly 2020, leaving little time to plan smooth implementation; further, for Washington State, the EPA baseline assumes the closure of the Centralia coal

- fired plant, since the state has an agreement to ensure its closure, with Unit 1 coming offline by 2021, and Unit 2 shutting down by 2 026. C ommenter s said unfortunately, EPA has failed to recognize these74 closure dates and instead has assumed that both units 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

- years; this optio n is unrealistic and would be damaging to the state, both from economic and power system reliability perspectives. C ommenter s said ideally the final rule will not include interim goals. C ommenter s 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 measurements are required, demonstrate to EPA that the plans are on track to reach final 2030 goals. C ommenter s said eliminating the interim goals, or allo wing states to develop their own glide path to 2030, would provide true flexibility in the rule; allowing states to determine when and how to achieve CO2 emission rate reductions will moderate some of the economic impacts and unintended consequences of the proposed rule.

Commenter s stated in 2013, anticipating the issuance 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 propo sed rule and in accordance with Section 111(d) of the Clean Air Act, to establish best system of emission reduction that has been adequately demonstrated for coal

- fired electric generation units subject to the performance standard. Commenters said i n devel oping the performance standards the Division for Air Quality must take into account: 1) the cost of achieving the emission reduction; 2) impacting non

- air quality health and the environment; and 3) maintaining energy requirements needed to serve the load o n the electric generation unit. C ommenter s said the Kentucky legislature also limits the application of the proposed rule by the Division for Air Quality to reductions in emissions of carbon dioxide that can reasonably be achieved through measures undertak en at each coal

- fired electric generating unit and efficiency and other measures that can be undertakes at each coal

fired 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 generating unit

Commenter s stated EPA's proposed rule is not consistent with intent of the Kentucky Legislature, who has mandated an approach that is consistent with Section 11 1(d), unlike the

over

- reach that EPA is attempting with the proposed rule. C ommenter s said there is the need to eliminate the interim goals and to rather allow impacted EGUs the full time to ensure that the most cost effective long

- term controls are implem ented.

Commenter s stated EPA has also offered no legal justification for the interim goals. C ommenter s said EPA has said that its "state goals form the EPA's emission guidelines"; thus, EPA's regulations would allow the agency to take into consideration " the time within which compliance75 with emission standards... can be achieved" when setting its state goals. C ommenter s said as the D.C. Circuit recognized in 1973, whether a particular degree of emission reduction is "achievable" depends on whether the syst em of emission reduction on which it is based is available, and "the question of availability is partially dependent on 'lead time,' the time in which the technology will have to be available." C ommenter s said the regulations would also allow EPA to "speci fy different [state goals] or compliance times or both for different sizes, types, and classes of designated facilities..."; they would not, however, authorize EPA to specify different state goals for different compliance times, which is what EPA is attemp ting to do with its interim goals.

Commenter s added nor are interim state goals necessary under EPA's implementing regulations. C ommenter s said state plans under section 111(d) must include compliance schedules where "Compliance schedule" is defined to me an "a legally enforceable schedule specifying a date or dates by which a source or category of sources must comply with specific emission standards contained in a plan or with any increments of progress to achieve such compliance." C ommenter s said addition ally, if compliance will take more than 12 months (which it would, under the CPP), state compliance schedules must include "legally enforceable increments of progress to achieve compliance for each designated facility or category of facilities." C ommenter s said the increments of progress in state plans would ensure that states, affected EGUs, and/or affected entities would stay on track to achieve required CO2 emission reductions. C ommenter s said nothing in section 111(d) or Subpart B, however, authorizes E PA to impose its own increments of progress up

- front, in the form of interim state goals.

Commenter s added EPA's state interim goals may be unnecessary to some extent; EPA has asserted that states and affected EGUs are already undertaking many or most of t he measures that make up EPA's proposed BSER. C ommenter s said EPA has said, for example, that "[a]verage deployment of RPS

- supported renewable capacity from 2007

- 2012 has exceeded 6 GW per year."; EPA reports that "[i]n 2012, RE accounted 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[.]'" C ommen ter s 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.

Commenter s asserted that the EPA's interim goals are unnecessary and prohibit ively expensive, that many of the assumptions that underlie the establishment of the EPA's goal are unrealistic and/or inapplicable to Missouri, and that attempting to achieve the EPA's goals could have major adverse impacts on electric system reliability, as well as rates. C ommenter s urge d the EPA to, at a minimum: (a) eliminate the interim goals; (b) give serious consideration to revising the long

term goals so that they are more practical and economically achievable; eliminate the unrealistic interim goa ls and focus on developing realistic long

- range targets and timelines.76 Commenter s stated as a consideration for the electric cooperatives that the CPP abandoned the interim goal and rely only on the final goal. C ommenter s said this would allow for cooperatives to diversify their generation portfolio with additional NGCC, low carbon emitting and enhanced energy efficiency programs. C ommenter s said the additional time would allow for cooperatives to plan for the transition i n a cost effect and strategic manner to better serve their member

owners.

The EPA has not provided a rational basis for imposing 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 the EPA's only justification for the interim goals are vague statements of urgency and assumptions about what the EPA believes states are capable of doing within the schedule that the EPA has set. The c ommenters urged the EPA to remove the interim goals from the rule.

Comment 5: Stringency and Timing of Interim Target

. Response 5: See section s I.A. and V of the final rule preamble of the CPP for the EPA’s response to this comment.

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

Commenter s stated in the proposal, EPA sets an interim 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. C ommenter s strongly supports the flexibility that averaging over the

ten

- year period provides. C ommenter s said to the extent the interim targets are retained in a final rule, commenters request ed EPA retain the ability to demonstrate comp liance based on a ten

- year average; however, the interim targets EPA has proposed 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 target. C ommenter s said for 11 states, EPA assumes that over 75 percent of the reductions required 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 o nly 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 generating, transmission and distributio n systems. C ommenter s said given the stringency of the interim goals, the proposed implementation schedule will force states to adhere to EPA's prescribed natural gas redispatch and coal unit closures to achieve compliance with the interim goals. C ommenter s said although EPA indicates that states may choose their own path for their compliance program, by selecting among the four BSER building blocks used to establish the state targets and other GHG

- reducing options, it has proposed to make mandatory a minim um rate of progress or pace of implementation during the interim (2020

- 2029) period; this highly prescriptive implementation approach is unprecedented77 under Section 111 and arguably contrary to EPA's own acknowledgement that the states have discretion to d esign their implementation strategy.

Commenter s stated in determining the final goal and the interim year annual rates, EPA assumes increasing renewable energy (RE) and energy efficiency (EE) levels between 2020 and 2029 to reflect the gradual movement of states toward regional benchmarks. C ommenter s said ramping up RE and EE levels reduces the annual rates progressively, 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 Building Blocks l and 2, respectively), remain unchanged between 2020 and 2029. C ommenter s said reductions 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 50 percent of the total national emission reduction in 2030 under the proposed rule , in 2020. C ommenter s said on average, about 67 percent of all rate reductions happen by 2020, with the remainder taking place gradually between 2020 and 2029.

Commenter s stated the level and compressed time associated with the interim targets will requir e states to begin taking action to reduce emissions before the interim period starts in 2020 in order to achieve the 10

- year average interim emission rate; the near

- term compliance challenge is compounded by the fact that state emission rate goals are pred icated on states taking actions to reduce emissions before the interim compliance period starts in 2020 in order to achieve the 10

- year interim emission rate. C ommenter s said for example, EPA assumed that states will begin ramping up end

- use efficiency pro grams and annual incremental 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 and renewable energy, implying that new natural gas generating capacity will increase 20 percent to 22 percent by 2020 to replace retiring coal

fired capacity under Option l, and stating that new natural g as generating capacity will increase nine percent relative to the base case in 2020 under Option 2. C ommenter s said EPA assumes that much of the shift in dispatch from coal to NGCC would occur before 2020; this assumes that adequate infrastructure to suppo rt coal unit retirements and increased utilization of NGCC units can be put in place within as little as two to three years. C ommenter s said most of the significant new renewable capacity will be constructed far from load centers because of the unique siti ng needs and sensitivities of large

- scale wind and solar projects; timing for development of natural gas and electric transmission, natural gas storage, renewable and, nuclear generation, and energy efficiency deployment are not sufficiently accounted for. C ommenter s said ramping up both renewable energy and natural gas generation will require significant infrastructure improvements, most notably, more transmission lines and natural gas pipelines. C ommenter s said building this infrastructure will require ma ny layers of permitting, design, engineering, procurement and construction as well as years of regulatory approvals, often at federal, state, and local levels. C ommenter s said it should also be noted that the building blocks for both energy efficiency and renewable energy assume that all states will adopt policies from a subset of states78 selected by EPA, typified by higher rate environments and in many cases different utility regulatory models.

Commenter s stated generally, a large number of permits, consul tations, and approvals are needed from multiple government bodies to get a new transmission line permitted and constructed; the timeline for a transmission project depends on completion of planning studies and technical analysis, real estate availability ( negotiating rights

- of

- way or exercising eminent domain authority), procurement of long lead time equipment, environmental permitting requirements, public opposition, regulatory approval, and opportunities for tie

- in outages. C ommenter s said a relatively si mple 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. C ommenter s said more complicated projec ts that will traverse federal lands, environmentally sensitive areas, 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 ru n into regulatory delays from a sister federal
agency.

Commenter s stated more broadly, the investments needed to comply with state plans will need to be approved by state public utility commissions, such as Virginia's SCC. C ommenter s said EPA should be mi ndful 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. C ommenter s said it should 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 being 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. C ommenter s said in Virginia and North Carolina, investments in energy efficiency and renewable energy are the province of state public utility regulators, not env ironmental regulators.

Commenter s stated if states decide to include changes 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 independent system operators (ISOs ) will need significant time to work with stakeholders after state plans are finalized to determine what market rule changes may be needed. C ommenter s said the EPA proposed timeline appears to be inconsistent with the defined forward periods for capacity p lanning and does not allow sufficient time for permitting, design, engineering, procurement and constructing new resources. C ommenter s said for example, the PJM forward capacity auction is held approximately three years in advance of the need for the resou rce; the commitment of resources into the capacity market has already been established for calendar year 2017; the rationale being that adequate lead time is necessary to support the development of new generation (specifically new combustion turbines to pl an for peak reserves in PJM) into the market. C ommenter s said changes to PJMs, or other RTOs/ISOs, market structure often require stakeholder involvement and FERC79 approval, adding further delay to implementing potential changes that may come to rise from

s uch a proposal.

Commenter s stated the proposed guidelines would require the states to develop and submit implementation plans by June 2016 with the option of requesting a one

- year extension to June 2017 if states can demonstrate the need for such an exten sion; although the additional year afforded the states to submit state plans is welcome, it still provides little time for states that do not have sufficient existing renewable or energy efficiency programs already underway to get such programs developed, approved at the state level and implemented. C ommenter s said EPA itself assumes that states will need to begin implementing renewable and energy efficiency measures beginning in 2017 (at a time when some state plans may have just been submitted, still be a waiting EPA approval or, in the case of multi

- state plans, still be in development) to ramp up to meet interim and ultimately final state emission targets. C ommenter s added the proposal does not take into consideration changes in the direction of a given e nergy 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 which, in turn, affects the amount of energy savings attributable to a program. C ommenter s said t he 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 fact ors affect the amount of energy savings attributable to a program, or the findings of required measurement and verification measures. For these and the additional reasons stated above, commenters request ed EPA to abandon the interim target concept in the final rule.

Commenter s said states should be able to choose a smoother reduction glide path that achieves the 2030 target without requiring a substantial portion of those reductions to occur prior to 2020;

commenter s request ed that EPA grant additional flexibility by:

- Allowing states the option to select compliance with EPA's proposed alternative 2025 target, but not establish any interim (2020

- 2024) target;

- In the alternative, defer to the states to se t their 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 actual average historic NGCC capacity factor, instead of the option EPA has suggested in the Notice of Data Availability (NODA).

Commenter s stated to the extent EPA requires interim progress with either a 2025 or 2030 target to be monitored, commenter s suggest ed EPA consider calculating interim year rates over the 2020

- 2029 period that would decline at a constant annual rate equal to 10% of the difference between the baseline (2012) emission rate and the 20 25 or 2030 target rate. C ommenter s also request ed EPA retain the ability to meet any interim target based on a 10

- year average.80 C ommenter s said in addition, EPA should not dictate bi

- annual compliance requirements that would trigger federal enforcement or corrective measures before the end of the 10

- year interim averaging period. Furthermore, commenter s request ed EPA to provide states the opportunity to seek adjustments to the emission rate targets to reflect changing circumstances over time. C ommenter s als o request ed that the Agency allow states to revise and update their plans to respond to future developments such as the availability of newer and lower

- emitting technologies, other abatement measures not originally contemplated by the state at the time the compliance plan was initially developed and submitted, impacts of extended nuclear unit outages or other potentially unforeseeable circumstances. C ommenter s said adding a process for states to seek and implement modifications to state plans would appropri ately recognize that circumstances may change in the next 16 years and would allow EPA to retain approval authority.

Commenter s stated these alternative and more flexible approaches appropriately acknowledge that energy regulation and planning is essentia lly a state responsibility and that full consideration of the factors noted above cannot be reasonably achieved in the immediate term and will require a period of many years. C ommenter s said if the interim target is not eliminated, a more gradual complianc e glide path to implement the required reductions would allow states to ensure that there is sufficient time to complete needed infrastructure development, including electric and/or gas transmission, and would obviate concerns regarding system impacts of a brupt changes to electric generating, transmission and distribution systems. C ommenter s said it would also allow a more rational, less burdensome and more cost

- effective glide path for reductions.

Commenter s stated EPA's proposed interim goals pose a "carb on cliff," a regulatory scheme that causes a sudden and severe reduction in carbon emissions beginning in 2020. C ommenter s 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

Commenter s stated EPA's modeling forecasts significant coal plant retirements in Illinois (e.g., 3.6

- 4.5 GW) before 2020, mainly due to MATS. C ommenter s 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, Wood River, Joppa, Hennepin, and Edwards Units 1 and 2; however, given the recent significant investment in em ission reduction technologies, including mercury controls to comply with the Illinois Multi

- Pollutant Standard ("MPS"), there are no plans to retire these units in the near future (except Edwards Unit 1), as a result of MATS or otherwise.

Commenter s state d not only are the reductions required 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. C ommenter s said EPA expects to approv e complete state plans within 12 months, but even if EPA meets this ambitious goal (given that states will be submitting plans nearly simultaneously), state plans will not likely become final until 2018 or81 2019. C ommenter s said because interim goals are ef fective beginning in 2020, the stringent reductions require states to take significant steps towards meeting those goals before the state plan is even approved.

Commenter s stated EPA recognizes that renewable energy and energy efficiency measures cannot b e implemented in significant amounts until after 2020; accordingly, to comply with the interim goals, forced retirement of plants may occur. C ommenter s said as EPA notes, roughly 46 GW of coal plant retirements are expected as a result of other EPA require ments such as the MATS rule; as a result of the CPP, more will retire, and may do so before replacement power is available. C ommenter s said the industry historically retires units in a manner that does not jeopardize reliability, but early implementation o f 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 ex pansions or upgrades to new non

- fossil units or NGCC units is time consuming and fraught with permitting, financing and locational difficulties; these cannot be solved by 2020.

Commenter s stated the interim goals must be eliminated 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. C ommenter s urge d EPA to eliminate the interim goals and rely on the proposed final goals only. C ommenter s said eliminating the interim goals allows the states flexibility to propose non

- bind ing milestones geared to ensure progress, instead of EPA's proposed interim goals and compliance periods.

Comment 6: Interim goals

- timing

Response 6: See section s 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:

Commenter s stated EPA should strengthen its proposal by ensuring that states meet their interim goals by not allowing beginning dates past 2020.

Commenter s added EPA should als o find ways to encourage early actions up to the initial (2020) target date, and not create a perverse incentive for states and utilities to reserve RE and EE "low hanging fruit" until then, forgoing valuable pre

- 2020 emissions reductions.

Several commente rs requested a b eginning date of 2025 for interim goals.

Commenter s stated establish 2025 as the first compliance year for the interim standards; this additional time would give states a reasonable timeframe to implement additional projects for82 renewable energy and to implement effective energy efficiency measures. C ommenter s said this allows some portions of Building Blocks # 3 and 4 to be implemented, enabling better decisions to be made on natural gas dispatching or fuel conversion

.

Commenter s stated th e implementation of the rule would be greatly improved if EPA did not require compliance with the interim emission targets until at least the year 2025 or alternatively if EPA removed the interim emission targets from the program. C ommenter s 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. C ommenter s said EPA's proposal requires that the interim emission targets be met during the 2020

- 2029 timeframe starting with the first compliance period of 2020

- 2021; thus, in some cases, the SIP's will be due in 2017 or 2018 with some emission reductions that ar e required as early as 2020. C ommenter s said this rule framework will result in states only essentially being able to try to implement Building Block # 1 (coal plant efficiency) and some semblance of Building Block 2 (change dispatch of electricity). C omme nter s were concerned that a number of states may just default to trying to change fuel types 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 coi ncide with a number of petrochemical projects coming on line (2018

- 2020), putting them in competition for the same natural gas resources.

Commenter s request ed that the interim goal be eliminated, or at the very least, be delayed to the year 2025, with si gnificantly less stringency compared to the final goal.

Several commenters requested an extension for the interim goals.

Commenter s stated it is reasonable that additional electric transmission infrastructure will be needed to accomplish the requirements o f the CPP proposed rule in light of the projected retirements of existing generating units; in the Southwest Power Pool footprint it takes up to eight years to plan, approve, construct, and place electric transmission facilities in service. C ommenter s said this eight

- year planning and building 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, commenter s asserted that the interi m goals require a choice between meeting the CPP's proposed standards and maintaining reliability. C ommenter s said the current timeline in the CPP proposed rule does not provide enough time to accomplish both; because of the large magnitude of reduced carb on emissions required early in the 2020 interim goal compliance timeframe, commenters asserted that an extension of the interim goal is necessary. C ommenter said an extension of the 2020 date would allow more time for constructing any needed electric trans mission and generation infrastructure, which would allow reliability of the bulk electric system, an electric 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 section s 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:

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

Commenter s added that for many states, the stringency of the interim limits would require most of the emission reductions required by 2030 to be achieve d starting in 2020. C ommenter s said that EPA's assumptions supporting goal development and the Agency's subsequent IPM modeling supports this conclusion. C ommenter s stated that it will be impossible for some states to achieve these significant reductions i n such a short amount of time

- potentially as short as two years after a state has developed its plan. C ommenter s 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 anticipated or taken into account in its proposed rule. C ommenter s added, obtaining the permits and building the infrastructure necessary to comply with the rule in 2020 may be impossible in many states. C ommenter s s tated 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 stat es indicates there is no way to achieve the interim goals without near

- term retirement of all existing coal

- fired generation ; i n some states, most, if not all, retirements would need to occur by 2020. C ommenter s said this would result in the loss of thousa nds of jobs, threaten electric reliability, and increase electric rates by a significant amount. C ommenter s stated EPA has not adequately assessed these impacts.

Commenter s added that EPA will have a short span of only four years to implement major portion s of the plan as required by the rule

- including all critical phases of power planning, permitting, financing, plant design, engineering and construction and operational systems

- testing and start

- up. C ommenter s said several key facts support this point:

- Achieving the required emission reductions will necessitate colossal investments in our country's energy infrastructure and core power generation supply systems.

- Natural gas and nuclear generation capacity will require major, unprecedented expansion

- e ven assuming we can count on the most optimistic forecasts for renewable sources. In the natural gas industry alone, enormous challenges exist for growing capacity; thousands of miles of antiquated pipelines throughout the country must soon be replaced 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 energy solution, faces difficult and time consuming barriers, not the le ast of which are licensing and permitting.84 - Each of the various stages required for addressing these challenges will involve multiple years of planning, deliberation and review by numerous state and local governmental bodies, from state legislatures to ut ility commissions to local zoning agencies.

Commenter s added EPA's aggressive schedule of the interim goals would not provide enough time to build the necessary infrastructure needed to ensure grid stability and reliability to support the amount of renewab le generation required to meet state targets over the next 5

- 15 years while continuing to provide safe and reliable electric service.

Commenter s added sufficient time is required to engage in rational planning, construction and integration of cost

- effecti ve resource and infrastructure solutions that maintain reliable and efficient delivery of electricity. C ommenter s stated EPA should allow states to submit plans for EPA's approval that specify the interim compliance objectives that best fit their circumsta nces.

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

Commenter s added time is required to ramp up new programs and make program redesigns. C ommenter s stated pilot progr ams, used to gauge customer interest, market penetration rate, and the ability to make the program cost

- effective long

- term, are typically run for more than one
year. C ommenter s said pilot programs serve an important function in the utilities' energy effic iency 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. C ommenter s stated given all of these factors, it is simply infeasible to conduct traditional deployment of the energy efficiency programs that would be required by the proposed rule under the extremely short timeline required by Rule 111(d).

Commenter s added EPA's interim goals are unachievable. C ommenter s said t he Existing Source Proposal assumes that emission reductions can be achieved on a steady path beginning in 2020; it therefore proposes binding interim emission reduction goals based on a 10

- year average emission rate from 2020 to 2029. C ommenter s said meet ing those interim emission reduction goals requires extremely aggressive reduction efforts 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 su bstantially below the average emission rate that EPA has set. C ommenter s said as a result, states might be required to achieve emission rates in later years of the interim period that are even lower than the final emission rate that EPA proposes would appl y beginning in 2030, this simply is not feasible.

Commenter s added the proposed interim goal requiring 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 o f submitting a plan, and the reality of receiving timely USEPA approval of a plan, states will have no more than three years to meet the 80 percent reduction requirement.85 C ommenter s said a more realistic approach would be to permit states to develop a stat e

- specific "glide path" to reach their 2030 target.

Commenter s added substantially increasing natural gas infrastructure to meet the goals, which will require adding new interstate and intrastate pipelines, will require significant time periods and financi al investments; adding pipeline capacity in time for the interim deadline is essentially impossible at this time. C ommenter s 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 North Carolina, and the Mountain Valley Pipeline to connec t the Equitrans transmission system in West Virginia to the Transcontinental Pipeline in Virginia. C ommenter s said as proposed, the Atlantic Coast Pipeline project would require three to five years for construction and operation, assuming no significant de lays 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. C ommenter s sai d 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 construction; even with a current announcement of this project, the likelihood of its c ompletion in time to support the interim deadline is extremely low. C ommenter s said the Atlantic Coast Pipeline and Mountain Valley Pipeline are best cases, since they are at least well along in the planning stage; any additional pipeline projects needed t o meet requirements of the Proposal will be starting from this point forward or after state plans are crafted. C ommenter s said this means they would almost certainly be unable to come on line by the interim deadline and would more likely be completed sever al years thereafter; consequently, any interim goal requirements in the final Guidelines dependent on natural gas use and availability must be based solely on existing infrastructure and cannot be premised on construction of additional capacity since it co uld not be completed prior to the interim deadline.

Commenter s added increasing the renewable energy sources in a State within such a short period would be highly unlikely due to the time needed to receive required regulatory permits and authorizations, de sign, contract for, and install the necessary equipment.

Commenter s added often new transmission will be necessary to support added renewable energy

sources ; t his takes years to plan and implement; in the East and Midwest, two recent examples of the time n eeded to add electric transmission lines occurred in: Pennsylvania

- PPL Electric Utilities has proposed a new 500 kV line, due to regulatory delays, construction of the line is still ongoing, PPL now anticipates that the line will be completed and in serv ice by mid

- 2015

- three years later than the original schedule; and Minnesota

- ITC Midwest, a regional transmission company, has proposed a 345 kV electric transmission line, at best, the line will not be available for service earlier than 2018

- 2019. C omm enter s 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 deadline; and these are electric transmissions projects that ar e well along in the planning and regulatory stages. C ommenter s 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.

Commenter s added even relatively s imple energy efficiency 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 e ven the twelve best performing States have been in place for several decades and with three exceptions, none of them has achieved anywhere close to the 1.5% annual energy efficiency requirement EPA proposes. C ommenter s said a period of two and one

- half yea rs to ramp up the program, even allowing until 2025 as EPA suggests, is entirely insufficient to implement these build block components.

Commenter s added by imposing interim goals to be met 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. C ommenter s said EPA claims states and the regulated community will have sufficient time to understand the requirements and b egin implementing them, which apparently assumes they 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 wi ll therefore have more time to act.

Commenter s added the challenges confronting states are many, and EPA's proposal lacks the clarity necessary to guide the development and approval of state plans within the very aggressive time frame outlined in the propo sal. C ommenter s said the CAA does not set a specific time for the submission of state plans, nor does it establish a rigid compliance deadline for the designated facilities that are to be governed by the plans; EPA should reassess its schedule, given the

r ealities of the tasks it has set before the states.

Commenter s added EPA has assumed that all of the measures required under building blocks 1 and 2, as well as initial steps to implement block 4 and ongoing renewable energy development efforts, can be com pleted by 2020, and that assumption significantly affects a state's ability to demonstrate compliance with the 2020

- 2029 goal. C ommenters 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 make

up of the bulk electric system cannot be completed within this ti me frame; the result is widespread concern over the integrity of the bulk electric system.

Commenter s added EPA has given no reasoned explanation of why it believes the transformation it seeks can be accomplished in less than five years after the final gui delines are published; its assumptions are inherently unreasonable because they are based upon significant changes in investments occurring without sufficient regulatory certainty to support those changes. C ommenter s said EGUs are in large measure regulate d entities whose significant investments87 (whether they be generation, transmission or distribution assets) are subject to the oversight of state regulatory commissions, and are regularly examined in careful detail so as to protect the interests of utility customers. C ommenter s said since this process of regulatory oversight and approval typically occurs at the time the assets are placed in service, utilities must be prepared to demonstrate that the investments were prudently made, or risk disallowance of re covery for all or a portion of the investment; therefore, until utilities are reasonably confident that the proposed investment is consistent with the contents of a state plan that will not be disapproved by EPA and replaced by a federal plan, they will ha ve no incentive to take measures to implement these requirements. C ommenter s said EPA's proposal assumes 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 fo r implementation is arbitrary, unreasonable and unlawful.

Commenter s added if EPA finalizes a proposal that includes all or significant portions of the building blocks, EPA should eliminate the interim goal and provide states with true flexibility to desig n a glide path toward compliance.

Commenter s stated EPA's proposed interim 2020 standards are unachievable and will drive inefficient decisions; EPA proposes states achieve significant GHG emission reductions by 2020 under an interim set of standards. C omm enters 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 achieve the interim standards. C ommenter s said this will force stat es and utilities to make rushed and inefficient decisions; a single deadline that provides a long time for more rational and cost effective decisions should be implemented instead.

Commenter s stated the timeline to comply with the rule is effectively 2020, not 2030; for example, the interim target rate for Texas is 853 lbs CO2/MWh (a 33.6% reduction from its 2012 base rate of 1284 lbs CO2/MWh) and the final rate is 791 lbs CO2/MWh (a 38.4% reduction from the 2012 base rate). C ommenter s said there is little difference between the stringency, and therefore, compliance obligations under the interim or final emissions target rates. C ommenter s 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 period; to do so would create a "bow wave" of burdens that would only magnify the already

- crippling compliance impact of the Rule Proposal.

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

Commenter s added under the current schedule, final EPA approval of state plans will not occur until sometime between mid

- 201 7 for single

- state plans and mid

- 2019 for multi

- state plans; yet the proposed targets for many Western states require large reductions by 2020, primarily due to the assumptions in Block 2 related to switching from coal to natural gas generation. C ommenter s said some states will find it difficult to meet their interim goal in 2020 and are concerned that such steep reductions early in the program could preclude opportunities to implement more cost88 effective strategies that require more time to ramp up, such a s expansion of renewable energy and energy efficiency programs; therefore, states need more latitude for establishing a path to the 2030 targets. C ommenter s encourage d EPA to continue to work with our states to explore how more flexible and different miles tones might better support the transition to a less carbon intensive electricity sector in the West by allowing adequate time for implementation of a wider range of strategies and programs that can be tailored to a state's unique circumstances.

Commenter s added the interim goals, referred to as "The Cliff," are unworkable in the limited amount of time between the release of the final rule and the start of the interim averaging period. C ommenter s said the time needed to have South Carolina's state plan appr oved at the Legislature (proceeding before federal approval) and to implement the components will not allow the Department enough time to meet the aggressive interim goal; a better approach would be to develop a glide path transition process where each sta te will monitor expected progress until the final goal deadline.

Commenter s added much of the expected reductions for CO2 emissions would have to occur by 2020; commenter s said South Carolina's concern is that this may not provide sufficient time for adeq uate implementation of the Distributed Energy Resource Program Act passed into law this year and that full operation of the under construction nuclear units at the V.C. Summer Plant may not occur before 2020. C ommenter s said South Carolina's interim reduct ion 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//MWh); currently, 33 percent of South Carolina's electricity generation is from coal. C ommenter s s aid with questions concerning the state's renewable energy hurdles and the displacement of capacity from coal fired units by NGCC, there is concern that some existing coal plants could become uneconomically viable and lead to premature closures; this could impact both the baseload generation and the reliability of South Carolina's grid. C ommenter s said another possible 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

cost s to consumers for electricity.

Commenter s recommend ed the EPA eliminate the interim 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 discussed the energy planning processes already in place as a foundation to develop a plan to meet the state goal. C ommenter s said states could incorporate aspects of these processes, for example the Integrated Resource Plans (IRPs), in the
progress r eports that the EPA seeks in its proposed rule. C ommenter s 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. C ommenter s said enabling sta tes 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.

Commenter s added the proposed rule sets an overly strenuous 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 2020. C ommenter s said whil e compliance with the interim goal would be measured on a ten

- year average basis between 2020 and 2029, any under

- compliance in the early years of this period would have to be compensated for by over

compliance in the later years. C ommenter s said since any given state plan may not be approved by EPA until as late as the middle of 2019, requiring such a significant emission reduction beginning only half a year later in 2020 is not realistic; even if it is possible to comply with the interim goal, this timeli ne may present technical challenges that will prevent the use of the most cost effective strategies.

Commenter s stated the proposed interim compliance period, 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 flexibility, and would have the effect of causing sub

optimal planning decisions as compared to merely having a 2030 final goal. C ommenter s said if the interim compliance period and resul ting lack of flexibility drives a large amount of coal unit retirements by 2020, significant time is required to complete the planning, approval and implementation for replacement generation; upgraded and expanded transmission and distribution facilities; and new natural gas pipeline infrastructure that will be required to support the retirements while maintaining system reliability. C ommenter s said these changes will take years to plan and execute as they must be carefully implemented so as not to cause re liability problems and to minimize cost impacts to consumers; they simply cannot be accomplished before 2020, the start of the interim compliance period.

Commenter s added in its October 30, 2014 Notice of Data Availability ("NODA"), the EPA seems to recog nize for the first time that the Proposed Guidelines' interim goals deny states the implementation flexibility and safeguards for reliability that the CAA requires; this result is the opposite of what the EPA states it intended to preserve in the Proposed Guidelines. C ommenter s 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 necessary to achieve the Proposed Guidelines' ultimate goal.

Commenter s added EPA believes that "some [Block] measures may take longer than 2020 to implement, while others can be, and are being, implemented more quickly;" stated another way, it appears that EPA believes if one Block's requirements are too burdensome, they can be offset by achieving compliance with another Block. C ommenter s said this is a false assumption that is particularly relevant in EPA's discussion of stakeholder comments pr oposing 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. C ommenter s said in GCLC states, however, the Rule Proposal's limits are so burdensome, so large, and with far

- too

- short a compliance timeline, it is highly like that none of the Blocks' targets will be met by 2020; this provides no individual Block excesses to be us ed for future offsets.90 Commenter s added as EPA has heard from many parties, the Proposed Rule's interim targets present a significant challenge for overall cost, economic disruption, stranded assets, and potentially electric system reliability. C ommenter s said the interim targets are based on the assumption that Blocks 1 and 2 can be fully implemented in 2020, which for many states is not realistic. C ommenter s said even under its current, very aggressive schedule, EPA will likely approve most state plans by 2017 to 2019 at the earliest, yet the plans will likely require states and utilities to undertake permitting changes, investments in new gas and transmission infrastructure, procurement of significantly greater amounts of firm gas supply, and other action s that will take several years to implement; moreover for some states

- including Minnesota, North Dakota and South Dakota

- Block 3 is also fully phased in by 2020, giving no gradual ramp

- in. C ommenter s said for these and other reasons, NERC and several r eliability regions (entities primarily responsible for ensuring electric system reliability) have studied the Clean Power Plan and found that stringent interim targets would likely have an adverse impact on reliability.

Commenter s added states with clean energy leadership 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, have 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%. C ommenter s 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. C ommenter s said these required reductions to interim targets are dramatic, and in some cases unworkable.

Commenter s added while it is true that the interim targets incorporate flexibility by allowing a

ten

- year ave raging period, the flexibility is in reality 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, effectively creati ng an interim target that is more stringent than the final target. C ommenter s added there 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 in terim targets may be premature retirement of much or all coal capacity, which will have implications for cost, stranded assets, and reliability.

Commenter s added it is true that ongoing emissions reduction efforts prior to 2020 will reduce emissions rates and reduce the gap between 2012 rates 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 2014 to 2016 on top of our nation

- leadi ng wind portfolio; however, the current plans are not nearly enough to achieve the interim targets.

Commenter s added the Southwestern Public Service system in Texas vividly illustrates the significant timing problem with the interim targets. C ommenter s sa id the in

- state Texas 111(d) equivalent emissions rate of the Southwestern Public Service (SPS) operating subsidiary is currently about 1,780 lb CO2/MWh; while 450 MW of additional wind energy in Texas is being added by the end of 2015 and also shifting di spatch to newer, more efficient natural gas units, by91 2020 the emissions rate will be 1,670 lb/MWh, nowhere close to the Texas interim target of 853 lb/MWh. C ommenter s said in fact, achieving that 853 lb/MWh rate, or anything close to it, is all but imposs ible for the SPS system in Texas in the few years before 2020. C ommenter s 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 20 20.

Commenter s added the design of the interim compliance 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 sufficient reduction s early in the 2020

- 2029 interim period to meet the interim goals. C ommenter s said for 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, and construction are all needed to complete the type of infrastructure improvements (gas pipeline or electric transmission) that will be require d in order to increase the utilization of natural gas combined cycle units enough to comply with the interim goals. C ommenter s said the time required for state legislative processes alone is problematic; for example, non

- controversial legislation in Wiscon sin takes about 27 months to
pass; legislation necessary to facilitate a state plan is likely to be controversial, and consequently, is likely to take more than 27 months to pass. C ommenter s said EPA should phase in re

- dispatch from affected steam generati ng units to NGCC units under Block 2 based on the extent to which additional infrastructure improvements are needed. C ommenter s said the phase

- in would consider the amount of utilization shift that is feasible by 2020, and how quickly that amount could inc rease after 2020 to the full amount of NGCC utilization that could ultimately be achieved as part of the BSER.

Commenter s stated the EPA's proposed interim goals do not provide sufficient time to prepare for compliance. C ommenter s said EPA approval of stat e plans may be no sooner than 2017 for

state

- only and possibly as late as 2019 for multi

- state regional plans. C ommenter s said EPA's proposal does not adequately factor in the schedule required to deploy additional energy resources and infrastructure (ex. heat rate improvements, additional renewables, natural gas pipeline, transmission). C ommenter s said EPA's proposal must contemplate potential impacts to regional energy markets and allow for a transition that avoids impacts to reliability and minimizes cos ts by not disrupting economic dispatch. C ommenter s said a realistic effective date for initial compliance requirements is needed to allow for permitting, regulatory approvals, project development and possible construction. C ommenter s 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 Power Plan should recognize the nature of electric utilities investments that hav e long

- term energy resource planning cycles covering 10

- 15 year outlooks, broad system costs and long

- lived asset lives.

Commenter s stated the interim goals are driven by EPA's estimates of what can be achieved in Building Blocks 1 and 2; however, these es timates are unachievable. C ommenter s said first, the heat rate improvement expected from Building Block 1 is unachievable because generating92 companies have already made most of the possible heat rate improvements. C ommenter s said in Block 2, the emission r eductions associated with dispatch of natural gas plants is based on fundamental errors (e.g., unrepresentative heat rates and use of nameplate capacity) and flawed assumptions (e.g., that adequate gas pipelines and electric transmission infrastructure exi sts to support NGCC capacity factors of 70%). C ommenter s said the CPP recognizes that the additions and transformations affected by Building Blocks 3 and 4 will be gradual and not achieved by 2020, and the commenter s ' own analysis confirms that conclusion. C ommenter s said utilities are therefore left with limited options, e.g., retiring existing fossil units or curtailing operations, all before the end of unit's useful life and at significant cost to customers, or accelerating the addition of unneeded NGCC. C ommenter s added utilities 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 on line for reliability purposes while transmission or other solutions are developed. C ommenter s said as designed, the interim goals simply cannot be met and should be eliminated.

Commenter s recognize d EPA's concern that elimination of the interim targets may result in less than its desired progress on emiss ion reductions during the 10

- year period leading up to 2030; however, EPA can ensure significant reductions by identifying and requiring state plans to include "objective criteria or milestones" that can be monitored and will provide real emission reductio ns during the 2020

- 2029 period. C ommenter s 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 minim ization, as required by the CAA. C ommenter s added this approach would result in plans filed by states that EPA could approve, thus minimizing the need for later enforcement. C ommenter s said this approach is consistent with EPA past practice; specifically, EPA 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. C ommenter s said such approach is equally appropriate here, where EPA has borrowed from the NAAQS program already. C ommenter s 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.

Commenter s urge d EPA to elimi nate 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 considering their unique circumstances and the requirement to address remaining useful lives of the assets at issue; EPA is in receipt of a letter from Missouri's Governor, Jeremiah "Jay" Nixon, which supports flexibility with respect to the interim targets as well as addressing other issues supported in these comments. C ommenter s concurred with these recommendations.

Commenter s stated eliminating the interim goals allows states flexibility to develop plans that will ensure progress in the most cost effective and reliable fashion; eliminating the propo sed interim goals mitigates legitimate cost and significant reliability concerns as well as the litigation risks that all parties will face as a result of the rule. C ommenter s said as noted in Missouri93 Attorney General Chris Koster's November 26, 2014, Com ment Letter regarding the CPP, any GHG plan must ensure energy affordability and infrastructure reliability. C ommenter s said EPA knows how to assure that states demonstrate reasonable progress; it should do so here.

Commenter s stated the interim state goal s as proposed in the Clean Power Plan, which would need to be met on average over the 2020 to 2029 time period, are very close to the final goals and would require near

- term generation changes including replacing most if not all of the coal capacity in the state, enhancements to the gas transportation infrastructure, and transmission infrastructure development. C ommenter s 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 p roposed are below the emission rate of even the most efficient natural gas generation, incremental renewable generation and energy efficiency over levels prescribed in the building blocks would be required to comply.

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

Commenter s stated eliminate the interim compliance goal

.

Commenter s stated EPA's Clean Power Plan requires a 30 percent nationwide reduction in CO2 emissions by 2030; the goal for Nebraska is 26 percent; compliance must start in 2020; the EPA has announced that a final rule will not be issued until June of 2015. C ommenter s 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 unworkable. C ommenter s said the interim targets in the Plan for 2020 should be elimina ted and any plan should allow for states and utilities to adequately plan and prepare for future compliance.

Commenter s stated even though renewable generation has a more flexible siting process than NGCC, the 10

- year timeline needed to put transmission in service under present rules does not mesh with the interim target. C ommenter s said given that states will submit plans in 2016 or 2017, and the EPA needs an additional year to approve the states' plans, it will likely be 2018

- 2019 before utilities will ev en know what they will need to do to comply

- leaving a very short amount of time to plan, permit and construct necessary infrastructure prior to the interim period commencing in 2020. C ommenter s said this defies the empirical evidence of 10 years to commi ssion 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 gas infrastructure. C ommenter s said most other utilities will also be engaging in the same process simultaneously, competing for the time and resources of the already overtaxed state and federal agencies that handle these processes, as well as the consultants and contractors who assist on such projects. C ommenter s said to properly plan for and complete the compliance effort required for a rule touching all sectors of the electric grid (i.e., electricity generation, transmission and consumption), commenter s stated utilities needs longer than the two

- to

- four years to properly respond to an EPA

- approved CPP94 state plan. C o mmenter s said eliminate the interim goals and allow states and utilities to focus on meeting the still challenging final goal.

Commenter s stated that there is not enough time to implement the proposed interim emission rate goals, especially additional nuc lear generating units.

Commenter s added constructing and operating additional 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, obtain federal and state regulatory authorizations for the project, construct the plant, and commence operation.

Commenter s added a current example is the V.C. Summer Nuclear Station Units 2 and 3 project in South Carolina; the application was filed in M ay 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. C ommenter s said the time period from filing 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.

Commenter s added Duke Energy currently has a two

- unit nuclear project application pending before the Nuclear Regulatory Commission (NRC) that clearly demonstrates the extended time period necessary to licen se, construct and operate nuclear generating units. C ommenter s said the application for the W.S. Lee Nuclear Station near Gaffney, S.C., was filed with the NRC in December 2007, but the project has been repeatedly delayed; a final hearing on the COL applic ation would not occur until 2016. C ommenter s said assuming the hearing occurs in 2016, the COL is issued by 2017, and construction commences immediately, the units would still not come into service until at least 2023

- 2025; consequently, they would not be available to provide

non

- GHG emitting generation until well after the 2020 interim deadline.

Commenter s added a recent example of lack of progress in adding nuclear (non

- GHG emitting) generation is Duke Energy's cancellation of two proposed nuclear units, Levy 1 and 2, in Florida. C ommenter s said plans for the two units were announced in 2008, however the company cancelled the project last year based on the inability of NRC to issue the needed approval; demonstrating a typical time period required prior to issuance of regulatory approvals and start of construction

- six years. C ommenter s said 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 brin g on additional nuclear generation as contemplated in the Proposal is more realistic.

Commenter s added overall, the electric utility industry proposed more than two dozen nuclear reactors across the country, but only two major projects are under construct ion: 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 entirely fanciful. C ommenter s said only nuclear units well along in the planning process or for which regulatory applications have been filed could be constructed and operated as part of a state plan prior to the 2030 final deadline.

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

Response 8: See section s 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:

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

Commenter s stated one of the many problems with the interim compliance period is the fact that the EPA has front

- loaded the emission reduction goals by assuming that Building Blocks 1 and 2 are fully implemented by 2020, and remain at that level throughout the 10

- year interim compliance period; adding to this problem is the fact that the 2020 goals also reflect an increase in renewable energy generation and demand

- side energy efficiency over the 2012 baseline, thus further lowering the 2020 state goals. C ommenter s said the consequence is that EPA is proposing that many states be required to achieve unrealistic CO2 emission r eductions immediately.

Commenter s stated while under the Proposed Guidelines a state technically would not be required to fully achieve its 2020 interim goal, the more delay there is in meeting the front

- end goals, the more aggressive the back end of the program would have to be for a state to be able to meet its 10

- year average interim compliance goal; there will therefore be significant adverse consequences for a state that does not meet its 2020 goal; in other words, given the significant reductions req uired 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. C ommenter s said in fact, if a state wer e to fail in the early years of the interim compliance period to achieve its 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 st ate could achieve a rate lower than its final 2030 goal in 2029, for example, yet still possibly be out of compliance because it may not have met its 10

- year average interim compliance goal. C ommenter s said therefore, rather than having a 10

- year ramp

- up p eriod to the 2030 goals and providing states with flexibility in the design of their plans, the interim compliance period creates a 2020 compliance cliff for many states; given the fact that the measures required to achieve the 2020 goals cannot be impleme nted in many states by 2020, the 2020 goals for many states are simply unachievable.96 Commenter s stated EPA's decision to rely on nationally modeled capabilities to reduce emissions before 2020 results in a highly aggressive approach which fails to adequ ately account for 1) state specific factors, 2) the need to assure electric reliability or 3) to allow for an economically efficient transition from higher emitting resources to lower emitting resources. Commenters said f rontloaded reductions required by t he 2020 start of the program account for a significant percentage of the overall program reductions yet the availability of these reductions remain inadequately demonstrated to be achievable or administratively implementable by the state plan
process. C omm enter s said while targets vary by state, the primary reduction opportunities that drive interim goal reductions are the switch from existing coal

- based generation to natural gas

based generation under Building Block 2 and the 6% coal plant efficiency impro vements. C ommenters said the incremental natural gas required 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 boost tota l US gas demand by 17%. C ommenter s 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 actions necessary to meet EPA's expectations would not only consume all natural gas production growth in the US b ut also directly compete with existing users of natural gas to make up the annual production shortfall of TCF. C ommenter s said this shortfall presumes no increase in manufacturing, commercial or residential demand for natural gas and, most importantly, no export of domestic fuel supplies. C ommenter s stated how exactly this transition will occur cannot 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 pot ential impacts of increased reliance 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. C ommenter s stated the early reduction re quirements are expected far too soon and are unachievable; EPA should withdraw the interim targets altogether and allow the states to set their own glide path towards a 2030 compliance obligation based on inside the fence measures.

Commenter s added the Age ncy should eliminate the interim goals; in its current form, application of the interim goal front

- loads the implementation requirements of the proposed emission guidelines and requires significant reductions by the year 2020, leaving only minimal addition al reductions to be achieved in each subsequent year before reaching the state's 2030 final goal. C ommenter s said the front

- loaded nature of this goal stems in part from EPA's goal calculation methodology, which assumes that states will fully implement hea t rate improvements under Building Block 1 and redispatch under Building Block 2 (the most impactful component of EPA's proposed BSER) by 2020, with only Building Blocks 3 and 4 increasing to the year 2030. C ommenter s said in practice, the interim goal eli minates any implementation "flexibility" that EPA claims to have provided in the proposed emission guidelines. C ommenter s said the Agency should eliminate the interim goals altogether and allow states to demonstrate their progress toward achieving the 2030 final goal through the use of a "glide path" similar to the BART regulatory process; under such an approach, states would be expected to improve from97 current emission levels to the 2030 final goal target level on a uniform rate of progress, but would have the discretion to deviate from this "glide path" where uniform progress would be impractical. C ommenter s 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 all of the Building Blocks and not just Building Blocks 3 and 4, in order to avoid creating a significant "cliff" in permissible emissions in 2020, and/or (c) taking some other measure to preserve state flexibility in implementing the emission guidelines.

Commenter s support ed the elimination of the interim goals because they force an overly

aggressive compliance schedule; even assuming that state compliance plans can be submitted and approved in 20 16 (which is impossible) utilities and cooperatives would have only three years to come into compliance otherwise it is not possible to meet the interim goals. C ommenter s said state compliance plans are much more likely to be approved in 2018 and beyond wh ich will force immediate compliance; compliance, of course, becomes even more difficult in states with lower emissions rate goals. C ommenter s said EPA's suggestion that the interim goals could become more flexible based on infrastructure expansion requirem ents or book life of affected EGUs does not acknowledge that 2030 is the earliest that a compliance obligation can go into effect. C ommenter s said flexibility in the compliance schedule for interim goals does not change this fact.

Commenter s stated in sett ing the interim compliance period state emission goals, EPA has relied on unrealistic timing assumptions for the implementation 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 implementation of the plant efficiency improvements required under building block 1 by 2020. C ommenter s said one important constraint overlooked by EPA is the obligation for EGU owners to obtain the necessar y air permit authorizations in those instances where the efficiency improvement project may trigger NSR permitting requirements. C ommenter s added other important constraints that justify an extended implementation schedule include securing the financing an d contractors to complete efficiency upgrades, and then phasing in those upgrades during available outage schedules. C ommenter s said a similar timing problem exists with respect to EPA's assumption that states can require the re

- dispatch of existing NGCC c apacity 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 substantial additional build

- out of electric transmission i nfrastructure and natural gas pipeline capacity. C ommenter s said this development of additional transmission and pipeline infrastructure will likely take years to permit, finance, and construct.

Commenter s stated the timing assumptions used for determinin g when building blocks 1 and 2 will be implemented are totally unrealistic; for example, EPA fails to take into account a number of important timing constraints that would substantially impede the implementation of the plant efficiency improvements require d under building block 1 by 2020. C ommenter s said these98 constraints include obtaining the NSR permit and PUC authorizations, securing the financing and contractors to complete efficiency upgrades, and then phasing in those upgrades during available outage schedules; similarly, requiring the re

- dispatch 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 pipeline capacity. C ommente r s said this development of additional transmission and pipeline infrastructure will likely take years to permit, finance, and construct.

Commenter s stated EPA's approach is a dramatic departure from how EPA calculated the RE and EE components of the state goals under building blocks 3 and 4. C ommenter s 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 the 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 period in recogni tion that states cannot immediately construct the infrastructure or implement the programs necessary to achieve the RE and EE goals of building blocks 3 and 4.

Commenter s stated EPA proposed its interim carbon emission rate goals as a means of assuring

re asonable progress towards achieving the final carbon emission rate goal. C ommenter s said this is the only real purpose of the interim goals, but it is unnecessary. C ommenter s said as pointed out by EPA, utilities have been, and will continue to take action s every year to reduce carbon emissions; moreover, with a looming final carbon emissions goal, the utilities will be motivated to continue work towards achieving the final goal. C ommenter s said because the final carbon emission rate goal will be incorporat ed into the operating 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 that would occur without interim goals and the carbon emission reduction that will occur with interim goals will do little to affect climate change, rendering the interim goals unnecessary. Because of these reasons commenter s do not support the use of interim goals for achieving the desired outcome of the Proposed Rule.

Commenter s stated however, if EPA determines that interim goals must be used, at the very least EPA should allow the states to set the interim goals in order to establish a logical compliance trajectory for each individual state. C omme nter s said each state will have a better understanding of what actions will be necessary to achieve the final goals and the appropriate timing for achievement. For example, commenter s stated they are currently pursuing actions with the state that will dras tically reduce future carbon emissions, but due to certain requirements, these actions cannot be completed until the mid

- 2020s; this is exactly the type of information the states will have to use in setting more realistic and achievable interim targets.

C ommenter s stated EPA's proposed interim goals are structured such that the majority of the reductions have to occur very early in the compliance period. C ommenter s said a recurring concern raised by affected EGUs is their ability to design, procure, and in stall the necessary control equipment; develop new RE sources; and implement demand

- side energy efficiency99 programs in a timeframe that will allow for compliance with the rule. C ommenter s said others have noted the protracted timespan needed to construct n ew transmission pathways; for example, SPP notes: EPA has considered neither the cost nor the time required to plan and construct electric transmission facilities. C ommenter s said in the SPP region, as much as eight and a half years to study, plan for and construct new transmission facilities has been required. C ommenter s 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 required transmission expansion. C ommenter s said accordingly, in order to ensure reliable operation of the transmission grid and compliance with NERC reliability standards, EPA should eliminate the proposed interim goals applicable during the 2020

- 2029 phase

- in period in favor of a single 2030 goa l. C ommenter s said alternatively, EPA should reconfigure the interim goals such the majority of the requisite reductions can occur 5 to 7 years following EPA's approval of the state plan.

Commenter s stated the interim goals are excessively front

- loaded and should be eliminated. C ommenter s said the Clean Air Act does not mandate any interim compliance goals ; i ndeed, 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. C ommenter s said setting an achievable deadline for any proposed rule under Section 111 should not be based on random deadlines, as EPA's curre nt proposal is. C ommenter s said the initial interim compliance date of 2020 is particularly aggressive in light of the considerable tasks that the state and electric generating sector must accomplish to meet EPA's deadlines. C ommenter s said numerous entiti es have concluded that EPA's proposed deadlines are simply unworkable; in its assessment of EPA's proposal, NERC, which is charged with monitoring and assessing the reliability of the nation's electricity grid, has explained that "[l]ong lead times for tra nsmission development and construction require long

- term system planning

- typically a 10

- 15

- year outlook." C ommenter s said based on this and other issues, "NERC is concerned that reliability

- related enhancements may not be able to be completed for a 2020 implementation." C ommenter s said indeed, EPA itself has recognized the practical problems with its 2020 deadline; EPA's recent Notice of Data Availability ("NODA") identifies two significant issues that prevent states from meeting the 2020 interim deadline that EPA proposed

- the need for additional infrastructure and concern about stranded investments.

Commenter s regarding the development of the final goals, the commenter s took special exception to the design of the proposed interim goals, which are unreasonable and potentially unattainable. C ommenter s said on a very practical level, the interim goals are largely unnecessary given the fact that all electric providers will have to make generation resource decisions during the 2020

- 29 period in order to meet the 2030 goals. C ommenter s said the interim period is sometimes referred to as a glide path, but the commenter s saw it as more of a BASE jump in which there is a very fast and p otentially dangerous fall before things level out into a gentle descent.100 Commenter s stated the glide path reflected by the interim goals developed by EPA for the years 2020

- 2029 imposes a significant burden on many western states. C ommenter s said to demons trate compliance, states must calculate the actual 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 goal. C ommenter s s aid beginning in 2022, each state would have to compare its actual achieved emissions to levels projected in the state plan; however, a significant challenge for some states arises 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 combined cycle) are assumed to occur by 2020 resulting in a "compliance cliff" for states. C ommenter s said "Notably, the interim state emission

rate goal is only slightly higher than the final emission goal, putting pressure on states to make significant progress toward the interim goal in the years prior to the compliance period." C ommenter s said therefore, planning, preparation and steps to achieve actual compliance must begin well before then; this is exacerbated by several factors:

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

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

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

C ommenter s said the nature and pace of these actions are no t at the sole discretion of companies operating these systems, but rather a host of public and private stakeholders that will influence the state's strategy. C ommenter s said the compressed timeframe risks force a rush to find "whatever works" compliance op tions, rather than options resulting from thoughtful consideration of costs and risks. C ommenter s urge d EPA to change the structure of the interim goal by allowing states to develop their own glide paths under the CPP that demonstrate continuous, reasonabl e and verifiable progress toward the 2030 goal; in this regard, delay would not be an option but states would be able to apportion the effort from 2020

- 2029 based on cost and risk to customers. C ommenter s said states would continue to operate within the st ructure of EPA's proposed guidelines, which already requires that states submit

- and that EPA approve

- plans that clearly set forth how to achieve the 2030 goal; upon approval, the plans become federally enforceable. C ommenter s 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 its plan or issue a federal plan of its own.

Commenter s stated the emission rate targets are front

- 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 achie ve them. C ommenter s said development of new generation and transmission resources takes time; planning, design, siting, permitting, and construction can easily take as101 long as a decade. C ommenter s said comparing the interim emission rate reduction in 2020 (from the 2012 baseline) to the final emission rate reduction required by 2030, total emission rate reductions that must occur between the 2012 baseline and the 2020 emission rate target reach as high as 90%. C ommenter s said the median reduction level is 6 6% for all states during that timeframe. C ommenter s said under EPA's second building block

- prematurely shutting down coal

- fired generation in favor of natural gas combined cycle generation, EPA's emission rate formula results in a 100% decrease in coal g eneration by 2020 in some states. C ommenter s added this premature shutdown of coal

- fired generation will pose serious reliability risks to the electric grid and result in billions of dollars in stranded investment in expensive pollution control equipment t hat has been installed in order to comply with recent EPA regulations. C ommenter s urge d the elimination of the 2020 targets.

Commenter s stated as a result of EPA's unrealistic implementation timeframes, the Proposed Rule establishes interim emission rate goals for many states that impose a compliance "cliff," requiring the achievement of very steep CO2 emissions reductions immediately at the start of the section 111(d) compliance program. C ommenter s said nationally, the reductions expected by 2020 average to 75% of the total reductions required in the ten

- year interim goal period. While the commenter s support ed the concept of a long

- term (e.g., ten

- year) compliance period for an interim goal, proposing that such substantial reductions be front

- loaded to the first year of the interim compliance period fails to provide any meaningful flexibility. Many of the state s in which commenter s’ members operate illustrate the problem: Arizona is expected to achieve 94% of its interim goal by 2020; other states with significant cliffs include: Colorado (85%), Florida (86%), Georgia (88%), Oklahoma (86%), South Carolina (89%), and Texas (82%). These

commenter s members' states face the daunting task of achieving an enormous percentage of their interim CO2 emission goals by the start of the compliance program in 2020.

Commenter s stated the imposition of such a compliance cliff b y a 2020 implementation milestone would likely have many adverse impacts, including 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 complia nce program, 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.

Commenter s stated forcing the premature shutdown of these existing coal

- fired EGUs in 2020 will result in billions of dollars in stranded assets and replacement power costs; notably, many of these units are not close to the end of their useful lives and, in many cases, the units have recently installed expensive pollution control MATS R ule and the Regional Haze Best Available Retrofit Technology requirements. C ommenter s said given 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 t hese stranded asset costs and from the purchase of replacement power.102 Furthermore, the commenter s were concerned about the increased reliability risks that may result from premature shutdown of many coal

- fired EGUs.

Commenter s stated to address this probl em and provide additional timing flexibility for the implementation of these stringent reduction obligations, EPA should build in reasonable phase

- in periods for achieving the required emission reductions from building blocks 1 and 2, as contemplated in th e October 28 NODA; as a general matter, this phase

- in period should provide additional times for states to account for the significant regulatory, reliability, and capacity issues that will need to be addressed before they can fully implement building bloc ks 1 and 2.

Commenter s asserted that this outcome can be best achieved by giving each state the authority (subject to EPA approval) to set its interim CO2 emission rate goal based on an implementation schedule that is feasible; for example, each state sho uld be allowed to propose a state

- specific time schedule for implementing the building block measures 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, a nd other relevant state

- specific factors. C ommenter s said under this approach, the state would still achieve the final goal established by EPA based upon the four building blocks, but the stringency of the interim compliance period goal would be adjusted t o reflect the state

- specific schedule for implementation of the control measures within the state. C ommenter s said this would enable each state to develop a workable and reasonably achievable plan, with federally enforceable milestones, for implementation 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 approval, and such requests should not be unreasonably denied.

Commenter s added the over

- agg ressiveness of the proposed 2020 interim goal is illustrated by the EPA's proposed goals for Florida and North Carolina; the 2020 goals for Florida and North Carolina account for 76 percent and 71 percent, respectively, of the total emission rate reduction requirement in 2030 relative to each state's 2012 baseline. C ommenter s said for each state, the majority of the 2020 reduction requirement is attributable to Building Blocks 1 and 2; setting a state's 2020 goal at a level that requires such a large percen tage 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.

Commenter s stated the proposed interim and final goals established by EPA for Ar izona place an unreasonable and inequitable burden on the state to achieve CO2 reductions; particularly problematic for Arizona is EPA's proposed interim goal. C ommenter s said the Proposed Rule would require Arizona to achieve nearly 90% of the state's 203 0 goal by 2020

- more than any other state in the country; this is due primarily to EPA's assumptions regarding the application of Building Block 2 to Arizona. C ommenter s underst ood that EPA views Building Block 2 as a relatively easy way to achieve reduct ions in carbon intensity early in the program; where existing natural gas combined cycle (NGCC) generation is present and has a low annual capacity factor in 2012, EPA assumes states can easily shift generation from their higher emitting coal and oil103 gener ation to their lower emitting natural gas generation. C ommenter s 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 exist ing coal and oil generation in the state can be replaced with existing NGCC generation by 2020. C ommenter s said this assumption presumes that Arizona will achieve approximately 80% of its 2030 goal by 2020 from application of Building Block 2 alone

- again more than any other state. C ommenter s said if EPA does not change its Building Block 2 assumptions for Arizona, the Proposed Rule will create significant economic impacts within the state and strain the reliability of the state's energy grid.

Commenter s a sk ed why did EPA impose such an aggressive interim target on Arizona and did EPA consider allowing states to develop a more gradual and less economically disruptive approach to achieving reductions.

Commenter s stated the consequence of EPA's approach is th at the interim goal imposes a compliance cliff requiring many states to achieve very steep CO2 emissions reductions immediately at the start of the section 111(d) program. C ommenter s said this is illustrated by Arizona, which must achieve 94% of the State's interim goal by 2020 under the Proposed Rule; Arizona is not the only state that faces an almost impossible task of achieving all of its CO2 emission reductions under building bloc ks 1 and 2 by the start of the program in 2020.

Commenter s stated this front

- loading of the CO2 reduction requirements has the effect of requiring states to achieve, on average, 75% of their total annual reduction target in 2020.

Commenter s stated EPA's proposed implementation schedule leaves states with insufficient time to meet their CO2 emissions reduction obligations imposed under building blocks 1 and 2; at most, states will only have two or three years to complete all of the measures (including majo r infrastructure improvements to generation and transmission infrastructure as well as increases to natural gas pipeline capacity) that would be necessary to achieve these ambitious reduction levels.

Commenter s stated the establishment of a 10

- year averag ing 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 failure to implement at least a substantial portion of these two building blocks will have no choice but impose more aggressive RE and EE requirements on the EGUs and other affected entities within its jurisdiction in order to make up for the shortfall in emissions reductions from blocks 1 and 2. C ommenter s said as a result, EPA 's decision to frontload emissions reductions from these 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 on erous compliance costs on affected entities and consumers within the state.104 Commenter s stated the currently proposed interim goals for Arizona are too heavily weighted toward the early years; EPA presumes that these goals can be achieved by re

- dispatching all coal

- fired generation in the state to NGCC units commencing in 2020. C ommenter s said this change is not achievable as envisioned by EPA; there are significant concerns regarding electrical reliability and infrastructure that prohibit the total re

- dispa tch of the coal

- fired fleet to NGCC units by such an aggressive time. C ommenter s said if EPA is unwilling to allow the states to set the interim goals, EPA must be mindful of the fact that Arizona's utilities need a more level trajectory that provides addi tional time to fully prepare and respond in a reasonable fashion to the actions necessary to comply with any final goal. Accordingly, commenter s support ed 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. C ommenter s said EPA should take into account whether, and to what extent, additional infrastructure improvements, including natural gas pipeline expansion and transmission improvements, are nee ded 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, reliabilit y requirements, and infrastructure needs are maintained."

Commenter s stated the wide variation in the difference between the proposed interim and final goals on a national basis is arbitrary and capricious; as long as a state has prepared a 111(d) plan do cumenting compliance with a reasonable final goal, interim goals are unnecessary.

Commenter s stated under the EPA's proposed Clean Power Plan, Arizona would be required to reduce the carbon dioxide (CO2) intensity of its power generation fleet by approxima tely 47% by 2020 and approximately 52% by 2030 in order to meet its goals. C ommenter s said Arizona undoubtedly faces one of the most aggressive reduction requirements of all states, driven by the application of the EPA's proposed building block approach to determining state

- level emission goals. C ommenter s said the interim targets resulting from EPA's building blocks are unreasonable, are inequitable for Arizona, and cannot be achieved without major reliability

concerns. C ommenter s said alternative interim and final goals that fully consider the remaining useful life of existing plants would achieve significant carbon reductions without jeopardizing grid reliability and result in a lower cost to ratepayers.

Commenter s added the interim goals provided to the states for implementation in 2020 are simply too steep to achieve without significant economic and electric system dislocation; certainly, the 2020 Illinois goal of 1366 lbs CO2/MWh is not a pro rata step toward USEPA's final 2030 goal of 1271 lbs CO2/MWh. C ommenter s said the 2020 goal is a 37% reduction from the baseline in Illinois and a 12% reduction from the baseline in Kentucky; clearly, USEPA must understand that IMEA will not know the actual compliance obligation and the means available to meet that obligation until the Illinois EPA and the Commonwealth of Kentucky have completed their state plans. C ommenter s said given the complications within Illinois alone related to its large amount of nuclear and coal generation, its relatively small amount of NG CC generation, its need to address a poorly

- functioning renewable portfolio standard and the lack of any state105 authority to order generation of any kind to be constructed, that the IEPA will need to seek legislation to implement any state plan. C ommenter s 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 rate

- based, portfolio approach using the four building blocks, means more de lay; this could leave only a two

- year window between knowing the clear compliance obligations and the imposition of the 2020 goal. C ommenter s said given these facts, the 2020 goal would require somehow acquiring carbon

- free offsets equal to 31% of IMEA's t otal 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. C ommenter s 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 ability to phase in their carbon

- reduction activities throughout that period.

Commenter s state d EPA's decision to enforce "interim targets" requires states to demonstrate specific and verifiable emissions reductions every year between 2020

- 2029, before the final compliance date of 2030. C ommenter s said for states that have a long way to go before t hey reach EPA's expected "rate of progress," these interim targets would require that a substantial percentage of the total expected emission curtailment occur before 2020. C ommenter s said for Indiana, EPA's proposed interim target accounts for approximate ly 80 percent of the total emissions curtailment the agency expects from the state; this is simply not feasible. C ommenter s said EPA has entertained the possibility that it may need to adjust the interim goals and/or final targets for some states; however, EPA officials have suggested that any petition for an adjustment has to take place during the comment period. C ommenter s s aid 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 proces s.

Commenter s stated the interim goals pose a "carbon cliff," a sudden and severe reduction in carbon emissions beginning in 2020. C ommenter s said the proposed rule would require a state plan to specify the average emissions performance over the 10

- year interim plan performance period from 2020 through 2029; according to the methodology employed in the proposed rule, the majority of most states' carbon emission reductions 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 final 2030 targets by 2020.106 Commenter s stated the Goal Computation Technical Support Document ("TSD") reveals EPA's assumption that all of the carbon reductions from affected EGUs (i.e., blocks 1 and 2) must occur by 2020; the prop osal also assumes that states will expand renewable (RE), and/or energy efficiency and demand response ("EE/DR") over time. C ommenter s said Appendix 4 to the Goal Computation TSD presents the interim and final state goals based on Building Blocks 1 and 2

a lone; the final goals in this chart are not as stringent as EPA's preferred final goals, which rely on all four building blocks. C ommenter s said the document notes "there is no difference between the Interim and Final rates through the first two building b locks as the increasing annual potential only applies to block 3 and block 4." C ommenter s 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 c arbon emissions.

Commenter s stated Missouri's "cliff" in the proposed rule will force Missouri to adjust several key aspects of its Integrated Resource Planning (IRP), at great expense to its customers, in order to meet the requirements of the rule. C omme nter s said in order to achieve the rate

- based interim goals, Missouri would need to immediately commence designing, permitting and constructing NGCC facilities. C ommenter s said Missouri's customer load forecasts do not support the construction of 600 MW of natural gas generation until 2034, coinciding with the retirement of two coal units; however, the CPP would accelerate the in

- service date of planned NGCC resources by fourteen years, and those resources would need to be twice as large as currently planne d (600 MW vs. 1,200 MW). C ommenter s said none of the 1,200 MW would be needed to serve customer loads. C ommenter s said the new NGCC units would also be required to run uneconomically at a 70% capacity factor solely to meet the interim targets in the propos ed rule; for similar reasons, the retirement of the Meramec coal fired energy center would be accelerated. C ommenter s estimate d that the interim goals will cause an increase in cost to its customers of approximately $4 billion dollars compared to the IRP a pproach; these consequences are illogical, counterproductive to environmental stewardship and not cost effective; this cannot be what EPA envisioned when the rule was proposed.

Commenter s support ed the goal of diversifying the nation's generation fleet, ho wever have a number of concerns with the proposed rule, but there is one particular aspect of the proposed rule that is particularly troubling; the interim goals. C ommenter s said the proposed rule sets both a long term greenhouse gas (GHG) reduction goal t o be achieved by 2030, and interim goals beginning in 2020. C ommenter s urge d EPA to eliminate the interim goals, and allow states to file compliance plans that incorporate GHG reduction milestones that create a manageable glide path to the 2030 goal. C omme nter s asserted the interim goals are unnecessary to achieve the long

- term GHG reductions proposed in the Clean Power Plan and create a host of problems that argue for their elimination. C ommenter s said the goals 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. C ommenter s said many other states are in the same predica ment; some will have to achieve over 80% of their 2030 goal by 2020. C ommenter s said it is unreasonable to expect states to comply with such stringent targets on such short107 notice; such drastic reductions will needlessly increase costs and will jeopardize the reliability of the grid.

Commenter s stated a flaw from the proposed regulations is the application of the interim goal and the subsequent glide path from 2020 to 2030. C ommenter s 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. C ommenter s said this "cliff" should be eliminated and the states should develop compliance plans for reaching a 2030 goal based on their specific circu mstances. C ommenter s said based on the regulatory timelines for finalizing the regulations and gaining approval of state compliance plans, it is not possible to modify the infrastructure or build new facilities to meet a 2020 start date.

Commenter s oppose d the inclusion of the interim goals for both the primary and alternate state goals because there is insufficient time to implement the interim goal and to meet the extremely high 2020 interim goal. C ommenter s said Nebraska would have to reduce its CO2 emis sion rate more than 50% by 2020 to have a reasonable chance to meet the interim goal without being faced with the potential problems of significant over control late in the interim period as the only means for achieving the final goal. C ommenter s said due to the minimal time between approval of a state plan and the beginning of the interim period, the interim goal is too stringent and unnecessary to achieve the final goal.

Commenter s stated EPA's Clean Power Plan requires a nationwide 30 percent reduction in CO2 emissions by 2030, with interim compliance targets. C ommenter s said EPA's goal for Nebraska was set at 26 percent; however, the interim compliance targets are front

- end loaded creating a fatal cliff for compliance by 2020. C ommenter s 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 com pliance 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. C ommenter s said the electric utility industry is currently making substantial capital investments in its existing electric generating fleet to comply with various recent and proposed EPA rules. C ommenter s were concerned that such short compliance deadlines may result in the premature shutdown of some of these generating units resul ting in millions of dollars of lost or stranded investment. C ommenter s strongly urge d the elimination of the interim 2020 targets.

Commenter s stated the interim goals proposed by the plan are too aggressive; the current proposed interim goal for Iowa of 1 341 lb/MWh is only slightly higher than the final goal of 1301 lb/MWH. C ommenter s said the interim goals assume that Building Blocks 1 and 2 can be implemented immediately after the rule is implemented, but prior to 2020; this is unrealistic.108 C ommenter s as sert ed that the assumptions made for Building Blocks 1 and 2 are unrealistic for Iowa's municipal utilities; it is not possible or economic for Iowa's municipal utilities to retrofit their existing coal power plants to achieve a 6% heat rate improvement; a ny economic heat rate improvements have likely already been made. C ommenter s said Iowa's municipal utilities do not own any NGCC facilities, and cannot shift generation from their coal power plants to NGCC plants. C ommenter s said therefore municipal utilities 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 implemented immediately. C ommenter s adde d the rapid implementation required to meet the proposed implementation goal, is likely to be uneconomic.

Commenter s request ed that the interim goal be eliminated, or at the very least, start no earlier than the year 2025 with significantly less stringency compared to the final goal. C ommenter s said as proposed, there is very little difference between the interim goal and the final goal. (In Iowa, the interim goal is 1341 lbs/MWh and the final goal is 1301 lbs/MWh.) C ommenter s said effectively, the EPA has set a 2020 compliance deadline with no appreciable phase

- in. C ommenter s said the option offered by EPA to over

- comply 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 be required if additional time were allowed to make necessary changes to the electric system. Commenter s stated when requiring CO2 reductions, EPA's rules should allow for implementation of the changes in ways that maintain a reliable, affordable electric system that can be sustained over the long term; for many utilities, and therefore states, compliance with the final goal will require more time than allowed by the interim goal. Commenter s stated therefore, the in terim goal should be eliminated. C ommenter s said the enforceable goal should start in 2030 with credit for early actions prior to that date. C ommenter s said credit for early action will provide an appropriate incentive for utilities to take actions to redu ce their CO2 emissions and the carbon intensity of their generation fleet prior to 2030. C ommenter s 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 significa ntly less restrictive than the final goal to allow additional time for efficient, thoughtful planning and implementation of changes that will be required; this may lead to greater reductions in the long term if affected entities have more time for planning

.

Comment 9: The interim goals limit states' flexibility.

Response 9: See section s I.A. and V of the final rule preamble of the CPP for the EPA’s response to this comment. The EPA is also finalizing 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 goals than proposed. On average, there is a greater difference between the two in the final CPP than the prop osed CPP due to changes in the deployment path of building block two and building block three. This change addresses some of109 the commenter s concern s regarding the limited difference between interim and final at proposal (e.g., Arizona).

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

Several c ommenters stated that the interim goal limits state flexibility.

Commenter s added the interim goal deprives states of the flexibility to design their own compliance plans or choose the pace of reductions to respect state

- specific conditions and circumstances. C ommenter s 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. C ommenter s stated contrary to EPA's stated intent of providing states flexibility in setting 2030 emission goals, the interim compliance average goal creates more compliance challenges than it solves. C ommenter s said the proposed interim average compliance period and goal would create unnecessary compliance challenges, limit state flexibility in designing compliance plans and impose unnecessary additional costs on electric customers.

Commenter s added even if state agencies can acquire the necessary statutory authority and somehow meet EPA's aggressive SIP submission deadlines

- and assuming expeditious EPA plan approval

- implementation of plans including most if not all four of EPA's building blocks will be difficult. C ommenter s said as an example, even incr easing 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 will require engineering evaluation and design, and procurement and in stallation of parts and equipment. C ommenter s said completing this process for all affected generating units is very unlikely to be possible with a three

- year or possibly shorter time frame, if plan submission or approval is delayed; and with several hundr ed units across the country engaged in the same process to improve heat rate efficiency at the same time will undoubtedly result in significant delays.

Commenter s added even if individual States were able to adhere to the one

- year plan submission deadline, and EPA approves plans within an additional year or by June 30 2017, barely two and one half years would remain prior to the 2020 interim goal deadline; meeting the 70% dispatch goal for natural gas

- fired units is likely to require significant upgrades an d modification of many such units to make them capable of operating at that level. C ommenter s said to the extent that this is required for many units within a State, completing the needed upgrades and modifications within the short two and one

- half year im plementation period is highly unlikely.

Commenter s added the tight timeframe for meeting the interim goals largely negates the opportunity for States to develop any reasonable alternatives to EPA's approach, thereby eliminating any flexibility for States a nd affected facilities; this will force shutdowns of many coal

- fired power plants as the only means of achieving interim goals in such a short time frame; these plants will often have a useful life that extends well beyond the 2030 compliance deadline, and EPA's guidance must be revised in a way that assures the States and utilities have the ability to keep these plants economically viable. Commenters said s ome states will have little choice but110 to shut down coal

- fired capacity and dispatch natural gas (Bui lding 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.

Commenter s added EPA suggests States should begin to ramp up energy efficiency requirements by 2017, States will be unlike ly to have legislative authority in place for several of the building blocks and, at most, only have authority over building block 1; that leaves most States with only the option of forcing fuel switching from coal over to natural gas for base load power p lant

- assuming they even have the natural gas available and infrastructure in place to make such a sudden and dramatic change. C ommenter s said this would create complications of needing an uninterruptable supply of natural gas, pipelines and storage and e nough sufficient available NGCC units to make up the difference in electric generating capacity.

Commenter s stated EPA's requirement for states to achieve such a significant portion (roughly 60%

- 90%) of the required CO2 emission reductions early in the int erim period defeats the intended purpose of providing states flexibility in achieving the required emission reductions; EPA should consider the full range of options to ensure that each state is given the optimum amount of flexibility in developing its pre ferred approach to achieving the 2030 target.

Commenter s stated the interim compliance average period deprives states of choosing which reduction actions and measures to pursue and how quickly to implement them, with negative consequences for costs to cust omers. C ommenter s said many states will have few options to start making reductions by 2020, which limits their ability to choose the reductions actions and measures that best reflect their specific circumstances and to implement them in a way that minimiz es costs to customers. C ommenter s stated the interim goal limits the state's flexibility in determining how best to achieve EPA's ultimate goals, and in doing so, significantly increases

costs to customers.

Commenter s added the interim target presents sign ificant reliability and affordability issues; no consideration is given to the expected coal plant retirements. C ommenter s stated the proposed rule has an inadequate lead time for planning, siting, and constructing new electric and natural gas infrastructure; compliance with the rule will dramatically accelerate a fundamental shift in our generation fleet. C ommenter s said a r easonable path must be provided for infrastructure, policy, and institutional planning and development to avoid rate shock and capacity shortfalls that threaten reliability.

Commenter s stated as written, the vast majority of the emission reductions require d 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 again st 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 indep endence from carbon emissions by 2050. 3 ) This over

- build of new gas capacity111 would freeze out clean new energy resources for a decade or more, undercutting the U.S.'s ability to achieve critical mid

- century climate objectives. 4 ) Due to a high level of le gal uncertainty, many states are unlikely to take costly steps to achieve the reductions until the legal status of the rule is clarified

- late in this decade at the earliest

- leaving little time for thoughtful implementation, even more drastic initial re gulatory impacts and stronger grounds for concern, resistance and litigation of the rule and state plans.

Commenter s stated the proposed rule provides very little flexibility over when to actually achieve targets; this is because of two key features of the proposed rule; first, the interim goal, for many states, is a very high percentage of the total reductions required by 2030; second, the rule requires that the average of a state's emission performance in each of the years 2020

- 2029 equal or exceed the in terim goal. C ommenter s said the 10

- year average requirement provides little timing flexibility, and precludes the benefits EPA intended it to confer on states.

Commenter s added the more Arizona relies on Building Blocks 3 and 4 to achieve compliance with t he 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 comply with the final standard and ends up preserving a much smaller portion of its existing coal

- fired generation resources. C ommenter s said Arizona has no flexibility to shift from one Building Block to another to meet its rate

- based goal under the program as proposed. C ommen ter s said the state cannot increase reliance on Building Block 1, because the rate

- based goal assumes 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 gen eration remains in 2020, increasing the efficiency of coal units will obviously have no effect on Arizona's rate. C ommenter s said Arizona cannot increase reliance on Building Block 2, because the interim goal effectively requires the maximum redispatch
pos sible. C ommenter s said Arizona is not the only state in this predicament; EPA's goal calculation spreadsheet makes it clear that a number of other states have goals that presume redispatch of all or a substantial portion of coal and OG generation to NGCC b y 2 2020. C ommenter s added for some states, the presumption of 2020 implementation of Building Block 1 may present a similar impediment to flexibility. C ommenter s said EPA therefore should eliminate, or adopt a different approach to, the interim goal. C omm enter s 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 other states the flexibility it intended to include in the program.

Commenter s s tated that it would be theoretically possible to redistribute reductions over the 10

- year interim goal compliance period in order to achieve the interim goal without overshooting the final goal. C ommenter s said the relief afforded by manipulation of the 10

- year average, however, would be minimal. For example, commenter s 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 st ate'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). C ommenter s said there are, however, a number of problems with this s cenario; specifically, 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 may not be achievable.

- Compliance with a rate that is lower than the final g oal by 2025.

- Compliance with rates in 2026 through 2028 that are 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 Coro nado Unit 1, which has recently undergone millions of dollars of pollution control upgrades.

C ommenter s said if anything, the need to incorporate such aggressive and unrealistic assumptions in order to bring the interim and final goals closer together onl y serves to demonstrate the inflexibility inherent in the proposal.

Commenter s said the interim goal outlined for Arizona is simply unworkable and cannot be achieved. In addition to a more reasonable glide path, commenter s asserted compliance with any rule must take into consideration disruptions in State and local economies and the increased cost

to consumers. C ommenter s stated Arizona utilities should be provided sufficient flexibility to mitigate such disruptions.

Commenter s added the manner of demonstrating compliance with EPA's proposed interim goal, and the consequences of not meeting that goal, are not entirely clear. C ommenter s stated Colorado has already made binding resource decisions through 2020; taken along with the timing issues for developing and submitting state plans, meeting the interim goal in 2020 is extremely ambitious. C ommenter s added that the proposed emission reductions are front

- loaded; for example, Colorado's interim goal is very close to the final goal (within 50 lbs/ MWh).

Commenter s stated the Clean Power Plan, as currently structured, fails to give sufficient recognition to significant differences in the ability of individual utilities and geographic regions to achieve the targeted interim reduction s in greenhouse gas emissions within the timeframes established by the Plan. C ommenter s said as a practical matter, given current technology, the only way to achieve the EPA emission reduction targets while not jeopardizing the reliability of the electric grid may be to retire coal fueled generating capacity and replace much of that retired capacity with renewables, zero output nuclear generating facilities or comparatively low emitting combined cycle gas generation. C ommenter s said the efficiency of coal p lants has improved over the years, but still lags behind gas fired generation. C ommenter s said allowing for greater compliance flexibility will still achieve significant reductions in greenhouse gas emissions with less risk to electric system reliability a nd with economic 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 10 years. C ommenter s said with a 2012113 baseline of 171 2 lbs/MWh and the 2030 target of 1108 lbs/MWh, the average reduction is 1410 lbs/MWh; with an interim average goal of 1410 lbs/MW over the 10 years, this would provide Utilities the flexibility to plan additions, retirements and fuel switches in a staged m anner. C ommenter s respectfully request ed that in the final rule the EPA adopt a linearly declining emissions rate over the 2020

- 2029 time periods, with the compliance requirement to meet the average over the 10 year period; this allows flexibility to utili ties and the states to meet the stated 2030 goal in a gradual, flexible manner.

Commenter s stated in EPA's October 27, 2014, Notice of Data Availability (NODA), EPA requested comment on its 2020

- 29 interim targets; EPA 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 reductions early in the interim period that it defeats the intended purpose of providing states flexibility in how the y may achieve the required emission reductions." C ommenter s said this concern is absolutely true in Indiana, where the state will be required to achieve approximately 80 percent of its 2030 emission rate reduction through the 2020

- 2029 interim period; as s tructured, the proposed interim target will not achieve its intended purpose of providing states with flexibility in their "ramp

- up" to the final target. C ommenter s said rather, the interim target is a cliff that leaves states and utilities without a logic al glide path to achieve the final target. C ommenter s said EPA should remove the interim target from the Final Rule and allow states the flexibility to develop compliance plans most appropriate to achieve the 2030 final target.

Commenter s 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. C ommenter s said as currently proposed, existing coal utilization will need to be decreased without confidence that other types of generation can fill the gap; new electric and natural gas transmission needed for reliability cannot reasonably be expected to be built by 2020. C ommenter s said for these reasons, the 2020 interim target generates sig nificant electric system reliability risks.

Commenter s added the 2020 interim target also could unduly increase costs to consumers; for example, utilities may be forced to take actions such as prematurely retiring coal units that were recently retrofitted with pollution controls. C ommenter s said states should have the flexibility

- a stated goal of the Proposed Rule

- to craft compliance plans that address the unique challenges of individual utilities and consumers in an equitable, cost

- effective, and risk

- reduced manner. C ommenter s said the interim target speeds this process and forces states and utilities, faced with the threat of "corrective action," into the inflexible and intractable position of complying with a decade

- long average emission rate amidst the complexity of a dynamic power market.

Commenter s encourage d EPA to alter or eliminate the proposed interim goals that are currently established as requirements under each state plan. C ommenter s said while it is clearly advisable114 for states to demonstr ate progress toward a 2030 final emissions goal, the current 2020 "interim goal " ca rr ies stringent caps that will negatively and fundamentally restrict the choices available to plant owners in meeting long

- term goals. C ommenter s said limitations of the interim timeframe (2020) are evident in a number of sectors:

1. Many coal EGUs have made significant capital investment in recent years, in large part to comply with EPAs Mercury Air Toxics rule among others, and installed emissio n reduction retrofits (scrubbers, etc. ); in coal

- intensive states such as Ohio, a 2020 interim goal leaves little room for compliance without converting plants to natural gas or shutting down, thereby leaving recent capital investments stranded; a phased i n shift could mitigate the financial impact.

2. Given the limitations of existing natural gas pipeline infrastructure in some areas, the 2020 targets should accommodate different situations; New England states, for instance, remain disproportionately depe ndent upon fuel oil generation and face severe natural gas pipeline bottle

necks; the goal setting under Block 2, therefore should be apportioned to pre

- and post

- 2020 periods as the available infrastructure allows, and include a required infrastructure ro admap for pipeline build

- out; this will allow proper long term planning and avoid poor short term compliance choices.

3. Nuclear development is also constrained by a 2020 interim compliance deadline; this sector has the longest development horizon of avai lable technologies, despite its zero emissions and reliability profile; without a smoother path to compliance, 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 for the next thirty years.

Comment 10: The interim goals limits state's flexibilities; cannot consider remaining useful life.

Response 10: See section s I.A. and VIII of the final rule preamble of the CPP , and section 5.11 of this document, for the EPA’s response to this comment. In the final CPP, the interim compliance period begins in 2022. EPA has also incorporated a phase

- in of deployment assumptions for building block two, which along with the building block three ph ase

- in assumptions

– provide for an interim goal that reflects 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 publ ic comments under this comment:

Commenters stated the states do not have the flexibility that EPA claims and the interim goals in particular undermine the states' authority granted under section 111(d) to consider remaining useful life. C ommenter s said EPA has built into the interim goals its assumption that Blocks 1 and 2 can be implemented by 2020; it would be mathematically impossible for Texas to comply115 with the interim goal while allowing additional time for consideration of the units' remaining useful life beyond what EPA has assumed in setting the interim goals. C ommenter s said given the manner in which EPA has calculated the state goals, the states' consideration of remaining useful life of existing sources would have to made prior to establishing th e state goals, not afterward.

Commenter s added this provision of section 111(d) also 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 under this paragraph to take into consideration, among other factors, the remaining useful life of the existing source to which such standard applies." C ommenter s said this provision clearly states that any standard of performance established under section 111(d) be applied to an existing 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 authority under section 111, but do not even meet the definition of a stationary source under the FCAA, i.e., "any building, structure, facility, or installation which emits or may emit any poll utant." C ommenter s said most forms of renewable energy, such as wind and solar energy generation, do not emit air pollution and therefore are not a stationary source and not subject to the FCAA; nor are non

- emitting wind and solar power generation faciliti es part of the fossil fuel

- fired EGU source categories the EPA has identified as subject to this rule.

Commenter s added EPA's emission guidelines are so stringent that they effectively preclude a state from considering the remaining useful life of a source

. C ommenter s said states will have to achieve significant reductions even before 2020. C ommenter s said 47 percent of the required reduction for West Virginia would be required up front by 2020, clearly an impossible expectation. C ommenter s said if existing coal

- fired EGUs cannot achieve the majority of the required reductions by 2020, they will have to realize significantly greater reductions in their emission rate to meet the interim goal, far greater than required to meet the final goal in 2030. C ommenter s said for West Virginia, which has no existing or under construction NGCC capacity, very little (0.17 percent) current EE reductions, and currently only two percent non

hydro RE, there is no scenario under which the interim goal can be met; the situation only gets worse when the State's inability to achieve a six percent decrease in the coal

- fired EGU CO2 emission rate as a result of heat rate improvements is considered.

Commenter s added the interim goals create a disincentive to invest in Building Block 1 ; implementation of Building Block 1 is compounded by another issue: the interim target goals. C ommenter s said the USEPA calculated Nevada's interim and final goal by essentially closing Valmy and TSPP by 2020; by virtue of having two owners located in two different states, Valmy is subject to two different retirement schedules: retirement in 2025 by the PUCN and beyond 2030 by the Idaho Public Utilities Commission; neither retirement schedule would allow Nevada to comply with the interim goal. C ommenter s added TSPP was only recently commissioned in 2008; at the time it was commissioned, it was projected to operate for at least thirty years, and116 possibly forty years; as one of the newer coal

- fired power plants in the nation and one of the most highly contro lled from an air quality standpoint, closure of that facility by 2020 would result in a significant stranded investment. C ommenter s added nevertheless, the only way that Nevada could meet the interim goal as currently calculated would be to require the clo sure of both of those facilities by 2020; continued operation of the Valmy and TSPP facilities would exceed the proposed goals. C ommenter s said it would not, then, make economic sense for those facilities to undertake the engineering analyses and permittin g revisions that would be required to achieve any sort of heat rate improvement because they would have to shut down within a very short time after such improvements could be deployed. C ommenter s said they would not be able to recover their capital investm ents; if the facilities are retired on their normal schedules taking into account the remaining useful life of the plant, then Building Block 1 should be calculated on a plant

- specific basis, rather than on a national average of aged coal

- fired facilities

.

Commenter s stated as proposed in the CPP, compliance 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 comments critical of and disputing the so

- called "flexibility" of such an approach in that the forced retirements resulting from the CPP and other environmental laws could adversely impact the electrical systems ability to respond to extreme weather events like the 2014 polar vortex. C ommenter s said stakeholders also expressed concerns about how premature retirements would affect remaining asset value of existing coal

fired generation and resulting stranded cost implications. C ommenter s support ed the elimination of the interim targets to allow for cost

- effective implementation of state and utility system compliance strategies. C ommenter s reiterate d that the 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 demonstrate a reasonable glide path to the 2030 targets.

Commenter s stated the Proposed Rule's assumed implementation of the entirety of Building Block 2 (BB2) in 2020 deprives Arizona, of any meaningful 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 Arizona greatly overshooting the Final Goal. C ommenter s said as a result, Arizona is basically locked into EPA's goal setting exercise, which requires the complete redispatch of Arizona's coal

- fired EGUs to NGCC EGUs in 2020. C ommenter s reviewed EPA's Integrated Planning Model ("IPM") runs, which predict that the Sprin gerville coal

- fired EGUs will remain on

- line under the Proposed Rule. C ommenter s conclude d , however, that given the low utilization rates predicted by IPM for the Springerville EGUs, the more economically rational decision would be to shut down the Springe rville plant. C ommenter s said Springerville is the only coal

- fired EGU that EPA's IPM suggests would survive the Proposed Rule and the analysis concludes that it likely would not. C ommenter s asserted that its concern that the Proposed Rule would require th e premature retirement of all Arizona coal

- fired EGUs in 2020 is legitimate and well supported.117 Commenter s stated the stringency of the proposed rule'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 Blocks 1 and 2 could be achieved at the start of the ten

- year interim compliance period. C ommenter s said as a consequence of this flawed assumption, for many states, almost all of the emission rate reductions that the Proposed Rule ultimately requires must be achieved in the first year o f the ten

- year interim compliance period. C ommenter s 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. C ommenter s said EPA i ntends to finalize 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 electric generating companies to achieve aggressive emissi on reductions and states to make sweeping changes to their existing regulations and electric generation, transmission, and distribution systems. C ommenter s said given the stringency of the interim standards, the proposed implementation schedule will force states to rely on coal unit closures to achieve compliance.

Commenter s stated allowing states to develop their own glide paths would also allow states to take into account the remaining useful life (RUL) of existing assets in compliance planning, which is a fundamental responsibility of the state. C ommenter s said recognition of RUL provides states with the flexibility to recognize in 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 infrastructure. C ommenter s said in proposing interim goals that effectively obligat e the early retirement of coal resources in some states, EPA does not address the remaining useful lives of these resources; Section 111(d)(1) states that EPA "shall permit the State in applying a standard of performance to any particular source under a pl an submitted under this paragraph to take into consideration, among other factors, the remaining useful life of the existing source to which such standard applies."

Comment 11: The EPA should eliminate the interim compliance goal and allow states to desig n their own glide paths and/or goals.

Response 11: The response to this comment is the same as the response to C omment 6 in section 4.2.1

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

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

Commenter s stated that rather than impose inflexible interim emission rate goals on the states, EPA should allow states to design interim plans that demonst rate credible pathways to118 compliance in 2030. C ommenter s said EPA can, and should, use objective criteria to evaluate state plans and assess whether each plan demonstrates how the state will reduce its emissions and/or emission rate to achieve its 2030 goa ls. C ommenter s suggested two criteria be used to evaluate state plans: (1) procedural criteria, designed to ensure that the plans are credible and enforceable; and (2) substantive criteria, designed to ensure that the plans consider factors important to co ntrolling greenhouse gas ("GHG") emissions from the power sector. C ommenter s stated the criteria should serve as the basis for an inquiry into whether a state plan adequately demonstrates that it will lead to compliance, although a state plan need not incl ude all of these elements; indeed, it would be inappropriate to require inclusion of all of the elements since they are not applicable to every state.

Commenter s said eliminating the interim targets does not mean that no actions will be taken by each state to reduce carbon emissions before 2030. C ommenter s stated on the contrary, each state would have the flexibility to determine the most cost effective and reliable way to achieve the 2030 emission goals while outlining the meaningful reductions expected in each individual state plan's glide path. C ommenter s 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 l ife of existing generating resources, grid reliability and customer cost minimization. C ommenter s said states would be required to demonstrate reasonable and verifiable progress toward the 2030 goal and could not delay taking action to reduce emissions. C o mmenter s said States would demonstrate progress towards the 2030 goal consistent with their projected emission reduction glide path through the annual reporting of emission performance to EPA, taking corrective measures if needed to achieve the 2030 emissi on levels. C ommenter s stated ultimately, if states 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 prescribe a federal pl an.

Commenter s added there is a significant burden imposed by the interim compliance requirements: Projection of emission performance for nine two

- year periods; Calculating and reporting of performance annually for ten years; and Comparison of performance to the projection annually for ten years with explanations and corrective actions, if needed. C ommenter s recommended that the interim compliance period and goal be replaced with a non

enforceable glide path. C ommenter s said the glide path approach has been used successfully in EPA's Visibility Improvement (Regional Haze) program. C ommenter s added the state

- developed glide path would establish emissions performance targets that would be non

- enforceable prior to 2030. C ommenter s added comparison of one

- year e missions performance to the glide path would be conceptually more straightforward than comparison of performance to cumulative multiyear averages as currently proposed. C ommenter s stated states would have the responsibility to make adjustments as required to stay on track to meet the enforceable 2030 compliance target.

Commenter s added EPA should apply the structure it has adopted within the regional haze rule (40 CFR 51.308 (d)(1)) for ensuring reasonable progress; 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. C ommenter s stated the region al haze program allows the state to assess the cost of compliance, and then determine the rate of progress needed; the goals established by the state are not federally enforceable, but are considered by the Administrator and then approved when the Administ rator evaluates the adequacy of the state's plan. C ommenter s stated alternatively, or as a part of allowing states to set their reduction goals, an interim goal that reflects an average emissions rate from 2012 to the final goal would more appropriately ta ke into account the timing of measures to be implemented to achieve final reduction goals.

Commenter s added major transmission upgrade projects could take nearly the entire compliance time period to complete; this further supports a rationale 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 impacts on interim compliance
progress. C ommenter s added this approach also fully recognizes state energy planning processes in Clean Power Plan implementation.

Commenter s added for situations where states may fail to set a reasonable interim goal (or any goal at all), EPA could rely on their proposed interim target approach as a "backstop" to ensure reasonable progress on a state

- by

- state basis. C ommenter s suggested, at a minimum, EPA modify the 2020

- 2029 averaged interim target and instead 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 abov e the interim target value with proportionate performance below the target value.

Commenter s added an interim goal of 70 percent of the proposed 31.5 percent overall emission reductions by 2020 is unattainable. C ommenter s said instead, there should be a gl ide path with reasonable further progress reports describing advancement toward meeting the final goal; it is reasonable to expect the reports be required by 2020. C ommenter s propose d that the pace and path be left to the state to decide, so long as it att ains the final goal set forth in the rule.

Commenter s stated the interim target and mathematical 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 orde r to assess progress toward meeting a final target. C ommenter s 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 wi th the availability of engineering, financing, and labor resources; the sharp energy market dislocations that EPA projects for 2020 could be mitigated by eliminating the numerical interim target in favor of a mid

- course review process. C ommenter s said if a n interim target is maintained in the rule, states should be responsible for setting their own individual targets, to reflect state

- specific plans for compliance.120 Commenter s stated allow states to determine their own emission reduction trajectories to achi eve the 2030 goals; states are best positioned to manage the transition of the generating fleet to meet the final goals established by the 111(d) regulation; the final rule should eliminate the interim goals and instead require states to propose emission r eduction trajectories to EPA in their state plans. C ommenter s said giving states the flexibility to appropriately consider the costs (including costs resulting from significant job and other losses in communities that are often highly reliant on local powe r plants as economic engines), non

- air environmental impacts, planned retirements, and the implications of a massive shift to different generating resources for much of the electricity supply provides a forum for properly recognizing early action to retire coal plants.

Commenter s stated EPA should reassess the 2020 and other intermediate goal requirements and allow states to develop alternative phased

- in compliance timeframes that will ensure the final goals are met. C ommenter s appreciate d the compliance fl exibility that USEPA has built into the proposed rule, but note d that some emission reduction measures may take considerable time to implement (e.g. heat

- rate improvements, re

- dispatch, and the financing and construction of renewable energy sources); in ad dition, commenter s 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
energ y or energy efficiency, which may take more time to develop, but could result in lower CO2 emissions.

Commenter s stated eliminate the interim emission targets and allow states to design a SIP that meets the emission targets for 2030 and beyond; this provid es states additional flexibility and meaningful time to design an SIP that could contain all four of the Building Block principles.

Commenter s added States, not EPA, are in the best position to determine what is possible for a specific timeframe by working with the facilities under 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 their state plans. C ommenter s said because of structural and legal considerations, some states will take longer for similar actions than other states; allowing states to determine their own glide paths will relieve EPA of a burden best left to states; it will be up to states, then, to justify the prop osed milestones and their associated timing. C ommenter s said approval of this type of plan could include consideration of planned activities outside of the Building Blocks used for goal setting. C ommenter s added averaging the emissions rates for the interi m compliance period creates a very steep glide path between now and 2020 for

most states. C ommenter s said alternatives offered in 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; further, the options offered in the NODA may not accomplish the smoothing that has been requested.

Commenter s stated EPA could eliminate the interim goals completely, and simply require states to file and de velop plans to achieve the 2030 goals with an emission reduction trajectory of the state's choosing.121 Commenter s stated EPA could revise its interim goals to provide a reasonable emission reduction trajectory, while granting states considerable deference to craft a different emission reduction trajectory. C ommenter s said EPA could authorize states to apply the elements of the BSER in establishing their own emission reduction trajectories, or it could allow states to make

non

- BSER based adjustments on the bas is of reliability, cost, effectiveness and other considerations.

Commenter s stated the interim goal should be replaced with a milestone approach; commenters suggest ed the replacement of the interim goal with a milestone approach that is negotiated by the

s tates and the USEPA during the planning process would allow for more measured and effective implementation, providing states with the ability to meet their electricity needs while continuing to ensure the safety and reliability of the grid, and compliance with overarching federal laws such as the ESA. C ommenter s said many of the measures identified under each of the building blocks are discrete events that will result in large 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

. C ommenter s said state plans should include compliance m ilestone targets, rather than a glide path , that are aligned with integrated resource planning approvals, instead of an unachievable interim goal.

Commenter s added EPA's proposed schedule for implementing the rule leaves states with little or no flexibility to determine a different compliance path and avoid the compliance cliff; EPA intends to finalize the Proposed Rule in 2015, which means that the earliest s tate implementation plans could be approved by EPA is 2017 or 2018. C ommenter s said at most, this schedule leaves 3 years for electric generating companies to achieve aggressive emission reductions and states to make sweeping changes to their existing elec tric generating, transmission, and distribution systems; given the stringency of the interim goals, the proposed implementation schedule will force states to adhere to EPA's prescribed redispatch and coal

- unit closures to achieve compliance with the goals. C ommenter s said EPA should forego the interim goals and work with states to develop a glide path toward a legally defensible BSER taking cost and remaining useful life into consideration as required by the CAA.

Commenter s added there are two options for providing true flexibility when creating the State Plans. C ommenter s said the best option is the elimination of the interim goal; the State Plan already requires biennial reporting, which will provide the EPA with an updated measure of how the states are p rogressing. C ommenter s said there is no legitimate reason to force a state into having a pre

- requirement when it already has a final goal to meet. C ommenter s 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 of the states and the ratepayers who ultimately may have to fund these changes. C ommenter s said the second option is to establish a glide

- path towards the goal that will allow states to more effectively reach the target than if they had to122 abruptly comply with a majority of the goal 10 years prior to the final goal; this would also allow states to take into consideration the remaining useful lives and book lives of coal plants that would reach the end of their book lives during the 2020

- 2030 time period. C ommenter s said the best option is to eliminate the interim goal, allowing a glide

- path towards the end goal with biennial check

- ins as required by the State Plan.

Commenter s stated EPA should not include the proposed interim goal in the final rule and should let States establish the 2030 glide path to allow adequate time to reliably achieve compliance. C ommenter s said this will provide states and affected electric utilities with the flexibility EPA wants to allow and provide a more reasonable timeline to achieve EPA's CO2 reduction goals and to develop plans that can be tailored to individual states and regional conditions.

Commenter s stated much like the Proposed Rule affords 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 their own enforceable interim goals that will best position them for achieving their respect ive final emission performance goals. C ommenter s emphasize d 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., thr ough emission standards applying to such affected entities) to the same extent that they would have to adhere to federally

- imposed interim goals. C ommenter s added EPA should require states to justify the projections underlying their interim goals, such tha t the goals set the states on a reasonable path to attaining the final goals. C ommenter s 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. C ommenter s believe d that incorporating flexibility would be more consistent with the value of cooperative federalism that undergirds the Proposed Rule generally. C ommenter s 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 interim goals EPA would impose in the Proposed Rule, but would not dictate how and when states plot out their trajectory towards achieving thei r final goals.

Commenter s question ed the actual benefits that will be achieved by interim carbon intensity goals; however, at the very least, the states should be allowed to establish these goals. C ommenter s said allowing the states to set the interim goal s is more consistent with the legal requirements of the Clean Air Act and because the states have a greater understanding of the specific state issues, they are better suited to establish interim goals to place each state on a successful path to achieve th e final goal.

Commenter s stated remove the interim target goal deadlines and let states set the glide path to the final compliance date of 2030.

Commenter s stated EPA should allow states to determine their own glide paths, using milestones, for reaching th e final goal, rather than setting out interim goals based on national123 average assumptions. C ommenter s said states, not EPA, are in the best position to determine what is possible for a specific timeframe by working with the facilities under their jurisdict ions; 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 their state plans. C ommenter s said because of structural and legal considerations, some states will take longer for similar actions than other states. C ommenter s said allowing states to determine their own glide paths will relieve EPA of a burden best left to states; it will be up to states, then, to justify the proposed milestones and their associated timing. C ommenter s said approval of this type of plan could include consideration of planned activities outside of the Building Blocks used for goal setting. C ommenter s said averaging the emissions rates for the interim compliance period creates a very steep glide path between now and 2020 for most states. C ommenter s said alternatives offered in 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; further, the options offered in the NODA may not accomplish the smoothing that has been requested.

Commenter s stated many states have already undertaken acti ons that EPA anticipates, including plant upgrades, the building and increased use of natural gas

- fired and renewable generation, transmission line construction, demand

- side efficiency measures and other actions included within EPA's four building blocks. C ommenter s said because such actions come at significant cost to ratepayers, states will need to evaluate the potential economic and other impacts associated with additional near

- term and often large

- scale investments in their energy systems to determine h ow much additional cost ratepayers can absorb and how quickly. C ommenter s said only state economic regulators will have the information sufficient to determine the appropriate manner and timing of the further investments necessary to achieve EPA's 2030 car bon intensity target. C ommenter s said these difficult decisions are best made by the state within the broader context of assuring that a state's electricity supply remains affordable. C ommenter s said states are also best positioned, in conjunction with reg ional transmission entities, to determine resource adequacy implications of implementation timing; for example, states and regions are best able to

assess:

- existing natural gas transportation infrastructure (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 supply and market conditions to determine whether they would be adequate to support the 70% state

- 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

- regional dispatched based substitution of NGCC generation and increased renewable generation contemplated by the CPP ;

- potential limitations on a state's ability to influence 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 significan t investments 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 path and timing.

C ommenter s said therefore, consistent with the Congressional division of responsibility in sections 110 and 111, EPA should allow states to set the appropriate pace for implementation prio r to the final 2030 performance targets; recommends that EPA allow each state to determine both the interim path and the interim timetable to meeting its 2030 performance goal.

Commenter s stated states should be able to choose a reasonable emission reducti on glide path that achieves the 2030 goal; requiring that states demonstrate compliance with the 2030 goal through implementation of the EPA

- approved plan, without reference to the proposed interim 2020

- 2029 average goal, would give states flexibility to d esign workable compliance plans which establish reasonable compliance glide paths consistent with ensuring reliability and protecting consumer interests. C ommenter s said this would allow states to ensure that there is additional time to complete needed inf rastructure development (including electric and/or gas transmission) in order to provide reliable power, and would obviate concerns regarding the system impacts of abrupt shifts in dispatch between existing coal

- and gas

- based units; these infrastructure d evelopments continue to take more and more time as public opposition must be resolved prior to construction. C ommenter s said it would eliminate conflicts between the timing of the interim period and legislative calendars, market rules and utility investmen t schedules; it also would recognize and value reductions achieved since 2012, encouraging early action where possible.

Commenter s stated eliminating the interim compliance average goal does not require a fundamental altering of the proposed guidelines; i nstead, the proposed guidelines already are designed to allow states to develop their own compliance plans, and a description of the reduction trajectory to 2030 is a required element of state plans. C ommenter s said EPA can and should use the proposed appr oach to state plans to ensure that state plans and emission reduction glide paths are designed to meet

- and do actually achieve

- the 2030 goals.

Commenter s stated EPA should revise the proposed Rule to allow states to set the standard of performance ind ividually for each unit in its jurisdiction and to abandon the interim goals altogether. The commenter s said if EPA chooses to keep an interim goal, EPA must permit states to define a phase

- in schedule for building block 2 based on infrastructure limitatio ns; this is absolutely necessary to give states a fighting chance at trying to comply with the final rule.125 Commenter s stated EPA has proposed interim emissions goals that are so stringent that many states will be required to achieve most of their CO2 emis sions reductions by 2020. C ommenter s said EPA's proposed timetable for the approval of state plans leaves states at most with two

- and

a

- half years to implement required CO2 reduction measures; a task that will be extremely difficult or impossible to achiev e without severe economic disruption. C ommenter s said EPA should give states discretion to develop individualized 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
manag eable terms.

Commenter s stated the proposed rule includes a large 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. C ommenter s said it is im portant that a rule with this potential effect follow a timeline sufficient to develop clarity and a reasonably functional process for implementation. C ommenter s said as there is no statutory requirement that reductions be achieved on a particular schedule and to address concerns about the pace and timing of reductions, EPA could relax the schedule and still achieve the proposed reductions on a timely basis. C ommenter s said to provide the necessary relief, EPA should finalize the proposed 2030 goals and all ow increased flexibility for states to select the interim compliance goals and glide path timeline for meeting the 2030 goal. C ommenter s said should EPA deem it necessary to have a specific interim target, EPA should allow individual states to select the i nterim goal as long as they demonstrate compliance and meet either the final 2025 or 2030 emission rate goals at their discretion. C ommenter s said in providing this flexibility with the timeline, the EPA should allow

states to use state

- specific informatio n regarding energy efficiency and estimated energy savings. C ommenter s said the EPA should allow states to include non

- binding milestones as a means of measuring and ensuring progress toward the final goal, in lieu of interim compliance periods that

serve as binding annual requirements.

Commenter s stated the ultimate objective of EPA's proposed 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 feder al action may be taken), even though the 2030 goal may not be in jeopardy. C ommenter s said complicating this matter is the fact that EPA set interim goals that are front

- loaded, and state plan approval timelines leave insufficient time for action; furtherm ore, the U.S. Energy Information Administration (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). C ommenter s said the interim goal progress, established by each state or multi

state compact, should not be over

- ruled by EPA for a mere 10% deviation; such enforcement discretion should solely be with state regulators who are more familiar with state specific circum stances and planning. C ommenter s 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, commenter s request ed that EPA eliminate the interim federal goals and enforcement mechanisms, and allow states or multi

- state compacts to develop their own emissions reduction trajectory within their individual plans; the request maintains the concept of the 2030 long

- term federal goals, while supporting st ate specific planning scenarios and infrastructure development.

Commenter s stated i n setting interim goals, the EPA assumes that heat rate improvement projects can be implemented by 2020; it is unlikely that heat rate improvement projects could be complete d 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. C ommenter s said longer time periods for compliance provide for more flexibility in project management and cost control. C ommenter s said the projects that offer the greatest heat rate improvement potential are long lead time projects; if many parties across the country are attempting to accomplish similar projects during the same time period, there may be cost increases or sc heduling concerns due to supply chain bottlenecks in obtaining equipment. C ommenter s recommend ed to eliminate the interim goal (2020

- 2029) and allow states to establish a state

- specific glide path to the 2030 final goal. C ommenter s said if the interim goal s remain, the EPA should allow states to determine a reasonable schedule for implementing heat rate improvement projects on a case

- by

- case basis. C ommenter s said at a minimum, as suggested in the Notice of Data Availability (NODA), the EPA should phase

- in the Block 1 heat rate improvements for coal

- fired power plants in the Best System of Emissions Reduction (BSER) goal computation calculation.

Commenter s stated in setting interim goals, the EPA assumes that 70 percent NGCC redispatch can be accomplished b y 2020; this is not realistic if air, water or other permit amendments, or upgrades to natural gas pipelines and electric transmission facilities, are required to accommodate increased NGCC operation and changes to the operation of the electrical grid. C om menter s said in some cases, NGCC dispatch of 70 percent may not be achievable due to physical site limitations or equipment design constraints. C ommenter s recommend ed to eliminate the interim goal (2020

- 2029) and allow states to establish a state

- specific glide path to the 2030 final goal. C ommenter s said alternatively, EPA should allow states to determine a reasonable schedule and feasible level for implementing NGCC redispatch in their states based on the extent to which permit modifications and additiona l infrastructure improvements (e.g., natural gas pipeline expansion or transmission improvements) are needed to support increased use of existing NGCCs. C ommenter s said if the interim goals remain, then the commenter s support ed the suggestion in the NODA o f phasing Building Block 2 in gradually over time by assuming a ramp up period.

Commenter s stated EPA should eliminate the proposed interim goals and allow states to determine an appropriate path to achieving compliance with the final emission rate goals i n 2030. C ommenter s said this would allow energy companies more time to bring on new generating resources, work to seek solutions to transmission and fuel supply issues created by operational changes, and/or implement conservation measures, and states to en sure there are adequate resources to meet state demand.12 7 Commenter s 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. C ommenter s said this 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). C ommenter s said it also allows the states to address many of the timing issues created by the rigid 2020 interim goal that requires 80% of reductions be achieved in such a short time frame. C ommenter s said this will give the states the opportunity to consider 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. C ommenter s said it also provides time to develop EE credit tracking mechanisms; most importantly, it allows states to work with the industry and other stakeholders to develop their plan to meet the 2030 final goal in a manner that reflects the nature of their existing fl eet, their renewable potential, and allows for the most cost

- effective approach to prevent economic chaos during the interim period.

Commenter s added many states face a dramatic drop from their 2012 emission rate to their interim goal; in South Dakota's ca se, 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. C ommenter s said this occurs because for South Dakota, EPA's first three building blocks are assumed achievable immediately, or are fully ramped up, by 2020. C ommenter s 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 e ntirely inconsistent with utility investment planning. C ommenter s said in effect, 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 Dakota, the only option to achieve the 2020 goal is likely to be premature retirement of the state's only coal

- fired power plant. C ommenter s said this will lead to high costs, stranded assets, and reliability issues. C ommenter s said instead, EPA

s hould: 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 practical and cost

- effective ways to reach the 2030 goal; and 2. If state plans show a credible trajectory to the 2030 goal with reporting milestones and verifiable measures, EPA should not set binding interim goals.

Commenter s stated EPA's 2020

- 2029 interim goal and emissions rate glide path eliminates state flexibility and is economically burdensome to Utah an d other states. C ommenter s said EPA has proposed an interim emissions goal for the state that is front

- loaded and will require Utah to achieve over 75 percent of its CO2 emission rate reductions 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. C ommenter s said the front

- loading of emissions rate reductions means states will only have two or three years to implement the requi red CO2 emissions reduction measures. C ommenter s said the implementation of EPA's compliance tools, including heat

- rate improvements and redispatch, are costly, unrealistic and require more time to implement than is allowed under the proposed rule. C omment er s said the proposed rule does not adequately address the time or cost of infrastructure needed to facilitate new power generation,128 including natural gas and renewable power generation. C ommenter s said the EPA has also not addressed the particular challen ges of developing new infrastructure in the West. C ommenter s said compared to other parts of the country, utilities 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). C ommenter s said the EPA has not presented any plan for addressing these issues. C ommenter s 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.

Commenter s stated EPA has proposed interim emissions goals that are so stringent that many states will be required to achieve most of their CO2 emissions reductions by 2020. C ommenter s said EPA's proposed timetable for the approval of state plans leaves states at most with two

- and

a

- half years to implement required CO2 reduction measures; a task that will b e extremely difficult or impossible to achieve without severe economic disruption. C ommenter s said EPA should recognize Montana's discretion to develop individualized plans for the 2020

- 2029 time period that are tailored to Montana circumstances for achiev ement of any emission reduction goals.

Commenter s stated the EPA should allow states to establish interim compliance targets and a glide

- path as a part of the state's State Plan filed for approval with EPA; no interim goal should be established by EPA. C o mmenter s said EPA has repeatedly stated that its goal is to give states flexibility; the goals set for Arizona do not provide that flexibility; in fact, they provide Arizona with no flexibility as 90 percent of the goal must be achieved by 2020 in order fo r Arizona to meet the proposed interim goal. C ommenter s said removing the interim goal could restore some flexibility for Arizona.

Commenter s stated the current Interim Goal deprives Arizona of any flexibility in how it implements the proposed rule; Arizona has one choice only: the way that EPA has set forth the goal calculations; any change in the proposed balance between Building Blocks (BB) 1, 2, 3 or 4 results in Arizona being unable to achieve the Interim Goal, or else results in Arizona greatly overshooting the Final Goal. C ommenter s said this effectively prevents from exercising any flexibility in shaping a compliance plan for the state a nd greatly increases the costs and reliability risks of the proposed rule. C ommenter s asserted that the appropriate solution is for EPA to direct states to prepare and submit a proposed Interim Goal, together with appropriate increments of progress, as par t of the State Plan; an Interim Goal that reflects appropriate implementation time frames for BB1, BB2 and EPA's proposed approach to BBs 3 and 4, should be presumptively approvable. In addition, commenter s recommend ed that EPA consider granting the states the ability to vary from the presumptively approvable goal if the state can identify specific transmission or infrastructure obstacles to achieving the presumptive Interim Goal in a timely fashion; upon State Plan submittal, EPA would review the State Pla n, including the129 proposed Interim Goal and increments of progress, and would approve the Interim Goal as part of Plan approval. C ommenter s asserted that this approach provides improved flexibility and recognizes, as does Section 111, that there may be stat e

- specific issues that require final adjustment. C ommenter s 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.

Comment er s 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 and track its own progress towards t he state final emissions rate goal. C ommenter s said rather than mandating an enforceable interim goal, EPA should give Arizona (and other states) discretion to develop an individualized plan that establishes programs and measures that set the state on an a chievable compliance path to meet the established goals; in particular, EPA should allow each state to make its own determination as to which measures can be implemented on a time table that is manageable for the state but leads to achievement of the 2030 goals. C ommenter s 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 the true flexibility contemplated by 111(d) and the ability to de velop plans that more fully recognize an achievable path to 2030.

Commenter s urge d EPA to eliminate the proposed interim goals and allow states to exercise the authority granted to them by Section 111(d) to set a graduated path for achieving compliance wi th the final 2030 emission rate goals. C ommenter s said the proposed interim goals are unnecessary to ensure that states take measurable steps to achieve reductions throughout the 2020 to 2029 compliance period. C ommenter s said states have a strong economic incentive to gradually implement emission rate reductions and avoid abrupt changes in their electric generating, transmissions, and distribution systems, which would jeopardize grid reliability. C ommenter s said allowing states to phase in reductions gradu ally, rather than making sweeping and disruptive changes to the existing electric generating system, would provide Oklahoma with reasonable accommodations to complete necessary infrastructure improvements, including the construction of new generation resou rces, transmission 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.

Commenter s 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 regulated source and are predicated on actions by others. C ommenter s said the Building Blocks used to develop the individual state goals are inappropriate and are, for Florida at least, based o n inaccurate data. C ommenter s were concerned that because none of the Building Blocks is fully achievable in Florida, there is no margin to130 make

- up under one Building Block the amount to which Florida would fall short on another. C ommenter s said to determi ne the interim goal for each 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 assumed that each state's fleet of coal

- fired
gene rating units could achieve a six percent heat rate improvement and that the improvement would directly translate to a six percent reduction in net CO2 emission rate. Commenters said

u nder BB 2, EPA assumed that states would be able to utilize existing and under

- construction NGCC up to seventy percent of their capacity; neither of these is achievable, prudent or economically logical. Commenters said i n contrast to its treatment of BBs 1 and 2, EPA assumed that emission rate reductions from BBs 3 and 4 would ramp up gradually throughout the ten

- year interim compliance period. C ommenter s said as a result of EPA's assumptions regarding the implementation of BBs 1 and 2, the interim goals for many states are so stringent almost all of the required emission rate r eductions required by the Proposed Rule must be achieved in the first year of the ten

- year interim goal compliance period. C ommenter s said for Florida, EPA assumes 76% of the total reduction required in 2030 would be achieved by 2020; if the structure of C PP withstands legal challenges and progresses under a building block regime, each state should be allowed to develop its own numeric goals based on what it determines is reasonable and achievable.

Commenter s stated as currently proposed, the 2030 final goal established by EPA will be challenging for states to meet; each state faces its own unique challenges with respect to generation mix, transmission infrastructure needs, natural gas supply constraints, market deman ds and limitations, and legal and political roadblocks, all of which hinder development and implementation of a state plan and achievement of the final goal. C ommenter s said EPA proposes an aggressive interim goal, which for Kansas is a rate

- based standard of 1578 lbs CO2/MWh averaged over the years 2020

- 2029. C ommenter s 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. C ommenter s said according to EPA's proj ections, Kansas would need to achieve over half of the required emissions reductions by 2020, a mere two to three years after approval of a state plan, and almost 90 percent of the required reductions by 2025. C ommenter s recommend ed that EPA eliminate the aggressive interim goals and allow each state to determine its own interim reductions and glide path toward achieving the 2030 goal and maintaining that final goal thereafter.

Commenter s stated the interim goal proposed by EPA is far too aggressive; Kansa s is required to achieve 82 percent of its required reductions by 2020 in order for the state's utilities to meet the interim goal of 1,578 lbs CO2/MWh; the final goal for Kansas is 1,499 lbs CO2/MWh by 2030. C ommenter s said Kansas would have only a few ye ars 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. C ommenter s said EPA should eliminate the aggressive interim goals and allow each state to determi ne its own interim reductions and "glide path" toward achieving the final 2030 goal.131 Commenter s stated Washington State has some of the lowest carbon emissions in the country and the only coal plant, the Centralia Coal Plant located in Centralia, Washingto n, shuts down partially in 2020 and fully in 2025, but Washington cannot meet the 2020 goal. C ommenter s said EPA's interim goal for Washington State is too strict and would require too large of a reduction too quickly because application of EPA's building blocks would require the entire 1,460 MW Centralia Coal Plant to retire before 2020. C ommenter s said with a final rule and state implementation plan due out in 2016 or 2017 there is not enough time to comply with a stringent 2020 requirement. C ommenter s sa id effectively the interim 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 issues or costs to consumers. C ommenter s said the only way Washington can comply is to completely shut down its only coal plant (the 1,460 MW Centralia Coal Plant) by 2020, earlier than planned. C ommenter s 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 would make the region short by an approximately 730 more megawatts of capacity. C ommenter s said it is not realistic to expect that much new electric and fuel supply infrastructure can be constructed to meet this capacity shortfall in such a short timeframe. C ommenter s stated Washington State will not meet its interim and final goal until after 2026 when all Centralia units are shut down. C ommenter s said EPA has determined the 2030 targ et; therefore, commenter s recommend ed that states should have broad discretion to set an interim goal to ensure the 2030 target is met and to also address regional reliability and cost issues. C ommenter s said EPA should allow each state to adopt their own unique emission glide path (rate or mass) that demonstrates ultimate compliance with the 2030 date, but takes into account reliability and cost, allowing for alternative interim targets and dates; this would provide states the flexibility to adopt binding interim reduction goals on a glide path that makes sense based on each state's unique balance of reliability and cost.

Commenter s said the time needed to plan and deploy the infrastructure necessary to support CPP compliance warrants the elimination of th e interim target period it stipulated for 2020 through 2029. Commenter s said instead the EPA should defer to the states to establish measures needed to achieve the EPA's CPP 2030 target. Commenter s said the EPA's current glide path is "front loaded" by req uiring most states to provide the Blocks 1, 2 and 3 compliance by 2020 and enabling gradual deployment of efficiency measures through 2030. Commenter s said this approach fails to recognize the time necessary to build out utility infrastructure necessary to achieve compliance with the CPP and ignores the ongoing integrated resource planning underway in Minnesota that has provided for early deployment 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 evaluation of building block potential in the final CPP , the interim period begins in 2022 and ends in 2029 (as opposed to starting at the proposed 2020 year) . The EPA has provided illustrati ve emission values for the interim period steps 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

. The use of these132 3 year, 3 year, 2 year rates over the inter im period is discussed in Section VIII. Also, s ee section s 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:

Commenter s stated th e 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 ten

year averaging period (2020

- 29) prior to the final compliance date of 2030. C ommenter s s aid the difficulty with this approach stems from the fact that EPA has set an interim goal that requires Utah to achieve a majority of the required emission reductions, 75 percent, by the year 2020. C ommenter s said this goal scenario looked at whether 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 2030 EPA emissions target for the state of 1,322 lbs/MWH. C ommenter s said under the current compliance trajectory Utah would exceed the interim rate starting in 2020. C ommenter s said a less stringent Glide Path, created by assuming a straight

- line trajectory between 2020

- 2030 would move the 2020 emissions rate target of 1,487 lb s/MWH out in time to 2023 and enable the state to be in compliance with the Section 111(d) interim standard through 2023, and provide an extended period for the state and affected utilities to implement measures while still being on a path to achieve Utah' s 1,322 lbs/MWH emissions rate target.

Commenter s urge d EPA to provide states with additional 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

- carbon generation fleet and ret ains existing commitments to coal retirements. C ommenter s said such 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 obligation to ma ke consistent progress toward, and to achieve, its 2030 emissions reduction goal.

Several commenters said the EPA should eliminate enforceable interim goals from its proposal and preserve the discretion of the states to determine the most appropriate stat e

- specific compliance approach and timeline. C ommenter s said providing the states with the flexibility to propose a more tailored glide path by taking into account the statutory factors such as remaining unit life, energy requirements, and cost, will subst antially reduce overall compliance costs. C ommenter s said if states are provided greater control and flexibility, unit closures and other significant compliance measures, including potential replacement power, can be incorporated into a longer planning hor izon that minimizes stranded costs and economic dislocation. C ommenter s said existing state or regional programs and requirements (e.g., integrated resource planning, energy efficiency programs) can provide objective criteria through which the EPA can moni tor ongoing improvements and ensure that compliance with final emissions targets will be achieved.133 Comment 13: The EPA should eliminate the interim goals and allow a phase in approach for BB 1 & 2; rate of progress

. Response 13: See section s I.A. and V. D. of the final rule preamble of the CPP for the EPA’s response to this comment. Per commenters suggestion, the EPA has introduced greater flexibility in the deployment of building block two. Additionally, the final CPP includes an interim period that st arts in 2022.

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

Commenter s stated EPA should eliminate state interim goals or, if not, phase in building blocks 1 and 2 over the entire compliance period. C ommenter s said as proposed, EPA assumes states can completely achieve building blocks 1 and 2 by the year 2020, which makes the interim goal for the early part of the compliance period (starting in 2020) unreasonably strict. C ommenter s said under the proposal, Wisc onsin would need to achieve 40

- 50% of the state's total emissions reductions by 2020

- just a few years after state plans are due. C ommenter s said it is unrealistic to assume states and utilities can make these changes this quickly, and attempting to do so could negatively affect the reliability and cost of the electric system. C ommenter s said t he Midcontinent Independent System Operator (MISO), the ISO that handles dispatch and reliability for the region, has also expressed concern that the interim goals a s proposed would create resource inadequacy and reliability problems for the region. C ommenter s 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 enac t unreasonably strict limits in the latter years; in addition, assuming full compliance with blocks 1 and 2 by 2020 in calculating the goal entirely ignores the practical matter that plan development will require substantial time following EPA's final rule making; further, utilities will need ample time to seek construction permits from WDNR, authorizations by the PSCW, perform construction and demonstrate compliance with blocks 1 and 2. C ommenter s said EPA should eliminate the numerical interim goals and in stead require states to demonstrate that they are making reasonable progress towards their final goals between 2020 and 2030; this approach would be similar to the state demonstrations of rate of progress (ROP) already required under other parts of the Cle an Air Act and would rely on state determination of intermediate goals as part of their state plan. C ommenter s said alternatively, if EPA chooses to retain the interim goals, they should allow states to phase in building blocks 1 and 2 over the 10

- year com pliance period; this would be consistent with the construction of building blocks 3 and 4, which are phased in over the compliance period, and would create a more realistic and achievable glide path for states to follow to reach their final goals.

Commente r s stated a reasonable phase

- in period for reduced emission intensity at coal

- fired EGUs and redispatch is needed.

Commenter s stated in establishing the proposed interim goals, the EPA's assumptions about the time needed to implement emission intensity re ductions and redispatch (Building Blocks One and Two) are overly aggressive and may not be achievable in light of cost, transmission constraints, and reliability concerns. C ommenter s said the EPA proposes to calculate states'134 interim emission goals based o n the assumption that both Building Blocks One and Two can be fully implemented by the 2020 start date for the interim compliance period; thus, the EPA has effectively "front

- loaded" the emission reductions that states are expected to achieve from these

me asures.

Commenter s stated the EPA's assumption that all emission reductions from Building Blocks One and Two could be implemented by 2020 does not account for a number of important constraints; for example, implementation of the equipment upgrades include d in Block One could require an EGU to obtain or modify its state or federal permits, 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 cons truction of additional 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 weather

- or transmission

- related reliab ility

concerns.

Commenter s stated because the proposed interim compliance target is computed as the average of the emission rates of each year in the 10

- year interim 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. C ommenter s said these states may find it necessary to impose more aggressive RE and EE targets on their EGUs or other entities or other measures outside of the BSER in order to make up for the shortfall in emission reductions from Building Blocks One and Two; consequently, for certain states

- 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 that are far more stringent and costly than the EPA assumes, along with potential reliability, pipeline, and transmission constraints.

Commenter s stated in calculating other components of state goals, the E PA has explicitly assumed reasonable phase

- in periods, in recognition of the fact that states cannot immediately construct the infrastructure or implement the programs necessary to achieve the EPA's RE and EE projections for 2030. C ommenter s said the EPA s hould likewise build in reasonable phase

- in periods for Building Blocks One and Two that account for the significant regulatory, reliability, and capacity issues that will need to be addressed before states can fully implement Building Blocks One and Two. C ommenter s said in the alternative, the EPA should allow states to adjust their interim goal to account for the barriers, delays, and reliability concerns they may face in implementing Building Blocks One and Two.

Commenter s stated EPA ' s second suggested a pproach to 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." C ommenter s said the imposition of 100% of the Block 2 reductions in 2020

- even recogniz ing 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 significant price impacts in 2020 and possibly thereafter. C ommenter s said it is not specifically the Block 2 targets that are problematic, but135 rather the sudden increase in NGCC dispatch vis

- a

- vis the current operating profile of existing NGCC facilities. C ommenter s said phasing in the Block 2 targets over time would be an effective way to reduce the sudden impact of significant re

- dispatch to NGCC facilities.

Commenter s stated EPA's proposed glide path for reaching the 2030 emissions rate target is overly restrictive; under the c urrent 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 combined cycle (NGCC) resources to a 70
perc ent capacity factor to occur by 2020. C ommenter s said in states with significant coal and/or natural gas resources, this results in a dramatic reduction in emissions that must be implemented by 2020. C ommenter s said since state plans may not be approved un til as late as 2019, this potentially leaves a year or less to achieve these reductions. C ommenter s said requiring such dramatic emission reductions in such a short time period cannot be reliably or cost

- effectively accommodated by the interconnected elect ric system. Commenter s added for example, when applying building blocks 1 and 2 to Arizona's resources, all of the coal generation in Arizona, including PacifiCorp's Cholla Unit 4, is completely displaced by natural gas resources by 2020. C ommenter s underst ood EPA's stated intent that states are not obligated to apply building blocks 1 and 2 in this manner and may choose to meet the interim 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 reductions from year to year that do not reflect the step

- change nature of resource development, it would 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 of certain coal

- fueled resources. Commenter s added as recognized by EPA, renewable resource development and energy efficiency programs take years to ramp up and develop ; renewable resource development timelines in particular are significantly impacted by permitting and construction requirements. C ommenter s 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. C ommenter s said these issues are complicated by the fact that many of the NGCCs in states bordering California were developed by i ndependent power producers with long

- term power purchase agreements with California utilities. C ommenter s said when coupled with the short compliance timeframe for emissions reductions associated with building blocks 1 and 2, states are left with no viable options to comply with the proposed interim goals. Commenter s added EPA should remedy this situation by allowing states to develop their own compliance plan reasonable progress trajectories prior to 2030, or at a minimum, phase

- in all of the tools it choo ses to use for compliance over the entire 2020

- 2029 compliance period, including heat rate improvements and increased utilization of natural gas.

Commenter s asserted the 2030 targets as currently proposed can be met and meaningful emission reductions achie ved; however, commenter s asserted EPA should consider removal of the interim targets or allow a phase

- in of heat rate improvements and NGCC re

- dispatch in a manner similar to the phase

- in of renewables and energy efficiency, particularly in states where th ese two136 components of BSER impact the ability of those states to ensure safe, reliable supplies of electricity at a reasonable cost.

Commenter s recommend ed introducing greater flexibility 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. C ommenter s said under the current proposal, the

met hodology for establishing the interim emission rate goal requires that emission reductions occur by 2020 that are equal to the BSER assumptions for heat rate improvements and increased utilization of natural gas. C ommenter s said in states with significant coal and/or natural gas resources, this results in a substantial step change in emission reductions required by 2020. C ommenter s said thereafter, emission reductions are assumed to occur through 2030 based on the BSER assumptions for further increased rene wables and energy efficiency. C ommenter s said accordingly, though there is a "glide path" available for compliance from 2020 to 2029, in many cases this is preceded by steep emission reduction required by 2020. C ommenter s said such a sudden and steep trans ition from coal to natural gas

- 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

- fuel ed resources. C ommenter s said allowing states to phase in these components of BSER over the entire 10

- year interim period would effectively mitigate the concerns identified above and establishes parity for the timing of requirements among the four building blocks. C ommenter s said such an approach could provide relief to states with significant reduction requirements by 2020, as currently proposed, without jeopardizing the ability of states to meet the final emission rate goals. C ommenter s said this approach would also allow states to take into account their unique circumstances, such as the timing of coal retirements, when proposing how they will meet the final goal.

Commenter s stated EPA should adopt a procedure for phase

- in of Building Blocks 1 and 2 in

st ate plans. C ommenter s said the proposed Clean Power Plan assumes that building blocks 1 and 2 can be fully implemented by 2020. C ommenter s had two valid concerns with achieving building blocks 1 and 2 by 2020; improvements related to building block 1 are u nit specific and may require significant capital investment; Building block 2 affects ongoing investment in pollution controls. C ommenter s said Colorado, and likely most other states, have experience developing plans to achieve a glideslope with milestones (for example, the Regional Haze State Implementation Plan) or a future goal with measurable intermediate actions (for example, the Ozone State Implementation Plan); EPA should adopt one of these procedures for states to use in setting interim milestones f or building blocks 1 and 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 o f 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:

Commenter s stated the proposed interim compliance average period excludes emission reductions achieved before 2020 and perversely limits state incentives for initiatin g earlier emission reductions. C ommenter s said EPA proposes to 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. C ommenter s stated in creating an interim compliance average measured over the period 2020

- 2029, EPA has created an arbitrary dividing line: planned emissions reductions that were "on the books" as of 2012 may not be counted, but the same reductions that we re put "on the books" in 2013 or later would be counted.

Commenter s added the interim goal as proposed is troublesome in part because not allowing RE and energy waste reductions to count prior to 2020 has the perverse effect of delaying implementation of t hose programs, which can lead to fewer total tons of CO2 emissions being avoided. C ommenter s said when a state has shown success 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 expand these programs until a future year when credit can be taken; there should be some programmatic method to allow credit towards the program goals for permanent reductions achieved from 2012 t o 2020. C ommenter s 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 determined in terms of calculating lifecycle savings and associated emission reductions for measures installed prior to 2020. C ommenter s said these emission reductions from EE programs should be shown to be permanent, recurring into the future, and contributing to CO2 reductions so long as the energy savings were quantified and verified throu gh independent evaluation, measurement, and verification. C ommenter s said in the event that USEPA feels compelled to maintain an interim goal, 2025 would be more favorable than 2020, time is needed to make the proper adjustments and accommodation to shift generation to meet the US EPA required goals.

Commenter s stated with regard to the suggestion that early reductions could be used as a way to ease the 2020

- 2029 glide path, the EPA requests comment on a range of possible approaches to this type of credit for early action (79 FR 34918

- 34919). C ommenter s 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 reduc tions needed during the 2020

- 2029 period. C ommenter s said the EPA also requests comment in the proposed rule on a second approach in which states could choose early (e.g., pre

- 2020) implementation of state goal requirements, which could provide states wi th the ability to achieve the same amount of overall emission reductions but do so by making some reductions earlier (79 FR 34919). C ommenter s asserted that these approaches are too limited and should be expanded to better represent the progress already ma de by electric utilities to reduce CO2 from the power sector and to encourage further early reductions pre

- 2020. C ommenter s 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. C ommenter s said this approach does not appear to recognize that certain existing NGCCs may have design, operational, or regulatory restrictions that need to be factored into the schedule. Therefore, commenter s recommend ed that the EPA's final guideli nes 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. C ommenter s said at a minimum, the EPA's Clean Power Plan should not require reduction s any sooner than five years from EPA's final approval of a state plan (or regional plan).

Commenter s stated EPA calculated a 2012 emission rate for each state as part of the process to set the state

- specific emission rate goals, but the interim average co mpliance period does not start until 2020. C ommenter s said EPA proposes to limit the reductions that can be included in state plans to those achieved during the interim period; this means that states would not be able to include reductions that occur befor e 2020. C ommenter s said for example, states that undertake EE measures in 2015 will only be able to include the reductions from five years of those measures' estimated 10

- year reduction life; similarly, depending on whether a state chooses a

rate

- or mass

- based approach, retiring coal

- based units 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. C ommenter s said in creating an in terim compliance average measured over the period 2020

- 2029, EPA has created an arbitrary dividing line: emissions reductions achieved after 2019 count, but the same reductions achieved before 2020 would not. C ommenter s said this penalizes states and EGUs that have taken early action to reduce emissions, creates disincentives for additional early action, is not required by the CAA and unnecessarily limits state flexibility in designing compliance plans.

Commenter s stated the proposed rule provides little or no incentive for states to implement emission reduction measures prior to 2020, since these measures would provide no compliance benefit until 2020. C ommenter s said in the case of energy efficiency projects, since such projects have a limited measure life , implementing energy efficiency projects before 2020 would reduce the total benefit received over the life of the project. C ommenter s recommend ed States should be allowed to bank credits from emission reduction measures implemented after 2012 and prior to 2020; such credits could be in the form of either tons of emissions reduced or MWh of carbon

free generation. C ommenter s said states should be able to use such credits for compliance purposes beginning in 2020, and should be able to bank excess credits ge nerated during a compliance period for use during a subsequent compliance period.

Commenter s stated the proposed rule is being interpreted as offering disincentives for action between now and 2020 by utilities and state regulators. C ommenter s said while th e proposed rule clearly states that actions between now and 2020 would count toward compliance, it is not clear at all how that would happen, as there is no provision for banking credits for use during the compliance period. C ommenter s said EPA should main tain this early action incentive and make it more meaningful and clearer, especially if a utility pursues a compliance action that their state does not include in the final state plan. C ommenter s stated that utilities should be empowered to act to reduce e missions prior to the finalization of a state plan, even if that state plan does not139 explicitly recognize the compliance option the utility chose to pursue. C ommenter s added EPA should also consider how to encourage early actions during the 2012

- 2020 per iod to reduce cumulative emissions and improve emissions performance. C ommenter s said EPA should also clarify that retirements occurring after the base year and before 2020 count toward compliance, regardless of the reason why the specific EGU is being ret ired; the focus should appropriately be on the fact that the specific EGU will no longer be emitting pollution.

Commenter s stated EPA's proposed goal calculation methodology 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. C ommenter s 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.

Commenter s adde d 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 g oals for Illinois (16 percent), Michigan (10 percent), Minnesota (30 percent), Missouri (10 percent), and Wisconsin (10 percent). C ommenter s said EPA determined the constant rate at which each region would need to increase its RE generation each year to re ach the regional RPS target if these rates were applied in the period from 2017

- 2029. C ommenter s said the constant rate of annual RE generation increase is called the "growth factor." C ommenter s said the growth factor for the North Central Region is six pe rcent. C ommenter s said EPA applied the region's annual growth factor to each state's 2012 RE generation level to calculate a new level of RE generation for that state in the initial year of 2017. C ommenter s 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.

Commenter s added using thi s regional annual growth factor methodology forces states that had high levels of RE during the baseline period to meet more stringent interim goals on a faster timeline; for example, Minnesota's maximum RE target (which, in this case, is the same as the 2 029 RE goal) is determined by multiplying the region's RPS goal (15 percent) by Minnesota's 2012 total generation (52,194 GWh), which equals approximately 7,889 GWh. C ommenter s said even though Minnesota's 2012 RE generation (9,453 GWh) exceeds this goal, EPA added 7,889 GWh to the denominator of Minnesota's BSER calculation beginning in 2020 and running through 2029. C ommenter s said if Minnesota's 2012 RE were less than the state's 2029 goal, Minnesota's annual RE goals would have been determined by multip lying 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. C ommenter s said the growth factor would be utilized through 2029 unless Minnesota hit its maximum tar get in advance (at which point the growth factor would no longer be used).

Commenter s added with Minnesota's 2012 RE exceeding its 2029 goal, the annual growth factor does not apply; instead, Minnesota's 2020 RE goal is the same as its 2029 goal. C omment er s 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 unrealistic plant efficiency upgrades and increased natural gas dispatch. C ommenter s said Minnesota's rew ard for early action on RE is a more stringent final performance goal for RE that must be reached by 2020.

Commenter s 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. C ommenter s said specifically, existing EE determines (1) how quickly a state will reach the proposed 1.5 percent annual EE improvement rate, and (2) a state's cumulative EE goal (because the cumulative EE goals depend on how quickly a state reaches the proposed EE improvement rate). C ommenter s said EPA assumes that states with higher historic annual incremental EE levels will reach the proposed 1.5 percent incremental improvement rate sooner than states with lower historic ann ual incremental EE levels, resulting in higher cumulative EE savings levels for early

- acting states. C ommenter s said under Building Block Four, EPA added the cumulative EE savings levels to the states' BSER calculation denominators; a higher cumulative EE savings level results in a lower performance goal; this means that states that have historically high incremental EE levels are faced with more stringent final goals.

Commenter s 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 ever

increasing incremental EE savings that EPA incorrectly assumes are achievable. C ommenter s said EPA assumes that states with higher historic annual incremental EE levels will reach the proposed 1.5 percent incremental improvement rate sooner than states with lower historic annual incremental EE levels. C ommenter s said states with existing EE incremental savings rates greater than one percent begin the performance p eriod with a 1.5 percent incremental savings rate, while states with lower starting EE incremental savings rates have a longer ramp

- up period. C ommenter s said if early

- acting states are unable to 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.

Commenter s stated when the original RGGI Program began in 2009, a limited number of "Early Reduction Allowances" were credited into the Program as 2009 allowances; similarly, when the amended RGGI Program began in 2014, previously "banked allowances" were credited. C ommenter s recommend ed 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 reductions beginning in 2020 and would recognize the imperative that BSER properly include early reductions; however, the overall stringency of the CPP in 2030 sho uld not be weakened; thus, any credit awarded by EPA in 2020 should be phased out by 2030, in a manner similar to application of the budget adjustments under the RGGI Program.

Commenter s supported EPA's suggestion to devise a scheme of early reduction cred it for states that take early action; early reduction credits could provide an incentive for states to begin more concerted efforts to reduce carbon pollution sooner rather than later. C ommenter s said early141 reduction credit could also eliminate the apparen t disparities between the emissions goals set for early acting states and the goals set for states that have been less proactive. C ommenter s asserted that any early reduction credit scheme adopted by EPA should abide by the following principles: Use of ear ly reduction credit should be limited to the state that created the credit; Early reduction credit should expire at the close of the Interim Compliance period to preserve national stringency post 2030; Credit for RE should promote renewable sources with mi nimal criteria and hazardous air pollutant emissions; and Credit for early and surplus redispatch to natural gas should only be based on measures that are federally enforceable and permanent and replace high carbon fuels with natural gas (e.g., burner repl acement memorialized 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 that 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: Inte rim targets for states that pursue multi

- state, market

- based approaches

Response 15: See section VII I 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:

Commenter s stated there is not enough time to coordinate with partners in multi

- state power grids.

Commenter s added states in regional power grids will not even know the final composition of all the state plans by 2020, when compliance with the i nterim goals begins. C ommenter s stated EPA vastly underestimates the complexity of the power system planning process and the time it takes for new infrastructure development. C ommenter s added that Texas's CREZ process took nearly 9 years from concept to co mpletion, with Texas in complete control of the execution of this process; transmission and natural gas pipeline planning, which can require approvals from multiple states and federal agencies, will take even longer.

Commenter s stated emission reductions from re

- dispatch 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 r e

dispatch. C ommenter s said in particular, states have requested modification of the interim state targets in order to allow states more time to phase

- in measures to re

- dispatch the existing fleet. C ommenter s consider ed multi

- state, market

- based approaches to be the only means to efficiently achieve re

- dispatch of generation. C ommenter s said recognizing that it will take some time for states that do not currently have carbon policies in place to coordinate and develop multi

- state, market

- based approaches, t he commenter s recommend ed that EPA signal flexibility for states142 that pursue such an approach. C ommenter s said such flexibility could involve modification of the assumptions regarding the timing of emission reductions from re

- dispatch in line with later ph ase

- in of a carbon price under a multi

- state program. C ommenter s said alternatively, EPA could establish a 'safe harbor' for compliance with interim targets for states that implement multi

state, market

- based approaches, in line with any guidance provided by EPA. C ommenter s asserted that providing this type of "carrot" in the final rule for states that pursue multi

- state, market

- based approaches will help encourage states to build multi

- state alliances, an outcome the commenter s asserted as strongly desirab le and beneficial to all interests.

Comment 16: The EPA should not assume that all efficiency improvements and emissions reductions can be implemented by 2020.

Response 16: In response to commenters’ concerns and further consideration, the interim period now begins in 2022 and ends in 2029. See section s 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:

Commenter s stated EPA should not assume that all efficiency improvements can be implemented by 2020. C ommenter s said EPA's assertion that all heat 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 approval for any heat rate improvements or to secure financing and contractors to complete the work. C ommenter s said for example, the lim ited universe of remaining equipment upgrades that Santee Cooper could implement at coal

fired units could increase those units' annual potential to emit other pollutants; because such an increase could trigger EPA's NSR process, Santee Cooper may be force d to undergo a costly, lengthy NSR process in order to achieve the additional heat rate improvements EPA requires in the target goal set for South Carolina. C ommenter s 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 implemented and on

- line by 2020.

Commenter s stated some coal states may be able to realize a significant portion of their emission reduction requirements before 2020, which would further minimize the first step by pre

achieving some of it; however, this is likely to only happen in states with a unique combination of features such as:

- Coal plants that are at best marginally economic under forward prices for gas and po wer;

- Less aggressive EPA interim emission reduction goals;

- Capacity markets to support cost recovery for repowering competitive coal plants to low capacity

- factor natural gas plants;143 - Ample current and future reserve margins to allow retirements witho ut 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 under 111(d).

Com menter s added these conditions do not exist in number of coal states; indeed, a number of these states are likely to see increases in CO2 emissions between now and 2020, due to economic factors such as higher natural gas prices, economic growth and, potent ially, from any nuclear retirements or extended outages in the intervening years.

Commenter s added for some states, significant interim emission goals may be correlated with higher power sector emissions before 2020; for example, states with large amounts of both combined cycle and coal plants have the largest emission reduction requirements from the EPA's second building block (gas re

- dispatch); but such mixed generation fleets will exhibit a strong tendency to increase both coal MWH and CO2 emissions as gas prices recover, consistent with forward market curves and EIA projections, especially in competitive markets. C ommenter s said similarly, states with large amounts of nuclear power have a larger emission reduction requirement due to the proposed rules t hird building 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 CO2.

Commenter s added these CO2 emission drivers are primar ily economic or market

- based; by contrast, specific policy efforts to meet some or all of EPA's GHG emission requirements prior to 2020 are unlikely in a number of coal states, for the simple reason that may be unwilling to embrace costly measures to meet the EPA's requirements before legal challenges to the rules are resolved. C ommenter s said such resolution is unlikely before 2020, and may take even longer, leading to the potential need for dramatic reductions in the first years of the program but little time for states to develop effective policies.

Comment 17: States cannot increase utilization of existing NGCCs units to 70 percent by 2020; BB2

. Response 17: The EPA has adjusted the start of the interim compliance period to 2022 in this final rule, and has incorporated a phase in of building block two deployment. Both of these adjustments address the concerns below about the immediate ramp

- up assumed for NGCC in 2020. The EPA does not believe any state needs to achieve reductions prior to the start year.

See section s 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 publi c comments under this comment:144 Commenter s 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. C ommenter s said unlike RE and EE measures, increased NGCC utilization is not phased in over the interim average compliance period; therefore, in order to meet the proposed goals, states must achieve the full magnitude of the reductions associated with this significant dis patch change starting in 2020. C ommenter s added for states in which increased utilization of existing NGCC units drives the stringency of the emission rate goals, this means that the majority of compliance must be achieved before 2020. C ommenter s stated EP A asserts that the interim period is a "10

- year ramp

- up period," but instead of allowing states to phase

- in reductions, the 2020 interim average goals create an emission reduction 'cliff' for many states.

Commenter s stated the currently proposed interim go als for Arizona are too heavily weighted toward the early years and cannot be achieved through the re

- dispatch of all coal generation in the state to NGCC. C ommenter s said though a specific resolution is not known at this time, Arizona would have to add new generation, transmission, natural gas capacity or combination thereof, which could not be achieved by 2020, the date at which the EPA assumes re

- dispatch of all of Arizona's coal units. C ommenter s said Arizona's utilities need a more reasonable trajectory that provides additional time to fully understand the implications of the proposed rule and to assist the state to develop and implement an appropriate plan.

Commen ter s stated Mississippi's interim goal is 732 l b /MWh and the final Goal is 692 l b /MWh; this means that in achieving the interim goal, Mississippi will account for over 90% of its reductions toward the final goal. C ommenter s said this is achieved based on t he assumption that all of the measures proposed in Building Block 2 can be accomplished in a short period of time; this is not the case. C ommenter s said several of the utilities in Mississippi have long

- term power and fuel contracts requiring continued ope ration and utilization of fuel; in addition, facilities such as Mississippi Power's Plant Daniel and South Mississippi Electric Power Association's Plant Morrow, have recently installed new or upgraded pollution control equipment to meet the requirements o f the MATS rule. C ommenter s said shutting these units down in such a short time period and switching to other generators would result in stranded assets and increased cost to

consumers. Commenters urge d the removal of the interim goal.

Commenter s stated it is difficult to imagine that the Interim goals could be met by 2020 in a sustainable manner. C ommenter s said using the results of Ohio EPA's regression analysis, it is estimated that such generation from all natural gas

- fired units combined would not be r ealized until 2025. C ommenter s said if the 2012 contribution 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 no t be realized until 2034. C ommenter s said U.S. EPA's goal setting for NGCC units goes well beyond what the Ohio EPA analysis asserted is technically feasible; commenters urge d U.S. EPA to examine fully the historical growth of natural gas, understanding th at such growth is reliant on adequate infrastructure development.145 Commenter s stated it is not clear that the dramatic increase in utilization of existing NGCC units by 2020 envisioned by EPA can be achieved. C ommenter s said EPA incorrectly assumes that

current natural gas infrastructure is sufficient to support this dramatic increase in the utilization of existing NGCC units. C ommenter s said under EPA's proposed guidelines, existing pipeline infrastructure would need to be expanded in a short time frame; ho wever, it take years to complete contracts and additional three to five years to permit and build new pipelines. C ommenter s said although the FERC is the lead federal agency for approving interstate natural gas pipelines, these new pipelines often require approvals from other federal agencies.

Comment 18: The proposed interim goals will not jeopardize t electricity reliability.

Response 18: See section I.A. of the final rule preamble of the CPP for the EPA’s response to this comment. See the Resource Adequacy Technical Support Document.

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

Commenter s were concerned about the impacts on reliability and the timeline associated with the interim goals in the CPP proposed rule. C om menter s were concerned that: 1) the EPA inadequately considers electric transmission facilities in establishing the timeline for the interim goals in the draft CCP; 2) the energy efficiency assumptions relied upon in the CPP are unrealistic and not sustain able; 3) the CPP's utilization of a 70% capacity factor for combined cycle units is unsound; 4) the CPP's failure to consider the availability of the materials and labor for constructing the electric transmission and generation infrastructure required to c omply 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.

Commenter s stated under the current rule, substantial 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 reliability and reduce emissions. C ommenter s said the steep emission reductions required by the 2020 interim goal limits the time avail able to plan, permit, and construct infrastructure and upgrades, in addition to forcing inefficient retirements. C ommenter s said given that the rule will not be finalized until June 2015 with state plans due June 2016 at the earliest, accomplishing a signi ficant amount of the required emission reductions prior to 2020 may have system reliability consequences.

Commenter s were concerned with the reliability impact of the USEPA's proposal given the stringency of the interim goal. C ommenter s said the USEPA stat es that the "IPM model is specifically designed to ensure generation resource adequacy" but also, "assumes that adequate transmission capacity exists to deliver any resources located in, or transferred to, the region." C ommenter s stated they do not equate resource adequacy with reliability and cannot support at this time the USEPA's assumptions regarding the adequacy of the transmission system to support its resource adequacy position. C ommenter s note d that the Western Electricity146 Coordinating Council (WECC ), the reliability organization for the Western Interconnection, has only begun to complete an assessment of reliability impacts of the proposed rule. C ommenter s said the WECC noted in its "EPA Clean Power Plan, Phase I

- Preliminary Technical Report" dated September 19, 2014 (WECC Report) that "[c]omprehensive analyses, considering [Remedial Action Schemes], voltage stability, and path rating impacts, among other reliability aspects, are still needed to finalize any conclusions around system reliability." C ommenter s said WECC cannot completely and accurately address its concerns about the Clean Power Plan's impacts on reliability until states have selected their co mpliance plans, which creates a chicken

and

- egg situation.

Commenter s added the WECC stated some of its concerns about continued reliability in the WECC Report; first, since the current electric system was designed to deliver energy from existing resource s, changing the location, size and type of generation may make delivering power to local load a challenge; path ratings may also be affected; a second concern is that the location of replacement resources may not have transmission infrastructure available; siting and construction of generation and transmission resources is a long process and could delay implementation of state plans; third, changes in the types of generation resources that are being used may require changes in operating practices and proced ures, and changes in how existing generation is used. C ommenter s said these changes all take time to implement; to do so by 2020 is unreasonable, and could have significant negative consequences on system reliability.

Commenter s stated the North American E lectric Reliability Corp (NERC) has recently issued a report that cautions the EPA to consider delaying the interim goal deadline of 2020 "The proposed timeline does not provide enough time to develop sufficient resources to ensure continued reliable opera tion of the electric grid by 2020," according to the report. "More time for implementation may be needed to accommodate reliability enhancements." C ommenter s said EPA should carefully evaluate the effect of the Rule on electric grid reliability prior to ru le promulgation; the rule comes on the heels of an economic recession that started in 2009; the additional assets to meet the state goal require significant capital expenditures in order to achieve interim goals in 2020 and a final goal in 2030. C ommenter s 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 should remove the interim goal, impractical deadlines should not be used to rush forward a program of this magnitude and complexity; the unintended consequences need to be vetted, analyzed, and mitigated.

Commenter s stated the interim standards proposed by EPA cannot be met while maintaining reliable service in the Entergy region; the interim g oals should be removed from the Proposed Rule. C ommenter s said alternatively, the interim goals should be phased in over a reasonable timeline, or EPA should allow each state the flexibility to determine its own glide path to the final goal.

Commenter s add ed EPA's Proposed Rule would require Entergy's generation portfolio, and its operations as a whole, including transmission, distribution, and energy efficiency programs, to147 change dramatically in a very short time period; notably, the potential impact on t he generation portfolio would affect not only Entergy's coal plants, of which it has relatively few, but also its steam oil/gas units, which provide a critical reliability role in the Entergy system. C ommenter s 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. C ommenter s said the formula EPA uses to calculate these goals implies that all emission rate reductions from Building Blocks 1 and 2 would be realized by 2020

- the start of the interim period

- or soon enough after 2020 to allow the state to meet the interim goal as an average between 2020

- 2029. C ommenter s said because it is highly unlikely that most states, including Entergy's utility states (Arkansas, L ouisiana, Mississippi, and Texas), will be able in later years to have an emission rate significantly lower than the very stringent interim targets, the Proposed Rule essentially has "front

- loaded" the reduction requirements; this requires a steep decline in state emission rates in the first years of the interim period in states that already have invested in efficient, low emitting NGCC capacity. C ommenter s said according to the EPA modeling, several of Entergy's fossil units that are important to reliabili ty would close by 2020 in order to comply with the Proposed Rule. Several commenters have explained in detail the infeasibility of complying with the interim standards as they are set in the Proposed Rule; through its "Portfolio 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

. C ommenter s 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 f or Louisiana, the proposed re

- dispatch of NGCC capacity results in an abrupt 54% reduction in coal fired and oil/gas capacity, for Arkansas a 64% reduction, for Mississippi a 100% reduction, and for Texas a 52% reduction. C ommenter s said the resulting 2020 interim standard s in the Proposed Rule are extremely aggressive, and EPA has not met its obligation to demonstrate that it is feasible to meet them

- in particular, that they can be met while also meeting FERC and NERC reliability requirements.

Commenter s stated for state s to comply with EPA's proposed 10

- year average goal, many states must achieve the majority of emission reductions by 2020. C ommenter s said achieving the 2030 goals would require significant changes to the interconnected power system and the way that it
op erates; these changes in the manner in which power is generated, transmitted and consumed must be done in a way that maintains operational reliability and provides consumers with least

cost power. C ommenter s said this would be accomplished by eliminating t he interim goals and allowing states to establish a glide path to 2030 compliance.

Commenter s stated EPA's primary attempt to demonstrate the feasibility of the Proposed Rule is the agency's IPM modeling of the year 2020, which purports to illustrate an ac hievable "snapshot" of compliance with 2020 requirements. C ommenter s do not assert that EPA's IPM modeling reflects a realistic picture of an electric grid that can maintain required reliability standards, partly because its representation of the electric system does not capture all148 transmission constraints and operational requirements; the closure of so many units necessary to grid operations by 2020 is not feasible.

Commenter s stated EPA's IPM modeling forecasts that by 2020 there will be 3,974 of MW rat ed coal capacity retired in Arkansas, 3,045 MW of rated coal capacity retired in Louisiana, 2,519 MW of rated coal capacity retired in Mississippi, and 8,728 MW of rated coal capacity retired in
Texas. C ommenter s 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 critical reliability role on the system because they are in transmission constrained ar eas and five baseload coal units. C ommenter s said several independent studies, including one undertaken recently 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 down, 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 sta te 111(d) plans (2017 at the earliest) and 2020.

Commenter s stated to demonstrate the infeasibility of EPA's IPM results, and, by extension, the infeasibility of the 2020 interim goals, the commenter s ran their own transmission

- constrained dispatch models assuming the closure (or non

- operation) of the plants consistent with EPA's IPM 2020 compliance modeling and the commenter's load forecasts from the 2013 business plan; the results were unambiguous

- not only co uld the system not be operated in compliance with reliability requirements, but involuntary curtailments (rolling blackouts) would be required on a routine basis. C ommenter s ' modeling of EPA's compliance scenario shows that it would result in a shortage of generation in place to serve load, causing rotating black outs on the system for approximately 100 days a year, even in "normal" weather conditions, likely during the winter and summer months.

Commenter s stated this level of service interruption is appro ximately 1000 times higher than the NERC planning standard for interruption of service due to insufficient bulk system facilities ( generation transmission ). C ommenter s said the NERC standard is "one day in 10 years," meaning that system operators and load serving entities 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 outages caused by local distribution failures, storms that tempo rarily disrupt transmission, or similar incidents. C ommenter s 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, transmission, and distribution facil ities in place and operating properly

- and would violate federal standards.

Comment 19: Regional Effects149 Response 19: T he interim period now begins in 2022 and ends in 2029. See section s I.A, V.A., and VI.B 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:

Commenter s stated the WECC has begun a phased study process to analyze potential impacts of the Proposed Rule to the western electric generation and transmission industry. C ommenter s said preliminary WECC results indicate that states' decisions made regarding compli ance with the CPP can "drastically impact grid operations, system resiliency, and potentially, compliance opportunities for a neighboring state." C ommenter s said the WECC has stated that its analyses will continue throughout 2015. C ommenter s said the EPA s hould take advantage of such regional analyses to appropriately modify the interim goal structure.

Commenter s stated the RTOs and ISOs will need time to determine any necessary market rule and system changes; obtain state and federal approvals, including F ERC approval; and reliably implement the required changes. C ommenter s 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 sta rt before final approval. C ommenter s 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 in 2029. See section s 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 proposed interim compliance average period is inconsistent and incompatible with state planning and legislative processes and planning.

Commenters added although state plans are due in mid

- 2016, EPA has offered states the option of seeking an additional year (for an individual state plan) or two (for multistate plans). C ommenter s stated additional time to create workable state plans is a welcome flexibility; however, this extension conflicts with legislative schedules in many states. C ommenter s said several states already have noted that their legislatures do not meet every year a nd that the relevant future sessions are out of sync with the proposed timing for submission and approval of state plans. C ommenter s stated to the extent that states need to pass new legislation to ensure that all elements of compliance plans are enforceab le, the legislative calendar in some states will be an impediment to both ensuring that compliance plans are completed on time and allowing key compliance measures to reduce emission rates to move forward before 2020.150 Commenter s stated EPA should eliminate the proposed interim goals in its Final Rule. C ommenter s said the first interim year is currently 2020, which establishes an unrealistic timeframe for developing and implementing individual state plans. C ommenter s said the Final Rule is expected to be pro mulgated in June 2016 after which time states will have two years to develop individual state plans (or three years for multi

- state plans). C ommenter s said if a state plan is submitted in June 2018, EPA is expected to take at least one year to review and g rant 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 interim goals. C ommenter s said in the event EPA required alterations to a state's plan, approval and complianc e would be further delayed by another round of state revisions and EPA review likely extending into 2020. C ommenter s said most states (including North Carolina) will be required to undertake statutory revisions and initiate state rulemakings to implement p ortions of their state compliance plan. C ommenter s said North Carolina does not have a full

- time legislature and it is likely that the legislature will have adjourned for the year prior to EPA approval of North Carolina's compliance plan in 2019. C ommenter s said the resulting state rulemakings will require drafting and vetting, public notice and comment, consideration by the promulgating regulatory body and review by the Rules Review Commission; it is extremely unlikely that these state legislative and regu latory processes could be completed prior to the interim goal.

Commenter s 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 reduction programs, and the 2015 Texas legislative session will end before the proposed rule is finalized.

C ommenter s stated that while TCEQ, as the Administrator of Texas's air quality program under the CAA, would be responsible for submitting any State Plan and monitor compliance with same, it would clearly need the assistance of the PUCT and possibly the RRC. C ommenter s contended that EPA has failed to address the extensive level of coordination among state agenci es that would be necessary to implement this rule. C ommenter s explained that the coordination among Texas state agencies that will be required by Rule 111(d) would also require changes to Texas law and such laws could not be amended until 2017 at the earli est. C ommenter s added that the additional state laws required 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 the RRC and would almost certainly require interagency contracts or agreements between these agencies. C ommenter s concluded that EPA's compliance deadlines, particularly its interim compliance deadlines, do not account for the time needed for state agency coordination (and the associated costs) required by Rule 111(d). C ommenter s added that Rule 111(d) will also require extensive coordination with FERC to ensure that all entities (both inside and outside of ERCOT) comply with existing FERC reliability standards. C ommenter s a dded that this is a potentially significant aspect of compliance that EPA has not addressed in the proposed rule. C ommenter s explained that because Rule 111(d) will almost certainly impact grid reliability 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. C ommenter s added that EPA has also failed to address the cost and time implications for states and utilities in coordinating with FE RC to implement Rule 111(d).

C ommenter s urged EPA to ensure that final rule will not compromise the thorough review of Minnesota's Integrated Resource Planning (IRP) Process, with its due consideration of reliability and rate impact. C ommenter s explained that Minnesota's regulated utilities file a biennial IRP that evaluates the utility's projected load growth and the least

- cost mix of demand and supply

side resources for that utility's service area over the 15

- year planning period. C ommenter s added that r eview of the IRP is a transparent process: the 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. C ommenter s concluded that the IRP proce ss has been highly successful, allowing long

- term planning to meet several legislative directives aimed at increasing energy savings, renewable energy, including solar energy, and greenhouse gas reduction. C ommenter s expressed concern the proposed rule would interfere with the IRP process and that the interim targets in the proposed rule could require steps that are not the most

cost

- effective for their state for meeting the goal and assuring the reliability of the sy stem. C ommenter s added that the interim goal fails to account for the manner in which large energy generation shifts occur and is at odds with Minnesota's energy planning. C ommenter s concluded that adding flexibility into the interim compliance level is es sential for Minnesota's least

- cost compliance.

Comment 21: Interim compliance average period is inconsistent with utility investment decision

- making.

Response 21: T he interim period now begins in 2022 and ends in 2029. The EPA has included illustrat ive interim period statewide emission values 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 section s I.A, V.A., and VI. of the final ru le 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 period is inconsistent with utility investment decision

- making

. C ommenter s said it takes years for electric utilities to plan, gain approval for and build infrastructure and other supporting projects, which includes new efficient fossil

- fuel plants; unit

- level efficiency retrofits; new transmission lines to mitigate plant closures and to bring new energy sources to the grid; and a host of other compliance activities. C ommenter s 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. C ommenter s said this uncertainty will challenge states' ability to meet and152 demonstrate compliance with the interim average emission rates starting in 2020. C ommenter s stated EPA's assumption that states can take significant 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 accou nt this lead time necessary to achieving reductions.

Commenter s stated because the capital investment and operational changes required to comply with the Final Rule cannot occur overnight, the interim goal has the potential to drive uneconomic actions by a state. C ommenter s stated North Carolina will be required to meet approximately 71% of its final goal by 2020 in order to utilize the glide path toward 2030 compliance; achieving 71% compliance by 2020 is both impractical and unrealistic and eliminates muc h of the flexibility that EPA claimed to incorporate into the rule. C ommenter s said in the event a state falls behind its interim goal targets in the first five years, it is possible that the state would have to meet an emissions target in the closing year s of the interim period that is more stringent than the final emissions target. C ommenter s 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 str anded assets. C ommenter s said in North Carolina, such early retirements would likely occur at plants where significant investment has been made in environmental and emissions upgrades over the past decade; this would be economically wasteful of ratepayer f unds and penalize states that have recently invested capital to reduce coal plant emissions. C ommenter s said states should be allowed to establish their own glide path and the Proposed Rule should focus solely on achieving full compliance by 2030 and susta ining 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 the CPP for the EPA’s response to this comment.

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

Commenter s stated the proposed interim compliance average period is inconsistent with market schedules. C ommenter s added similarly, for states that participate in competitive wholesale markets, the timing o f state compliance plans does not account for already scheduled capacity auctions. C ommenter s stated because units that are selected in these auctions are expected to be available to provide power in the relevant timeframes, 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. C ommente rs said this will complicate state planning as it may limit reduction options available before 2020.153 Commenter s were concerned about EPA's assumption that market power will be freely available post

- 2020, as the Clean Power Plan will substantially disrupt existing generation and market patterns.

Comment 23: Interim compliance period creates compliance uncertainty becaus e the electric utilities and the regulatory officials will not know the amount of reductions needed each year to stay on target

. Response 23: T he interim period now begins in 2022 and ends in 2029. The EPA has included illustrative interim period statewi de emission values 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 section s 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:

Commenter s stated 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.

Comment 24: Alternates for Interim Goals

Response 24: For renewable generating sources built after 2012, the generation from that capacity in a future compliance year will be eligible 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 have reduction potential in these early years.

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

Long

- term IRP

Commenter s stated every two years, each investor

- owned utility in Idaho must develop a long

term IRP describing how the utility plans to serve its customers' expected electrical needs over the next 20 years; the required IRPs are informed by detailed analyses of existing and new supply

- side and demand

- side resources, load

- to

- resource balancing under multiple resource154 portfolios, ri sk analyses and regulatory compliance scenarios. C ommenter s said these comprehensive IRPs are developed with input from stakeholder groups and ultimately reviewed and acknowledged by the Idaho PUC.

Commenter s stated because the utilities' IRP planning pro cesses produce resource acquisition plans that are designed to comply with all state and federal regulations, the EPA should consider utility IRPs as a reasonable and more efficient alternative to the interim goals. C ommenter s said under an IRP

- based alter native to the EPA's proposed interim goals, the state would demonstrate progress toward the 2030 emission goals by providing utility

- specific plans to serve future customer demands in a manner that complies with all the EPA regulations.

Use renewable ener gy

Commenter s asserted that EPA should abandon the interim 2020

- 29 goals altogether in the final rule, at the very least the rule should allow states to use 2013

- 19 renewable energy to show compliance with the interim goals. C ommenter s said such a provisi on would provide a tangible reward to leaders who have promoted the use of renewable energy, while maintaining the stringency of the final requirements.

EPA Should Replace Interim Targets With Periodic Review

Commenter s stated another consideration would be for EPA to replace the interim goals with a less formal periodic review; the 2020 "interim" goals 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 goa l

- even with averaging all the preceding years. C ommenter s said this is an unnecessary hurdle that will only create more paperwork for the states at a time when they should be focusing on meeting their end goals.

Milestone Approach

Commenter s stated replac ing the interim goal with a "milestone approach" discusses the fact that much of the carbon reduction must be done with retirement of large EGUs. Commenter s said other building blocks can be applied to reduce carbon emissions gradually; these include energ y efficiency and renewable energy increases, increasing the use of more efficient gas units, decreasing the use of coal units over time, etc. Commenter s 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 subcat egory

- specific emission performance rates through a variety of mechanisms that may or may not include changes to generation levels at particular EGUs. For instance, t he155 Bonanza unit has the f lexibility acquire emission reduction credits (either from EGUs located on its lands or elsewhere) to demonstrate compliance with the emis si on rate.

See section s I.A. and III.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:

Commenter s state d, in regards to the supplemental proposal, the time remaining and complex jurisdictional issues surrounding the Bonanza Unit cannot be resolved and a plan developed and implemented by 2020. C ommenter s 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. C ommen ter s said EPA Region 8 has issued all federal permits pertaining to Clean Air Act in the past. C ommenter s said it is unlikely that the Tribe will have sufficient time and resources to develop a carbon dioxide plan; EPA will most likely be called upon to do so.

Commenter s stated, in regards to the supplemental proposal, Deseret sells a significant portion of the output from the Bonanza Unit 1 under terms of long

- term power purchase agreements that predate any contemplated carbon dioxide standard. C ommenter s 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. C ommenter s sai d these contracts include at least one very large, 20

- plus year contract in the amount of approximately 100 MW of power tied to Deseret's Bonanza unit. C ommenter s said this agreement will not expire until September 2024, well into the timeframe set for com pliance with the Interim goal under the Supplemental Proposal

. Commenters urge d EPA to demonstrate the intended flexibility built into the provisions of 111(d) by commencing the Interim compliance period for the Bonanza Unit 1, and therefore the Uintah

- Our ay reservation no sooner than 2025, and to 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 one

- 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 flexibility to allow states and regional planning groups to establish glide paths for their interim goals and toward meeting the final 2030 goal. We are also requiring “check

- in’s” that analyze plan perfor mance during interim timelines and156 may trigger corrective actions to bring plan performance back to the glide path slope, as necessary. Yet we are not requiring that a particular glide path follow a set slope, but rather that the plan outline the steps an d goals, including indicators and timelines, such that an effective plan arrives at the set goal when the interim end is reached. In other words, reductions may be greater during the early portion of a particular interim, 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:

Commenter s stated that another option for addressing stakeholders' concerns about the potential challenges associated with achiev ing all of the reductions 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 four building blocks) and spread the em ission rate reduction requirements more evenly across the interim years

. The commenter s 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 comment er s 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 commenter s stated that this would be a relatively simple and straightfor ward, but potentially effective approach to avoid potential problems that affected EGUs and states may have achieving compliance with front

- loaded interim emission targets relatively soon after their SIPs are approved by EPA.

Comment 27 : Comment supporting interim goal and glide path, and suggesting use of a 10

- year averaging period in the final rule

. Response 27 : The EPA thanks the commenters for support of the interim goal and glide path approach to meeting the final goal. We are finali zing this rule with one interim period beginning in 2022, and retaining the final goal period of 2030. As such we expect the interim period and the associated 3

- year, 3

- year, 2

- year steps , combined with other planning flexibilities afforded to state and r egional planning groups, will provide for a proactive approach to achieving meaningful GHG reductions and effectively manage the 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), commenter s suggested a milestone approach for measuring progress during the years preceding the 2030 goal . The commenter s stated that a milestone approach would all ow for stepped reductions in a manner that comports with the Nevada Public Utilities Commission's integrated resource planning (IRP), would give states greater flexibility in meeting their final goals, and would create meaningful targets that take into acc ount planned retirements of coal

fired EGUs.157 If, however, the EPA adopts a 10

- year averaging period in the final rule, then the commenter s indicated that they would prefer a modified interim period that accounts for a phase

- in schedule

. The commenter s sta ted that a phase

- in schedule would provide time for infrastructure improvements that would support increased existing natural gas

- fired generation as well as modifications that would minimize stranded investments. The commenter s noted that a milestone
appr oach based on the IRP process would involve measured decision making taking into account various stakeholder interests, including inter alia individual states, tribes, utilities, and ratepayers. The commenter s noted that such a process is more likely to r esult in targets that address stakeholder concerns, such as infrastructure improvements, stranded investments, continued safety and reliability of the grid, and overarching federal laws such as the National Environmental Policy Act.

Comment 28 : States sho uld 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:

Commenter s noted that the EPA is proposing states can 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 calendar year period for the interim period (2020 to 2029). Given the numerous references to flexibility and the EPA's understanding that many factors influence the ability to achieve the interim goal, commenter s expressed concern regarding a 2

- rolling calendar year increment of performance. C ommenter s disagreed with the necessity for such frequent milestones to be achieved in the interim period, especially given the implications being proposed relevant to corrective measures and potential penalties or implications for not meeting these 2

- yea r increments of performance. C ommenter s stated that essentially the EPA is turning a 10

- year interim compliance period into a 2

- year compliance period.

C ommenter s disagreed with the necessity for increments of emission performance on a 2

- rolling calendar year period for the interim period (2020 to 2029) while post 2030 is based on a 3

- year period. C ommenter s argued that states should be able to define a glide path that does not necessitate short 2

- year increments . Second, commenter s disagreed with the need for final goal performance checks beyond the final determination of compliance with the 2030 goal

. C ommenter s stated that the proposal implies 3

- year performance checks would continue indefinitely into the future. C ommenter s stated that the EPA is also pr oposing an option where, in addition to submitting a plan demonstrating emission performance through 2030, states would be required to make a second submittal in 2025 showing whether their plan measures would maintain the final

- goal level of emission perfo rmance 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] C ommenter s disagreed with this approach and stated tha t these proposed demonstrations go far 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 proposed 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 develop, and the timing.

Commenters have raised a number of issues related to 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 ru le. Please see section V of the preamble for the final BSER determination. Please see section s VI and VII of the preamble for the final emission performance rates and statewide CO2 emission performance goals.

The alternate proposed goals reflected a differ ent set of building block assumptions on which EPA took comment. The final rule can inherently only have one set of building block assumptions, so the Agency is not finalizing alternate goals. However, the comments on the alternate goals still informed t he final source category rates and quantification of BSER. For instance, the proposed goals were based on a 6% heat rate improvement, and the alternate goals were based on a 4% alternative assumptions. Although there are no “alternate goals” in the final rule by the nature of it being final, the final heat rate improvement assumptions more closely resemble those presented in the alternative goals at proposal.

The following are summaries of the specific public comments under this comment:159 Several c ommenters approved the alternate goals as an available regulatory option

.

Commenter s added that allowing the alternate final goals with the proposed goals would allow maximum flexibility in adopting either goal and its associated timeline.

Commenter s reque st ed that states have the flexibility to select between EPA's proposal and 5

- year option in their state plans.

Commenter s added the Alternative Approach more accurately reflects the emission reduction and deployment potential of renewable energy than the R PS Approach.

Commenter s added EPA has proposed two formulations of the BSER as alternatives for use in state emissions limit target setting; each recognizes the reality of the interconnected nature of the electric system, which enables lower or zero CO2 em itting sources to substitute for the higher

emitting affected sources, thereby reducing CO2 emissions from the affected sources overall. C ommenter s said EPA's first approach relies on a combination of building blocks 1 through 4. C ommenter s said the second alternative BSER approach offered by EPA, identified as consisting of building block 1 coupled with "reduced utilization" of the designated facilities, is grounded more closely in EPA's statutory authority to direct emissions reductions from the affected sources. C ommenter s said this "reduced utilization" 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 directl y measured, reported and enforced. C ommenter s said the alternative 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.

Commenter s added natural gas re

- dispatch, energy efficiency measures and increased reliance on

zero or near

- zero emitting renewable energy generation costs are clearly "reasonable" as they are already in widespread use; including them in the BSE R will provide indirect incentives for further innovation in these CO2 reducing technologies

- precisely the kind of technological innovation leading to decreased costs associated with pollution control that the standard setting process is intended to yiel d.

Commenter s added the concept of "reduced utilization" of the regulated sources is not new, but has long been recognized as a pollution control measure under the Clean Air Act; for example, the plain text of the 1990 Acid Rain provisions includes the red uced utilization language, as well as references to energy efficiency, showing that Congress 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.

Commenter s added the alternative "reduced utilization" BSER is a simpler formulation; on the implementation side, it is the CO2 reduction associated 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 participation of non

- regulated entities.

Commenter s respectfully request ed th at, if a Clean Power Plan is to be pursued, a more rationally established compliance horizon and carbon 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 customers; the alternative carbon emission rate of 1,216 that EPA presents for Virginia, for example, would achieve a substantial carbon emission reduction for existing fossil

- fuel units in Virginia without compromising reliable a nd affordable electric service to Virginia's citizens and businesses.

Commenter s stated in this proposal, EPA has requested comment on an alternative set of state

specific goals with a less stringent application of the same BSER with a shorter timeframe;

commenter s support this alternative approach because it provides a more realistic and achievable goal.

Commenter s support providing the option of complying with less stringent alternate state goals. C ommenter s said the alternate goals should reflect what c an 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 current computations of what reductions can theoretically be achieved under the fo ur building blocks to incorporate what actually and realistically can be accomplished. C ommenter s said the alternate state goals would provide the states with less stringent BSER requirements and an accelerated implementation time frame.

Commenter s stated as compared to the proposed goals for Indiana, the less stringent alternative goals would mitigate the adverse economic consequences of compliance and are more appropriate.

Commenter s stated Oregon is among the leading states in energy efficiency policy an d investments, and PGE, their customers, and their partner, the Energy Trust of Oregon are leaders within Oregon at capturing energy efficiency. The commenter s said the proposed method of determining BSER from energy efficiency does not match our current p ractices or our understanding of the leading policies that have been demonstrated to acquire the most significant savings over time. C ommenter s said the final Clean Power Plan should adopt the alternate energy efficiency approach outlined in the proposal w hich assumes that states can achieve 1.0% annual incremental efficiency, approximating the cumulative level of savings achieved by leading states in 2012.

Commenter s stated EPA can capitalize on the changing landscape of energy markets by shortening and a dvancing the rule's compliance schedule while committing to issue updated performance standards that will take effect in 2026. C ommenter s said the rule currently is scheduled to take effect in 2020, but there is no reason that the leading states cannot sub mit plans by 2016, with approval in 2017 and a phased

- in compliance schedule beginning in 2018.161 C ommenter s said an accelerated schedule will both reward states that have and plan to adopt the kinds of policies that will achieve significant CO2 reductions w hile motivating the less

- inclined states to draft an approvable plan, lest they be subject to an EPA

- issued federal plan.

Commenter s 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 performance standards issuing in 2021

- 22 and a final rule scheduled for 2022

- 23. C ommenter s said States would have up to two yea rs to submit revised plans, allowing for a compliance period for the updated standards commencing in calendar year 2026. C ommenter s said by adopting this accelerated schedule and committing to an 8

- year review (similar to the 111(b) approach), the agency c an 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 modifications.

Response 2: The EPA is not finalizing the alternate goals in the final rule. However, we are incorporating feedback received on the alternate goals into the final BSER quantification. Please see section V of the preamble for the final BSER determination. Please see section s 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 c ommenters support the alternate goals, but recognize it needs modific ations.

Commenter s stated the 5

- year option has some merit, because it takes a slightly more realistic approach to Best System of Emission Reduction, however: EPA's calculation methodology penalizes states with under

- construction nuclear and takes away sta te flexibility in meeting the compliance goal; and the 5

- year option requires "too much, too soon" with the interim goal, and by requiring heat rate improvements, natural gas dispatch changes and energy efficiency targets prior to the rule taking effect in 2020.

Commenter s stated the Alternative Approach, when adjusted to adequately capture the contributions from solar, would most effectively capture the emissions reductions achievable through application of the BSER to affected EGUs. C ommenter s stated the Alternative Approach is more accurate because it does not rely on one policy to determine the solar potential in a state, as the RPS approach does; thus the Alternative Approach would set a more realistic expectation of the amount of solar growth feasible that will create a balanced energy portfolio in each state. C ommenter s added the Natural Resource Defense Council (NRDC) engaged with ICF to run the Integrated Planning Model (IPM (registered sign)), the same model that EPA uses, to reproduce EPA's RE Mark et Potential run based on the below solar energy recommendations, using up

- to

date cost and performance assumptions for renewable energy technologies. C ommenter s stated the resulting national target for renewable generation nearly doubles from EPA's estima te,162 growing from 524 TWh in 2030 to approximately 973 TWh in 2030. C ommenter s said this clearly demonstrates that significantly higher levels of renewable energy are both technically and economically achievable, compared to the levels proposed in either of EPA's target

- setting approaches. C ommenter s concluded based on these results, EPA should strengthen the contributions of renewable energy in its target

- setting to accurately reflect the full potential that these technologies can have in reducing dangerous carbon pollution from the electricity secto r.

Commenter s added the EPA should reconsider NGCC capacity factors for states, like Minnesota, with higher RE potential to reflect the role played by NGCC in backing up RE generation. C ommenter s added if EPA uses the Alternative RE approach in the final r ule, where expected RE generation is substantially increased for many states in EPA's determination of BSER, the reliance on a 70% NGCC capacity in building block 2 target

- setting calculations for Minnesota and other states with similar generation profiles should be reconsidered. C ommenter s said EPA's current assessment of NGCC in building block 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 backup for wind energy. C ommenter s said Minnesota is concerned whether existing NGCC, run as base

- load plants with capacity upward of 70%, could additionally fulfill their existing role in supporting RE generation and peak load service. C ommenter s said with current RE generation of about 10,000 GWhr, it might be reasonably expected that with whatever role NGCC plays 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. C ommenter s said Minnesota recommends that if EPA finalizes the alternative RE approach, it re

- visit NGCC capacity factors on a state

- by

- state basis to refine state targets.

Com menter s stated the agency has solicited comment on an alternative compliance period ending in 2025, with interim goals applying between 2020 and 2024. C ommenter s urge d EPA to adopt the shorter time frame with two additional features. C ommenter s said first, EPA should advance the compliance schedule to begin as early as January 2018, rather than 2020. C ommenter s said second, the agency should engage in a continuous internal review of the rule during the compliance period and should commit to issuing a revise d set of emission guidelines that would take effect in 2026.

Commenter s added under either the 2025 or 2030 formulation of the rule, states are expected to cut their CO2 emissions according to the levels provided under Building Blocks 1 and 2 in the first year of compliance, while Building Blocks 3 and 4 require incremental cuts spaced out over the remainder of the compliance period; what this means is that the substantial majority of reductions occur early on in the compliance schedule, while later years c ontribute relatively little in the way of emission cuts. C ommenter s said they approve of the agency's decision to require steep cuts early on, commenter s believe that RE and EE

- which are phased in more slowly under Blocks 3 and 4

- will provide much grea ter opportunities for emission reductions than the rule currently anticipates. C ommenter s said renewable technologies in particular are rapidly dropping in price, whereas fossil fuels will become increasing expensive between now and 2030.163 C ommenter s said b etween now and 2020, it can be expect ed that the changing economics of the electricity sector to make RE investments significantly more attractive across the board, including in states that are currently resistant to these innovations.

Commenter s stated EP A has asked if less stringent goals should be promulgated with a 2025 due date. C ommenter s said there may be some merit in this 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 goals 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. 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 c ommenter s s tated EPA is also soliciting comments 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. C ommenter s said for Kentucky, the alternate limits are 1,951 lbs/netMWh interim a nd 1,918 lbs/netMWh final. C ommenter s said this alternative approach identifies the "system of emission reduction" as including, in addition to Building Block 1, the reduction of fossil fuel

fired EGUs' mass emissions achievable through reductions in gener ation of specified amounts from those EGUs. C ommenter s said under this approach, the measures in Building Blocks 2, 3 and 4 would not be components of the system of emissions reductions, but instead would serve as bases for quantifying the reduction in emi ssions resulting from the reduction in generation at affected EGUs. C ommenter s said this alternative approach 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 will result in a significant increase in cost and forced retirements. C ommenter s said like the primary proposal, EPA's alternative goals do not create a workable framework; the proposed alternative does not provide relief from the devas tating financial impacts. C ommenter s said basing the calculations on net versus gross emission, the alternative goals include the same unrealistic concept that all facilities (or any EGU) can get a six percent heat rate reduction in addition to the project s 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. C ommenter s said the goal calculation is fatally flawed no matter which Building Blocks are or are not included.

Commenter s stated in the CPP Proposal, EPA developed 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 would be achievable by 2025, after a 2020

- 2024 phase

- in period, with interim goals that would apply during the phase

- in period on an average basis as States progress toward the final goals.164 Commenter s oppose d EPA's alternative set of goals for 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 between whether they will implement the proposed or alternative goals. C ommenter s said states have a better understanding regarding which standard(s) and deadline(s) they would be more likely able to meet, and should, at a minimum, have the requisite flexibility to choose which of the two plans they prefer implementing. C ommenter s urge d EPA to extend the schedule for states to meet the alternate final goal to no earlier than 2030 while eliminating the interim goals and allowing states to determine the emission reduction trajectories that work best in meeting their final goals in the most equ itable, cost effective and efficient manner possible.

Commenter s stated EPA also solicited comment on the combination of Building Blocks 1 and 2 only as the basis for BSER. C ommenter s said this is not EPA's preferred alternative, and EPA states that the p roposed combination of all four building blocks is capable of achieving greater reductions in CO2 emissions from affected EGUs at a lower cost. C ommenter s said the fatal flaw in EPA's analysis, is the use of Building Blocks 2, 3 & 4, which impose obligatio ns on sources not within the relevant subcategory and which are not part of the physical affected source as defined in EPA's proposed NSPS for coal

- fired EGUs and IGCC units.

Commenter s stated if EPA insists on retaining Block 2 as part of its BSER determ ination, 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). C ommenter s said under construction nuclear, new nuclear, renewable energy and energy efficiency mea sures that fall within Blocks 3 and 4 would be available in the suite of measures States could use to comply with the derived CO2 performance standards.

Commenter s stated EPA is also soliciting comments on alternative state goals at higher CO2 emissions ra tes, 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 lbs/netMWh and the alternate final limit is 1,683 lbs/netMWh. C ommenter s said this alternative approach identifies the "system of emission reduction" as including, in addition to Building Block 1, the reduction of fossil fuel

- fired EGUs' mass emissions achievable through reductions in generation of specified amounts from those EGUs. C ommenter s said under this approach, the measures in Building Blocks 2, 3 and 4 would not be components of the system of emissions reductions, but instead would serve as bases for quantifying the reduction in emissions resulting from the reduction in generation at affected EGUs. C ommenter s said this alternative approach contains a more aggressive compliance timeline than the primary CPP option and the lack of projected RE and EE in the compliance calculation for a portfolio approach will result in a significant increase in cost and forced

r etirements. C ommenter s said like the primary proposal, EPA's alternative goals do not create a workable framework; the proposed alternative does not provide any relief from the significant cost and reliability impacts that are detailed above. C ommenter s sa id basing the calculations on net versus gross emissions, the alternative goals include the same unrealistic concept that all facilities (or any EGU) can obtain a six percent heat rate reduction over and above heat rate165 reductions already obtained by proje cts that have been completed, and that are not credited by the CPP. C ommenter s 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 buil ding blocks are or are not included.

Commenter s 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 commenter s are equally concerned about th e feasibility and impact of the rule should the EPA adopt the alternate state goals.

Commenter s added NRECA has provided numerous reasons detailing that the interim 2025 compliance option and 2030 compliance building block goals are unachievable; each buil ding block goal is based on flawed assumptions without which the building block goals are not achievable for numerous States. C ommenter s said the five

- year alternative building block goals are no more achievable for similar reasons; they certainly cannot b e rationally strengthened.

Commenter s added the alternate goals suffer from the same fundamental flaw as the proposed goals: they are based on an unlawful BSER determination; a standard of performance under section 111 must be achievable by individual regu lated sources based on measures that the source's owner can integrate into the design or operation of the source itself; Building Blocks 2, 3, and 4 are inconsistent with this requirement. C ommenter s said simply lowering the targets of the various Building Blocks doesn't change this fact. C ommenter s said the alternate goals also suffer from the same challenge as the proposed goals in that the interim compliance period, which begins in 2020, does not allow enough time between state plan approval and 2020 to develop and implement a compliance strategy to avoid stranded investments and potential reliability problems. C ommenter s said the EPA should not finalize any guidelines that are based on a BSER determination that includes Building Blocks 2, 3, and 4, regar dless of the level of stringency of any of the Building Blocks; if, however, the EPA does proceed with finalizing guidelines that are based on a BSER determination that includes Building Blocks 2, 3, and 4, it should finalize goals for 2030 and 2025 withou t 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 exacerbates problems with achieving goals

. Response 4: See response 1 above

.
The fo llowing are summaries of the specific public comments under this comment:

Several c ommenter s stated EPA proposed an alternate set of emissions goals and has asked for comments on the appropriateness of the alternative goals. C ommenter s stated they do not support the adoption of any of the alternative interim or final goals for Arizona. C ommenter s said most of the problems associated with achieving the Arizona goals proposed by EPA surround the short166 duration for their achievement; an even shorter ti me period to achieve the goals, albeit somewhat higher, would only exacerbate these problems.

Commenter s stated the agency is also requesting comment on an alternative option, a 5

- year period for compliance, in combination with a less stringent set of CO2 emission performance levels. C ommenter s said it is unclear, in the provided text, why the EPA decided to consider this shorter compliance period and corresponding less stringent performance levels. C ommenter s said a shorter compliance period seems unlikely to make it any easier for states to implement their programs to comply with this rule. C ommenter s said a shorter compliance period may have exactly the opposite effect in many states, even if the performance levels specified are less stringent. C ommenter s consider ed this alternative an unnecessary distraction and urge the EPA to cease any further consideration of it.

Comment 5: Oppose Alternate Final Goals, Support Proposed Final Goals.

Response 5: See response 1 above.

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

Several c ommenters oppose d the less stringent alternate goals and support more aggressive proposed goals.

Commenter s stated that EPA's approach is conservative and, when combined with the flexibility afforded to states to use additional advanced energy technologies in compliance plans, shows that the state targets are technically and economically easy to meet; there is, therefore, no basis for EPA to adopt less stringent goals.

Commenter s said according to the i nformation 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.

Commenter s stated the state of Hawaii has implemented EE/RE programs and is in the beginnin g stage of implementing Hawaii's GHG Rules that impact large stationary sources. C ommenter s said the state

- specific detailed planning, public review, 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. C ommenter s said that this state specific approach provides the best way to execute a GHG program "consistent with a vibrant and growing economy and reliable, affordable electricity to support that economy." C ommenter s stated they do not support the "alternate interpretation 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 associated state specific economic impacts have not been performed by EPA in the development of the proposed Plan.167 Commenter s stated the alternative option of a 5

- year period for compliance time with a less stringent set of CO2 emiss ion performance levels is the opposite of what needs to be done in the interest of the American people and the global population; compliance can happen within the time period proposed in the Clear Power Plan, and the plan should incorporate the most string ent carbon pollution reductions as are feasible within the existing proposed compliance time period.

Commenter s 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 b asis during the 2020 to 2029 with the final goal achieved in 2030. C ommenter s said for Ohio, the interim goal is 1452 (adjusted output

- weighted

- average pounds of CO2 per net MW

- h) with a final 2030 goal of 1338. C ommenter s said as an alternative option, U. S. EPA is proposing a less stringent goal, therefore, less time is provided. C ommenter s said interim goals are applied from 2020 to 2024 with a final goal in 2025. C ommenter s said for Ohio, the interim goal is 1588 (adjusted output

- weighted

average pounds of CO2 per net MW

- h) with a final 2025 goal of 1545. C ommenter s 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 2030 preferred goal. Commenter s added alt hough this alternative is a less stringent target, nevertheless, it also cannot be achieved in Ohio. C ommenter s said the U.S. EPA believes evidence that one or more of the individual building blocks is not achievable is not sufficient to cause re

- evaluatio n of the goal unless the state demonstrates that increased control of another building block is not feasible. C ommenter s ha ve serious concerns with the achievability of each individual goal, or the combination of, in the State of Ohio.

Commenter s stated th e proposed goals reflect EPA's quantification of the state's average emission rate from affected EGUs that could be achieved by 2030 and sustained thereafter, with an interim goal that would apply over a 2020

- 2029 phase

- in period, through implementation of BSER based on all four building blocks. C ommenter s said EPA indicates it is also taking comment on a second set of state

- specific goals that would reflect less stringent application of the same BSBR, in this case by 2025, with interim goals that would app ly over a 2020

- 2024 phase

- in

- period. C ommenter s said Tennessee's goals on this shorter time period are 1,363 lbs/MWh (interim and 1326 lbs/MWh (final). C ommenter s said EPA indicates that the interim and final goals, as promulgated in the final guidelines, will be binding emission guidelines for state plans. C ommenter s stated they generally support the longer time frame because it appears to allow for more planning and implementation time.

Commenter s added the State of Montana prefers EPA's primary proposal of an interim average goal extending from 2020 to 2029 and a final goal beginning in 2030 over the alternative proposal of an interim goal extending from 2020 to 2024 and a final goal beginning in 2025. C ommenter s said the longer timeline for compliance p rovides greater flexibility while also delivering greater carbon emission rate reductions that will further promote a more sustainable society and generate greater environmental benefits.168 Commenter s added climate change is an important environmental issue; the opportunity to achieve reductions from power plants, which emit one third of the greenhouse gas emissions nationwide, is very important; the proposed regulation includes an option for a less stringent target. C ommenter s support ed the more aggressive t arget of 30 percent reduction from the 2005 baseline by the year 2030; according to the information 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.

Co mmenter s added under Option 1 (EPA's preferred option), 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 alternative goals (Stat e Emission Target Option 2) with a final goal in 2025 based on less stringent building block targets. C ommenter s preferred that EPA adopt State Emission Target Option 1 since it would result in earlier and greater overall emissions reductions than State Em ission Target Option 2.

Commenter s support ed EPA's compliance Option1; Option 2, which proposed a shorter compliance time frame with a less stringent emissions reduction standard, offers less opportunity for job creation. C ommenter s said while the Clean Po wer Plan calls for significant reduction goals, it is important to keep in mind that the more ambitious and flexible the standards, the greater the potential opportunity for innovation and economic growth. C ommenter s said some stakeholders point to the pot ential for achieving even stronger reductions, than those currently proposed, through increased investment in renewables and energy efficiency; which will have direct benefits for small business owners and operators. C ommenter s said importantly, more job opportunities are created under EPA's preferred Option 1 proposal; therefore, the commenter do not support consideration of Option 2, which proposes a shorter compliance time frame with a less stringent emissions reductions stan dard and therefore less opportunity for job creation.

Commenter s favor ed Option 1 over Option 2; even at the 2025 time point, Option 1 calls for a larger reduction in carbon dioxide emissions than Option 2. C ommenter s said even those reductions anticipate d under Option 1, will not be sufficient to provide adequate protection of human health and the environment; additional reductions will be needed. C ommenter s said Option 1 has additional benefits that also protect health in that the reductions in the emiss ion of SO2, NOx, and PM2.5 will be greater than achieved under Option 2.

Commenter s disagree d with the Alternative State Goals in the Draft Rule on Table 9.15 b ecause EPA has determined that the Draft Rule demonstrates compliance with the requirements of Section 111(d) as the "best system of emission reduction...adequately demonstrated." C ommenter s said the alternative goals are not justified and would not make as much progress toward carbon reduction as possible.

Comment 6: Alternate final goals should no t be less than NSPS; the alternate goal is not

. Response 6: See Response 1 above169 As discussed elsewhere in this document and the preamble, the NSPS 111(b) rates and the 111(d) rates are not comparable as the latter reflects reductions in generation level s.
The following are summaries of the specific public comments under this comment:

Several c ommenters stated any carbon emission rate adopted for Virginia must be higher than what is required for new units. C ommenters note d , for example, that EPA provide s 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 efficiency] into the denominator" of EPA's calculation. C ommenters said a carbon emission rate of 1,216 would be a substantial reduction for existing fossil

- fuel units in Virginia, as it is 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 reasonabl e compliance horizon, would address most of the cost and reliability concerns identified herein. C ommenters said certainly, the final carbon emission rate should be no lower than the 1,100 pounds of CO2/MWh the EPA has set for new gas generation using the best available control technology; of course, because of the Commonwealth's substantial investment in and production from zero

- carbon nuclear generation, Virginia's entire generation fleet would, in reality, emit carbon at a rate far lower than the EPA con templates 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 rule heat rate improvement assumptions, commenters may see EPA’s response in the GHG Mitigation Measures TSD and in preamble section V.C

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

Several c ommenter s 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 across affected coal

- fired steam EGUs. C ommenter s stated they do not believe U.S. EPA's approach 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. C ommenter s wishe d to emphasize, just as the S&L Study indicated, the best method for determining the ability for HRIs at individual facilities is through site

- specific evaluat ions. C ommenter s said the analysis presented by U.S. EPA applied proposed methodologies and proposed HRIs from the S&L Study. C ommenter s said heat rate improvement projections should be based on what has been done and what could be done at individual coal

- fired units as well as empirical data on HRIs that can be adequately demonstrated to be the direct result of a specific project or best

- practices methodologies. C ommenter s said U.S. EPA's assumption that each individual coal

- fired EGU can obtain a 4% HRI f rom 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 technical feasibility is possible at the individual units. C ommenter s sa id the inaccuracies and challenges demonstrate that only heat rate studies performed on a unit

- by

- unit basis conducted in direct consultation with on

- site operators with knowledge of individual unit operations will be productive.

Comment 8: Alternate Final Goals

- BB2 65%

Response 8: See Response 1 for a clarification on why alternate goals are not part of the final rule package.

However, the EPA used comments on the alternate goals 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 suggestion. See section V.D of the preamble for a response to how combined cycles may operate at 75% utilization.

EPA notes, that the final rule assu mption of 75% utilization is based of summertime net dependable capacity instead of nameplate. The 75% utilization value that the commenter s are referencing below is based on nameplate capacity and would consequently reflect a higher generation total for the building block than 75% utilization of summer capacity.

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

Several c ommenter s 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%. C ommenter s want ed to point out again that in the state driven compliance IPM run, U.S. EPA could only show achievement of a 64% utilization r ate. C ommenter s d id not agree that 75%, 70% or 65% is technically or economically achievable given the analysis and method U.S. EPA has used to establish feasibility of these various levels.

Commenter s stated in the proposal, EPA also solicits comments on an alternate 65 percent utilization rate, noting that 16 percent of NGCC plants had utilization rates over 65 percent in 2012; however, none of the issues identified with respect to the 70 percent utilization assumption are ameliorated with a 65 percent ut ilization rate. C ommenter s 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 utiliz ation rate of existing NGCC fleet to the levels desired in order to balance the integration of new renewable generation onto the grid. C ommenter s said increased cycling of NGCC units to accommodate renewable would decrease efficiency of those units and inc rease CO2 emissions. C ommenter s said implementation of the 65 or 70 percent NGCC dispatch requirement would require states to put an emissions cap on individual coal units in order to move those units ahead of coal in the dispatch queue (environmental disp atch); this could cause additional coal units to become uneconomic and to shut down, especially those in competitive energy markets; it may also cause coal unit curtailment without regard to reliability needs, which could result in reserve margin risks, an d cause some coal units to run at reduced, less efficient loads, which creates more/additional CO2 emissions. C ommenter s said it could lead to fuel171 diversity issues, making ratepayers more susceptible to natural gas fuel spikes, particularly without substa ntial investments in new natural gas pipeline infrastructure. C ommenter s 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 calcu lation is very uncertain. C ommenter s said transmission constraints limit the ability to re

- dispatch the fleet. C ommenter s said natural gas availability, particularly during the winter heating season, can limit the ability to re

- dispatch the fleet. C ommenter s said 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. C ommenter s said without drastic changes to market rules to

run s ome NGCC facilities out of merit, economic fundamentals may prevent NGCC facilities from achieving an average capacity factor in the range of 65 to 70 percent. C ommenter s said to the extent this forced dispatch to natural gas approach is retained, we reque st that EPA allow states to ramp to a 70 percent capacity factor in order 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 which 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 section s VI and VII of the preamble for the final performance rates and state goals.

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

Several c ommenter s stated the EPA invites comment on whether a more stringent incremental goal could be set for demand

- side electricity programs. C ommenter s encourage d the EPA to consider setting the goal for annual incremental electricity savings from 1 percent to 1.5 percent in states where the average kilowatt

- hour usage per cons umer per month is significantly higher than the national average.

Commenter s stated EPA's proposal includes two options for setting the EE goals or mandates, using 2012 data as the baseline: Option 1) 1.5% "goal" starts in 2017 and continues thru 2030 and beyond, or Option 2) achieve 1.5% in 2020 and then a "goal" of 1.0% after that thru 2025. C ommenter s d id not support either option to its fullest; while both options will flatten the utility's load curve, given the reality of the challenge of actually achi eving energy efficiency, it is more appropriate that the alternative approach offered by Option 2 be adopted (or that it be lowered further). C ommenter s said because the supposition that 1.5% savings can be achieved each year is inaccurate, it is preferabl e that the alternative which aligns more closely with actual achievable results is employed by EPA. C ommenter s said 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.

Commenter s stated EPA should adopt an alternative option for energy efficiency which uses a more realistic goal that reflects the actual level of performance that is achievable, such as the172 0.7%. C ommenter s said the alternative Option 2 suggested 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 close ly aligned with actual conditions, but it is still too high. (Option 2 also uses the 0.15 % per year level for the pace at which incremental savings are increased from their historic levels.) C ommenter s said using an alternative which sets the initial EE s avings at 0.7% in 2020, and then requiring it be maintained at 0.7% through 2025 and beyond (along with the incremental 0.15% annual increase), this approach is preferable to the flat 1.5% goal which the commenter s ha ve established is not achievable. C omme nter s 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 secti on s I.A and V of the preamble for the timing of the final emission performance rates and statewide CO2 emission performance goals.

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

Several c ommenter s recognize d that EPA desir es to reduce CO2 emissions as quickly as possible, which drove both the interim goals and the final alternative state goals for 2025. C ommenter s said while North Carolina contends that the final alternative state goals suffer from the same legal and techni cal deficiencies as the Proposed Rule, the final alternative state goals for 2025 should be left in place as an incentive to encourage states to achieve compliance earlier. C ommenter s said states should have the option to plan for compliance with the 2025 or 2030 state goal.

Commenter s stated in the proposal, EPA includes and requests comment on a set of state

- specific alternative emissions rate goals and related building block goals that would be achieved in a shorter time frame of five years instead of th e proposed rate over ten years. C ommenter s applaud ed EPA for including these alternative 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 for Virginia to fully assess the benefits a nd impacts of the alternative goal. C ommenter s recommend ed that EPA allow individual states to select the approach that is most suitable and beneficial given state

- specific circumstances in the final rule. C ommenter s believe d this flexibility should be pro vided to states that have already achieved significant reductions in their carbon intensity 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; Solar

.173 Response 11: See response 1 above

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

Several c ommenter s stated within the Alternative Approach, the current proposed rule first establishes a technical potential benchmark that is used in combination with an IPM projected market potential. C ommenter s d id not support the inclusion of the technical potential benchmark in setting a state's target; instead, the commenter s recommend ed that EPA rel y solely on the IPM model when applying its Alternative Approach.

Commenter s added as the EPA notes in its proposal, applying NREL's technical potential for solar in each state to determine the state goals has limited value. C ommenter s said that the technical potential is arbitrary because it shows the solar capacity that could be built in a given state without recognizing real

- world limiting factors such as economic growth and grid constraints; therefore, the EPA should not rely on NRE L's technical potential for setting state goals.

Commenter s added the EPA should solely rely on the IPM model for setting the state targets. C ommenter s said unlike the technical potential, the IPM model takes into account the cost of building renewable ge neration, as well as grid conditions in each state and a number of other factors; in addition, the IPM model considers the resource potential that is considered by NREL's technical potential. C ommenter s believe d that with the correct solar data inputs, the IPM model provides a realistic projection of solar energy potential at the state level that can be relied upon for setting state goals.

Commenter s added there is precedent to rely solely on the IPM model for setting the renewable targets in each state und er the Alternative Approach. C ommenter s said the EPA currently uses the IPM model to analyze the impact of air emissions policies on the U.S. electric power sector such as the Clean Air Interstate Rule, Cross

- State Air Pollution Rule (CSAPR), the Mercury a nd Air Toxics Standards (MATS), and the proposed Carbon Pollution Standards for New Power Plants; therefore, there is precedent to rely solely on the IPM model for setting the renewable targets in each state under the Alternative Approach. C ommenter s said the EPA also notes that "for the development of its latest power sector modeling platform, EPA has increased its external engagement with state air quality planning officials, power company representatives, regional transmission organizations, and others w ho have provided 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.

C omment 12: Tribes & Territories

- Support for Alternate Final Goals174 Response 12: EPA has shifted to a regional subcategory

- specific framework for this final rule. Consequently, all fossil steam sources receive an emission rate of 1,305 lb/MWh. For states/tribal lands that only have fossil steam sources

– 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 assumed to oper ate) in the b aseline, and retirements (or generation reduction) after the baseline 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 c ommenter s stated in the Supplemental Proposal, EPA solicits comment on alternate goals that would reflect a shorter compliance deadline but a less stringent application of the building blocks; for the Navajo Nation, EPA seeks comment on a proposed final goal of 2,034 lb/MW h that would apply in the year 2025, and an interim goal of 2,035 lb/MWh that would apply over a 2020

- 2024 phase

- in period.

Commenter s support ed adoption of the alternate goal approach for sources on the Navajo Nation; any CO2 reductions that are required by the BART rule for NGS will have to take place by December 31, 2019, and FCPP has already reduced CO2 emissions significantly. C ommenter s said they are working closely with the Navajo Nation and APS to explore opportunities to use emissions reduction cr edits associated with EGU retirements 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 goal compliance. C ommenter s said if higher alternate goals are finalized by EPA and then converted 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. C ommenter s encourage d EPA to work closely with the Navajo Nation to establish mutually acceptable alternate CO2 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.

Comm enter s encourage d 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. C ommenter s said there is no difference in the environmental benefit between t he proposed goals and the alternative goals as all the emission reductions are driven by other regulatory programs. C ommenter s said there is, however, a potential difference in the economic benefit from application of the alternative goals through particip ation in a multi

- jurisdictional plan. C ommenter s said from a cost

- benefit perspective, the alternative goals are clearly superior.

Commenter s stated EPA identified alternate final goals for Indian country that reflect less stringent application of the fou r building blocks and a higher emission rate that would be achieved earlier: by 2025, after a 2020

- 2024 phase in. C ommenter s support ed EPA offering an alternative final goal that can be complied with earlier; the commenter s would like the flexibility175 to se lect which goal it ultimately complies with and would like additional time to make that determination. C ommenter s said providing additional time to sort out the future operation of plants and flexibility in consideration of an alternate final goal would be helpful. C ommenter s said in light of the fact that Building Blocks 2 and 3 do not practically apply to the Navajo Nation (and the Navajo Nation believes that Building 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 earlier final carbon emission goal in exchange for additional flexibility in the emission goal beyond what is contemplated in the Supplemental Proposed Rule. C ommenter s w ould like to engage EPA in discussions on what might be possible with regard to a final emission goal or other incentives for early compliance under a scenario where reductions are achieved prior to 2020.

4.4 COMPUTATION PROC EDURE

Section 4.4 covers publ ic comments related to the computation procedure of the final and interim goals, including BSER factors, data used, calculation, alternative approaches, treatment of data years, and other computation comments.

4.4.1 BSER factors informing state emission rate goals

Section 4.4.1 covers public comments related to the individual building blocks and their interaction with each other in relation to the state goal.
This section contains significant overlap with the building blocks discussed in Preamble Section V, RTC Chapter 3, and the GHG Mitigation Measures TSD. Where the commenter s were focusing on the building block quantification and analysis, the EPA refers to those respective sections. Where the commenter s were focusing specifically on the manner in whi ch the building blocks are treated in goal computation, the EPA tries to address that through responses in this section

Commenters have raised a number of issues related to 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 BSER 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 part of its expression of the BSER. However, mitigation measures of this nature may still count towa rds compliance.176 The following are summaries of the specific public comments under this comment:

Several c ommenter s stated EPA's inclusion of the system

- wide approach to compliance is fundamental to increasing the use of clean energy technologies and substa ntially lowering emissions; without this, the states would have fewer options for compliance and less flexibility. C ommenter s said utilizing a diverse portfolio of clean energy options available for compliance will make the US economy stronger, reduce emis sions and increase resiliency.

Commenter s stated when calculating Oregon's BSER and the rate goal, EPA properly accounted for all energy efficiency investment in Oregon including energy efficiency investments made on the systems served almost solely by hyd roelectric power.

Comment 2: Difficult to comment/ overall concerns, the EPA should reevaluate its BSER.

Response 2: The expression of the BSER has been modified from proposal to reflect

s ub category

- specific emission performance rates that are more con sistent with prior EPA 111(d) rulemakings and comments suggesting such an approach. This addresses the commenters concern that generators of the same sub category receive similar incentives regardless of the state in which they are located.

Based on comment, nuclear generation (including under 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 Mitigation Measures TSD for more information regarding the building blocks.

After the initial quantification of BSER sub category

- specific emission performance rates, EPA further test the feasibility and compliance cost s of 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 and constraints reflecting fuel markets, emissions market s , electricity markets and the interaction of all three. It is a least

- cost linear programming model that optimizes the method for meeting energy and peak demand requirements of the modeled time horizon. EPA disagrees with the comment that it did not test or recognize the constraints of the power sector when evaluating its BSER

– both the building block analysis described in the GHG Mitigation Measures TSD and the power sector modeling used to evaluate the final rat es reflect a very robust assess ment of system

- wide imp acts 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 Commenter s stated even with the c larifications provided 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 achievabili ty of EPA's modeled emission performance requirements. C ommenter s said without knowing the structure of the State Implementation Plan, the FPSC cannot address the achievability of EPA's proposed emission performance requirements through EPA's best system

o f emission reduction (BSER) approach or any other compliance approach with certainty.

Commenter s stated EEI members companies have identified a range of technical concerns with each of the four Building Blocks that comprise EPA's proposed BSER. C ommenter s stated EPA overestimated the potential CO2 emission reductions that could result from each of these Building Blocks. C ommenter s said in addition to specific issues with EPA's analysis of potential reductions from each Building Block, any assertion of the a chievability of the proposed state goals is undermined by the fact that EPA ignored the interactions between and among the Building Blocks and state

- specific constraints when assessing the reduction potential of each Building Block, and, consequently, prop osed state emission rate goals may not be achievable.

Commenter s stated prior to promulgating a final rule, EPA should, at a minimum reconcile the extensive legal and technical issues that a have been identified regarding their interpretation, evaluation, and determination of the BSER.

Commenter s stated the Agency's emissions limitations 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. C ommenter s said EPA must better explain and disclose the underlying assumptions and data that serve as the foundation for these binding targets. C ommenter s 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.

Commenter s stated throughout the proposed guidelin es, 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 significant utility investments; in developing BSER, required by Section 111 (d) of the CAA, EPA specifically explains that each of the technologies and measures chosen are being utilized throughout the country within the electric system. C ommenter s were concerned that EPA has taken the fact that some states and/or utilities have invested in certain technologies and/or measures, concluded 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 measures (set at best practices levels) from all states in the form of mandatory state goals. Commenters said t he result is that, for the most part, each state's mandatory goal represents a level of emissions reductions built from the application of each and every component of the system with no analysis by EPA as to whether that actually makes any sense or is economically reasonable for each state. C ommenter s 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.

C ommenter s said EPA's application of its propo sed BSER to states reflects the inequity that is created by the agency's failure to develop a BSER that is as dynamic as the electric system, reflecting a myriad of state policies and utility investment choices; for example, state goals for Tennessee, Geor gia and South Carolina reflect a significant amount of emissions reduction required from the application of "under

- construction" nuclear units within EPA's System that are not yet complete. C ommenter s said EPA determined that these units are technologies t hat should be included within the System, but only applied the representative emission reductions to these three states. C ommenter s said on the other hand, EPA determined the growth of renewable energy generation is a measure that should be included within BSER, but that particular measure, and the associated emission reductions, should be applied 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 availa ble in these states, have state goals that reflect emission reductions associated with the growth of renewable energy generation that they have already met or exceeded. C ommenter s said every other state, including Tennessee, must make additional investment s to grow this resource. C ommenter s 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 reasonable cost; in particular, t he mandatory nature of the state goals make EPA's proposed guidelines particularly troublesome.

C ommenter s recommend ed EPA reevaluate its BSER, taking into consideration the specific comments provided below and revise the System accordingly, or publish the final guidelines with state goals as presumptive values, for which states can request modification during the state
p lanning process in their respective plans.

Commenter s stated EPA's approach for determining state

- by

- state CPP targets ignores ownership rights in generating resources.

Commenter s stated EPA should not compel regulated sources 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.

Commenter s stated EPA should provide additional justification for the appropriate a ssignment of cost effectiveness for setting BSER target stringency for the states.

Commenter s stated the weaknesses in the analysis cannot be ignored. C ommenter s said a better strategy for EPA is to (1) get the analysis right and (2) be technology neutral and not appear to endorse subsidies for any specific resource, as it did in the case of nuclear power.179 Commenter s stated inclusion of non

- fossil resources in the BSER formula leads to state targets that diverge more than when an average fossil rate is use d as the starting point; if states develop a flexible rate

- based policy approach and their neighboring 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 co mpliance costs. C ommenter s said this kind of competitiveness issue could lead to environmental leakage, but it would be reduced if the starting point for developing the state standards was a fossil rate.

Commenter s stated the EPA's definition and use of t he BSER to set state goals proposes a system of compliance that is intrinsically inflexible. C ommenter s stated the dynamics of compliance, under circumstances of any unplanned shortfall in the non

- emitting resources required for compliance, force an additi onal curtailment of covered fossil output, creating a further reduction in supply and forcing states to increase imports or reduce exports. C ommenter s stated this creates the risk of multi

- state compliance failures that could disrupt interstate power flows

.

Commenter s stated EPA states, "We consider our proposed findings of the BSER with respect to the various building blocks to be severable, such that in the event a court were to invalidate our finding with respect to any particular building block, we wou ld 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 preamble and that TSD." Commenters added the state's target must be adjusted commensurate with the elimination of the percentage contribution to the target should a court invalidate one or more of the building blocks. C ommenter s stated if Building Block 4, Energy Efficiency, is vacated, Kentucky's target of 1,763 lbs CO2/MWh should increase to reflect only the effect of Building Blocks 1, 2 and 3; assuming that the loss of one or more of the building blocks can be made up by the remaining building b locks is not appropriate and should not be employed by EPA as a backstop. C ommenter s said there are real technological limitations to each of the building blocks, and these limitations cannot be dismissed.

Commenter s stated the methodology used in develop ing the proposed goals is atypical of an emission rate calculation and the building blocks used to establish the goals are highly questionable. C ommenter s said a typical emission rate calculation will involve the total mass of emission divided by total gen eration; the CPP emissions standard is calculated as the ratio of expected future emissions after implementing the assumed building blocks, divided by the sum of fossil, renewable, new or "at risk" nuclear, and generation avoided through energy efficiency. C ommenter s said the CPP emissions standard represents neither the fossil fleet emissions rate nor the emissions rate of the entire generation fleet. C ommenter s said the resulting measure is used only as a way of setting a state goal and incorporating the benefits of activities "outside the fence" of EGUs.180 Commenter s 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 real ities 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 assumptions for implementation and achievement of emissions reductions.

Commenters state d, U.S. EPA has proposed BSER as the 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 pointed out several flaws in U.S. EPA's belief that many of these measures have been "amply demonstrated." 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. Comment er s said, this analysis is unwieldy, unfair and inaccurate when applying 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 units i s performed radically different than in a regulated state. Commenters said, in Ohio many of the 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 traditional method for requiring controls on individual units, U.S. EPA is forcing states to expand the regulation to entities that do not even have emissions like RE or EE. Commenters said, in addition, this method ignores cost assessments and tech nical feasibility in the rulemaking process and, instead, forces states to make BSER determinations with an ultimate goal already predetermined.

Commenters stated, having the ultimate goal already predetermined is not the intent or correct method for a BSE R analysis. Commenters said, U.S. EPA is required to consider technical feasibility, costs, size of emission reductions and technology promotion as part of BSER. [79 FR 34835] It is Commenters' belie ved that U.S. EPA has ignored this requirement by applyin g 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 establishi ng a BSER based on outside

- the

fence requirements to further reduce coal

- fired units generation (EE/RE). Commenters said, further, it should be noted that U.S. EPA never provided any analysis to show it is adequately demonstrated that states can meet the g oals for individual building blocks in combination.

Comment 3: BSER B uilding B lock Application and Interaction181 Response 3: The EPA agrees with the comment that it should consider ways to quantify the regional impact of building block 2 across state lines. As explained in preamble section V and VI, it has incorporated a regional building block framework for all building block s in the final rule based on comment.

The flexibility of the emission rates embodied in both the sub category

- specific emission performance rate and the state goal does not constitute a limit on generation from existing sources. The EPA believes that the metrics and flexibilities of this final rule do not restrict load growth in existing sources as suggested by the commenter s

. The final BSER quantification does capture the interactive effect of all three building blocks. Moreover, the EPA tested the re sulting rates through its IPM power sector modeling tool to further verify the viability of BSER and the aggregate effect of the three building blocks.

EPA does not believe that a reduction in utilization of the fossil steam fleet as a result of building b locks two and three would inherently result in a reduction 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 some of th e more efficient units more relative to 2012 levels. This would potentially lead to increased 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 o f 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 scenario where building block two an d 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 commenter s that the NODA approach to building block three where the incremental RE generation offsets baseline generation on a 1

- for

- 1 basis

– holding all else equal

– would result in a more stringent quantification of BSER (i.e., a low er 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 understated its potential.

As explained in section V, EPA has taken a regionalizatio n approach to the building blocks in this final CPP rule which reduces the disparity between some state emission rate goals that existed at proposal and noted by comments below. This is consistent with the comment that EPA should consider ways to utilize the potential of natural gas generation to displace coal generation so that the building block more equitably reflects emissions performance improvement opportunities across states.

EPA’s quantification of BSER does recognize the interaction of the buildin g blocks. The comment below suggest s that applying building block one first (heat rate improvement) and then building block two causes the building blocks to contradict each other. However, this sequence respects the interaction of the building blocks, r ather than interfere with it. See section VI of the182 final rule preamble for discussion of the subcategory

- specific emission performance rates and how they were calculated

.

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

C ommenter s stated the methodology for calculating state goals is applied consistently across all states, but it leads to real differences in emissions targets across states. C ommenter s said for building block 1, EPA should allow states to demonstrate pre

- ba se

- 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 this information in determining improvement pote ntial for that state. C ommenter s said for building block 2, EPA should consider ways to utilize the potential of natural gas generation to displace coal generation so that the building block more equitably reflects emissions performance improvement opportunities across states. C ommenter s said in designing 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 alternatives. C ommenter s said if at

- risk nuclear remains in the calculation of state goals, and a state's nuclear plant shuts down at the end of its license term, or due to safety reasons, the EPA should consider allowing measures to adjust a state's goal or budget appropriately, after considering the availabili ty of other zero carbon

resources. C ommenter s said EPA should take a consistent approach toward the carbon intensity of resources when establishing state goals and when assessing compliance.

Commenter s stated within each state, each utility's CO2 emissions should be evaluated against the building blocks based on the ability of each utility to implement those building blocks within its own system. C ommenter s said in the event that a state has excess credits, those should be the property of the utility and av ailable for it to use toward compliance in another state.

Commenter s stated the goal setting and interim targets proposed by EPA do not properly take into account all relevant factors that are impacted by both BSER and non

- BSER components. C ommenter s 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 existing fossil fuel

- fired EGUs through application of the BSER. C ommenter s said the proposed goal for California, in adjusted
mega watt hour (MWh)

- weighted

- average pounds of CO2 per net MWh from all affected fossil fuel

- fired EGUs, is 556 pounds per megawatt hour (lbs CO2/MWh) for 2020

- 2029, and 537 lbs CO2/MWh for 2030 going forward. C ommenter s said California would have to meet both the interim and final target in order to comply with the EPA's mandate, utilizing the four building blocks that reflect BSER.

Commenter s stated the state goals, and in particular 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. C ommenter s said one such goal is increased electrification of the transportation sector; California's goal for electrification of the transportation sector will result in increased electric demand, which increase d demand is not specifically recognized as part of EPA's calculation of California's reduction targets. C ommenter s said the determination of state targets also appears to be devoid of an analysis of state's industries, and how increased electrification of industries (such as ports and railways) will impact electric generation from existing facilities. C ommenter s added it appears that the state

specific targets do not account for potential load growth that will be met by existing resources, rather than new f acilities.

Commenter s stated the record appears to assume

- but does not demonstrate

- that all load growth in California would be met by new generation, and as such, the California target set by EPA may be too stringent in light of California's ambitious electrification goals. C ommenter s stated without supporting data, it is not reasonable to assume that all load growth will be met by new generation. C ommenter s said EPA's assessment does not appear to fully consider the ramifications of increasing generat ion from existing 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 be offset by energy efficiency measures as the
Pro posed Rule implies. C ommenter s said the record does not support a conclusion that these increases can be met my energy efficiency savings or new facilities, and EPA should review and revise the state targets in light of these variables. C ommenter s said the Proposed Rule has the potential to adversely impact reliability in several regions, including the west. C ommenter s said the timing of the interim goal has the potential to further restrict the ability of utilities to ensure the efficient operation of the electric grid; as such, EPA should reevaluate the level of the interim goal, and adjust the extent to which states are required to "front load" reductions. C ommenter s said revising

- or potentially eliminating

- the interim targets will enable states and t heir regional partners to develop the gas and electric infrastructure that will be necessary to ensure sufficient electric generation resources in their optimal locations.

Commenter s stated the proposed guidelines do not include adequate information as to how EPA's proposed BSER functions as a whole system. C ommenter s said EPA proposes the building blocks as a system, but provides calculations that do not illustrate how the blocks may interact with one another. C ommenter s said in some scenarios, the blocks will actually work against one another; utilities will improve heat rate at coal affected EGUs and then be forced to re

- dispatch some of that generation to NGCC affected EGUs. C ommenter s said the result will likely be that some of the improved heat rate wi ll be lost at the affected coal EGUs. C ommenter s said failure to consider these interactions between the blocks, artificially inflates the actual reductions that may be technically feasible or achievable at a reasonable cost and forces to states to evaluat e these interactions on their own or otherwise over comply to ensure compliance with the state goal. C ommenter s recommend ed EPA evaluate these interactions and correct the proposed BSER to account for the interplay between blocks.184 Commenter s stated EPA generally overestimates the possible reductions available from the Building Blocks, resulting in state goals that may not reflect the reductions that are achievable. C ommenter s said in setting the state goals, EPA simply added the estimated pot ential reductions from each Building Block. C ommenter s said this is the largest overarching flaw in EPA's methodological approach to BSER and the proposed state goals. C ommenter s said because the Building Blocks are part of the interconnected power system, they need to be evaluated jointly, taking into consideration their interactions in the context of that system. C ommenter s said EPA did not consider these interactions, which tend to limit the reduction potential of each when compared to EPA's assessment o f the Building Blocks in isolation. C ommenter s said if EPA relies on the interconnected power system as the basis for the BSER determination, the Agency cannot ignore these interactions when projecting the reductions achievable through each of the Building Blocks. C ommenter s said the Agency should consider them before finalizing the state

specific emission rate goals; EPA should consider any state

- specific issues identified in state compliance plans and adjust final state goals if necessary.

Commenter s sta ted EPA has stated that the four building blocks may be used in any combination (or none) by states to comply; however, EPA's own modeling, along with independent analysis, shows that most states will be heavily dependent on implementation of all four buil ding blocks in order to meet their goals. C ommenter s said because states will be simultaneously dependent on all four building blocks, EPA must take into consideration the effects of each building block on the other building blocks. C ommenter s said for exa mple, increasing the capacity factor of the NGCC fleet to 70% under Building Block 2 will inevitably 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 impact.

Commenter s stated in its October 30 NODA, EPA proposed taking a similar approach for Building Blocks 3 and 4 as it did for Building Block 2, which will only lead to tighter standards; that is, in the original CPP pr oposed rule, renewable energy and energy efficiency are added to the denominator (MWh), but no corresponding adjustment is made to reduce the generation and associated emissions from other fossil sources (as was done with Building Block 2). C ommenter s said this resulted in a higher BSER rate than the two approaches EPA suggests in the October 30 NODA. C ommenter s said EPA is now proposing two approaches for adjusting down the fossil generation and emissions offset by renewable energy and energy efficiency, o ne is based on a
pro

- rata share of all fossil generation and the other starts with the highest emitting sources (i.e., steam); both approaches would lead to more stringent emission rate standards relative to the original methodology. C ommenter s provided a simplified example:

- In the current approach, if coal has a 2,000 lb/MWh emission rate and 2012 generation was 10 MWh and the renewable and energy efficiency building 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 Building Block 2, the emission and generation of the fossil (in this example coal) would be reduced; so, the calculation becomes 2,000 lb/MWh for 5 M Wh of generation (10 MWh of coal reduced by 5 MWh of non

- emitting) and 5 MWh of non

- emitting generation; under this approach, the BSER becomes 1,000 lb/MWh (i.e., 5x2000 + 5x0)/10); under this approach, total generation is equivalent to the historical leve l and forces energy efficiency and renewable energy to supplant fossil generation.

The commenter s said as shown in the simplified example above, EPA's updated proposed methodology would result in a more stringent standard.

Commenter s stated in determining what level of RE deployment is achievable by states, EPA did not consider the system and reliability implications 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. C ommenter s said EPA's failure to fully consider the electric system as a whole when setting state RE targets undermines the reasonableness and achievability of these goals. C ommenter s said this failure cou ld result in overall emission increases, even if states satisfy their compliance obligations.

Commenter s stated variable RE resources could also be supported by existing simple

- cycle CTs, which would need to operate at higher utilization rates. C ommenter s said because CTs are less efficient than NGCCs, this could increase overall CO2 emissions and hamper states in their efforts to meet their overall emission reduction goals. C ommenter s said EPA does not appear to have considered these potential impacts and outcomes when calculating RE potential.

Comment 4: B uilding B lock ordering can affect contributions to the target rate

Response 4: In this final rule, as discussed in section VI, order of the building block calculations in the equation does influence the final 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:

Commenter s stated a common point of confusion is in analyzing the relative contribution of the individual Building Blocks used to create the EPA target 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 or der in which the Building Blocks are added. C ommenter s said as a result, if the computation is performed by first removing heat rate improvement (BB1), then natural gas re

- dispatch (BB2), renewables and nuclear (BB3), and energy efficiency (BB4) in that or der, the results will be different than if the computation were performed by first removing BB4, then BB3, BB2, and BB1. C ommenter s provided its own assessment of the impact of each Building Block by state that provides data that is comparable across Build ing Blocks and does not depend upon the ordering. Commenters said t his 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 remo ving 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

- by

- one approach does not have this property and will tend to ex aggerate the impact of the Building Blocks removed last in the calculations.

Example of How Building Block Ordering Affects Contributions to the Target Rate

From the EPA provided spreadsheet '20140602tsd

- state

- 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 (BB3): 35.33TWh

Existing nuclear g eneration (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 or der. As you remove each building block, the target rate changes as shown below

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 = 1627 lb/MWh.

Now suppose you instead consecutively remove BB4, BB3, 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 = 1627 lb/MWh.

Now compare the incremental contribution of each building block to the target rate using the two methods.

C ommenter s said this example demonstrates that ordering is important; a change in ordering can change the impact of a single building block by more t han 50%; furthermore, calculating the numbers by removing Building Blocks in order like this creates a bias towards those Building Blocks removed last; the example calculations are all computed off a common base

- the EPA target rate

- and are thus compara ble.

Commenter s stated that the EPA should clearly state the priority order of preference for GHG reduction efforts. The commenter s suggested the following prioritization: conservation, efficiency, distributed generation, renewables (industrial scale), and cleaner fossil fuels. The

commenter s added that the most environmentally protective energy is that energy that is not used.

Comment 5: Conflicts between results and purported BSER elements

Response 5: The IPM compliance scenario is not intended to repli cate 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 real ize 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 . Moreover, the modeled compliance scenario also reflects non

- BSER o n

- the

- way reductions that represent alternative compliance mechanism s (e.g., scheduled retirements) and therefore lessen the amount of building blocks observed in the model.

The EPA did receive significant comment on its building block three assumptions an d has revised those as discussed in section V of the preamble and in the GHG Mitigation Measures TSD.

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

Commenter s stated from the IPM results that are publically available, ther e are considerable inconsistencies between the modeled outcomes and what EPA has suggested as the BSER for the "building block" approach to calculating state goals. C ommenter s 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. C ommenter s said as the IPM model is a least

- cost optimization, the fact that NGCC units do not188 reach 70 percent capacity factor in aggregate suggests there are unaccounted for significant economic and or physical barriers to increased utilization; this calls into question the robustness of EPA's initial BSER determination.

Commenter s stated another example of an inconsistency between the IPM modeled outcomes and building block determinations is in the deployment of renewable energy resources. C ommenter s said EPA's modeling suggests a relatively small amount of new renewable energy dev elopment; for wind energy, the dominant source of renewable energy additions, there is only an 11 to 12 percent increase in generation in the policy cases for Option 1, as compared to the base case. C ommenter s said additionally, the renewable energy capaci ty 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. C ommenter s said in light of these inconsistencies, EPA should revise its BSER determi nation 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 rate improvement assumption of 2.1%, 2.3% and 4.3% for the Western, Texas, and Eastern Interconnection respectively. The EPA’s BSER quantification does not assume that individual units will all make heat rate improvements of this level, but that on a verage the coal fleet is capable 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 improvement. Also see Chapter 2 of the GHG Mitigation Measures TSD.

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

Commenter s stated EPA solicits comment on increasing 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 effective of these upgrades are already in place and that a 2 percent improvement overall is an overly

- aggressive target. C ommenter s said EPA solicits comment on increasing the technical potential for heat rate improvements through the adoption of best practices from 4 percent to 6 percent; commenters said the most effective of these practices are already in place and that the proposed additional 4 percent improvement is not achievable. C ommenter s said EPA should work with states 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. C ommenter s said these specific examples illustrate that EPA's assumptions regarding additional heat rate improvements are flawed; therefore, if supported by a state evaluation of heat rate improvement pote ntial, the Block 1 reduction calculations should be adjusted to reflect an accurate potential heat rate improvement, if any.189 Commenter s stated a 6 percent improvement in coal plant heat rates is not reasonable for Arizona's plants, commenter s recommend ed t hat EPA reduce Building Block 1 to 1 percent.

Commenter s 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. C ommenter s performed a high

- level assessment of the possible efficiency improvements that could be realized at coal units from all of the measures outlined in the 2009 Sargent and Lundy report. C ommenter s said some of the improvements are not practical units (such as installing variable fan drives 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)

. C ommenter s ' assessment 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%.

Commenter s were concerned that HRI measures made at coal

- fired utilities p rior to 2012 cannot be considered and are not taken into account by U.S. EPA. C ommenter s stated that the coal fleet in Ohio is highly efficient when compared to the nationwide coal fleet. C ommenter s examination of gross heat rate data for the nation

- wide c oal

- fired 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%. C ommenter s said similar representation was observed in 2013 data. C o mmenter s said nationwide in 2012, gross heat rate was 10,352 BTU/kW

- h. Commenters said a lthough Ohio utilities had 19 units with heat rates greater than this average, 11 of those units are to retire in 2015. C ommenter s urge d U.S. EPA to develop options tha t would allow states to take credit for these retirements. C ommenter s said in U.S. EPA's GHG Abatement Measures TSD [Page 2

- 18], it is stated that the gross heat rate of the nationwide study group is 9,754 BTU/kW

- h; following U.S. EPA's goal setting proced ure, a 6% reduction in this value would yield a reduced nationwide gross heat rate of 9,169 BTU/kW

- h. C ommenter s ' analysis demonstrated that the 2001 to 2012 average gross heat rate of Ohio's coal

- fired fleet is 9,788 BTU/kW

- h. C ommenter s said accounting f or 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 simila r value of 9,169 BTU/kW

- h. C ommenter s added furthermore, given the variability of heat rates, it is likely that in some future years, Ohio's coal

- fired fleet could potentially meet or exceed U.S. EPA's goal. C ommenter s recognize d that some units may be abl e to take some steps to increase heat rates marginally; commenter s do not believe that Ohio's post

- MATS

- compliance fleet, which will continue to operate in a competitive market, will be able to realize a further 6% reduction as envisioned by U.S. EPA. C omm enter s also wishe d to emphasize, as Sargent & Lundy also emphasizes, that "installation of additional pollution controls such as that required by regulations including BART, MATS, etc. will decrease the heat rate efficiency of any unit as compared to its h eat rate efficiency before the installation." C ommenter s said a blanket, nationwide approach to setting the BSER is not appropriate for all units, and the results of the commenter s ' analysis further reinforces the190 position that any HRI goals should be base d on a unit

- by

- unit analysis of past and potential future HRI projects.

Commenter s stated in the proposed regulations, the EPA assumes that a total of 6% heat rate improvements for coal facilities can be achieved through best practices that account for 4%, and equipment upgrades that add another 2%; where calculations were based on an average for all existing coal facilities. C ommenter s said such calculations would be of limited value when applied to individual coal facilities in Nebraska or elsewhere, espe cially those that may have already experienced upgrades. C ommenter s said also, Nebraska's utilities have already implemented changes necessary to achieve the highest efficiency from many of their coal generation facilities. C ommenter s asserted the 6% heat rate improvement is not realistic; to be achievable and meaningful, improvements should be tailored to individual facilities.

Commenter s recommend ed a state's goal should be modified if sufficient evidence exists to demonstrate that a fossil facility canno t obtain a 6% heat

- rate improvement because of efficiency measures already undertaken, i.e., operational before the beginning of the rule's baseline data period.

Commenter s recommend ed a state's heat

- rate efficiency 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 methods of consumption for purposes of heat

- rate improvement.

Commenter s stated heat

- rate and efficiency improvements 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 afte r the available data used in the goal calculation should be eligible for compliance consideration. C ommenter 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 counted for compliance.

Commenter s stated the goal calculation should be modified if sufficient evidence for a specific site shows that a 6% heat

- rate improvement is not attainable due to improvements already made at that site; specifically, Montana's 2,100 MW Colstrip facility, the second

- largest coal

- fired power plant in the West, is in this situation. C ommenter s said the facility's operator, PPL

Montana, has made several improvements over the past 10 years that have increased efficiency of the plant by approximately 5%; these upgrades include 3

- 4% improvement in efficiency resulting from using a new blade design in the tu rbine 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 improvements. C ommenter s said those projects do not leave many heat

- rate improvements available for the site. C ommenter s emphasize d that certain efficiency improvements that hold promise in one region of the country may not work in another region; for example, drying moisture out of coal to improve the efficiency of combus tion191 will not work for Colstrip because de

- moisturized Powder River Basin coal, the fuel for Colstrip's generation, becomes highly combustible. C ommenter s said experiments at Colstrip with de

- moisturized coal have resulted in spontaneous combustion events. C ommenter s said after consideration of the efficiency improvements already made at Colstrip, as well as the particular combustion characteristics of the plant's fuel stock, it becomes apparent that only 1

- 2% in efficiency gains are available at the facili ty and that the achievement of a 6% increase in efficiency is not a realistic expectation.

Commenter s stated Georgia has already performed all the efficiency improvements that are cost effective and do not expose a possible New Source Review (NSR). C omment er s stated on the Northside Units 1 and 2, $26M was spent on turbine upgrades yielding approximately a 1.2% improvement in efficiency; the only possible upgrades remaining for these units are not currently cost effective. C ommenter s said there may be some room for a 1

- 2% increase in efficiency available for SJRPP 1 and 2 units, but those improvements are not currently cost effective, and are at risk of triggering an NSR review. C ommenter s said Georgia Power's Scherer 4, has received significant efficiency u pgrades in the process and deploys the best available control technology (BACT).

Commenter s stated t he risk of an NSR review has historically been the single major driver preventing even cost effective efficiency upgrades from being implemented; should ma intenance or upgrades to a unit result in a net increase in emissions by virtue of an increase in output or in unit use, the unit would be subject to NSR. C ommenter s 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. C ommenter s said it is not prudent for any utility to proceed with an upgrade that could trigger NSR wi thout assurances (i.e. inclusion in the CPP rulemaking) that the rule driving the upgrade will in fact exempt the resultant upgrades from NSR; no such assurances have been given in the proposed NSR.

Commenter s stated a more significant hindrance to implementing Building Block 1 than NSR is the practical impact of implementing Building Block 2, the re

- dispatch of coal

- fired generation toward gas. C ommenter s said any attempt to implement Building Block 2 will res ult 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 efficiency 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. C ommenter s said r educed load operation and increased starts will negate any improvements to overall unit efficiency, and the total net unit CO2 emission rate (lb/MWh) will increase.

Commenter s stated it is not at all reasonable or even possible to achieve the Florida State 2020

- 2029 or 2030 average emission goals for CPP regulated units even with all building blocks implemented. C ommenter s stated facilities can only achieve this goal by effecti vely retiring all solid fuel units and building gas units that are subject to Section 111(b). C ommenter s said since192 the CPP in effect (though not in the rule) mandates forced closure of coal units, Building Block 1 is rendered completely ineffective, impra ctical, irrelevant and unnecessary; it only exists to give credence to the desired appearance that this rule does not in fact force closure of coal units (though it does in practice). C ommenter s said Building Block 1 at a more realistic rate of one to

two percent might be viable if BB 2 were abandoned. C ommenter s said BB1 is the only one of the four BBs that is effective at the "source" EGU.

Commenter s request ed that EPA consider the following and adjust building block 1 in the goal computation procedure accordingly:

- An EGU's heat rate is not constant; heat rate varies with such parameters as process design, equipment design, maintenance, cleanliness, weather c onditions, fuel energy content, fuel delivery, process water temperatures, and cooling water temperatures; heat rate improvements are not uniform or universal; what works for one EGU may not work for another.

- Heat rate improvement projects are limited fo r new and well

- maintained units; some units have been proactively engaged in heat rate improvement efforts, including implementation of best practices, yet they receive no credit for these efforts prior to 2012 according to EPA's Clean Power Plan; for thes e units, it will not be economically or technically feasible to achieve an additional 6% improvement; heat rate improvement projects 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 type of boiler or turbine upgrade projects that could achieve significant heat rate improvements is the fact that they would likely trigger a Be st 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 improvement project that might cost $5 million could turn into an SCR project for NO x reductions with a price tag of $100 million; smaller scale heat rate improvement projects that would not trigger a BACT review would not be able to achieve the 6% goal contained in this building block.

- Heat rate improvements made at coal

- fired EGUs will be offset by dispatch changes implemented pursuant to building block 3, re

- dispatch of electricity production to new renewable

resources; EPA's proposal is aimed at reducing utilization of fossi l

- fuel fired EGUs, particularly coal

- fired units; increased re

- dispatch to renewable 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 wi ll have an adverse effect on heat rate.

C ommenter s recommend ed that EPA should make two modifications to the proposal with respect to building block 1; first, EPA should adjust the heat rate improvement goal to within a range of 1% to 2%; several utilitie s have made cases 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 proposed rule.

Commenter s stated EPA did not consider the puniti ve 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. C ommenter s said in 2015 about 9 55 coal

- fired power plants will be operating

- of which perhaps 520 are larger than 200 MW. C ommenter s said among the larger units, 192 have retrofitted one or more of SCR and FGD process equipment. Commenters added , the retrofit of either FGD or SCR proce ss equipment can at times be accompanied by a change in fuel properties, also affects plant heat rate; these actions

- undertaken to comply with EPA regulations

- are not considered in EPA's supporting materials.

Commenter s stated Building Block # 1 in th e Clean Power Plan focuses on affected units and heat rate improvements in those affected units. C ommenter s stated Streeter Station Unit #7 is listed as an affected unit; it is currently operated as a peaking unit, with operation as a coal fired unit limit ed to peak demand periods only during a maximum of a few weeks during the heat of summer and a few weeks in the winter. C ommenter s said given the few run hours on this unit, the cost estimates of heat rate improvements and the likelihood of incurring addit ional environmental regulations (New Source Performance Standards), a heat rate improvement on Unit #7 would not be feasible.

Commenter s 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. C ommenter s said beyond section 111, other provisions of the CAA will require some existing coal

- fired EGUs to install additional controls that will increase those units' net heat rates in ways that are not reflected in the 2012 generation 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; other s will be required to install further retrofits to comply with regional haze requirements; EPA is currently considering revisions to the NAAQS for ozone, which could result in more areas being designated as nonattainment and having to impose more stringent emission limits. C ommenter s said it is obligated by state implementation plans to install emission controls at several coal

- fired EGUs, including the installation of SCR and mercury control 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 rate improvements proposed by EPA.

Commenter s stated in November 2012, GVEA entered into 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. C ommenter s said as an element of this Consent Decree, GVEA is obligated to install additional air pollution control equipment; this equipment, while re ducing nitrogen oxides (NOX) and sulfur dioxide (SO2) emissions, consumes additional energy. C ommenter s said this additional energy consumption results in a less efficient heat rate and an increase in the CO2194 emission rate on a pound per net megawatt

- hour (lb/MWh) basis. C ommenter s 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.

Commenter s stated an issue with the heat

- rate improvement section of th e goal calculation relates to the installation of pollution control equipment required under other air quality rules. C ommenter s said a specific example of this can be seen at the Big Stone plant located in South Dakota and co

- owned by Otter Tail Power, Mo ntana

- Dakota Utilities, and North Western Energy. C ommenter s 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; how ever, in addition to requiring a significant capital cost, those haze

reducing upgrades will also require approximately 8 MW of the plant's production. C ommenter s said this "parasitic load" means that a portion of the plant's power production

- and associa ted carbon emissions

- no longer serve consumer load but will be used in compliance of an EPA rule. C ommenter s said while one EPA rule has the effect of increasing the plant's rate of carbon emissions output per unit of customer

- consumed energy, the propos ed section 111(d) rule requires significant reductions in that same pollution metric.

Commenter s stated EPA determined the fleet

- wide potential for the two types of HRI using fundamentally different analyses; both of these approaches are flawed, resultin g in overly optimistic projections for fleet

- wide HRI that may result in state emission rate targets that are unachievable. C ommenter s 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.

Commenter s 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 built, or could provide incremental CO2 reduct ion required for compliance assurance. C ommenter s advocate d 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 additional Block in interi m or final goal setting.

Commenter s 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 Building Blocks 1 and 2 citing "it involves only affected EGUs and generation from affected EGUs". [79 FR 34878] The comme nter s believed BSER should be based on only inside

- the

- fence application. The commenter s also believed BSER should apply directly to the affected EGU and not be a system comprised of multiple affected EGUs and "entities." The commenter s stated that it is u nlawful for U.S. EPA to develop a BSER that requires emission increases from existing NGCC units.

The commenter s noted that U.S. EPA continues to cite concern that HRIs at coal

- fired EGUs might make them more competitive and they will therefore increase th eir generation making195 them less effective at reducing CO2 emissions; the "rebound effect." The commenter s stated that U.S. EPA uses this to further justify increased utilization of NGCC, which the commenter s noted increases their CO2 emissions. The comment er s stated that they had difficulty with U.S. EPA's concern regarding a potential "rebound effect." Unfortunately, the commenter s stated that due to the nature of this proposal, U.S. EPA has found themselves in a position where such a ludicrous concern is worthy of consideration. The commenter s stated that they can think of no other federal or state regulatory requirement that requires significant monetary investment in a control strategy that reduces emissions (such as HRIs) coupled with an expectation tha t the investment should result in reduced operation. In general, the commenter s stated that the principle behind investment in control is that more efficient and well controlled facilities will operate more than less efficient and controlled facilities. Th e commenter s 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 commenter s noted that however, coupled with Building Block 2, these same EGU owners are instruct ed to operate less, or in a cycling manner, which in turn reduces the efficiency of these units. The commenter s stated that this is counter to basic engineering principles and common sense. The commenter s stated that this is not the manner in which Section 111(d) is intended to be implemented. The commenter s stated that 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 comm enter s 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 commenter s stated that by reducing overall generation from coal

- fired EGUs the combination of Building Blocks 1 and 2 also has the potential to raise the cost of the portion of the overall emission reductions achievable through heat rate improvements relative to the cost of those reductions if Building Block 1 were implemented in isolation. The co mmenter s 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 that their coal

- fired EGUs did co

- fire with natural gas (most notably at Hudson Unit 2) and given 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. Commenters referred to a spreadsheet titled "tsd

plant

- leve l

- data

- unit

- level

- inventory", where EPA included all of the CO2 emissions and net generation from their coal

- fired EGUs in 2012 regardless of the fuel burned at the time. Commenters stated that it appears that EPA calculated the coal

- fired EGU emission rat e in Building Block 1 using the total 2012 data from these units. Commenters stated that they calculated a true annual, average coal

- fired generation emission rate for their units based on the CEMS data for the hours when coal was burned at each facility. Commenters stated that Table 2 summarizes the analysis with the data EPA included in its spreadsheet titled "tsd

- plant

- level

data

- unit

- level

- inventory." (Table 2) Commenters stated that the inclusion of natural gas co

firing in the coal emission rate puts the New Jersey coal EGUs at a disadvantage because EPA is seeking an additional six percent heat rate improvement on units that have lower emission rates because of this co

- firing and therefore, EPA must recalculate New Jersey's coal emission rate196 based on the hours when the units fired coal only and 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 EGUs, EPA should recalculate that state's emission rate goals accordingly.

Comment 7: Building Block 2 considerations that the EPA should take into account.

Response 7: The EPA agrees that using a net summertime capacity metric instead of a nameplate capacity for building block two can help control for some of the weather

- based generating potential across different regions. This final rule relies on net summertime capac ity 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 proposal 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 potential should be assessed assuming a 1,000 lb/MWh emission rate. Section V of the preamble explains 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/MWh would be analogous to assuming that they emit more than current average levels. This assumption is inconsistent with the notion of the BSER to id entify emission reduction potential.

The EPA has taken into consideration the comments and is finalizing a BSER premised on a 75 percent capacity factor using net summertime capacity. Please see section V.D. of the preamble and the GHG Mitigation Measures TSD for more information 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:

Commenter s stated much of Florida has a climate that 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 BSER at 70% of nameplate capacity. C ommenter s asked if EPA has considered whether summer capacity better reflects the actual generating capacity of affected facilities, and whether a determination of the 90th percentile of NGCC capacity factors should be based upon net summer capacity.197 Comme nter s added in justifying the need for revised building block 2 calculations based on power system dynamics, fuel switching infrastructure time frames, and reliability issues, several factors can complicate the construction of additional NGCC capacity:

- L engthy time lines in siting and permitting new energy 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 offse ts.

- 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 RTOs, without considering intra

- company, intra

- regional dispatch that does not compromise a company and RTO's ability to meet its load.

Commenter s stated EPA should work with states to adjust building block 2 targets based on these factors or any other factors deemed reasonable by a state. C ommenter s said for example, in South Dakota, there is one NGCC

- Deer Creek station (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 methodology for building block 2, Deer Creek is ramped up to a 70 percent capacity factor, requiring South Dakota's lone coal

- fired unit (Big Stone) to reduce operations to an annual capacity factor of 23 percent; however, EPA fails to consider that the Deer Creek and Big Stone plants have different owners and are located in different RTOs (Big Stone in the Midcontinent Independent System Operator and Deer Creek in the Southwest Power Pool, beginning in 2015) and serve different loads

.

Commenter s 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 for compliance unde r 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 of new natural gas plants. To correct this
error, commenter s recommend ed that EPA phase in the gas redispatch amount in equal increments across the entire 10 year period from 2020 to 2029.

Commenter s 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. C ommenter s recommend ed that EPA review and recalculate the assumptions as appropriate for Block # 2.

Commenter s stated EPA's assumed redispatch of all coal and oil generation to NGCC must be modified.198 Commenter s stated some individuals have argued that efficiency improvements cannot be achieved at coal plants in North Carolina if these plants are als o being re

- dispatched to natural gas under Building Block 2 and therefore operating at lower capacities. C ommenter s said this argument conflates the building blocks used to create North Carolina's target with the options available for compliance; in realit y, increases in generation from other electricity sources

- including and exceeding the limited increases envisioned by EPA's building blocks

- will allow older and less efficient coal units to retire. C ommenter s said it is therefore mistaken to assume tha t inefficient coal plants will continue to operate at a low capacity and inhibit North Carolina's ability to reach its target.

Commenter s stated these comments are applicable to Building Block 2, re

- dispatch of 90% of coal

- fired energy to natural gas fired combined cycle (NGCC), and operation of NGCC at a minimum capacity factor of 70%. Commenter s stated it should be possible to operate the existing NGCC unit consistently at an average capacity factor of 70% when coupled with market purchases of NGCC energ y adequate to allow solid fuel units to be seasonally idled; it may be more difficult, or may not be possible at all, to achieve a capacity factor over 70% without opportunity purchases, or without construction of another combined cycle natural gas unit (w hich is not otherwise planned). C ommenter s said the key to higher NGCC capacity factors has been shutdown of solid fuel units in the shoulder months, and the commenter s ' lone NGCC unit does not provide enough capacity or energy by itself to achieve that go al.

Commenter s 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 from solid fuel units to gas

- fired NGCC units, the commenter s ha ve shown that operating a NGCC unit at the se 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 expected to be comprised of approximately 48% coal and/or petcoke fired steam u nits, 16% natural gas fired combined

- cycle units, 5% Nuclear (PPA not ownership), 25% simple

- cycle gas fired peaking units, and 6% other units (primarily distillate fired CTs), on a capacity basis. Commenters stated a s the system only has one third the natural gas fired combined cycle (NGCC) 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 gen eration by re

- dispatch using existing and planned (none planned) NGCC units by 2030.

Commenter s 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 remai n. C ommenter s said first, the replacement generation must be located at or near existing coal

- fired sites in order to minimize local transmission impacts such as load and voltage issues. C ommenter s said second, there is not currently adequate gas transmiss ion 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. C ommenter s said in order to support construction a nd operation of an adequate amount of new NGCC units under 111(b) to achieve 90% re

- dispatch, there must be extensive improvements made to local gas delivery199 infrastructure as well as to the gas transportation infrastructure; the commenters said EPA has

co nsidered none of this.

Commenter s stated for purposes of setting state goals the state may rely on the ISO to forecast the impact of re

- dispatch from coal units to combined cycle units. C ommenter s said the ISO is the regional modeling expert and is in the best position to forecast generation re

- dispatch in the region taking into account unit characteristics, transmission congestion and losses, and market prices.

Commenter s stated if NGCC units are re

- dispatched to a capacity factor of 70 percent, as

assume d by the EPA, the role of these units will essentially shift from load

- following, intermediate resources to baseload resources; however, the need for load

- following resources will not be eliminated as a result of the rule. C ommenter s said if anything, the need for load

following resources will increase due to the increase in renewable penetration assumed in Building Block 3. C ommenter s said if NGCCs become baseload resources, the intermediate load role will likely be taken up by a combination of coal units operating at reduced loads and/or simple cycle peaking units operating at increased capacity factors. C ommenter s 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 have reduced efficiency (higher heat rates).

Commenter s stated in regards to the question of whether decreasing the ability to quickly ramp NGCCs up or down adversely affects intermittent renewables on the system, simple cycle combustion tur bines (CTs) could supplant NGCCs for providing quick ramp up capability when needed. C ommenter s said simple cycle CTs are less efficient and more expensive to run than NGCCs, but if located in the appropriate electrical location they should be able to prov ide ramping capability. Commenters added all intermittent resources added to the system since 2011 required to become dis

- patchable intermittent resources, will be expected to respond to dispatch signals and move in the direction (up or down).

Commenter s stated EPA does not appear to have conducted sufficient analysis of the ability of the existing natural gas pipeline system to support increased utilization of NGCCs. C ommenter s said based on 2012 data, re

- dispatching Wisconsin NGCCs to 70 percent would re sult in an increase in statewide gas consumption of approximately 24 percent. C ommenter s said page 3

- 26 of "Regulatory Impact Analysis for the proposed Carbon Pollution Guidelines for Existing Power Plants and Emission Standards for Modified and Reconstruc ted Power Plants" projects a 4 to 8 percent increase in pipeline capacity by 2020, suggesting existing infrastructure is not adequate.

Commenter s said additional natural gas storage may also be needed if simple cycle CTs start to be relied on significantl y more because of the rule changes; this is especially true if the need grows in the winter. C ommenter s said currently, storage for Wisconsin's needs is available for purchase at a reasonable price, but the pipeline transportation to deliver it is not alwa ys available without very significant costs.200 Commenter s stated Wisconsin is 'geologically challenged' 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 i t is likely that as new NGCCs come on

- line, and existing NGCCs operate at higher capacity factors, there will be more competition for limited storage and transportation capacity. C ommenter s said it is not clear that the EPA analysis has taken note of these types of concerns about the availability of storage and associated interstate delivery capacity.

Commenter s 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 cases, particularly if air permit or other operational amendments or upgrades to natural gas pipelines and electric transmission facilities are required to accommoda te increased NGCC operation. C ommenter s said the EPA should allow states to determine what level of re

- dispatch is feasible and the reasonable schedule for implementing NGCC re

- dispatch. C ommenter s said alternately, as is the case with the treatment of ren ewables and energy efficiency, the EPA should assume a ramp

- up period for implementing

re

- dispatch.

Commenter s stated assuming that the permits are revised and infrastructure accommodates base load operation, the commenter s asserted a 70 percent 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 demonstrated to be achievable (instead of nameplate capacity) to avoid overestimating the potential for re

- dispatch. C ommenter s added, EPA should allow states to adjust goals for units with design or other constraints that prevent achieving the 70 percent capacity factor.

Commenter s support ed that a state should be all owed, but not required to include new NGCC units in its state plan, allowing the units to be included in the state's compliance calculations under Section 111(d).

Commenter s implemented a switch over to NGCC, on which the proposed budgets heavily rely,

ev en before 2012, the year utilized as the budget baseline. C ommenter s said an analysis of the 2012 baseline emission and generation figures for the two City of Tallahassee NGCCs demonstrates that EPA is dictating that each utility go far beyond even a switc hover to natural

gas. C ommenter s said CO2 Emissions from Hopkins and Purdom from both NGCC and OG Steam for 2012 total 1,195,479 tons. C ommenter s said generation of the two facilities total 2,425,470 MWh, producing an average emission rate for the two faci lities of 985.77 lbs / MWh; yet, the interim and final budgets for Florida are 794 lbs/MWh and 740 lbs/MWh respectively. C ommenter s said in order to meet these goals, the utilities of Florida must average this rate; some may be higher, which means some mus t be even lower than the goal. C ommenter s 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 program and purchase reduction credits.201 Commenter s said they have significant concerns over EPA's concept, formulation, and application of Building Block 2 in determining each state's goal rate. C ommenter s 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 facilities may be considered BSER; putting aside both that fundamental question and the disparate effect of Building Block 2 on the goal rate among different states, commenter s asserted that EPA has underestim ated the challenges that the redispatch approach presents. C ommenter s said few, if any, states have an actual excess of clean, reliable natural gas combined cycle ("NGCC") unit capacity that is sitting idle and simply awaiting this redispatch; increased ut ilization of modern NGCC production to replace older power sources is likely to continue; however, EPA grossly 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 reductions. C ommenter s were concerned with building block 2, such as the limitations of existing infrastructure, which are discussed in the Notice of Data Availability. C ommenter s said many of the "underutilized" n atural 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 of these units have been kept available for use only in extraordinary circumstances. C ommenter s added state producers maintain reserve units to stabilize grid current when renewable energy generation is unavailable. C ommenter s said these Combined Cycle units, along with any that are more than 30 years old and/or have a 2012 CO2 emission ra te of greater than 1,000 lbs/MWh should not be included in the Building Block 2 portion of the goal calculation.

Commenter s stated the proposed methodology, as it is currently applied to South Dakota, produces flawed targets that must be adjusted; for exam ple, 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% capacity factor, forcing the state's only coal unit to be offline at least half the year. C ommenter s said this also assumes that the ability to redispatch resources under building block 2 is technically feasible as applied to South Dakota, which is incorrect.

Commenter s stated EPA's Building Block 2 calls for increased dispatch of natural gas f acilities vis

- a

- vis coal

- fired plants. C ommenter s said this likely would lead to fewer hours of dispatch and more cycling at plants, and as a result lower efficiency and increase the plant's average CO2 emission rate. C ommenter s said base

- load plants opera te most efficiently when run closer to its peak capacity. C ommenter s said efficiency is lost when the plant is forced to stop and start in response to dispatch instructions. C ommenter s 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 longe r blocks of time; this leads to a higher average heat rate and a higher average CO2 emissions rate than during base load operations.

Commenter s stated over the course of the past several 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 under the proposed rule. C omme nter s said the202 reasoning for fully using new NGCC generation is simple: in the face of decreased coal

- fired generation and increased (intermittent) renewable electric generation sources, fossil fuel generation needs to be available for dispatch to provide critical reliability of electric service. C ommenter s propose d that EPA allow any EGU whose CO2 emission rate is lower than a state's goal be factored in to the state's rate calculation for compliance purposes.

Commenter s stated when EPA contemplated the re

- dispatch of all the state's coal

- fired generation to NGCC, EPA must have incorrectly assumed a command and control authority of the state utilities over the merchant plants within Arizona. C ommenter s said there are currently five merchant power plants loc ated within Arizona that control over 6,550 megawatts of generation capacity; the reality is that the merchant plants are free to establish power purchase agreements (PPAs) with whomever they want. C ommenter s 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 Arizona. C ommenter s said the potential unavailability of this generation creates an additional deficit for meeting Ariz ona's energy needs.
T he commenter s said the most reasonable choice to overcome this deficit is to use some of the existing coal

- fired generation within Arizona.

Commenter s stated Arizona's proposed final goal is 702 lb/MWh; when running in their optimum c ondition and under prime operating scenarios, NGCC units operate at a much higher carbon emission rate than 702 lb/MWh. (Even EPA acknowledges in its Section 111(b) rule for new units that a new NGCC unit cannot be expected to have less than 1,000 lb/MWh.) C ommenter s said thus, a likely scenario is that an existing merchant

- owned NGCC unit operating under prime conditions would emit approximately 198 lb CO2/MWh more than the Arizona goal. C ommenter s said to complicate matters, this same merchant generator c ould be running this EGU for the purposes of selling the energy outside of the state of Arizona; thus, under the Proposed Rule, which requires carbon emissions 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. C ommenter s said under this scenario, Arizona would be penalized for carbon emissions without reaping the benefit of ha ving 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 an y NGCC units generating electricity for out

- of

- state consumption to calculate compliance. C ommenter s recommend ed that the EPA include a provision in the final rule to account for such interstate transfers such that the generator's home state is not harmed.

Commenter s stated that it is unreasonable for EPA to 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. C ommenter s stated that under Building Block 2, the Agency expects states to increase utilization of NGCC units to provide more base load generation. C ommenter s added depending on the design of these units, increased utilization may actually increase the overall fleet's average CO2 emission rate. C ommen ter s said many of the NGCC units that have203 historically operated at lower capacity factors than EPA's target level of 70 percent may have done so because they operate more efficiently at those levels than when serving base load. C ommenter s 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 emission rates.

BB2 should not be less than new NSP S 1000

Commenter s stated the EPA maintains that these proposed 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 is significantly below the proposed emission standard for both categories. C ommenter s said the emission rate in the state goal may not be representative of the current NGCC fleet, which already shows historical exceedances, in future years due to efficiency deterioration f rom the age of the unit and high ambient temperatures in Florida. C ommenter s 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. C ommenter s said if gener ation is re

- dispatched to these units, their efficiencies may deteriorate at a faster rate due to increased utilization in order to meet demand requirements.

Commenter s stated using an existing source representation of BSER that is significantly more stri ngent than that proposed as new source BSER under Section 111(b) of the Clean Air Act is illogical and does not align with the intent of the statute. C ommenter s 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 more 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.

Commenter s stated they understand that the EPA did not validate the nation

- wide assumptions at the plant level; however, these examples show why it would be inappropriate to bas e a state

specific limit, derived from unit

- specific actual data, on nation

- wide assumptions. C ommenter s

are not suggesting that the EPA go through the vast effort to change the model to plant

- specific calculations; instead, commenter s suggest ed that Build ing 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 (gross) for all units with a capacity of 850 MMBtu/hour or less. C ommenter s added to what is suggested here, it would be appropriate to adjust the emission rate up accounting for the use of net generation

- based factors in the proposed Clea n Power Plan, as compared to gross generation

- based rates in the NSPS.

Commenter s stated Building Block 2 may have only limited usefulness in Nevada for meeting the goals under the proposed rule; Nevada's load profile is unique; electricity demand is rela tively low during the winter months but increases substantially during the summer months. C ommenter s said during peak summer hours, replacing energy from coal

- fired EGUs with204 energy from NGCC EGUs will require Nevada utilities to secure additional resource s to replace the coal capacity. C ommenter s said resource adequacy levels in Nevada are developed based on meeting peak load plus providing a level of reserves for contingencies such as forced outages of generation equipment. C ommenter s said if coal

- fired E GUs 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 fact, none of the coal

- fired EGU capacity in Nevada has a hot stand

- by featur e, and the coal

- fired EGUs were not designed for cycling. C ommenter s 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 affect the level of resources that need to be

secur ed for peak purposes, as the level of reserves will be reduced by the level of coal capacity that is shut down. C ommenter s said because of these limitations, the utilities in Nevada would have to find replacement capacity to serve as reserve if Nevada is t o meet its interim and final goals. C ommenter s recommend ed adjusting the goal calculation to account for utilities that have summer peaking requirements and cannot retire generation capacity without securing additional capacity to ensure reliability during peak demand times.

Commenter s stated there are many ways to reduce peak load on the demand side of the equation: distributed generation can pick up a significant portion of peak load, as can new energy efficiency and employing energy storage technology.

Commenter s stated when determining reductions available to states from Building Block 2, EPA should consider a state's potential for reducing emissions by redispatching not only to existing NGCCs located within the state, but also to NGCCs located in othe r states that are electrically interconnected with the state; because redispatch can and will be performed on a regional basis, even states with little or no under

- utilized NGCC capacity may still be able to realize substantial emissions reductions through redispatch. C ommenter s said reductions in carbon emissions achievable through regional redispatch can be allocated among states in the region based upon a rational criterion such as historic generation, cost, or accepted modeling protocols, as EPA has don e in the Cross

- State Air Pollution Rule ("CSAPR") and other rules governing the electricity

sector.

Commenter s added when determining reductions available to states from Building Block 3, EPA should ensure that a state's goals are matched to the means avai lable to comply with those goals. C ommenter s said for example, if EPA continues to allow states to demonstrate compliance through renewable energy credit ("REC") programs that allow the purchase of RECs from any other state, then EPA should modify emission s targets for Building Block 3 to reflect that possibility of compliance. C ommenter s said currently, the emissions targets are premised on renewable generation presumed to be available within state borders; but states that themselves may lack the condition s for robust renewable generation may nonetheless be able to carry out substantial emissions reductions in Building Block 3 by buying RECs produced by renewable facilities in other states. C ommenter s said Building Block 3 should also account for states' ab ility 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 differently than reductions achieved by Building Block s 3 and 4

Response 8: The EPA disagrees with the commenter s that incremental building block three generation would not replace fossil steam generation. The EPA received significant comment s suggesting that as RE generation levels increase well beyond historical levels, it will have a significant impact on generation from existing fossil sources. This is supported by the EPA power sector modeling and is described further in preamble section V.E and the GHG Mitigation
Measures TSD. In regards to the relationship between natural gas generation and increased renewable generation see Section V.D or the preamble.

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

Comm enter s 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 generation 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 assumes that these measures can replace fossil MWh on a one

- for

- one basis. C ommenter s said accordi ngly, it is appropriate to have different approaches to the different Building Blocks when calculating the state goals, as this recognizes that different generation sources can and do play different roles in the reliable operation of the interconnected pow er system.

Commenter s added the proposed approach to the numeric 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 generation an d 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 block s three and four replace historical generation from affected fossil fuel

- fired sources and those incremental resources are therefore unavailable to meet new demand for electricity." Mass

- Based Equivalents TSD at 6 n.20. C ommenter s 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 historic demand and emissions. C ommenter s said proposed applicability requirements would exempt existing and new simple

- cycle CTs that sell less than one

- third of their potential output to the grid. C ommenter s said if simple

- cycle CTs alone were required to support the reliable integration of renewable generation into the grid, many of these units likely would exceed this one

- third sales limit, subjecting them to standards, at least for new units, with which they cannot comply. C ommenter s said it is not clear how renewable generation could be integrated into the grid under such regulatory conditions.206 Comment 9: The EPA Should Look B eyond State Borders When Calculating 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 section s V and VI, it has defined and quantified the BSER in this final rule 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:

Commenter s stated EPA's Goal

- S etting NODA also addresses, 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 shift some minimum amount of generation to
N GCC plants, even if such plants are located in other states; and second, whether EPA should calculate a state's potential for reducing emissions through renewable electricity by calculating regional potential reductions, and then allocating those reduction s to states within each region. C ommenter s said while these issues relate to different 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 redu ctions 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 interconnected, interstate nature of the elec tricity system

- reflect emissions reductions supported by measures that can be taken regionally.

Commenter s stated the Proposed Rule limits emissions 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 economically reduce emissions. C ommenter s said for example, under the Proposed Rule, for states with little or no under

- utilized NGCC capacity, the emissions goals reflect little or no emissions reductions 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. C ommenter s said likewise, for Building Block 3, the Proposed Rule sets emissions goals based upon a state's 2012 renewable generation, scaled u p over time using regionally

- calculated growth factors; that is so even though a state may be able to achieve emissions reductions by relying upon renewable generation constructed in other states; in fact, the growth factors are based upon RPS programs tha t expressly allow reliance on renewable generation constructed in other states.

Commenter s stated the state

- bound approach taken in the Proposed Rule artificially and unrealistically limits the reductions that can be achieved by Building Blocks 2 and 3; f or example, Pennsylvania's emission goals reflect redispatch 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. C ommenter s said EPA projects t hat after implementation of the Proposed Rule, New Jersey's NGCC fleet will have a capacity factor of only 44 percent, far below the 70 percent used as the ceiling for Building Block 2 ; New Jersey's NGCC fleet

- which is dispatched by the same grid operato r as Pennsylvania's coal fleet

- could absorb approximately207 13 million MWh from coal units in neighboring states. C ommenter s said if Pennsylvania coal generation were shifted to New Jersey NGCCs until those units reached 70 percent capacity, the net emissi ons from the two states would be reduced by nearly eight million short tons of CO2 per
year.

Commenter s stated in the Goal

- Setting NODA, EPA proposes alternative methods of calculating emissions rate goals that more closely conform to the integrated, inte rstate nature of the electricity system; the final rule should account for emissions reductions that can be achieved through measures taken beyond a state's borders. C ommenter s said for example, as just discussed, coal

- fired generation located in one state can often be displaced by under

- utilized NGCCs located in another state. C ommenter s said setting state goals to reflect the potential for redispatch to NGCCs located in other states not only would be reasonable, but failing to account for such potential c ould significantly underestimate the degree of emissions reductions achievable through the BSER, which, as EPA has explained, takes into account the interstate nature of the electric industry. C ommenter s said likewise, EPA should set state goals to account for a state's ability to reduce emissions through reliance on zero

- carbon generation located in another state; doing so would be consistent with EPA's apparent intention that states be able to demonstrate Building Block 3 reductions through the purchase o f credits from other states.

Commenter s stated in the electricity system, the location of the resource that displaces or avoids emissions reduction is not determined by state boundaries, but instead is dictated by market forces, chiefly cost. C ommenter s s aid emissions goals reflecting the reductions achievable in that "best system of emission reduction" should, therefore, reflect the full amount of reductions that can occur in an interconnected region. C ommenter s said in determining the boundaries of the

r elevant region, it would be natural for EPA to adopt the boundaries of existing ISOs and RTOs, as those grid operators control dispatch within their territory. C ommenter s said in areas of the country not governed by an ISO or RTO, power flows are managed w ithin "control areas" that similarly can span state lines.

Commenter s stated in determining the emission reductions 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 Planning Model ("IPM") that it has already developed and used in similar contexts. C ommenter s said IPM models areas within ISOs and RTOs as sub

- markets; the model would allow EPA to project where emissions reduc tions occur in the interconnected electricity system, and EPA could easily formulate state goals based upon that modeling. C ommenter s said this approach would be very similar to the way in which EPA calculated total allowable emissions from each state in t he CSAPR based on the state's ability to achieve highly cost

- effective emissions reductions, and approximated an allocation based on

cost. C ommenter s said EPA could also use a simpler allocation system, in which the total emissions reductions in a region i s apportioned to the constituent states based on historical generation (e.g., MWh produced in 2012), electricity load (e.g., MWh consumed in 2012) or historic emissions (e.g., CO2 tons emitted in 2012).208 Commenter s said reductions based on renewable generation 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 appears to contemplate allowing states to demonstrate compliance through RECs purchased from other states. C ommenter s 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 generate d in other states, then EPA should set state emissions reduction goals consistently. C ommenter s said those goals should reflect states' ability to comply by purchasing RECs from other states, and they should include an allocation of potential renewable gen eration across states capable of supporting it through the purchase of RECs.

C ommenter s said at a minimum, EPA should set state emission reduction goals for renewable generation based on the reductions that can be achieved 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." C ommenter s said this approach reflects the reductions achievable through the "best system of emission reduction" taking int o account the interstate nature of the electric system; moreover, a regional approach encourages regional compliance, reducing the risk of "double counting" renewable energy credits by ensuring that renewable generation is only counted once.

Comment 10: B uilding B lock 3 R enewable E nergy
Response 10: The EPA agrees with the commenter s that we should account for the replacement potential of historical fossil generation levels with building block three. We also agree that we should factor in the regional connectivity of the grid when assessing reduction potential. The EPA has taken into consideration the comments and is promulgating a final rule that relies on a revised building block three. Please see section V.E. of the preamble for more information

re garding the building block three and renewable energy

. In regards to the fossil leverage factors, t he EPA recognizes commenter s concern that as proposed compliance with the state goal emission rate require d significant additional action from in

- state gener ation 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 building blocks (and compliance op portunities) no longer limit states to in

- state generation, 3) the flexibilities provided through sub category

specific emission performance rate s and the mass

- based state goals can reflect reduction potential that may not inherently manifest itself on a st ate 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 Commenter s stated both existing and new renewables should receive regionalized treatment in any goal setting methodology. C ommenter s stated whatever 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 customers outside of Main e.

Commenter s stated EPA has developed the BSER baseline and formula by including all the renewables located within each state when developing that state's target, but in many instances another state may be claiming the output or credit for that developm ent and be buying the energy and/or hold the renewable energy certificates (RECs) associated with generation. C ommenter s stated EPA is also considering tracking ownership of renewables in rate

- based approaches using RECs, which could be from in

- state or ou t

- of

- state generation. C ommenter s added EPA should create greater consistency between the BSER formula structure, current state renewables tracking, and planned compliance tracking. C ommenter s stated the simplest way would be to consider only new RE genera tion and not include existing RE generation in the BSER baseline. C ommenter s said this allows EPA to avoid allocating generation from existing renewables in the BSER formula, which may be located in one state with output claimed by another state. C ommenter s said looking forward there would be no concern about using RECs for tracking generation whether from in

- state or out of state generation, if the formula is no longer based only on in

- state generation; it also avoids the problem of including in

- state gene ration in the determination of a state's target when the state does not receive the output of generation delivered to and utilized by another state.

Commenter s stated there are implications of including all non

- fossil resources if plants retire; including total generation and emissions from all sources in the BSER formula, including all nuclear and hydro. C ommenter s stated this approach would deliver a lower emissions standard; while this would create an incentive to keep non

- and low

- emitting resources run ning and force any retirements to be replaced with resources of similarly low emissions, commenters are concerned that the approach would impose an unfair burden on states that face retirements and thus incentivize the continued use of nuclear plants that may be unsafe.

Commenter s 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 simpler to treat all r esources with the same emissions profile the same. C ommenter s stated this allows EPA to be technology

- neutral and not have to classify resources by type or category, which would be inevitably contentious and time

consuming. C ommenter s said for example, exi sting wind (100% included), hydro (0% included), and nuclear (5.8% included) are all treated differently in the BSER formula; again, if the existing resources are excluded from the BSER formula, EPA can credit all new non

- emitting resources in the same way going forward and avoid concerns about inconsistent treatment.210 Commenter s added including non

- fossil resources in the BSER formula leads to more disparate state targets than if an average fossil

- only rate is used as the starting point; of greater concern are the distortions such inclusion would create during compliance: if states develop a flexible rate

based policy approach and their neighboring 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. C ommenter s stated this kind of competitiveness issue could lead to environmental leakage, which would be solved if the starting point for developing the state standards was a fossil

- only rate.

Comme nter s added the EPA should employ a formula that fully reflects the potential for zero

emitting resources and demand

- side efficiency to reduce emissions from fossil generating units; this will be achieved by basing targets on the use of available Block 3 a nd Block 4 resources to displace the highest

- emitting fossil units (generally coal

- fired power plants) first. C ommenter s stated this approach will achieve the greatest emission reductions from the available resources and thus comports with the Act's mandat e to base standards on the best system of emission reduction.

Commenter s added in the goal

- setting equation, EPA correctly accounted for the displacement effect of the resources in Block 2 (natural gas units) but failed to correctly account for the effect of the resources in Blocks 3 and 4; for Block 2, EPA accurately reflected the fact that the increase in generation from natural gas units can achieve a corresponding decrease in generation (and emissions) at coal

- fired steam power plants, but EPA failed to apply this approach for Blocks 3 and 4. C ommenter s stated the original proposal's state target calculation formula simply adds additional renewable energy and energy efficiency megawatt

- hours to the denominator of the formula without reducing generation o r emissions at fossil

- fuel fired plants. C ommenter s said as a result, under the proposed formula, Block 3 and 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 of carbon pollution by a larger number of megawatt

- hours. C ommenter s said this fails to achieve 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."

Commenter s added EPA must ensure that the approach to attributing emission reductions from renewable resources for compliance is consistent with the treatment of these resources when setting the state

- specific emission goals. C ommenter s said if a state cannot use cer tain RE generation for compliance, that generation should not form part of the basis for that state's emission rate goals; put another way, EPA assumes that each state's 2012 RE production is relevant in determining a state's potential for future, addition al RE generation because EPA based the states' RE compliance goals, in part, on the level of in

- state RE generation in 2012. C ommenter s said If EPA finalizes guidelines that allow for states to use out

- of

- state RE generation for compliance, the Agency must recalculate state goals to reflect where this generation was used for compliance in 2012, not where it was produced. C ommenter s said it would be unfair to base a state's goals on RE generation that will be used by another state for211 compliance as it overes timates the potential for RE deployment in that state for compliance
purposes.

Commenter s asserted that the approach used by EPA to calculate the contribution of renewables to the state goal is flawed; Existing Renewable Portfolio Standards (RPS) that were mandated through legislative action that are not capacity

- based were used to calculate regional "averages" for RE generation. C ommenter s said these averages were used to determine the generation level and required growth factor to attain that level; the g rowth factor was then applied to each state in order to calculate the target RE generation as a percent of total generation. C ommenter s said the percent of total generation was then capped to not exceed the regional average. C ommenter s said it is more appr opriate to use a weighted average, so as not to create unattainable goals based on the RPS averages, where many of the states with high RPS contribute much lower amounts of energy to the grid, such as Maryland or Washington D.C. C ommenter s also asserted th at the quantification of RE generation needs to include cost factors, availability during critical periods of energy demand, land use and environmental impacts, and effects on reliability of the electric grid due to meteorological variability.

Commenter s a dded EPA should value incremental renewable energy generation and energy efficiency in Building Blocks 3 and 4 in terms of the CO2 emissions they avoid by displacing existing fossil fuel generation. C ommenter s said currently, EPA values them only as additi onal 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.

Commenter s added assure that the renewable energy and energy efficiency assumptions used to set state targets are realistic with little uncertainty 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. C ommenter s said allowing stat es to bank "over generation" of energy efficiency and renewable energy would help avoid future shortfalls and their negative consequences.

Commenter s 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 market.

Commenter s added longer averaging periods for compliance 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 averaging period. C ommenter s said given the lead times for adding more renewable energy or energy efficiency, this is unlikely to be possible with a thr ee

- year averaging period, and in any case requires over investment creating an eventual surplus of energy efficiency or renewable energy in the long term.

Commenter s added the structure of EPA's goal setting equation using the building blocks creates incon sistencies for states that fail to meet targets under building blocks 3 or 4 (i.e. a shortfall of renewable energy or energy efficiency). C ommenter s said the inability of a state to meet its212 required renewable and energy efficiency targets requires a reduc tion in fossil emissions from affected sources in order to meet the state emission reduction target; however, the algebra of the target setting equation produces a multiplier effect that the commenters terms a "Fossil Leverage Factor" (FLF) for each state. C ommenter s 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 generation or energy efficiency achieved for a state to

meet its target. C ommenter s said this idiosyncrasy in the calculation causes a multiplier effect for shortfalls in achieving building blocks 3 and 4 that offers additional challenges to states in developing compliance plans. C ommenter s recommend ed that the sta te targets for building blocks 3 and 4 are developed with clear certainty in the ability of states to achieve these goals, and that safety valves are provided where circumstances beyond a state's control prevent states from achieving their renewable and en ergy efficiency targets.

Commenter s added under the proposed Carbon Emission Guidelines each state will only receive credit for electric energy generated using renewable resources if the renewable energy is consumed within that state; this policy negativel y impacts states that already re, or are striving to be, net exporters of renewable energy. C ommenter s said states that provide renewable energy to other areas of the country or a region should receive some credit for energy created in that state but expor ted to other areas. C ommenter s said if the EPA determines it is necessary to credit states for only that electric energy that is consumed within each state, then the EPA should at the very least treat carbon emissions similarly and count only those carbon emissions against a state that are actually generated in that state. C ommenter s asserted the EPA's formula allowing only a small percentage of credit for electricity generated by nuclear facilities and no credit for existing hydro

- electric facilities is not based on sound reasoning and should be amended to provide full credit for electricity generated by nuclear facilities. C ommenter s said there are two nuclear generating facilities operating in Nebraska, and several hydro

- electric facilities; if the EPA is truly interested in protecting the environment by limiting carbon emissions, the curren t formula providing only nominal credit for electricity generated by nuclear facilities, and no credit for hydro

- electric facilities, flies in the face of that goal. C ommenter s said nuclear and hydro

- electric facilities produce no carbon emissions and have proven to be a safe, clean, and reliable method for meeting the baseload generation needs for electric consumers. C ommenter s urge d the EPA to revise its proposed guidelines so that full credit is provided toward compliance goals for electricity produced b y nuclear generation facilities.

Commenter s stated EPA must provide clear, consistent treatment of renewable energy generated in one state, but sold or consumed out of state. C ommenter s said EPA's decision to set goals based on renewable generation, but le ave to the states the allocation of credit for that generation for compliance purposes, will promote disharmony, rather than cooperation, among the states, and incite economic protectionism. C ommenter s said it also penalizes states that export renewable en ergy, by building into their goals exported renewable energy that cannot be counted toward compliance because it is not consumed in

- state. C ommenter s said for all purposes, goal setting and compliance, EPA must assign credit for renewable generation to eit her the state in which the resource is physically located or credited to the state where the generation is utilized.213 Commenter s stated under the proposed guidelines' primary approach to determining RE baseline and target goals, EPA relies on state RES requ irements to create regional RE targets that are then applied to individual states. C ommenter s 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 R ES programs by failing to recognize RES design elements that reduce the amount of in

- state generation necessary for compliance. C ommenter s said EPA fails to adjust state RES goals to reflect the fact that generation from existing biomass and hydropower gen eration cannot be used for compliance under the proposed 111(d) guidelines. C ommenter s said although the baseline year penalizes actions taken by EGUs to voluntarily reduce carbon emissions prior to 2012, RE projects developed prior to 2012 are used to low er the state emission rate target. C ommenter s added the EPA's calculation of RE assumes all electric service providers are subject to that states' RES; for example, the MO RES is only applicable to investor owned utilities (IOU's), and as such, municipalit ies and cooperatives are not subject to the standard. C ommenter s said the EPA calculated its RE targets based upon a broad stroke of applicability.

Commenter s 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, commenter s have significant concerns regarding EPA's concept, formulation, and application of Building Block 3 in determining each state's goal rate. C ommenter s said there are additional concerns over how the Proposed Rule addresses incorporating, tracking, and crediting renewable energy ("RE") into and through a state plan; 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 conditions that will determine the future of RE.

Commenter s stated the Building Block 3 component used in setting each state's goal rate should better reflect these considerations: Step 4b (renewables) should provide for adjustments to the 2020

- 2029 existing and Incremental RE values for each state, to account for the likely significant d ifferences between EPA's 6

- to 15

- year projections and actual conditions. C ommenter s said unless and until Congress renews the wind generation tax credits that were in effect in 2012, the renewable energy goals that assumed high levels of wind growth for t he years 2014 through 2030 should be greatly reduced.

Commenter s stated the final rules should assume emission 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 renewable generation, and EPA sh ould define simple methods for calculating those assumed reductions.

Commenter s stated the method used to calculate state

- specific renewable energy ("RE") is flawed and unworkable for many of the states in which Entergy operates. C ommenter s said under the proposed method, EPA averages the individual state 2020 Renewable Energy Standard requirements within each of six EPA

- determined regions and then sets a regional renewable target for 2029 equal to this average; EPA then calculates 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 ommenter s said EPA's state

- specific RE goals assume states start increasing RE generation i n 2017 and continue increasing RE generation every year through 2029.

Commenter s stated the second component of Block 3 is renewable energy generation; in its proposed approach, EPA assumed that each state could increase its use of renewable energy

resourc es to a level consistent with renewable portfolio standards ("RPS") in its region. C ommenter s said EPA took this approach for two reasons: First, states that have adopted an RPS, like North Carolina, have set state RPS requirements taking into account issu es like feasibility and costs, so these state policy decisions serve as a sound basis for the EPA targets; second, renewable resource development potential varies by region. C ommenter s said EPA's decision to adopt a regional approach based on existing lega l obligations of neighboring states ensures that the renewables target reflects regional availability of renewable energy resources; in short, states have already decided that these investments are feasible and cost

effective based on each state's access t o renewable energy in its region.

Commenter s stated to develop the renewable generation component of Block 3, EPA first quantified the level of renewable generation in each region in 2012, prior to implementation of the RPS; next, EPA estimated the averag e of the state RPS percentage requirements for 2020 in each region and multiplied it by total 2012 generation for the region; finally, EPA computed a regional growth factor that would be necessary to bring the region from the 2012 starting level up to the average regional RPS requirement in 2020. C ommenter s said for the Southeast region, the regional growth factor is 13% per year; for purposes of Block 3, North Carolina is part of the Southeast region, which also includes Alabama, Florida, Georgia, Kentucky, Mississippi, South Carolina and Tennessee. C ommen ter s said because North Carolina is the only state in the region with an RPS, EPA based the Southeast regional average on North Carolina's RPS goal. C ommenter s said for the Southeast region, EPA calculated a renewable energy goal of 10% of total 2012 gener ation 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 incentives to encourage each state to reduce its carb on

- intensive fuels. Commenters stated the EPA applies its building blocks to create the final carbon goal that it imposes on the states. Commenters 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

- emitting resources are treated equally under the CPP. Commenters said in fact, the EPA's met hodology favors wind and solar.

Comment 11: The EPA should reevaluate the BB3 BSER calculations 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 not 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 section V of the preamble for more information regardin g the building block three and nuclear generation

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

Commenter s stated EPA proposed as part of Block 3 that states with nuclear generation be eligible to receive credit for the c arbon savings associated with keeping 6% of "each state's historical nuclear capacity" in operation. C ommenter s said EPA's 6% assumption is based upon a percentage of total U.S. nuclear power generation that EPA deems to be at risk of retirement. Commenter s said EPA should reevaluate the BSER calculations regarding states with nuclear generation that is not "at risk," as the national percentage is not a uniform national trend and EPA's standing assumption creates a compliance risk for those states.

Commente r s stated EPA's final version of the Clean Power Plan should allow states to equitably credit nuclear generation under construction the same as renewable energy and energy efficiency to the advantage of the consumer; commenter s further support ed the inclus ion of both new nuclear generating units and uprating of existing nuclear generating units as components of state plans and factored into state compliance; they should not be included in determining the state carbon intensity goal.

Comment 12: The EPA sho uld reevaluate the BB3 BSER treatment of hydropower

Response 12: The EPA agrees with the commenter s that existing hydropower should be treated equally in both the quantification of BSER and in compliance. 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 unf airly penalized 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 disagreement by shifting to a regional assessment of increme ntal RE potential.

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

Commenter s stated if EPA chooses not to allow existing hydropower to count toward complying with a state's goal, EPA should also remove hydropower as a compo nent of the state's total generation when calculating the required amount of renewables in Building Block 3.

Commenter s support ed efforts by the State of South Dakota to receive credit within the Clean Power Plan for the abundant, clean hydropower that pre sently exists within the state; while the proposed rule's preamble states that existing hydropower is excluded from 2012 generation for216 purposes of RE generation potential, EPA's calculation methodology actually penalizes South Dakota for its exceptionally well

- developed hydropower 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 part of the BSER

. Please see section V. A. of the preamble for more information regarding the building block four and demand

- side energy efficiency.

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

Commenter s stated there are errors in block 4 goal calculation.

Commenter s added EPA inaccurately calculates the transmission and distribution line loss by dividing the total supply of electricity less direct use energy by retail sales using information from the EIA's United States Electricity Profile 2010' this result s in EPA's proposed line loss of 7.51%. C ommenter s stated calculating line loss by dividing 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 elect ricity, provides a more accurate and timely reflection of the line loss. C ommenter s said this calculation results in a United States line loss of 4.955%.

Commenter s noted that the EPA assumed a 7.51% transmission 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.cfm?id=105&t=3). Commenter s asked how the EPA arrived at 7.51% and why did EPA use a national loss rate.

Commenter s added EPA has failed to adjust total retail sales to remove zero CO2

- emitting generation; zero CO2

- emitting generation would presumably grow annually as each state approaches the renewable energy percentage deemed achievable by EPA. C ommenter s stated adju sting for the growth in zero CO2

- emitting generation 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 i n renewable energy being developed in accordance with Block 3.

Commenter s stated the EPA's methodologies for evaluating energy efficiency in the BSER rely on NEMS forecasts, based on the AEO2013 reference scenario for future electricity consumption. C ommen ter s said EPA quantifies energy efficiency contributions in the BSER

- and by which state plans could potentially claim credit for energy efficiency

- is based on the AEO2013 reference scenario. C ommenter s said in its process for determining the BSER, the EPA matches each state to one of the NEMS Electricity 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 growth rate over t he period 2012 to 2040 from the matched EMM region, as projected in the AEO2013 reference scenario; thus, in the BSER, energy efficiency potential is measured against baseline projections from the AEO2013 reference scenario. C ommenter s stated for over a de cade, NEMS has significantly overestimated national electricity sales.

Commenter s 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 low er the efficiency reduction level to 0.6 percent per year for those states with EE programs already in effect. C ommenter s said if the carbon goal is set using a realistically achievable EE percentage, then there is more flexibility for states to actually u tilize Building Block 4 as a carbon abatement measure. C ommenter s said the current Proposed Carbon Rule with EE savings of 1.5 percent per year presents challenges for states with existing EE programs and in essence creates a de

- facto requirement effective ly eliminating all flexibility related to Building Block 4. C ommenter s 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
pe rcent per year.

Commenter s recommend ed that EPA reduce the target annual 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
E nergy S tar, 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 more information regarding the building block four and demand

- side energy efficiency.

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

Commenter s 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. C ommenter s asserted an integral element of reducing carbon emissions is energy conservation. C ommenter s propose d that EPA take a stronger position on energy efficiency and should allocate more resources to expand the Energy Star pro gram and work collaboratively with the US Department of Energy. C ommenter s said these programs have collectively been underfunded and even had funding reduced while simultaneously representing some of our best energy and greenhouse gas reductions. Commente rs said EPA and DOE need to become serious about energy efficiency; this program results in a reduction in carbon emissions while improving the efficiencies of operations and the use of energy.218 Comment 15: Importance of Rigorous EM&V in Energy Efficiency Goal

- Setting

Response 15: The EPA appreciates the comments regarding energy efficiency and EM&V, 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 more information regard ing 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 VIII of the preamble.

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

Commenter s stated quantifying the results of state efficiency programs is crucial not only in assessing state compliance efforts, but in determining whether the formula upon which state expectations are based is appropriately incorporated in to in the Best System of Emissions Reductions ("BSER") formula. C ommenter s stated the MWh of savings from efficiency programs are not subjected to metering as are the other generation

- related factors incorporated into the BSER; therefore the system whereby the savings are quantified must be rigorous at a high level of confidence.

Commenter s stated in the goal

- setting context, rigorous EM&V will ensure that any standard derived from the results of existing state programs is credible; if the goal

- setting met hodology relies on efficiency programs with weak EM&V protocols, there is a risk that the formula will project efficiency savings that will be difficult to achieve when stronger EM&V protocols are applied during compliance. C ommenter s said as with all the other building blocks, the stringency of the standards used in goal

- setting must match the stringency of the compliance expectations, or distortions will result. C ommenter s said the EPA must establish robust EM&V guidelines against which the results of sta te efficiency programs 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

r ule. These changes reflect the regional nature of RE when quantifying subcategory

- specific emission performance rates and state goals. Section VIII also explains how compliance and state plans accommodate the location versus use discrepancies in generati on technologies. In this final rule, existing RE generation is not credited to a state goal (or the sub category) 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 state

specific definition of identifying and assigning renewable potential. These changes were made, in part, to address the commenters concerns.

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

Commenter s said in many states, the state policies that have delivered the most development and generation from new renewable energy have been state renewable energy or portfolio standards (RES/RPS). C ommenter s said these standards have been 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 percentage of the electricity delivered in the state to be from re newables, most of these state policies do not require the generating resource to be located in the state. C ommenter s said many states have developed or purchased large quantities of wind generation to satisfy the RES/RPS requirements in other states; refle cting this market reality, EPA has proposed that credit for the emission reductions driven by renewable energy deployment be assigned to the purchaser of the renewable energy credit (REC), which

commenters support ed

.

Commenter s added state 2012 emission ra tes under the proposal reflect in

- state renewable

energy

- although the entities holding the RECs associated with that renewable energy may be out of state. C ommenter s said EPA should address consistency between the BSER formula structure, current state renewables tracking, and planned compliance tracking. C ommenter s said while there are other ways this could be done, the simplest way would be to consider only new

renew ables generation and not include existing generation in the BSER baseline. C ommenter s 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.

Commenter s 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. C ommenter s said it should be noted that, in the latest AEPS compliance period, 41% of Tier I credits are from states located in regions outside of EPA's East Central region; consequen tly, credits received from these states could not be considered in meeting PA's BB3 standard. C ommenter s said EPA should consider allowing credits derived from facilities located in these states to be utilized under the BB3 construct to meet the EPA CO2 em issions targets.

Commenter s stated the EPA proposes to exclude renewable 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. C ommenter s said RE imports into PJM is effectively displacing fossil energy thus lowering GHG emissions as effectively as in

- state renewables. C ommenter s said EPA should modify its requirements under BB3 to give credit to out

- of

- state re newables with due consideration paid to avoidance of double counting.

Comment 17: The EPA should use a more gradual glide path in applying BSER.

Response 17: The EPA agrees with the comment and has incorporated deployment assumptions in its building bloc ks that result in interim rates that reflect a more gradual glidepath on average relative to the final goals (from both the final sub category and state goals perspective) for this final rule. See section V of the preamble for a discussion of these buildin g 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:

Comment er s stated BSER, as applied to states, is inconsistent across building blocks with regard to when states may need to ramp up measures over time. C ommenter s 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. C ommenter s said while the proposed guidelines set state renewable energy generation and energy efficiency targets according to a gradual "glide path" approach over time, the application of BSER requires immediate and constant reductions for building blocks 1 and 2 as well as for building block 3 (nuclear generation) at a specific point in time. C ommenter s said for various reasons, measures within buildings blocks 1

- 3 may not deliver, at a date certain, in whole as the applied BSER assumes. C ommenter s recommend ed EPA use a more gradual "glide path" in applying BSER, in its totality, 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 addresses the regional potential to reduce fossil steam generation in these fossil steam intensive states. The EPA made changes t o its BSER quantification that reflected greater offsetting impact of incremental gas and incremental renewable generation in fossil

- steam intensive states.

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

Commenter s stated t he Proposal's application of the BSER may unfairly discriminates against states with large amounts of both combined

- cycle gas and thermal fossil power plants. C ommenter s said while some degree of differentiation between states resource mixes may be

reasona ble to expect in 2030, it would be both more reasonable and more equitable in setting final 2030 goals to anticipate increased penetration by then of low and no carbon resources in those states with large amounts of coal but relatively few natural gas powe r plants, and to reduce the redispatch component in states with large amounts of both thermal and combined

- cycle fossil generation.

Comment 19: The EPA should consider the design life; useful life in the final goal calculation.

Response 19 : The EPA prov ides significant flexibility for states 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 final 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 discussion on this.

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

Commenter s 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 serious reliability issues, o r the final goal date should be extended.

Commenter s requested EPA permit states to adjust their goals in accordance with legal and practical necessity, and in consideration of the remaining 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 any specific units to reduce their generation. These sources may still avail themselves of credits from other lower emitting sources as a means of demo nstrating a rate that complies with a sub category

- specific emission performance rate or a state goal. Moreover, the state has the ability to assign reduction burden and corresponding rates in a manner it sees best fit for demonstrating aggregate complianc e with the CPP reduction expectation.

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

Commenter s stated because of their location far from other sources of generation, and because of the unique cost constraints faced by many rural electric cooperatives, gas

- fired and RE sources are often unavailable; this makes the emission reductions that EPA assume s can be obtained from Building Blocks 2 and 3 unrealistic. C ommenter s said if rural electric cooperatives retire coal units to achieve the CPP's CO2 goals, the inaccessibility 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 sub catego ry. Because these EGUs can 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 demonstrati ng 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 the more emissions

- intensive states.

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

Commenter s stated many states have implemented measures to decrease reliance on fossil fuel generation, including retirement of coal plants, implementation of demand

- side management and energy efficiency program s, and adoption of renewable energy portfolio standards. C ommenter s said the extent to which a state has implemented such measures directly affects the amount of additional measures the state can implement going forward. C ommenter s said when a state has al ready implemented the "low hanging fruit" in many of these areas, it is inappropriate to assume that a state (or other states) can continue implementing additional measures at the same or higher rate as part of a "one size fits all" standard. C ommenter s sa id North Carolina already has the most efficient coal generation fleet in the United States and has lowered its CO2 rate in recent222 years. C ommenter s said the Proposed Rule should establish each state's standard based on what the state can achieve at each E GU.

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 supporting the final CPP and see section V. C . of the final rule preamble of the CPP for more information about Building Block 1. As described in section VII of the preamble, Puerto Rico is not included among the areas for which EPA is finalizing goals.

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

Commenter s 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 cal culated an alternative goal, applying a 4% HRI to the affected EGUs. C ommenter s said the proposed 6% improvement consists of a 4% improvement by implementing "best practices" to reduce the hourly heat rate and a 2% improvement by implementing equipment upg rading. C ommenter s 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. C ommenter s said in Puerto Rico, there is only one coal

- fired facility that is op erated and maintained by AES

- Puerto Rico, LP (AES

- PR); AES

- PR is located in the Guayama municipality, at the south coast of the Island; therefore, in the case of Puerto Rico, building block 1 only applies to the AES

- PR generating units 1 and 2. C ommenter s said these EGUs have a generating capacity of 227 MWh each, and commenced their commercial operation in 2002. C ommenter s asserted that AES

- PR will implement most of the best practices and equipment upgrades necessary to comply with the Mercury and Air Taxi es Standards (MATS), and that its EGUs heat rate will be impacted upon completing the operational changes to the existing air pollution control system (dry electrostatic precipitator), which will be required to comply with this new regulation; in synthesis , the precipitator will be required to operate at higher levels of auxiliary power in order to increase the filterable particulate matter (PM Filterable) collection efficiency, resulting in a higher net heat rate. C ommenter s said there is a potential for t he activities described in building block 1 not to contribute in achieving the proposed goal for Puerto 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 Computat ion TSD for CPP Final Rule supporting the final CPP and see section V.D. of the final rule preamble of the CPP for more information about Building Block 2. EPA relies on a regional approach to identifying reduction potential in this final rule, meaning e ven 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 Commenter s 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 cycle (NGCC) units on the Navajo Nation

a vailable for re

- dispatch.

Commenter s stated the Supplemental Proposed Rule also correctly acknowledges that the Navajo Nation does not currently employ natural gas combined cycle units ("NGCCs"); therefore, as EPA asserts, building block 2 does not result in any 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 supporting the final CPP and 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 com ments under this comment:

Commenter s stated in the Supplemental Proposal, application 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 b aseline renewable energy capacity in the area as of 2012, and that baseline is zero. C ommenter s said EPA asks for comment on an alternative methodology,

co

- proposed for U.S. territories, where the 2012 renewable energy capacity baseline is set at 0.37
perc ent of the total electricity generation. C ommenter s support ed EPA's application of the building block as proposed in the Supplemental Proposal and opposes any adjustments or alternatives to the methodology aimed at increasing the stringency of the emission rate goals. C ommenter s said the potential adjustment identified by EPA for building block 3 would apply a false value to the calculation, arbitrarily using data associated with another jurisdiction. C ommenter s said the potential adjustment for which EPA s eeks comment would represent a change to the methodology used for all the states, with no basis other than a desire for greater stringency. C ommenter s added, as stated in the Supplemental Proposal and identified by the Navajo Nation, the identified adjustm ent for re

- calculating the building block 3 contribution to the emission rate goal results in an amount of renewable generation that equals a "significant portion of the area's electricity demand"; such a result 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).

Commenter s added the Navajo Nation had zero renewable generation in the 2012 baselin e year; therefore, EPA's proposed application of an annual growth factor to the Navajo Nation's baseline renewable energy ("RE") generation

- an approach consistent with the Clean Power Plan's methodology for building block 3

- results in no adjustment 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:

Commenter s stated in the Supplemental Proposal, application 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 sa les, and the amount of electricity sales on the Navajo Nation is significantly lower the energy generation from NGS and FCPP. C ommenter s said EPA asks for comment on whether the methodology should be adjusted in order to achieve a larger reduction in the e mission rate goal from this building block. C ommenter s said as with building block 3, the commenters oppose d any adjustments or alternatives to the methodology for building block 4 aimed at increasing the stringency of the emission rate goals. C ommenter s s aid EPA did not even identify a specific potential adjustment for building block 4, which reinforces the arbitrary nature of any such adjustment. C ommenter s said any adjustment would represent a change to the methodology used for all the states, with no ba sis other than a desire for greater stringency.

Commenter s added the energy efficiency goal in building block 4 of 9.15 percent by 2029 for the Navajo Nation is overly aggressive. C ommenter s said using state data to develop goals relating to energy consump tion on the Navajo Nation does not make any sense given the significant difference in energy availability and consumption patterns between the states and the Navajo Nation. C ommenter s said energy consumption on the Navajo Nation needs to increase in the fu ture 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 mo re information about the final performance 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 potential 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 stretch an identified 'best' measure to match with states that had already s pent effort to appropriately reduce CO2 emissions. Commenters stated in glossing over prior actions taken to reduce CO2, the EPA effectively ignores the situational225 increase in compliance costs with the proposal and sets each building block measure at a le vel 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 investment point over which further investment in a particular measure beco mes uneconomical, even in the context of compliance. Commenters said because Minnesota and commenter s ' organization's members have undertaken programs to reduce CO2 related emissions, they are potentially forced to spend more than other entities that may b e 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 to 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 addressed 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 F inal CPP, the EPA did not adjust the baseline based on scheduled or planned retirements. The EPA is using net summertime capacity to account for the weather

based generation limitations described by commenter s . As described in Section V of the Preamble, BB3 assumption s have been revised. See the EPA’s Resource Adequacy and Reliability TSD of the final CPP.

In regards to Ohio/Kentucky/ Wyoming comment, the EPA continues to list the nameplate capacity reported in the 2012 EIA

- 860, but relies on net summertime capacity to account for the weather

- based generation limitations and its building block two calculations

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

Commenter s stated there are unit data errors and Building Block assumption erro rs; the unit data errors are simply oversights by EPA. The commenter s for example, units that do not meet EPA's226 applicability criteria are included. The commenter s said there are also Building Block assumption errors, such as projecting infeasible heat rat e improvements.

Commenter s 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.

Commenter s stated on March 19, 2014, the Senate Committee on Environment and P ublic Works Minority issued the report: "EPA's Playbook Unveiled: A Story of Fraud, Deceit, and Secret Science." The commenter s said this report documents the extremely disturbing 20 year saga of the use of severely flawed particulate matter (PM) and ozone science; this is the same science that was crucial in the 2009 Endangerment Finding and the 2010 / 2013 Social Cost of Carbon. The commenter s said this science has been used 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 2013 subpoena of EPA.

Chairman Smith: "In September 2011, the EPA's then

- Assistant Administrator Gina McCarthy committed to make the data sets available to th e Committee. Even though Ms. McCarthy now leads the agency, she has yet to provide the promised data to the Committee. This subpoena could have been avoided. Unfortunately, we've been put in this position by an agency that willfully disregards congressiona l requests and makes its rules using undisclosed data. After two years of failing to respond, it's clear that the EPA is not going to give the American people what they deserve

- the truth about regulations. The EPA should not base its regulations on secre t data; by denying the Committee's request, the agency prevents 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 that the d ata sets do not support the agency's actions. The American people deserve all of the facts and have a right to know whether the EPA is using good science." The commenter s said in the EPA's March 2014 response, the EPA admitted that EPA does not have the da ta.

Ohio (OH)

Commenter s ha ve identified several errors in Ohio's goal computation, including the double

counting of an existing NGCC unit as a new NGCC unit and several discrepancies between CO2 emissions reported to EIA and the Clean Air Markets Databas e; U.S. EPA's use of nameplate capacity, rather than the more appropriate summer capacity, in the re

- dispatch calculations; and the inclusion of 6% "at risk" nuclear capacity.

Commenter s asserted that the percent of Ohio's in

- state generation for EE should be 85.1%, and not the 85.97% used by U.S. EPA in the Goal Setting TSD example. The commenter s said the 85.97% number cannot be replicated using the EIA data cited by U.S. EPA. The commenter s sai d Ohio's 2012 total retail sales were 152,456,864 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)

Commenter s 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, which is closed, was included in the EPA computations for South Carolina; the final rule should reflect this change in the data.

2. For Building Block 2, the EPA used the boiler nameplate data, which is not the actual capacity that these units can achieve; the actual capacity for a natural gas combined cycle (NGCC) unit can be affected by ambient te mperature, humidity and availability of fuel. The

commenter s suggest ed that the EPA consider defining a unit's CO2 emissions based on the appropriate actual generation. The commenter s said potential alternate sources for this data are the Institute of Elec trical and Electronics Engineers, Inc. (IEEE) standard term "Dependable Capacity" number for a unit, or US Energy Information Administration 860 data. The

commenter s said these data are based on figures a unit can actually deliver in terms of generation du ring a certain time of year, which accounts for variances in temperature, air pressure, etc. The

commenter s also suggest ed the EPA consider the use of the National Emissions Inventory (NEI) data for more accurate CO2 emissions for units subject to this pro posed rule; data accuracy is a concern for the commenter s 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 commenter s said a recently published document by The North American Electric Reliability Corporation (NERC) "Potential Reliability Impacts of EPA's Proposed Clean Power Plan, Initial Reliability Review, November 2014" identified an inaccuracy pertaining to the Southe ast region's RPS target. The commenter s said the EPA should look to the State of North Carolina to better understand their existing RPS. Further, t he commenter s agree d 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 long

term assumptions made by the EPA. The commenter s said the ability to achieve the state reduction goals can be influenced by many outside factors, including the status of the national and state economy and even weather. The commenter s said while the interim phase time period of ten years may provide some flexibility, the load growth assumptio ns made by the EPA are very critical. The commenter s said utility IRPs provide 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 Commenter s stated there are errors (in some cases material errors) to the IRP model data posted on the docket; specifically, the IPM run file na med "Option 1 Regional" posted on the docket have errors describing OVEC units. The commenter s said these units include:

I. Column P (EMF Controls)

- The data in this column incorrectly lists Fabric Filters as a control technology installed on Clifty Unit s 4, 5 and 6, as well as Kyger Units 1 and 5; neither facility has fabric filters and there are no plans to install 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 for these units.

I II . Column BJ (Capacity)

- Kyger Creek there are material errors; Unit 1 is listed as 445.635714 MW (the reported net maximum MW for this unit and the other 4 Kyger units is 199 MW/each); Units 2, 3 and 4 are listed as 189 MW each

- off by 10 MW each from the reported net Maximum number reported to EIA and NERC; Kyger Creek Unit 5 is listed as 120.15 MW; in total, Kyger's capacity is listed as 1,132.79 MW while the actual number should be 199 MW net for each, for a total of 995 M W

- a difference of 137.79 fewer MW than the plant can generate.

The commenter s said the heat rates for "summer" and "winter" are the same for our units when they should not be; due to thermal/condenser back pressure issues during the summer, both plants no rmally show a heat rate that is approximately 3% lower in the summer.

Wyoming (WY)

Commenter s stated EPA's information in the document "Wyoming: Goal Setting Comments for Proposed Clean Power Plan" is in error. The commenter s said the document identifie s the capacity of Black Hills Power's CPGS combined cycle units as 220 MW; however, the units' output capacity is actually 95 MW. The commenter s said Air Quality New Source Review (NSR) Permit CT

- 12636 lists the units as 100 MW based on maximum design. The commenter s said the Wyoming Industrial Siting permit lists the units as 95 MW, which is based upon as

- built performance. The commenter s 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 commenter s said to compare, the combined cycles in Pueblo, CO (elevation approximately 4,000 feet) achieve 1 00 MW net generation output; these are the exact same units operating in two different environments, impacted by elevation and air density, both of which reduce output. The commenter s said EPA may not rely on incorrect information to establish regulations; the calculation of Wyoming's goal should reflect the 95 MW capacity for CPGS.

Comment 2: The EPA should show data; verify data used to calculate 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 eGRID data used to inform the sub category

- specific emission performance rates and state goals is based on EIA generation data and reported emissions data to EPA. The link provided 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:

Commenter s stated EPA at a minimum should select a representative basis for the final

gu idelines, and present the information, data, sensitivity analyses, and a complete set of background information, and allow an opportunity for public comment on the proposal.

Commenter s asked where the source data for the table showing 2012 emissions, elect ricity generation, and emissions per MWh rates, along with the 2030 goals (available here: http://www2.epa.gov/carbon

- pollution

- standards/where

- you

- live ) come from. The commenter s

w ere surprised to see a data table published without 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 state), but have not been able to reproduce the numbers.

Commenter s stated the Useful thermal output (UTO) for 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 describ ed as the EIA ratio; the commenter s could not locate any more information in the documentations for the Clean Power Plan; can EPA provide information to clarify this portion of the plan.

Commenter s stated prior to finalizing the Proposed Rule, the EPA shou ld verify the data upon which the goals are based

Comment 3: Difficult to evaluate; most readily available information, 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 supporting the F inal CPP.

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

Commenter s stated that some crite ria about which EPA 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 criteria in question. The commenter s said for230 exampl e, total state RE generation is the wrong standard for an RPS theory if a substantial portion of that generation is exported; further, the standard should stem from intrastate retail sales of RE, and not from gross intrastate MWh sales, which is a larger a nd different number. C ommenter s are concerned that EPA's approach is being driven by the most readily available information, not the most appropriate.

Commenters stated, the EPA's Clean Power Plan proposal to regulate utility emissions reductions "beyond the power plant fenceline" is both precedent

- setting and far

- reaching making its implementation highly complex. Commenters said, to be successful, accurate data and appropriate planning assumptions need to be factored into the EPA's BSER analyses. Commente rs said, this recognition is critical to establishing technically sound and feasible state level CO2 reduction goals that will be achievable in the final Clean Power Plan rule.

Commenters stated, EPA has not clearly or adequately established a set of limit s 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). Commenters 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 strategies contemplated under the building blocks. Commenters said, if EPA believes that the rule must set a goal rate based on a set of building blocks, it is critical that both the national/regional basis and the state

- by

- state application of each separate building block goal calculation be reasonably attainable, while assuring continued reliability of the power sector. Commenters understood that, as EPA has stated num erous times, states do not have to achieve the per

- block goals, and that the states may use any combination of measures to achieve the overall (and interim) goal by the end of the compliance period. Commenters said, this does not diminish the importance of EPA's basis, assumptions, data, and calculations for each building 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 nationa lly or for a particular state.

Commenters stated, EPA has asserted that each of the individual building block targets assigned to states are based on "reasonably achievable rather than maximum performance levels." Commenters were concerned that, as with i ts proposed rule for new power plants, EPA is basing enormously impactful mandates on technology assumptions that have yet to be demonstrated as achievable at a reasonable cost and in some cases achievable at any cost. Commenters said, detailed analysis mu st be undertaken and made available 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 t he 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 F inal CPP, the EPA 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:

Commenter s stated Georgia Power has already made decisions to retire a number of its oldest, dirtiest and least economic coal

- burning units. The commenter s said the Georgia Public Service Commission ("PSC") has approved these retirements as prudent economic decision s that are in the best interests of the utility's customers. The commenter s said the units for which retirement decisions have already been made include:

- Plant Branch. Georgia Power has received PSC approval to retire all four of its coal

- burning units, totaling 1,750 MW, at this facility near Milledgeville, 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 emissions.

- 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 Newnan, Georgia; the five units will cease operation by April 2015; in 2012, these five units accounted for 698,523 MWh of gen eration 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 accounted for 625,568 MWh of generation that produced o ver 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 tons of CO2 emissions.

The commenter s said the electric generation and carbon emi ssion levels from these units were included in Georgia's baseline emissions rate; however, EPA did not include the planned retirements of these units when calculating Georgia's emissions rate target. The commenter s 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 reduction.

Comment 5: Planned gas conversions

Response 5 : See response 4 above

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

Commenter s stated Georgia Power has received PSC approval to convert two to other coal

burning 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 commente r s said the efficiency of converted units typically pales in comparison to new or existing NGCC units, and therefore is not particularly cost

- effective as a strategy for lowering carbon emissions. The

commenter s said nevertheless, Georgia may rely on the Y ates gas conversions for compliance purposes, and compared to the coal generation they replace, the converted units will produce lower carbon emissions. The commenter s said in 2012, Yates 6 and 7 were responsible for 1,673,942 MWh of generation and 1.7 mil lion tons of carbon emissions; the units ran at a capacity factor of 24 percent. The commenter s 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 re tain 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 EPA did not adjust the baseline based on scheduled or planned r enewable projects. See section VIII for discussion of how renewa ble energy projects can be used in state plans.

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

Commenter s stated in 2012, Georgia's existing non

- hydropower 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

- mostly solar, but also wind

- th at Georgia Power is in the process of adding to its energy mix. The commenter s said through its Advanced Solar Initiative and related programs, Georgia Power is on pace to add more than 900 MW of utility scale and distributed generation solar to its supply portfolio by 2016. The commenter s added earlier this year, Georgia Power entered its first

- ever wind deals, under which it will import 250 MW of cost

- effective wind generation, along with associated renewable energy credits (RECs), from facilities in Okla homa. The commenter s 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 because they will provide benefits in the form of cost savin gs and fuel diversity.

Commenter s stated although the precise capacity factors associated with these projects are not publicly available, it is reasonable to assume a 20 percent capacity factor for the solar installations. The commenter s said for the wind agreement, 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 electricity consumed by 50,000 such homes equates to 658,800 MWh; dividing that figure by 8,874 hours and by 250 MW yields a capacity factor of 30 percent. The commenter s said assuming a 30 percent capacity factor, these deals will

resu lt in 658,800 MWh of renewable generation. The commenter s 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 resul t is a reduction of 68 lbs/MWh, or almost 9 percent of the target reduction.

Comment 7: Planned energy efficiency

Response 7: See preamble section VII I for a discussion of EM&V and use of demand

- side energy efficiency measures for demonstrating complianc e.
The following are summaries of the specific public comments under this comment:

Commenter s stated Georgia's largest investor

- owned utility, Georgia Power Company, operates eight certified demand

- side management programs: five residential and three comme rcial. The

commenter s said by 2017, these programs are expected to achieve annual incremental savings of 364,508 MWh and cumulative savings of 1.4 million MWh. The commenter s said EPA assumed that states that are net importers of electricity will receive c redit for only a portion of their energy efficiency investments; thus, using EPA's approach, as a net electricity importing state, Georgia receives credit for 88 percent (its share of in

- state generation) of its energy efficiency investments. The commenter s believe d that EPA should not use that discount for importing states like Georgia; nevertheless, even if Georgia can credit only 88 percent of these additional savings, if they are added to the 2012 energy efficiency levels, the effect is to lower Georgia 's emission rate by 6 lbs/MWh.

Comment 8: Improperly used nameplate capacity, use nominal capacity

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:

Commenter s suggest ed that EPA may consider using monthly 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 c ommenter s said as EPA calculated the average capacity factor for states using nameplate capacity, commenter s also suggest ed that recalculate these averages using nominal unit capacities; this is a more realistic method as nameplate capacity is based on ma nufacturer ratings at standard temperature and pressure. The commenter s said the nameplate capacities do not reflect real world capacity ratings which are typically 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 apples.

Comment 9: The EPA should use net generating capacity instead of n ameplate capacity.

Response 9: The EPA relies on net summertime capacity for building 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:

Commenter s stated that EPA improperly relied on nameplate capacity to determine the level of existing NGCC capacity to be available for re

- dispatch to displace coal and oil/gas

- fired steam EGU generation.

Comme nter s added that a more realistic measure of unit generating capacity is net capacity. The

commenter s said net capacity reflects the maximum output that generating equipment can supply to system load, and it is typically lower than nameplate capacity becau se it reflects capacity reductions due to electricity use for station service or auxiliary loads such as emission control technology. The commenter s explained, net capacity for a unit may differ significantly between periods of peak summer and winter deman d, reflecting the effects of ambient temperature and other factors on unit capacity. The commenter s stated net capacity is a better indicator of the amount of NGCC capacity available for re

- dispatch purposes because it reflects the amount of energy that th ese units will actually be able to supply to the power grid in Building Block 2.

Commenter s stated in order to support the levels of re

- dispatch assumed in EPA's proposed state goals, NGCC units would have to operate at statewide average capacity factors in excess of 80 percent and above

- much higher than the already

- inflated utilization level of 70 percent that EPA assumes causing many NGCC units to have to operate at even higher annual capacity factors. The commenter s said correcting for these inflated values to use net capacity would significantly increase the state emission goals. The commenter s stated EPA did not acknowledge the implications of its use of nameplate capacity rather than other capacity measures, despite the fact that an accurate assessm ent of the existing NGCC capacity actually available for re

- dispatch is essential to developing an achievable emission guideline using EPA's building blocks. The

commenter s stated EPA should use net capacity when analyzing and applying Building Block 2 in order to reflect more accurately existing NGCC generating capacity and the level of NGCC235 utilization that would be necessary to compensate fully for displaced generation from other

sources.

Commenter s stated using nameplate capacity results in EPA adding a n erroneously high level of gas fired generation into a state's goal calculation, thereby excessively reducing the amount of coal fired generation included in determining a state's goal. The commenter s said it is important to recognize that NGCC nameplate and net generation also can be reported including the additional generating capacity derived from the firing of duct burners, which are designed for and typically used to provide temporary power augmentation, but are not always economical to operate becaus e of their higher heat rate. The commenter s said typical design practice does not consider power augmentation modes as continual duty. The commenter s said the result of improperly using nameplate capacity and considering the additional power augmentation f rom 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 for many states to meet. The commenter s said Table 1: NGCC Capacities and Generation, page 69 illustrates the difference in generation at a 70% annual capacity factor between nameplate and summer net capacity for seven example states. The commenter s said the difference in generation 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 using nameplate capacity instead of summer

net.

Commenter s stated the EPA assumed that existing natural gas combined cycle ("NGCC") units can be dispat ched with a 70% capacity factor; the commenter s ha d concerns with the achievability of this assumption; the ability to run NGCC units at 70% has not yet been studied; therefore, the reasonableness of this assumption is unknown. The commenter s added it is

u nknown whether there is sufficient electric transmission 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 commenter s said the EPA used the nameplate capacity of NGCC units to make this determination instead of using the net dependable capacity, which would be more indicative of the actual capabi lities of NGCC units.

Commenter s stated in calculating the energy that would be produced by the operation of NGCCs at a capacity factor of 70 percent, EPA used the nameplate rating of the NGCCs, rather than the net capacity at which the units can actually operate. Commenter s stated the nameplate capacity can vary significantly from a unit's actual net capacity; the total average net capacity of Wisconsin's NGCC units is approximately 9 percent lower than the total nameplate rating used by EPA in its calcula tion. Commenter s stated EPA should use an average of the summer and winter net capacity ratings rather than the nameplate capacity to obtain a more reasonable estimate of average annual net capacity of an NGCC unit. The commenter s said the same EIA

860 dat abase that EPA used to find nameplate capacities also provides summer and winter net capacity ratings, as reflected in EPA's NGCC Capacity by Age spreadsheet. The commenter s said for Wisconsin, making this switch and using the average of the summer and win ter net236 capacity ratings in the goal

- setting calculation makes the state's interim and final goals approximately 3 percent less stringent.

Commenter s stated in the eGRID baseline data for 2012, EPA used the EIA860 nameplate capacity rating (in MW) by gener ator as the basis for any capacity factor or energy production computations; nameplate capacity represents the design gross capacity of the generator before any internal plant usage (auxiliary power) is deducted, and does not correctly reflect a unit's tru e capacity due to various operational restrictions, whereas the net capacity represents the value after auxiliary power is deducted. The commenter s said net capacity is what a unit can supply to the electrical grid; there is also a seasonal component to ne t capacity, with summer net capacity being lower than winter net capacity, but both typically are lower than nameplate capacity

- and occasionally significantly lower. The commenter s said EPA is using net generation (in MWh) as the input for emission rate calculations on a lb/MWh

- net basis.

Commenter s recommend ed that EPA use the average seasonal capacity for NGCC generation rather than the nameplate capacity when redispatching the NGCC generation; for Arizona, this would be 9,626 MW.

Commenter s stated EPA' s analysis assumes the capability of the combined cycle resources based on capacity values from the 2012 eGRID report; these capacity values are facility nameplate capacities, which do not accurately represent the actual net capability of these resources. The

commenter s 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 commenter s sai d as proposed by the EPA, for the reasons discussed above, the amount of NGCC energy that can be used to offset other affected generation is significantly overstated.

Commenter s evaluated how Utah's 2030 emissions rate goal would change if EPA used net
ope rating capacity for both coal and NGCC units; three different assumptions of operating capacity were evaluated using data reported by SNL: Summer operating capacity; Winter operating capacity, and; Average annual operating capacity. The commenter s said the effect of using operating capacity is to first reduce the number of MWH that are re

- dispatched from coal to NGCC; this in turn raises the Utah 2030 EPA emissions rate goal. The commenter s 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 commenter s 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 calculate the 2030 target rate. The commenter s said in all cases, changing the assumptions for NGCC 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 w ould have to cover in its state 111(d) implementation plan.

Commenter s stated EPA used nameplate capacity as a means to determine capacity factor achievability at NGCC units; however, nameplate capacity does not represent how the unit237 actually performs an d 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 abilities of NGCC units. The comm enter s 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 equivalent assumption that a large truck with a 200 horsepower engine will have the same speed and pe rformances as a small sedan with a 200 horsepower engine. The commenter s said engine (or for NGCCs, nameplate generator size) is only one component of determining performance. The commenter s said summer and winter net capacities are a far more accurate bas is to determine 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."

Commenter s stated the configuration of Front Range is two combustion turbines powering one steam turbine (commenter s included a diagram). The commenter s 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 nameplate capacity of 154 MW each and the steam turbine has a nameplate capacity of 233 MW. The commenter s said based on this information, EPA incorrectly assumed that Front Range Power Plant has a total ca pacity of 541 MW. The

commenter s said full capacity of the generator driven by the combustion turbine cannot be achieved at the altitude of Front Range, about a mile above sea level, and is further degraded in typical summer temperatures. The commenter s sa id the capacity of the steam turbine relies on output from the combustion turbines, and it too cannot physically attain nameplate capacity. The

commenter s said capacity varies with temperature and has different summer and winter values. The commenter s said for simplicity, we recommend relying on the highlighted numbers, the average of summer and winter capacity; the Capacity for Front Range Power Plant Must Be Corrected to 480 MW.

Commenter s stated the data that the EPA has used to generate the proposed em issions 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 ac tual operation. The commenter s said in many cases, the facility is unable to reach the nameplate capacity of the unit that EPA believes is achievable. The commenter s provided "Table 3

- 1. Nameplate Capacity Ratings vs. Summer Generation Ratings" that addres ses the disparity in megawatts that is possibly used in the EPA's case model.

Commenter s stated EPA should use operational capacity for all fossil fuel

- powered EGUs for consistency and accuracy when determining the amount of re

- dispatch available. The

com menter s said nameplate capacity is not appropriate 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 humidity. The commenter s said these factors, are considered when permitting these sources in New Mexico; using nameplate capacity overestimates the generating capabilities of NGCC facilities.238 Commenter s stated in its calculation of the energy that would be produced by the operat ion of NGCCs at a capacity factor of 70 percent, the EPA used the nameplate rating of the NGCCs, rather than the net capacity at which the units can actually operate. The commenter s said nameplate capacity is the nominal maximum output of a generator, assu ming a particular set of ideal, often location

- specific, operating conditions, including altitude, temperature, humidity and other factors that cannot be controlled by unit operators. The commenter s said nameplate capacity is not demonstrated capacity, whi ch represents the maximum output that can be delivered to the grid as measured by a unit's historic performance. The commenter s recommend ed assuming that the permits are revised and infrastructure accommodates base load operation, the commenter s believe d a 70 percent 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 demonstrated to be achievable (instead of nameplate capacity) to a void overestimating the potential for re

- dispatch. The commenter s added EPA should allow states to adjust goals for units with design or other constraints that prevent achieving the 70 percent capacity factor.

Commenter s stated in its application of Buildi ng Block #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 amount of existing NGCC capacity (MW) that is available in the state, and dete rmined the total annual generation (MWh) that could be produced by the NGCC plants at 70% capacity factor. The commenter s said imperative to an assumption that coal and oil generation can be pushed to NGCC operating less than 70% is the determination of ca pacity factor; the EPA calculates capacity factor 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 factor (%)

G = sum of net electric generation from all NGCC in the state in 2012 (MWh)

N = sum of nameplate capacities from all NGCC in the state in 2012 (MW)

Commenter s said the nameplate capacity is a fixed number; even if two NGCC in different locations have id entical nameplate capacities, they cannot be expected to have the same actual capacity over a year. The commenter s said actual unit capacity changes over time as a unit degrades, changes through a maintenance cycle, changes due to varying levels of dispatc hing, and even is affected by the weather. The commenter s said the EPA has incorporated as part of a standard setting process a fixed constant for a variable that is at the whim of Mother Nature.

Commenter s said the EPA acknowledges this variability (alth ough 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. While some units may model actual weather239 adjusted capacity by the hour/minu te, these data are not reported for the fleet. Therefore, the EPA used the nameplate capacity reported for units."

Commenter s 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 generating capacity; however, EPA references data collected from Form EIA

- 860 throughout the rule. "What is the nameplate capacity for this generator; Report t he highest value on the generator 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 convert 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."

Commenter s said Form E IA

- 860 also has entries for net capacity, both in winter and

summer; EPA already has at their disposal at least seasonality capacity. The commenter s said as well, EPA has at their disposal Section 114 of the CAA to collect additional data for better resolu tion, and a more accurate assessment, if needed. The commenter s urge d EPA to utilize the data and tools readily available to assess the state

- specific impact of broad, nation

- wide assumptions, such as a required 70% capacity factor.

Commenter s stated EPA h as made a critical error in its calculations for building block 2. The

commenter s said although EPA claims that it has applied building block 2 on a "net" basis EPA's target for increased natural gas generation actually reflects a calculation of "gross" ge neration because EPA developed its gas generation target based on applying a 70 percent capacity factor to the "nameplate" capacity of existing NGCC units. The commenter s said "Nameplate" capacity refers to the total "gross" MW because it reflects the maxi mum 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 calculation actually reflects "gross MWh," not "net MWh," whereas E PA's calculation of 2012 coal

- fired generation remains based on "net" generation.

Commenter s 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 m ust 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 commenter s stated in the converse, coal units must give up more total "gross" generation because they only receive credit in the tradeoff for "net" generation; either way, coal units are held to a more stringent standard because EPA's calculation relies on a "gross" nameplate capacity for gas units to determine their dispatch of "net" generation from coal units. The commenter s said this difference is not insignificant

- as EPA explains, "the difference between gross and net electricity is the amount of electricity used at the plant to operate components such as pumps, fans, motors, and pollution control dev ices," which "may represent from 4 to 12 percent of gross generation at a coal

- fired steam EGU." The240 commenter s said in other words, EPA's unfair "re

- dispatch" comparison of net gas generation to gross coal generation itself may account for as much twice t he difference in total generation as EPA's entire building block 1 assumption of six percent.

Commenter s ask ed EPA to recalculate its building block 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 commenter s said in the case of New Mexico, the total nameplate rated capacity of the NGCC units relied upon by EPA in the building block 2 calculati on is 1,662 MW, whereas the blended summer/winter net dependable capacity is actually only 1,448.5. The commenter s said use of that more representative capacity value in determining New Mexico's goal would thus increase the 2030 goal from 1,048 lb/MWh to 1 ,104 lb/MWh. The commenter s said relying on the net capacity of New Mexico's NGCC fleet (based on the more representative blended summer/winter net dependable capacity) instead of gross capacity would raise the goal for New Mexico from EPA's original propo sal of 1,048lb/MWh to 1,104 lb/MWh. The commenter s 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 N GCC fleet, and therefore represent a more achievable and appropriate goal for the State.

Commenter s stated EPA used an annual average capacity factor; this capacity may not be available during peak periods and for operational reasons coal

- fired units cann ot be used interchangeably with natural gas

- fired units for peaking. The commenter s said EPA needs to evaluate capacity on a seasonal, if not hourly basis to determine how much capacity can effectively be dispatched.

Comment 10: Incorrect use of nameplat e capacity, the EPA should use summer capacity.

Response 10: In this final CPP, the EPA has switched from relying on nameplate capacity to utilizing net summer capacity for determining BB2 potential. See Section V

. D of the Preamble for more discussion.

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

Commenter s stated for existing NGCC facilities, EPA uses "nameplate capacity" to determine the potential electricity generation capacity factors; however for under construction NGCC facilities EPA uses data from the NEEDS database, which the Department believes uses expected summer capacity. The commenter s ask ed if EPA has considered in determining the BSER, the effect of using expected summer capacity to select the capacity of u nder construction NGCC units while using nameplate capacity for existing units.241 Commenter s added in order to determine the 70% dispatch 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 determined 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 commenter s said in order to validate the feasibilit y of a 70% NGCC capacity in a compliance scenario, EPA used the Integrated Planning Model, which uses the NEEDS database as its primary input for information on generating units. The commenter s asked if EPA has considered the fact that the NEEDS database d oes not rely on "nameplate capacity" as its principle data input, but rather summer capacity.

Commenter s asked if EPA has considered that discrepancies may exist between nameplate and summer capacities as a result of repurposed equipment; for example, Flor ida has identified at least one heat recovery unit that was repurposed, and, as a result, now operates well below its nameplate capacity because of insufficient waste heat from the combustion turbine. C ommenter s asked if EPA has considered whether use of t he NEEDS database or summer capacity might eliminate such discrepancies.

Commenter s stated further compounding the calculation of the targets for Building Block 2 is EPA's use of nameplate capacity for existing NGCC units, instead of net summer capacity; n et summer capacity is the tested maximum output of a unit at the time of summer peak demand and is generally lower than nameplate capacity. The commenter s 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 calculations reflects a redispatch of natural gas fired generation that is actually greater than a 70 percent capacity factor for existing units. The

commenter s said they recommend that EPA utilize net summer capacity in calculating targets for natural gas fired units in building block 2.

Commenter s added in projecting a 70% capacity factor for NGCC units, U.S. EPA used the nameplate capacity of those units. The commenter s 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 unit as a whole. The commenter s believe d that the "summer capacity" of the units' should be used instead. T he commenter s said s ummer capacity represents the net rating or capability of the generating unit as a whole. The commenter s said when summer capacity is considered, which the c ommenter s believe d to be the most representative and appropriate approach, Ohio 's 2012 NGCC capacity is 3,895.3 MW and not the 4,342.5 MW of nameplate capacity utilized in the goal

- setting calculation for Ohio.

Commenter s stated EPA used nameplate/gross capacity in its calculations rather than actual/rated capacity which results in s ubstantially overstating gas generation potential in each state; nameplate capacity represents the design gross capacity of the generator before any internal plant usage (auxiliary power) is deducted, whereas the net capacity represents the value after aux iliary power is deducted. The commenter s said there is also a seasonal component to net capacity with242 summer net capacity being lower than winter net capacity; the EPA needs to use summer net capacity factors for re

- dispatch calculations.

Commenter s stated in building block 2 for Alabama's proposed goal, EPA utilizes a 70% capacity factor for NGCC based on statewide total nameplate capacity for years 2020

- 2029. The

commenter s said the NGCC fleet is relied upon more heavily during periods of greater electric ity demand, which is primarily during the summer months; the summer capacity factor is, therefore, a better measure of NGCC capacity. The commenter s said in Alabama's goal rate computation, EPA used a total nameplate capacity of 10,333 MW for NGCC. The com menter s recommend ed that EPA use the total 2012 summer capacity of 9,278 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 commenter s sa id based on this factor alone, the

commenter s recommend ed that Alabama's 2020

- 2029 goals 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.

Commenter s stated the U.S. EPA used nominal nameplate capacity when determining the capacity for EGUs in this proposed rule; the commenter s believe d summer peaking values should be used, as they are a much more accurate measure of an EGU's capacity.

Commenter s stated as detailed in the Techn ical Concerns portion of this document, U.S. EPA utilized the nameplate capacity of the nationwide nuclear fleet instead of the more appropriate summer capacity. C ommenter s said that the nameplate capacity of a unit represents a gross

rating of the generat or alone, and is not indicative of the net capability of a particular unit as a whole. The commenter s believe d that the "summer capacity" of the units' should be used instead. The commenter s said summer capacity represents the net rating or capability of g enerating unit as a whole. The commenter s 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.

Commenter s analyzed EIA forms 923 and 860 data for years 2008

- 2012; these data demonstrate that improper use of nameplate capacity in calculating capacity factors would result in a 2008

- 2012 nationwide nuclear capacity facto r of 85%. The commenter s said using the more realistic and appropriate summer capacity, the five

- year nationwide 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 commenter s added that they did not attempt to exclude those nuclear units committed to shutdown, as was the case with U.S. EPA's goal setting calculations.

Commenter s stated in the eGRID baseline data for 2012, EPA used the EIA860 nameplate

capac ity rating (in MW) by generator as the basis for any capacity factor or energy production computations. The commenter s said nameplate capacity represents the design gross capacity of the generator before any internal plant usage (auxiliary power) is deduct ed, and may not correctly reflect a unit's true capacity due to various operational restrictions, whereas the net243 capacity represents the value after auxiliary power is deducted. The commenter s said there is also a seasonal component to net capacity, with summer net capacity being lower than winter net capacity. The commenter s said in its calculation, EPA consistently mixes the nameplate capacity rating with the net generation capacity rating when calculating the baseline capacity factors for NGCC units. Th e commenter s said this capacity factor calculation is the basis for the Building Block 2 NGCC re

- dispatch, and EPA's error results in an overstatement of potential net MWh generation that could be added to the electrical grid to achieve a 70 percent NGCC c apacity factor (or 15 percent capacity factor for units under construction). The commenter s said instead of using nameplate generator capacity, EPA should use the net s ummer capacity rating of each generator, which will produce more realistic estimates of generation NGCC units can supply to the electrical grid, and the differential amount of net generation to be deducted from coal

- fired units.

Commenter s stated as with the re

- dispatch of natural gas component of the goal setting, U.S. EPA relied on nameplate capacities in their calculations. The commenter s said they understand that the nameplate capacity of a unit represents a gross

- rating of the generato r alone, and is not indicative of the net capability of a particular unit as a whole. The commenter s believe d that the "summer capacity" of the units is more representative. The commenter s said summer capacity represents the net rating or capability of a g enerating unit as a whole. The commenter s 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

commenter s ha ve identif ied that U.S. EPA, in the GHG Abatement Measures TSD, used 2,150 MW of capacity for Ohio's nuclear fleet, and has been unable to resolve this value with available nameplate and summer capacity information.

Commenter s stated BB2 and its redispatch of coal

- fired generation to NGCC also ignores problems associated with peak usage by failing to use net summer capacity in calculating NGCC capacity. The commenter s said EPA should have used net summer capacity because it ref lects the maximum output that generating equipment can provide to the system at the time of peak summer demand, which is particularly critical in Arizona and other states with a wide divergence between peak and average demand. The commenter s said net summe r capacity is generally lower than the actual nameplate capacity because it reflects capacity reductions resulting from efficiency loss and electricity use for station service or auxiliary loads. The commenter s said net summer capacity is a much better ind icator of existing 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 sources.

Commenter s stated EPA's refusal to use net s ummer capacity creates a false impression about the availability of existing NGCC generation for redispatch. The commenter s said EPA's refusal to account for net summer capacity further harms states with severe weather, such as Arizona. The

commenter s said Arizona has a uniquely high summer peak demand; most of central and southern Arizona, and specifically the cities of Phoenix and Tucson, have very high ambient temperatures during the summer months, resulting in an annual energy profile that peaks244 signifi cantly during the long summer months; as a result, Arizona has the greatest change in capacity utilization of any state on a month

- to

- month basis. The commenter s said currently, the existing NGCC capacity in the state of Arizona is designed to act as an in termediate capacity resource with the ability to quickly and efficiently 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 commenter s said if Arizona were to redispatch coal with the existing NGCC capacity, the State would need to build out significant additional NGCC capacity and infrastructure and renewable resources or make large and likely unsustainable market purchases. The commenter s said the Pace Stu dy similarly found that existing NGCC EGUs are inadequate to replace the coal

- fired EGUs.

Commenter s request ed that EPA use "net summer capacity" when determining a unit's generating capacity. The commenter s said the proposal relied on nameplate capacity, which is often much higher than realized capacity, especially 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 commenter s said the following ar e some examples of the differences in generating capacity between nameplate and net summer capacity for Lakeland Electric units in Florida:

Unit 1

- nameplate capacity: 103.5 MW, net summer capacity: 85 MW

Unit 2

- nameplate capacity: 126 MW, net summer capacity: 106 MW

Unit 3

- nameplate capacity: 363.8 MW, net summer capacity: 342 MW

Unit 5

- nameplate capacity: 369 MW, net summer capacity: 338 MW

Unit 8

- nameplate capacity: 126.5 MW, net summer capacity: 105 MW

Comment 11: Improperly used nameplat e capacity, the EPA should use net capacity with recommendations.

Response 11: The EPA relies on summer capacity to inform its final rule sub category

- specific emission rate s

. See section V. A and V.D of the final rule preamble of the CPP for the EPA’s response to this comment. Also see the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule.

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

Commenter s stated the EIA860 database provides reporte d summer and winter net capacities in addition to nameplate capacity, so the information is readily available. The commenter s said for245 combustion turbine

- based generation, including NGCC units, the summer net capacity can be significantly lower than the wi nter net capacity due to higher combustion air inlet temperatures. The commenter s said EPA should therefore take seasonal net capacity variation into consideration as well (the FCG

- EC's recommended methodology for taking seasonal net capacity variations in to account is detailed below). The commenter s 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 turbine(s) and the steam gener ator); 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 gross capacity.

Commenter s recommend ed the following procedure for replacing generator nameplate ca pacity 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 identified at the total unit level only, allocate the summer net capacities to the indi vidual generators via pro

- rata share of generator nameplate gross capacity.

- For NGCC under construction, verify source and type of capacity rating; confirm that all project values used represent net capacity.

- Use summer net capacity as the annual avera ge net capacity; this will ensure that the net generation potential of NGCCs at a 70 percent capacity factor will not be overestimated and is most representative of average temperatures in a state.

- This net capacity rating methodology is also needed to c alculate coal

- fired unit capacity factors and incremental NGCC emission rates as modifications to other parts of the calculation.

Commenter s stated the EPA should have used net generating capacity instead of nameplate capacity for natural gas combined cycl e units in its application of Building Block 2. The

commenter s recommend ed 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 identified 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 type of capacity rating. Confirm that all project values used represent summer net capacity.246 The commenter s 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 s ee section V. 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 the use of nominal nameplate capacity rather than the actual demonstrated capacity was incorrect.

Commenter s stated with the improper nameplate capacity assumption for NGCC, in EPA's goal setting methodology for Building Bl ock 2 under Option 1, the Agency essentially retires all coal capacity in 11 states, and its generation is replaced by NGCC generation from existing units; these states are: Alaska, Arizona, California, Connecticut, Massachusetts, Mississippi, Nevada,
New Hampshire, New Jersey, Oregon and Washington. The commenter s 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 future. The commenter s said this is also shown by EPA's parsed IPM modeling files projecting complianc e 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, Mississippi, Nevada and New Jersey. The

commenter s said this modeling seem s to be supported by the North American Electric Reliability Corporation (NERC), which stated that current and planned pipeline infrastructure in both Arizona and Nevada are inadequate to handle increased demand due to the Proposed Guidelines. The commente r s said it should be noted that the EPA only made one parsed IPM file available pertaining to Option 1; therefore, we were unable to ascertain projected unit compliance in 2030, the first year required to meet the Final Goals in the proposed emission guide lines ("Proposed Guidelines") and the year in which compliance with the Interim Goal is assessed.

Commenter s added reflecting the impact of adding this excessive NGCC generation into the state goal calculation, the capacity factors that would actually be r equired to reach these generation levels when applied to summer net capacities in these seven states are extremely high and well above the 70% capacity factor EPA assumes as the basis for its conclusion that its state goals are achievable.247 Commenter s adde d EPA should recalculate North Carolina'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 Carolina calculates this revised number to be 1,930 MW.

Commenter s stated in the state goal computations, EPA 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 nameplate ratings

- or 5,588 MW. T he commenter s 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 commenter s believe d that it would be very difficult, and in some cases impo ssible, to meet an annual capacity factor of 70% for some NGCC units; this is due to the fact that annual capacity factors must include planned and unplanned outages. The commenter s said based on historical operations, during years when major maintenance i s required on NGCC units, the planned outage factor alone could approach 15%; in addition, unplanned outages typically range from 2%

- 5%. The commenter s said if 70% is nearly impossible, then operating at a capacity factor of 83.9% is flat out of the quest ion. The commenter s said the state goal computations need to be recalculated in the final rule using (1) each unit's actual tested NGCC capacity as opposed to the unrepresentative nameplate capacity; and (2) a lower NGCC capacity factor than 70%

- such as 60% or even lower, based upon industry average performance data.

Commenter s 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
EP A has already acknowledged, ambient conditions play a large role. The commenter s 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 is 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.

Commenter s stated beyond the identification of mis

- analyzed data p oints, realized utilization in Florida in 2012 is significantly greater than realized 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% o f the hours, many of the largest capacity units greater than 90%. The commenter s said the EPA "assumes that NGCC has a utilization of 87%"; this refers to the cap of available hours of operation, not also to the generation capacity in each of those hours. The commenter s said a closer look at the specific data suggest that even those plants that operated for a significant number of hours, were not over 70% capacity factor; for example, the Treasure Coast Energy Center had a utilization of 96%, 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. Commenter s stated when operating, 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 when operating. The commenter s said in248 Florida, the high ambie nt temperatures play a limiting role; station

- specific constraints also should be considered. Commenter s suggest ed that EPA re

- evaluate the level of achievable existing NGCC capacity factor based on state

- specific, and NGCC

- specific data (not plant level); by doing so, the analysis will based on data with higher resolution for each state; however, it should be noted that even when refining the analysis, there are many other system constraints that must be taken into consideration that further restrict the p ossibility of re

- dispatching to existing NGCC. The commenter s said following the same 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 fa ctor for Florida is 65%.

Commenter s stated the rule's calculation methodology is based on a fundamental misunderstanding of how utilities plan to meet electricity demand. The commenter s said utilities must ensure that sufficient resources are available to meet peak demand, not annual average demand. The commenter s said for example, their peak hourly load reached its highest value of 557 MW on July 25, 2012; all available generation resources were being utilized at full capacity to meet that peak demand, and would not be available for re

- dispatch. The commenter s said it is clear that additional redispatching of the commenter s ' fleet of NGCC to support the state wide goal would not be possible at all times. The commenter s 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 demand. The commenter s said the combined nameplate capacity of the commenter s ' two NGCC units 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 commenter s said the system load was less than that for approximately 70% of the year. Commenter s stated coal and oil s team plants cannot be replaced by increasing the utilization of existing NGCC plants; the only way to replace coal and oil steam plants is to construct new NGCC power plants to ensure sufficient capacity is available in peak periods.

Commenter s stated in a pplying building block 2, EPA assumed that underutilized existing and currently under construction NGCC EGUs could be dispatched to a 70 percent capacity factor in replacement of coal

- fired EGU generation; the following concerns raise questions regarding t he validity of the EPA assumption:

- EPA used name plate capacity to estimate the potential underutilized NGCC capacity that could be available for redispatch; the actual capacity of NGCC EGUs is affected by many factors including elevation, temperature, h umidity, etc.

- The EPA estimates of underutilized NGCC capacity did not account for capacity held in reserve to maintain system reliability and provide for anticipated growth in demand.

- NGCC EGU's located in non

- attainment areas for criteria pollutants such as PM2.5 and ozone may not be redispatched as anticipated by EPA without infringing on permit limitations; in Utah, the Wasatch Front is a non

- attainment area for PM2.5.249 The commenter s said the EPA assumption that increased utilization to 70 percent capacity of NGCC can be redispatched in place of coal

- fired generation 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 from com pliance requirements of other permits.

Comment 13: Errors

- nameplate capacity value

Response 13: The EPA continues to list the nameplate capacity reported 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. S ee the CO 2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule f or summer capacity 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 calculations.

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

Commenter s stated the nameplate capacity used by EPA for Deer Creek Station is in error. The

commenter s sated as described by Basin Electric in its Application for an Energy Facility Siting Permit, its PSD Air Quality Construction Permit Application, and its April 2013 Integrated Resource Plan, the capacity for Deer Creek Station is 300 MW. The commenter s s aid EPA used an erroneous rating of 324 MW in calculating Deer Creek Station's additional capacity. The

commenter s said the 300 MW rating can be verified by examining the gross hourly load data reported to EPA's Clean Air Markets Division by Deer Creek Sta tion's continuous emission monitoring system. The commenter s said an examination of the data reveals that the full load achieved on a gross basis is typically 301

- 304 gross MW, which aligns with the 300 net MW rating.

Commenter s ha ve identified an error in the nameplate capacity used for WPL's Riverside Energy Center (ORIS ID Code 55641) located in Wisconsin for the Block 2 NGCC redispatch calculation. The commenter s provided Table 8 that summarizes 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 commenter s d id not recommend use of NGCC nameplate capacities for the Block 2 calculation; rather than use the nameplate rating of NGCCs in EPA's calculation of t he energy that would be produced by the operation of NGCCs at a capacity factor of 70%, the EPA should use the demonstrated net capacity at which the units can actually operate ; however, if the EPA does not alter its original approach, the commenter s reque st ed correction of the nameplate rating used for WPL's Riverside Energy Center.

Commenter s stated the EPA made an error in their analysis of the Cheyenne Prairie Generating Station, the sole natural gas combined cycle unit in 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 V I of the final rule preamble of the CPP for the EPA’s response to this comment. The response to this comment is also addressed in section 3.1.4.

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

Commenter s stated EPA requested comment on the use of "net" versus "gross" sa vings in the context of energy efficiency compliance approaches; one important distinction is that utility ratepayer

- funded energy efficiency programs and other non

- ratepayer programs (e.g., state energy efficiency loan funds, energy savings performance co ntracting, building energy codes) may not need to be treated in the same manner. The commenter s said the net

- savings approach is linked to cost effectiveness issues and not emissions issues; non

- ratepayer funded energy efficiency programs are developed in a different context. The commenter s said if a state wants to leverage a revolving loan fund and the associated energy savings that are achieved through retrofits facilitated by the fund for 111(d) compliance, the state should not have to determine the

net energy savings from those projects. The commenter s said the gross energy savings should be sufficient for 111(d) compliance; overall, NASEO recommends that EPA allow gross energy savings from energy efficiency projects to be used for compliance purposes, at least on programs that operate outside of utilit y ratepayer

- funded programs, 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 efficiency programs included in their 111(d) pla ns, that should be their option.

Commenter s added the USEPA requested comment on net energy output (proposed) and gross energy output; the current reporting of CO2 emissions from EGUs is required by 40 CFR, Part 75 to be in gross energy output and the prop osed EGUs' CO2 emission limits are expressed as net output. The commenter s said the USEPA did not propose a methodology for how any adjustments in net output would be modified for reporting in 40 CFR Part 75. The commenter s said net output fails to account for broad discrepancies of parasitic loads to the EGUs. The

commenter s said an example of this would be comparing the gross CO2 lbs/MWh from an EGU with a wet sulphur dioxide control device to one with a dry scrubber; if all other things are equal, the EG U with a wet scrubber will have a higher carbon intensity than the dry control device, thereby skewing the net rate. The commenter s said this would be magnified with multiple or very large units in a state's generation mix. The commenter s said the goal cal culations 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 determines to be appropriate.

Commenter s stated EPA solicits comment on the prospect of monitoring a nd reporting net versus gross generation; the commenter s are concerned with EPA's proposed use of net rather than251 gross electricity generation as a basis for the emission rate goals in the proposal. The

commenter s said the additional monitoring required to accurately determine net generation is burdensome and of little or no benefit beyond the current gross energy monitoring requirements. The commenter s said use of net generation penalizes utilities for the electricity that is used to power pollution contro l 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 commenter s said for consistency and to minimize the monitoring

an d reporting burden, gross generation should also be used for the section 111(d) standards.

Commenter s added Delaware has one coal

- fired unit in the state; Nitrogen oxide (NOx) emissions from this unit are controlled by selective catalytic reduction (SCR) t echnology, and sulfur dioxide (SO2) emissions by a scrubber. The commenter s said units equipped with emission control equipment have higher heat rates than those without, due to the energy needed to operate the control equipment; the NOx and SO2 emission c ontrols were installed on Delaware's unit after the 2012 base year, so the station auxiliary loads associated with those controls were not reflected in the net generation of the 2012 base year. The commenter s said given that EPA 2030 goal calculations are based on net generation States with controlled units appear to be at a disadvantage. The commenter s recommend ed EPA consider calculating heat rates on gross generation, instead of net generation, for units that are equipped with advanced emission controls. The commenter s said this recommendation is only for units that have enforceable requirements to continuously operate such emission controls at all times the associated unit operates.

Commenter s stated the goals are based on net generation which excludes p ower used to operate air pollution control equipment; using net generation penalizes sources that have installed good air pollution control equipment. The commenter s said air pollution control equipment can consume up to 15% of the electricity generated by an EGU; as such, the commenter s believe d it would be more equitable to use gross generation for establishing the goals and determining compliance.

Commenter s stated any rate, whether in mass tons or otherwise, must be based on gross output rather than net output because each power plant's internal load to run pollution control equipment varies and units with more pollution control equipment and a greater internal load should not be adversely penalized in the baseline calculation or in any carbon reduction program. The

commenter s 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:

Commenter s stated USEPA should reassess the use of net electrical output rather than gross electrical output for calculating heat rate/efficiency improvements. The commenter s said reporting of gross electrical output is already required from EGUs with specific, clea r methods for its measurement; this does not appear to be the case for net electrical output. The commenter s said any requirements in state rules to implement heat rate improvements on a net basis would require additional reporting requirements and rules o n how net output could be consistently measured and calculated; additionally, emission controls on EGUs reduce efficiency as internally generated electricity is used to power such controls thereby increasing the parasitic load and reducing net output; cons equently, using net electrical output to calculate efficiency creates an undesirable incentive for sources to avoid installing new or operating existing criteria pollutant emission controls when seeking to improve EGU efficiency. The commenter s said use of gross electrical output for heat rate calculations avoids this conflict, although there is still the issue of the best controlled and least polluting units potentially being the least efficient. The commenter s examined the possible use of net electrical o utput 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 V I of the final rul e 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:

Commenter s stated the proposed rule uses net generation as opposed to gross generation in the denominator both in setting the goal and for compliance purposes under a rate

- based approach. The commenter s recognize d that the use of net generation allows for plant

- leve l efficiency improvements to be accounted for; however, the use of net generation does present some concerns. The commenter s said if a utility installs controls for a traditional air pollutant (mercury, SO2, or NOx) or for addressing other environmental is sues such as clean water regulations, it often requires electricity to operate the control equipment, reducing the utility's net generation. The commenter s said if pollution controls are installed at an EGU after 2012, in order to meet the 6% heat rate imp rovement in building 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; this penalizes EGUs for installing traditional
p ollution controls, which is likely an unintended consequence of using net generation. The

commenter s suggest ed that the EPA rectify this in the final rule; one option to alleviate this concern is to allow a utility to include the electricity used to operat e pollution control equipment253 installed after 2012 to meet any state or federal environmental requirement in its net generation for compliance purposes.

Comment 17: Gross vs. Net capacity to set goals; more information required

Response 17: See section V I of the final rule preamble of the CPP for the EPA’s response to this

comment. Per commenters ’ suggestion, EPA has relied on net summer capacity to inform its BSER quantification of subcategory

- specific emission performance rates and state goals in the f inal CPP.

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

Commenter s stated nameplate capacity represents the design gross capacity of the generator before any internal plant usage (auxiliary power) is deducted, whereas the net capacity represents the value after auxiliary power is deducted. The commenter s said net capacity is what a unit can supply to the electrical grid; there is also a seasonal component to net capacity, with summer net capacity being lower than winter ne t capacity, but both typically are lower than nameplate capacity

- and occasionally significantly lower. The commenter s said EPA is using net generation (in megawatt

- hours (MWh) as the input for emission rate calculations on a pound of CO2 per net MWh basi s. The commenter s said more information is required to understand the most representative value for determination since other 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 Also, see section 3.1.4 in this RTC document in regards to the interaction between heat rate improvements and auxiliary contr ols. EPA continues to rely on total CO2 emissions when establishing emission rates to be consistent with the reporting requirements of the rule.

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

Commenter s stated the CPP e stablished state emission rates using gross CO2 emissions from 2012 and net generation from the same year. The commenter s believe d this to be an inconsistent methodology and believes gross emissions and gross generation should be utilized to establish BSER . The commenter s said this relevant in light of additional controls and the loss of generation and increased heat rate required for emissions controls by other EPA rules including254 the Mercury and Air Toxics Standard (MATS), Cross State Air Pollution Rule ( CSAPR), and National Ambien t Air Quality Standards (NAAQS).

Commenter s stated EPA is not consistent with the use of gross versus net generation when calculating state level goals. The commenter s said EPA calculated unit

- specific heat rates using
gross gen eration data from the Continuous Emission Monitoring Systems (CEMS) as the basis for estimating heat rate improvements related GHG reduction potential. The commenter s said the use of gross generation completely overlooks the negative impacts to auxiliary l oad caused by pollution control equipment such as scrubbers, fabric filters, selective catalytic reduction technology, dry fly ash handling systems, or waste water treatment systems; however, when calculating individual state CO2 emission rate goals EPA us ed net generation. The commenter s said while gross generation is not affected by the installation of pollution control, net generation can be affected significantly. The commenter s said EPA should be consistent with its use of gross and net generation. The commenter s said given the level of new pollution control retrofits necessary to respond to recent and upcoming EPA regulations, net generation is the most appropriate value to use throughout the proposed Guidelines.

Comment 19: Solar data in goal calcula tion

Response 19: See section s V.A and V. E . of the final rule preamble of the CPP for the EPA’s response to this comment.
The following are summaries of the specific public comments under this comment:

Commenter s stated the data used by EPA for calculating solar energy potential as part of the building block 3 is out of date and incomplete; therefore, the EPA's current proposal does not reflect the BSER. The commenter s said the EPA should update its cost and penet ration data for solar when determining state emission reduction targets to ensure that the BSER is correctly reflected in state goals.

Commenter s added the BSER as proposed by EPA does not properly account for solar energy measures because it fails to proj ect accurate emissions reduction and cost potential, and it fails to include distributed PV entirely; therefore, the state goals as set forth in EPA's proposal are inaccurate. The commenter s stated the EPA should exclude the technical potential benchmark f rom the alternative approach and rely on the IPM model results with modifications. The

commenter s 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 for distributed PV from the S olarDS model. The commenter s said the EPA should use the Sunshot

- 62.5% scenario distributed PV solar capacity projections to hard

- wire distributed PV into the IPM model to include distributed PV. The commenter s said the EPA should update the current gener ation data for solar from EIA data with SEIA's recommended outlined approach. The commenter s said the EPA should update the performance estimates used in the IPM model for solar. The commenter s said the EPA should use a 2012 or higher baseline year.255 Commen ter s added use Sunshot

- 62.5% s cenario d istributed PV s olar c apacity p rojections to h ard

- wire d istributed PV into the IPM Model.

Commenters stated distributed PV meets the necessary requirements to be considered a part of the BSER; distributed PV can be de ployed at a reasonable 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 wholes ale power model such as IPM; instead, it is more accurate to rely on separate modeling that fully accounts for market dynamics at the customer level. The commenters said for example, NREL has developed the Solar Deployment System model (solarDS), a modelin g complement to ReEDS which projects distributed PV installations by state based on system prices, retail rates, and consumer economics.

Commenter s stated the Solar Deployment System (SolarDS) model is a geospatially rich, bottom

- up, market penetration mo del that simulates the potential adoption PV on residential and commercial rooftops in the continental United States 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 commenter s said SolarDS calculations are run at a high level of disaggregation by calculating PV generation in 216 solar resource r egions (shown in Figure ES

1), and combining PV output with state

- based electricity rate distributions from 3000 utilities. The commenter s said Regional PV financial performance is used to simulate PV adoption rates for each customer type and building type ; SolarDS then aggregates regional PV adoption to the state and national level.

Commenters stated in an analysis of the EPA Clean Power 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 distributed 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 assumptions corr espond 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% scenario.) The commenters said NRDC also approximated a growth pathway between 201 4 installed capacity and the Sunshot 2030 distributed PV capacity projections; the Sunshot

- 62.5% distributed PV solar capacity projections were then hard

- wired into IPM to ensure that the effects on the grid and other generation options are captured; mean ing, the capacity projections were 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 considerati ons, regulations, etc.).

Commenters stated the analysis by NRDC notes that using the

- 62.5% cost reduction scenario may be a conservative projection, as an October 2014 notice from the Sunshot program projects that distributed solar prices are still on tra ck 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 analysis assumes no further price declines after 2020, when in fa ct many analysts expect that prices will continue to decline. The commenters said the NRDC analysis does not assume any carbon price or incentives for renewable energy beyond those already in place in 2012. The commenter s said therefore, an analysis that i ncludes an application of a $30/MWh cost reduction or similar 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 Scenario 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 strengths lie in its use of technical and economic data to calculate the state renewab le energy potential.

Commenters stated the EPA has relied on outdated and 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 comm enters said EPA's modeling should use the most reliable and up

- to

- date cost and performance assumptions available, which will provide a more accurate representation of the cost competitiveness of renewables and demonstrate that more renewables can be deplo yed 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 the costs for residential and commercial PV (which together make up the distributed sola r market) 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 used 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 residential distributed PV and $1.88/watt for commercial distributed PV for use with the

- 62.5% capacity projections as inputs direct ly for the solarDS model, which is then hard

- wired into the IPM model.

The commenter s stated NRDC compared a variety of sources to determine an installed cost for utility solar PV.

Commenter s stated update the Capital Cost Adders for CSP; for CSP cost, t he Proposed Rule's 2016 cost and performance numbers are consistent with a near

- term molten

- salt tower, if the location multipliers are accounted for and the dollars are converted to 2014 dollars; however, the maximum targets for solar thermal provided in the Proposed Rule are too low; in addition, the "short term capital cost adders," intended to account for maxing out the production capacity of any given technology, are too high and their use results in unrealistically high costs (we note as well that the steps on the short term cost adders of 90 MW and 60 MW are unrealistically low). The commenter s said these should be corrected; the cost adder should be no more than 10% or257 20%. The commenter s said there is significant excess capacity for the CSP equipmen t today, including factories for receivers and mirrors all over the world; most of the equipment in a CSP plant is conventional power plant equipment or materials (steel and concrete); only a small percent is specialty equipment, for example mirrors, recei vers, heat transfer fluids and salt. The

commenter s said in addition, the future cost reduction assumptions are too conservative, as costs are predicted to continue to decrease as new CSP plants come on line. The commenter s said if availability impacts the EPA analysis, it is important to note that operating CSP plants in the US have availabilities above 95% after the first couple years of operation. The commenter s 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 plant configurations are likely to be as or more relevant; EPA should m odel all of the three options.

Commenters stated update the Current Generation Data 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 comm enters said the EPA can source data from a number of publicly available data sources to understand the solar potential from DG solar, utility PV, and CSP; the EIA collects data on distributed PV, utility PV and CSP capacity and generation through 4 separat e forms. Those forms are 860, 861, 826, and 923:

- EIA form 860: Annual Electric Generator Report. This covers system

- level data for all plants larger than 1 MWac; therefore it does not include most distributed PV capacity deployed; while detailed data fro m this form is reported only annually, monthly data releases with important metrics are available from EIA's Electric Power Monthly table 6.3.146

- EIA form 861: Annual Electric Power Industry Report. This form includes data on the number and capacity of s olar 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 and capacity.) This form also conta ins fields related to energy exported to the grid from these systems reported in megawatt

- hours (MWh) but due to different metering infrastructure and different interpretations of the survey questions, this data is not consistent or reliable.

- EIA form 82 6: Monthly Electric Utility Sales and Revenue Report with State Distributions This form includes data on the number and capacity of solar energy systems deployed under net energy metering. This data is updated monthly and, thus, is more current than form 8 61 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 customer

- sited solar. (Note: data for 2012 and 2013 likely does not include plants larger than 2 MWac but a fo rm update recently approved by OMB means new data will include those systems and capacity.) This form also contains fields related to energy exported to the grid from those systems in megawatt

- hours (MWh) but due to different metering infrastructure and di fferent interpretations 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 this form does not cover a ll power plants, EIA uses this data to estimate generation from power 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 sola r generation 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 data from 2012 in the proposed rul e, the commenters strongly encourages the EPA to use the latest available data before setting final targets. The commenters said given the rapid deployment of solar energy in recent years, the amount of existing solar capacity is now much higher than at th e end of 2012; further, the EPA failed to account for distributed PV capacity reported in forms 826 and 861.

Commenters stated given the shortcomings regarding the timing and limitations of EIA forms utilized, the commenter s submit ted that a more comprehe nsive estimation approach would present a more accurate picture of actual solar generation; the commenter s suggest ed the EPA take the latest available data on solar PV capacity (both distributed and utility) from EIA forms 860, 861 and 826 and multiply thi s capacity by the estimated generation per unit of capacity by state, which is current through the end of September 2014.

Commenter s stated the annual generation data should be used as a direct input into the IPM model.

Commenters stated update the Perfo rmance Estimates used in the IPM Model for Solar; the EPA used EIA data that does not reflect current performance 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 state as modeled using PVWatts in NREL's System Advisor Model (SAM). The commenters recommend ed using the maximum capacity factor in each state, as utility scale developers will target the highest resource regions. Commenter s s aid it should be noted that through innovation such as oversized inverters, individual projects have reported capacity factors of up to 30%, but the commenter s do not currently have publicly available data that captures this trend at a national level.

Comm enters added the EPA should use the highest RPS in a region to set the state targets, not the average RPS, unless a state specific determination shows that a lower RPS would be more appropriate. The commenters said the current approach groups states into 6 different regions and takes the average of the 2020 RPS goals for those states in that region and multiples this by the total 2012 generation for the region. The commenters said the EPA chose this RPS approach for two principal reasons: "First, in establi shing 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 resource development potential varies by region, and the RPS requir ements developed by the states necessarily 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 state will have weighed t he 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 solar deployment has exceeded RPS deployment schedules, indicating that the RPS goal co uld have been more aggressive; for example, in New Jersey, Pennsylvania, Arizona, California and Massachusetts, solar has already exceeded the RPS goals. The commenters said these aggressive goals are an indication that higher

- levels of renewable energy de ployment are viewed as possible in each respective region. The commenters added a recent report called "The State Clean Energy Cookbook" from former Senator Jeff Bingaman notes that only five of twenty

- nine states have fallen below 90 percent of expected a nnual progress toward RPS targets.

Commenters added the EPA should use 2030 RPS targets, 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 sev erely limits the renewable energy potential for an entire decade. The commenters said for example, the RPS goal for HI is set for 40% by 2030, compared to just 25% by 2020. The commenters said Minnesota also has a 10% solar target by 2030, in addition to o ther RPS goals. The commenters 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 requirements in 2020 as part of their int egrated resource planning processes; selecting a 2030 RPS goal sends a clear message on the potential for a state to include renewables as part of a balanced state energy portfolio by 2030.

Commenter s stated Florida is the "Sunshine State", but compared to southwestern states such as Arizona, we are really the "Partly

- Cloudy State". The commenter s 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 commenter s said solar is a v iable resource 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 commenter s added given the lack of utility

- scale electric storage, it is a daytime

only resourc e. The commenter s are a leader in solar utilization in Florida, and as the price for panels decrease the commenter s expect ed 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, nec essarily limits the total amount of solar that can be put on the system without introducing unacceptable instabilities. The commenter s provided graphs indicative of the existing Jax Solar 12.6 MW plant's daily performance with a) afternoon showers, b) a ra iny day, and c) a sunny day showing peaks of power (MW) during day light (8am to 7pm). The commenter s 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 th e solar comes back. The commenter s said this need for system backup is a large component of the overall cost of solar when performing evaluations.

Commenter s stated the breakdown for where this electricity is produced in the Clean Power Plan map for NC sho ws that NC has no significant solar generation capacity. The commenter s260 stated other sources show the NC has 550 MW of solar power; this should produce about 1TWh of electricity per year (1.4% f 71 TWh). The commenter s asked

, why t his is not included in th e calculation for NC power production ?

Comment 20: Solar

- Technical Potential Benchmark

Response 20: For the EPA’s response to this comment, see sections V.A and V. E . of the final rule preamble of the CPP and the building block three chapter in the GHG Mitigations Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenter s stated should the EPA choose to include the technical benchmark potential, the EPA must in clude updated solar data to reflect the current solar industry. The commenter s said to establish the technical potential benchmark, the EPA compares each state's renewable energy technical potential against its existing renewable energy generation; the tec hnical potential is measured by NREL in the report "U.S. Renewable Energy Technical Potential: a GIS

- based analysis" and existing renewable generation as reported by the EIA for 2012. The commenter s said the EPA notes that for solar, the EPA uses NREL's te chnical 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 potential estimates for distributed solar; this technical potential for ro oftop solar can be found here: http://www.nrel.gov/gis/re_potential.html.

Commenter s stated to ha ve severe concerns with the existing renewable generation data used for solar as reported by the EIA in 2012; the commenter s recommend ed the EPA take the late st available data on solar capacity (both DG and utility) 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 commenter s said for CSP facilities in operation, the EPA should use production estimates provided by NREL since generation from these plants is more project

- specific.

Commenter s stated the comparison of the renewable technical potential to the existing renewable net generation yields the proportion of achi eved renewable generation from technical potential, which the EPA represents as the renewable energy development rate. The commenter s said the EPA next takes the average renewable energy development rate for the top third of states to use as a benchmark re newable energy development rate for each technology; the benchmark rate is applied to each state's technical potential to calculate the benchmark generation for each technology type.

Commenter s said using the ir recommended approach for accurate solar data in each state and the NREL technical potential figures gives a new benchmark average solar development rate of 4.74% when looking at the top 16 states as the approach calls for; the current EPA proposal has a benchmark average solar development rate of 0. 009%.261 Commenter s stated the EPA realizes the limits with the technical potential, and therefore pairs the benchmark development rates with an IPM model to take into account the cost of building the renewable generation; the final target renewable generation for each state is achieved by taking the lesser of these two approaches: the technology benchmark rate multiplied by the in

state technical potential, or the IPM

- projected market potential for that specific technology.

Commenter s d id 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 ove r; 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 electricity from rural utility PV, etc.; a fraction of any

o ne of these would be more than enough to comply with the requirements for Texas under the Clean Power Plan. The commenter s provided a table summarizing the renewable energy potential relative to annual consumption in Texas (km2, Acres, GW, GWh, Renewable p otential as a fraction of Total Texas Consumption)

.

Commenter s 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 t he 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 a esthetic 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. Similarly, the technical potential for CSP is enormous: about 17,500 TWh of annual CSP electrici ty generation, which is more than four times the 2010 U.S. annual demand, could be sited in seven southwestern states on land that has been pre

- screened to avoid prominent land

- use issues and to meet technical requirements such as insolation and slope. Abo ut 370,000

- 1,100,000 hectares (ha) (900,000

- 2,700,000 acres) are required for utility

- scale solar installations in 2030 under the SunShot scenario, and about 860,000

- 2,500,000 ha (2,100,000

- 6,300,000 acres) are required in 2050. The required land area is e quivalent to about 0.05%

- 0.14% of the contiguous U.S. land area in 2030 and about 0.11%

- 0.33% in 2050. Solar development in the SunShot scenario is greatest in the South and Southwest. Often the highest

- quality solar resource areas are dry environments tha t 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 supporting the final CPP and section s 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 st ated other approaches to setting the renewables portion to the state targets, such as the Union of Concerned Scientists' (UCS) demonstrated renewables growth approach, show double the amount of renewable energy potential using the correct data for renewabl e energy. The commenters said the UCS demonstrated growth approach would improve on the EPA's proposed approach by incorporating the following core components:

- Setting a national renewable energy growth rate benchmark based on demonstrated growth in the states from 2009 to 2013

- Assuming full compliance with current state RES policies, 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.

The commenters said the UCS state

- level renewable energy 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 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.

Commenter s said this demonstrated renewables growth approach results in a total of 923 TWh of

t otal renewables to be deployed nationwide, nearly double the EPA's estimate of 524 TWh in 2030. The commenter s said to arrive at this level of generation, the UCS utilized the ReEDS model and SolarDS; inputs were provided into SolarDS first, with the outpu t then inserted into the ReEDS model; this allows for distributed PV to be included. The commenter s said updated solar data and cost assumptions were used in the UCS demonstrated growth approach

Comment 22: Utility plans for nuclear

Response 22: See sect ion 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.
The following are summaries of the specific public comments under this comment:263 Commenter s stated Georgia's existing nuclear fleet provided 28.7 million MWh of generation in 2012; EPA assumes that 5.8 percent of this generation will remain on

- line through 2030, and provides a credit for the amount o f generation this would represent: 1.8 million MWh. The

commenter s said this lowers Georgia's emission rate by 29 lbs/MWh or approximately 4 percent of the target reduction. The commenter s said EPA's assumption is conservative in light of the utility's mos t recent resource plan, which shows it retaining all of its current nuclear fleet through 2030.

Commenter s stated Georgia Power is in the process of constructing two new nuclear units, totaling 2,200 MW, at its Plant Vogtle facility near Waynesboro, Georg ia; the two units have expected operation dates of December 2017 and December 2018, respectively. The commenter s said assuming, as EPA does, a 90 percent capacity factor, 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 the BSER quantification directly, its presence as a zero emitting generation technology not subject to the rat e creates still provides an additional incentive for it to remain in service.

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

Commenter s stated an alternative clarification in the final rule could potentially achieve the sam e incentives as a system

- wide rate to maintain existing nuclear facilities, although it would be somewhat more complex; without changing EPA's proposed target rate calculation methodologies, EPA could still ensure that states have 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 any premature nuclear retirement. The

commenter s said EPA could indicate that, in determining whether a state is meeting its goals, EPA will subtract from the rate denominator the full amount of any lost nuclear generation, effectively requiring full replacement with equivalently carbon

- free generation; like a system

wide emissions rate, this approach would give each state an incentive to preserve all of its existing nuclear plants that may be at risk of early 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 include all megawatt

- hours of existing power plant generation in determining a state's target emissions rates, as proposed above. The

commenter s said regardless o f methodology, EPA should 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 ot her zero

- emissions generation; a plan that failed to satisfy this principle should be deemed non

compliant.

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:

Commenter s stated EPA should not limit the inclusion of nuclear generation in the calculation of a state's emissions rate goals to those facilities deemed "at risk"; however, to th e 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 o f early retirement. The commenter s said this solution, while an improvement to the rule as proposed, does not treat all carbon

- free generation the same and is far from preferable; it will not provide states with sufficient incentives to value the carbon

- fr ee generation of all existing nuclear facilities, nor will it provide them with sufficient incentives to preserve every cost

- effective megawatt of existing nuclear power. The

commenter s 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 determination from time to time, adjusting state goals with each addition to the list of endangered nucle ar plants. The commenter s 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

Respo nse 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 discussion of use of nuclear generation in demonstrating compliance in the state plans.

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

Commenter s recommend ed that EPA allow states in their 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 generation would be included as a componen t of Building Block 3. The commenter s said operation below the threshold capacity factor would have no impact on the state's compliance. The commenter s were aware that other parties may be suggesting an approach like this may include specific recommendatio ns 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 VIII of the final rule preamble of the CPP for the EPA’s response to the hydropower portion of this comment.

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

Commenter s stated one way that states could choose to help ensure the continued vitality of existing nuclear and hydropower plants is to include such generation in their portfolio standard programs through what might be called a "clean energ y credit;" doing so would place a value on the environmental attributes of nuclear and hydropower generation, just as Renewable Portfolio Standard ("RPS") programs place a value on the environmental attributes of wind or solar. The

commenter s said, few if any state RPS programs encompass 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 seek to achieve state policy goals other t han, or in addition to, CO2 emissions reductions. The commenter s 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 provides the l argest source of reliable renewable generation.

Commenter s stated if states are given the proper incentives 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 programs to include nuclear and existing large

scale hydro by mandating procurement of clean energy credits. The commenter s said such credits, like RECs under existing programs, could also be traded, thereby allowing a stat e to comply by helping to preserve an existing nuclear or hydropower facility located in another state. The commenter s said EPA should make clear in the final rule that such clean energy credit programs will be recognized as a valid method for states to co mply 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.

Commenter s stated the reasons for including nuclear and large

- scale hydropow er in clean energy credit programs are similar to the reasons for fully counting nuclear generation in EPA's goal

setting formula. The commenter s said procuring one MWh of electricity from a nuclear generator is at least equivalent to procuring one MWh of electricity from a wind generator; moreover, clean energy credit programs would avoid the negative consequences for emissions reduction that can result from RPS programs that favor some zero

- emissions generation technologies and not others. The commenter s said existing RPS programs that favor wind power but exclude nuclear power exacerbate the economic pressures faced by nuclear generators; tradable nuclear and hydropower credits would help ensure, particularly in rate

- based states, that nuclear and hydropo wer facilities are appropriately valued for the zero

- carbon attribute of the electricity they generate.266 Commenter s stated current supply to 49 member communities consists of over 1200 MWs of nuclear and hydroelectric power capacity; the result is that over 50% of the electricity supplied to the communities is produced while creating no emissions. The commenter s said this proposed rule provides little credit for these carbon free resources 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 th e communities unnecessarily. The

commenter s said looking to invest in the future of their communities, members have not only committed to the construction of new non

- emitting resources in Vogtle Units 3 and 4, but have also funded 1/2 billion dollars in st ate

- of

- the

- art emission control improvements for coal generating resources based on recent federal and state rules. The commenter s said this proposed carbon dioxide rule penalizes the communities for these investments by asking for more emission reductions from the State of Georgia, which has seen substantial reductions in carbon dioxide emissions since 2005. The commenter s said the proposal approach does not consider nuclear investments. The commenter s said the 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 the cost of electricity to consumers in the communities.

Comment 27: The EPA should use hydroelectric power data i n baseline and state goal calculations.

Response 27: The EPA only factors generation from affected sources and potential replacement generation (which may include incremental hydro) into the quantification of BSER. See section s V I and VII I of the final r ule preamble of the CPP 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. See sections V. E for a discussion of RE generation technologies quantified in build ing block 3.
As discussed in the preamble section VI, EPA has made 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:

Commenter s recommend ed that U.S. EPA include hydroelectric 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 ; also, it does not encourage states or utilities to invest in potential new hydropower capacity. The commenter s said Indiana has five hydropower plants that have the capacity for roughly 73.2 megawatts (MWs) of electric generation, according to the EIA, a nd these plants are currently not included in Indiana's state goal calculations. The

commenter s said according to the National Hydropower Association, by 2025, the U.S. has the potential to install around 60,000 MW of new hydropower capacity; further, acco rding to the EIA, Indiana produced around 34% more electric generation 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 commenter s said if U .S. EPA intends to encourage the use of renewable energy through this proposed rule, they need to promote the use of all types of renewable energy, not just certain ones. The commenter s recognize d that U.S. EPA has not ruled out the option for states to in clude incremental hydropower generation from existing facilities or later

- built facilities and encourages U.S. EPA to include hydropower generation in any revised goal calculations.

Commenter s stated EPA arbitrarily excludes hydropower from its calculation of renewable energy potential. The commenter s said this is a particularly glaring omission because EPA concedes that "hydropower is America's largest existing source of RE, for which generating capacity has remained relative constant over the last 20 year s." The commenter s 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 distort the proposed approach by presuming future development potential of large hydroelectric capacity in other states." The commenter s said EPA's justification is unwarranted; the NREL study 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 stat es having the potential to produce over 1,000 GWh (including 4,883 GWh in Illinois)

- undermining EPA's distortion argument. The commenter s said in failing to consider hydropower, EPA is dismissing the potential for future hydropower. The commenter s said a cknowledging this fact, EPA states that "the analysis informing regional RE targets does not explicitly account for the potential of building new hydroelectric facilities as a source under RPS policies." The commenter s said similar to its decision to simpl y ignore those states with no RPS requirements, EPA's exclusion of hydropower

- based on a tenuous distortion argument

- has no real scientific basis; rather, it appears that EPA is allowing its own desired approach to dictate its policy decisions and is o nly considering those technologies and

- indeed those states

- that expedite the implementation of its chosen approach. The commenter s said by incentivizing wind, solar and nuclear

- specifically building preservation of "at

- risk" nuclear into the goal cal culation

- EPA has weighed into a policy debate regarding which sources of renewable energy states should foster going forward. The commenter s said such broad policy choices are not the role of EPA under this emissions regulation.

Commenter s stated the EPA should adjust the amount of emissions in the goal and those used to measure compliance by normalizing the amount of hydroelectric generation during both periods. The commenter s said this approach is a reasonable solution that ensures states with significa nt hydropower resources are treated fairly; this process of "normalizing," or "averaging," hydroelectricity generation across periods and scenarios is a common regulatory practice utilized by the Idaho PUC since 1982. The commenter s said normalization coul d 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 Proposed Rule's intent or results.268 Commenter s stated normalizing baseline hydro generat ion allows average hydro conditions to be taken into consideration and adjusted in baseline emissions from affected units; similarly, by normalizing hydro generation during compliance measurement periods using the same method, the effects of consecutive ye ars of poor (or good) hydro conditions are accounted for. The

commenter s said this will ensure that hydroelectric generation variability is accounted for in the same way in both the goal

- setting and compliance evaluation processes, thus eliminating water

y ear variability as a determining factor for Idaho's compliance with the Proposed Rule.

Commenter s stated the EPA's method of calculating the Proposed RE Targets is flawed because it is not reasonably tied to the generation and emissions of the units that the EPA intends to regulate. Notably, Washington and Idaho are the only two states with Proposed RE Targets that exceed their 2012 affected unit generation. The commenter s 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 affected unit generation by 168%; this occurs because the EPA calculates the Proposed RE Targets independently of affected unit generation and emissions, which is incon sistent with the main premise of the EPA's BSER method for establishing state goals (i.e., offsetting CO2 emissions from fossil fueled affected units). The

commenter s said the EPA thus forces Idaho to offset more than Idaho's fair share of emissions; this point is illustrated in the November 2014 Translation of the Clean Power Plan Emission
Rate

- Base CO2 Goals to Mass

- Based Equivalents technical support document, in which the EPA states "Mil two states (Washington and Idaho), the proposal identified increm ental generation under building blocks three and four that exceed the amount of affected fossil fuel

fired generation in 2012. The commenter s said the EPA oversteps its CAA authority by requiring states to develop more mitigation than needed to offset emis sions from affected units, which leads to the arbitrary and capricious result of requiring states to develop RE to displace existing

zero

- carbon emitting generation. The commenter s said the EPA could alleviate this disparate treatment with Proposed RE Targ ets by capping the Proposed RE Targets (existing plus incremental) at the amount of 2012 affected unit generation. Commenter s provided Table 3 compares the EPA's Proposed RE Target against affected unit generation and total generation for each state; as sh own, under the EPA's current proposal, Idaho's targets significantly exceed every other State's targets as a percent of 2012 affected unit generation.

Commenter s stated EPA has excluded existing hydropower from consideration under the Proposed Rule, ostens ibly because it would "distort" calculation of goals. While the

commenter s agree d that including existing hydropower in goal calculations would be distorting because hydropower may not have the same growth capacity as other renewables, EPA's concern about distortion does not justify eliminating consideration of existing hydropower for purposes of complying with the Interim and Final Goals. The commenter s said just like other renewables, hydropower generates electricity with a considerably lower carbon inten sity than coal, fuel oil, or even natural

- gas; thus, use of hydropower achieves EPA's objective of reduced carbon intensity. The commenter s said EPA should explicitly recognize that hydropower generation should be included in calculating a utility's or sta te's compliance with the Interim and Final Goals. The

commenter s said explicitly stating that existing hydropower can be used for the compliance269 demonstration creates an important incentive to keep such hydropower available for future use and to avoid repl acing it with other, more carbon

- intensive forms of power generation.

Comment 28: The EPA should exclude hydroelectric power from calculation of state goals.

Response 28: See section V I of the final rule preamble of the CPP 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 power is not included in the BSER quantification or the state goals. EPA has also made adjustments to the baseline as dis cussed in section VI to address concerns about unrepresentative hydro generation in the baseline period

.

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

Commenter s stated as utilities with significant hydropower assets, we support the proposed Clean Power Plan's approach to exclude existing hydropower resources in the calculation of state goals. The commenter s recognize d the many benefits of hydropower, including its ability to deliver affordable, reliable and emissions

- free power; nevertheless, we believe that existing hydropower resources should remain excluded from the building block calculation due to the nature of EPA's approach. The commenter s said states endowed with large hydropower resources (California, Idaho, Orego n, and Washington) are recognized as our country's leaders at moving towards a cleaner grid, with existing policies in place to increase the use of hydropower and non

hydro renewable energy and energy efficiency. The commenter s said these states already ha ve the most stringent final goals in the nation, and including hydropower in the state goal calculation could further increase the disparity between goals in the west coast and those in the rest of the country.

Commenter s added moreover, hydropower's year

- to

- year 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 emissions. The commenter s said including hydropower in the goal

- setting calculatio n would magnify the difficulty hydropower

- rich states will have in demonstrating compliance should hydropower decline from baseline levels. The

commenter s said this is of particular concern given the possibility that changes in hydrology resulting from cli mate change and regulatory outcomes, include those arising from the FERC re

licensing process, could lead to reduced generation from existing hydropower projects in the coming years. The commenter s said for these reasons, we strongly encourage EPA to maint ain the proposed approach and continue to exclude existing hydropower from the state goal calculation; at the same time, we encourage the finalized Clean Power Plan to clarify that all new and incremental hydropower generation can be used to demonstrate co mpliance.

Commenter s stated Washington State is the most hydropower dependent state in the nation; the residents and businesses are served primarily through low

- cost, reliable, non

- emitting270 hydropower and EPA should recognize the value of this important non

- emitting resource in how hydropower is accounted for in setting emissions goals and as a strategy for achieving carbon emissions reductions in the SIPs. Nonetheless, the commenter s support EPA's decision to leave existing hydropower resources out of th e building block calculation due to the complexity of hydropower's year

- to

- year variability and the difficulty hydropower

- rich states will have in demonstrating compliance in low water years. The commenter s ' own analysis shows doing so would significantly narrow the carbon emission target for Washington and, if there was a poor water year, make compliance very difficult; therefore, the commenter s urge d EPA to maintain the approach proposed, and leave existing hydropower out of the building block calculation

.

Commenter s stated as a carbon neutral utility, the commenter s ha ve tracked its emissions needed to serve retail load since 2005 since the commenter s must offset them. The commenter s said almost all of the emissions are due to power purchases (netted out on a monthly basis) as everything else is very small (vehicles, airplane travel, etc.).

Commenter s stated while it is appropriate to exclude existing hydropower from the base year(s) generation for purposes of setting state goals, it is critical to affi rm that incremental hydropower and hydropower efficiencies are clearly identified as options for compliance with state goals in the final proposed rule. The commenter s said given the role of energy markets and the number of Washington electric utilities se lling hydropower on the wholesale energy market, it is important for hydropower to be just as attractive, if not more, than switching to NGCC. The commenter s added "at risk" hydropower plants should be treated in the same manner as "at risk" nuclear is

tre ated in the rule. The commenter s said both resources are non

- emitting and the loss of these resources can have significant impacts on the economy and regional grid reliability.

Comment 29: Use of Biomass for RE GHG Abatement

Response 29: Biomass is inclu ded in the IPM baseline projection. Biomass is not considered part of the best system of emission reduction in this rule and therefore it is not included in goal

setting or compliance evaluations. However, similar to other technologies outside of BSER, bio mass may be considered as a part of a state’s plan to meet the emission guidelines.
For more information regarding Building Block 3, refer to Section V.E of the preamble.
For more information regarding biomass in the IPM baseline projection, refer to EP A v5.13 Base Case Documentation Supplement to Support EPA’s Proposed Carbon Pollution Guidelines for Existing Electric Generating Units in the docket.
A discussion regarding the use of some biomass feedstocks for compliance purposes can be found in Section VIII.I and Section VIII.K of the preamble.271 The following are summaries of the specific public comments under this comment:

Commenter s stated EPA uses two different values for existing RE in the proposed rule; in the TSD

- GHG Abatement Measures (Table 4

- 1: 2012 RE Performance by State), the 2012 MWh generated from solar plus biomass is used as the baseline 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 position on whether biomass is carbon neutral. The

commenter s said EPA should not include RE from bioma ss in the GHG abatement measures until it has made a determination on how it will account for biomass as a BSER. The commenter s said if EPA chooses to include biomass, it should estimate how much of a state's biomass generation would not qualify and subtra ct that amount from the total RE generated in 2012.

Commenter s stated after reviewing the draft State Plan for South Carolina to comply with the proposed rule; it has become apparent that KapStone's specific cogeneration source data is incorrect. The comme nter s said the basis for these inconsistencies is likely because the states are using the Energy Information Administration (EIA) Reports to obtain the data to perform the calculations necessary for the proposed rule; the data in these reports do not provi de 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 commenter s propose d 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 commenter s 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 content of 12 percent (The commenter s ' biomass moisture ranges between 45

- 55 percent moisture).

Commenter s stated overview of biomass energy.

Commenter s stated biomass emissions offsetting is a "beyond the fenceline" mitigation measure.

Commenter s stated EPA could improve the GHG rule and responsibly accoun t for net bioenergy emissions.

Commenter s stated biomass energy

- the combustion of 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

- hou r (MWh), biomass power plants emit more CO2 than coal plants, and that co

- firing biomass at coal plants increases CO2 emissions and decreases facility efficiency. The commenter s said given these facts, it is important to determine how the EPA counts bioene rgy emissions under the existing source GHG rule, and what role EPA envisions for biomass power in helping states meet target emissions rates. The commenter s 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 state

- level totals. The commenter s said looking forward, the equation that EPA has developed to calculate state

- level power

- sector emissions rate goals, in which CO2 emissions are summed in the numerator, and power generation (as MWh) is summed in the denominator, treats standalone biomass power plants as contributing to power generation, but again, not to CO2 emissions (although the CO2 emitted by biomass co

fired at coal plants is counted), and again, bi ogenic municipal waste combustion is treated as having zero CO2 emissions. The commenter s said the one place where biomass (but not waste) emissions are counted is in EPA's going forward modeling, the model runs that the Agency conducted to determine a lea st

- cost pathway for states to achieve their emissions goals. The

commenter s said there, emissions from standalone biomass plants are counted, along with emissions from biomass that is co

- fired at fossil fueled plants.

Commenter s stated bioenergy does not directly provide "mitigation" of emissions in the GHG rule. The commenter s 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 em issions, and the GHG rule, as currently formulated, treats biomass and biogenic waste burned at standalone plants as having zero carbon emissions.

Commenter s stated EPA's biogenic carbon accounting approach is likely to be science

- based

.

Commenter s stated EPA's baseline and goal rates are skewed by the assumption that biomass is carbon neutral. The commenter s said to develop goal emissions rates for states, EPA first determines each state's baseline emissions rate from 2012 power sector data on emissions a nd generation. The commenter s said the "goal computation" technical support document actually presents two rates: first is the emissions rate from just the fossil fueled plants that are initially regulated under the rule, which in the case of Maine is deri ved from only four plants and is 873 lb CO2/MWh; the second rate adds generation from renewable 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 ener gy as having zero emissions. The commenter s said Maine's rate in this case is 437 lb CO2/MWh.

Commenter s stated in calculating the adjusted rate, EPA counts electricity generated by wind, solar, geothermal, biomass, waste, and landfill gas as reported by E nergy Information Administration, but excludes power generated at conventional hydroelectric facilities; while all these technologies contribute electricity, none contribute CO2 in the rate equation

- all biomass, waste, and landfill gas burning is treated as emitting zero CO2. The commenter s 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 instance, that while Rumford Cogeneration in Maine is exempted from regulation under the rule, the portion of electricity that the plant generates burning wood and paper

- making wastes is credited as carbon

- free, even as emissions from other fuels burned at the plant (like shredded tires) are unregulated by the rule.

Commenter s stated EPA's modeling counts biomass energy emissions

.273 Commenter s stated EPA has not yet issued final guidance regarding carbon emissions from biomass, and has treated carbon emissions inconsistently in the proposed guidelines. The

commenter s s aid EPA assumed that biomass is carbon

- neutral for the purpose of setting state goals, and should treat biomass as carbon

- neutral for the purpose of demonstrating compliance with the state plans. The commenter s 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 commenter s said it is unclear, however, whether the proposed guidelines would allow the use of such measures. (See e.g. the discussion at 79 Fe d. Reg. 34910.) The commenter s said baseline and goal calculations assume biomass has zero GHG emissions; however, EPA's integrated planning model (IPM) results assume biomass has GHG emissions that are greater than zero; for example, the CO2 emission rate for We 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 commenter s said the inconsistency between baseline and target calculations and the modeling assumptions should b e corrected by assuming that biomass is carbon neutral for all purposes related to the guidelines, and both existing and new biomass should be treated as carbon neutral for compliance purposes.

Comment 30: The EPA calculated unit

- specific heat rates usin g 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:

Commenter s 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 environme ntal controls, such as selective catalytic reduction and flue

- gas desulfurization controls. The commenter s said the EPA then used net generation data, without consideration for these retrofits, for coal

- fired EGUs when calculating the state CO2 emission ra te goals; these retrofits will reduce the net output of these units, as well as their associated net heat rate efficiency. The commenter s said not considering these reductions creates an inconsistent approach, especially considering that most coal

- fired EG Us 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 addressed in section 3.1.4 of this document as well.

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

Commenter s stated heat rates will vary over time depending on capacity factors, maintenance, season, temperature and other factors, including dispatch; dispatch may also be driven by out

- of

state demand that is outside of Utah's control. The commente r s said the EPA should determine appropriate heat rates based on unit

- specific calculations 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 block two sections for a discussion of building block two potential.

EPA feels that it is both reasonable and conservative in its use of NGCC region

- wide baseline emissi on

- rate data to estimate the regional NGCC emissions from the fleet at higher utilization levels following building block two adjustments

. First, N GCC unit

- level and fleet

- level rates generally decrease rather than increase as NGCC utilization increases. This is consistent with expectations of increased efficiency from reduced start

- up and shut

- down time . Furthermore, a significant portion of the NGCC capacity is under construction which is, on average, more efficient than o lder units on which the state and regional emission rate is based

. These are the units that would conceptually increase most from their 2012 levels (0% utilization) to 75% utilization levels. If they are generally more efficient tha n the existing NGCC fleet, than their sharp increase in utilization and increased share of the expected NGCC generation following building block two would put downward pressure on the NGCC rate. Finally, EPA is not making any unit

- level assumptions

- that is

, there is not the assertion that the least effic ient 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 less 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 expect ations post building block two.

U sing the unit

- level emission rate for units that currently operate very little would not only be less reasonable for the reasons stated above, but would clearly overstate the emission rate for these units on average if t hey were to increase utilization . 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 emission 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 some cases cut it in half as they increased generation levels

. Finally, EPA modeling of the 75% capacity factor scenario suggested a NGCC emission rate of 883 lb/MWh was lower than the national average in EPA’s 2012 baseline data (i.e., low 900s lb/MWh). This further supports EPA’s assertion that is approach to estim ating NGCC emissions post BB2 is reasonable.

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

Commenter s recommend ed that EPA consider how the system 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 commenter s recommend that the EPA perform an hourly dispatch of the system; however, to be conservative, the commenter s ha ve used the maximum monthly capacity factor for the NGCC generation in performing its analyses. The

commenter s said for Arizona, this would be 49.4 percent, which is comparable to the 70 percent maximum capacity factor.

Commenter s stated in Building Block 2, EPA assumes that all natural gas combined cy cle (NGCC) units in a state will operate a capacity factors up to 70%, with a corresponding kWh reduction in generation by coal units; EPA uses mismatched coal and gas generation data to arbitrarily make the state goals more stringent.

Commenter s stated E PA should use actual emission rates instead of the average. The

commenter s said when computing the NGCC emissions for the Building Block 2 NGCC re

dispatch, EPA calculates the additional CO2 emissions from baseline NGCC units using the increase in generati on from baseline to 70 percent NGCC capacity factor, multiplied by the original baseline

- year state average NGCC CO2 emission rate. The commenter s said this is inaccurate, inappropriate, and underestimates the additional NGCC CO2 emissions due to the re

di spatch. The commenter s said instead of erroneously using the state average baseline

- year NGCC CO2 emission rate, EPA should use the incremental NGCC CO2 emission rate, on a

state

- average basis; that is because the most efficient, lowest

- emitting units are already generating at or near the baseline 70 percent capacity factor, whereas the units that would actually be re

- dispatched and contribute the greatest increase in net generation are the less efficient, higher

- emitting units. The commenter s said EPA can readily calculate the state average incremental NGCC CO2 emission rates using the generator

- level data that is included in eGRID; after appropriately determining the generator net capacity ratings, EPA must calculate and review generator by generator the b aseline capacity factor, CO2 emission rate, and potential contribution of each to the redispatch. The commenter s 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 assumptions, 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:

Commenter s stated U.S. EPA notes from 200 5 to 2012, NGCC generation increased 80% and they believe it could increase approximately 50% from 2012 levels by 2020; the

commenter s disagree. The commenter s collected nationwide natural gas generation data from the EIA's August 2014 Monthly Energy Repor t for years 1993

- 2013. It should be noted that the

commenter s w ere 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 commenter s said linear regression analysis of this data indicates that the annual growth of natural gas net generation is well described by a straight line, with an R2 value of 0.9502. The commenter s provided a graph of the Nationw ide Natural Gas Generation from 1993

- 2013, showing a linear increase in net generation of NG in the electric power sector. The commenter s said using the results of the linear regression analysis, the net generation from all natural gas EGUs in 2020 was pro jected by the commenter s to be 1,263
TW

- h. The commenter s 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 c ommenter s ha ve several concerns with U.S. EPA's estimate. Comparing the commenter s ' projection to U.S. EPA's 2020 goal indicates a net generation shortfall of 181 TW

- h. The commenter s said this is even more concerning when it is considered that the comment er s ' projection represents 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 ab ove historically observed trends; elimination of 2012 data improves the R2 value of the regression analysis to 0.9719. The commenter s said U.S. EPA effectively ignored dominant trends in the growth of natural gas generation over the past 21 years; examined in this light, U.S. EPA's projection of 1,444 TW

- h by 2020, from combined cycle units alone, would seem to represent a goal far beyond historical precedence and, therefore, 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 no 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:

Commenter s stated renewables targets for the southeastern states including Florida were based on the Renewable Portfolio Standard (RPS) in North Carolina at 10% by 2030. The commenter s said from the Initial Reliability Review released by NERC in November 2014, "In addition to hydroelectric power, energy efficiency plays an important 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 properly excluded by the EPA, would reduce North Carolina's RPS target to 7.5 percent from 10 percent, thereby lowering targets for the entire Southeast region..." The commenter s said EPA's assertion tha t the North Carolina RPS is 10% is incorrect and its application to Florida is inappropriate and should be withdrawn. The

commenter s said Florida has a unique geography and thus a unique capability and access to renewable resources; Florida's CO2 reduction goal should not be based on any other state's renewable potential. The commenter s said CPP should be revised to allow Florida to set the renewable goal for Florida.

Commenter s stated in calculating renewable energy goals for states, EPA should utilize sta te

specific 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.

Commenter s stated the assignment of states into geographical regions, and the subsequent use of regional averages for the calculation of state renewable energy goals, does not give a representative or justifiable outcome, as suggested by EPA. The commenter s said when multiple states have either none or relatively large renewable portfolio energy (RPS) requirements, the "average" of those requirements is not the appropriate measure. The commenter s said a median would be more representative if the geographical approach is used, as in EPA's proposal; this would prevent outliers from skewing the results

- for example, in the West, California with an RPS target of 33% or Wyoming with a target of 0%.

Commenter s stated RPS requirements are not representative of the actual renewable statewide
goa ls. The commenter s 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 t he 15% Montana standard (and other states' nominal percentage standards) inflates the regional averages on which Building Block 3 relies. The commenter s said if an average methodology is used, it should reflect states' true percentage targets. The commente r s 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 contribution to the West region. The commenter s said applying Montana's 15% RP S requirement and looked at in the context of total electrical generation in Montana in 2012, renewable energy makes up 5%, not 15%, of generation in the

state.278 Comment 35: Generation in regional RPS calculation

Response 35: See section s V. A and V.E of the final rule preamble of the CPP for the EPA’s response to this comment. Per the commenters suggestion, 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:

Commenter s stated that U.S. EPA did not adequately consider generation in its regional RPS calculations. The commenter s 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 producing 70% of the regional total. The

commenter s said from a RE perspective, two of the states in this region, West Virginia and Virginia, have determ ined that establishment of RE portfolios are not an economically feasible action for their state, yet both have renewable generation above New Jersey, Maryland, Delaware, and Washington D.C., which have highly ambitious 2020 RE RPS goals. The

commenter s sa id it is concerning that these non

- RPS states were not somehow factored into U.S. EPA's averaging in setting RPS goals, thus giving great weight to states in the East

- Central region with highly ambitious 2020 targets, but little or no real renewable genera tion.

Comment 36: Specific state RE generation % electricity generation values differ than RE in 2012 12% electricity generation value from proposal.

Response 36: See preamble section s V.A. and V.E. Per the commenters suggestion, 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:

The commenter s said U.S. EPA states RE in 2012 represented 12% electricity generation nationally (including hydropower) which is up from 9% in 2005. The commenter s added U.S. EPA found more than half of the states have established state

- level RE with an average of almos t 20% of 2020 generation supplied by renewables; however, 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 investme nts in RE

Response 37: See preamble section s V.A. and V.E.

The following are summaries of the specific public comments under this comment:279 Commenter s stated applying a uniform growth rate to states within a region has the perverse effect of penalizing sta tes that have made the most significant early investments in RE. The

commenter s said while the growth rate EPA applies to each state within a given region is uniform, that growth rate is applied to drastically different baseline RE generation capacities; a s a result, states that have the highest baseline RE generation capacity within their region are expected to increase their RE generation capacity the most in absolute MWh. The commenter s said for example, New Jersey, Delaware, and Maryland are all located in the East Central Region, which has a 17% growth rate; under EPA's approach, 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 tar get of 907,300 MWh; New Jersey's high target is a direct consequence of its early investments in RE, which led it to have a higher baseline of RE capacity.

Comment 38: BB3; the EPA's assumed land available for development was too high

Response 38 : See pr eamble section s V.A. and V.E and the GHG Mitigation Measures TSD.

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

Commenter s stated EPA relied on the U.S. Renewable Energy Technical Potentials: A GIS

Based Study (Study), which assessed the amount of land available for RE development. The

commenter s said the Study detailed that the largest technical potential in Wyoming was for wind energy, and the amount of land available for such development was 110,415 km2; however, the Study failed to consider high

- priority environmental 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 habitats, and other protected areas of cultural and historical significance. The commenter s ha ve determined that the land available for wind energy development is remarkably smaller than the amount outlined in the Study.

Commenter s said one of Wyoming's greatest challenges 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 Species List by the FWS. The commenter s said Wyoming is dedicated to protecting the Greater Sage

- Grouse, which lives in the abundant sagebrush steppes of Wyoming. The commenter s said the State has devoted significant resources towards devel oping a conservation plan for this species; 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 continues support of the State's Cor e Area Strategy for sage

- grouse conservation (EO 2011

- 5); the Executive Order identifies the species' core habitat areas and effectively removes 15,263,210 acres (61,768 km2) of Wyoming land from wind energy development. The commenter s said this impact cou ld grow depending on a280 FWS decision expected in mid

- 2015 regarding the listing of the Greater Sage

- Grouse; if the species is listed, then there will be substantially less land available for any development.

Commenter s stated when the areas of land restric ted from development for designated core habitat areas and other protected areas are compared to the land identified for wind development, the conflict is evident; specifically, 3,563,040 acres (14,419 km2) of Wyoming land classified as Wind Potential Clas s (WPC) 4 or higher cannot be developed for environmental reasons. The

commenter s provided Figure 1 that identifies the land with WPC 4 and higher and considered commercially viable for energy generation; the map has no exclusions for protected lands. The

commenter s provided Figure 2 that illustrates the reduction in land available for development; the Greater Sage Grouse core area, as well as cultural and historical lands that are protected and unavailable for development, have been removed.

Commenter s st ated the Study identified 110,451 km2 available for wind development; in reality, only 20,158 km2 are potentially available for wind development. The commenter s said accounting for the wind farms already built or permitted in this area (1,888 km2), the tot al available land is further reduced to 18,270 km2, or 16.5% of the total land available for wind development. The commenter s said EPA has relied upon an incomplete study to determine the technical potential of RE in Wyoming. The commenter s said EPA must a djust the State's goal to account for the realistic technical potential for Wyoming. The commenter s said Wyoming is receiving conflicting messages regarding RE development from the FWS and EPA; FWS is telling Wyoming not to disturb large areas of land in o rder to guard against habitat fragmentation; EPA is telling Wyoming to develop as much wind energy as possible. The

commenter s said wind energy facilities are very large and disturb greater land areas than EGUs, which have much smaller footprints; these tw o federal agencies are giving Wyoming directives that are directly at odds with each other.

Comment 39: BB3; the EPA Methodology Fails To Explicitly Recognize All Of The Tier 1 Sources

Response 39: See response 38

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

Commenter s 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 commenter s said PA's Tier I include res ources that are not CO2 neutral, such as biologically

- derived methane that provide greater than a 1:1 ratio of CO2 reductions. The commenter s said EPA should give consideration to specifically giving credit for the additional reductions associated with the use of these non

- CO2 neutral resources. The

commenter s said these specific Tier I resources derive their benefit from utilizing biologically or other naturally occurring sources of methane (a more potent GHG) for the production of281 electricity. The comment er s said the PA AEPS program recognized the value of deriving energy through utilizing methane emissions as an energy source as evidenced by the inclusion of methane

- emitting sources in Tier 1; methane has been determined to be more than 25 times as enviro nmentally 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 efficie ncy growth rate used.

Response 40: As explained in preamble section V .A demand

- side energy efficiency is not part of BSER quantification in the final CPP.

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

Commenter s stated EP A set goals for this Building Block relying on broad inferences from state successes with energy efficiency (EE) programs; using broad inferences to the most recently available Energy Information Administration data, EPA calculated specific goals by tying these together. The commenter s 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 commenter s ' analysis of annual growt h 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 retirements to quantify BSER. The starting point for its baseline is 2012 reported data. As explained in the RIA, projections are illustrative of potential compliance scenarios as the regional and more aggregate levels

– the levels at which EPA assesses the model’s results

. Unit

- level projects illustrate one p otential realization of those regional results, but are not meant to be anticipatory of the individual EGU source compliance decision. IPM is used when evaluating 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:

Commenter s request ed that EPA update its compliance demonstration IPM input data to remove incorrect assu mptions regarding the commenter s ' EGUs. The commenter s reviewed EPA's 2025 "Base Case" modeling results, which predict electric system operation without the Clean Power Plan, and EPA's 2025 "Policy Case" modeling results, which predict electric system oper ation with the Clean Power Plan. The commenter s 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 commenter s believe d the modelin g should be as accurate as possible since the results are being used to predict costs and benefits of the rule proposal. The

commenter s provided Appendix F with the incorrect assumptions and corrections.

Commenter s stated EPA relied on The National Electri c Energy Data System or "NEEDS" database for its assessment of the impacts the proposed Clean Power Plan using the Integrated Planning Model (IPM). The commenter s said NEEDS includes basic geographic, operating, air emissions, and other data on electric ge nerating units affected under the rule. The

commenter s ha ve reviewed the information contained in the NEEDS database pertaining to its electric generating fleet and has identified several errors and inaccurate assumptions that significantly impact EPA's IP M modeling results and need to be corrected. The commenter s provided Appendix B of their comments with corrected electric generating fleet data.

Commenter s stated EPA used Integrated Planning Model ("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 Power Plan. The commenter s ha ve reviewed this data and identified the following data discrepancies for several of its operating units that n eed correcting:

1. EPA assumes that George Neal North Unit 3 and Walter 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 carbo n injection, MidAmerican will not retire either unit prior to 2020.

2. EPA assumes that Riverside Generating Station Boiler 9 will retire prior to 2020; however, this unit is dual

- fueled (coal and natural gas), and will be limited to natural gas operation s by April 16, 2015; there are no plans to retire the unit prior to 2020.

Commenter s stated EPA's modeling runs assume significant changes in Arizona's energy position from a net exporter to a net importer of power, an assumption and forecast that is shared by none of the Arizona utilities due to the ownership structure of the Arizona pow er market, where much of the generation is tied to owners from other states who export that power to their own systems.

Commenter s stated EPA's IPM v.5.13 base case contains significant errors. The commenter s added in May of 2013, EPA released NEEDS databa se v.5.13, Southern Company reviewed the database and suggested several changes; the EPA released a second version of NEEDS database v.5.13 which incorporated some of Southern Company's suggested changes. The commenter s said Southern Company analyzed a sid e

- by

- side comparison 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 corrected. The commenter s provided Table 17 (titled: “ Southern Company' s Suggested Changes to NEEDS Database ” ) illustrating some of the283 key discrepancies that remain and potentially affecting EPA's IPM compliance modeling. The

commenter s said it is apparent that Southern Company's recommended changes were not incorporated in the version of IPM used by EPA and, therefore, the error

- laden assumptions produced inaccurate results. The commenter s said for example, the database shows that Gulf Power and Mississippi Power's Plant Daniel Units 1 and 2 do not have a wet scrubber despit e Southern Company's recommendation to reflect the under

- construction scrubber that will come online in 2016. The commenter s said EPA must correct these errors and reanalyze its proposal to more accurately determine compliance costs, which are likely underestimated due to these assumption errors.

Commenter s stated EPA used the Integrated Planning Model (IPM) to estimate the co mpliance cost and economic and energy impacts associated with the proposed rule, as well as likely future electricity market conditions with and without the proposed rule. The commenter s 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 building block 2 in the state goal computations are supported by analysis that has been conducted using the Integrated Planning Model (IPM). The commenter s said to fu lfill its purpose of producing projections related to the electric power sector and its related markets

- including least cost capacity expansion and electricity dispatch projections

- that reflect industry conditions in as realistic a manner as possible, I PM incorporates representations of constraints related to fuel supply, transmission, and unit dispatch. The

commenter s said at the EGU level, IPM includes detailed representations of key operational limitations such as tum

- down constraints, which are desig ned to account for the cycling capabilities of EGUs to ensure that the model properly reflects the distinct operating characteristics of peaking, cycling, and base load units. The commenter s said inputs to IPM for all existing EGU s and those under constr uction are based on data contained in the National Electric Energy Data System (NEEDS). The commenter s said in developing the proposed rule, this data served as the starting point against which policy scenarios were compared. The

commenter s said unit capac ity values in NEEDS reflect 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, after accounting for station or auxiliary services. The commenter s 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 databa se in determining Louisiana's NGCC capacity, especially given that electrical demand in usually highest during the hot summer months.

Commenter s stated it appears that the Integrated Planning 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 used for EPA's 2018 Emissions Modeling Platform. The commenter s said since the NEEDS database supplies many essential electrical generating unit (EGU ) parameters to 111(d) IPM modeling, 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 Commenter s stated a summary of concerns on the IPM (Basecase 5

- 13) forecas t includes incorrect predictions that certain EGUs will:

- continue operating units that have already shutdown,

- retire units (with a combined summertime net capacity of ~1,646 MW as reported by IPM) that currently have no plans to shut down and instead are 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 wind , hydroelectric, and combined

- cycle generation with a nominal capacity over 1,600 MW.

Commenter s stated it also appears that EPA made updates, such as heat

- rate improvements, which created some differences in the projected statewide total emissions betwee n the 111(d) IPM results and the original NEEDS v5.13 data, but the commenter s 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 commenter s seek clarification from EPA on the unit

- level results for its 111(d) modeling.

Comment 42: The EPA s hould u se the c apacity p rovided in NEEDS v.5.13 for e ach NGCC Unit

Response 42: As explained in preamble section V. D the EPA is relying on net summer capacity as for its building block two assessment. NEEDS also relies on this same metric for its unit

- level capacity designations.

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

Commenter s stated EPA used the Integrated Planning Model (IPM) to estimate the compliance cost and economic and energy impacts associated with the proposed rule, as well as likely future electricity market conditions with and without the proposed rule. The commenter s 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 building block 2 in the state goal computations are supported by analysis that has been cond ucted using the Integrated Planning Model ( I PM). The commenter s said to fulfill its purpose of producing projections related to the electric power sector and its related markets

- including least cost 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 supply, transmission, and unit dispatch. The

commenter s said at the EGU level, IPM includes detailed 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 properly reflects the distinct operating characteristics of peaking, cycling, and base load units. The co mmenter s 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 commenter s said in developing the proposed rule, this data served as the starting point agai nst which policy scenarios were compared.6 Unit capacity values in NEEDS reflect 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 uni t in megawatts (MW) for daily planning and operation purposes during the summer peak season, after accounting for station or auxiliary services. The

commenter s 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 electrical demand in usually highest during the hot summer months. The commenter s provided Attachment 4 with NEEDS v.5.13 data for affe cted NGCC units.

Comment 43: IPM data not robust enough

Response 43 : 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:

Commenter s stated when looking at the proposed guidelines with a view of system reliability, the EPA's analyses using the IPM to evaluate the building blocks and whether goals are achievable, uses less robust data than data possessed by and u sed by the MISO. Commenters stated that f or 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 delive rability for gas

- fired units, plans for replacement of units, and also consider the electrical location and network deliverability of units expected to be retired. The commenter s said in contrast, the IPM modeling used by EPA does not appear to consider an y of these factors. The commenter s believe d 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

commenter s said the models used by the RTOs, ISOs, and NERC are more sophisticate d for assessing electric system reliability than is the IPM model, and these organizations also have planning expertise that could promote a more robust analysis. The commenter s said system modeling should also evaluate what reserves are available under th is rule and understand what resources will be called on to meet those reserves. The commenter s 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 energy. The commenter s said simple cycle units may be required to fill that need because coal

- fired units are not as able to respond quickly to load changes given their base load characteristics.

Commenter s stated for a number of years, numerous states and organizations have expressed concerns regarding U.S. EPA's IPM modeling and concerns of its accuracy and appropriateness286 for developing important policy and regulatory programs. The commenter s ha ve concern s regarding the economic optimization of the IPM model specifically with respect to the power system, which is not completely governed by economics; reliability, emissions credit trading, and corporate/organizational inertia can all influence where compani es select to generate power. The commenter s 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 generati on, also the unit runs during the spring maintenance periods of the nuclear plants in Virginia; this example illustrates the inherent problem with using a national model such as IPM that cannot take into account the potential state and local reliability is sues that arise.

Commenter s stated to ha ve reservations concerning the ability of the IPM to accurately predict and demonstrate grid reliability under the proposed rule. The commenter s stated they understand that the IPM model is a deterministic linear pr ogramming model, which, for specified periods of time, determines the least

- cost method of meeting energy and peak demand requirements; IPM is categorically not a dispatch model, and is limited in multiple ways in its reliability assessment capabilities. T he commenter s said among these limitations are seasonal only dispatch, lack of the necessary finely

- detailed transmission and distribution information required to accurately model intra

- regional dispatch, and the treatment of generating units as aggregates (as opposed to individual, geographically located entities within the transmission grid), which fails to represent congestion at the local geographic level.

Commenter s stated IPM inadequately represents solar, wind, and other forms of intermittent

renewa ble generation which are reliant on favorable meteorological conditions; IPM does not account for meteorology through either past observed weather data or random meteorological data generation. The commenter s said accurate and reliable transmission modelin g of the type conducted routinely by RTOs and other entities concerned with grid reliability can only be accomplished with sophisticated dispatch models. The commenter s said models of this type are nonlinear, rely on historical operating data to achieve op timal dispatch, correctly treat generating units as specific, geographically located entities, and are capable of identifying congestion at the proper level of detail. The commenter s contend ed that 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

commenter s said given the impacts of the proposed rule and the consequences of grid reliab ility issues, if U.S. EPA insists on moving forward with this proposal, the commenter s urge d U.S. EPA to engage in outreach with the various RTOs, FERC, NERC, and other entities capable of adequately modeling dispatch scenarios under the proposed rule. The commenter s believe d that a fully optimized economics based projection tool is an inappropriate mechanism for building future policy frameworks or setting policy budgets.

Commenter s questioned how accurate is the forecast demand likely to be; for each rule making, the Integrated Planning Model is updated to insure that its assumptions are current. The

commenter s said because the Integrated Planning Model simulates power plants and the287 electricity system but not the economy as a whole, it must be provided wit h an exogenous estimate of demand for electricity. The commenter s said EPA has long used the most current available Annual Energy Outlook forecast for this information.

Commenter s stated the first step in assessing predictive ability or forecast skill is t o 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 consumpt ion of electrical energy connected to the high voltage transmission network in the United States and are created using the same reporting system used to initialize NEMS. The commenter s 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 installations; this will serve generally to reduce apparent demand/consumption of electric power; however, since the rule in consideration here is

o ne that acts upon utility scale fossil

- fired electric power plants, this difference is immaterial.

Commenter s stated both the changes in electricity demand growth and the Forecast Error analysis provide alternative options for projecting future U.S. elect ricity demand. The

commenter s said one might assume that the apparently linear trend in percentage change of electricity demand continues into the future. The commenter s said under this scenario, peak demand for electricity has already occurred and during 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.

Commenter s stated alternatively, one might assume that the NEMS forecast used to design the state goals and to initialize the Integrated Planning Model for purposes of the Clean Power Plan contains the same level of bias as the previous 14 Annual Energy Outlook refe rence 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 commenter s said this is almost exactly equal to forecast growth in the NEMS reference case, thus this bias cor rection implies essentially no load growth during the next 15 years

- before any energy efficiency efforts are taken under the Clean Power Plan.

Commenter s stated neither recent history of electricity demand does not suggest that the future will be like t he past; indeed the consumption of electricity and its relationship to GDP growth has been evolving since at least 1950; likewise, analysis of the electricity demand forecast used to project future consumption indicates a strong positive bias. The commente r s said making alternative assumptions consistent with these observations, rather than taking the NEMS reference case at face value, suggest very different alternative growth trajectories for the U.S. bulk power system, the subject of this rulemaking.

Com menter s stated at a minimum, EPA should consider to what degree observed bias in NEMS should be corrected for when setting rate

- based goals that assume a particular level of future demand; this may well be a minimum estimate of the degree to which NEMS bas ed 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 the plan. The commenter s 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 three times longer farther into the future.

Comment 44: NEMS has consistently overestimated national electricity 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. Also, s ee preamble section VIII for mitigation measures that can be counted in state plans

– specifically VIII. K for EM&V requirements.

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

Commenter s stated the EIA has been using NEMS to generate its Annual Energy Outlook rep ort series since the mid

- 1990s. The commenter s said Annual Energy Outlook reports over the past decade have projected that electricity consumption would grow significantly; however, actual electricity consumption has remained consistently below the forecas ted levels.

The commenter s said one reason for the discrepancy is that earlier NEMS projections did not account for the national recession that began in 2008

- 09; nevertheless, the recession only explains some of the reduced electricity demand observed ove r the last few years, especially when considered in the context of past model projections. The commenter s said other factors include the structure of and assumptions in NEMS itself; for example, in the residential and commercial sectors of the model, adopt ion of energy

- efficient technologies is driven primarily by user

- specified input parameters describing consumers' discount rates. The commenter s said if consumer preferences change, or if new energy efficiency technologies emerge in the coming two decades, those developments will not be reflected in the AEO2013 reference scenario.

The commenter s said if the structure and business model of the U.S. electricity industry changes in the coming twenty years

- as many analysts expect it will, due to the improvem ents in distributed and renewable energy technologies

- then the AEO2013 reference scenario would serve as a poor proxy; after all, EIA intends its Annual Energy Outlook series not as a prediction of future conditions, but as a projection of the status quo policy and discernable economic trends into the future. The commenter s said the reference scenarios are, by definition, not intended to project significant changes in the energy industry or macro economy.

The commenter s said it is worth considering the h istory of NEMS projections and state

- level electricity sales patterns in greater detail.

Commenter s ’ concerns center on the use of electricity consumption forecasts from the reference scenario in the Annual Energy Outlook 2013 ("AEO2013") from the U.S. En ergy Information Administration ("EIA"); this report is based on output from the National Energy Modeling System ("NEMS"), the EIA's primary national forecasting and policy analysis model. The289 commenter s 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.

Commenter s stated for over a decade, NEMS has significantly overe stimated 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

commenter s said indeed, most prominent e nergy models have done a relatively poor job anticipating future levels of consumption; this observation counsels adopting a conservative approach to mitigating the risk of forecast error

- especially when developing guidance on appropriate methods for con structing their state plans.

Commenter s ma de the recommendation of in developing guidance for the evaluation, monitoring, and verification ("EM&V") of demand

- side energy efficiency programs in state plans, the EPA should explicitly prohibit use of the met hods the Agency used to calculate energy efficiency potential in the context of the Best System of Emission Reductions ("BSER"). T he

commenter s said while these methods may be defensible as an approach to evaluating the potential for energy efficiency in t he context of the BSER, they are insufficient as a means of establishing the contribution of energy efficiency towards an individual state target.

Commenter s ma d e the recommendation of in the context of establishing equivalent mass

- based targets for new a nd existing units, the EPA should evaluate the extent to which relying on the AEO2013 reference scenario to project future electricity 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 happened in the absence of the Clean Power Plan. T he commenter s said the Agency should consider alternative methods for use in state plans, such as (1) using the actual energy consumption trends observed between 2012 and 2020 in place of forecasts made today, or (2) using forecasts 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 Rate and Goal Computation TSD for CPP Final Rule on historical baseli ne 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 Sin ks: 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 sources themselves who attest to thei r accuracy.
The following are summaries of the specific public comments under this comment:290 Commenter s stated IPM projects, under the state

- only policy case, 3,001 MW of new wind capacity in Ohio by 2025. The commenter s said under the regional compliance plan, this is increased to 4,955 MW of new wind power in 2025. While the commenter s recognize d 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 base

- load pow er supplied by coal and natural gas fired power plants. Furthermore, the commenter s strongly urge d U.S. EPA to consider the highly

- localized nature of wind

- power and its ability to serve a small portion of the overall grid; these results clearly indicate t hat location and base

- load reliability concerns were not considered fully in the IPM projections.

Commenter s examined wind capacity projections from EIA's 2014 Annual Energy Outlook. Between years 2012 and 2030, the largest annual change in wind capacity for the RFCW region, of which Ohio is a part, was 37 MW. The commenter s said U.S. EPA's projection of 3001 MW of new wind capacity in Ohio by 2025 under the state

- only scenario represents the addition of 195 MW each year starting in 2012 and concluding in 2025. The commenter s said thus, U.S. EPA is projecting a growth rate in wind capacity 5.3 times greater than that projected by EIA. The commenter s found this difficult to comprehend. The commenter s said U.S. EPA's reliance on an inaccurate model leads to a large overestimate of the amount of RE that can be achieved in Ohio and only reinforces the level of inaccuracies in this proposal.

Commenter s stated EPA suggests that projections could be based o n capacity expansion and dispatch planning model or a dispatch simulation model but these models must receive input on how much energy generation will be required. The commenter s said they cannot reach to the challenge of accurately and reliably translatin g improvements in energy efficiency and the utilization of renewable energy activities into energy demand reductions.

Commenter s stated EPA used the U.S. Energy Information Administration (EIA) 923 and 861 reports to calculate CO2 emissions for each unit; the CO2 emissions contained in the EIA reports use different calculation methodologies. The commenter s said EPA should only use the well

established 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:

Commenter s recommend ed that U.S. EPA use the 2013 EIA growth forecast for goal estimation as opposed to 2010. The commenter s sa id 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 building blocks, the EPA does consider cost as discussed in the GHG Mitigation Measures 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 and commenters generally favored the use of a historical baseline over a projected baseline. Moreover, the EPA test s the resulting quantification of BSER in a power sector modeling that observes th e system constraints referenced by commenter s

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

Commenter s stated establishing performance standards should be unrelated to state historic data; EPA must establish BSER and the emission standard by taking into account cost, non

- air and environmental impacts, and energy requirements. The commenter s said the statute does not contemplate consideration of historic baselines.

Comment 48: Historical and future emissions reductions

Re sponse 48: See preamble section VIII.

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

Commenter s stated EPA should allow states to recognize historical emissions reductions from existing energy efficiency programs to the ext ent that energy efficiency program measures continue to provide quantifiable emissions reductions.

Commenter s stated EPA should allow states to recognize 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 all 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 base case documentation at292 http://www.epa.gov/ airmarkets/ powersectormodeling .html http://www.epa.gov/airmarkets/power sectormodeling.html

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

Commenter s were concerned that the modeling efforts supporting the CPP proposed rule did n ot adequately and accurately account for the electric transmission system, as the EPA's models considered generation and load, but not the transmission infrastructure necessary. The

commenter s said this approach by the EPA is not an accurate portrayal of h ow our nation's electrical system works.

Comment 50: Demand response programs

Response 50: See preamble section V .A for a discussion of the EPA’s treatment of demand

- side energy efficiency in the BSER quantification. See Section VIII for a discussion of mitigations measures that can be use d to achieve/demonstrate compliance.

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

Commenter s stated demand response programs can be effective programs that reduce carbon emissions, or they can be programs that appear to reduce carbon emissions but actually increase such emissions. The commenter s said effective programs are b ased on a reduction in electric usage due to measures such as load curtailment or employment of energy efficiency measures. The commenter s said the "sham" programs drop load, and replace the load with on

- site fossil fuel fired "behind

- the

- meter" generation . The commenter s recommend ed that the EPA ensure demand response programs are only allowed for credit in goal calculations when such programs do not include any on

- site "behind the meter" fossil fuel generation capacity.

Comment 51: DSIRE

Response 51: Se e preamble section V. E for a discussion o f revisions to building block 3.

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

Commenter s 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 University Database for State Incentives for Renewables and Efficiency (DSIRE, www.dsireusa.org/ ). The commenter s said this website provides a disclaimer specifically stating it provides 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 c ommenter s 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 the accuracy, completeness, reliability or293 suitability of the info rmation." The commenter s said because of the extensive amount of information to review under this proposal and the very limited time to complete comments, the

commenter s did not have sufficient time to review all the data on DSIRE to determine its
accuracy relative to Ohio's RPS policy. The commenter s question ed why U.S. EPA would use as their only source of information, a database to develop BSER for RE that warns of the unsuitability of its information for that purpose. The commenter s said for such an imp ortant proposal and for the determination of what is technically feasible and cost

- effective for BSER for RE, why would U.S. EPA not review the actual individual state RPS policies themselves; U.S. EPA's methodology is flawed and the commenter s do not beli eve 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 out

- of

- state renewable generation; the EPA m ethodology r elies o n i n

- s tate g eneration, n ot s ales

Response 52: See preamble section V. E for a discussion o f revisions 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:

Commenter s stated that U.S. EPA did not distinguish between in

- state and out

- of

- state renewable generation, when many of the actual renewable portfolios averaged in U.S. EPA's regional goals do so. The commenter s said this further calls into question the rationale b ehind the regions selected by U.S. EPA according to RE potential, when most states have already recognized these potentials and their limitations when designing their own renewable portfolios. The commenter s said U.S. EPA relied upon the document "Renewabl es 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 requirements can vary substantially; the eligibility of different renewabl e technologies, whether existing projects qualify, the treatment of

out

- of

- state generators, the use of credit multipliers, methods to enforce compliance, and waivers for compliance are just a few examples.

Commenter s said U.S. EPA appears to have ignored this variability; U.S. EPA's requirements for implementation, will restrict states due to federal enforceability requirements. The commenter s said U.S. EPA's best practices and ultimately the state 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 compliance. The commenter s said if U.S. EPA is to rely on current RPS programs in the states as "best practices" then U.S. EPA must take them at face value and allow those programs, as implemented in each state, to fully qualify for implementation under this proposal.

Commenter s were concerned that this lack of distinguishing between in

- state and out

- of

- state renewable generation tha t U.S. EPA did not accurately account for could have led to double

-294 counting in determining the state goals. The commenter s said a state with an RPS that allows for RE to be imported may be considered to have a higher level of RE potential than is actually generated in the state. The commenter s said the state(s) it imports from has an RE potential that also considers this same level of RE generation; U.S. EPA cannot double count this RE potential in formulating goals. The commenter s said this calls into ques tion how credit can be taken in a state plan and then how compliance with a state plan is determined. The commenter s 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 commenter s ask ed if a state's RE is exported to another state and counts towards the importing state's reductions, what happens to the exporting state's RE target; should it not be adjusted. The commenter s said U.S. EPA must use consistent methodologies to eliminate double

- counting in goal setting and in plan development and compliance determinations.

Commenter s 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 commenter s said while in

- state generation does contribute to GHG production, much of this generation is utilized by consumers outside of PA and even outside of the PJM region. The commenter s said states should be accountable 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 commenter s said EPA has no control over the consumption patterns of others outside of their jurisdiction nor does PA have jurisdiction over the dispatching of generation. The

commenter s said EPA should revise its BB3 methodology to reflect state sales as opposed to generation.

Commenter s tried several ways and could not recreate the ratios of sales to in

- state generation EPA provided in the goals calculation spreadsheet therefore, commenter s would like EPA to explain how this ratio was calculated. Commenter s also sta ted 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 Nat ional Data

Response 53: The EPA did shift to a regional framework for identifying building block potential in this final rule. We also reevaluated the appropriate regions based on comment s . See section V of the preamble for more discussion.

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

Commenter s stated excluding the carbon reductions that EPA projects a state can achieve from renewable electricity under Building Block 4(b), national data is used to project the i ncremental reductions in the other Building Blocks. The commenter s 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 s ide efficiency.295 Comment 54: Using national aggregated instead of each states data

Response 54: The quantification of BSER in this final rule is based on a regional assessment of building block potential. The equivalent rate

- based and mass

- based state go als described in section VII reflect state

- specific baseline data. Moreover, the resulting state goals are evaluated in a comprehensive power sector model to estimate compliance impacts. The model reflects competing state

- level constraints.

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

Commenter s stated in composing each state's emission 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 commenter s said because this national data represents EPA's analysis of 48 states total, and not any one individual state, EPA is skewing each state goal to the point where it in no way reflects that state 's ability to meet it. The

commenter s said these state standards are not at all 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 t heoretical.

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:

Commenter s stated the USEPA based its calculation upon an inappropriate discount rate. The

commenter s 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 discount rate appears to be a c ustomer discount rate rather than a utility discount rate. The commenter s believe d this is inappropriate for a multitude of reasons. The commenter s said it appears that the USEPA is using the discount rate more commonly used for the Societal Cost Test in i ts analysis. The commenter s believe d the more appropriate discount rate to use in utility resource planning is the utility discount rate (such as is used for the RIM, PACT, and TRC tests), not the customer discount rate. The commenter s respectfully suggest ed that the USEPA use a discount rate that is reflective of the manner in which DSM costs are actually recovered and consistent with its own best practices manual: a blended utility discount rate, somewhere around 8%.

Commenter s stated electric utilities r arely 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

-296 8%. The commenter s said societal discount rates are generally applied to measures such as building code changes, but are not generally used for utility energy efficiency programs.

Comment 56: Outdated cost and performance numbers for RE and EE

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:

Commenter s 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

commenter s said EPA found that under the Clean Power 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 commenter s said a study by the Natural Resources Defense Counc il found 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. Th e commenter s said in the final rule, EPA should update its cost numbers and strengthen the state targets to reflect the emission reductions available based on current data on availability and cost.

Comment 57: Duct burner capacity

Response 57: EPA relies on net summer capacity for quantification of building block two potential in this final rule.

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

Commenter s stated that EPA has included some units' temporary supplemental generat ing capacity from the use of power augmentation modes, such as duct burners, in the existing NGCC capacity available for long

- term re

- dispatch. The commenter s said duct burners increase power throughput, but at the cost of substantially increasing heat rat e and accelerating component

wear. The commenter s added that continual operation of duct burner capacity is not a feasible option for displacing coal

- fired generation and should not be considered as part of a strategy to reduce CO2 emissions. The commenter s concluded that EPA must examine the NGCC capacity values used in its goal calculation and eliminate any duct burner capacity.297 Comment 58: Load growth

Response 58: While load growth in a reference case scenario is expected at the fleet

- level , load

grow th amo ng likely affected existing sources is not expected based on a review of historical data from a fixed set of units over time. In regards to comments on load growth considerations in the EPA’s compliance modeling, the commenter s should review the EPA power sector modeling documentation. In regards to load growth considerations for determining sub category

specific rates or state goals, the EPA believes the baseline is a reasonable baseline expectation and does not expect aggregate generation levels fr om these sources to increase during the compliance period beyond what is accounted for through the EPA adjustments accounting for under construction units and hydro adjustments

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

Commenter s stated as with any model, the inputs used on the front end greatly influence the results; this is true in the case of EPA's use of IPM for the proposed rule. The commenter s said one of the basic and most important inputs in determining the resulting power prices is the expected load growth. The commenter s said EPA's Base Case peak load growth for the SERC Central TVA region is very similar to TVA's internal 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 commenter s said while the dramatic drop could be attributed to increases in Energy Efficiency (EE) for Option 1, the incre ase in EE as proposed in the calculation of the state emission rate goals only gradually increases to about 10% by 2029. The commenter s said it appears that the early years of the compliance period (2020 thru 2025) have the load growth rate arbitrarily red uced. The commenter s said on the "Generation and Peak Demand" sheets in the supporting document named: "Option 1 Regional

- April 2014 Draft DAT Replacement File.xlsx," the year

- by

- year generation and peak demand values for the SERC Central TVA region show a saw

- tooth pattern. The commenter s said the values show a gradual (1%) increase year over year for 4 to 6 years followed by a large (

- 2% to

- 4%) cline. The commenter s said this pattern of demand growth is not reflected in any of the parameters in the emi ssion 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 commenter s said except for those years that have the negative growth, the year by year growth ra tes in the Option 1 case are exactly the same as in the Base Case.

Commenter s added the same observations can be made for the Option 2 case

- file named "Option 2 Regional

- April 2014 Draft DAT Replacement File.xlsx"; the demand growth for years 2018 and 2019 have been arbitrarily reduced and there is a saw

- tooth pattern of growth rates with every 4 to 6 years having a large negative growth rate. The commenter s said the other year's growth rates are the same as the Base Case. The commenter s said the use o f 2012 data coming out of a recessionary period may not be indicative of future economic growth; EPA should revise the load growth assumptions in its analysis basing them on documented reasonable assumptions.2 98 Comment 59: Distribution CO2 emissions and net generation for units that d o not report unit

level values

Response 59: The EPA disagrees that this methodology is inappropriate for dealing with missing data. Holding all else equal, generation levels do typically track with generation capacity for the given units at a plant. Moreover, because the data is aggregated to the regional level, the unit

level apportionment has no impact on the sub category

- 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 subset are excluded. Moreover, while the apportionment of plant

- data may not match unit

- level non

- reported data, the EPA believes it is a reasonable approach using the best availa ble data that does not introduce any bias into the sub category

- specific rates that are informed at the regional level

. EPA is using the best available data, and making reasonable assumptions where necessary. Furthermore, EGUs have the ability

to comment on their covered unit status, and EPA can also compare the inventory of resulting likely affected EGUs to sources that are covered under 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:

Commenter s stated EPA's attempt, to deal with missing data is inappropriate. The commenter s said for calculating a unit's applicability and state emission rate goals, the Agency used data submitted to EPA and EIA. The commenter s said for units that reported to EPA under 40 C.F.R. Part 75, reported CO2 emissions were used; if a unit did not repor t CO2 emissions under 40 CFR Part 75, then the reported fuel use from the EIA

- 923 dataset and the reported emission factors under EPA's "Inventory of U.S. Greenhouse Gas Emissions and Sinks of the Climate Registry Default Emission Factors" were used to cal culate CO2 emissions. The commenter s said if no unit

- level fuel use was reported in the EIA

- 923 dataset, but the prime mover fuel data existed and more than one unit at a plant had the same prime mover, then the prime mover fuel level emissions were distri buted to each generator in the prime mover proportionally by nameplate capacity. The commenter s said this exercise is arbitrary and may inadvertently include units that do not meet EPA's proposed applicability criteria.

Commenter s added EPA completed a si milar exercise for 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 more than one unit at a plant had the same prime mover, then pr ime mover fuel level net generation was distributed to each generator in the prime mover proportionally by nameplate capacity. The commenter s said this is an arbitrary exercise by EPA that could have unintended consequences.

Comment 60: If the EPA uses a savings percentage of sales from energy efficiency, it should be based on estimated actual electricity sales299 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 speci fic public comments under this comment:

Commenter s stated if EPA uses a savings percentage of sales from energy efficiency, it should be based on estimated actual electricity sales. The commenter s said the draft rule estimates potential energy savings in t he target years and uses that to adjust an emissions rate that is based on 2012 generation levels; the savings potential estimate starts from a BAU sales estimate that is based on 2012 actual sales and estimated growth from the AEO 2013 Reference Case (GHG Abatement Measures TSD, 5

- 40). The commenter s said the incremental savings are calculated by taking a percentage of BAU sales minus net cumulative savings ("sales after net EE" on p. 5

- 41); but as the draft rule recognizes elsewhere, the AEO projections i mplicitly incorporate some savings that states are achieving that would qualify under this rule. The commenter s said those savings are being double

- counted in the sales after net EE, decreasing the estimated sales and thus decreasing the estimated savings potential. The commenter s 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 multiplies by 2012 sales (p. 5

- 43 and Goal Computation TS D, p. 17); however, the savings potential is initially calculated based on an incremental savings percentage of actual sales after the savings. The commenter s said the cumulative savings percentage should be calculated using the same denominator, sales aft er net EE. The commenter s said in South Carolina, for example, in 2029 the potential savings are 10.2% of BAU sales but 11.4% of sales after net EE; using percentage of actual sales, the target rate would be 763 rather than 772. The commenter s said the sta te rate calculations 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 including BB

- 4 in its quantification of final BSER.

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

Commenter s stated the sales for Lower Valley Energy Inc. should be excluded because the energy efficiency achieved by LVE was reported by the Bonneville Power Authority, following instructions for EIA Form 861: "...Federal Power Marketing Administrations should coor dinate with the reporting of DSM information with their power purchasing utilities to avoid double counting the effects and costs of DSM programs." The commenter s said BPA confirmed to LVE that "BPA Energy Efficiency already reports all reportable savings (both utility and BPA implemented) to the Power Business Line which in turn is reported to EIA." The commenter s 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.300 The commenter s said where efficiency effects have been reported by an entity other than a utility listed for Wyoming, the goal calculation should not include related Wyoming sales.

Commenter s 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's Campbell County service territory, which will in turn make customary energy efficiency programs infeasible. The c ommenter s said the company's service territory includes eight of the ten largest coal mines in the United States, collectively responsible for over 336 million short tons of coal in 2012. The commenter s provided information about a recent study considering the impact of section 111(d).

Commenter s added Basin Electric Power Cooperative (Basin Electric) is one of the largest electric generation and transmission (G&T) cooperatives in the United States; it is not a local distribution company, and Commission sta ff confirmed that the only transactions with its two customers in 2012 were wholesale. The commenter s said Willwood Light & Power is a local distribution company which reported sales of its own on Form 861S, so it would be double counting to include the sa les to Willwood under Basin's auspices. The commenter s said F.E. Warren Air Force Base is a federal military installation over which the state exercises no economic regulatory control; Basin's sales to F. E. Warren Air Force Base ended in 2013.

Commenter s added the entry labeled Adjustment is actually an assortment of fourteen entities (nine municipal, four cooperative, and one political subdivision) small enough to file an EIA Form 861S, which is a short version of the Form 861. The commenter s said Form 86 1S does not require quantities for energy efficiency; all of these entities were individually listed by EIA in 2011. The commenter s said as an example of scale, in 2011 Midvale Irrigation District had total revenues of $3700 and six customers; Southeast El ectric Coop is actually a Montana coop with 10 Wyoming customers; Willwood Light & Power Company had 49 customers, all residential; the largest of the other entities is the Wheatland Rural Electric Association, with 3,717 customers; only four other entitie s had more than a thousand customers. The commenter s said if these entities are too small to have to quantify energy efficiency, they should be too small to be included in the basis for the state target; doing so would take the EPA too far into the depths of rural America, and subject the entities to administrative 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 in its TSD on St ate Plan Considerations.

Commenter s added if these exclusions are made, the cornerstone for intrastate sales is 13,282,366 MWh; adding back 24 gigawatts, the Business As Usual case for Wyoming would be 13,306,366 MWh.; the calculated cumulative savings sh ould be counted against this reduced base.

Commenter s 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 com menter s said for Wisconsin, the data file on state goal calculation301 accompanying the original proposal listed this number 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

commenter s said EPA should correct this discrepancy.

Commenter s stated for EE, the TSD states the EPA used a growth factor for electricity sales obtained from the Average Annual Growth Rate from AEO 2013 NERC Region. The

commenter s said for SERC this value is stated to be 1. 10%; however, in the EPA spreadsheet a value of 1.10184% was used. The commenter s said this discrepancy becomes significant over the long time period of this building block. The commenter s added, the spreadsheet also changed this growth factor from 1.01101 8 to 1.011218 in the year 2041.

Comment 62: Wholesale electricity from multi

- use water projects; exclude

Response 62: 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:

Commenter s stated the Western Area Power Administration (WAPA) is one of four power marketing administrations within the U.S. Department 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, cities and towns, rural electric cooperatives, public utility districts, irrigation districts and Native American tribes. The commenter s said they, in

turn , provide retail electric service to consumers in the West. The commenter s said as a federal agency over which the state exercises no control, it should be excluded from setting the state's goal for energy efficiency.

Comment 63: The EPA Should Use a Syst em

- Wide Emissions Rate to Set Emissions Rate Targets.

Response 63: See preamble section V for an explanation of the mitigation measures quantified as BSER, section VI for an explanation of the metric of the BSER quantification, and section IV.D for an exp lanation of affected units. The EPA understands the commenter s ’ suggestion, but as explained in the aforementioned sections , the EPA is only quantifying BSER for likely affected 111(d) sources ( including replacement generation for those sources). Additio nally, while not subject, the sub category performance rates , state goals, and mass equivalents do create

an additional incentive for non

- affected zero emitting generation to stay on line as they become more competitive relative to the affected fossil sources 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:302 Commenter s stated within th e framework of EPA's current proposal, the most straightforward solution is for the Agency to calculate state emissions targets by counting in the denominator of the rate not only all of a state's existing fossil fuel generation and existing renewable gene ration, but also all of its existing nuclear and hydropower generation.

Commenter s stated use of such a "system

- wide" emissions rate is consistent with EPA's approach to defining the "best system of emission reduction," as required by statute; under EPA's rationale, because the statute uses the term "system of emissions reduction," it is appropriate to consider emissions reduction opportunities from all parts of the electricity supply and delivery system. The commenter s said EPA also recognizes that "elect ricity production ...takes place interchangeably between and among multiple generation facilities and different types of generation;" for that reason, EPA has included non

- emitting resources in calculating initial emissions rates and rate targets. The comm enter s said 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 rates.

Commenter s stated adopting a true system

- wide ra te 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

- f ree generation that has been lost. The commenter s said because each nuclear facility is so large, a state could not easily replace the lost nuclear generation with other carbon

free resources in the short term, to compensate for the increase in the calcula ted emissions rate; therefore, a state would have reason to prevent the premature retirement of any of its nuclear generation.

Commenter s stated using a system

- wide rate to set goals would require states eventually to replace existing nuclear units with a n equal amount of new zero

- emissions generation (or energy efficiency) once those units have reached the end of their useful lives in the coming decades; while it may be challenging for states to do so today, inclusion would give states and industry incent ives to speed development of new carbon

- free generation technologies.

Commenter s stated adopting a technology

- forcing standard is entirely consistent with the Clean Air Act and its legislative history; in proposing the 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 under section 111 were intended to be technology

- forcing. The commenter s said that intent applies equally to standa rds for existing sources; both section 111(b) and section 111(d) direct EPA to adopt a "standard of performance," a term defined in section 111(a) to reflect the application of the "best system of emission reduction." The commenter s said as the D.C. Circui t has held, section 111(a)'s "mandated balancing of cost, energy, and nonair quality health and environmental factors embraces consideration of technological innovation as part of that balance. The statutory factors which EPA must weigh are broadly defined and include within their ambit subfactors such as technological innovation."303 Commenter s stated the electricity industry can meet the challenge, in coming decades, of replacing nuclear units that have reached the end of 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 demonstrated, proven technology for gener ating zero

carbon electricity. Certainly, it is technically feasible to replace units that have reached the end of their remaining useful life with new units. As EPA notes, five nuclear EGUs at three plants presently are under construction: Vogtle in Georg ia, 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 a nd implements such innovations, and the Nuclear Regulatory Commission will soon receive applications to extend licenses for a fourth twenty

- year term.

- Next

- generation nuclear technology. The nuclear industry is currently developing modular small and medi um size nuclear reactors that could significantly 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 r egulated markets, and when the technology is proven, applied more broadly. The International Atomic Energy Agency has also identified developments in fast 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 Some involve the capture and purification of CO2 emissions to compress the CO2 to a super

- critical liquid that can then be reused in industrial processes or injected into geologic formations for long term, permanent sequestration and removal from the atmosphere. In 2009, Pennsylvania examined establishing a network of geologic sequestrat ion sites in the Commonwealth and found it feasible.116 However, in the absence of market incentives for carbon emissions reduction 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 from long

- term carbon sinks.

- CCS from NGCCs. CO2 capture from NGCCs for reuse or sequestration will be feasible within the next decade, so that retiring nuclear plants could 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 technol ogy at a site in Texas, using supercritical CO2 as a working fluid to drive a combustion turbine and ultimately to produce pipeline

- quality CO2 that can be sequestered or used in industrial processes. The developer is working toward commissioning the plant in 2016.304 - Improved solar generation. Photovoltaic solar is becoming dramatically less costly. There have also been new developments in utility

- scale thermal projects that can deliver solar

- generated electricity with increasing reliability. For example, th e 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 when the sun is no longer shining to achieve a 40 percent capacity factor.11 9 The price for Solana's power falls within the range EPA has determined is cost

- effective. Moreover, new technologies such as solar shingles and solar films are allowing increasing use of distributed solar generation 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 generate electricity, they will allow greater and more efficient use of intermittent t echnologies such as wind and solar. Fuel cell technologies will also permit more efficient production of electricity from natural gas during periods of time that renewable generation is unavailable.

- Smart Grids and improved techniques for distributed gen eration. These innovations in electricity distribution allow demand to be matched more closely with supply of electricity, allowing intermittent renewable resources to be integrated efficiently, electric vehicles to provide grid balancing services, demand response to reduce electricity consumption at peak times in the most efficient manner, and transmission losses to be reduced through distributed generation.

The commenter s said these emerging technologies hold great promise in reducing the carbon intensity of our electricity system; their advancement would be strongly encouraged by a Clean Power Plan that requires states to build on the emissions reductions they have already achieved, and that prohibits states from backsliding and increasing CO2 emissions f rom historical levels. The commenter s said indeed, historically, environmental regulation has been a strong driver of innovation in the power sector; moreover, environmental regulations have consistently cost substantially less to implement than EPA or ind ustry originally estimated; thus, the prospect that existing nuclear units will eventually retire should not be a justification for failing to consider the full effect of that generation in setting state goals.

Commenter s said including nuclear (or hydrop ower) units in setting emissions rate targets need not negatively affect a state if a nuclear (or hydropower) facility were forced to retire unexpectedly for reasons beyond reasonable control

- for example, due to an unexpected equipment failure (or, for h ydropower, a prolonged drought); in that circumstance, EPA's regulations implementing section 111(d) provide a mechanism for a state to amend its plan to provide a different pathway for achieving compliance. The commenter s said the general regulations expl icitly allow for the possibility that a state plan or revision may, under certain circumstances, provide for a longer compliance period or establish less stringent emission standards, at least for a time; specifically, a state may provide for longer compli ance schedules or the application of less stringent emissions standards if the state demonstrates with respect to a facility or class of facilities that costs of control are unreasonable because of "plant age, location,305 or basic process design," installing necessary control 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 commenter s said such plan submissions wo uld 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 interpreted to authorize a rev ision of system

based 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 of measures that increase transmission and distribution (T&D) efficiency or reduce electricity use. It allows that the verified and quantified MWhs of avoided losses or reduction in end use electricity that result from T&D measures to be used to adjust a CO2 emission rate. For more information on the accounting approach for adjusting a CO2 emission rate and specifics on eligible transmission and distribution measures, see Section VIII.K. For more detail on the requirements and criteria for proper quantification and verification of MWhs, see Secti on VIII.K.

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

Commenters said that the EPA should increase line loss credit from 5 percent to 6 percent to be consistent with the EIA which says that the national average transmis sion and distribution line loss is 6 percent. Secondly, commenter s said, it is very important that the EPA bring clarity to the applicability of the line loss credit. Commenter s said that it appears that the credit is only applicable to CHP systems that ar e directly affected by the CPP. Commenter s urged the EPA to emphasize the benefits of distributed energy in reducing transmission and distribution costs and increasing reliability to states and extend the 6 percent credit to both affected units and non

aff ected units.

Commenter s said that the proposed 5 % line loss credit 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 to l ine losses of 7% or higher. Commenter s stated that several studies have found that line losses are far greater during peak hours. For example, commenter s said, in 2011 the Regulatory Assistance Project found that a grid segment or area with average line lo sses of 7 percent could have marginal line losses of 20 percent during peak load, and other studies have shown that one MWh of local generation can displace up to 1.47 MWh of central generation. To reflect the actual energy benefit of distributed generatio n,
commenter s said that the EPA should provide a 7.5% credit to distributed generation. Commenter s added that the EPA should consider increasing the credit for distributed baseload generation operating during peak hours, because this would encourage the de ployment of CHP Systems that can provide reliable peak baseload power to off

- set baseload coal plant closings.306 Commenter s stated that because the proposed rule only addresses line loss credit in the context of affected units, the Final Rule should make it clear that a similar line

- loss credit should be credited to generation from unaffected units. Commenter s said that selling industrial CHP/WHP carbon credits, should apply against potential future industrial GHG reduction obligations. Commenter s urged the EPA and states to recognize that when an industrial company sells its energy efficiency

- based GHG reduction, it simultaneously reduces its own GHG baseline. If the company is ever regulated on GHG emissions, commenter s said that early reduction must be

cre dited to any GHG emission reduction required under any such future regulation. Commenter s also urged that when comparing CHP emissions to affected EGUs, that you not compare it to a regional rate, but instead, compare it to a more realistic estimate of the GHG reduction in dispatch of base load/intermediate/peaking (coal and gas), plus credit for avoided transmission and distribution losses.

Commenter s said that the EPA should provide a full

- line loss credit rather than the proposed modest 5 percent line l oss 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 the rmal output are factored into the unit’s adjusted emission rate. For non

- affected units, however, the final rule calls for the use of the avoided emissions method to calculate the qualifying ERC generated. For more information regarding crediting of CHP, see Section VIII.K.

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

Commenter s said that the EPA should provide a full 100 percent thermal credit. Commenter s stated that avoided transmission and distribution losses associate d with CHP are significantly larger, and the rule needs to fully credit these savings. Commenters said that b y installing CHP systems manufacturers reduce emissions throughout the air shed, but since they are now producing electricity on site, their own em issions may modestly increase. Commenter s concluded that these facilities need to have assurances that actions that they take now will not subject them to more demanding requirements down the road.

Commenter s stated that the ability to obtain air permits is a major determinant as to whether industrial CHP units are built. Commenter s noted that industrial companies' primary business is making manufacturing products, not electricity. As such, and given that air permits are getting harder to get, commenter s said that building a CHP unit and any resulting increase in emissions (albeit less emission per MWH than regional EGUs) can be a significant challenge to a manufacturing company. Commenters said that the EPA sh ould provide a full thermal credit (100%) for CHP units instead of only 75 percent of the useful thermal output as proposed.307 Commenter s described the different approaches have been used in federal and state regulations and guidance documents to account for the efficiency benefits of the thermal output of a CHP system: equivalence approach and avoided emissions approach. Commenter s said that the EPA should provide full thermal credit for affected CHP units when using the equivalence approach. While the avoid ed emissions approach is arguably a more accurate reflection of the emissions benefits of CHP, commenter s said that many stakeholders believe the equivalence approach could be simpler to implement.

Commenters noted that the EPA has historically applied 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 T urbines. Commenters added that a 100% credit has likewise been applied in several states that have used the equivalence approach in state regulations. Commenter s stated that the actual comparison between the equivalence and avoided emissions approaches is site specific and depends on the overall 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 appropri ate under the Clean Power Plan. Commenter s stated that, as compared to the 75% credit in the proposed rule, for typical CHP systems, a 100% thermal credit results in an effective emissions rate for CO2 that more closely approximates the emissions rate dete rmined by the avoided emissions method. So long as the rule includes monitoring and a minimum thermal output requirement (to protect against "sham" CHP projects), commenter s recommended that 100% of the thermal output be recognized under 111(d) as well. Co mmenter s 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. Commenter s stated that providin g 100 percent of the thermal credit will help the economic viability of the CHP unit be financed and constructed. Commenter s agreed that a higher credit for thermal output will encourage the development of more CHP facilities consistent with the president' s goals. Commenter s supported the EPA's proposal to allow credit for 75% of the useful thermal output of CHP systems that qualify as EGUs. Commenters also stated that f or unaffected CHP units, they recommended that the EPA allow both CHP and WHP to be elig ible compliance methods, WHP under Block 3 and CHP under Block 4 in states that choose the emissions rate approach.

Commenter s said that the EPA should establish that WHP can contribute to CO 2 savings under Building Block 3, Alternative Power Generation. C ommenter s noted that 15 of the existing Renewable Portfolio Standards define WHP as a renewable resource. For the purposes of the 111 (d) rule, WHP is unequivocally a type of power generation, commenter s said, and while it does increase the energy productiv ity of an industrial process, its purpose is to generate emission

- free electricity. Commenter s added that the 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 Comm enters stated that relative to heat rate improvement opportunities 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 indicated that the carbon reduct ion benefits of such improvements were determined to be "relatively small." Commenters noted that this analysis did not include a robust analysis of heat rate improvements considering improvements not only in electricity output but also thermal energy outp ut in 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 affected EGUs, with heat distributed to buildings and industry via highl y efficient district heating systems. Commenters urged the EPA to include in BSER heat rate improvements achievable through conversion to CHP or expansion of CHP operations in all affected EGUs including oil/gas steam 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 clarity. Commenters asked : When is a CHP facility considered "covered"? If this is determined by sales criteria, at wh at date is the determination made? Can this determination change? If so, under what criteria?

Comment 6 6 : Tribes & Territories

- Use of imports in target emission rates

Response 6 6 : For the EPA’s response to this comment, see section VII I of the preamble

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

Commenter s stated in regards to the supplemental proposal since importing states have minimal formal influence on the energy policies of Canada or its provinc es, we do not recommend that the potential for increasing imports be factored into states' target emission rates, regardless of how imports are treated for compliance purposes in the final rule.

Comment 6 7 : Tribes & Territories

- Data

Response 6 7 : The EP A appreciates the information regarding emissions data, f or 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 informing EPA baseline.

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

Commenter s stated in regards to the tribal and territories supplementary rule Navajo Mine and FCPP has been burning bituminous coal instead of sub

- bituminous resultin g in higher output of carbon pollution; FCPP leaking emissions before releasing 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 to 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 BSER and building blocks.

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

Commenter s 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 transition to cleaner energy that is already happening. C ommenters said, over 178 coal power plants are slated for retirement. Commenters said, the trend of coal power plant retirement decreased carbon pollution significantly ahead of the 2012 baseline year. Commenters said, with low renewable energy prices, thi s 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 into the final CPP rule as explained in Se ction s V and VI of the p reamble. BB4 and nuclear generation are not included as part of BSER as explained in Section V of the p reamble.

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

Commenter s stated EPA lacks authority t o regulate existing 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 commenter s said although these flaws alone require the withdrawal of the C PP, there are additional technical and legal problems with each of the310 Building Blocks that EPA has proposed to use in setting state CO2 emissions targets. The

commenter s said these problems include faulty Building Block assumptions and major inconsistenci es in the application of those assumptions in setting the goals among the states; as a result, in addition to being illegal from a statutory perspective, EPA's proposed approach to setting state goals is also arbitrary, capricious, and unreasonable and the refore provides further compelling grounds for EPA withdrawal of the proposed rule.

Commenter s stated the BSER and goal

- setting formula should be modified.

Commenter s stated EPA bases its proposal on flawed information and assumptions for the four building blocks that are used to calculate each state's emissions target.

Comment 3: Data errors in goal calculation

Response 3: See Appendix 1 for the unit

- level 2012 data use d in the final CPP rule. This data reflects capacity changes for Mankato Energy, Pu eblo 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 several facilities, including Washington Parish and Perryville

, based on c omment.

Based on comments, the EPA has re

- categorized units that commenced operation in 2012 as “under construction” and assumed an annual generation value for them reflective of typical operation of new units in that technology class. Moreover, we also reviewed under construction

sources

– adding and removing some units from it s inventory 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 EPA 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 set instead of a projected year data set that forecasted different generat ion levels based on retir e ments. A significant number of commenters supported the EPA not factoring in announced retirements 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

commenter s ’ note that this does not affect system

- wide 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 to address the concern raised by commenter s as the summertime capacity is significantly lower than nameplate.

The EPA reviewed technical corrections submitted by Colorado EGUs an d made changes where appropriate.

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

Commenter s said there are data errors in EPA's goal calculation methodology

.

Commenter s identified one case where EPA used generation data for only two months when the plant actually had operated for 11 months.

Commenter s identified another case where EPA attributed emissions from a co

- located steam unit to an NGCC.

Commenter s stated EPA a lso included non

- NGCC units and other non

- affected sources in its analysis.

Commenter s stated that Arizona's Department of Environmental Quality (DEQ) already has informed EPA that the state will not be able to rely on fuel switching to meet its 2020 inte rim goal because there is no available NGCC capacity in the summer months, which will hamper its ability to meet the 2030 target.

Commenter s stated that Louisiana's environmental regulator has noted concern about EPA's data regarding NGCCs in the state, s uch as the inclusion of a plant that has not even been permitted.

Commenter s stated that Alabama's environmental regulator also has expressed concern about the EPA's general approach to reducing emissions from existing sources.

Commenter s 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 tha t states cannot require from non

- affected EGUs.

Commenter s added Colorado encourages EPA to review technical corrections submitted by Colorado EGUs, including Black Hills Energy and Public Service Company of Colorado; it appears that several units may hav e erroneously been included or excluded within the proposed rule.

Commenter s found numerous instances of incorrect data and assumptions; the

commenter s submit ted that the errors in EPA's modeling and analysis are further proof that states312 are in the best p osition to oversee utility resource planning. The commenter s request ed the technical flaws be remedied in the final rule.

Commenter s stated in the Goal Computation Technical Support Document, EPA states that all NGCC units under construction that were inc luded 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 commenter s said LADWP's Scattergood 3 repowering 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.

Commenter s stated the EPA has misapplied the data available; for Cane Island, the station

- wide analysis may be appropriate, however, the net generation from each of the three NGCC on

- site were apportioned based on nameplate capacity alone

- giving each the same capa city factor. The

commenter s 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 commenter s said fo r 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 Cap acity" so as to not penalize the redispatching calculation under Building Block 2. The commenter s 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).

Commenter s stated the consequences of EPA's overreach are compounded by the technical errors and fundamentally flawed assumptions embedded in EPA's emission rate goal calculations. The

commenter s said EPA failed to con sider constraints on (1) EGUs' abilities to achieve and sustain heat rate improvements, (2) redispatch from existing coal

- fired EGUs to natural gas combined cycle units (NGCC), and (3) exponentially increasing investments in renewable generation and
energy efficiency measures. The commenter s 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 commenter s encoura ges EPA to amend the Proposed Rule based on emission reductions to measures that can be undertaken at affected sources and allow states to comply through a portfolio of measures; failing this, it is imperative that EPA make changes to the Proposed Rule to address the most severe consequences of the rule.

Commenter s stated in the TSD

- GHG Abatement Measures (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 13.4%. The commenter s are requesting that EPA's recalculation of the "Annual Regional Growth Factor'' correction is applied consistently in the final rule making.313 Commenter s stated In Table 4

- 8 of the TSD

- GHG Abatement Measures, the interi m target for NC is given as 7%; however from the spreadsheets the value should be 6.4%.

Commenter s stated throughout the CPP, EPA makes calculation errors that directly impact the proposed goals; for example, substantially more natural gas generation will be required to meet the CPP's goals than EPA estimates. The commenter s said EPA's calculations assume a 400 TWh/year shift to existing NGCC generation from coal (376 TWh/year) and older oil

- gas steam (64 TWh/year) units; EPA estimates that the NGCC market will increase from 29 percent of the country's energy in 2013 to 33

- 34 percent of the nation's energy from 2020

- 2030. The

commenter s said for NGCC to be 35 percent of the country'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 commenter s said with these miscalculations underestimating needed NGCC, EPA's CPP also underestimates the necessary substantial investment in NGCC.

Commenter s stated that they believe EPA should corre ct unit level NGCC inaccuracies. The

commenter s stated that "in Colorado the Brush 1

- 3 "GT2" unit was erroneously included while the Brush 4 "GT4" and "GT5" units erroneously excluded." This would result in a net increase in NGCC capacity of 25MW. Commente r s 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 construction" unit. The Pueblo Airport facility with 200MW was online in 2012. Commenter s also believe d 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.

Commen ter s supported comments by LDEQ on several data errors that impact the rate

- base calculation for Louisiana. Commenter s stated that EPA excluded two NGCC units that are "under construction" at Ninemile Point Electric Generating Plant which would add 559 MW of net summer capacity and a new NGCC unit at the Morgan City Power Plant which would add 64.5MW of net summer capacit y. Commenter s 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. Commenter s also said that 4 units at Entergy Gulf States Louisiana shou ld be removed since 3 are boilers and one does not meet the EGU definition. Commenter s further stated that Unit 2

- 1 at Perryville Power Station is a simple cycle and should not be included. Commenter s included a table that showed the impact of these correc tions and said that Louisiana's baseline emissions rate changes 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 requires reductions from other regulator y initiatives. The EPA does base BSER of an inventory of likely affected units that reflect, indirectly, the power grid and its re s ponse to those policies by that point in time. Although expected CO2 reductions occurring as a result of other regulatory pr ograms are not part of BSER, to the extent that they occur, they represent on

- the

- way reductions that will help314 sources/states meet their CPP compliance obligations and possible serve as a substitute mitigation measures for other reduction alternatives.

Th e 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 existing at

- risk nuclear. This was intended to give stakeholders a sense of th e state

- level starting position relevant to their final goal. The data for this rate is found in the Proposed Appendix 1 to the Goal Computation TSD. This TSD (available online and in the docket) has the existing fossil sources provided in column B throu gh 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 these totals to get at

- risk nuclear values. The existing RE values are in a different spreadsheet available o n the website and in the docket titled Data File: Proposed Renewable Energy (RE) Approach. Although the EPA disagrees with the commenter s’ assertion s that these values were not available at proposal, it also points out that these metrics are not germane t o the final CPP rule quantification of BSER as explained in Section V of the final rule preamble.

All underlying data necessary to recreate the sub category

- specific performance rates and the state goals is available in the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule.

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

Commenter s stated with regard to calculating EE for Building Block 4, the

commenter s request ed that U.S. EPA provide a more detailed e xplanation of its calculations. The

commenter s said some states calculate energy efficiencies differently than others and in order for each state to get equal credit for various energy efficiency measures; a standard methodology needs to be set by U.S. EPA . The commenter s said for instance, the same LED light bulb replacement is credited differently under Michigan's RPS than under Indiana's renewable portfolio goal. The commenter s 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 commenter s also request ed that U.S. EPA pro vide detailed spreadsheets that contain formulas, rather than hard numbers, in order for states to have the opportunity to understand just how the EE calculations would work going forward, particularly for the calculations used in Building Blocks 3 and 4.

Commenter s 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 commenter s said on June 30, 2014, the news website Climate Central published an articl e by journalist Bobby Magill entitled "Basis for EPA Clean Power Plan Cuts a 'Mystery'". The commenter s said the article contained many disturbing revelations, including:315 - "How the U.S. Environmental Protection Agency reached the Clean Power Plan's CO2

em issions reduction goal for each state is somewhat mysterious, experts say, with answers buried in a complex formula that doesn't clearly detail why each state would have to slash its carbon dioxide emissions to a certain level under the plan."

- "EPA offic ials did not answer questions about how the agency arrived at each state's CO2 emissions reduction goal. EPA Media Relations Director George Hull told Climate Central that EPA officials and scientists can speak to journalists about technical details of the plan only on 'background,' a practice of providing information that cannot be quoted directly or attributed to a specific source."

- "To explain how different states wound up with different 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 state

- level emission goals were created.

Commenter s asked if on pages 25 and 26 of the "Technical Support Document: Goal Computation" could EPA ex plain and provide the data for how column C (2012 Fossil, RE, NuclearAR) was calculated; the commenter s are trying to create the table in Appendix 5 using the "Technical Support Document: Goal Computation

- Appendix 1 and 2" (XLSX) file but

are unable to c alculate column C.

Commenter s stated EPA states that measures put into place before 2012 have been factored into each state's goal, but EPA's methodology is not transparent. The commenter s said EPA appears to rationalize this approach by explaining that th e 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 commenter s said although EPA explains that the values are meant to be illustrative rather than prescr iptive, it relies on those same values for determining state goals; moreover, the 2012 rates EPA relies on in the proposal in many cases no longer reflect current rates or emission reductions that will result in the near future due to existing programs or measures.

Commenter s stated EPA's proposed state goals should consider factors similar to those it analyzed in determining the economic impact of the proposed rules. The commenter s said the base case for EPA's regulatory impact analysis (which uses the In tegrated Planning Model ("IPM")) considers state rules that have been finalized and/or approved by a state's legislature or environmental agencies, as well as final federal rules. The commenter s said the model includes the CAIR and MATS, and other state an d federal regulations that contain measures, permits, or other air

- related limitations or requirements; additional legally binding and enforceable commitments for GHG reductions, as well as energy efficiency and renewable portfolio standard policies consid ered in the base case are discussed in the documentation for IPM. The

commenter s said these state and federal programs and policies are factored into the cost assumptions of the rule, but do not appear to be factored into each state's goal computation;

car bon reductions achieved pursuant to such programs, 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 betwee n units and generators were not able to be determined. E PA follow ed the methodolog y described in Appendix 9 of the CO2 Emission Performance Rate and Goal Computations Technical Support Document for CPP Final Rule . T he generator level net generation values were extracted from EIA

- 923 and the Part 75 reported emissions from Units 8 and 9 were apportioned to g enerators 7, 8, 8A, and 9 using net generation. I f apportionment result s in unit

- level discrepancies

, most discrepancies will cancel out at the facility and s tatewide levels , and any remaining discrepancies will be negligible. For the Muscatine Plant #1

, if the generator 7 emissions were redistributed to generators 8, 8A, and 9, the resulting increase to the s tate coal steam emission rate is insignifican t (less than 0.1 %).

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

Commenter s stated the calculated values for MP&W Units 7, 8, 8A, and 9 in the "Data File: 2012 Unit Level Data Using the EGRID Methodology" (2012 Unit Leve l Spreadsheet) are inconsistent with the methods presented in the "Description of 2012 Unit Level Data using the EGRID Methodology". The commenter s said MP&W staff discussions with EPA's staff indicate that "ratios" were used to apportion CO2 reported from CAMD for Unit 8 and Unit 9, according to the proportion of net generation relative to total generation reported for all the units on EIA Form 923. The commenter s said this approach does not match the above referenced method and does not accurately reflect the CO2 emissions from covered MP&W EGUs. The commenter s added, it arbitrarily assigns an emission value used for State goals to Unit 7, which is not a covered unit under the proposed rule. The commenter s request ed that EPA clarify the actual method and a ssociated rationale used for calculation of CO2 for MP&W EGUs. The

commenter s stated they understand that EPA considers the calculated emission values to be an "exercise" used to develop State goals but, because EPA uses these calculated emission values fr om the "exercise"" to quantify state goals, the numbers need to be reliable and accurate as the data will be relied upon when states move forward with 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 corresponding changes in emission rates) will be incremental to the baseline and help sources/states move tow ards compliance. Section VIII of the preamble explains how sources can incorporate CO2 reduction measures into state plans.

Both the change to quantifying the Best System of Emission Reductions described in section V and VI of the preamble along with the adjustment to the first year o f the interim period should address commenters concern regarding Boardman.

The following are summaries of the specific public comments under this comment:317 Commenter s request ed that EPA clarify how affected coal

- fired facilities retired before the complianc e period (pre

- 2020) will be treated in the compliance calculation. The commenter s stated it is important that coal

- fired facilities retired in 2015

- 2020 do not simply disappear from the equation, but are treated as an emissions reduction for the purposes o f state compliance; and that states will get credit for early coal retirements. The commenter s said Minnesota has already been on a path of early coal

- fired plant retirements through its IRP Process and have a list of coal

- fired affected facilities under 1 11(d) that have 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)

Commenter s stated that according to EPA's technical support documents, Xcel Energy's Black Dog units 3 and 4 units generated approximately 2,680,500 MWh's in 2012; these t wo units will be retired in April 2015. The commenter s request ed 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 carbon intensity of only those affected units remaining in operation during the 2020

- 2030 compliance period.

Commenter s stated PGE, state regulators and a group of diverse stakeholders agreed to an innovative plan in 2010 to cease coal use by December 31, 2020 at Oregon's only coal

- fired EGU (Boardman 2020 Plan); the Boardman Plant was not scheduled to cease operations until at least 2040, so the plan would retire Boardman at least twenty years before this would otherwise be expected to occur. The commenter s said as proposed, the Clean Power Plan would penalize Oregon for the timeline of that plan, which was developed 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 release of EPA's proposal. The commenter s said despite the fact that EPA approved the Boardman 2020 Plan, the Clean Power Plan's application of the BSER to Oregon creates an unreasonably stringent interim goal, due to the a ssumption that Boardman ceases burning coal one year before the current schedule. The commenter s said EPA should amend the Clean Power Plan to avoid penalizing 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 Commenter s stated under the EPA's proposal, North Carolina will reportedly be required to reduce the CO2 emissions rate of its electric generation fleet by 40%. The commenter s said the EPA's proposed rules are arbitrary and unfair to states like North Carolina who were early adopters for lowering power plant emissions and have made subsequent emission reduction investments. The commenter s said in 2002, North Carolina enacted The Clean Smokestacks Act in whi ch electric utilities were required to dramatically lower power plant emissions. The

commenter s support ed the use of a multi

- year baseline that gives more credit to states that have already been implementing significant emission reductions over the past fi ve years. The

commenter s 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

commenter s believe d that the remaining useful life of a state's generation assets should be given consideration in establishing goals for states. The commenter s said because generation investment decisions were made and rates were established upon reliance that such asset would operate through its useful l ife, any proposal that would force closure of generation plant before its useful life is reached places an unjust rate burden on consumers. The commenter s said it is patently unfair that the EPA does not take the aforementioned measures into consideration; thus will penalize North Carolina's utilities and ultimately ratepayers throughout the State. The

commenter s said the EPA's proposed standards will be harder to achieve and impossible to do without significant economic harm to North Carolina and other sta tes across the United States.

Comment 7: The credit for the retirement of existing fossil

- fired generating units should be substantial.

Response 7: Section VIII of the preamble provides details on incorporating CO2 emission reductions into state plans. The EPA has provided states more alternative metrics in this final rule such as a mass based state goal . If state s/sources feel that one measure better captures reductions through retirements, they have the flexibility to use that metric for compliance de monstration purposes.

The EPA believes that the flexibility provided for states to craft plans that are appropriate for their circumstances and emission reduction strategies fully recognizes the role that retirement of affected EGUs can play. Under a rate

- based plan, retirement of a higher

- emitting affected EGU will reduce the weighted average CO 2 emission rate of the remaining fleet of affected EGUs, helping a state to achieve its rate

- based CO 2 emission goal. States also have the alternative of implementi ng 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 affected EGU is a compliance option for the owner or operator of an affected EGU, as a retired affected EGU w ill 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 reduction measures that they accommodate, are discussed in section VIII of the preamble to the final rule.

The following are summaries of the specific public comments under this comment:319 Commenter s stated the proposed rule allows for states to demonstrate compliance with the state goals through either a rate

- based or a mass

- based approach; one difference between these two approaches is the way in which retired units are treated. The commenter s said under a mass

based approach, if future EGU retirements are not known, 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

- based conversion process). The commenter s said under a rate

- ba sed approach, because the retirement reduces both emissions and generation in the state, the credit for reducing the CO2 emissions is minimal.

Commenter s said because the proposed rule aims to reduce CO2 emissions and retiring older EGUs is one of the mos t 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 commenter s suggest ed 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 commenter s said one approach is to allow states to treat retired EGU generation similarly to the way that renewable energy is treated; under this approach, the historical generation from the retired EGU would remain in the denominator when determining compliance with the state goal after the unit is retired. The commenter s said an alternative approaches include: 1) allowing a per centage of the historical generation from retired units to remain in the denominator or 2) keeping historical generation in the denominator but reducing it by a percentage each year.

Commenter s added despite the CAA granting states explicit authority to do so, EPA's proposal unlawfully prohibits states from considering remaining useful life and other factors on a case

- by

case basis to adjust standards of performance for existing sources; for example, EPA fails to appropriately account for, at a minimum, the more than 70,000 MW worth of facilities that either have already been retired (i.e., since the 2012 baseline), 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 during the interim compliance period or shortly thereafter. The commenter s said the EPA's November 13, 2014 notice providing additional information regarding the conversion of emission rate

- based CO2 state targets to m ass

- based equivalents states is unlawful and severely distorted by EPA's failure to exclude capacity with limited remaining useful life. The commenter s said while it is certain that EPA has no authority to set statewide emission caps under 111(d), it is ev en more certain that EPA cannot approve state caps that are based on a methodology that fails to exclude, at a minimum, all of the aforementioned 70,000 plus MW of units either already retired (since 2012) or scheduled to be retired. The commenter s said by failing to exclude these units, EPA impermissibly has inflated the number of covered units and is requiring a significantly higher total amount of statewide emission reductions than are allowable under 111(d).

Commenters believe d the rule will not properl y credit coal plant retirements that are not replaced with new generation under a rate based compliance program. 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 c oal plants are removed from the emission 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 c ommenters said in order to properly reflect the benefits of coal plant retirements, these units should be treated as zero emitting units, whereby the associated megawatt hours are left in the denominator, similar to the way energy efficiency is treated in the rule.

Comment 8: Retirement assumption errors

Response 8: The EPA IPM model is not used directly in quantifying the Best System of Emission Reductions. It is a least

- cost linear programming model that EPA relies on for state, region, and system

- level impacts assessments. It does contain unit

- level “parsed” files as an illustrative example of how the p ower sector may comply with CPP. While unit

- level projections and real world compliance strategies can and will differ, this does not impact the EPA’s assessment as the single unit

- level projections 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:

Commenter s stated EPA has made assumptions on unit retirements that do not align with the

commenter s ' current plans. The commenter s said EPA has assumed a retirement year of 2016 for Hopkins Unit 1, a boiler and steam turbine that runs 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 T SD for CPP Final Rule

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

Commenter s stated when EGUs are retired the remaining units are necessary to provide voltage support. The commenter s said EPA should account for the gener ation of the volt

- ampere reactive power when determining the state

- specific goals by subtracting this generation from the goal computation. The commenter s added EPA should account for emissions from generating units that will be required to operate because of the transmission 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 exis t321 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 Ru le )

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

Commenter s stated Washington Parish Energy Center was first permitted on June 25, 2000; however, construction of the facility was never completed. The commenter s said on June 19, 2009, at the request of Calpine Corporation, LDEQ withdrew the facility's application for a Title V renewal, effectively rendering the existing permits for the facility null and void. The

commenter s said the facility remains unpermitted a s of today; therefore, Washington Parish Energy Center should be removed from EPA's computations.

Commenter s stated in calculating state goals and the related existing NGCC capacity, EPA included NGCC units that do not currently exist, units that have not yet been fully developed, and units that may never be completed. The commenter s said EPA should revise their calculations to accurately demonstrate generation capacity that is currently available.

Comment 11: The EPA's treatment of "under construction" u nits in the goal calculations should be revised.

Response 11: The EPA agrees with the commenters ’ assertion s 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 commenter s’ data (incorporating many of the below comments), EIA data, and NEEDs data and internet search of public statements on units . Per the

commenter s ’ 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 quantifying BSER. The EPA recogn izes that these are only likely affected units, and that their status may change pending follow through with construction completion and/or applicability determinations. Section VII of the preamble discuss potential changes to state goals resulting from in ventory changes. However, the EPA believes that by relying on comments and utility

- reported data to EIA, that it has a representative inventory of likely affected units and potential unit

- level reclassific ations would not result in a bias to its sub category rates or state goals.

EPA used best available data for which it could apply 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 repor ted by the sources themselves. Commenters suggested EPA may be missing more than twenty under construction sources by ignoring this data. EPA also examined commercial operation dates, scheduled month/year of start/operation, and information on constructi on start dates to further verify consistency with the reported EIA data. EPA also examined websites and news articles further verifying construction start. EPA recognizes that322 sources could potentially be cancelled, but we risked understating a state’s mass goal if we did not include units that were reporting as under construction and likely affected by 111 (d). Therefore, EPA felt that it was necessary t o include these sources in the inventory.

EPA believes this reflects an objective assessment of the i nventory using best available d ata. It does not constitute “cherry picking” as described by c ommenter s . Assuming that the BAU generation from these sources does not replace any operating 2012 generation levels from existing sources is an additional conse rvative measure.

Per commenters ’ suggestion, Dan River , Lee Combined Cycle , and Deer Creek un i ts (along with others ) have been reclassified to under construction 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 Tennessee’s state goal. Dresden is counted once in the calculation of sub category

- specific emission performance rates and state goals. The EPA did continue to i nclude units like Hansel in its 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 online in a compliance year. Moreover, we analyzed the impact of removing the four NGCC units identified as scheduled for retirement and deter mined that it has an insignific ant impact of the sub category

- specific emission performance

rates

. Upon review, the EPA did not consider the Texas Clean Energy Project would be a likely affected source under 111(d) and it is therefore not included in the ba seline inventory. Among other things, the EPA found the project’s website to announced construction to begin in summer of 2015 (well after the 1/08/14 cut

- off date for 111(d) sources ) . See http://www.texascleanenergyproject.com/project/ as displayed on J une 15, 2015. The EPA’s review of the reported status in EIA 860 also suggested 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 likely affected EGUs in its baseline. The building block potential from these units will be fully available and representative for the BSER time fram e of interest. EPA disagrees with the commenter that it should ignore the likely affected EGUs that were not commissioned in 2012. EPA’s cutoff for its baseline has been 1/08/14 to best reflect all likely affected EGUs.

EPA notes that these baseline adju stments always result in an increase in generation for states. This generally carries over to adjusted emissions as those are a product of the adjusted generation. The one exception on the emissions side is the sta te of Georgia. EPA’s treats the Jack M cDonough plant (units 5 and 6) “under construction

– commenced in 2012” based on its reported online year . In this case, the EPA methodology effectively assumes a 55% capacity factor for the unit, only up slightly from its 2012 value. However, for the und er construction323 units, EPA uses the state

- level average NGCC emission rate to estimate their emissions. EPA believes this is reasonable and conservative as most of the more new NGCC units can generally perform at levels equal to or better than the histori cal 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 i n the Geor gia baseline relative to the total reported in 2012 (e.g., 0.008 million tons). EPA determined that it was still appropriate to make the adjustment as the increase in generation assumed from the 55% capacity factor results in slightly higher mass goal for the state of Georgia. The small negative emissions 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 construction" units in the goal c alculations should be revised.

Commenter s added EPA has included NGCC units that are 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.

Commenter s added in calculating each state's goal, EPA assumes that NGCC units that were under construction in 2012 have available generating capacity that may be utilized to displace coal

- fired generation under Building Block 2; specifically, EPA assumes that each NGCC unit under construction will be completed and that it would operate at a 55 percent annual capacity factor under a "business as usual" scenario in the absence of the proposed emission guidelines. The commenter s stated this 55 percent annual capacity f actor reflects EPA's calculation of the "average performance of NGCCs that came online in the past 5 years," although EPA did not provide any data analysis to support that calculation. The commenter s 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 potential to meet other system needs presumed to have motivated the construction" of those units. The commenter s said accordingly, EPA assumes that an additional 15 percent of the under

- construction unit's nameplate capacity will remain available for re

- dispatch, bringing the unit to an overall annual capacity factor of 70 percent. The

commenter s added EPA should not rely on generating capacity from "under construction" units when applying Building Block 2 to calculate the proposed state goals; EPA has no basis to assume what generating capacity will be available for re

- d ispatch from NGCC units that had no operating history during or prior to the 2012 baseline year. The commenter s said EPA should exclude "under construction" NGCC units from its application of Building Block 2 for the purposes of calculating state goals; be cause 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 interim and final goals if they satisfy the relevant applica bility criteria.324 Commenter s added in setting state goals based on units that may never be completed, EPA distorts its assessment of achievable emission reductions.

Commenter s objects to the inclusion of "under construction" NGCC units in the goal setting calculations. The commenter s said these units were not operational in 2012, contributed no CO2 emissions, and produced no electricity; they are clearly not part of the "base year", nor does "under construction" guarantee or even suggest that these units wi ll be operational. The

commenter s find it very difficult to rationalize why 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 commenter s suggest ed that the hand

- 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 inclusion results in a further lowering of state goals, as
appears to be the case. The commenter s believe d that 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 (with 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 potential uncertainty in renewable and EE markets.

Commenters stated EPA should not include NGCC units u nder construction in the calculation of the state reduction targets, explaining that for purposes of BSER and developing the state targets under Building Block 2, the classification of these units with respect to NSPS is irrelevant. Commenters stated, sinc e these units were not operating during the baseline year, there is no regulatory or legal requirement for EPA to determine 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 available 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 utilities for un dertaking these projects whose operation is assumed in the state's baseline even though the plants have not yet commenced operation and disadvantages the states and the utility 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 into account the specific circumstances of these NGCC unit s to determine the expected extent to which those units can increase their utilization to displace higher

- emitting steam generating units. Commenters closed, stating that EPA's assumption that units built for the purpose of supplying base load generation w ill run at only 55 percent capacity factor significantly overestimates the contribution that these units can have in displacing CO2 emissions from existing steam generating units.

Commenter s added the structure of the intensity target itself appears to be a means to discount the effects of unit retirements, with no clear guidance provided to account for the significant

mass

- reductions already realized; if reduction of atmospheric 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 purposes 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 operating during the baseline year, there is no regulatory or legal require ment for EPA to determine 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 available for redispatch from NGCC units t hat had no operating history and no emissions during or prior to the 2012 baseline year, and the inclusion of these units in effect penalizes utilities for undertaking these projects whose operation is assumed in the state's baseline even though the plants have not yet commenced operation and disadvantages the states and the utility 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 NG CC units under construction in the calculation of state goals, commenters remarked, EPA should take into account the specific circumstances of these NGCC units to determine the expected extent to which those units can increase their utilization to displace higher

- emitting steam generating units. Commenters closed, stating that EPA's assumption that units built for the purpose of supplying base load generation will run at only 55 percent capacity factor significantly overestimates the contribution that these units can have in displacing CO2 emissions from existing steam generating units.

Multiple States

Commenter s added EPA has double counted some units in both the existing NGCC capacity and the "under construction" capacity and EPA has identified some uni ts as under construction that apparently do not exist. The commenter s said in the Goal Computation TSD, EPA indicated that all NGCC units under construction that were included 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 three other NGCC plants and one IGCC plant that were under construction: Dominion Brunswick plant (Virginia, 1,358 MW), Cheyenne Generating Station (Wyomin g, 220 MW), Cane Run plant (Kentucky, 640 MW), and the Kemper IGCC plant (Mississippi, 582 MW). The commenter s 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 plant s operating in 2012. The commenter s said EPA reports the 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 simple

- cycle gas turbines (GTs) that total 120 MW. The

c ommenter s said the Kemper IGCC plant should be removed from any NGCC under construction calculation because it is a coal plant. The commenter s said the fact that many of the units identified as "under construction" in California, Colorado, Florida, Mississ ippi, 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 this capacity in any goal setting methodology under Building Block 2. The commenter s said accor ding to NEEDS, North Carolina has 2,249 MW under construction, and EPA used this value in its Building Block 2; however, in evaluating EIA Form

- 860 data for North Carolina, the only facility that could be found that either was under construction or entered operation after 2012 was the 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 calculating North Carolina's goals. The

commenter s said it is possible that this excess "under 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 (nameplate capacity 1,759 MW, su mmer net capacity 1,540 MW) in its Building Block 2.

Commenter s added both the CPV Warren facility in Virginia and Cheyenne facility in Wyoming may have incorrect capacity levels assigned to them. The commenter s stated according to EIA
Form

- 860, CPV Warre n has an expected nameplate capacity of 1,329 MW compared to the NEEDS capacity of 572 MW; the Agency also reports the 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.

Commenter s added many of the units identified as "under construction" in California, Colorado, Florida, Mississippi, and North Carolina cannot be identified by name suggests that development of those units is uncertai n, and that it would be speculative for EPA to rely on those units becoming available for re

- dispatch.

Commenter s stated in terms of the NGCC capacity that EPA classified as "under construction" in the building block two calculations, EPA assumed that the se 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.

Commenter s s tated EPA determined that nine states had 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 "potent ial" units identified within EPA's NEEDS database and Integrated Planning Model. The commenter s said NEEDS describes potential units as follows: "Potential" units refer to new generating options used in IPM for capacity expansion projections of the electri c industry... whereas potential units are endogenous to the model in the sense that the model determines the location and size of all the potential units that end up in the final solution for a specific model run.

Commenter s stated these "potential" units are nothing more that phantom units that do not represent real projects that have been proposed, designed, permitted, or constructed; to the extent that these "potential" projects come to fruition, they would be subject to the new source327 standards under 1 11(b), not the existing source 111(d) guidelines; as such, these "potential" units should not be considered in building block two.

Commenter s stated for the remaining four states, the inaccurate inclusion of these units as "under construction" capacity is largely a result of the EPA incorrectly assessing the actual status of these units; for example, the one "under construction" facility identified by EPA for Ohio is the Dresden Plant that was actually commissioned in 2012 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.

Commenter s stated for Virginia, the data source used by EPA to determine that 1,928 MW of NGCC capacity is "under construction" ha s not been determined; EPA employed the NEEDS database to determine the under construction capacity in other states, but NEEDS lists only 570 MW of capacity related to a plant that has yet to receive an air permit or commenced construction. The commenter s said a separate review of the 2012 EIA860 report identified 2,801 MW of "proposed" NGCC capacity in Virginia, but only 1,472 MW of that capacity represents units that are known to have commenced construction. The commenter s stated EPA identified 220 MW of "under construction" capacity in Wyoming, which is associated with the Cheyenne Prairie Generating Station; this project includes both 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 process.

Commenter s stated the agency has not recognized other proposed NGCC projects that may fall into the under construction category; for example, a review of the spreadsheet tab marked "pr oposed" in the EIA860 report that has been referenced by EPA quickly identifies many potential NGCC projects that were simply ignored by EPA in building block two. The

commenter s said potential NGCC projects have been identified for over 20 states, which m ay meet the definition of "under construction" as currently defined in building block two.

Commenter s stated in determining the CO2 emissions associated with the redispatch of "under construction" capacity, EPA used either the average emission rate for ex isting NGCC units in the state, or a national average if the state did not have any existing units. The commenter s said based on the significant flaws in how the state average NGCC emission rates were calculated, EPA's approach for determining the future e missions from under construction units is inaccurate and inequitable. The commenter s said to highlight these differences, consider the emission rates that were assumed for the NGCC facilities that EPA alleges are "under construction," even though most of t hese examples are not actual projects.

Commenter s stated EPA must correct these errors in both the scope of "under construction" units considered and the assumptions for consistently estimating emissions from these units.

Florida (FL)328 Commenter s state d in building block 2, EPA not only includes existing NGCC capacity, but NGCC capacity under construction, as elements in setting a state goal. The commenter s added for example in Florida, the Proposed Rule included the Cape Canaveral NGCC (1,295 MW), whic h did not begin commercial operation until April 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. Commenter s added in Florida, the new construction capacity is incorrect and should include Cape Canaveral (1,210 MW) and Riviera NGCC (1,212 MW), which was expected to enter operation in June 2014.

Commenter s stated EPA did not make any adjustments for plants that have retired since 2012; for example, Kissimmee Utility Authority has retired the Roy B. Hansel Power Facility. The

commenter s said the EPA identifies this facility as an included NGCC with a total nameplate capacity of 55.0 MW. The commenter s said why 55. 0 MW for this unit was included is unknown, as even EPA's data suggests the unit is retired. The commenter s said the Florida DEP modified the facility's Title V Air Operation Permit No. 097001

- 011

- AV to have already expired as of September 30, 2012; this i nformation was available during EPA's preparation of the proposed rule, and evident in running eGRID and Part 75 data reports. The commenter s said if the EPA is going to use as a key building block redispatching to existing sources, they must reevaluate to ensure those sources are still in existence prior to suggesting that a state move generation to it and retire other plants that are still on

- line; furthermore, some facilities have physical or permitted operational restrictions (e.g. PSD avoidance limitat ions). The commenter s said the EPA must take into consideration these operational constraints on the feasibility of redispatching. As such, the commenter s request ed that 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 permitted operational restrictions, to more accurately identify NGCC availability. The commenter s said form EIA

- 860 also requires in Line 8 an estimate of whether the generato r will be retired in the next 10 years; these should also be taken into account and subtracted from the nameplate capacity. The commenter s added EPA should remove from the existing NGCC capacity and add to the under construction capacity the Cape Canaveral NGCC; this 1,295 MW unit had no operation in 2012, as it did not come online until April 24, 2013. The commenter s said it should instead be treated as an under construction NGCC. The commenter s said this lowers Florida's existing NGCC Capacity from 29,485 .1 MW to 28,190.1 MW.

North Carolina (NC)

Commenter s added according to NEEDS, North Carolina has 2,249 MW under construction and EPA used this value in its building block 2; however, in evaluating EIA Form

- 860 data for the state, the only facility tha t could be found that either was under construction or entered operation after 2012 was the L.V. Sutton NGCC (622 MW), which entered operation in November 2013. C ommenter s added this leaves 1,627 MW of unidentifiable generating capacity "under329 construction " that the Agency has included in calculating North Carolina's state goals. The

commenter s stated in the alternative, this excess "under construction" capacity may be the result of EPA double counting the existing Dan River and Lee Combined Cycle plants (n ameplate capacity of 1,759 MW or summer net capacity of 1,540 MW) in its building block 2. Commenter s added Duke Energy's Dan River NGCC plant started operating in December 2012 and Duke Energy's NGCC Lee facility started reporting 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 commenter s stated these units should more appropriately be credited as "under construction" units rather than as part of the baseline of fully operational units. The commenter s added EPA identified 2,249 MW of new NGCC under construction capacity when in fact only 625 MW of NGCC was under construction; that was Duke Energy's Sutton NGCC plant that was under construct ion but not yet operational by the end of 2012; it began operation in late 2013.

Commenter s stated EPA calculates North Carolina's 2012 under construction NGCC capacity as 2,249 MW; even disregarding the fact that 1,759 MW (H. F. Lee NGCC and Dan River NG CC) of NGCC capacity should be reclassified from existing to under construction, EPA's number of 2,249 MW is significantly over

- stated. The commenter s said besides those two units, the only

non

- operational NGCC unit to have received a Certificate 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 capacity had been identified, no CPCN applications had been filed, and no other filings had been m ade with the NCUC regarding specific NGCC capacity in North Carolina by December 31, 2012, including the IOUs' annual Integrated Resource Planning documents; thus, no other plant could have legally been under construction at the end of 2012. The commenter s said EPA has provided no documentation with respect to how it calculated its 2,249 MW under construction NGCC capacity. It is the

commenter s ' understanding that EPA's IPM modeling program 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 commenter s said this outcome was either the result of invalid inputs or an error within the model and its underlying assumptions. The commenter s said increasing North Carolina's NGCC under construction value by 1,624 MW when no such unit exists or was planned is arbitrary and erroneous. The commenter s said for these reasons, EPA's 2012 calculati on for "under construction" NGCC capacity in North Carolina should be corrected to 730 MW. The commenter s said after reclassifying the H. F. Lee NGCC capacity and Dan River NGCC capacity from "existing" to "under construction," the correct total 2012 "under construction" capacity for North Carolina should be 2,489 MW (nameplate) instead of the EPA's identifie d 2,249 MW.

Commenter s stated Building Block 2 of the EPA's CO2 emission rate goal calculation for North Carolina includes 2,249 MW of NGCC capacity under construction. The commenter s ha d traced this number back to the EPA's NEEDS v5.13 database; this value is in error. The commenter s 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 should be co nsidered under construction was the Duke Energy Sutton NGCC plant; this plant was under construction in 2012 and came on line in late 2013. The commenter s said there were no other NGCC units in North Carolina that meet the definition the EPA has establishe d for under construction units; that being '...anything that came on line in 2013 or that was under construction, site prep, or testing by January 8, 2014." The commenter s said this is confirmed by a review of open construction permits with the NC Departme nt of Environment and Natural Resources. The commenter s said the Sutton NGCC plant has a net summer capacity rating of 622 MW; the EPA should therefore eliminate the erroneous 1,627MW of NGCC under construction capacity for North Carolina.

Commenter s stat ed one of Duke Energy's newly constructed NGCC facilities in North Carolina entered service very late in 2012 (EPA's selected baseline year); net generation and CO2 emissions data for the Dan River NGCC facility were first reported to the EPA's Clean Air
M arkets Division (CAMD) in December 2012; the total 2012 operating time reported to CAMD for the Dan River NGCC facility in 2012 was less than 10 days. The commenter s said the facility appears in the eGRID database for 2012 with net energy output of 135,081 MWh; this translates to an annual capacity factor of 2.4 percent. The commenter s said despite this exceedingly low capacity factor due entirely to the fact that the facility was just beginning began operation in late 2012, the EPA took none of this into c onsideration 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.

Commenter s stated the Dan River facility was clearly more like an under c onstruction facility for 2012 than an existing facility. The commenter s recommend ed 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 constr uction units; 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

commenter s d id not believe that it was the EPA's intent to treat a facility like Dan River as an exist ing facility; treating the Dan River unit as an existing unit assigns generation for redispatch that is actually needed to meet generation obligations from the unit that was not reflected in the very limited partial year data. The commenter s said it is cle ar that under a business

- as

- usual scenario the Dan River facility was intended to operate at least at the 55 percent annual capacity factor the EPA assumed as the baseline capacity factor for under construction NGCC facilities. The commenter s believe d that the EPA must reclassify the Dan River facility as an under construction facility for purposes of applying Building Block 2 to the North Carolina goal calculation.

Commenter s stated a second Duke Energy NGCC facility located in North Carolina, the Lee NGC C 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 the North Carolina goal calculation. The

commenter s said the facility appears in the 2012 eGRID database with z ero net generation and emissions; there was also no data reported to CAMD for the Lee (Wayne County) NGCC facility in 2012. The commenter s said it is clear that the EPA erred in treating the Lee NGCC facility as331 an existing facility; the EPA must reclassif y the Lee NGCC facility in North Carolina to an under construction facility.

Commenter s stated using the summer net capacity ratings, the North Carolina new NGCC under construction input value should be composed of (1) Sutton NGCC at 622 net MW; (2) Lee
N GCC at 920 net MW; and (3) Dan River NGCC at 620 net MW, for a total of 2,162 net MW; this is very close to the original value of 2,249 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)

Commenter s added the Dresden Energy Facility (Ohio) is an existing unit and can be found in EPA's Plant Level TSD spreadsheet of plants operating in 2012. Theref ore EPA is double counting this facility.

South Dakota (SD)

Commenters stated in South Dakota, Deer Creek Station, 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" during 2012 because it did not go into commercial operation until late in 2012 and had only 190 total run hours for the year. The

commenter s stated while firing of the Deer Creek unit may have begun in April, it wa s not commercially operated for the bulk of the year; the 1 percent capacity factor is clearly unrepresentative, and South Dakota was the only state that had a less than 10 percent NGCC capacity factor applied in EPA's building block 2 calculation. The com menter s stated EPA's proposed methodology, as currently applied to South Dakota, produces flawed targets that the Agency should adjust. The commenter s 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 Dakota to re

- dispatch resources under building block 2. Th e commenter s stated this assumption is incorrect because Deer Creek Station and the Big Stone Plant operate in different RTOs; EPA should recalculate its proposed targets with these plants in their proper categories. Commenter s added the one coal

- fired pla nt, Big Stone is owned by Otter Tail Power Company, Montana

- Dakota Utility Resources Co., and NorthWestern Energy. The commenter s stated Deer Creek will be in the SPP as of October 2015, and Big Stone is in MISO; thus, for South Dakota at least, Building B lock 2, or any form of re

dispatch, is not available, because these two plants have different owners with no contractual relationship, and they are committed and dispatched by two separate entities with unique commitment and dispatch processes. The comment er s said 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 station service required by this upgrade

- estimated to be as much as 8 MW out of 475 MW

- will cancel out any heat rate improvements that the plant might achieve. (J. Edward Cichanowicz & Michael C. Hein, "Evaluation of Heat Rate Improving Techniques for Coal

- Fired Utility Boilers as a Response to Section 111(d) Mandates" at 2

- 7 (Oct. 13, 2014) (Attachment D) ("Cichanowicz Heat Rate Report").

Commenters have concerns about how EPA counted Basin Electric's combined cycle generation in South Dakota. The commenter s said the Deer Creek station was under construction for the major ity 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 the entire year. The commenter s said this is highly inaccurate and unfairly penalizes the State of South Dakota in de termining that state's emissions target. The commenter s said EPA needs to correct South Dakota's target to reflect that Deer Creek was under construction during 2012.

Tennessee (TN)

Commenter s added in calculating Tennessee's goal, EPA included TVA's Wa tts Bar Nuclear Unit 2, which is currently under construction; Tennessee cannot meet its state goal without this unit. The commenter s stated because of the many potential 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 state goal assumptions. The commenter s said if the Agency continues to assume completion of nuclear units in state goals, then it should allow for an off

- ramp or other adjustment if nuclear units are not completed or do not operate as expected.

Texas (TX)

Commenter s stated EPA's list of potent ially affected EGU facilities appears to omit the Texas Clean Energy Project (TCEP), a 400 MW integrated gasification combined cycle (IGCC) coal

fired power plant that began construction in June 2012. The commenter s said because TCEP began construction bef ore the January 8, 2014 applicability date, it should be included in the list of affected EGUs, and incorporated into Texas' state goal calculation. The commenter s said EPA should incorporate this under

- construction coal

- fired facility using reasonable ass umptions about how similar facilities operate on the grid at high efficiency levels without the use of carbon capture sequestration technology (CCS). The commenter s said EPA should assume that this new

state

- of

- the

- art IGCC facility will operate without CC S at an average 80% capacity factor and at an average emission rate of [1,450 lb. CO2/MWh] based on projected heat levels achievable for the facility. The commenter s said any emission reductions 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 federal plan. The commenter s said as it has done for other under

- construction EGUs, EPA should clarify 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 reductions 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 commenter s that we should include under construction affected EGUs in our BSER quantification for the final CPP (see res p onse 11)

. We have continued to do so, and a list o f units included that 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 appreciates the comment that some of these units are being built specifically to replace fossil steam sources. EPA discusses in section VI of the preamble the uncertainty in projecting which unit(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 determined 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:

Commenter s support ed the inclusion of under construction NGCC units in the goal setting calculation; under construction NGCC units will be cons idered "existing units" because they have commenced construction prior to January 8, 2014 (the date of the reproposed New Source Performance Standard for EGUs) and the emissions from these sources will have to be accounted for in a state's compliance plan under section 111(d).

Commenter s stated upon review of EPA's docket, it appears that EPA did not include several under construction NGCC units being built in New Jersey; over the past few years, permits have been issued to three new projects: 1) LS Power' s West Deptford facility, 2) Hess' Newark Energy Center, and 3) CPV's Woodbridge facility. The commenter s said EPA must work with states to ensure all under construction NGCCs are captured.

Commenter s added the emission rate for under construction NGCC un its for the goal setting calculation should be the New Source Performance Standard (i.e., 1,000 lbs/gross

- MWh for large NGCC units); this is because the state

- specific average 2012 emission rate for NGCC units may be below the permitted limit for under con struction units. The commenter s said for example, the average 2012 rate for NGCC units in New Jersey was 889 lbs CO2/MWh. The

commenter s 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; therefore, EPA must use the New Source Performance Standard for under construction NGCC units for the goal setting calculation.334 Commenter s stated EPA has assumed that under construction NGCC plants are being built mostly to meet new electricity demand. The commenter s said assuming those plants operate at 70 percent ca pacity factor, the agency assumes that a larger portion (a 55 percent capacity factor, meaning 79 percent of a new plant's generation) meets new demand, while the remaining 15 percent is available to displace existing fossil; however, this overestimates th e 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 deemed uneconomic due to age, lack of pollution controls, and cheaper alternatives.

Commenter s stated of the nine states with under construction NGCC units incorporated into the Building Block 2 target methodology, all except for California have significant planned coal generator retirements scheduled between 2012 and 2018. The commenter s said the total capa city of planned coal retirements in these states outweighs the capacity of under construction NGCC plants by nearly a factor of 2 to 1 (16,366 MW vs 8,938 MW). The commenter s 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 from coal units the utility is retiring at its Cane Run, Green River, and Tyrone facilities

.

Commenter s stated while it is difficult to precisely determine how much generation from new NGCC capacity will go toward displacing retiring coal, it is clear that the EPA's estimate is overly conservative. The commenter s recommend ed reversing the EPA's proposed allocation of generation from under construction NGCC units by allocating 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 p ercent unavailable) 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 quantification of BSER as they are likely affected EGUs under the 111(d) applicability requirements. The commenter s language on page 109 of comment ending in docket number 24030 suggests that it understands EPA’s intention to only reflect under construct ion 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 values assu med for Kemper to be consistent with its assumed generation and emission rate

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

Commenter s stated because the Mississippi Power Company 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 assumption may present compliance issues. The

commenter s said the state of Mississippi's interim and final goals are 732 and 692 CO2 lb/MWh

net, respectively, which are less than EPA's emission rate assumption of 800 CO2 lb/MWh

- net for Kemper County. The commenter s said if Kemper County were to operate above EPA's assumed capacity factor of 70 percent, then the state of Mississippi's complianc e with the proposed guidelines will be made more difficult. The commenter s hope d that EPA's intent was not to penalize or limit the operation of the nation's first IGCC facility with carbon capture and storage. The commenter s said rather than reward Missis sippi Power's effort to build and operate a first

- of

- a

- kind, clean power facility, EPA has proposed a target more stringent than the country's most state

- of

- the

- art generation technology could achieve and would potentially penalize the facility for operati ng at capacity factors above the assumed 70 percent.

The commenter s 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 Mississip pi's state goal. The commenter s said it is unclear how these numbers were developed but they should be explained.

Commenter s stated in the goal calculations for certain states, EPA incorrectly included certain NGCC projects that were not commissioned until after 2012 as part of the "existing" NGCC units that were redispatched up to a 70% capacity factor; 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 sou rce subject to the proposed section 111(d) guidelines. The commenter s 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 fo r accounting for units in partial operation in 2012.

Response 14: The EPA agrees that the calculation for under construction NGCC incremental potential merited revisiting. It has done so and changed its assumptions for units commencing operation in 2012. See Section VI of the Preamble for more discussion.

The Dresden Energy Plan t, Fremont Energy Center, Lee Combined Cycle Plant, and the Dan River facilities have been identified as commencing operation in 2012 and Unit 2 at the Healy plant has be en 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 applicability criteria that make i t unlikely that any simple

cycle 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 operation in 2012 in its goal setting methodology; many of these units that entered operation in 2012 have very low annual capacity factors because they did not operate for a full year, resulting in either lower amounts of coal

fired generation being reported in the 2012 baseline 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 their 2012 and 2013 generation and capacity factors (CF).

Commenter s stated with the exception of two facilities (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
gener ator four, resulting in a six

- month outage.

Commenter s added this same trend with regard to capacity factors also applies to those coal

- fired units that entered commercial operation in 2012, which EPA included in its goal calculation for Building Block 2; as can be seen from Table 7, by using 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 those particular states downward.

Comm enter s believe d that U.S. EPA's methodology does not appropriately account for units that were not operational for the entirety of 2012 in determining state

- wide capacity factors. The

commenter s 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 not begin operation until January 20, 2012, and the Freemont Energy Center did not begin operation until January 31, 2012; thus, the calculated capacity factors for those units, i f based on 8,784 hours of operation, do not accurately reflect the operation of those units in 2012. The commenter s said when partial operation is taken into account and the corrected generation at the Dresden plant considered, the capacity factor of NGCC units in Ohio is calculated to be ~69%; furthermore, Ohio EPA believes that the re

dispatch of NGCC units should be based on this historic capacity factor and not historical generation, as historical generation reflects bias concerning units that did not b egin operation until after January 1, 2012. The commenter s conclude d that when summer capacities, correct capacity factors, and re

- dispatch based on historical capacity is considered, the anticipated re

dispatch is nearer to 444,000 MW

- h and not the 5,793, 981 MW

- h proposed by U.S. EPA; if order

- of

- magnitude errors are present in other state goals, the commenter s would call into question much of U.S. EPA's methodology.

Commenter s stated a number of NGCC projects were identified that could be considered exist ing 111(d) facilities, but were ignored by EPA in the building 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 by EPA

.337 Commenter s added EPA overstates the amount of redispatch available from NGCC units commissioned in 2012 because it does not weigh the commissioning date into its calculation; when calculating redispatch, EPA assumes that all of these units were availabl e to operate throughout 2012 even though some of these units were not commissioned until later in the year. The commenter s said this assumption means that these new units are calculated to have an artificially low capacity factor, which produces an artific ially high amount of NGCC redispatch; the end result is a state emission rate goal that is biased low.

Commenter s stated for example, two of the five existing NGCC units in Ohio were commissioned in 2012. The commenter s provided a table that compares base line capacity factors for these two facilities if calculated based on their in

- service date versus EPA's assumption that they were available for the entire year.

Commenter s stated in the state goal calculation, EPA uses the following steps to determine th e amount of NGCC capacity to be redispatched:

(1) Determine the total net generation from all existing NGCC units in 2012

(2) Calculate the "potential" NGCC capacity that could be redispatched if the entire NGCC fleet in the state operated at a 70% capac ity factor as follows: Potential Redispatch Capacity (MWh) = (existing NGCC capacity) * (8784 hours/yr) *70% [the commenter s said note EPA incorrectly uses nameplate capacity in this calculation]

(3) Calculate the amount of NGCC redispatch to be used in building block 2 as follows: State NGCC redispatch (MWh) = "Potential" NGCC capacity at 70%

- 2012 NGCC net generation

The commenter s said thus, the amount of redispatch that EPA computed for certa in states is inflated by the inclusion of the capacity that units did not generate (and were not available to generate) prior to being commissioned in 2012; if units 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 commenter s said using the historic capacity factor approach accounts for the fact tha t units were commissioned in 2012 and appropriately weighs the in

service date into the redispatch calculation; this calculation would involve the following:

(1) Determine the total net generation from all existing NGCC units in 2012

(2) Calculate the po tential operating hours for each existing NGCC unit in 2012 based on the date that each unit was commissioned Potential operating hours for units in

- service prior to 2012 = 8,784 hours Potential operating hours for units commissioned in 2012 = 8,784 hours

- (time prior commissioning)

(3) Calculate the maximum potential 2012 NGCC generation for each existing unit: Maximum potential generation = potential operating hours (from 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 % capacity factor: Amount of redispatch (% capacity factor) = 70% capacity factor

- 2012 NGCC capacity factor (step 5)

(7) Determine the amount of redispatch in MWh: Amount of redispatch (MWh) = redispatch

c apacity factor (step 6) * net summer capacity * 8784 hrs.

The commenter s said using this approach for the Dresden and Fremont Plant, along with the correction of other errors noted throughout the comments would reduce the amount of NGCC redispatch calcula ted for Ohio from 5,793,981 to 439,452 MWh

- a 92% reduction from EPA's calculated amount.

Commenter s said consider another example, the H.F. Lee Plant, which is a 920 MW NGCC unit commissioned on December 31, 2012; the unit was available to operate for o nly one day in 2012, yet EPA's calculation assumes that the unit was available for the entire year. The commenter s said EPA used the nominal nameplate capacity (1,068 MW) to determine that approximately 6,548,976 MWh (equivalent of a 70% capacity factor) w as available to be redispatched from this facility because it would have had a near 0% baseline capacity factor in 2012 by EPA's logic. The commenter s said these 6,548,976 MWhs represent over 20% of the total redispatch calculated for the state of North Ca rolina

- even though the H.F. Lee plant had not been commissioned until the last day of the year. The commenter s 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, 201 2; if the associated "redispatch" capacity from Dan River is considered as well, then nearly 40% of the redispatch capacity calculated for North Carolina was from units that had not been commissioned or available to operate for most of the year. The commen ter s provided other examples of this issue in a table on page 116.

Commenter s stated EPA's proposed 111(b) rule for new units included a technical support document for combustion turbines that was designed to evaluate potential differences in emission

rate s due to various unit

- specific factors; the evaluation focused on NGCC units that were commissioned from 2000 through 2010; with respect to new NGCC units that were commissioned after 2010, EPA noted that "Although new NGCC units came online in 2011,

none are included here as they lacked sufficient data to calculate a 12

- month rolling average, the basis for determining a standard of performance." The commenter s said EPA should apply this same rationale and exclude units commissioned in 2012 from the calcula tion of existing NGCC units to be redispatched. The commenter s said these units could then be separately included in the "under construction" category of units within building block two calculation; at a minimum, EPA must at least revise the state goal cal culations to properly account for the date that new units were commissioned in 2012.339 Commenter s 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 eac h, not 108.2 MW.

Commenter s stated any other unit that began commercial operation during 2012 will have reported an artificially low capacity factor because 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 redispatch that is needed to meet generation obligations not reflected in the partial year data. Based on the commenter s ' review of EPA's Goal Computation Technical Sup port Document Data File, this change would affect approximately only a dozen units nationwide.

Commenter s stated the initial rate

- based emission is 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 commenter s said since Healy 2 would increase the proposed initial fossil fuel rate in lbs/MHh, the initial emission rate is inaccurately low.

Comment 15: Entered operation during or after 2012

- incorre ct 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 in 2012 as under construction. As described above, to ensure sub catego ry

- specific emission performance rates and state goals that best reflected a representative year’s likely affected units

– 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 it relies on 2012 as the basis of its representative year, it does not remove sources that are scheduled to retire.

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

Commenter s provided Table 8 that illustrates the effect that EPA's application of its incorrect state post

- redispatch capacity factors have upon the state generation levels for those NGCC units that entered op eration in 2012. The commenter s said the column "EPA Post

- Redispatch Generation" uses the same approach that EPA employed in the Building Block 2 calculations (Nameplate Capacity * Post

- Redispatch Capacity Factor = Total Generation); the post

- redispatch

ca pacity 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. The commenter s said for those states that had post

- redispatch capacity factors less than 70 percent, this normally represents the NGCC capacity factor that is required to displace all coal

- fired generation in that particular state.

The commenter s said as Table 8 illust rates, the difference between these new NGCC unit's post

redispatch generation and 2012 (partial year operation) 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 significantly higher generation levels during a full year of operation, and in the case of Idaho, Georgia and North Carolina, exceeded the post

redispatch generation levels; therefore, these new NGCC units, which ente red operation in 2012 and have only partial year generation levels, should be removed from the Building Block 2 goal calculation as they appear now, because they over

- estimate the amount of available NGCC capacity that would be available in those states to displace coal

- fired generation.

The commenter s said to correct for this excessive NGCC 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 commenter s s tated for EPA 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 commenter s stated implications of EPA's methodology for Build ing Block 2 includes excessive NGCC generation in a state's goal calculation due to the following:

- EPA use of nameplate capacity;

- EPA including units that did not enter operation in 2012;

- EPA inclusion of NGCC capacity that has been out

- of

- service or has/will be retired;

- and, EPA including low capacity factor NGCC and coal units that entered operation in 2012.

The commenter s said this excessive generation artificially reduces the amount of coal

- fired generation included in determining a state's goa l; if one corrects for these erroneous calculations and removes this additional gas

- fired generation from the redispatched NGCC generation level in EPA's methodology, a state's 2030 Final Goal and 2020

- 2029 Interim Goal will increase. The

commenter s said i n addition, analysis of other EPA assumptions for Building Block 2 shows that states will not be able to ramp up existing NGCC capacity to meet the proposed state goals even if EPA was correct in assuming nameplate capacity rather than net capacity.

Comme nt 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:

Commenter s stated emission reductions associated with natural gas generation units constructed after 2012, including those constructed prior to 2020, should be included in the calculation of whether a state has met its interim and final CO2 emission reduction goals. The commenter s341 stated adding new NCGG units to a state's generation resource mix is costly and reductions in state CO2 emission rates resulting from construction of new natural gas generation units are real. The commenter s concluded reductions from units constructed 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 NGCC

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

Commenter s stated the proposed guidelines will require 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 level of operation for a vertically integrated utility, there appears to be no leg al authority to require operation of a merchant plant if they can meet the emission rates outlined in the proposed guidelines. The commenter s said because utilities with significant coal

- fired resources in their portfolio are mandated to shift some generat ion to NGCC, the proposed guidelines will work to create an 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 appears to miss the most essential details of operation in an RTO market. The commenter s said power plants do not operate when their owners decided operate; they operate when they are authorized to operate by the RTO to maintain adequate supply on the grid. The commenter s said under Federal 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 commenter s suggest ed withdraw the rule and reconstruct without requiring use of a shift t o 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 units. Consistent with the comment,
M organ City and Nine Mile Point have been added to the inventory of likely affected units. Consistent with the comment, under construction NGCC is included in the rate calculations.

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

Commenter s stated EPA's calculations do not consider several new NGCC units which are currently under construction. The commenter s said on August 16, 2011, LDEQ issued Title V and PSD permits allowing Entergy Louisiana to construct and operate two new NGCC units,342 along with a new steam turbine generator, at its Ninemile Point Electric Generating Plant, located in Westwego, Jefferson Parish. The commenter s said the new NGCC units, identified as 6A and 6B, have a nameplate capacity of 640 MW and a pro jected net summer capacity of 559 MW; these figures account for the steam turbine generator. The commenter s added on September 26, 2013, LDEQ issued Title V and PSD permits allowing Louisiana Energy and Power Authority (LEP A) to construct and operate a ne w NGCC 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 capacity of 84 MW and a projected net summer capacity of 64.5 MW; as befo re, these figures account for the steam turbine generator.

Commenter s stated for the past several years, the commenter s ha ve been engaged in a planning process with the Purchasers for the repowering of its coal

- fired units with NGCC. The

commenter s said th ese plans require the unanimous approval of the Purchasers which has not yet been obtained. The commenter s said if as a result of the approval of these plans or otherwise, the

commenter s were to construct NGCC, such NGCC generation would be available to displace coal

- fired generation. The commenter s said it is not clear under the Proposed Rule that such NGCC generation would be included in the rate calculation; the commenter s 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 nuclear from its quantification of BSER in the Final CPP Rule. However, we stil l i nclude 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 th e expression of BSER. Furthermore, EPA believes that failing to do so could potentially harm a state using a mass

- based equivalent if the EPA had not appropriately accounted for all generation of likely affected units.

The EPA feels that its basis for ass uming a 55% baseline value as not available for replacement/BB2 consi d eration 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 sample 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 decrease in fossil steam baseline generation even though a decrease in fossil steam generation has been 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 reflection of average u tilization 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 the average utilization rate of 55% used to reflect incremental generation and emission fro m under construction sources is not hindered by potential unit

- level variations.

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

Commenter s urge d EPA to exclude both under

- construction and at

- risk nuclear generation from the state goal calculation procedure if and when EPA issues a final rule.

Commenter s question ed the methodology used by the EPA in calculating the contribution of nuclear plants to the state goal in Building Block 3; EPA determined that 5.8 percent of the exi sting nuclear fleet is at

- risk, and in calculating the state goal assumed that the existing nuclear generation in each state would be reduced by that amount. The commenter s said that at

- risk generation was used in the calculation of the goal, but is then a warded to the state without conditions in calculating compliance with the goal. The commenter s said at

- risk nuclear plants are in danger of a total shut

- down, not a curtailment in their generation; therefore, existing nuclear plants should not contribute t o the state goal calculation, and only existing nuclear plants that are truly at

- risk should be counted for compliance purposes, provided the approach is lawful under Section 111 (d) of the CAA. The commenter s said in Pennsylvania, the nuclear portion of
B uilding Block 3 accounts for 7. 8 percent of the state goal.

Commenter s recommend ed that EPA remove the 5.8 percent at

- risk nuclear component from states with nuclear generating facilities whose units are not "at

- risk".

Commenter s urge d EPA give South Caro lina equitable treatment in the final Clean Power Plan, especially with regard to the treatment of nuclear units under construction. The commenter s said several years ago, Santee Cooper began planning for strategic reduction of CO2 emissions; Santee Cooper devised a measured approach, one that balances environmental stewardship, reliability and costs. The commenter s said since 2005, Santee Cooper has reduced their CO2 emissions by 23 percent. The commenter s said Santee Cooper previous and current initiative s are projected to reduce their CO2 emissions 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 units in the country. The commenter s 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.

Commenter s stated in calculating each state's goal, the EPA assumes that NGCC units that were under construction in 2012 have available generating capacity that may be utilized to displace coal

- fired generation under Building Block 2; specifically, the EPA assumes that eac h NGCC unit under construction would operate at a 55 percent annual capacity factor under a "business as usual" scenario in the absence of the proposed emission guidelines. The commenter s said this 55 percent annual capacity factor reflects the EPA's calcu lation of the "average performance of344 NGCC units that came online in the past 5 years." The commenter s said the Agency claims it "conservatively designated the generation associated with this 55 percent capacity factor as unavailable for redispatch to redu ce CO2 (i.e., not qualifying for Building Block 2), instead, reserving that amount of generation potential to meet other system needs presumed to have motivated the construction" of those units. The commenter s said accordingly, the EPA assumes that an addi tional 15 percent of the under

- construction unit's nameplate capacity will remain available for redispatch, bringing the unit to an overall annual capacity factor of 70 percent.

Commenter s stated the EPA's approach is arbitrary and unreasonable; as a gene ral 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 complet ed, 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 commenter s said the EPA has no basis on which to make assumptions about what generating capacity will be available for redispatch from NGCC units that had no operating history in 2012 or earlier. The commenter s

s aid the average annual capacity factor of all recently completed NGCC units, is an inadequate predictor of the future generation performance of the individual units the EPA includes in the state goals. The commenter s said such an average does not account f or the fact that some units are constructed for the purpose of supplying base load, while others are constructed as load

following units. The commenter s said recent experience suggests that the EPA's methodology grossly overestimates the generation capacit y available from units that were under construction in 2012.

Commenter s stated given the EPA's inability to provide a rational justification for predicting the hypothetical operating duty of units that were not operating in the baseline year of 2012, it

s hould exclude "under construction" NGCC units from its application of Building Block 2 for the purposes of calculating state goals. The commenter s said because these units are technically "existing sources" under section 111, however, they would remain sub ject to appropriate state plan requirements and would count towards compliance with a state's interim and final goals if they satisfy the relevant applicability criteria. The commenter s added NGCC units classified as "under construction' should not be incl uded in state goal calculations because they do not meet the applicability criteria for stationary combustion turbines; they would not have supplied one

third or more of their potential electric output to a utility distribution system on a 3

- year rolling

a verage basis as of 2012.

Commenter s recommend ed that the EPA remove existing generation resources (renewable energy and nuclear energy) from the denominator of the formula used to calculate state goals. The commenter s said the EPA's adjusted emissions rate formula includes existing renewable energy generation and 6% "at risk" nuclear generation in the denominator of the formula used to calculate state emission reduction goals. The commenter s said this results in a form ula that is not truly measuring the emissions rate reduction. The commenter s said removing these components345 from the formula would result in a goal that is a better representation of the BSER and would also result in a more consistent treatment of all zero

- carbon emitting generation sources.

Commenter s recommend ed EPA reexamine the state rate

- based emissions equation to exclude at risk nuclear and under construction nuclear from goal calculation.

Commenter s stated it would be inappropriate to include assumptions about relicensed nuclear facilities in calculating state goals because relicensing can be costly and uncertain.

Commenter s added EPA should treat under

- construction, relicensed, and uprated nuclear f

acilities the same as it treats RE facilities: it should exclude these facilities from the state goal

setting methodology, but allow states that build new facilities or uprate or relicense existing facilities to count the generation from those facilities t oward compliance.

Comment 20: The 6% of nuclear capacity to be "at risk" is insufficient.

Response 20: At

- risk nuclear is not considered part of BSER quantification in the final CPP Rule. See section V.A of the final rule preamble for discussion of nuclea r generation and the BSER. See section VIII for a discussion of how reductions stemming from incremental nuclear generation can be considered in state plans.

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

Commenter s stated the U.S. EPA identified 6% of nuclear capacity as "at risk" based on projections of potential retirements presented in the 2014 EIA Annual Energy Outlook as well as the announced retirement of six nuclear EGUs. The commenter s are not aware of any supportin g documentation presented by EIA or U.S. EPA to support these projected retirements, and only a single reference is cited in the TSD; this reference, "Implications of accelerated power plant retirements, J. Jones and M. Leff, 2014" presents only vague and ambiguous ""economic challenges". The commenter s said the EIA study itself 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 comm enter s understand that a BSER is based on adequately demonstrated, economically feasible measures; in this instance, the

commenter s believe d that the designation of 6% of nuclear capacity as "at risk" based on a single study presented with little to no sup porting documentation 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 renewable in the sub category 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:

Commenter s stated EPA should allow states to claim compliance credit for that portion of nuclear capacity assumed to be at risk in EPA's goal 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).

Commenter s support ed the fact that the EPA identifies the continued operation of existing "at

risk" instal led nuclear capacity and under construction nuclear capacity; in addition, the construction of new nuclear generating units as well as the uprating of existing nuclear units is identified as approvable emission reduction measures.

Commenter s support ed a fi nal rule which addresses the factors that affect carbon intensity, rather than one which tries to define clean power. The commenter s believe d the proposed rule goes beyond the scope of carbon dioxide, specifically regarding the value of alternatives such a s nuclear energy. The commenter s 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

commenter s said with respect to individual rate

- based goals, the comme nter s would include all three of the nations largest historic sources of electric generation: coal, natural gas and nuclear. The commenter s stated they think the inclusion of only 6% of each states nuclear energy production fails to accurately observe actu al carbon 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.

Commenter s d id not feel it is appropriate to reflect completion of the five identified nuclear EGUs currently under construction in the state goals. The commenter s believe d the 2012 baseline carbon dioxide rate

- based intensity values should not be reduced as if these EGUs were already online. The commenter s said the proposed rule would have the effect of ignoring the carbon dioxide reduction these plants will represent; furthermore, this adjustment is inconsistent with counting the contribution of other future sources, as found elsewhere within the rule.

Commenter s stated the public policy debate on the relative risks of nuclear and fossil generation is likely to evolve; with the certainty that both forms of electric generation will continue to exist, the inclusion of their size and impact upon rate

- based CO2 should be capture d in full measure.

Commenter s stated EPA's BSER analysis does not provide meaningful credit for existing nuclear generation and excludes existing hydropower generation entirely; this lack of appropriate credit has significant impact on States such as Arizo na that generate a large percentage of their power from these zero

- emission sources.347 Commenter s stated the current supply to 49 member communities consists of over 1,200 megawatts of nuclear and hydroelectric power supply; the result is that over 50 percen t of our electricity supplied to communities is produced with no emissions. The commenter s said the proposed rule provides little credit for these carbon

- free resources, and instead will require these communities to fund new unneeded renewable energy resou rces and new energy efficiency programs, which raise the cost of electricity to consumers unnecessarily.

Commenter s stated EPA's supporting documentation indicates it did not consider the nuclear and hydropower facilities currently operating in Arizona. Th e commenter s 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 inappropriate. The commenter s ask ed why did EPA ignore these zero

- emission resources.

Commenter s stated hydropower makes up over half of the portfolio of Northwest generation resources, and is over 80% of BPA resources. The commenter s said hydroelectric power is a major piece of the Northwest's low

- cost, reliable and non

- emitting resource mix. The

commenter s said PNGC Power and other public and investor

- owned utilities in the Northwest have invested in additional renewable resources and will continue to achieve even higher renewable electricity production from wind and solar becau se of the firming support provided by the Northwest hydropower system. The commenter s said the proposed rule should recognize the value of hydroelectric power as a compliance tool in meeting greenhouse gas (GHG) emission reduction goals; additionally, new and incremental hydropower should be considered as building blocks in meeting state GHG reduction targets.

Commenter s stated it is important for the EPA to address the "5.8%" calculation that limits nuclear energy's full contribution to reducing a state's carbon emissions. The commenter s 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 Registe r). The commenter s said as Devoe writes, "We must insist that the EPA considers the total generation from all energy sources in calculating carbon emissions intensity." The commenter s agree d

, we cannot meet carbon reduction goals without nuclear
energy playing a major role. The commenter s said doing 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 fut ure, 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 final CPP. See section
V .A of the preamble for further discussion.

The followin g are summaries of the specific public comments under this comment:348 Commenter s stated in New York, particularly, the EPA has not included the generation associated with its existing large hydroelectric facilities as part of the zero

- emission resource Build ing Block, reportedly because it "distorts" the adjusted emission rate for the State. The

commenter s said in the same manner, emission

- free nuclear generation, either in the numerator or the denominator of the adjusted emission rate, distorts the ability o f the State to meet its adjusted emission rate target. The commenter s suggest ed 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 emis sion

- free generation technologies in cooperation with the NRC if nuclear generation is a preferred approach or in cooperation with other permitting entities if other technologies such as wind or solar are more cost effective.

Commenter s request ed that the EPA not include any nuclear as a part of calculation of the goal. The commenter s said the 90% capacity factor assumed is difficult to achieve continuously due to years when refueling and maintenance outages are needed. The commenter s said the 90% capacity factor and 5.8% "at risk" factor add greater risk to companies that have invested in nuclear power as a carbon free source. Although the commenter s are requesting that the EPA remove nuclear generation from the goal formula, if EPA elects to keep nuclear in the formula, the commenter s were concerned about the 90% capacity factor used for at risk existing nuclear plants in the EPA formula for computing each state's emission goal. The commenter s said although existing nuclear units are normally used as base load and have high capacity factors, planned refueling and maintenance outages lower the capacity factor by approximately 11%. The

commenter s said another important point of reference is the fact that the average lifetime capacity factor of the 10 0 nuclear plants now operating is 80.3% (through 2013). The

commenter s added on a three

- year rolling average basis (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 plan ts are operating well below 90 percent capacity factors. The commenter s said under the proposed rule, when these anticipated outages occur and reduce existing nuclear capacity factors below 90%, replacement power would have to be obtained from another CO2 non

emitting generation source. The commenter s said the cost of power will be very high to make up the shortfall to meet the 90% capacity factor requirement; therefore the commenter s suggest ed using 70% as the capacity factor in the goal calculation.

Comment 23: The EPA should reconsider the inclusion of existing nuclear power generation in the calculations.

Response 23: The EPA excluded nuclear generation from BSER in the final CPP. See section
V .A of the preamble for further discussion. See sectio n VIII for a discussion of how states can incorporate reduction s from nuclear generation into their state plans.

The following are summaries of the specific public comments under this comment:349 Commenter s stated it is not clear how existing nuclear power generation can reduce CO2 emissions, when these units have been operating at near

- constant capacity factors for many years. The commenter s said any displacement of more carbon intensive generation would have already taken place. The commenter s said the app roach taken by U.S. EPA in including even a fraction of existing nuclear generation is inappropriate, as these existing units cannot and will not displace generation from more carbon intensive sources. The commenter s 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 than necessary or practical. The

commenter s urge d U.S. EPA to reconsider the inclusion of existing nuclear generation in all CO2 intensity calculations.

Commenter s stated the accounting algorithm chosen to establish goals for each state gives a carbon emissions reduction credit to states that have currently operating nuclear power plants and allow them to shut down; thoug h it is perhaps not 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 li ke it has reduced its emissions intensity. The commenter s said it is also unfair to count carbon intensity based on the amount of power generated inside the state instead of more accurately assessing the carbon intensity of the power that is consumed insid e the state. The commenter s said the way the current rule is written, Vermont never has to take any action as long as it forces power producers to locate their plants somewhere outside of the state boundaries. The

commenter s said the plan also gives no cre dit to the consumers in rate regulated states like Tennessee, Georgia and South Carolina that recognized 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 e mission nuclear power plants. The commenter s said according to the plan, none of that investment counts while all of the investments in unreliable wind and solar power that have been made during the same time period count towards the emissions reduction go als. The commenter s said please take action to correct these aspects of the rule; they are not only unfair, but they are in direct opposition to the goal of reducing the overall carbon intensity of the United States.

Comment 24: Treatment of new nuclear i n setting the EPA goals

Response 24: The EPA has excluded nuclear from building block three in the fin al CPP rule. See Section V.A of the final rule preamble.

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

Commenter s stated three states have new nuclear plants under construction; these plants will not begin operation until after EPA is scheduled to issue the final rule; however, EPA has prematurely included this carbon

- free generation in establishing these state goals . The

commenter s said EPA's treatment of these new nuclear units has lowered the emission rate goals350 for each of these states, ignoring the practical difficulties associated with such projects; also, developing a new nuclear power plant could take about 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 commenter s recommend ed :

- New nuclear generation should be excluded from building block 3 when determ ining state emission rate goals and instead should only be considered as an eligible action for compliance
purposes.

- New nuclear generation should remain an eligible action.

- Given the long lead time for development and construction of a nuclear generat ion unit, EPA should consider new nuclear generation as an eligible action if construction has commenced prior to the end of the compliance period; if a nuclear unit or uprate is under construction prior to 2030, the predicted CO2 reduction or MWh benefits should be credited in 2030, as a way to further promote new nuclear generation.

Commenter s stated new renewable and nuclear generation are not used to decrease fossil fuel generation in setting the EPA's target rates; rather the generation numbers are sim ply 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 commenter s said the treatment of new nuclear and new renewables is unlike the treatment of i ncreased natural gas combined cycle generation, where the increase in generation is actually assumed to reduce fossil fuel generation, with the constraint that total fossil fuel generation would remain the same. The commenter s said this approach favors nat ural gas over other forms of generation.

Comment 25: Affected units

Response 25: See section VI of the preamble for an explanation of 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 replacement generation in sub category

- specific emission performance rates and state goals to capture this reduction that would not inherently show up in a stack emission rate.

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

Commenter s stated U.S. EPA also uses, in setting goals, the CO2 emissions from regulated entities (numerator); however, in the goal setting, they used generation (denominator) from all electric generation in the s tate, not just from the regulated entities. The commenter s said so, in setting renewable goals, they took percentages of total 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 commenter s said CO2 and generation should be measured and expressed only if they are produced by an351 affected unit. The commenter s said by calculating renewable goals from this all

- inclusive generation value, U.S. EPA is unfairly "double

- counting" 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 nameplate capacity greater than 25 MW will be included. As explained in Section VI and the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule, the inventory does not constitute an applicability determination, but serves as a reasonable baseline of likely affected units in a historical baseline
year (2012) . While final applic ability determinations on all individual units may be necessary after the final rule, the EPA does not believe t hat unit

- level discrepancies , taken collectively, would result in any bias or alter the reasonableness of its quantification of BSER sub category

specific rates

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

Commenters stated EPA's goal calculation methodology is defective because it applies the measures identified as BSER to sources that do not qualify as "affecte d EGUs" for the purposes of the Proposed Guidelines. The commenter s said the proposed state goals assume that state plans will constrain emissions from sources that EPA cannot lawfully regulate under section 111(d); this error affects the state goals becau se it overstates the number of sources that are available to implement the BSER building blocks

- particularly Building Block 2, which is based on shifting generation from higher

- to lower

- emitting affected EGUs.

Commenter s added excluding non

- affected E GUs from the state goal calculation is critical because including these units in the 2012 generation and emission levels affects the stringency of the state goals as they will eventually be applied to affected EGUs. The commenter s said the

s t ate goals, as currently calculated, assume that some 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 additional burden associated with t hese units will ultimately fall on affected EGUs that do meet EPA's applicability criteria. The commenter s said this is particularly important in implementing Building Block 2, where EPA's purported "system of emission reduction" requires transferring ener gy generation from coal

- and oil/gas

- fired steam EGUs to NGCC units with available generating capacity.

Commenters added EPA made no effort to exclude from the Proposed Guidelines NGCC units that were not "constructed for the purpose of supplying, 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 commenter s stated EPA can, and must, examine historical data for existing EGUs in order to determine which units would be exempt from regulation under the one

- third sales352 exclusion before calculating each state's goal. The commenter s said this historical data is readily available to EPA; EPA included generated data from 2010 and 2011 in the docket for this rul emaking, although it has not performed any analysis 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 should apply the measures identified as BSER to Subpart Da units only if they "combust fossil fuel 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

- electric output to a utility power distribution system for sale on an annual basis." 79 Fed. Reg. at 1502, Proposed 40 C.F.R. section 60.46Da(a). The commenter s said the NSPS for new Subpart Da units applies only to sources that meet these (and several other) criteria; E PA proposed 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. Reg. at 34,954, Proposed 40 C.F.R. section 60.5795(b)(1); 79 Fed. Reg. at 34,979. The commenter s 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 Proposed 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 calculation.

Commenter s added EPA has further distorted its assessment of achievable state goals by inappropriately including units smaller than the Proposal's 73 MW applicability threshold in its calculations of the state goals; EPA has provided no justification for its decision to include these units in setting state goals.

Commenter s stated non

- affected EGUs are not included i n the numerator of the rate goal calculation; however, they are included in the denominator of the RE calculation. The

commenter s asked why is this inconsistent approach used when performing the RE calculations vs. the rate efficiency calculations.

Com ment 27: Unit s mistakenly counted as "affected units" in goal 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. Based on the final rule applicability lang uage, the EPA did not exclude non

- cogen NGCCs greater than 25 MW.

The EPA changed the status of Perryville Power Station unit 2

- ct to reflect the comment that it is a simple cycle turbine and hence the unit was excluded from BSER calculations

.
Based on com ment and the baseline cogeneration status of Louisiana 1, the EPA has re

categorized it as “exclude” in its baseline consistent with the comment.353 The 150 MW of under construction NGCC in Mississippi refer to the Moselle units that commenced operation in 2012, but are treated as under construction as described in Preamble section VI.

The EPA did not include South c entral Power Plant U nit 4 in its fi nal CPP rule baseline consistent with the comment.

Because Beluga 6, 7, and 8 were all considered likely affected, the sum generation and emission from the three is counted in Alaska’s baseline generation at proposal. However, Alaska and its EGUs are not subject to the final CPP . The unit

- level 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 understands 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 determination for the CPP inventory, but its baseline constitutes a representative inventory of likely affecte d units based of the final CPP applicability provisions.

The EPA believes that non

- cogen NGCC facilities greater than 25 MW to be likely affected units and are thus included in the baseline (e.g., Noblesville).

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

Commenter s stated J.M. Shafer and Rifle are outside the scope of section 111(d) regulation, EPA nevertheless included them in this Proposal when applying Building Block 2 in its state goal calculation for Colorado; by doi ng so, EPA bases Colorado's state goal on the assumption that both Tri

- State NGCC units would be subject to the Proposal and that Colorado could force these units to operate at a 70 percent annual capacity factor; this is clearly incorrect. The commenter s said the mistake results from EPA's flawed goal calculation methodology, in which the Agency made no attempt to exclude from re

- dispatch under Building Block 2 EGUs that do not meet the applicability criteria for the January 2014 proposed NSPS. The comment er s said if EPA proceeds with this rulemaking, it must remove J.M. Shafer and Rifle (as well as any other EGUs that do not meet the applicability criteria for the source category) from state goal calculations.

Commenter s 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 operates in simple cycle mode.

Commenter s stated EPA's calculations cla ssify the five electric generating units (EGUs) at Entergy Gulf States Louisiana's Louisiana Station No. 1 Electrical Generating Plant as NGCC turbines; however, three of these units (1A, 2A, and 3A) are actually boilers, not turbines. The

commenter s added a large portion of the power generated 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 Louisiana 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

- electric output to a utility distribution system."

Commenter s stated Louisiana Station 1 is a co

- generation faci lity that was constructed for the purpose of supplying electricity and steam to the Exxon refinery; the units do not supply one

third or more of their potential electric output to a utility distribution system on a three

- year rolling average basis, and thu s are not defined as "affected units" by the Proposed Rule and should be removed from the state's goal

- setting calculation; additionally, Louisiana Station 1 Units 1A, 2A, and 3A are steam units, not NGCC units.

Commenter s stated Perryville Unit 2

- CT is l isted in the goal

- setting calculation as an NGCC unit; this is a low

- use simple cycle turbine and should be removed from the state's goal

- setting calculation. The commenter s said Louisiana has two NGCC units under construction that should be included in th e goal setting calculation for the state. The commenter s said Entergy's Ninemile Unit 6 has a nameplate capacity of 640 MWs and a summer net capacity of 550 MWs; Louisiana Energy and Power Authority's unit 14

- 01 has a nameplate capacity of 84 MWs and a sum mer net capacity of 64.5 MWs. The commenter s said in Mississippi, EPA calculation for setting the state goal includes 150 MWs of NGCC under construction; to the best of the commenter s ' knowledge, there is no NGCC under construction in Mississippi.

Commente r s the affected electric generating unit (EGU) inventory that was used to calculate the Alaska rat

- based carbon dioxide (CO2) emission performance goals is inaccurate; the following corrections should be made prior to calculating the final Alaska performa nce goals:

- Unit 8 at the Chugach Electric Association (Chugach Electric) Beluga Plant should not be listed as a separate affected EGU; Unit 8 is a non

- fired heat recovery steam generator (HRSG) associated with the natural gas

- fired stationary combustion t urbines 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 Unit 8 HRSG; the power generated by Unit 8 should be included with the power ge nerated by Beluga Units 6 and 7 to accurately represent the combined

- cycle turbine electrical generation of these EGUs.

- The Chugach Electric Southcentral Power Project Unit 4 (EPA EU ID 4) has not yet commenced construction and so should be eliminated fr om the affected EGU inventory.

Commenter s stated it is clear from the Proposed Guidelines, however, that EPA disregarded these applicability criteria and applied the BSER building blocks to units that do not meet the applicability criteria when determinin g each state's obligations; in particular, it appears that the EPA made no effort to exclude from the Proposed Guidelines NGCC units that did not "...suppl[y], one

- third or more of [their] potential electric output and more than 219,000 MWh

net

- electrical output to a utility distribution system on a 3 year rolling average basis." The

commenter s said including NGCC units that did not meet the one

- third sales exclusion in the goal calculation artificially inflates the amount of NGCC generating capacity that i s available for355 redispatch, which thus inflates the amount by which coal

- fired EGUs must reduce generation under Building Block 2. The commenter s said once this 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 generation that states cannot require from non

affected EGUs.

Commenter s stated with respect to Indiana, using the summer rated net capacity of the Noblesville NGCC facility of 285 MW, the facility would have needed to generate 826,135 net MWh in 2012 to operate at a 33 percent annual capacity factor; the Noblesville NGCC facility generated 820,513 net MWh in 2012; in 2010, the facility generated a total of 227, 093 net MWh, and in 2011 the facility generated a total of 350,091 net MWh. The commenter s said this results in a three year average capacity factor over the period 2010

- 2012 of 18.6 percent; this unit does not meet the "and supplies, one

- third or more of its 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 Noblesville facility.

Commenter s state d 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 sources that do not meet EPA's applicability criteri a.

Comment 28: Unofficial standby units should be removed from data 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 supporting the final CPP. The EPA did not remove stand

- by units if they appeared likely to meet the affected unit

- criteria.

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

Commenter s stated EPA has proposed state

- specific CO2 emission performance goals , and requirements for each state to develop a plan to achieve its goal by the year 2030; the proposed emission rates are based on each state's fossil

- fired EGUs. The commenter s said not unlike many states in its region, Oklahoma can experience extreme wea ther conditions in any season. The

commenter s said the electric generators in Oklahoma keep a significant number of older and less cost effective units in reserve capacity, a condition where the unit only operates enough to ensure it could be used if neede d in case of extreme weather or natural disaster. The commenter s said generators are hesitant to decommission such units, despite limited use, due to the need to be responsive to extraordinary conditions when peak power is needed in a specific location. Th e
commenter s said Oklahoma generators maintain thirteen 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 les s than 0.10.

Comment 29 a : CHP units356 Response 29 a : In the final CPP, all emissions from likely affected CHP plants are included in the baseline. Useful thermal output is not included in the quantification of BSER in the final rule, so the apportionment of emissions discussed above is not relevant to final rule BSER quantification . Affected sources would be responsible 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 compliance.

EPA identified approximately 2,900 cogeneration units connected to the grid. It “excluded” nearly 85 percent o f these as likely non

- affected sources because they reported their primary source category as commercial or industrial. EPA also remove d some NGCC cogen units from its baseline inventory of likely affected units when identified by commenter s by name and t here was supporting publically available data

. For the CHP units that identified their source category as electric utility or IPP, EPA did continue to include the units unless the commenter s provided unit

- specific data supporting their exclusion.

EPA fo und no technical reason why the likely affected 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 these sources did incr ease utilization from year

to

- year (potentially as incentives such as fuel prices decreases made doing so more attractive )

. As natural gas fueled electricity became 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 320 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

Commenter s stated based on Federal Energy Regulatory Commission criteria to be a cogeneration facility, the addition of electrical generation equipment to an existing industrial combustion unit makes these facilities CHP units that can provide new electricity generation without new emissions. The c ommenter s said EPA should clearly identify in the support documents and preamble that the addition of electric generation to existing industrial combus tion sources can be used as a new generating source in calculating compliance with the proposed emission standards, even if it does not qualify as a renewable resource under state RPS requirements. The commenter s added if the state can demonstrate that the re are no new CO2 emissions resulting from adding electrical generation equipment to these combustion units, they request that a state be able to count this generation 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.

Commenter s added given the right incentives and guidance, CHP can be a cost

- effective emission reductio n strategy for each state regardless of the particular numerical emission rate target. The commenter s were concerned with the treatment of certain CHP units that in 2012 qualified as "affected EGUs." The commenter s stated their view is that no CHP faciliti es should be considered affected EGUs. The commenter s said however, 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 units to non

- C HP NGCC units is good policy that will result in emission reductions.

Commenter s added natural gas

- fired CHP units cannot be dispatched as part of Building Block 2 due to the integral relationship with adjacent customers; EPA should not factor natural gas

- fired CHP units into state goal calculations. Commenters stated t hese natural gas

- fired CHP units in select states that were included in EPA's goal calculations should be removed in order to accurately account for realistic dispatch capabilities. The comme nter s 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 generation, historic NGCC generation, and the NGCC nameplate capacity. The commenter s provided a table ( titled "Table 16: Natural Gas

Fired CHP Units That Should Not be Included in Goal Calculations" ) showing the names of power plants in three southern states. The commenter s said if EPA chooses incorrectly to include natural gas

- fired CHP units in state goal calculations, the Agency must evaluate these facilities based on similar applicability criteria to the Agency's January 2014 NSPS Proposal. The

commenter s said in the January 2014 NSPS Proposal CHP units were able to subtract "purchase d power of the thermal host facility or facilities" in determining net

- electric output for applicability purposes. The commenter s supported EPA's intent to subtract purchased power of adjacent facilities in calculating the 219,000 MWh applicability criteri a threshold for CHP facilities. The

commenter s also believed it was EPA's intent not to require the direct transmission of electricity to the adjacent facility. The commenter s said as proposed, CHP units are not afforded the same net energy output definiti on in the existing source proposal; this treatment inadvertently includes some CHP units in state goal calculations. The commenter s d id not believe this was EPA's intent. The commenter s said during EPA's webinar series for the proposed guidelines, EPA ackn owledged that CHP units, for applicability purposes, may deduct power used internally or power purchased by an adjacent facility. The commenter s said EPA must remove all CHP units from state goal calculations or, at a minimum, evaluate units using similar applicability criteria to the January 2014 NSPS Proposal.

Commenter s stated in its analysis of the NGCC fleet, EPA also inappropriately included industrial Combined Heat and Power (CHP) plants. The commenter s said in 2012, according to Edison Electric Inst itute (EEI), almost a third of the NGCCs over 25 MW were CHP plants and accounted for approximately 15 percent of total electric generation analyzed by EPA; although358 these CHP plants contribute to the overall electric production of the nation, their operat ion is fundamentally different from that of a power plant primarily dedicated to serving electric

- only load and the needs of the grid. The commenter s said CHP plants tend to have much higher capacity factors than EGUs. The commenter s said their electric ou tput is typically a by

- product of steam production and directly related to their industrial activity and heat production. The

commenter s said CHP plants are not operated primarily to serve the demand of the electric sector at large; also, CHP plants cannot typically be dispatched like other power

- sector plants. The

commenter s said EEI reports that approximately half of the plants EPA identified as having utilization rates of 70 percent or more were, in fact, CHP plants. The commenter s 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 analysis resulted in an overestimate of the potential for fossil fuel

- fired EGU redispatch; the redispatch portions of the state targets must be recalculated accordingly.

Commenter s 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 commenter s said EPA's 2012 Unit Level Spreadsheet flags Unit 8A as a cogeneration unit and as "EXCLUDED". The commenter s 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 asso ciated with the useful thermal output not used for electricity production are included in the state goal and would be reported under the 111 (d) reporting guidelines if the unit meets the 111 (d) applicability criteria. The emissions and energy output asso ciated with the useful thermal output are captured in the "other" category. 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 generat ion portion of CHP is available for redispatch purposes, and therefore only this portion of the cogeneration operation is reflected in the technology generation totals."

Commenter s stated Unit 8A is a small unit that is not an affected source and it is no ted 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 goals. The commenter s said the calculated values for Unit 8A in the 2012 Unit Level Spreadsheet are inconsistent with the methods that EPA states were used in the "Description of 2012 Unit Level Data using the EGRID Methodology". The commenter s said MP&W staffs discussion with EPA staff indicates that "ratios" were used to apportion reported CO2 reported from CAMD according to ratios of generation reported on EIA Form 923. The commenter s said this approach does not accurately reflect the actual thermal output from the CHP at Un it 8A (nor does it accurately reflect actual CO2 emissions from the individual units). The commenter s said it appears that this approach for a CHP unit may result in double counting of CHP related emissions. The commenter s request ed clarification of the ac tual methods and associated rationale used for calculation of CO2 from CHP units, identification of the calculation(s) used by EPA to determine what amount, if any, was considered to be the electrical generation portion of the Unit 8A CHP that was availabl e for dispatch purposes, and what was considered to be in the "other" category. The359 commenter s support ed CHP

- related generation being EXCLUDED from the calculations of generation available for re

- dispatch and the heat input/output calculations.

Commenter s stated EPA has double counted CO2 emissions for CHP plants characterized under coal and "Other." The commenter s said for example, the total 2012 CO2 emissions for North Carolina's Edgecombe Genco Plant is 416,411 tons; EPA determined that 223,731 tons of t hese emissions are associated with thermal output; EPA determined the baseline rate by assigning 416,411 tons under coal and 2231731 tons under "Other". The commenter s said this results in a total plant

- wide CO2 emissions of 640,142 which is clearly higher than recorded emissions data. The commenter s said the correct method for this plant would be to assign 192.680 tons for coal (416,411 minus 223,731) and 223,731 tons for "Other'. The commenter s said this error correction also applies to North Carolina's o ther two CHP plants: Roanoke Valley Energy Facility I and II. It also applies to all CHP plants nationally.

Comment 29b : Commenter s stated that PSEG's three coal units will be the only remaining coal

fired steam EGUs in the state of New Jersey in 2020. Co mmenters stated that only other coal

fired steam EGU is owned and operated by Rockland Capital 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 natural gas pipeline in southern New Jersey.

Commenters stated that the only other coal

- fired units are combined heat and power ("CHP") facilitie s owned by Chambers Cogeneration LP and Logan Generating Company LP. Commenters stated that CHP facilities are integrated energy systems that provide: 1) onsite generation of electrical and/or mechanical power to a host, and 2) waste

- heat recovery to the h ost for heating, cooling, dehumidification, or process applications. Commenters stated that CHP facilities are designed to operate more efficiently than traditional EGUs because of the waste

heat recovery and requiring additional heat rate improvements fro m 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, heat rate improvements will likely result in additional excess power sold to the grid. Commenters stated that sale of excess power to the grid benefits the facility owner by promoting recovery of costs to operate and maintain the coal

- fired CHP unit(s). Commenters stated that a coal

- fired CHP facility may no longer be justified if the opport unity to sell excess power to the grid is eliminated under Building Block 2. Commenters stated that due to the foregoing, PSEG believes that 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 units from its baseline inventory based on their primary sector was commercial and industrial as opposed to electricity360 generation. However, some cogen eration EGUs that have 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 EPA makes no unit

- level assumptions in BSER quantification that t hese specific units will conduct 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

- cogen capacity will generally result in a

c ompetitive 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 may still take credi t for useful thermal output in compliance. This creates an additional incentive for cogeneration units to continue to operate relative to similar technology without cogeneration capability.

Comment 29c : Commenter s suggested that the EPA consider four categories 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 should take into consideration the overall efficiency of the system at converting fuel to useful energy, and state plans should be able to value the carbon reductions that result from increased dispatch of power fr om these lower carbon EGUs; (2) New CHP systems that will be regulated under 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 co mpliance plan should be able to recognize the carbon reduction potential of systems that have lower 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 to convert fuel to useful energy should be recognized if the systems have the ability to provide power to the grid and their hours of operation increase or they switch to a lower carbon fuel such as switching from coal to natu ral gas or from natural gas to a biofuel; and (4) New CHP systems not covered by existing rules; these systems should be treated as energy efficiency measures, and the energy savings they provide converted into a reduction of generation and associated emis sions from affected EGUs.

Response 29c : The 111(d) rulemaking only regulates existing sources. However, the EPA believes that the rule generally favors and incentivizes more utilization from more efficient units (regardless of whether they are affected), and therefore CHP units that operate in a manner where useful thermal output is a significant component should enjoy a compliance advantage relative to similar generating technologies that lack the cogeneration capability

Comment 29d : Commenters disagree d that the thermal contribution of CHP should be relied upon in the plan to meet a state goal since it requires that the thermal output be used far into the future. Commenters stated that an agreement to generate heat for a co

- located industrial or manufac turing facility may not last through the interim period, 2030, and beyond. Commenters361 stated that using the short term agreements to establish BSER puts states at risk of not meeting their carbon rate reduction goals.

Commenters stated that the rule shoul d be modified to ensure affected CHP units are adequately treated. Commenters stated the proposed rule includes several provisions that relate to the subset of existing CHP installations that are treated as Electric Generating Units. Commenters stated thes e provisions only apply to the handful of the nation'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 output going forward.

Comment 29e : Commenters stated that CHP units should not be subject to emission limits unless the primary purpose of the unit is to sell electricity on the grid. Commenters stated that otherwise, units that provide power pri marily for on

- site use should be allowed to voluntarily opt in to state reduction plans.

Re s ponse 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 utility (as opposed t o commercial or industrial)

.

Comment 29f : Commenters disagreed that thermal energy generation with CHP systems should be included in baseline calculations. Commenters disagreed that increased thermal efficiency offered by CHP systems can be best utilized as an incentive 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 EPA 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 be allowed

.
Commenters stated that CHP facilities should only report 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 state chooses to use CHP activitie s as part of its state compliance option, commenters stated that a CHP facility should be given credit for any reduction in CO2 from the thermal portion but it should 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 the 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 assumptions about increases and decreases in utilization. As exp lained in the CO2 Emission Performance Rate and Goal Computati on TSD for Final CPP

, the EPA recognizes that 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:

Commenter s stated EPA in cluded several units in Florida's goal calculation that have federally enforceable operating limits restricting their operation to levels below the proposed applicability thresholds. The commenter s said including such units in Florida's goal calculation is clearly in

error. The commenter s 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 BSER measures. The EPA has finalized a CPP rule that does capture a framework for evaluating the additional power production made possible by efficien cy upgrades. Section VIII.G of the Preamble discusses actions taken to adjust the CO2 emission rate of an affe cted EGU. Inherent in the emission rate is the reported emissions and generation of the source 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 rate.

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

Commenter s stated EPA's proposed approach narrowly targets the existing fossil fuel

- fired electric generating fleet, reducing carbon emissions from a 2012 average rate of 1,444 pounds per megawatt hour (lb/MWh) to a 2030 average rate of 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 e missions target. The commenter s said EPA must measure compliance according to a future fleet

- wide emissions average; this artificial distinction between existing and future fleet generation creates a number of measurement and compliance concerns.

Commente r s stated as proposed, this rule ignores all existing hydropower and 94 percent of existing nuclear generation; together, these sources generated 26 percent of nationwide electricity production in 2012 and represent more than 80 percent of the carbon

- free power supply. The commenter s said the result is an emissions rate target that is out of step with current emissions. The commenter s said consider the states which would be able to increase actual carbon emissions over the compliance period if actual emissi ons from their generation fleet were measured accurately in the baseline.363 Commenter s stated EPA's baseline calculations disguise the 31.4 percent of the power supply currently generated from carbon

- free sources and undervalue the carbon reduction accomplishments of 11 states that draw more than half their electricity from nuclear and

rene wable sources.

Commenter s stated as we move into the compliance window, however, EPA must change its tune; the compliance target is not achievable with even the cleanest of fossil fuels. The

commenter s said compliance cannot be measured according to the e missions rate of the fossil fleet in isolation, but must include additional power sources. The commenter s said EPA will measure a state's emissions rate by considering emissions 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 poss ible by energy efficiency investments.

Commenter s stated this asymmetric treatment of carbon

- free sources, that bolsters production from variable sources and diminishes the role of baseload 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 commenter s said such an approach would appropriately credit early

- acting states that rely heavily on nuclear and hydro and create near

- term incentives to improve the efficiency of and power production from these significant existing sources. The

commenter s said if the EPA does not capture these existing sources in compliance measurement, it must create a framework for evaluating the additional power pro duction made possible by efficiency upgrades or be prepared to abandon significant low

- cost compliance possibilities.

Comment 32: Application of BB1

Response 32: As described in the Section V. C of the Preamble, the 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 individual units may face limitations that keep it from achieving the fleet

- wide building block assumptions. 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:

Commenter s stated for step 2 (application of Building Block 1), U.S. EPA took the total CO2

em issions amount for the coal

- fired steam EGU group in each state from Step 1 and reduced it by 6%, reflecting HRIs. The commenter s contend ed that there is no direct, one

- to

- one relationship between HRI projections and CO2 intensity; this represents a gross oversimplification of the true complexity of fossil

- fuel

- fired generating units.

Commenter s stated the use of a standard assumption of 6 percent heat rate improvement applied to all coal units will not be feasible on some units, and results in more stringe nt 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 commenter s said many utilities already implement ongoing heat rate improvement programs to c apture the efficiency gains that EPA is assuming in the "best practices" portion of its Building Block 1 assumption, making a further 4 percent improvement unlikely. The commenter s said the ability to achieve a 2 percent improvement through equipment upgra des will vary from plant to plant; new coal units and coal units that have already implemented heat rate improvement projects will have more difficulty achieving further heat rate reductions than older units and units that have not previously undertaken th ese projects/programs. The commenter s ma de 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 potential for, and cost

- effectiveness of, further heat rate improvement projects at individual electric generating units (EGUs).

Comment 33: Discrepancy between BB1 goal setting HRI and compliance scenario

Response 33: The EPA’s BSER quantification is not prescriptive. Therefore, in the EPA’s compliance modeling sources/states were free to choose 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 quantification, they repres ent alternative emissions reductions that can move a source/state towards compliance and alleviate the need for sources/states to rely on the building blocks technologies.

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

Comm enter s stated that there is an apparent discrepancy with EPA's goal setting vs. EPA's compliance modeling (e.g., EPA goal setting has coal

- fired units improving efficiency by 6%, but EPA's "Option 1

- State" compliance scenario shows all of Gulf Power Comp any's coal

- fired units retiring, which would completely negate any such efficiency improvements).

Comment 34: The EPA double

- counts CO2 emissions reductions from Block 1 and Block 2

Response 34: The EPA disagrees with the comment. The EPA showed each bu ilding block implementation at proposal. In some cases, one building block may have negated the prior. For example if building block two generation replaced all fossil steam generation in a state, than the building block one implementation has no impact. Because 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 c ommenter s 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 completely replaced coal generation. See secti ons VI and VII of the final rule preamble for discussion of how subcategory

- specific emission performance rates and state goals were calculated for the final rule.365 The following are summaries of the specific public comments under this comment:

Commenter s stated EPA's model predicts a fleet

- wide reduction in CO2 emissions resulting from a heat rate improvement of 6%; EPA then, under Block 2, appears to predict that many of the same coal fired power plants will be retired under Block 2. The commenter s said it would be nonsensical, and incredibly economically damaging, to undertake heat rate improvements and then only shortly thereafter shut down those same units; but by combining Building Blocks 1 and 2, and using projected emission reductions combined betwe en these two steps, EPA is doing just that. The commenter s said this results in the double

- 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 emis sion guidelines.

Comment 35: Application of BB2

Response 35: Because the 111(b) and 111(d) applicability requirements treat fossil steam sources as one category, the EPA’s replacement assumptions for building blocks two and th ree do not prioritize between coal and OG steam . Moreover, the EPA observed that nationally the ratio of OG steam generation to coal steam generation is low, and that in some cases OG steam sources have higher emission rates than coal sources in the baseline. For these reason s, the EPA treats all fossil steam equally for replacement purposes.

As described in Preamble Section V.A.4.b, the EPA relies on net summer capacity for quantifying BB2 potential in this final rule. Section V along with the Greenhouse Gas Mitigation TSD also explain the EPA assumptions regarding incremental NGCC generation potential and the underlying infrastructure comments.

As explained in the Goal Computations TSD at Proposal, 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 final rule is premised of regional fleet

- wide reduction potential of a building block and the EPA has left states the flexibility to assign reduction r esponsibility in a manner that it best sees fit regarding unit

- level limitations.

Neither at proposal or final does the EPA expect Arizona to eliminate all coal steam generation as part of their compliance pathway.

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

Commenter s stated for step 3 (application of Building Block 2), if the generation data for the NGCC group in a state developed in Step 1 showed average annual utilization below 70% of those units' maximum possible out put, and the generation data developed in Step 1 also included generation from the coal

- fired steam or oil/gas

- fired steam EGU groups in that state, the generation and emissions figures for the NGCC group were increased. The commenter s said in addition, th e generation and emissions figures for the coal

- fired and oil/gas

- fired steam EGU366 groups from Step 2 were proportionately decreased to reflect an estimated potential increase in utilization of the NGCC group to a maximum of 70%. The commenter s 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 fossil generation was shifted from the coal

- fired and oil/gas

- fired steam EGU groups, which h ave higher CO2 emission rates, to the NGCC group, which has a lower CO2 emission rate, the total (across all four groups) of the state's CO2 emissions was reduced. The commenter s said U.S. EPA is also requesting comment on an alternative computation proced ure; to the extent that 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 generation 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 commenter s ha ve 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 analysis of the natural gas infrastructure necessary to maintain these levels of ge neration, inadequate consideration of the geographic location of existing and under

- construction within the power grid, and an incomplete accounting of the true costs of increased natural gas usage with respect to manufacturing and residential heating need s. The commenter s wishe d to reiterate that increased use of NGCC units was driven in the IPM model by the addition of a "shadow cost" to each ton of CO2, absent a detailed explanation of how U.S. EPA envisions such a cost being applied in a state plan.

Com menter s stated EPA assumes that NGCC units can be "re

- dispatched" to a 70 percent capacity factor but fails to recognize several significant impediments to achieving that goal; first, some NGCC units were financed and designed to operate as a cycling plant at much lower capacity factors than 70 percent; as such, those NGCC units often have permit limits that may preclude operation at a capacity factor of 70 percent.

Commenter s stated for example, in EPA's goal calculation for New Mexico, EPA assumed that A fton 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 duct burner

- which represents a significant portion of the total capacity of the unit

- for 1,920 hours per year, which equates to only a 22 percent capacity factor. The commenter s said the MW capacity of the unrestricted portion of the facility (i.e., without the duct burne r) is only 232 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 commenter s said for the duct burner to make up that difference, based on the 60 MW capacity of the burner indicated in the Afton permit, it must operate at least 5,621 hours, which is nearly three times the level that the Afton permit authorizes for duct burner operation. The commenter s said conversely, if the duct burner operated for all 1,920 hours authorized, thus generating 115,200 MWhr, that would leave 1,644,684 for the unrestricted367 portion of the facility (232 MW) to meet EPA's 70 percent assumption, which would require operation at an 81 percent capacity factor, much higher than EPA has proposed.

Commenter s said in short, to satisfy the level of generation EPA calculated for the re

- dispatch of the Afton facility, PNM would have two choices

- either 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 permitting and regulatory requirements; because EPA has neither evaluated whether an 81 percent capacity factor is achievable (at Afton or any other combined cycle facility), nor evaluated the potential issues associated with revising the Afton permit to allow increased duct burner operation, EPA's rote application of its building block 2 assumptions to Afton, and New Mexico as a whole, is inappropriate.

Commen ter s were concerned about the significant impact of the very recent additional EPA proposal for creating a minimum value of re

- dispatched coal to non

- existent NGCC power plants

or to co

- firing natural gas in existing coal

- fired boilers.

Commenter s stated b ased on the commenter s ' evaluation 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 natural gas combined cycle, NGCC, generati on. The commenter s 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 commenter s said it is also unclear whether E PA reduced the generation account for reserves, transmission constraints, transmission losses, and added related issues.

Commenter s stated co

- owners of Big Stone are investing near $400 million in the regional haze pollution controls; the redispatch assumption is not feasible in this case and is expected to result in required replacement generation; effectively stranding this asset, i ncluding the investment of regional haze controls. The commenter s said due to this projected outcome, the

commenter s believe d that the remaining useful life of the unit has not been considered; for these reasons building block two should be eliminated from South Dakota's target.

Comment 36: Recommendations for Building Block 2

Response 36: See section s V.A., V.D. , and VIII of the final rule 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:

Commenter s believe d it is necessary for EPA to consider each affected facility's remaining useful life when setting the state goals, the commenter s also believe d 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 commit ments made by utilities to shut down or convert coal

- fired units to natural gas during the interim period. The commenter s propose d the following few targeted changes to the final rule:

1. For purposes of goal setting under Building Block 2:

a. Re

- dispatc h from coal

- fired EGUs to natural gas combined cycle (NGCC) EGUs should occur upon the later of any of the following, if re

- dispatch would occur prior to January 1, 2030:

i. January 1, 2020;

ii. 40 years after initial commencement of operation; or

iii. 20 years after commencement of operation of major pollution control retrofits, such as selective catalytic reduction (SCR), flue gas desulfurization (FGD), or baghouses at any EGU if installation occurred prior to issuance of the final 111(d) rule, or afte r commencement of operation of selective non

- catalytic reduction (SNCR) or electrostatic precipitators (ESPs) at an EGU owned by a small utility as defined by the Federal 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 convert to natural gas

- fired operation, re

dispatch would occur as specified in an applicable implementation plan or enforceable Title V permit, provided that such comm itment is entered prior to the effective date of the final rule and the date of shutdown or natural gas conversion is prior 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

- fir ed EGUs for purposes of calculating the interim and final Goals.

2. For purposes of goal setting, when re

- dispatching 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 Performa nce Standard for EGUs.

Commenter s support ed the Xcel Energy recommended changes 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 act ual NGCC MWh's to calculate a new adjusted capacity factor; then re

- calculate a new Block 2 with the adjusted capacity factor.

Commenter s stated one area in which EPA may want to revise its goal computations is the treatment of NGCC emission rates and pote ntial output; the proposed rules treat all NGCCs in a state as being essentially the same, and assume that all NGCCs can be operated at 70% capacity factor with the average 2012 emission rate of the state's combined

- cycle fleet. The commenter s said this as sumption is problematic, because NGCCs come in at least three varieties:369 - Cogenerating units with significant steam load, which have very low net heat rates and emission rates, and whose output may be limited by the energy requirements of the steam host; assuming that these units can increase output from 2012 levels may not be realistic, and their net emission rates are not representative of the potential performance 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, at high load; these units can generally operate at capacity factors over 85%, but many operated at much lower capacity factors in 2012; at low load levels, or with many starts and sto ps, the units had much higher 2012 heat rates and emission rates (over 900 lb/MWh in some cases); rather than assuming that these units will operate at 2012 emission rates at 70% capacity factor, EPA should assume that they will have a heat rate typical of high

- load operation.

- Older NGCCs, from the 1970s and 1980s, and those that 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 capacit y 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 (Ston y Brook and Cleary in Massachusetts, Coolwater in California, Brunot Island in Pennsylvania, Sterlington in Louisiana, Beaver in Oregon) ran at capacity factors as low as 1% and heat rates as high as 15,000; while these units will never operate at the effi ciency and CO2 emission rates of the high

- efficiency plants, their performance would improve remarkably were they operated at higher capacity factors.

The commenter s said the EPA should examine the feasibility of differentiating the NGCCs into these three categories, and using generic (rather than 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:

Commenter s stated Block 3 assumes that renewable energy production can increase to a level above the minimum lo ad in the ERCOT {Electric Reliability Council of Texas} market. The

commenter s said it would be extremely difficult for Texas to achieve both a 70 percent capacity factor for NGCC plants and 20 percent renewable energy production without increasing CO2 emi ssions. The commenter s said ERCOT currently has over 11 gigawatts (GW) of wind capacity and 49 GW of gas

- fired capacity; during low load periods (off

- peak hours in the shoulder months of spring and fall), the majority of ERCOT's NGCC fleet would be turned offline and a percentage will be backed down to the unit's Low Sustainable Limit (LSL) to provide ancillary370 services. The commenter s said when NGCC are ramping up or down or when those units are not performing at their High Sustainable Limit (HSL), CO2 emi ssions 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 compared to its HSL. The commenter s said not only are CO2 emissions higher per MWh, bu t other pollutants increase on a per MWh basis as NGCCs ramp up and down; this scenario provides another example of EPA's building blocks working against each other.

Commenter s stated New York State must get credit under the EPA's Plan for its existing

ren ewable energy resources. The commenter s said New York power plant developers have been making investments toward meeting the goal of the state's RPS of having 30 percent of the electricity consumed by New Yorkers come from renewable energy resources by 201 5. The

commenter s said according to the NYISO's Power Trends 2014: Evolution of the Grid, approximately 23 percent of New York's electricity generation is supplied by renewable energy resources. The commenter s said with the assistance of the RPS program, a diversified generation fleet has continued and been expanded, bringing the level of renewable resource capacity in the state to over 6,000 megawatts (MW). The commenter s said only in

- State renewable energy resources are eligible for the RPS. The commenter s said in terms of the overall resource supply mix available for New York State and the associated emissions benefits, the EPA's Plan should account for the value of existing in

- State hydro resources. The commenter s said imported resources should not be co nsidered for emission reductions ahead of reductions that are available from power plant assets in New York State. The commenter s said additional renewable energy resources in New York State are needed to meet New York's RPS goal and to garner the associat ed emissions benefits within New York State.

Commenter s stated Building Block 3 requires that states expand the amount of lower

- carbon generating capacity; in the case of Indiana, the interim goal is an additional 5 percent by 2020 and 7 percent by 2030. T he commenter s said since the 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 disincentive for future voluntary efforts to reduce GHGs or any other emissions from regulated units. The commenter s said in setting the state

- by

state renewable goals under Building Block 3 EPA did not consider the renewable potential of each state, but EPA instead used a regional methodology tha t does not account for significant differences in the renewable potentials of each state. The commenter s said for example, for purposes of setting renewable targets EPA placed Indiana in the "North Central" region, which includes Illinois, Iowa, Michigan, Minnesota, Missouri, North Dakota, South Dakota and Wisconsin. The commenter s said EPA used a regional average of existing renewable portfolio standards to prescribe state targets within that region; this ignores both the political realities that existing renewable energy standards are creatures of 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 rene wable potentials; for example, Indiana has limited solar resources. The commenter s said in 2013 the Indiana Utility Forecasting Group issued its report in which it explains that Indiana is in a region of the country371 that has the lowest annual average solar radiation. The commenter s said in addition, EPA's assumptions about the potential for wind power in Indiana are erroneous as compared to the wind potential of Iowa and the Dakotas, and the inclusion of Indiana in a region that includes these northern stat es inflates Indiana's renewable targets beyond the potential incremental capacity that may be available to meet the state's goals. The commenter s said EPA should allow each state to determine its own potential renewable targets based upon the renewable pot ential of that state. The commenter s said EPA must also clarify 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 state 's borders; approximately 50 percent of the wind secured in purchase power agreements in the state is produced out of state.

Commenter s stated the existence of emission reduction policies such as renewable portfolio standards act as a supplemental to the o verall average emission reduction per Mwh simply by being on the books; but the tangible benefits of such policies are so difficult to measure that it is impossible to know how much actual emission reduction is a direct result of these renewable energy ini tiatives. The commenter s said r ather 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 reduction goals; as a result, s tates would only be able to meet the new targets if they enacted pro

- renewable policies such as renewable portfolio standards.

Commenter s stated in the Proposal, EPA reduces each state's CO2 emission rate goal using renewable energy and nuclear energy fact ors:

- Renewable energy is factored in by adding potential renewable energy growth for each state into the state's emission factor for affected EGUs calculated 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

- percent capacity factor) to account for "at risk" generation into the state's emission factor for affected EUGs.

The commenter s said the EPA should calculate ren ewable energy's contribution to the goal in a way that does not penalize states that have taken steps to develop renewable energy while creating incentives for the continuation or furtherance of such efforts. The commenter s believe d the EPA satisfied this objective in the Proposal. The commenter s believe d the EPA's method of using regional averages is appropriate, as that approach is more likely to account for variability in the availability of resources across regions of the country. The commenter s ha ve no t investigated alternative regional boundaries; therefore, does not offer comment on the appropriateness of the specific regions used by the EPA. The commenter s also support ed 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 Commenter s stated Dairyland is a true leader in renewables; over 12 percent of the power Dairyland provided to c onsumers last year came from a diverse mix of renewable resources. The

commenter s said Dairyland has access to hydro, biomass, solar, biogas and wind resources. The

commenter s were concerned the proposed CPP does not guarantee Dairyland considerable effort s to develop renewable resources will be given proper credit. The commenter s said to diversify the Dairyland generation portfolio and protect Dairyland member interests, Dairyland utilizes renewable resources in all the states that Dairyland serves; yet ev en though Dairyland serves members in these states, the current rules do not ensure Dairyland will receive credit for these resources simply because the coal plants are all located in Wisconsin. The commenter s recommend ed the rules should give utilities cr edit for all their available renewable resources, regardless of the state in which the resource sites are physically located.

Commenter s stated EPA must be consistent in the manner in which it treats renewable energy that is sold across state lines. The co mmenter s said 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 achievement, if this generation is credited to the power purchaser i n a different state, the generating state would be required to make up the shortfall.

Commenter s stated the Proposed Power Plant Rule, only incorporates 'renewable green power' as a program under a States individual carbon emissions programs, a.k.a. Califo rnia 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, and monetized and not the actual value of the renewable green power generation capacity in terms o f Jobs, or ZERO emissions (wind, solar).

Commenter s stated EPA's BSER Building Block 3 encompasses both renewable generating capacity and new and preserved nuclear capacity; the commenter s support ed the increased development of renewable energy (RE) nation

- wide, but 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 individual state emission goals tha t are not achievable. The commenter s said EPA should revise the generic approach to quantifying potential reductions from increased deployment of renewables and EPA should adjust state

- specific goals to reflect state

- specific concerns about the proposed em ission rate goals before finalizing these goals; EPA should work with the states to set achievable state goals that reflect in

- state conditions.

Commenter s stated EPA's proposed primary and alternate methods for setting RE generation goals raise significa nt 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 commenter s said this regional approach inappropriately assumes that in dividual state RES mandates are proxies for region

- wide RE potential and that all neighboring states have similar RE potential; further, EPA's use of RES requirements fails to consider key design features of state RES programs.373 Comment 38: The EPA needs to consider the remaining useful life of existing plants when formulating the group of affected generating units.

Response 38: See sections V.A., V.D., and VIII of the final rule preamble of the CPP for the EPA’s response to this comment. Also see the dock et memo titled “Stranded Assets Analysis”.

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

Commenter s stated exclude coal plants from the re

- dispatch calculation if they are 40 or less years old as of 2030. The commenter s said this policy 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 accommodate the transition away from coal based ele ctricity.

Comment 39: The proposed rule does not account for increased duct firing as NGCC operations increase.

Response 39: The EPA disagrees with the comment that it should assume a higher NGCC emission rate based on increased utilization. First, the EPA surveyed historical state

- level data and found it to support a negative correlation between emission rate and utilization

– suggesting the emission rates are generally lower (not higher as suggested by the commenter s ) as utilization increases in a stat e. This is likely due to efficiency 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 building block analysis and a ssessment of the 75% value is based off historical generation and reported capacity values that reflect duct burner operation.

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

Commenter s 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 consider the implications of its building blocks on unit opera tions. The commenter s 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 commenter s said the duct

- fired capacity has a significantly higher incremental heat rate

- and emission rate

- than the unfired capacity, so the 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 some units . The commenter s said when determining the appropriate emission rate to use for 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 i ncreased 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 NGCC

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:

Commenter s stated in calculating the emission rate targets for Arizona, EPA assumed that NGCC units would operate in future years at an emission 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 with EPA's analysis regarding emission rate capabilities for new, highly efficient units under section 111(b). The comm enter s said this single year snapshot could underestimate the emission rates for these units given that these units could operate differently in the future. The commenter s said EPA should remain consistent with its analysis regarding the emission rate that is continuously 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 cl ean energy storage must be properly accounted 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:

Commenter s stated the proposed CPP fails to recognize the importance of clean energy storage in its compliance equations and BSER analysis. The commenter s said Michigan is a prime example of the importance of energy storage vi a the Ludington Pumped Storage reservoir (LPS or Ludington) co

- owned with DTE Electric. The commenter s said Ludington can provide energy at a moment's notice, which is critical for grid stability and reliability. The commenter s said at night, when electric demand is low, Ludington's reversible turbines pump water 363 feet uphill from Lake Michigan to the 842

- acre reservoir. The commenter s said during the day, when electric demand is high, the reservoir releases water to flow downhill and turns turbines to m ake carbon

- free electricity. The commenter s said Ludington 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 receive 300 MW in additi onal efficiency upgrades. The commenter s said the output is more than double the capacity of any single unit on Consumers Energy's system, and is a key piece of Michigan's reliable energy infrastructure. The

commenter s said pumped storage technology enable s the plant to respond quickly to the daily,375 weekly and seasonal highs and lows of Michigan's energy demand. The commenter s said the plant also provides economic benefit to Michigan ratepayers by enabling Consumers Energy to avoid expensive spot market pri ces when customer demand exceeds the capacity of the company's baseload plants, such as during extreme weather (e.g. heat waves and polar vortexes). The commenter s said nonetheless, EPA's proposed compliance formula does not include clean energy storage; i t penalizes states that have prudently invested in energy storage technology because the emissions and megawatt hours from plants used to charge the storage system are included in the equation, but the megawatt hours discharged 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 resources with energy storage

Comment 42: Co

- firing

Response 42: Co

- firing is not part of the final BSER quanti fication. See section V. of the Preamble and the GHG Mitigation Measures TSD

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

Commenter s stated co

- firing should not be included in the calculation of state emission rate goals.

Commenter s agreed that co

- firing should be an available compliance option for coal

- fired EGUs, but opposes the inclusion of co

- firing in the computation 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 commenter s stated under the federal NSR regulations (which most states have adopted either direc tly or by issuing their own similar regulations), EGUs can compare baseline emissions to projected actual emissions to determine whether a project will result in a significant increase in emissions. In calculating "projected actual emissions," 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 commenter s st ated in guidance regarding the Northampton Generating Company, EPA Region III made clear that both conditions are required before emissions increases can be excluded from the projection. The commenter s said for example, according to the Northampton Guidan ce, 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 emissions from use of the new f uel under the demand growth exclusion because the emissions would be related to the fuel switch. Northampton Guidance at 4

- 5.376 The commenter s stated this means that, for a coal

- fired unit that proposes to co

- fire natural gas, the unit would be unable to in crease its utilization and corresponding emissions over the baseline period without potentially triggering NSR, at least for NOx, CO and particulate matter.

The commenter s said this is because, even though increased utilization and emissions from a unit

w hile it is combusting coal would be unrelated to the 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 calculating the projected e missions.

The commenter s stated such a consequence will discourage companies from undertaking natural
gas co

- firing projects at their coal

- fired units.

The commenter s said given the risk that co

- firing will trigger NSR or require units undertaking such p rojects to limit their future utilization, it is not appropriate to consider co

- firing in the computation of the emission rate goals. The commenter s stated at a minimum, before considering this option, EPA would need to evaluate the costs associated with o btaining an NSR permit for co

- firing, including the potential installation of hundreds of millions of dollars in controls for conventional pollutants.

Commenter s 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 Inapp ropriate.

Response 43: The EPA assumes the historical NGCC average emission rate as a reasonable reflection of the NGCC fleet

- emission rate going forward. In addition to the reasons provided in Response 39, the EPA disagrees with the comment here on several grounds. First, the significant amount of NGCC fleet expected to come online is expected to be more efficient than the historical average. Second, as units increase their utilization they improve efficiency by removing the inefficiencies that materialize in units 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 fleet 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 the same 75% utilization level. For these reasons, the EPA feels that its rel iance on the historical emission rate is conservative and reasonable.

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

Commenter s stated when computing the NGCC emissions for the Building Block 2 NGCC redispatch, EPA calculates the additional CO2 emissions from baseline NGCC units using the increase in generation from baseline to 70 percent NGCC capacity factor, at the original base line377 year state average NGCC CO2 emission rate. The commenter s said this is inaccurate and inappropriate, and underestimates the additional NGCC CO2 emissions due to the redispatch. The commenter s said instead of using the average baseline year NGCC CO2 em ission rate, EPA must compute and use the incremental NGCC CO2 emission rate; that is because most of the most efficient, lowest emitting units are already generating at or near the basis 70 percent capacity factor (and have hence significantly influenced downward the baseline average CO2 emission rate), whereas the units that would actually be redispatched and contribute the most increase in net generation are the less efficient, higher emitting units. The commenter s said the incremental emission rate of t hese higher emitting units must be used to estimate the additional CO2 emissions from the redispatch.

Commenter s stated to compute the state average incremental NGCC CO2 emission rate requires an analysis of the eGRID baseline data at the generator level; the EPA cannot summarize the data to the state level first, and then perform the calculations. The commenter s said after appropriately determining the generator net capacity ratings the EPA must calculate and review generator

- by

- generator the baseline cap acity factor, CO2 emission rate, and potential contribution of each to the redispatch. The commenter s recommend ed the following procedure to compute the state average NGCC redispatch incremental CO2 emission rate:

- For each NGCC generator, calculate the ba seline year net capacity factor using the eGRID net generation and the summer net capacity rating; subtract this number from 70 percent to determine the net capacity factor increase (or decrease) available; if a generator was operating above 70 percent net capacity factor in the baseline year, it is appropriate to adjust this downward to the 70 percent target.

- For each affected NGCC generator, calculate the baseline year average CO2 emission rate by dividing the CO2 emission (in tons) by the net generatio n MWh, times 2000 to convert to pounds.

- For each NGCC generator, calculate the number of annual net generation MWh available for redispatch using the net capacity factor increase available, and the summer net capacity rating of the unit.

- For each NGCC generator, calculate the number of annual 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 annua l 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 availa ble; this is the incremental NGCC CO2 emission rate; use this in place of the378 baseline year average NGCC CO2 emission rate when computing the CO2 emission increase from NGCC units due to the Building Block 2 redispatch.

Comment 44: BB2

- New NGCC to subs titute for existing NGCC

Response 44: See Section V in the Preamble for a discussion of building block two in the final CPP Rule.

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

Commenter s stated under Block 2, EPA is calli ng for 70% capacity factor existing NGCC unit operation; EPA is taking comment on whether new natural gas combined cycle generation should "count" towards delivery of EPA's existing NGCC 70% capacity factor Block 2 target. The commenter s said EPA is also t aking comment about whether new NGCC should be allowed for displacing existing coal generation. The commenter s said EPA proposed that they will have the new NGCC figured into both target

- setting and compliance. The commenter s recommend ed that EPA not inclu de new NGCC into Section 111(d) target setting or compliance. The

commenter s support ed EPA allowing the segment of new NGCC generation that outperforms the Section 111(b) NSPS to "count" towards satisfying Section 111(d) compliance targets. The

commenter s said EPA should leave it to the discretion of the state about whether the state wishes to opt

- in new NGCC for giving relief to EPA's proposed 70% capacity factor target for existing NGCC. The commenter s note d that EPA should eliminate the Block 2 target co mponent for Minnesota, giving deference to the Minnesota established Integrated Resource Planning process, which is already giving consideration to fuel diversity, cost and environmental profile, including CO2 environmental externalities. The commenter s su pport ed 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 EPA is finalizing building block three treatment in the a similar manner it finalized 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:

Commenter s stated moving forward with the proposal, EPA wishes to receive further comment on whether or not the difference of the target renewable energy goal for each state and its 2012

counte rpart should exceed 2012 fossil fuel

- fired generation. The commenter s said the difference should absolutely surpass the state's reported carbon producing generation level because it will then push the effort of rising renewable energy higher than fossil fu el

- 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 com ment:

Commenter s stated the draft rule bases the final target on 2029 energy efficiency and renewable energy potential, but the target is for 2030. The commenter s said while the state plans are to show how they will meet the target in 2030, actual demonstr ation of compliance with the final target is over the rolling three

- year period of 2030

- 2032. The commenter s stated the targets for 2030 and later should be based on the energy efficiency potential in those years. The commenter s added the impact of an ex tra year or two would be greater, 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 discussion of nuclear and RE treatment in the final rule.

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

Commenter s stated for step 4 (application of Building 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 commenter s said nuclear generation was estimated as the amount of under

- construction and preserved nuclear capacity for each state operated at a utilization rate of 90%, consistent with recent industry

- wide average utilization rates for nuclear units. The commenter s ha ve several concerns with the technical approach used by U.S. EPA.

Commenter s support ed 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 4 8: See response 47 above.

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

Commenter s support ed EPA's reliance on increased renewable energy generation to achieve significant carbon emissions reductions, but believes that the EPA significantly underestimated the potential for renewable energy generation, in part because the proposed rule does not380 explicitly account for distributed solar resources. The commenter s said renewable energy, especially wind and solar, have been growi ng at an astonishing rate and their costs have declined dramatically. The commenter s urge d the EPA to: (1) remove the "maximum" limits on growth of renewable energy, (2) adjust the renewable energy goals to account for the gains in renewable energy deploym ent 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 evaluate the quantity of renewable e nergy that can be achieved at reasonable cost. The commenter s believe d the CPP should drive renewable energy development in Texas by accounting for the actual and expected rate of deployment, rather than weakening it.

Commenter s stated there is a potential difference between the options for establishing RE potential for the purpose of goal setting and how EPA will determine compliance. The
commenter s said in target setting, EPA set the baseline 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 generation by total in

- state generat ion to yield a percentage. The commenter s said EPA's methodology does not account for whether that renewable energy had been "implemented" by the state, or whether the RECs corresponding to that generation are held in

- state; thus, some states may have a hi gher 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

- specific policies in its calculation of renewable energy potential

.

Commenters s tated, since 1981, the FPSC has established 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 and new load growth, howev er, is not an appropriate standard setting strategy. Commenters said, likewise, PURPA and Florida law provide the legal framework for the development, interconnection, and economic parameters of renewable energy. Commenters said, the EPA must defer to exis ting Federal and state

- specific policies in its calculation of renewable energy potential for Florida and other states.

Comment 49: The EPA has miscalculated renewable energy availability

Response 49: See response 47 above.

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

Commenter s stated EPA miscalculates the availability 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 the maximum level of RE generation in any state at the regional average target, assuming that all States within a region will grow at the sam e rate to reach RE targets, recognizing only RE developed 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 commenter s added most legislation accounts for RE at the point of use, rather than the point of generation. (See Pace Study Section 3.1, at 16.) The commenter s said unless EPA is seeking to substantially disrupt the market in RE, it should clarify that renewables are accounted at the point of use, not generation, consistent with state practice.

Commenter s stated in order to determine state RE targets 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 targets. The commenter s 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 available within ea ch State, availability of other fuels within the State, availability of transmission in the State, the costs, benefits and consequences of achieving environmental, economic and power goals through alternative means, and economic conditions of electric cons umers and/or rural electric ratepayers.

Commenter s stated EPA complicates its faulty methodologies by using blanket assumptions for all States, both for assuming that all states within a region will grow at the same rate to reach RE targets and in applyin g its 5.8% nuclear "at risk" assumption to every state that has existing nuclear capacity. The commenter s said these assumptions particularly harm Arizona and its associated RE target as Arizona's nuclear generation is not at risk of being retired due to m arket conditions; therefore, it is inappropriate to apply the 5.8% "at risk" assumption to Arizona and its target. The commenter s said EPA's failure to account for the fact that "at risk" facilities are not spread evenly throughout the nuclear fleet and fo r states that have much lower "at risk" units, substantially affects States', such as Arizona's, RE 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:

Commenter s stated EPA's BSER Building Block 3 encompasses both renewable generating capacity and new and preserved nuclear capacity. The commenter s said EPA's approach to quantifyi ng 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 achievable. The commenter s said if EPA does not revise the approach to quantifying potential reductions 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 revised its BB3 approach to better reflect the comment. Section V also explains why demand

- side energy efficiency is not part of382 the final BSER quantification. Both RE and EE abatement measures are eligible for demonstrating compliance (See Section VIII of the Preamble).

As described in Section VI and the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule, the EPA reversed the order of implementing the building blocks to be sure it captured the full pot ential of BB2 per the commenters 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 take s a regional approach to quantifying the BSER, and thus the corresponding sub category rates and state goals reflect the interconnected

- nature of the grid and the replacement potential of the regional RE potential is distributed across the sources/states in a region instead of being concentrated in the state where they may be eventually located.

A discussion regarding the use of some biomass feedstocks for compliance purposes can be found in Section VIII of the preamble.

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

Commenter s stated EPA must make consideration regarding the RE & EE calculation in the state goals.

Commenter s stated EPA must be consistent in the manner in which it treats RE that is sold across state lines. Th e commenter s said when EPA calculated 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
commenter s stated this points out one more reason that RE should not be used in EPA's goal setting but, rather, encouraged as a means of achieving compliance.

Commenter s added EPA should adjust the goal

- setting formula for calculating building block three to reflect the reduced emissions from affected EGUs from displacement by renewable energy. The commenter s stated the NODA addresses the issue regarding the calculation of state

specific carbon reduction goals; specifically, it acknowledges 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 make the building block 3 calculation consistent with the building block 2 calculation. The commenter s 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 fr om the reduction in fossil generation when renewables and energy efficiency increase; 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 block three, and emissions associated with affected EGUs should be removed from each state's carbon intensity numerator. The commenter s said this approach would also be consistent with the approach in block two for calculating the impacts of block three on the state e mission rate goals.38 3 Commenter s added renewable energy and energy should be used to remove emissions from the highest emitting resources first; this is consistent with how renewable energy would be used under a best system of emissions reductions, as displa cing the highest

- emitting resources first would be the most cost

- effective option for achieving the maximum emissions reductions. The
commenter s said if carbon cost were accounted for in generation dispatch decisions, as it may be in some regions as part o f implementation of building 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.

Commenter s added if EPA maintains its Proposed RPS Approach, it should also account for load growth when calculating the MWh required to meet the future percent

- based renewable energy targets. The commenter s stated the calculations included in the TSDs that accompany EPA's June 2 release indicate that, un der the Proposed RPS 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 arrive at the 2030 renewable energy MWh target; in rea lity, state RPS targets are almost always written as a share of future electricity consumption, so the conversion to the 2030 MWh target should have used an estimation of future load growth and 2030 load, such as the state and regional estimates provided i n EIA's Annual Energy Outlook.

Commenter s added States should be allowed to use RE generation and EE resulting from measures implemented prior to 2020 by adding such generation to the denominator in subsequent compliance periods or to allow a state to ext end beyond 2030 the impact of the final emission rate goal. The commenter s stated a state could accumulate an RE and EE "bank" between 2012 and 2020 and use it to demonstrate compliance in 2030 and subsequent years; this would recognize that states which a re leaders in RE and EE, and thus already have harvested some of the "lower hanging fruit" of cost

- effective opportunities, may need more time to reach their final goal. The commenter s said EPA should clarify that utility programs and commitments to invest in RE and EE measures constitute "existing measures" that states may count toward compliance.

Commenter s added Colorado EGUs and ratepayers have made, and continue to make, significant financial investments; requiring more reductions in states that have a lready made significant carbon reduction investments may not be as cost effective as EPA projects. The commenter s stated as proposed, the state goal is derived from extremely complex calculations that are based on numerous technical details and long

- range projections that confer a high degree of uncertainty in determining whether the state goal is appropriate, realistic and attainable. The commenter s said that states such as Colorado essentially receive reduced or little credit for early investments in rene wable energy, as the reduced baseline was then used to calculate a more stringent 2030 goal. The commenter s 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

- 20 12 renewables.

Commenter s suggested the following adjustments when determining state goals to ensure that the EPA's state emission reduction targets reflect application of the BSER to affected EGUs:

1. The EPA should exclude the technical potential benchm ark from the alternative approach and rely on the IPM model results with modifications.384 2. 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 for distributed PV from the SolarDS mode l.

3. The EPA should use the Sunshot

- 62.5% scenario distributed PV solar capacity projections to hard

- wire distributed PV into the IPM model to include distributed PV.

4. The EPA should update the current generation data for solar from EIA data with SEI A'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 year.

Commenter s 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 have to ensure that it maintains the potential emission reductions from building block 2. The commenter s said if RE and EE are assumed to displace NGCC generation, that would lower the capacity facto r 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 commenter s added the correct reductions from NGCC units could be calculated eit her by displacing 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 the specified 70 percent capacity factor.

Commenter s stated Building block 3 (RE) is calculated based on 2012 electricity demand but does not account for load growth; in some states, if load were to grow, they would basically need to add more renewables than natural gas in order to reach/maintain the goal (b ecause the goal is significantly less than the new source performance standard for new or modified NGCC plants). The commenter s asked if EPA has considered adding load growth to its equation, and if so, what growth percentage does it believe is reasonable.

Commenter s stated existing renewable generation and energy efficiency should not be used in calculating a State's emission rate goal but instead should only be considered as an eligible action for compliance purposes. The commenter s added existing 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.

Commenter s stated the power sector is moving to clean er 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 bene fit as other stakeholders have noted. The commenter s said for example, the Silver Lake Power Plant in Rochester, MN is retiring because it was too expensive to continue running and enough wind power and energy efficiency had come online in the area that th e plant was not needed for reliability. The commenter s 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 both th e numerator and denominator of the goal

- setting equation, so that 1 megawatt

- hour of renewable energy displaces 1 megawatt

- hour of fossil generation. The commenter s said either using 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.

Commenter s stated EPA also contends that some stakeholders' believe that the state goals fail to reflect the full potential, under the BSER, for incremental RE and EE to replace fossil steam generation. The commenter s said by adding incremental RE and EE generation, this action actually avoids emissions and does not decrease emissions. The co mmenter s said therefore, to subtract equivalent fossil generation from the BSER would be erroneous.

Commenter s stated as proposed, the rule is inconsistent in how it incorporates renewable energy into the calculation of Utah's 2030 goal. The commenter s sai d the inconsistency is that EPA has established a 2030 emissions goal for Utah by accounting 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 tha t receives this power under a Purchased Power Agreement (PPA) or some other "enforceable measure" to count the renewable energy towards compliance with that state's goal. The commenter s said approximately 60 percent of renewable electricity generated in Ut ah in 2012 was exported, which inflates Utah's additional renewable energy in EPA 2030 emission rate proportionally. The commenter s said excluding exported renewable electricity from Utah's goal computation would reduce Utah's compliance gap by 56 lbs CO2/ MWH. The commenter s said alternatively, keeping exported renewable energy in the goal and allowing Utah to include all renewable energy projects located in the state in the calculation of the state's post

- 2020 emissions rate would reduce the emissions rate and stringency of the goal by 39 lbs/MWH. The commenter s said EPA must ensure that the approach to attributing emission reductions from renewable resources for compliance is consistent with the treatment of these resources when setting state

- specific emis sion goals. The commenter s said EPA should either eliminate exported renewable energy from Utah's goal calculation or allow Utah to account for these renewable resources in its post

- 2012 emissions rate calculation and recognize PacifiCorp's MSP as an "enfo rceable measure" with regards to 111(d) renewable energy credit.

Commenter s stated the Proposed Regulation's emission rates for Virginia are set unreasonably and unlawfully low is because of EPA's inclusion of significant amounts of new renewable generatio n and energy efficiency in the denominator of its mathematic formula. The commenter s said although the Proposed Regulation sets state

- specific Mandatory Goals, the calculation of Virginia's Mandatory Goals disregards real world considerations specific to V irginia. C ommenter s said in this regard, the Proposed Regulation arbitrarily and capriciously extrapolates renewable and energy efficiency policy requirements of other States that have not been achieved. The commenter s said there is no analysis as to how t hese aspirational levels of renewable generation and energy efficiency, derived from other states that have their own particular geographies, existing infrastructures, and political considerations, could reasonably be achieved in Virginia or whether such l evels can be achieved in a cost effective manner given Virginia's particular circumstances. The commenter s said although the Proposed Regulation purportedly recognizes that "states differ in important ways," EPA's generic approach to this aspect of its cal culation ignores geographic differences that cannot be reasonably ignored. The commenter s said the end

- result of this unrealistic approach is that it deprives Virginia of the flexibility needed to achieve carbon reductions at a reasonable cost while still maintaining reliable service.386 Commenter s 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 min imally higher than U.S. Energy Information Administration (EIA) projections under a "business as usual" scenario. The commenter s ma d e the recommendations for inclusion of current state Renewable Energy and Efficiency Standards, which are set by law, and d etermination of future goals based on more recent growth rates of renewable energy (2009 to 2013). The commenter s said utilization of alternative energy that emits little if any greenhouse gas (unlike natural gas or incineration) should have higher weighti ng as a building block as it also produces the least harm of other direct pollution from mining, burning or management of waste products.

Commenter s stated EPA contends that some stakeholders' believe that the state goals fail to reflect the full potential , under the BSER, for incremental RE and EE to replace fossil steam generation; by adding incremental RE and EE generation, this action actually avoids emissions and does not decrease emissions; therefore, to subtract equivalent fossil generation from the BSER would be erroneous.

Commenter s 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 e xisting fossil

- based generation, under the current approach, the generation from RE and EE is essentially added to the 2012 baseline fossil generation

- this new approach would assume that some of that baseline fossil generation would be displaced by new a nd incremental RE/EE, in the context of the CPP, generation from the two major examples of renewable generation in "GHG Abatement Measures TSD," photovoltaic (PV) and on

- shore wind, appear to be preferred due to the fact they are the "fastest growing techn ologies" and they are "competitive in many regions."

Commenter s stated photovoltaic and on

- shore wind generation is not dispatchable, due to the intermittent nature of the sources; accordingly these sources must be backed up with dispatchable capacity fro m fossil

- fueled sources. The commenter s said when these intermittent generation sources begin to

- be integrated into a system, quick

- start simple cycle gas turbines are typically used to compensate for the variability in their generation; however, as they b ecome 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 commenter s said increased numbers offload swings will increase the CO2 intensity of those units and increa sed start

- ups and shutdowns will increase CO2 emissions without generation. The commenter s said it is also difficult to determine how to calculate which fossil

- fueled emissions would be displaced by the RE and EE resources. The
commenter s ask ed would it be just coal or NGCC or some calculated combination of both; the differences could be significant. The commenter s said a calculation could be done to simply subtract from the coal generation and emissions, but this would not reflect the reality of constantly changing generation into the grid. The commenter s 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.

Commenter s stated although biomass is dispatchable, it is a limited resource. The commenter s said four biomass plants as well as the existing consumers of wood products in the area will largely consume the economically available and sustainable wood basket in the region. The387 commenter s said these biomass un its currently run at 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 available wood basket such as paper manufacturers; ther efore very little additional capacity is available to compensate for a quick drop off of wind or solar generation, a factor Virginia lawmakers realize in capping the amount of biomass that may count as part of compliance with the state's voluntary RPS prog ram. The
commenter s added the final impact on CO2 emissions is still under review by EPA, although the
commenter s strongly urge d EPA to consider biomass carbon neutral for purposes of this rule.

Commenter s stated energy efficiency measures suffer from sim ilar variability; they may be based on installation of increasingly more efficient equipment, but the use of that equipment by households, businesses and industries will be variable, driven by factors other than energy use alone. The commenter s said for ex ample, equipment that cuts energy costs may make a product or service more competitive, actually leading to increased usage that may result in more energy consumption than is saved; it should also be noted that the ultimate successes of energy efficiency p rograms are generally within the control of the customer, not the utility; utilities offer a range of consumer

- friendly energy efficiency programs but must prepared to still serve their native load should such programs not be as successful as they hope.

C ommenter s stated it should be observed that EPA's assumption of energy efficiency savings by states takes state self

- reported savings at face value; individual states have varying degrees of rigor in their measurement and verification of energy efficiency savings; moreover, the most successful states in energy efficiency, according to their self

- reported data, have dramatically higher rates than what's offered in either Virginia or North Carolina service territory. The
commenter s 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 commenter s said t he potential for compensating with the variability with the other building blocks is limited, due to the long lead times required. The commenter s said t o ensure compliance, it is essential that the emissions and generation from existing sources be retained as they are and not be reduced by the RE and EE resources.

Commenter s stated the formula used by EP A to establish 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 replace generation from the dirtiest fossil fuel

sourc es and at a faster pace, yielding greater emissions than the EPA assumed.

Commenter s stated in order to set stronger goals, the commenter s urge d EPA to greatly increase the assumption for possible increases in renewable energy development used in setting s tate reduction targets. The commenter s said the formula used to set state goals to the plan currently only includes a conservative average of regional renewable energy policies; the
commenter s believe d the EPA should use the assumption of at least 30 perce nt 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 end date for the Clean Power Plan.

Commenter s 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 commenter s said states have the policies, technology, and workforce available to achieve more energy efficiency gains right now;388 accordingly, EPA should increase energ y efficiency targets in their goal

- setting formula to much more than the 1.5 percent annually after 2017.

C ommenter s requested that EPA affirm that it will not discount reductions from EE measures, other than to limit reductions to those that occur during the compliance period. The commenter s stated that EE measures should be treated the same as RE measures.

Commenter s support ed EPA's proposed revision to the goal computation methodology; in reality, fossil EGUs will dispatch less when load is reduced, and when low

- cost, must

- take renewable energy generation is available. The commenter s 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 commenter s said how muc h the rate declines is highly sensitive to what assumptions EPA makes about which fossil units are displaced. The commenter s said if EPA's emission rate targets do not include this effect, then they will be artificially high (less stringent); thus, a state could actually do less in all building block categories than EPA anticipates, and still reach its target. The commenter s sa id this possibility reveals that the emission rate does not properly reflect the best rate of emission reduction.

Commenter s stated in EPA's June proposal, incremental renewable energy ("RE") and energy efficiency ("EE") was simply added to the denominato r 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 on a pro rata basis across generation types (i.e., fossil steam a nd gas turbine). The commenter s said of these two approaches, the
commenter s support ed the former calculation methodology. The commenter s said location constraints on the New York system mean that all generation is not fungible, and that a wind farm locate d up

- state will not offset the use of steam units in the New York City metropolitan area; the same is true of energy efficiency programs. The commenter s added, NGCC units will be needed to balance intermittent resources such as wind and solar and provide a ncillary services during normal grid operations.

Commenter s provided comments on how to properly account for emission reductions of BSER as a system. In their statements, they argued that the Proposed Rule treats the increased utilization of lower

- emitti ng existing NGCC differently from increased generation from other low

- and zero

- carbon sources and from energy savings. The commenter s noted that EPA's description of Building Block 3 showed that EPA intended to reflect the reduced utilization of affected EGU's and not just the addition of zero carbon generation, and therefore, the
commenter s suggested that the final Clean Power Plan should treat generation from nuclear energy, renewable energy and existing NGCC in the same way.

Commenter s stated that the energy savings that constitute Building Block 4 replace MWh that would otherwise be needed from generation sources, these savings should also be treated the same as redispatch to existing NGCC. According to the commenter s , in order to calculate the impact s of Blocks 3 and 4 in a way that is consistent with the approach for Block 2, EPA should remove emissions associated with displaced EGUs from the numerator of each state's carbon intensity numerator. Affected EGU MWh should also be removed from the denomi nator, 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 commenter s expanded their discussion by stating, that to properly evaluate the system

- based impacts of Building Blocks 3 and 4, EPA should calculate the incremental MWh of nuclear generation, renewable generation, and energy savings. The commenter s clarified that, for nuclear generation, only under

- construction nuclear should displace 2012 fossil fuel

- fired generation. For renewable generation, the commenter s suggested that EPA should add all MWh representing renewable generation to the denominator in calculating each state's rate. However, the
commenter s clarified, EPA need only displace fossil generation r epresenting the renewable energy that is incremental to that produced in 2012. Finally, the commenter s concluded that all energy savings would be considered incremental to 2012 generation and so all efficiency MWh would displace existing generation.

Comme nt 52: Net generation from RE; avoided generation for EE; non

- affected units

Response 52: See Preamble Section V and VI for a discussion of BSER and the form of the emission rates. In order to capture the impact of reduced generation through building blo ck three (and alternative compliance vehicles that sources/state may chose) the EPA incorporates the generation from this replacement technology into the emission rates.

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

Commen ter s stated U.S. EPA adjusts the goals by estimating annual net generation from RE and avoided generation for EE and adding it to the output from affected units (MW

- h). The
commenter s object ed 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
commenter s said generation values should come only from the affected units, and the re newable 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 accounted for when sources/states are demonstrating compliance. The EPA has revised its building block, formula, and compliance to recognize the regional natur e of RECs.

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

Commenter s stated EPA must ensure that the equation that states use to calculate their emission rate for compliance with EPA's 111(d) interim and final targets is also the same equation EPA uses to calculate each state's interim and final emission rate targets. Commenters stated EPA has requested comment in numerous places within the draft rule and TSDs about how CO2 emission reductions from renewable electricity ge neration and energy efficiency savings should be factored into calculating a state's CO2 emission rate. Commenters stated t he State of Montana390 recommends EPA continue to use the draft rule equation, treating each MWh of renewable electricity and energy eff iciency savings as one MWh of emission free electricity.

Commenter s stated t he alternative of requiring states to attribute a specific amount of avoided CO2 emissions to each MWh of renewable electricity and energy efficiency, potentially requiring differ ent avoided CO2 emission figures for 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 m odeling marginal electricity generatin g units within a state or region is a complicated, time

- intensive, and expensive proposition. Commenters stated that e ven EPA, which has considerably more resources than most state environmental departments, does not release its eGRID estimates every year and only estimates annual, regional marginal emission rates for key pollutants rather than more detailed state

- or time

- specific marginal emission rates.

Commenter s stated that m oreover, accounting for avoided emissions as a result of renewable electricit y and energy efficiency presents a significant double counting issue for avoided emissions that occur in another state. Commenters stated g iven the interconnectedness of the electricity grid in the continental U.S., the impact 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 electrici ty was generated or energy efficiency investments were made. Commenters stated a s 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 i n its carbon emissions and generation that did not actually occur 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 immensel y complicated system of carbon emission and electricity generation trading between states in which every state's emissions and generation figures will be augmented in order to account for every other states' activities. Commenters stated t his is a recipe f or an accounting, reporting, and regulatory nightmare that will be grossly inefficient, prone to miscalculations and double counting, and more likely to create antagonism between states than to foster partnerships. Because of this, commenters stated, EPA s hould not base state compliance for renewable electricity and energy efficiency on demonstrations of avoided emissions. Commenters stated that i nstead, EPA should continue to use the accounting methodology used in the draft rule that credits renewable elec tricity and energy efficiency as zero emissions sources of electricity.

Commenter s stated h owever, if EPA determines in its final rule that the equation states must use to demonstrate compliance with their interim and final CO2 emission rate targets needs to be revised from what has been proposed in the draft rule, then EPA must also use the revised equation to recalculate each states' interim and final CO2 emission rate targets. Commenters stated that t o do otherwise would be to potentially require some s tates 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 blocks. Commenters stated i f EPA opts to account for renewable electricity gene ration and energy efficiency savings by requiring states to model avoided emissions, EPA must make it clear that states are allowed to take credit for avoided emissions that occur out of state as a result of a state's renewable electricity generation and e nergy efficiency investments so long as states use reasonable and verifiable methods for determining carbon emission impacts. Commenters stated t he avoided carbon emissions that391 result from increased renewable electricity generation and energy efficiency i nvestments are real but, because of the interconnectedness of regional electricity grids, are likely to occur across many states. Commenters stated that l imiting state credit to only in

- state avoided emissions under the modeling approach would limit the cr edit a state receives to only a fraction of the real avoided emissions that resulted from a state's investments in renewable electricity and energy efficiency.

Commenter s stated EPA has proposed to base the CO2 reduction goals on generation, while determin ing whether the goal has been met based only on consumption; this approach is essentially "comparing apples to oranges"

- it is inconsistent and will create inaccurate results, because the inputs upon which the goal is calculated are fundamentally differen t from the inputs used to measure goal attainment. C ommenter s said EPA's proposed approach has the potential to result in goals for some states that are unachievable, and goals that are too easily achievable for other states. C ommenter s said in order to mi nimize this imbalance, a state would have to find willing partner states to engage in regional or even national planning efforts or trading, so that its goal is averaged across many other states' goals. The commenter s said the notion that some states would be required to engage in extensive national or regional planning efforts to achieve compliance (i.e., states which export energy and therefore have steeper goals), while other states would have little incentive to coordinate (i.e., states which primarily purchase energy) is inconsistent and unfair.

Commenter s stated under EPA's proposal, a state that 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 r ule's requirements than states that do not. The commenter s 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 likewise; however, when calculating whet her the state has achieved its goal, the state will not receive credit for the exported low

- carbon electricity. The
commenter s said further, for those states which are given more easily achievable goals, there is a disincentive to participate in a regional /multi

- state effort because that goal will be averaged out across the states, making their own goals more stringent than they would have been otherwise; however, the states with more difficult

- to

- achieve goals will only fully benefit from regional/multi

- st ate planning if the states with easier

- to

- achieve goals are also involved.

Commenter s stated for example, consider a state that 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 generation and could increase to 20 percent generation by 2030 (a 5 percent increase), and would be the basis for the state's carbon reduction goal. The commenter s said if the state were to demonstrat e compliance today, it would only receive credit for 7.5 percent wind consumption, which would require an increase of 12.5 percent in order to reach that same 20 percent generation goal; therefore, without taking any actions whatsoever, the state would hav e moved further from its goal just because the metrics for the goals are different than the metrics for compliance.

Commenter s stated both goals and compliance should be based on the same metric; if the goals are based upon generation, compliance should a lso be based on generation. The commenter s said alternatively, if compliance is based on consumption, the goals should also be based on consumption. The commenter s said this will make compliance more achievable within state392 boundaries and will not discoura ge states from engaging in regional planning. The commenter s said due to the relative ease and certainty in calculating generation compared to calculating consumption, the use of a generation approach may be preferable in the final rule as a basis for both goal

- setting and measuring compliance.

Commenter s stated in the Proposed Rule, RE contributions are included the state's rate calculation based upon the RE being located within the states geographic boundaries. The
commenter s 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 consistently applied in the rate calculation for both goal setting and compliance purposes.

Comment 54: BB3&4 "backs out" the generation from affected fo ssil EGUs by the generation from existing renewables twice, since the 2012 fossil EGU data already reflects the presence of 2012 levels of renewable generation

Response 54: The EPA agrees that replacing existing historical fossil generation with existing historical RE generation would be double

- counting the effects of the RE. However, it did not do this at proposal, and it does not do so at final only 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:

Commenter s stated some stakeholders' proposal to use 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 out" the generation from affected fossil EGUs by the generation from existing renewables twice, since the 2012 fossil EGU data already reflects the presence of 2012 levels of renewable generation; 2) it assumes that the system

- wide efficiency and renewable investments contemplated are exc lusively associated with reduced generation from the affected units, ignoring load growth and any generation in the remainder of the electricity system.

Comment 55: Building Block 4; Energy Efficiency (EE) in goal calculation.

Response 55: The proposed b uilding 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:

Commenter s stated the cumulative annual EE savings are used as part of the c alculation of allowable carbon dioxide emissions under the Proposed Rule. The commenter s said the calculation is expressed as: [(Coal gen. x Coal emission rate) + (OG gen. x OG emission rate) + (NGCC gen. x NGCC emission rate) + "Other" emissions] / [Coal gen. + OG gen. + NGCC gen. + "Other" gen. + Nuclear gen. + RE gen. + EE gen] where the term "EE gen" represents the annual cumulative EE savings. The commenter s said in North Carolina's case, the Proposed Rule393 sets an interim goal of 1077 by 2020 and a fin al goal of 992 by 2029 for adjusted output

weighted

- average pounds of CO2 per net MWh from all affected fossil fuel

- fired electric generating units. The commenter s 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 level of CO2 emissions.

Commenter s stated another concern is that EPA has not considered the EE savings from many North Carolina EMCs. The comment er s said GreenCo Solutions, Inc., (GreenCo) provides EE program services and REPS compliance to 23 of the 26 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 alre ady achieved by GreenCo's EMCs means that EPA has understated the progress North Carolina has made in EE and toward its CO2 emission reductions. The commenter s provided a table showing annual EE savings including GreenCo's EMC of 0.46% of total BAU NC sale s for 2012. The commenter s said EPA's calculation of the 2012 incremental EE savings for North Carolina is derived from EIA Form 861 data, the commenter s prov id ed a table which shows annual EE savings including GreenCo's EMC of 0.37% of total BAU NC sales for 2012.

Commenter s stated while the CPP only lists energy efficiency as an "option", the state goals cannot be achieved by relying only on reductions from affected EGUs, or even reductions from affected EGUs and redispatch to natural gas (Building Block s 1 & 2). The commenter s said according to EPA, "[m]easures that avoid CO2 emissions 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 EG U when demonstrating compliance with a rate

based CO2 emission limit; alternatively, a state could use the effect of such measures as a basis for administratively adjusting the average CO2 emission rate of affected EGUs when demonstrating achievement of th e required emission rate performance level in a state plan." The
commenter s said to achieve the objectives of Building Block 4, states will need to implement significant energy efficiency programs; however, the assumptions and methodology underlying EPA's assessment of energy efficiency in calculating individual states' goals is flawed. The
commenter s said EPA's assumptions are far too aggressive and not achievable based on real evidence; first, the proposed rule overestimates the amount of energy efficienc y available; second, each state has methods to determine the cost

- effectiveness of energy efficiency, as well as methods for verifying the levels of reduction that should be, but are not, respected by the rule; third, companies can offer a full menu of eff iciency programs, but if the end user does not implement them, the efficiency targets will not be reached. The commenter s said the proposed rule does not give full effect to the intent of and application of existing state efficiency and demand response rul es.

Commenter s recommend ed that EPA revise the calculation for energy efficiency and remove the discount imposed on states that are net importers of electricity. The commenter s said the full benefit of ratepayer investment in energy efficiency projects should accrue to the state implementing the programs. The commenter s said as currently proposed, the full benefit of energy efficiency projects is not credited in a net importer s tate, nor is it accounted for in any other state, thereby eliminating a portion of these measures as a compliance mechanism.394 Commenter s encourage d EPA to include in its calculation of energy efficiency benefits not only additional zero

- emission generation capacity, but also replacement of baseline fossil fuel generation.

Commenter s stated the CPP treats efficiency in its rate calculation in a problematic manner; it adds efficiency to generation in the denominator when in physical reality efficiency reduces generation requirements and hence also reduces emissions. The commenter s said in the EPA's rate calculation, it does neither; it just lowers the allowed rate of emissions. The commenter s 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 commenter s said the EPA should also adopt a consistent approach to estimating the emissions target for each year in the final CPP. The commenter s said consistent calculation of emissions and emission rates: The proper way to calculate CO2 emission rates is to include all CO2 emissions from affected generation units and divide that by all generation in a particular state in any year; doing this consistently for each year going forward can create a technology neutral rule that is consiste ntly based on a well

- defined best system of emission reduction, which must include technical feasibility, economics, and non

- air quality considerations.

Commenter s stated consistent with the CAA's requirement 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 actually achieved in 2012. The commenter s stated an analysis conducted by EEI shows that the median savings rate in 2012 was 0.48
perc ent. The commenter s said EPA notes that the national average was 0.58 percent; when data is skewed, however, a median is a better measure of central tendency than a mean. The
commenter s said in this case, the 2012 data is skewed, with 14 states reporting i ncremental savings rates of between 0.50 and .99 percent and 25 states reporting rates of less than 0.50 percent. The commenter s said regardless of whether the mean or median is used, both figures are considerably less than EPA's proposed 1.5 percent annua l incremental savings rate, and thus, the 2012 reported savings rates do not support EPA's assertion that all states can achieve 1.5 percent annual incremental savings. The commenter s said Indiana's performance has not demonstrated 1.5 percent annual savin gs to be achievable; if the reported data demonstrate anything meaningful about the feasibility of different levels, it would be that the median savings rate achieved in 2012 is a better measure of achievable annual incremental savings rate and thus more i ndicative of a demonstrated and achievable BSER measure.

Commenters stated in its target

- setting formula, EPA assumed that states that are net importers of electricity should receive credit for only a portion of their energy efficiency investments. The

com menter s said the portion is represented as the share of in

- state generation that is not imported. Commenter s said as a net electricity importing state, Georgia receives credit for 88 percent of its energy efficiency investments, which represents its share of in

- state generation in 2012. Commenter s stated as a net electricity importing state, Virginia receives credit for 58 percent of its energy efficiency investments, which represents its share of in

- state generation in 2012. Commenter s stated as a net elec tricity importing state, North Carolina receives credit for 85% of its energy efficiency investments, which represents its share of in

- state generation in 2012. Commenters said the problem with this assumption is that it discounts the value of energy effic iency programs as a compliance mechanism. Commenter s added it assumes that Georgia is likely to remain a net importer of electricity during the compliance period; with the expected395 completion of Vogtle Units 1 and 2, and the added generation they will furn ish, 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 as a compliance mechanism; this will be especially important if EPA adopt s the approach described in its recent NODA and adjusts the emissions rate formula to reflect displacement of fossil generation by energy efficiency and renewable generation. The commenters said in that event, 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 efficienc y where such investments are reducing generation from fossil

- fired resources. The commenters said failing to provide such credit will mean that a significant amount of energy efficiency is not recognized as a compliance option, even when they are having th e practical effect of displacing in

- state generation.

Commenter s stated there should be no reason to exclude load reductions from more demanding energy efficiency codes and standards; the technical feasibility of the EPA's proposed energy

efficiency

- based reductions in electricity sales could be significantly increased if the EPA's final regulations allowed a state to include reductions in energy sales that result from energy efficiency codes and standards towards meeting the state's targets that are accou nted for in the utility's load forecast.

Commenter s stated AEO inherently has some EE in its forecast. The commenter s would like EPA to discuss how this affects EPA's forecasting for the rule and whether this is the correct value to be using for this build ing block. The commenter s said if EE savings are inherently accounted for in the AEO forecast, EPA has underestimated the projected MWh of future electricity sales without EE.

Comment 56: BB4 demand side energy efficiency EE

- remove from calculation

Resp onse 56: See Preamble Section V .A . Demand

- side energy efficiency is no longer part of the BSER quantification in this final rule.

In regards to heat rate concerns at units retrofitting with controls, the response to this comment is addressed in section 3.1.4 of the response to comment 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 place of a projected one. Factoring in coal retirements, even scheduled ones, would require projections about where the generation would shift in the fleet. EPA took comment on using a projected baseline to inform this type of baseline, but received support for using a historical baseline as a mor e representative starting point given the reported nature of its data.

The following are summaries of the specific public comments under this comment:396 Commenter s stated EPA should not use demand side EE, an outside the fence line measure, for state goal c alculation. The commenter s said demand

- side EE should be used for compliance purposes only. The commenter s said the proposal seeks to incentivize the conversion of coal to natural gas, nuclear, renewables such as wind, and solar, and energy efficiency; whi le the plan only lists energy efficiency as an "option" not a mandate, the state goals cannot be achieved by relying only on reductions from affected EGUs, or even reductions from affected EGUs and conversion to natural gas (Building Blocks 1 & 2). The com menter s said EPA admits as much by calculating different, less stringent goals when relying only on Building Blocks I and 2 as BSER Goal Computation TSD, EPA, App. 4, (June 2014) (calculating Blocks 1 & 2 only state goals before entering nuclear, renewable , and EE into the denominator). The commenter s said according to EPA, "[m]easures that avoid CO2 emissions 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 aff ected EGU when demonstrating compliance with a rate

- based CO2 emission limit. Alternatively, a state could use the effect of such measures as a basis for administratively adjusting the average CO2 emission rate of affected EGUs when demonstrating achieveme nt of the required emission rate performance level in a state plan." The commenter s said for several reasons, EPA's assessment of EE is far too aggressive and not achievable based on real evidence; first, the proposed rule overestimates the amount of energ y efficiency available; second, each state has methods to determine the cost

- effectiveness of energy efficiency, as well as methods for verifying the levels 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 targets will not be reached. The commenter s said the proposed rule does not properly reflect existing state efficiency and demand response rules. The commenter s sugges t ed that EPA remove demand

- 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.

Commenter s stated that they believe there is an error with t he energy efficiency requirements in Building Block 4 because currently, "Increased energy efficiency lowers overall generation, which increases the emissions rate in the compliance calculation." The commenter s suggested that EPA should simplify "how energ y 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 already achieved and that will be implemented before c ompliance is required.

Response 57: See sections V.C., VI

, and VIII of the final rule preamble 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:

Commenter s observe d that EPA's methodology does not give compliance credit for renewable generation that comes online before 2020. The commenter s said there is no reason to disincentivize or otherwise fail to re cognize the contribution of projects that are underway or are397 being planned and will soon be implemented that will work toward the goal of decreasing CO2 emissions. The commenter s urge d EPA to allow states to count for compliance purposes pre

2020 renewabl e generation. The commenter s said since the environmental goals of the Clean Power Plan are concerned with aggregate future emissions of CO2, it is appropriate that any and all actions reducing CO2 emissions from affected EGUs should be credited toward com pliance. The commenter s said EPA should establish baseline references for each state by year and allow quantities of renewable generation achieved in excess of reference levels prior to 2020 to be carried forward for application in the compliance period.

C ommenter s encourage d EPA to seek regulatory mechanisms that will recognize and credit early actions and ensure regulatory parity among all states. The commenter s said New Hampshire has demonstrated, and will continue to demonstrate, leadership in reducing CO2 emissions. The
commenter s said in 2002, prior to the regional reductions achieved under RGGI, New Hampshire enacted first in

- the

- nation legislation that addressed CO2 emissions from power plants. The
commenter s said in response, several individual New Hampshire facilities made investments that resulted in greater efficiency and lower emissions. The commenter s said states that have not achieved equivalent reductions to date should be required to do more to achieve results comparable to New Hampshire, and New Hampshire should receive credit for acting early.

Commenter s support ed the recognition and encouragement of early emission reductions. The
commenter s said the impacts of climate change are directly related to cumulative GHG emissions, so early investm ents to reduce CO2 create important and long

- lasting environmental benefits. The commenter s said the EPA's assumptions in setting each state's emission rate goal include early state actions to reduce emissions prior to 2020, such as RE and EE measures. The
commenter s said the EPA also proposes to consider the post

- 2019 impacts of most pre

- 2020 RE investment (which we believe should include RPS

- eligible hydro investments) and of EE investments from mid

- 2014 onwards (which we believe should be adjusted to the beginning of 2013). The commenter s said the EPA also requests comment on whether emission reductions that existing state requirements, programs, and measures achieved prior to January 1, 2020 should be applied toward meeting the required levels of emissio n performance in a state plan. The commenter s believe d that reductions prior to 2020 should not be excluded from the compliance calculation, and support examination of feasible methods to credit such early actions that maintain the stringency and environme ntal integrity of the EPA's 2030 goals.

Commenter s stated many utilities have invested in energy efficiency efforts, making great strides in reducing greenhouse gas emissions; in the Pacific Northwest, energy efficiency improvements by electric utilities t otal 5,600 average megawatts, saving electricity consumers $3.5 billion in electricity costs. The commenter s said this achievement cost electric utilities $375 million (2006 dollars), making energy efficiency the second largest resource in the Pacific Nort hwest behind hydroelectric power. The commenter s said in this case, states through early action have already implemented a good portion of available renewable and energy efficiency measures to voluntarily reduce greenhouse gas. The commenter s urge d EPA to consider early action achievements in its calculation of state targets; to fail to do so will unfairly penalize states that made the early effort to reduce greenhouse gas emissions.

Commenter s stated on page 34918 and 34919 of the preamble, EPA sol icits comments on the option to recognize emission reductions achieved starting at a specified date which will allow a398 gradual emission improvement trajectory during the interim performance period of 2020 through 2029. The commenter s said EPA rationalizes this option because higher carbon dioxide emissions during the interim period would be offset by lower emissions prior to 2020. The
commenter s said South Dakota's electric cooperatives out of necessity have been promoting and rewarding energy efficiency an d conservation for decades; 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
commenter s said bec ause these programs are currently reducing carbon dioxide emissions and will do so in the future, EPA should give the states the flexibility to account for these existing energy efficiency programs. The commenter s recommend ed EPA allow for "banking" carbon dioxide emission reductions beginning in the baseline year through 2019 to allow states to take credit for what has already been accomplished and create an incentive for states to reduce more carbon dioxide prior to 2020. The commenter s said this incentiv e will not only give states the flexibility they need to plan for the future and reduce carbon dioxide emissions early, but also help reduce the impacts of this federal rule on energy reliability and affordability. The
commenter s said specifically, EPA sho uld allow high

- renewable states like South Dakota to bank excess renewable generation (above a national threshold) and use the banked megawatt

hours for post

- 2020 goal compliance; this would both reward these states' leadership in renewable energy investme nt prior to EPA's base year, and strengthen the incentive to continue renewable energy investments prior to 2020.

Commenter s stated EPA should provide for early action credit to reward those states that have proactively undertaken to reduce carbon emission s from their generation fleet, and to encourage states to take actions prior to the start of the interim compliance period.

Commenter s stated sound environmental policy clearly 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 commenter s said for a number of years, a portion of the affected stakehol ders argued against early state action because of the fear that such proactive measures may merely disadvantage the state when ultimately confronting a federal regulatory regime. The commenter s said should EPA's ultimate CPP program confirm such fears, the implication will be to create strong disincentives to future proactive environmental control measures by states; therefore, both to ensure consistency with the statutory requirements of Section 111, and as a matter of sound public policy, EPA should adjus t the state goals to avoid the application of a penalty against the significant efforts that many states already have undertaken to address GHG emissions from the power sector.

Commenter s stated EPA must allow for early action credit to reward those states that have been actively reducing the carbon emissions from their generation fleet and to encourage states to take actions prior to the start of the interim period. The commenter s said co mpanies have undertaken many initiatives to reduce the carbon intensity of the electric generating system, such as: heat rate improvements, nuclear plant uprates, and retirement of higher emitting units. The
commenter s said EPA must: (1) allow for adjustme nts 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 u prates and life extensions regardless of timing of the activity; and (3) EPA399 must credit fossil fuel

- fired plant retirements that have occurred during and after the baseline period.

Commenter s were supportive of an implementation plan that recognizes and r ewards 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 commente r s said it i s 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 commenter s said the level of overall carbon reductions required unde r the CPP are easily achievable; 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 early actions. The commenter s argue d that the EPA should, for the purposes of goal setting, recognize that some states are benefitting from not having existing natural gas EGU infrastructure, established renewable energy policies, or energy efficiency practices. The commenter s said the BSER, uniforml y applied to all of the states, results in a peculiar scenario where some states have less stringent goals due to their past indifference of BSER practices. The commenter s said to correct for this past indifference to BSER practices, the commenter s argue d that EPA should 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 negligible for the purposes of calculating the final AER goal for that state. The commenter s 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 stringencies.

Commenter s stated over the last ten (10) years, Flint, along with all the electric membership cooperatives in Georgia, have led efforts to pursue and secure renewable/green energy. The
commenter s said through the formation of Green Power EMC (GPEMC), the first major green
power project in Georgia started in 2003 at the Taylor 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 so in a way to promote affordabili ty and reliability. The commenter s said GPEMC has since secured additional landfill, biomass, and solar generation projects that were started

- up prior to 2012. The commenter s said independently, Flint secured a long

- term power purchase agreement for three megawatts (3MW) of landfill gas

fueled generation at the Houston County Landfill (Kathleen, Georgia). The commenter s said in the vein of attempting to maximize opportunities and resources, Flint has also been among the leading electric utilities to aggress ively deploy peak load management devices on air conditioning and water heater units that have moved approximately fifteen megawatts (15MW) from expensive peak generation to lower load periods and other units that helps lessen the immediacy of building new generation capacity. The commenter s said these initiatives have most assuredly contributed to the significant reduction in CO2 between 2005 and 2012. The
commenter s said efforts to take the lead and be environmentally responsible over the last decade

- in a manner that maintains affordability and reliability

- appear to work to the detriment and penalization of Flint members. The commenter s said other commenter s ' comments make the case for the commenter s ' concern..."by considering the 2012 benchmark data f or determining each state's goals, EPA effectively penalizes states that 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 propose d rule, 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."

Commenter s stated EPA shou ld reassess the assumptions 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 of developing EPA's BSER should be given some measure of credit in the proposal

- instead, states like Washington appear to be asked to redouble their efforts. The commenter s said for numerous reasons, the y believe d EPA needs to look more closely at what potential reductions actually remain in st ates that are already low

carbon emitters.

Commenter s stated Minnesota has long

- standing state

- level goals and requirements for renewable energy, conservation, efficiency, and greenhouse gas emissions reductions. The
commenter s said the Next Generation En ergy Act of 2007, for example, established the state's renewable energy standard (the "RES") and a qualified ban on new carbon emissions from the energy sector; further, significant utility repowering and emissions reductions projects were completed in rec ent years or are currently underway; for example, Xcel Energy's Metro Emissions Reduction Project ("MERP") was completed in stages from 2007

- 2009. The
commenter s said these and other efforts, such as Minnesota Power's Arrowhead Emissions Reduction Abatemen t ("AREA") program, have driven significant investments (paid for by Minnesota ratepayers) that have resulted in substantial carbon dioxide emissions reductions.

Commenter s stated specifically, Minnesota's electricity users, and in particular industrial u sers 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 Mi nnesota Power

- have recovered in rate riders for MERP and AREA, respectively, Minnesota ratepayers paid over $700 million from 2006 to 2012; but it is critical to also consider other environmental retrofit investments and renewable energy investments. The commenter s said when these investments are taken into account, costs borne by Minnesota ratepayers to reduce emissions from 2006

- 2012 approach $1 billion.

Commenter s stated cost recovery for these investments continues and is directly impacting industrial rates in Minnesota; in Minnesota, average retail electricity prices for the industrial sector have increased by almost 57% since 2004; for the large industrial custo mers in Northern Minnesota, the increase has been even more severe; rates for those customers have increased by over 60% since 2005. The commenter s said Minnesota's industrial electricity rates are therefore becoming increasingly uncompetitive; Minnesota r anks 31st in terms of competiveness for industrial rates as of 2012; and for those industrial customers whose cost of energy is a significant portion of the overall cost of production, the recent price increases are putting unsustainable pressure on Minnes ota operations; continuing 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.

Commenter s stated under the Clean Power Plan, forward

- looking states like Minnesota should be rewarded for early action (and not penalized) by crediting Minnesota's existing achievements and401 programs toward compliance with Section 111(d) carbon dioxide goals. In its initial comment letter to EPA last year, th e commenter s 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 year of 2012 for purposes of establishing Mi nnesota's reduction target; as a result, the proposed target for Minnesota is much more stringent than targets for other states that have done little to reduce emissions to date.

Commenter s stated Minnesota stakeholders have proposed several options for a djustments to the building block methodology that would better reflect progress and investments already made in Minnesota; for example, Xcel Energy has proposed several adjustments that EPA should consider adopting. The commenter s said EPA's current method for calculating Minnesota's target ignores the MERP project and the substantial investment made by Minnesota ratepayers to achieve significant emissions reductions through that project. The commenter s said t o address this problem, Xcel has proposed recalc ulating EPA's "Building Block 2" to exempt natural gas power plants built after 2005 to replace coal plants under multi

- pollutant programs. The
commenter s said t he MERP project included replacing 652 MW of coal capacity at the High Bridge and Riverside pla nts with 1,080 MW of natural gas capacity at the same sites. The
commenter s said t he result, according to Xcel, would be an adjustment of Minnesota's 2030 goal from 873 lbs/MWh to 957 lbs/MWh. The commenter s said a n exemption for projects like MERP makes s ense 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 billion in the most efficient and cost

- effective options such as the MERP and AREA projects.

Commenter s stated similarly, Minnesota has already made substantial investments in renewable energy and has commitments to continue such investment to meet the RES targets; Xcel proposed anot her potential adjustment to Block 2 that would account for the fact that variable renewable energy sources are often balanced with natural gas generation. The commenter s said
t he premise of Block 2 generally is to presume that natural gas plants can and sh ould ramp up to operate with 70% capacity factors; however , this premise is problematic for natural gas plants that are significantly displaced by wind generation. The commenter s said Xcel recommends calculating the number of natural gas MWh displaced by w ind 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 Minnesota that have already invested heavily in pairing wind power with na tural gas, a combination that the Clean Power Plan otherwise would appear to promote.

Commenter s stated the plan should provide states with credit for prior CO2 reductions as an option towards meeting a reasonable national target for reducing CO2 emission s from the electric power sector.

Commenter s stated in finalizing the CPP, EPA must also 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 commenter s said Section 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 b ased on those achieved performance levels 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 commenter s said the statutory provision requires national uniformity 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 measures to reduce the contribution of their sources to the nation's GHG load.

Commenter s stated with d emand

- side energy efficiency, EPA again does not present substantial evidence that its projection in the state goal calculations is "reasonably reliable," "reasonably efficient" or will "produce the performance necessary to achieve the goal." The commenter s said the Agency requires each state to achieve a goal of 1.5% annual savings in electricity generation achieved through demand

- side energy efficiency programs. The commenter s said EPA claims that 12 states have either achieved, or have established requir ements that will lead them to achieve, annual incremental savings rates of at least 1.5% of the electricity demand that would otherwise have occurred. The commenter s said EPA claims that this 1.5% savings rate is inclusive of, not additional to, existing s tate energy efficiency programs. The commenter s said this assertion is false because EPA is counting emission reductions that existing state programs achieve only as a result of actions taken after the date of this proposal. The commenter s said EPA cannot claim that this 1.5% savings goal is inclusive of existing energy efficiency programs when it is not counting emission reductions achieved from those programs unless some subsequent action is taken after the promulgation of this rule. Commenter s stated by discounting emission reductions achieved by these existing state programs, EPA is punishing states that have taken the early initiative to adopt energy efficiency programs. The commenter s said states that have been proactive and adopted programs such as en ergy efficient building codes, energy efficient appliance rebates, or smart meter infrastructure will see none of the emissions reductions achieved through these programs count toward its energy efficiency goal. The
commenter s said EPA is not only punishin g states for being good actors, but also including a BSER that cannot "produce the improved performance necessary to achieve" the goal.

Commenter s stated the EPA failed to recognize the past achievements made by TVA by its 30 percent reduction of carbon e mission levels between 2005 and 2013 in its generation and transmission of power and energy supplied to the LPCs; and which the TVPPA member LPCs helped achieve carbon emission reductions from TVA's generation system through EEDR initiatives actively promo ted by the LPCs to the separate individual ratepayers.

Commenter s stated energy efficiency improvements by electric utilities in the Pacific Northwest now total 5,600 average megawatts, making energy efficiency the second largest electricity resource in th e Pacific Northwest behind hydroelectric power. The commenter s said through early action, Northwest states have implemented a large percentage of available renewable and energy efficiency measures; these have led to lower GHG emissions. The
commenter s enco urage d EPA to consider early action achievements in the calculation of state GHG reduction targets.

Commenter s stated it is not fair that none of Minnesota's pollution control actions prior to 2012 were taken into consideration when the carbon emission for mulas for 2030 were created.

Commenter s stated the proposed rule and notice fails 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 an y offsets or credits for being early actors. The commenter s said by not recognizing these early contributions, the EPA is by default setting the compliance bar higher for states such as Arizona. The commenter s believe d that states such as Arizona, which ha ve been utilizing a significant amount of low carbon generation for some time, should be able to apply those cumulative emission reductions towards their 2020 requirements.

Commenter s stated as proposed, the CPP takes early action for granted. The commente r s said across the board, states that have already achieved substantial reductions in carbon emissions, improved efficiency at coal

- fired facilities, or executed successful demand

- side efficiency programs are asked to do more than their less proactive neig hbors. Commenter s stated the proposal presumes that states that have renewable capacity and/or statutory goals to increase carbon

- free generation will meet and, in some instances, exceed, those goals. The commenter s said the RE targets as established in building block 3 assume that states can achieve higher levels of renewable generation by virtue of existing installed capacity and the presence of binding or voluntary state targets. The commenter s said states may fal l short of these goals for a variety of reasons, not least complications over financing, technology, reliability, or infrastructure. Commenter s stated states that have already improved the efficiency of coal facilities are not credited for those investment s. The commenter s said Building block 1 of the CPP proposes that all coal facilities can achieve a 6 percent heat rate improvement. The commenter s said it is clear that facilities that have already undertaken the challenge to realize significant efficiency improvements may not be able to achieve further gains.

Commenter s stated state goals must recognize the significant efforts that states, utilities, and other entities have made over the past ten years to reduce GHG emissions. The commenter s said the Prop osed Rule unreasonably discriminates against states that took early action to invest in
cost

- effective EE by increasing the stringency of their goals and compliance obligations.

• From an equity viewpoint, the EPA should reward states that developed signifi cant 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 fully counted toward the goal.

Commenter s stated the EPA's proposal penalizes early actions already taken with respect to block 1, boiler efficiency improvements. The commenter s said many utilities have already completed the relevant efficiency improvement projects outlined by EPA to get these emissions reductions. The commenter s said the EPA's goal

- setting exercise for Flori da simply assumes a reduction from efficiency improvements as plausible without due consideration of whether or not potential measures have already been completed; this would arbitrarily reward those who delayed maintenance on power plants until after 2012 and penalize others who have proactively made reductions. The commenter s said states should be afforded the flexibility to work with EPA to adjust the goal if the appropriate efficiency projects that EPA assumes are feasible and have already been complete d or would not achieve the reduction EPA projects.404 Commenter s stated although the goal of the CPP is to achieve a 30% reduction in 2005 carbon dioxide emissions from the electric utility industry by 2030, the actual base year for the plan is 2012. The comm enter s said reductions in CO2 emissions achieved by the industry in a particular state during the seven

- year period from 2005 to 2012 are completely ignored by EPA's formula. The commenter s said EPA makes some modest assumptions about anticipated CO2 reduc tions during the eight

- year period from 2012 to 2020; those assumed savings don't count toward achieving the goal; they actually make the goal harder to achieve. The commenter s said any actual savings above EPA's assumptions are completely ignored by EPA's formula.

Commenter s stated under EPA's methodology, states are 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 assigne d reduction (41% for Minnesota) during the 10

- year period from 2020 to 2030. The commenter s said this construct not only flies in the face of reality in early adopter states such as Minnesota, it also ignores the incremental pace of change that occurs in t he highly regulated and capital

- intensive electric utility industry.

Commenter s stated EPA's assumption that all emission reductions will occur between 2020 and 2030 severely penalizes early adopter states such as Minnesota. The commenter s said the
averag e mandated percentage reduction in states with renewable generation of 10% or greater is 29%, while the average mandated percentage reduction in states with renewable generation of 5% or less is only 18%. The commenter s said the early adopter states have, on average, an 11% higher mandated reduction than the trailing

- edge states. The commenter s said that states with sizeable amounts of renewable energy on line in 2012 should have a lesser obligation during the 2020

- 2030 period, since they are already achiev ing substantial reductions in CO2 emissions. The
commenter s 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 under the EPA methodology, states that are making serious effor ts to reduce CO2 emissions prior to 2020 have to make greater reductions between 2020 and 2030 than those that are doing little or nothing today.

Commenter s stated the EPA stated in its press releases that it gives credit to forward thinking states for th eir CO2 reductions; however, in practice, 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 states are more costly t han the options available to states who have not acted on EE. The commenter s 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
commenter s note d that under a mass

- based ap proach, 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 commenter s said EPA seems to be forcing early action states to implement a

mass

- based approach.

Comm enter s stated in the emission limit calculation for a given state, credit electric generating units that repowered from coal to natural gas combined cycle as if they operated at the coal emission rate levels in the baseline years; since there are relativel y few repowered units, this approach would only slightly increase the calculated emission rate target but would provide the appropriate means of rewarding early action to reduce emissions.405 Commenter s stated in the emission limit calculation for a given st ate, do not restrict the dispatch of coal units that worked with EPA on commitments to reduce emissions that were memorialized in consent decrees. The commenter s said utilities that made these commitments did so at substantial additional costs to customers ; appropriately, these substantial costs were amortized over the remaining useful life of these units to minimize the additional cost burden of taking early action. The commenter s said these units must operate at a much higher capacity factor than allowed by EPA's proposal in order to allow customers to recover their investment; therefore, it is appropriate for EPA to recognize early investments that were made in good faith and reasoned judgment that EPA would not subsequently create new requirements that c ause significant stranded costs.

Commenter s stated EPA can recognize reductions made in voluntary, but legally binding CO2 reduction commitments. The commenter s said EPA should allow credit for these unused allowances by incorporating accrued early action emission reductions into the goal setting or by providing an explicit mechanism for states to recognize them.

Commenter s stated that the proposed rule would penalize 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 t he proposed rule uses 2012 data, but many coal

- fired units have MATS

- r elated projects currently underway that will increase heat rates above 2012 levels.

Commenter s stated that EPA should consider providing credit for heat rate improvement projects undertaken by utilities between the baseline year and the initial date of co mpliance. Commenters stated that for example, they recently completed heat rate improvement projects at IPL's Ottumwa Generating Station in November 2014. Commenters stated that WPL's Columbia Energy Center has heat rate improvement projects scheduled for completion by the end of 2017 and these projects are expected to improve efficiency on average by approximately 3

- 5% at these electric generating stations. Commenters stated that for the Ottumwa Generating Station project description see Iowa Utilities B oard (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 Wisconsin (PSCW) Docket No. 05

- CE

- 141, application filed on July 31, 2013 available at http://psc.wi.gov/ apps40/ERF_public/Default.aspx

.

Commenter s stated that efficiency improvements represent only part of the investment they ha ve made to improve the environmental performance of its coal

- fueled generating fleet. Commenters stated that they ha ve also install ed air quality control equipment to meet environmental requirements under such rules as the Mercury and Air Toxics Standards. Commenters stated that this equipment improves the quality of flue gas exiting the stack, but also requires station power for oper ation. Commenters stated that the increased station power consumption reduces plant efficiency and increases net plant heat rate. Commenters stated that coal facilities that placed this406 equipment in service after 2012 will need some amount of energy effici ency improvement just to restore plant efficiency to the baseline level used in the EPA's calculations.

Commenter s stated some units simply retire and questioned why didn't the EPA account for the changing profile of the coal fleet from 2012 forward when setting state goals?

Comment 58: C redit 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 thi s comment:

Commenter s stated it is essential that EPA adjust its future target reduction goals for RGGI state

participants, so they are not asked to achieve higher aggregate emission reduction targets that would place these "early adopter" states at risk o f more substantial risks of grid reliability disruptions and higher ratepayer costs. The commenter s concurred with RGGI comments of November 5th that advocate adjustment of future emission targets so as to recognize and not punish earlier achievements in the RGGI region; overall, 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 goals will be able to more easily meet the EPA goals for year 2030 emissions reductions.

C ommenter s stated that EPA should consider clarifying 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 the standard only applies to fossil generators, so those states with less fossil generation in the ir system mix will bear less cost.

Commenter s stated Tallahassee has lowered its carbon intensity to 960 pounds per megawatt hour; this rate represents award

- winning early reductions, which is approximately 20 percent lower than the current state average for Florida. The commenter s 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 greater than the EPA's proposed standard for Florida. The commenter s ha ve concerns about their ability to meet the limits in this proposed rule.

Commenter s stated over many years, Otter Tail has taken major steps, primarily through the following initiatives, to reduce carbon footprint and mitigate CO2 emitted in the process of generating electricity for customers: Supply efficiency and reliability, Energy Efficiency/Conservation, Renewable energy, EPA's SF6 (sulfur hexafluoride) Emission Reduction Partnership for Electric Power Systems.407 Commenter s stated th at in the October 28, 2014 Notice of Data Availability (NODA), the EPA acknowledged stakeholder concerns regarding the rigidity of the 2020 to 2029 glide path, and requested additional stakeholder comments to ensure that the overall framework includes suff icient flexibility. Commenter s stated that the EPA presented two suggestions for addressing the glide path implementation in the NODA. Commenter s stated that the first approach the EPA requested comment on was the option to allow credit for early CO2 emiss ion reduction. Commenter s stated that in theory, this approach is appropriate and would recognize the steps already taken by those states or EGU's that were engaged in early

- action to reduce CO2. Commenter s stated that however, 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. Commenter s stated that 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 would in fact be "credited" for those emissions by default when calcula ting their emission rates for compliance in 2020. Commenter s stated that the only approach that would provide an actual benefit to states engaged in early

- action, would be a credit for CO2 emission reduction activities performed prior to 2012. Commenter s 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 prior to 2012 are forced to further reduce carbon emissions with the same intensity as state s that have not already made investments in carbon reduction. Commenter s stated that PSNH urges the EPA to consider early

- action credit for those CO2 reductions that occurred prior to the EPA's selected baseline year of 2012. Commenter s stated that PSNH's early actions include the economic

- based transition of coal 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 Unit 2 in 2008, a nd the conversion of Schiller Station's 50 MW coal

- fired EGU to a biomass

- fired EGU via the Northern Wood Power Project in 2006.

Commenter s stated that the NODA reintroduces the question of crediting for early action, posing early crediting as a potential solution to the concerns of some stakeholders that meeting the interim targets will be difficult given the BSER determination that states can implement Building Blocks 1 and 2 by 2020. Commenter s suggested that one potential response to these concerns int roduced in the NODA would be to reduce the initial stringency of Building Block 2 by assuming that states would instead increase their natural gas utilization gradually, along a "glide path." As the c ommenter s explained clearly in its initial comments, the targets set by EPA are eminently achievable, and reducing the stringency of these targets is not necessary given the wide array of advanced energy technologies available to help states meet their goals.

Commenter s believe d that early action crediting shou ld be allowed. Commenter s stated that while EPA identifies early action crediting as another potential response to stakeholder concerns regarding Building Blocks 1 and 2, the c ommenter s believe d that such an approach is justified for reasons beyond smoothi ng out a "glide path," namely, as detailed in Section III.G of AEE's initial comments, early crediting for new actions will spur states to act earlier, accelerating the expansion of the advanced energy markets, driving earlier emission reductions, and prov iding states a longer period for compliance activity. Commenter s stated that the policy recommendation made by AEE regarding early action crediting achieves all of this without weakening the stringency of the emission targets and 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.

Commenter s stated that in addition to phas ing in Building 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 c ommenter s stated that provid ing full credit for these early actions recognizes the important emissions reductions states have already achieved and it continues to incent incremental reductions between the date of the proposal and the date of compliance. Commenter s stated that MidAmer ican supports 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. Commenter s stated that such reductions should not need to relate directly to the proposed building blocks so long as they contribute to achieving a state's emissions target. Commenter s stated that for example, development of renewable energy and implementation of en ergy efficiency programs, as identified in Building Blocks 3 and 4, will certainly continue prior to 2020 and should be credited towards compliance with the 2030 targets. Commenter s stated that other actions, such as retirement of fossil

- fueled EGUs, will also occur prior to 2020. Commenter s stated that unit retirement is not tied directly to EPA's proposed building blocks, but states should be able to credit the emissions reductions following such retirements, regardless of their reasons, towards complianc e with their 2030 emission goals.

Commenter s stated that as much as Minnesota wants to do its part to reduce CO2 emissions, we have to acknowledge that every CO2 reduction carries a cost with it. Commenter s stated that Minnesota's electric ratepayers are currently bearing the cost of an aggressive greenhouse gas reduction program, which is on track to produce reductions of 30% or more from 2005 levels by 2020. Commenter s stated that then they will have to assume the additional burden of meeting the very hi gh reduction under the Proposed Rule of 41% between 2020 and 2030. Commenter s stated that when all the low

- hanging fruit has been picked, further reductions in CO2 emissions become technically more difficult to achieve, as well as more expensive. Commenter s stated that there has to be a reasonable limit to how much one state can be required to achieve.

Commenter s stated that despite EPA's logic, every reduction in CO2 which occurs between 2005 and 2030 is equally important, no matter when it occurs. Commen ter s stated that early adopter states should not be penalized for moving ahead with greenhouse gas reductions in the absence of a federal mandate. Commenter s believed that the only fair way to design the program is to use 2005 as the base year and allow al l reductions achieved by states from that year forward to count toward achieving the state's goal.

Commenter s stated that if EPA does not wish to redesign the entire program to accommodate early adopters, we offer the following suggestions as a means of p roviding fair treatment to early adopters while retaining the existing overall program design. Commenter s 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 co rrelates with the state's ongoing greenhouse gas reduction efforts. Commenter s 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 res ults. Commenter s stated that this will allow early adopter states to receive credit for the very real CO2 emissions reductions that they will achieve prior to 2020 and greatly enhance the overall fairness of the program.

Commenter s d id not believe that th ere should be any insurmountable issues with allowing states to opt for a phase

- in period that begins prior to the EPA's de facto baseline year of 2012. Commenter s recognized that, however, that there may be reasons that EPA would not want a state's phase

- in period to begin prior to 2012. Commenter s 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.

Commenter s 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 achieved from 2005 to 2012, but at least it would allow us to receive credit for reductions from our ongoing and effective program from 2012 forward.

Commenter s stated that EPA proposed that the flexibility 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, separate a pplication of the remaining useful life provision by states in the course of developing and implementing their CAA section 111(d) plans is unnecessary. Commenter s disagreed that the flexibility in the state plan development process sufficiently allows for addressing remaining useful life considerations.

Commenter s stated that Kansas is in the midst of a period of great transition for its large coal

fired electrical generating units. Commenter s stated that the six largest coal fired units in Kansas have ma de and continue to make significant investments in criteria pollutant emission reduction equipment in the last three to four years to comply with the regional haze program. Commenter s stated that in addition, the Cross State Air Pollution Rule, Kansas City ozone maintenance plan rules, and the Mercury and Air Toxics rule have also contributed to massive investments in pollution control equipment at Kansas' largest coal plants in recent years. Commenter s stated that more than three billion dollars is earmar ked for these projects that have either just been completed or are still under construction. Commenter s 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 co mpliance period starting in 2020. Commenter s stated that investments of such magnitude are typically financed for much longer periods of time. Commenter s stated that the result is a large potential for stranded investments in the State of Kansas as a resu lt of re

- dispatch
to non

- coal generating units. Commenter s stated that 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 Commenter s stated that this is a fundamental issue that EPA must address at the front end of the 111(d) process by incorporating adjustments for plants with recently installed or to be installed controls into the state goal calculations or in t he compliance periods. Commenter s 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 financ ial instruments used to fund the control devices installed. Commenter s stated that facilities that have recently installed or are installing new scrubbers comprise 84% of Kansas' 2012 generation. Commenter s stated that this is a far 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 compliance period.

Credit for early action should not be given

Commenter s believed stronger and earlier emission reduction targets are required. Commenter s believed that the introduction of early credits, banking and trading can easily defer or displace emission reductions that are achievab le, cost effective and adequately demonstrated and that would otherwise be implemented. Commenter s urged EPA to refrain from introducing any of these methods to NSPS rulemakings, however, should EPA proceed, then early credits must be cabined by the follow ing principles: c ommenter s stated that first, credit should not be given for any action taken before the date of the Proposed Rule (June 2, 2014). Commenter s stated that the purpose of section 111, and of the Clean Air Act, is to reduce emissions below bus iness as usual, not simply to mimic that outcome. Commenter s stated that Section 111 standards must reflect "emission limitation[s]" achievable through the "best system of emission reduction . . . adequately demonstrated." Commenter s stated that a standard that fails to reduce emissions from business as usual plainly violates that requirement. Commenter s stated that second, as EPA notes, total emissions would be greater if early action credits were allowed to permit higher emission targets during the 2020

- 2 030 period, "unless the pre

- 2020 emission reductions that can be counted toward the state goal are limited to reductions that would not have occurred in the absence" of the Proposed Rule. Commenter s agreed that a credit limited in this fashion would be

an incentive for earlier emission reductions, an important goal because early reductions avoid additional costs of delay; therefore, we would support such credits if actually so restricted.

Commenter s stated that EPA states concern that without allowing cred its for early action, the Proposed Rule might create disincentives for pre

- 2020 emission reductions. Commenter s stated that EPA can avoid such disincentives if the targets it allocates for each individual state go beyond actions to which a state had alread y committed when the Proposed Rule was proposed. Commenter s stated that if so, credits for additional and/or speedier emission reduction efforts would incentivize, rather than discourage, such conduct.

Comment 59: Beyond

- the

- unit approach

- penalizes earl y actors

Response 59: See Pr eamble sections V.A and V.E

. The EPA has removed block 4 from BSER quantification and has revised its treatment of building block 3.411 The following are summaries of the specific public comments under this comment:

Commenter s 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 commenter s said because EPA's proposal assumes th at states will start implementing future emission reductions from RE and EE at the levels they had achieved by 2012, states that invested early in these emission reductions are assigned more stringent interim goals than are states that failed to invest ear ly; thus, EPA's approach effectively penalizes early actors by requiring utilities in those states to achieve deeper reductions than they would be required to achieve had they decided not to invest in zero

- carbon electricity and EE.

Commenters said that, by looking beyond the fence line at emission reductions that can be achieved through renewable energy generation and demand

- side energy efficiency, EPA is, in effect, punishing early adopters by imposing more stringent emission reduction targets. Commenter s said EPA's emission reduction targets for both renewable energy and energy efficiency are based on regional or national targets, but also include growth projections that begin in 2017 and continue through 2030. Commenters said for States that have alread y adopted and implemented such renewable and demand

- side energy efficiency programs, the ramp up period is short, and their emission reduction targets are based on EPA's maximum values within a few years. Commenters said in contrast, other States that have not yet implemented such programs will not be required to demonstrate full compliance 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 r enewable energy targets of 15%. Commenters said Missouri is only obligated to increase its renewable capacity from 1% to 3% of Statewide generation, while Illinois must increase its renewable capacity by 5% (from 4% to 9%). Commenters said that EPA is req uiring more aggressive renewable energy expansion for States that have already shown leadership in promoting renewable energy.

Comment 60: Disadvantages and Disproportionate Burdens Imposed for early actions

Response 60: See sections VI and VIII of the fi nal 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:

Commenter s stated the rule disadvantages the proactive states by exactly what has been done in calculating the state goals; states that have already planned to reduce CO2 emissions by building new nuclear units are at a disadvantage. The commenter s 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 commenter s said this is inequitable to customers in those states who are already paying for the nuclear units under constructio n. The commenter s said EPA also mentions that it recognizes that state that have already shifted toward lower carbon

- intensity generation are better412 positioned to meet state

- specific goals; this is not true if the state goal has been lowered by including t his under construction generation. The commenter s said this creates a disproportionate burden to those states to the detriment of their citizens; this also creates an inequity between utilities that have invested in different types of low

- carbon generation . The commenter s said utilities that have invested in nuclear as their low

- carbon generation are being further burdened since the reductions are already assumed in the state goal; on the contrary, utilities that have invested in wind and solar as their low

- carbon generation are rewarded since their investments do not further reduce a state goal.

Commenter s 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
commenter s ha ve incentivized since 1979. The commenter s said participation in the programs has been diminishing as the energy efficiency opportunities have been depleted in the 35 years of this already successful program. The commenter s said t he 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 due to the additional costs this proposal would bring. The commenter s said EPA s hould recognize that the decades of early action as well as new appliance and building codes are already reducing load demand; EPA should work with Florida to adjust the goal since any reductions beyond the current commitment have been shown to be too expe nsive or simply not practicable during the current Florida energy efficiency goal

setting process.

Commenter s stated the CPP is based on building blocks to reach goals; the methodology of measuring the success of those building blocks does not adequately r ecognize 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 disadvantaged as an early adopter of programs to reduce greenhouse gas emissions. The comment er s believe d that with changes to the building block methodology, state emission rate target calculations could more accurately reflect substantial progress made by a state or region in the last few years prior to the CPP issuance. The
commenter s said by r efining this part of the building block methodology, states would see more equity in the targets established for each state.

Comment 61: Regions; states don't fit into regions; overestimates RE goals for some states.

Response 61: The EPA has revised its block three quantification b ased 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 the available renewable resources or policy framework in Florida. Commenter s stated that "EPA's adoption of North Carolina's renewable energy and energy efficiency portfolio standard (REPS) for Florida does not r ealistically reflect the available renewable resources or policy framework in Florida." The commenter s further stated that Florida does not have viable wind resources and limited biomass. The commenter s413 also contended that EPA overestimated the potential r enewable energy generation assumption for the southeast region by misinterpreting North Carolina's REPS. Furthermore, the commenter s stated that "by using North Carolina's REPS as a component of the BSER, EPA has double

counted the use of energy efficiency , given the interaction between Building Blocks 3 and 4."

Commenter s stated EPA assigned states to "regions" for purposes of identifying best practices and calculating the portion of the state goals attributable to development of renewable resources; however, based on the in

- state resources available for development, certa in regional average targets appear overly aggressive for certain states. The commenter s investigated the impact of "re

- assigning" states to regions with more similar resource bases, and discovered that such re

assignments would actually increase the amount of renewable generation included in the calculation of the interim and final goals. The commenter s found (see Appendix C of their comment) that if Arkansas and Louisiana were assigned to the Southeast region, which has a regional average target of 10 perc ent, instead of being 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, a nd from 4,932,549 MWh to 7,282,579 MWh for Louisiana.

Commenter s stated EPA acknowledges that there are regional differences throughout the country that may result in differing capabilities and resources for increasing RE generation and encourages states to work together on regional compliance plans to address these. The
commenter s said EPA fails to recognize that significant differences often remain between states within a given region, and what may have been demonstrated to be achievable in one state, ma y not be achievable in another state. The commenter s said energy pricing, geography, topology, transmission, load, seasonality, endangered species

- related siting rules, state or local permitting and siting rules, congestion and existing energy mix are just a sample of the many factors that play a role in where renewable resources are developed. The commenter s said this calls into question EPA's decision to group states regionally when calculating state RE goals.

Commenter s stated the South Central region is calculated incorrectly. The commenter s said EPA used state RPS data to establish regional RE targets, 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 require ments of the states in that region; importantly, in deriving regional targets, EPA "did not include [RPS] targets that were capacity

- based."

Commenter s stated EPA derived the RE target for the South Central region (Louisiana, Arkansas, Kansas, Nebraska, O klahoma, and Texas) based on the RPS of a single state

- Kansas; however Kansas' RPS is based on gross generation capacity rather than total retail sales. The commenter s said consequently, it should have been discounted per EPA's stated protocol. The comme nter s said Texas also has a RPS, but like that of Kansas, it is also based on capacity.

Commenter s stated given the lack of a germane RPS standard within the South Central region, EPA must establish the regional RE generation target at 1 0%, consistent wi th its treatment of Alaska and Hawaii (and equivalent to that for the Southeast region).

Commenter s stated in order to increase the South Central region's RE generation by 22,249,199 MWh by 2030, the annual RE growth factor for the region should be set at 2.7 percent.414 Commenter s stated EPA's regional approach to renewable 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, based upon averaging all 2020 renewable portfolio standards ("RPS") requirements in that region; third, an annual growth factor was calculated that would allow the region as a whole to reach the regional renewable energy target in 2029 assuming that renewable energy generation would increase from 2012 levels beginning in 2017; fourth, the annual growth factor for a given region was applied to individual states' 2012 renewable energy generation to calculate future renewable energy generation in that state from 2017 thr ough 2029, not to exceed a maximum renewable energy generation level equivalent to the regional renewable energy target; finally, these annual renewable energy generation levels for each state were used to calculate interim and final renewable energy targe ts for the state. The
commenter s said EPA claims that "states within each region exhibit similar profiles of renewable energy potential or have similar levels of renewable resources." The commenter s said this assumption is off

- base because the regions are large and encompass states with drastically different renewable resources. The commenter s 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 commenter s 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 commenter s said renewable resources physically located in one state are often used to satisfy RPS requirements in other states. The commenter s said since these benefits are not allocated to the buyer's state, RPS quantification is an inefficien t method to determine renewable energy potential.

Commenter s stated EPA assigned each state renewable

- energy growth rates for 2020

- 2030 based on its review of the existing Renewable Portfolio Standards (RPS) after it grouped states on a regional basis; thu s, EPA assumed that states within a region could meet the same RPS targets, and it made this assumption without considering each state's definition of "renewable," what each state has available to it in terms of renewable resources, and the costs associate d with those resources, all of which are unique by state and region. The commenter s said in fact, Arkansas has not enacted an RPS to date, due in large part to the fact that Arkansas has few cost

- effective renewable resources for electric power generation.

Commenter s stated EPA acknowledges that there are regional differences throughout the country that may result in differing capabilities and resources for increasing RE generation and encourages states to work together on regional compliance plans to addre ss these; however, EPA fails to recognize that significant differences remain between states within a given region. The
commenter s said energy pricing, geography, topology, transmission, load, seasonality, congestion and existing energy mix are just a samp le 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.

Commenter s stated EPA grouped states together into six regions for determining state RE goals. The commenter s said EPA provides no rationale for why certain states are grouped together, other than proximity; proximity may not be an appropriate proxy for similarity of RE resource deployment potential. The commenter s said neighboring states can have very different solar or wind potential; for example, AR and KS have dramatically different wind resource potential, but415 are included in the same region. The commenter s said 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 goals based on, among other factors, state

specific resource availability. The commenter s said if EPA chooses to retain a regional approach
to developing state RE goals, the Agency should allow states to change regions if they can demonstrate that another region is more representative of their RE potential.

Commenter s stated utilities that operate in multiple states will meet challenges in comp lying with this proposed regulation. The commenter s 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 commenter s said further comp licating this issue while operating in multiple states is how each state will deal with RE resources. The commenter s said there are unanswered questions regarding how RE resources produced in one state will be treated when sold to utilities, delivered into regional RTO's and consumed in other states. The
commenter s said this issue greatly affects how, when and if companies comply with the rule in each state. The commenter s fully support the wind energy it purchases from KS to be used for compliance in other states, especially those states where its customers are paying for said energy.

Commenter s stated EPA set the South Central regional growth rate at 8%, using the Kansas RPS established in 2010 as the benchmark. The commenter s said while the RPS requireme nts of most other states are based on retail electric sales, Kansas' standard is based on generation capacity. The commenter s said EPA mistakenly applied the Kansas RPS requirements as if they were 20% of retail electricity sales instead of 20% of generati ng capacity. The commenter s estimate d that this overstates the benchmark growth rate for the region by approximately 9%.

Commenter s stated under the proposed guidelines' primary approach to determining RE baseline and target goals, EPA relies on state RES requirements to create regional RE targets that are then applied to individual states. The commenter s said this approach may overestimate what is achievable in some states, particularly those that do not have existing RES mandates, and ignores contrary dec isions made in those states. The commenter s added, EPA misuses state RES programs by failing to recognize RES design elements that can have the effect of reducing the amount of in

- state generation necessary for compliance. The commenter s 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) guidelines. The commenter s said EPA also delays a decision on the eligibility of biomass resources for co mpliance, adding further uncertainty to the RE assumptions in the proposed guidelines.

C ommenter s supported EPA 's consumption based approach to renewable energy crediting in state compliance plans. Commenters also supported the alternative method for rene wable BSER calculation, but with a modification to use regional technical and economic potential for each technology. C ommenter s contended that EPA used an arbitrary and unjustifiable methodology for determining each state's renewable energy (RE) generatin g 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 emission reduction; and 2) its application of a416 uniform RE growth rate to all states within a region, regardless of their baseline RE generation capacity. Commenters concluded that EPA failed to prove that the standards in block 3 of its BSER ha ve been adequately demonstrated. Commenters explained that RPSs are not an inherently accurate reflection of a system of emission reduction that is demonstrated or feasible. Commenters stated that while some RPSs may realistically reflect a state's RE grow th potential, others may be no more than an aspirational goal that does not account for the costs or practicalities of achieving the goal. Commenters also objected that in two of EPA's designated regions there was only one state with an RPS and in those st ates, the lone state with a RPS set the RE growth rate for the entire region.

Comment 62: RE potential; based on regional growt h ; need to base 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:

Commenter s stated in determining the proposed and alternate RE generation level goals, U.S. EPA first quantified the amount of RE in 2012 in each sta te scenario, excluding hydropower; Ohio's 2012 RE performance level is identified as 1% by U.S. EPA; then, as a starting level, U.S. EPA summed these amounts for all states in each of six regions (based on North American Electric Reliability Corporation (N ERC) 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 commenter s said then U.S. EPA estimated the aggregate target level of RE generati on in each of the six regions assuming that all states within each region can achieve the RE performance represented by an average of RPS requirements in states within that region; specifically, U.S. EPA averaged the existing RPS percentage requirements th at will be applicable in 2020 and multiplied that average percentage by the total 2012 generation for the region. The commenter s are raising numerous concerns with the various aspects of this approach.

Commenter s stated based on DSIRE, U.S. EPA determined 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 commenter s said then U.S. EPA assumes RE generation 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 commenter s said for Ohio's region, East Central, our target is 16%. The commenter s said then for each region they computed the regional growth factor necessary to increase regional RE generation from the 2012 level to the regional. The commenter s said this regional growth factor is the growth factor used for each state in that region to develop the best practices scenario. The commenter s wish to note that although f our of the six states in our region have effective RE levels predicted for 2020 of 18 to 22%, in 2012 the six states in our region had RE performance levels of 0 to 3%; and the state that performed at 3%, Virginia, is not even considered as part of our reg ional generation target because they do not have an RPS policy. The
commenter s said the remaining five states in our region achieved anywhere from 0 to 2% in 2012; this acts to drive our annual growth factor starting in 2017 to be 17%. The commenter s417 said the U.S. EPA developed the annual RE generation levels for each state by applying the regional growth factor to that state's initial RE generation 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 generation multiplied by 2020 effective RE level, 16% for Ohio's region). The commenter s said the interim goal is then based on the average achieved between 2020 and 2029 and the final goa l is the 2029 level; for Ohio, the interim goal is 6% and the final goal is 11%16 of RE generation in the state. The commenter s said Ohio is to grow RE within the state from 1% to 11% under this proposal; because Ohio is a large generator of electricity, t his represents 13,776 GW

- hs. The commenter s said while states in our region that are small generators, such as Delaware, will only be required to achieve 1,038 GW

- hs; the
commenter s find this expectation unreasonable. The commenter s said the only way to ac curately determine RE potential that is technically and economically feasible is to determine it based upon the specific states ability.

Commenter s stated supporting data could not be found to allow for replication of the EPA calculations used to determine the Alaska 2012 RE generation of 39,958 MWh. The commenter s 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 in Alaska, but no additional detail is provided. T he commenter s said this supporting data should be clearly identified in the record so that the public has the opportunity to verify the EPA calculations. The commenter s said sustaining this high level of RE generation growth in Alaska through 2030, as EPA assumed, does not seem likely. The commenter s said retaining this conservative growth rate results in lower goals than a more realistic RE generation growth rate; in correcting the Alaska CO2 Performance Goals calculations, EPA should identify a more repre sentative RE generation growth rate.

Commenter s stated EPA used statewide RE generation as a factor in calculating the Alaska CO2 Performance Goals, regardless of whether that RE generation offsets generation from existing affected EGUs. The commenter s sa id Alaska has numerous 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 existing affected EGUs to be used to determine whether actual CO2 emission are compliant with the goals. The commenter s said this inconsistency results in the Alaska CO2 Performance Goals being artificially low because RE credit taken in calculating the goals cannot be used for demonstrating compliance with th e goals. The commenter s said the calculation methodology and compliance methodology should be consistent to increase the likelihood that the calculated 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 Commenter s stated the proposed rule's calculation of 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. C ommenter s said the rule shou ld be improved by setting state

- specific goals based on the highest RPS in the region or recognizes the potential for renewable energy unique to each state.

Commenter s stated the proposed rule assumes a low growth rate for renewable energy; the rule shoul d be improved by adopting a growth rate for renewable energy that reflects renewable energy's demonstrated and accelerating growth over the past ten years, which is the market reality. The commenter s said this growth is proof of renewable energy's ability to scale up and provides a substantial amount of new generation to meet low

- carbon power demands.

Commenter s stated the rule should be improved by revising the 2020 interim compliance goal; the modification of the interim compliance goals would allow stat es to implement a more flexible compliance glide path taking into account their generation mix, reliability needs, emission target, renewable resources, and other factors. The commenter s said states would still be required to comply with the 2030 limits bu t would do so at a rate that is appropriate for each state; as an alternative, the USEPA could set a straight

- line compliance target that requires states to meet a steadily decreasing emission target but smoothes out reductions over the ten

- year period rat her than front

- loading the reductions as in the present, proposed rule. The commenter s said such an approach allows time for the adoption of effective, thoughtful renewable energy integration policies, as well as the construction of grid infrastructure, ad aptation of technology and business processes and renewable energy facilities at a scale that can provide generation to more effectively address all reliability concerns created by the retirement of existing coal

- fired EGUs.

Commenter s stated a more effect ive approach is to calculate a renewable energy target for each

non

- RPS state based upon its present renewable energy deployment levels, the recent growth rates for renewable energy in each state, and, importantly, each state's actual renewable energy pote ntial. Commenters stated s uch an approach ought to take into account the recent growth rates of renewable energy deployment in states with similar potential renewable energy resources.

Comment 64: Regional goals should be revised.

Response 64: The EPA h as revised the way it quantifies BSER based on comments. S ub category

- specific emission performance rates now apply to all units nationwide. See Preamble Section s V and VI.

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

Commenter s recommend ed that EPA revise the calculation 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 goals are calculated is unfair and pits states against states, creating further barriers to the development of renewable energy and jeopardizing419 the ability of states to cooperate on a regional basis to try to achieve the overall goals of the proposal.

Comment 65: Correct calculations for RES

- renewable energy standard

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 :

Commenter s stated the Colorado Renewable Energy Standard (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 commenter s said please make the following correction s:
1. The CO RES includes multipliers to incent specific technologies, early renewable investment, and community

- based renewable energy; without multipliers, most Colorado utilities' actual renewable capacity will be lower than the RES goals; please reduc e the RE targets in the proposed rule to reflect these multipliers.

2. The CO RES varies by type of utility: investor

- owned utilities have a goal of 30 percent, cooperatives have a goal of 20 percent and municipal utilities have a goal of 10 percent; plea se weight the goal to reflect these standards.

The commenter s said considering the above and the EPA's approach to determining achievable renewable targets, the commenter s recommend ed that EPA utilize an effective Colorado RE level of approximately 20% fo r 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 foll owing are summaries of the specific public comments under this comment:

Commenter s stated in setting a regional RE target as the first step in setting state goal, EPA appears to assume that there will be regional or multi

- state compliance efforts. The commenter s said multi

- state compliance planning may be valuable in resolving complianc e challenges identified by some states and utilities; however, EPA cannot set targets assuming that this will occur. The commenter s said this approach could result in inflated RE goals for states that are not able to engage in multi

- state compliance plans. The commenter s 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 calculations do not re cognize important elements of individual state RES programs, such as the use of out

- of

- state RECs for compliance, alternative compliance payments and credit multipliers for certain 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 consider these factors results in inflated state RE goals that may not be achievable in certain states.

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 encourage and at what co st 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 deviation s based on a force majeure finding or if utilities have made good faith efforts to comply but cannot because of factors beyond their control.

Commenters said further, 24 states (of the 29 states with a RES) and the District of Columbia allow the use of ou t

- of

- state power and RECs for compliance. The commenters said the use of these important compliance mechanisms enables critical flexibility in achieving the mandates, and serves to recognize that, in some cases, resources are more widely available or can b e 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 uses 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 typically require a lesser amount of in

- state generation than full compliance amounts.

Commen ter s said EPA must take into account that states have not established RES percentage targets in isolation, but have thoughtfully and intentionally determined the targeted levels of renewable generation for each state in the context of, and in conjunction w ith, determining the resources that are available to meet the target level, the cost of meeting the target level and other policy objectives. The commenter s said if EPA uses state RES mandates as the basis for setting regional or state RE goals, EPA must a djust RES goals to reflect these design elements or enable additional compliance mechanisms consistent with existing state RES programs.

Commenter s stated EPA also fails to recognize the credit multipliers that some states apply to certain resources to fur ther encourage development of these RE resources; twelve states and the District of Columbia have some type of resource

- specific credit multiplier. The commenter s said failure to adjust state RES requirements to reflect these credit multipliers results in overestimated RE goals; for example, if a state RES requirement is 20 percent by 2020, and that state provides an extra multiplier for solar generation, the actual requirement is less than 20 percent because solar resources are double counted. The commente r s said any use of state RES mandates used by EPA in setting regional or state RE goals should reflect this double counting.

Commenter s stated it is critical to allow the current tracking system utilized for compliance in MO and KS to be utilized in other states. The commenter s said systems such as the North American Renewables Registry are currently recognized by some states to track RECs for421 compliance and sale. The commenter s said KS wind RECs are exported to other states and tracked through this avenue to prevent double counting. The commenter s 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 commenter s said during EPA outreach meetin gs and calls staffers have presented confusing material on this subject matter. The
commenter s said since natural conditions in every state are not conducive for RE production, it will be essential for the RE and/or RE credits created in one state to be ut ilized for compliance in another state. The commenter s said allowing this is critical for the success of the Proposed Rule and the commenter s strongly support this concept; this will lower utility compliance costs and be a valuable asset for states in term s of economic development.

Commenter s stated EPA's approach to calculating states' renewable development potential also presents challenges; first, EPA's proposal to take a regional average of state Renewable Portfolio Standard ("RPS") targets and apply t he average to all states in the region imposes the policies in one state on its neighbors. The commenter s said it also in effect rewards states who have not adopted RPS targets, as their regional average is lower; indeed, regions of the country with the hi ghest technical potential for developing renewable resources have some of the lowest targets for bringing those resources online, while states with relatively lower technical potential are faced with the highest targets in the country. The commenter s said in New York, for example, the NREL study cited by EPA in its Alternate Approach finds New York has a technical potential to meet up to 5 percent of its electricity demand with renewable energy, while its target under EPA's proposed rule is five times that (at 25 percent).

Commenter s stated EPA uses a "best practice" approach to set state renewable energy targets, but the methodology is flawed; EPA's proposal divides the 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 commenter s 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 par ticular policy decision to adopt an RPS represents a meaningful estimate of the "feasibility and cost of the best practices scenario" for Texas and all the other states in the region. The commenter s said EPA's approach is arbitrary and unreasonable for at least two reasons :

The commenter s said first, EPA's "best practice" method 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; individ ual state decisions to enact an RPS could have been due to a combination of factors, including the presence 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 factors combined with the availability of resources. The commenter s said EPA provides no evidence to support its assertion that state legislatures adequately considered whether the levels of renewable energy prescribed b y the state's RPS would be achievable given cost and resource constraints. The commenter s said state RPS programs also embrace a wide range of generation technologies that can vary dramatically from state to state, and some RPS programs provide increased c redit levels for certain types of generation; these differences mean that standards

- even within a single region

- may not be comparable. The commenter s said Kansas has only 2,713 MW of wind generation compared to 12,214 MW in Texas; EPA did not take into account the amount of renewable energy produced Texas has compared to other states. The commenter s said Texas ranks number one in the nation422 for wind energy capacity and if Texas were a country, it would rate number six globally for installed wind energy capacity.

The commenter s said therefore, energy production in Texas required by the EPA proposal is exponentially greater than other states; in 2030, Texas must achieve over 85 million MWh in renewable energy to reach the goals in Block 3

- this 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 renewable energy increase under the proposed rule, which is California with a 37 percent increa se to 41 million MWh. The commenter s said the renewable energy generation goals the EPA has calculated for Texas are unachievable and impractical.

The commenter s said second, EPA does not appropriately set the regional RPS targets; EPA's RPS

- based approac h arbitrarily includes the anticipated level of renewable energy for states that have adopted a RPS, while ignoring the fact that other state legislatures have considered and rejected any level of RPS commitment for their states. The commenter s said EPA's approach to setting regional "best practice" targets cherry

- picks 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 commenter s said EPA ignores the judgm ent of these five other states in the South Central region, some of which have not adopted an RPS. The commenter s 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.

Commenter s stated EPA's reliance on historic RE development in only the top 16 states skews the resulting benchmark RE development rate. The commenter s s aid those states have typically been the most successful in developing RE resources because they have the greatest RE generation potential, often at lower development costs for a given RE resource. The commenter s said they are also likely to have socioecon omic characteristics and electric rates that make RE comparatively less costly. The commenter s said other states may not have sufficient resource potential and/or ability to deliver the energy at a given penetration level to achieve the benchmark developme nt rate set by the top 16 states. The commenter s 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 achievable in all states; nor has EPA provide d any rationale for the use of prior growth rates as an indication of achievable future growth, particularly given the technical challenges associated with increased penetration of RE on the electricity system.

Commenter s said as recognized by EPA, the po tential for expansion of hydro and geothermal resources in the future is minimal; past development of these resources, therefore, have no relationship to the future development of different RE generation sources.

Commenter s said in order to realistically account for 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 commenter s said this would provide a better estimate of what may be achievable across the country, grounded in what has been demonstrated as achievable in the past. The commenter s said EPA should exclude data related to the rate of423 development of both geothermal and hydropower resources, as given the limited potential for additional development of these resources.

Commenter s said specifically, under the Proposed Rule, MO would be expected to develop RE generation within the state, or accomplish this through 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 location for wind or solar installations.

Commenter s stated EPA's regionalized RPS approach to setting projected state RE generation levels in 2030 should be corrected for several reasons:

1) EPA applies its regional growth factor to a state's historic 2012 RE generation starting in 2017, this approach ignores existing and planned RE development that has occurred or will occur between 2 013 and 2016.

2) EPA assumes that existing state RPS programs represent "a level of renewable resource development for individual states... that [is] consistent with policies that a majority of states have already adopted based on their own policy objectiv es and assessments of feasibility and cost." The commenter s said for many states, this assumption is not correct, and, even if it were, EPA's methodology often results in state level RE targets that are lower than the targets set by state law. The commenter s said this is true for 17 of 29 states with existing RPS policies; 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 target of 25%. The commenter s said in fact, EPA projects that only one state in the entire 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 commenter s said this is not consistent with EPA's acknowledgement in the prop osed rule that, on average, states have achieved a 95% RPS compliance rate. 75 Fed. Reg. 34869. The commenter s said a 95% compliance rate for Illinois means that, by 2025, the state should have at least 23.8% RE penetration. The
commenter s said this dwarfs EPA's 9% RE projection for Illinois in 2030.

3) Five states already have equal or higher RE generation in 2012 than EPA's projected 2030 target for that state. The commenter s said four of those states (IA, MN, ND and SD) are clustered in the North Centra l Region. The commenter s 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 currently accounts for 24% of its electricity generation. The commenter s said of those four states, 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 th e North Central Region, except for the above four states that already meet or exceed EPA's 2030 targets, to achieve EPA's regional average maximum RE generation target of 15% by 2030.

The commenter s said this misalignment of EPA's RE target setting method ology with actual state level RPS goals and actual RE development, deployment and historical growth rates thereby424 greatly underestimates the potential of RE generation to displace fossil

- fuel generation and carbon emissions across the North Central Region and the United States. The commenter s said the result of EPA's proposed methodology would be weaker state goals that do not reflect BSER; in fact, EPA's approach results in national RE generation levels in 2020 that are below current Energy Information Adm inistration (EIA) forecasts and RE generation levels in 2030 that are only moderately higher than EIA's 2030 Business as Usual projections.

Commenter s stated EPA's use of state Renewable Portfolio Standards (RPS) to determine regional renewable energy goa ls is fundamentally flawed. The commenter s said these standards are end products of discussions within each state about the need for increased renewable generation and decreased emissions from each individual state's power sector. The commenter s said RPS i s a policy

- based mechanism for increasing renewable generation but does not necessarily represent actual market dynamics for renewable generation within states.

Comment 67: Regions

- inadequate consideration of RE generation

Response 67: The EPA has revis ed 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:

Commenter s f ound fault with the setting of renewable goals as a percentage of total genera tion, inclusive of generation not subject to the proposed rule. The commenter s believe d that if the CO2 emissions of the units to be regulated under the proposed rule are the only emission included in the numerator of the goal setting calculations, then ge neration from renewables and avoided generation resulting from EE measures should reflect only what is attributable to those regulated units, as well; thus, rather than using 129,745,731 MW

- h of net generation in Ohio as the basis for renewable goals, a mo re appropriate and representative 2012 generation value would be 110,505,950 MW

- h, derived by subtraction of wind, biomass, nuclear, hydro, and solar generation (Note that commenter s did not separate natural gas combustion from simple cycle turbines, which would decrease this value further). The commenter s strongly believe d that using total generation from all sources, including those not to be regulated by the proposed rule and indeed considered desired and environmentally beneficial generation, unfairly i mpacts those states who were early adopters of renewable and zero carbon generation technologies, and who maintain a robust and multi

- faceted generation mix that the commenter s believe d is an essential component of grid stability.

Commenter s stated it is inappropriate that the ambitious 2020 RPS targets of Maryland, Delaware, and Washington D.C were given equal weight 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 commenter s said Washington D.C. has a highly ambitious renewable target, yet contributed no renewable generation to the grid in 2012. The commenter s said despite what U.S. EPA describes as similar RE potentials amongs t 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 commenter s said if U.S. EPA is to pursue regional averaging in setting425 renewable goals (w hich the commenter s d id not agree with), a weighted average that takes into account the total generation contribution of each state, the renewable contribution of each state, and accounts for the fact that several states found the creation of a renewable p ortfolio to be uneconomical must be developed; absent this, the current proposed methodology places great burden on those states which generate far more electricity, discounts those states with no renewable portfolios, and requires very little of those sta tes with little generation capacity.

Commenter s stated the Nevada Agencies reviewed the State's 2020 RPS to determine an effective RPS consisting of components that could potentially be counted as RE for compliance with the emission rate goal in the propos ed rule and excluding those compliance measures that are not contemplated by the proposed rule. The commenter s 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 st ate RE goals; additionally, there remains considerable uncertainty that the entirety of the effective RPS could be credited because 1) Nevada 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
commenter s said given the differences between Nev ada'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 RE generation under existing state requirements. The commenter s contend ed that the proposed method of averaging regional RPS values to establish RE generation goal is problematic and does not represent a defensible method of achieving a Best System of Emission Reduction.

Comment 68: States w ith 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 rec ognize that some states do not have existing RES requirements. The commenters said for each region, EPA averaged the existing state RES requirements for 2020; if a state in the region did not have an RES, EPA ignored that state by excluding it from the den ominator of the averaging calculation; EPA then applied this skewed "average" RES requirement to all 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 av erage of all states in the region. The commenters said EPA provided no reasoned explanation as to why it ignored states without 2020 RES requirements when calculating regional and RE goals.

Commenter s added EPA's BSER goal calculation approach does not ap pear to recognize that the Kansas RES goal is based on peak demand capacity (in MW), whereas state BSER targets are based on net electricity generation (in MWh); in addition 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 deployment as a neighboring state.

Commenter s said RES targets are goals to be met in the future; in many cases, theref ore, the state with the existing RES target has not yet achieved the goal, yet it is assumed that neighboring states will be able to.

Commenter s said EPA inappropriately assumes that state RES requirements are a proxy for RE technical potential.

Commente rs said a state's RES requirements not only reflect that state's own policy decisions and assessment of the potential to deploy RE generation, but also reflect a range of policy choices that have nothing to do with technical RE potential.

Commenters said if EPA continues to average state RES mandates to derive regional RE generation goals, the Agency should include all states in calculating the average, even those states with no RES requirements; this would provide an actual average of the state requiremen ts in the region and would ensure that one state's RES is not imposed on all other states in the region. Commenter s said similarly, EPA should control for states with significantly more aggressive RES requirements when determining regional RE goals.

Comme nter s stated in its proposed approach for determining renewable energy potential in the "North Central Region," EPA used the average RPS requirement of the five states with an RPS requirement in the nine

- state region to arrive at a 15 percent "effective re newable level". The
commenter s said EPA concludes that states in the same region have similar renewable energy potential, as measured by existing renewable energy standards adopted by some states in the region. The commenter s said in this process, EPA has not considered that some states do not have RPS programs in

- place. The commenter s said if EPA's final guidelines continue to apply regional RPS levels to determine renewable potential, this assessment should factor in a zero into the regional calculation f or states without an RES or RPS; this would result in the North Central Region's effective renewable level being 8.4 percent as opposed to 15 percent. The
commenter s d id not support the alternative approach to renewable energy as published along with the p roposed rule or, without additional information, the regionalized approach in the NODA.

Commenter s stated EPA's approach to averaging state RES mandates to develop a regional RE goal is particularly problematic in the Southeast and South Central regions, where many states do not currently have RES requirements. The commenter s said in the Southeast regi on, only one of the eight states has an RES; in the South Central region, only one of the six states has an RES. The commenter s said as a result, one state's standard 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 commenter s said f urther complicating this issue is that the region a state was427 grouped in for the purposes of calculating the RE building block may not, and most likely will not, be part of the same multi

- state approach for compliance.

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:

Commenter s stated the proposal's approach to setting state goals using renewable energy introduces several problems that could make compliance unduly difficult and that may in certain cases under or over

- estimate the impact of RPS goals on renewable generation. The commenter s said EPA can improve the proposal's approach to establishing goals based on renewable energy in several ways. The comment er s said the final rule could apply regional renewable targets to retail electric sales rather than total electric generation, which would solve compliance controversies and more closely align with the RPS policies the EPA uses to justify its approach; or, EPA could recalculate the renewable energy 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

.

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

Commenter s stated whether or not states choose joint implementation strategies, credit under Section 111(d) for cross

- border investments in low

- carbon generation should be prope rly attributed. The commenter s said EPA has requested comments on this issue in the context of the methodology for Building Block 3 and how Building Block 3 targets relate to compliance options. The commenter s stated are particularly concerned with ensurin g 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 energy o utside Minnesota (e.g., Minnesota Power's Bison Wind Projects in North Dakota). The commenter s said the Minnesota Public Utilities Commission has approved these investments as well as recovery of the associated costs from ratepayers; it is vitally importan t that Minnesota receive compliance credit under the regulations for these CO2 reduction investments that have been paid for by Minnesota ratepayers. The commenter s urge d the EPA to protect the investments of ratepayers in forward

looking states like Minne sota.

Commenter s stated the compliance system for the Minnesota RES would be compromised if Minnesota ratepayer investments in renewable energy were credited outside of Minnesota. The428 commenter s said to demonstrate how these investments 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 that 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 commenter s said M

- RETS Certificates are "Whole Certificates" meaning "none o f the renewable attributes have been separately sold, given, or otherwise transferred to another party by a deliberate act of the Certificate owner."

Commenter s stated the Minnesota RES statute requires that RECs only be used once and that eligible technologies be treated equally with no more or less credit to energy based on the state where the energy was generated. The commenter s said the purpose of requiring r egistration of a "whole certificate" with M

- RETS, "is to help ensure compliance with the statutory prohibition against double counting of the environmental benefits, and to ensure that ratepayers receive the benefits of the renewable energy for which they are paying through their rates."

Commenter s stated the purpose of the Minnesota RES is, in part, to address climate change

- it was adopted in the Next Generation Energy Act of 2007 alongside greenhouse gas emissions goals; thus, to respect and make most ef ficient use of the investments already made by ratepayers toward reducing carbon dioxide emissions from the power sector via RES compliance, existing and future RES investments should be given credit under Section 111(d); and since RES compliance allows fo r utilizing out

- of

- state resources and all of the environmental attributes

including carbon

- from such resources have been allocated to Minnesota utilities for the benefit (and at the expense of) Minnesota ratepayers, any Section 111(d) "credit" attributed to such resources should also be allocated for the benefit of Minnesota ratepayers. The commenter s 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 the envir onmental benefits of renewable resources in the energy industry.

Commenter s 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 as those in the Midwest or the West Coast. The
commenter s said Quad, like many larger American companies has operations in states throughout the country. The commenter s said Quad is "doing the right thing" from a carb on perspective by working to consolidate its operations in its most efficient facilities, so that it can continue to produce product and provide job opportunities, while achieving significant energy

efficiency improvements. The commenter s said in the final rule, it is critical that EPA recognize the significant benefit of nation

- wide energy

- efficiency initiatives, such as those of Quad, and allow national companies to receive credit for their nation

- wide energy efficiency initiatives. The
commenter s said th is could be accomplished by allowing entities with multiple operations throughout the country to group or "bubble" operations together to demonstrate the energy

efficiency gains achieved by switching operations to more energy

- efficient platforms. The

comme nter s said likewise, the EPA should make clear that energy consumers that creates demand

- side savings have the right to transfer those savings anywhere throughout the country' this would create the most efficient market for the transfer and use of those de mand

- side and other carbon savings.429 Comment 71: Interconnected states

Response 71: The EPA agrees. It has calculated sub category

- specific emission performance rates and state goals in this final rule that assesses building block mitigation potential on a regio nal basis. See Sections V and VI of the Preamble for more explanation.

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

Commenter s stated the EPA should calculate state emissions goals in a manner that reflects
stat es' ability to comply by relying on lower

- emitting sources located in interconnected states, that recognizes that new renewable generation and energy efficiency should displace existing fossil fuel generation rather than simply add to total generation, and that reflects states' ability to reduce coal

- plant emissions through co

- firing with natural gas.

Comment 72: Purchasing power from another state

Response 72: See Section s VII and VIII of the Preamble for further discussion.

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

Commenter s urge d U.S. EPA to consider allowing states to obtain credit towards the determination of the state rate goal when purchasing power from NGCCs from another state. The
commenter s said this would be similar in implementation as proposed in Building Block 3 for renewable energy.

Commenter s stated in 2012, 20% of City Water, Light and Power (CWLP)'s energy was from wind generated at two Iowa farms, pursuant to two power purchase agreements (PPAs); yet, the GHG Rule neither gives CWLP credit for the wind power it has already purchased, nor for the wind power it may purchase from these farms in the future. The commenter s said this aspect of the GHG Rule may violate the Commerce Clause of the U.S. Constitu tion, according to at least one judge of the 7th Circuit Court of Appeals, covering 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 EPA is no t including BB4 in the final rule’s quantification of BSER. See Section VIII of the Preamble for a discussion of how demand

- side energy efficiency measures may still be folded into compliance demonstrations and state plans.

The following are sum maries of the specific public comments under this comment:430 Commenter s 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 commenter s d id not believe th at North Carolina's generation will actually decrease by this amount. The commenter s 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 i s more expensive and will be one of the first resources to be displaced. The commenter s 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 Ca rolina's existing EE programs.

Commenter s stated allowing a state to only take credit for in

- state CO2 reductions occurring as a result of EE programs creates a disincentive for importing states. The commenter s said electricity imports are generally more e xpensive and this resource will be displaced first before displacement occurs within the state's own sources. The commenter s said as an importing state, North Carolina EGUs may never achieve a reduction in generation because as additional EE measures are i mplemented, the EE savings would simply come off the electricity imported to the
state.

Commenter s stated if EPA establishes the same cumulative percent reduction goal in 2030 for each state, EPA may be able to avoid adjusting goals for importing and expo rting states; for instance, if all states must cumulatively reduce electricity sales by 10% by 2030, all states would be reducing GHG emissions at power plants fairly from an end user standpoint. The commenter s said states that import electricity would hav e to share in the cost of reducing GHGs from EGUs located in other states.

Commenter s 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 pract ices under the boiler MACT, which requires tune

- ups and energy assessments. The commenter s said this proposed process could still require EM

- V and tracking to ensure actual savings are achieved.

Commenter s said this approach would make the cost to 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 commenter s said it simplifies tracking of EE and does not require complex negotiations between states t o account for importing/exporting and avoided generation. The
commenter s said if states wanted to implement additional EE reductions beyond those required by best practices, the additional savings could be counted as avoided generation in a state carbon

em issions 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:

Commenter s stated EPA appears to have neglected to account for the significant amount of electricity that is imported to the United States from 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 without the imports. The commenter s said several U.S. states have formally recognized the significant role this imported power plays in reducing state electricity sector emissions. Vermont, Minneso ta, Wisconsin, and Connecticut all credit Canadian imported hydropower for compliance in state renewable portfolio standards. The
commenter s said if EPA fails to recognize the positive 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 trade distortion by dis

- incentivizing the current free trade of electricity that occurs across the U.S.

- Canada border.

The commenter s added u nder Chapter 9 of the North American 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. 2 89, 387 (1993) ("No Party may prepare, adopt, maintain or apply any standards

- related measure with a view to or with the effect of creating an unnecessary obstacle to trade between the Parties.")). The commenter s stated if the final guidelines essentially mandate a significant
ramp

- up of natural gas

- fired generation, without properly recognizing or crediting Canadian power imports, it is possible that zero

- emitting generation from Canada will be displaced in favor of higher

- emitting gas

- fired generating in the U.S., thus resulting in higher emissions, lower imports from Canada, and greater difficulty for a state in complying with its state targets. The commenter s said If EPA finalizes the Proposed Guidelines, 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 final CPP, it simply lays out a Best System of Emission Reduction that recognizes the reduction opportunities fr om shifting from reducing generation at given technologies and replacing with generation from other grid

connected sources. The EPA also assess es the cost, viability, and reliability impacts of its final rule in a manner that accounts for the interstate na ture of the electricity system. See section V of the final rule preamble and the Resource Adequacy and Reliability Analysis TSD for CPP Final Rule.

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

Commenter s stated the EPA g oal

- 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 S tate; wholesale transactions within this federally

- regulated marketplace are outside of state jurisdiction.

Commenter s stated EPA's "building blocks" analysis of the "best system of emission reduction" is not based on accurate or reasonably demonstrated c ircumstances in North Dakota and is not consistent with the realities of the electric grid. The commenter s said regulating the electric grid rests with the Federal Energy Regulatory Commission ("FERC") as to wholesale transactions432 and the North Dakota Publ ic Service Commission as to retail transactions. The commenter s said determining the proper balancing of electric resources to meet the needs of electric consumers consistent with the public interest is therefore a state function.

Commenter s 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, ad verse effects.

Response 76: See Section V of the Preamble for a discussion on building block three and RE assumptions for the Best System of Emission Reductions . The sub category

- specific emission performance rates calculated in this Final CPP Rule reflect a regional assumption regarding RE potential that is allocated to fossil steam and NGCC sources on a pro

- rata basis.

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

Commente r s stated EPA bases its RE goals on generation in a state, but state RPS programs are based on consumption in the state; a certain percentage of electricity sales, not generation, must come from RE sources. The commenter s said for a state that is a net exp orter of electricity, its RPS reflects, at most, the amount of in

- state consumption that must be supplied by RE; therefore basing the RE goal on in state generation has a profound adverse effect in states like West Virginia or Wyoming which consume in

- stat e less than half of their generation.

Comment 77: Exporting States

Response 77: See the EPA Resource Adequacy and Reliability Analysis TSD for CPP Final rule

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

Commenter s state d a number of states cannot meet their electricity demands without substantial imports of power; indeed, many states host electric utilities that have existing contracts with distribution companies outside their borders; accordingly, the shutdown of coal p lants in an exporting state could also constrain power supply in an importing state. The commenter s said it is evident that EPA failed to consider this "offshoring" of power requirements, and the corresponding carbon footprint, when it assigned reduction t argets to the states.

a. The commenter s asked why would EPA unfairly penalize those states that have made adequate power generation investments, which allow them to help other states achieve secure electricity supply.

b. The commenter s said under the pro posal, when exporting states must shut down coal plants, they could face serious constraints on generation resources, particularly during433 extreme weather; these constraints could create a difficult choice for states: allow their utilities to fulfill existi ng contracts with entities outside the state or service the citizens of the home state first. The commenter s asked has EPA's Administration considered the potential negative impact this proposal could have on commerce within the United States; and if so, p lease explain how EPA proposes to address this issue.

c. The commenter s asked has EPA adequately consulted with the entities charged with developing and enforcing reliability standards and with monitoring the bulk power system (e.g., Federal Energy Regula tory Commission (FERC) and the North American Electric Reliability Corporation (NERC)) on the proposal; 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 integrati on; (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 higher state goal for Arizona (along with sub category

- specific emission performance rates). The impacts of these rates on the generation level and profile of the Arizona Fleet are 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 commen ts under this comment:

Commenter s stated in 2012, Arizona exported a large portion (30 million MWhs, or 27%) of its in

- state generation to the neighboring regions. The commenter s said using EIA and EPA data, total generation in Arizona was 111 million MWh compared to 81 million MWh of consumption within the state. The commenter s said Arizona's historical net

- exporter status is in stark contrast to EPA's IPM projections for Arizona to become heavily dependent on imported energy and capacity in both the Base Case (without the rule) and under the proposed rule in the future. The
commenter s said EPA has not performed the required studies to support this major shift in power flows on the system. The commenter s said in a recent study, NERC has raised concerns abou t the sufficiency of the time frame to build necessary infrastructure for transmission and gas pipelines (in various regions including Arizona) to accommodate the shift in generation from coal to gas.

Comment 79: The EPA's Guidelines should achieve meanin gful nationwide emission reductions.

Response 79: See Section V of the Preamble for a discussion of the EPA quantified the Best System of Emission Reductions in a manner that recognizes the interconnected

- nature of the grid.

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

Commenter s stated in structuring its guidelines, EPA should take account of the emission reductions that are being achieved from the electricity system nationwide through a variety of434 programs, including RG GI and California's similar program, investments in energy efficiency, renewable energy programs, and switching to lower

- carbon fuels, and also consider the potential for contributions from available technologies that are not yet widely deployed in the Uni ted States, such as offshore wind and carbon capture and sequestration technology. The commenter s said EPA should recognize that the best system of emission reduction considers the electricity system as a whole, and utilizes all the opportunities for reduc ing emissions from this system.

The commenter s stated the methods of reducing emissions from the fossil fuel

- fired electricity system can be grouped into two categories; the first category consists of systems of emission reduction that reduce the amount o f electricity needed from fossil fuel

- fired power plants, such as energy efficiency programs that reduce the demand for electricity, demand

- side management, and investments in renewable energy that displace fossil fuel

- generated electricity. The
commenter s said second, emissions can be reduced by lowering the carbon intensity of the electricity generated by fossil fuel

- fired power plants. The commenter s said this is done through shifting generation from high emitting plants to new or under

- utilized lower

- em itting plants, and using the latest technology to reduce emissions at existing plants.

The commenter s said combined, these two categories, or wedges, of emission reductions can be substantial. The commenter s said the RGGI states' 40% emission reduction i s due to a suite of actions that address both wedges, including the RGGI mechanism, investments in energy efficiency and other demand

- side programs, support for renewable energy, and regulatory programs directed at criteria air pollutants and air toxics th at have reduced the amount of electricity generated by higher emitting plants. The commenter s said these programs have combined with market forces that have supported a major shift in electricity generation from coal

- fired to natural gas

- fired plants to transform the regional electricity system in the past eight
years.

The commenter s said by inve sting in energy efficiency and renewable energy and shifting generation to more efficient plants, other states and regions should be able to approach the level of performance that the RGGI states are already demonstrating. The commenter s said EPA should ev aluate whether and when this level of performance can be achieved throughout the United States using the various tools at the disposal of the states; while it may take longer for some regions of the nation to achieve comparable levels of performance, EPA s hould structure the emission guidelines to require that states make significant progress in the next decade toward achieving the reductions and performance level demonstrated by RGGI to be readily achievable by the best systems of emission reduction.

Com ment 80: Application of emissions savings resulting from re

- dispatch and increased renewable generation

Response 80: See Section VI of the Preamble for an explanation of the EPA’s treatment of increased renewable generation.

The following are summaries of the specific public comments under this comment:435 Commenter s 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 shoul d be applied solely to the higher generating sources or instead applied across all generation assets in a manner weighted to the current mix of generation. The
commenter s generally support ed the goal calculations as initially proposed by EPA; and defers to the states to further comment on the implications of these tweaks in the goal setting definition on their individual state criteria.

Comment 81: Account for the reduction in fossil plant efficiency due to additional renewables.

Response 81: As described in the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule, the EPA does not make unit

- level assumptions regarding utilization. The calculation for determining sub category

- specific emission performance rates and state goals anticipa tes a reduction in fleet generation levels for particular source categories, but the EPA does not expect units remaining in operation to reduce utilization by this identical perce n tage.

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

Commenter s stated the CPP did not take into consideration the impacts of low carbon generation on the CO2 emission rates of other fossil generation; renewable low carbon electricity generation such as wind, although cleaner has much lower capacity factors and more f requent cycles (starts and stops) due to the uncertainty of wind duration and speed. The commenter s said the unpredictability of renewable low carbon wind generation 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 commenter s said the CPP in their model did not take into consideration the reduced efficiency of fossil plants to accommodate low carbon gen eration when setting their renewable low carbon targets. The
commenter s 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./MWh during minimum loads; likewise the smaller units show increases in emission rates as they reduce load to accommodate renewable generation increasing their emission rates from 1,949 lbs./MWh to as high as 2,406 lbs ./MWh. The commenter s said the additions of renewables under the CPP plan will only increase the amount of time the fossil units operate at minimum loads. The commenter s said the CPP should adjust their model and state rates to account for the reduction in fossil plant efficiency due to additional renewables.

Comment 82: Appliance standards

Response 82: Demand

- side energy efficiency measures are not included in the quantification of BSER in the Final CPP Rule. See Section V of the Preamble. Section VI I I of the final rule preamble discusses how states may incorporate demand

- side energy efficiency into their state plans.436 The following are summaries of the specific public comments under this comment:

Commenter s stated that several states have their own appliance and equipment efficiency standards for products not covered by federal efficiency standards and that EPA should provide guidance on how savings from these standards can be calculated. The commenter s 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; where: Product sales in the state can be estimated from data compiled by trade associations, data com piled 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 s avings per product 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 standard, or one that is currently occurring in nearby or sim ilar states that do not have the standard; compliance rate can be determined by periodic surveys of products being offered for sale (for retail products) or products that have recently been installed (for contractor products such as heating and cooling sys tems).

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 Em ission Reductions. The building blocks are assessed on the regional

- level, and the fleet is assumed to reduce its emission rate by a given percentage below 2012 levels

– not each particular unit. The EPA power sector modeling 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 fleet will not inherently have a lower utili zation rate as suggested by the commenter s

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

Commenter s stated in calculating the state goals, EPA assumes that each state's coal

- fired units will emit CO2 at an average rate th at 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 Building Block 2; this assumption is unreasonable an d implausible.

The commenter s stated in practice, implementation of EPA's proposed BSER will increase the average CO2 emission rate of coal

- fired EGUs and may also increase the average emission rate of NGCC units.

The commenter s stated for coal

- fired EGUs , operation 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 unit's heat rate compared to full load by an amount greater than EPA claims units can improve heat rate through operating practices and equipment upgrades. Cichanowicz Heat Rate Report at 2

- 1, 2

- 6.437 The commenter s stated EPA itself acknowledges that EGUs have higher heat rates (and thus a higher rate of CO2 emissio ns) when operating as load following units and during periods of startup and shutdown. GHG Abatement Measures TSD at 2

- 5, 2

- 21.

The commenter s stated i n the related NSPS rulemaking for reconstructed coal

- fired EGUs, EPA observed that subcritical units exp erience a 10 percent 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 (IGC C) Facilities" at 4 Fig. 2 (June 2014), Docket ID No. EPA

HQ

- OAR

- 2013

- 0603

- 0046 ("2014 Reconstructed EGU TSD").

The commenter s stated a primary component of EPA's proposed BSER in the Proposed Guidelines is to reduce utilization of coal

- fired EGUs directl y through re

- dispatch to NGCC units under Building Block 2 and indirectly by increasing 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 loads, increasing their heat rates and counteracting any steps those units take to lower heat rate under Building Block 1. The
commenter s stated therefore, each state's average CO2 emission rate for coal

- fired EGUs in the state goal calculations s hould be higher

- not lower

- than its 2012 level.

Commenter s 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 commenter s stated this shift could in effect force coal

- fired EGUs to serve as "peaking units" and thus increase the net output rate of CO2 emissions.

Commenter s added there is great risk to double counting in a Section 111(d) pl an using the Renewable Energy Certificates (RECs) trading system currently in place, and therefore reported emissions would be lower than actual emissions. The commenter s stated EPA should specify that Power Purchase Agreements (PPAs), where RECs are tied to electricity consumed, be included as a compliance option for Section 111(d) state compliance plans; these RECs would then be retired.

Comment 84: Economic growth of electricity demand

Response 84: When quantifying BSER, the EPA examines the cost and f easibility of the aggregate system

- wide impact through testing the policy 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 p ublic comments under this comment:

Commenters stated the EPA did not allow for economic growth of electricity demand when calculating state goals; that could force the needless building of new generation plants, a cost which would again be borne by consume rs, when existing 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 this demand in the most effective and economic way, none o f our fuel options should be arbitrarily restricted or eliminated.

Comment 85: Calculation of Net Energy Output and Useful Thermal Energy

Response 85: As explained in Preamble Sections VI and VIII, Useful thermal output is not factored into BSER quantifi cation, but sources are still permitted to convert it to a MWh equivalent for compliance purposes. This conversion is explained in Section VII I of the final rule preamble.

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

Commenter s stated in the January 8, 2014 proposal for 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 commenter s believe d EPA should provide similar equatio ns in the Proposed Rule to provide clarity on how such calculations should be made.

Comment 86: Remove technology

- specific calculations from state carbon reduction goals.

Response 86: See Section s IV and V of the final rule preamble for an explanation of the EPA’s legal authority and how it translates that into a BSER. The EPA notes that while its method for quantifying BSER is determined through an assessment of regional reduction potential determined to be cost

- effective, it is not prescriptive. 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 discussed in section V.A of the final rule preamble

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

Commenter s recognize d that emissions based regulations are most effective when they remain technology

- neutral. The com menter s said as it is currently written, the CPP proposed state goals are oriented towards specific technology requirements and provide uneven emissions regulations across all states. The commenter s said this method of setting emissions goals is more diffi cult and less effective than a technology

- neutral solution. The commenter s recommend ed removing these technology requirements included in state goal calculations and replacing them with evenly applied carbon intensity reduction goals based on the EPA's int ended 2030 target of reducing the nation's carbon emissions by 30%.

Natural gas capacity factor

Commenter s stated the CPP predicts capacity factor for natural gas in many states is expected to shift from peak generation to baseload generation; this requi res plants to increase their operating439 capacity to 70% on average. The commenter s said even though this value is achievable with Natural Gas Combined Cycle (NGCC) plants and will reduce average emissions intensity across a state, this scenario would likely have several negative implications, including a decrease in peak generation.

Commenter s 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 for primary baseload generation, se asonal changes could be expected to cause considerable consumer electricity price volatility. The
commenter s said natural gas has historically been used by utilities for power peaking; if renewables are employed more widely, as projected in the CPP, the ne ed for demand response power peaking will become even more critical than it is today. The commenter s said by requiring an increase in average capacity factor, the CPP lessens states' abilities to keep natural gas plants on standby for power peaking purpose s. The commenter s said including increases in natural gas capacity factor creates an uneven landscape for state carbon reduction goals; a technology

neutral plan would not include this requirement.

Coal heat rate improvement

Commenter s stated there is a range of coal plant efficiencies throughout the U.S.; according to the EIA, in 2012 the average coal plant heat rate was 10,107 Btu, with the top five plants ranging from 8,888 Btu to 9,174 Btu. The commenter s said the EPA currently suggests a heat rate

re duction of 4

- 6%, with 6% corresponding to the proposed plan. The commenter s said this would require the national average to be decreased to a value of 9,500 Btu; although this is higher than the top five plants in the nation, it will be difficult for plant s 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 efficien t 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 commenter s said if this type of carbon regulation were technology

- neutral, i t would not demand specific requirements that would unfairly disadvantage some states, such as coal heat rate improvements.

Renewable increases

Commenter s stated the CPP proposes a nationwide goal of achieving 13% of total electricity generation from renewable sources by 2030; the commenter s support ed the development and installment of renewable power generation; however, this technology

- specific requiremen t creates an unfair landscape for some states.

Commenter s 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 regi ons. 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 EPA had to interpolate its results to the reference year. The commenter s said this creates a landscape that is not only unrepresentative of any existing RPS, but also sets a much different timeline than an individual state would historically anticipate.440 Commenter s stated due to the effects from interpolati ng dates and averaging regions, the CPP requires 4 states to reduce their renewable generation between 2012 and 2030; a carbon emissions reduction plan should not recommend this action. The commenter s said this clearly reveals the inconsistency in setting state goals using specific technology requirements.

Energy efficiency

Commenter s stated many states are currently implementing policies to improve energy efficiency (EE); according to the EPA, state improvements in EE have ranged from 0% to 2.19% with

cu mulative improvements of up to 15.77%. The commenter s said the EPA suggests using three different tiers of required EE improvements: over 1.5%, 1.0

- 1.5%, and less than 1%. The
commenter s said the states that have shown the most initiative in EE will be req uired to make further improvements of over 1.5%. The commenter s said while these states have proven their commitment to EE, it will be more challenging for them to further increase EE compared to states that have made few efficiency enhancements. The comme nter s said to require certain states to make larger increases in EE than others is 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 necessar y level of EE implementation towards attainment of the emissions goals.

Commenter s stated EE does not affect the carbon emissions from a power plant directly; although EE will help lower the energy demand and thus potentially lower net carbon emissions, i t does not improve the actual carbon intensity of energy produced. The commenter s said the proposed version of the CPP focuses on carbon intensity and existing plant emissions, but EE only affects the amount of power demanded. The commenter s said although EE has its place reducing overall emissions, it should not be included in state goal emission calculations; rather, EE improvements affecting a state's total energy generation will be credited, by default, as a total emissions reduction in the CPP.

Comme nt 87: Adjust goals if shift in emissions from one sector to another

Response 87: See Section VI I I of the Preamble for a discussion on state plans and demonstrating compliance. The EPA provides a multitude of compliance options to states

– including rate

based metrics

– that can accommodate growth in generation from existing sources.

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

Commenter s stated the impact of electrification of the transportation sector and solar technolo gy 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 400 MW. The commenter s 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 one sector to another.441 Comment 88: Cooperatives burden; rework goals

Response 8 8: For the EPA’s response to this comment, see 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:

Commenter s stated should a state choose to reduce the 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 commenter s said the solution is for EPA to re work 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 savings to be incorporated into the denominator

Response 89 : See Preamble Section V for a discussion of the building 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:

Commente r s stated EPA should allow the use of demand response programs such as air conditioning cycling for purposes of compliance with a rate

- based standard; these programs are designed to reduce customer electric usage during peak demand time periods and allow u tilities an additional option to demonstrate compliance. The commenter s 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; for 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 commenter s said to account for this when a state elects an emission rate approach, EPA should allow sta tes to account for demand response by allowing the MWh savings to be incorporated into the denominator. The commenter s said for states that select mass

based programs, the reductions are achieved at the stack and thus no adjustment is necessary.

Comment 9 0: Recommendations for displacing fossil generation

Response 90: See Preamble Section VI for a discussion of how the EPA is treating replacement generation from building block three.

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

Commenter s stated EPA seeks comment on the assumptions it should make in displacing fossil generation in the emission rate; EPA proposes several options, including: proportional displacement of all fossil, displacement of highest

- emitting units fi rst, or displacement of coal

fired EGUs first. The commenter s believe d that EPA should first remove steam EGUs from the442 formula the generation by the highest

- emitting units, which are typically coal

- fired. The
commenter s said this environmental dispatch co nstraint will yield the lowest target and is therefore the best system of emission reduction. The commenter s recognize d 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
commenter s ha ve advocated that EPA allow states to take credit for energy efficiency savings directly attributable to their EE programs, regardless of where the emission reductions actually occur. The commenter s said once fossil displacement is factored into the state's target, the state will have some incentive to design RE and EE measures in a way that causes displacement of in

state high

- emitting units, so that the state also receives tha t emission reduction benefit. The
commenter s said designing RE and EE measures in a way that avoids the need for operation of baseload coal

- fired plants will also reduce the difference between the environmental dispatch required to implement the rule, and economic dispatch practices.

Commenter s stated the final rule should use the same total generation that was used to determine the final state emission rate goals in the conversion equation. The commenter s said the TSD proposes to use a lower generation tot al to determine a state's final mass

- based goal than the generation total to determine a state's final rate

- based goal. The commenter s said this artificially lowers the overall mass

- based goal, which makes the mass

- based goal more stringent. The
commenter s said the more appropriate conversion method is the use of the total generation that was used to compute the final rate

- based state goals, since EPA used that generation in the denominator of the final rate

- based goal calculation. The commenter s said in de termining the state goals, EPA does not displace any fossil generation 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

- b ased state goal. The commenter s said the method the TSD uses in this latest proposal is entirely 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

- based state goal.

Comment 91: Improving the EPA analysis and proposal

- efficiency 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 a nd more information about Building Block 3 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:

Commenter s identified th e resource mix base case and the policy case (Option 1); there are several key points about the scenario.

The commenter s said first, contrary to the claims of some, all low carbon resources play a part in reducing emissions.

• Nuclear power and hydro are e ssentially flat in the base case and the policy case.443 The commenter s said all nuclear power, currently operating and under construction, is assumed to continue to produce electricity, with the exception of a small number of normal retirements (2.5% of tot al output) in the policy period (2020

- 2025).

• All currently operating hydro power is assumed to continue to do so.

• Natural gas increases significantly and steadily in the base case through 2030 (26%); in the policy case it drops slightly (3%); even in t he policy case, the output of natural gas

- fired generation is more than one fifth higher than the base year (2012).

• Renewables grow by over 80% in the base case; however, the additional increase in renewables under the policy case is minuscule, less than .5%.

• Efficiency is the key to the carbon reduction.

• Output from coal

- fired generators is projected to grow slightly in the base case (11%); in the policy case, it declines by 27%.

• The total output in the policy is projected to be 11% lower than the base case; this is the effect of efficiency improvements.

• The efficiency improvement decreases the rate of growth of output from just under 1% in the base case to .25% in the policy case; the base case demand embodies some efficiency improvement as a result o f the kinds of utility programs the EPA rule models.

T he commenter s 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 to 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 economic 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 case, efficiency accounts for almost three times as much reduction as renewables.

The commenter s said even looking at th e total change 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 total reduction in emissions.

The commenter s said it is important to emphasize in the strongest terms possible that EPA has set out in the right direction; efficiency is the least cost option. The commenter s said the base case pattern of changes in the generation mix and level of output are consiste nt with the economic fundamentals discussed earlier. The commenter s said wind is the next lowest in cost,444 followed by solar as the cost trends continue to develop. The commenter s said the potential contribution of these three resources is quite large and o ther advanced industrial nations have achieved much higher levels of carbon reduction utilizing these three resources, while transforming their electricity systems to deliver reliable power.

The commenter s said while the contribution of efficiency and ren ewable 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 what the literature reviewed above deems economic and achievable. The commenter s s aid a ccording to the Citi projection of base case growth, which includes only existing state RPS programs, at least 60% more could be achieved with renewables. The commenter s said since two

- fifths of the states have not adopted RPS programs, it is reasonab le 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 commenter s said the contribution of efficiency could also double, based on the estimate s of the national experts discussed earlier; in both cases the projected costs are competitive with the current cost of natural gas, so these carbon reductions impose very little increase in the cost of electricity; this outcome results from the fact that policy helps to overcome the efficiency and innovation gaps.

The commenter s said one of the primary sources of untapped carbon reduction from efficiency involves appliance efficiency standards, building energy codes and combined heat and power; while appl iance efficiency standards are frequently adopted at the federal level, states do have the ability to adopt their own standards. The commenter s said building energy codes are a state and local matter; combined heat and power is a local and state regulatory arena. The commenter s 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 commenter s said the large potential for additional carbon emissions r eductions from low cost efficiency and renewables has a major implication for the EPA analysis; capturing just one quarter of the potential additional reduction in carbon emissions would offset the loss of generation from all of the reactors identified as vulnerable to early retirement plus the abandonment of the reactors under construction, which have shown uneconomic. The
commenter s said thus, fixing these two aspects of the EPA analysis results in more carbon reduction at a lower cost; this would move th e EPA standard in the direction of a "better" system of emissions reduction.

The commenter s said as large as the benefit cost ratio is in the EPA analysis of Option 1, the
commenter s believe d that when these modifications are made to the economic analysis , the potential benefits of a well

- designed, least cost performance standard will exceed the costs by a much greater margin than EPA's Option 1 analysis suggests. The commenter s said when the economic analysis is corrected and a third, "high" reduction rul e analyzed, the higher standard will be very attractive. The commenter s said given that so much potential for low cost carbon reduction has been left on the table, it appears that a doubling of the contribution of efficiency and renewables, as some have su ggested, would be readily achievable and yield a substantially positive benefit cost ratio. The commenter s said whether or not EPA adopts the higher standard, having the more rigorous analysis of a higher standard available would serve to expand the range445 of options considered by the states, laying the basis for higher levels of reduction of carbon emissions in the future.

The commenter s said in the past month, the U.S. and China made important commitments on carbon reduction and the European Union put for ward a much more aggressive proposal; these announcements help to place the EPA proposal in perspective. The commenter s said EPA Option 1 is consistent with the U.S. China announcement; at the same time, a doubling of the carbon reduction would still be co nsiderably less than the target set by the European Union, in spite of the fact that the U.S. emissions are more than twice those of the EU per capita and three times those of China.

The commenter s said it is critically important at this turning point in global climate change policy for EPA and the U.S. to lay a strong foundation for a century of policy; a well

- crafted performance standard that looks to the future by highlighting the role of efficiency, renewables and transformation of the system is an ide al place to start.

Comment 92: Tribal & Territories

- correct assumptions for reductions

Response 92: For the EPA’s response to this comment, see 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:

Commenter s stated EPA's Supplemental Proposal contains several elements that are critical to the successful reduction of carbon emissions from the units located in Indian country; accordingly, these elements should remain in the final rule. The commenter s support ed 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 generation at the Navajo Genera ting Station ("NGS") by 2019 represent approximately a 30 percent reduction of total 2012 carbon emissions on the Navajo Nation.

4.4.4 Alternative approaches

Section 4.4.4 covers public comments related to alternative approaches to the proposed emission goals.

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

Comment 1: NODA

- Support the alternative BSER formulation proposed in the NODA.446 Response 1: 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 Final Ru le supporting the final CPP for more information.

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

Commenters support ed the alternative BSER formulation proposed in the NODA.

Commenter s added measures from building block 3 and 4 should explicitly reduce the generation from the covered sources in the goal

- setting equation; to achieve the maximum emissions reductions practicable using the best system of emission reduction, the equation sho uld prioritize real reductions from high

- intensity carbon emitters. The commenter s said the generation from building blocks 3 and 4 should be modeled as replacing replace generation from existing affected units first. The commenter s stated we urge EPA to f inalize a goal setting computation that simply takes the sum of a state's incremental renewable energy and energy efficiency megawatt hours, and subtracts it from the affected coal generation megawatt hours. The commenter s added if EPA made the adjustment and accounted for the resulting reduced utilization at coal

- fired power plants by totaling the amount of increased renewable energy and energy efficiency, this minor adjustment to the goal

- setting equation more accurately reflects how states will comply, t reats the building blocks consistently, and ensures that the emissions reductions associated with the building blocks lead to CO2 reductions from the designated facilities.

Commenter s added when EPA sets final state targets, it should use the corrected for mula proposed in the Notice of Data Availability. The commenter s support ed both of these NODA alternative approaches, and believes both are valid for BSER state goal setting. The
commenter s encourage d EPA to adopt the first approach, revising the target

- se tting formula so that incremental RE and EE (beyond 2012 levels) directly replace fossil generation and the corresponding emissions in proportion to the 2012 fossil generation mix, which could be seen as reflecting the potential for states to substitute ze ro carbon resources and energy efficiency for the highest

- polluting generation. The commenter s stated however, we also support the alternative approach, noting that it acknowledges that the addition of incremental RE and EE could replace various fossil res ource types without strictly replacing fossil in order of decreasing carbon intensity. The commenter s said if EPA adopts a formula 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

e fficiency displace NGCC generation, this will lower the capacity factor of NGCC plants and create additional potential reductions from building block 2. The commenter s said these additional reductions can be achieved either by displacing 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 will ensure that the Clean Power Plan fully reflects the potential for emission reductions achievable under the best system of emission reduction.

Commenter s added SEIA supports the second proposal outlined within the NODA that assumes renewables and energy efficiency would replace dirtier fossil generation first; this would correctly remove fro m each state's carbon intensity numerator emission reductions to express the447 drawdown in fossil fuel resources when renewables and energy efficiency increase. The
commenter s stated that is, affected EGU MWhs should be removed from the denominator and the e quivalent number of MWhs should be added back based on low

- and zero

- carbon generation from building block 3, and emissions associated with affected EGUs should be removed from each state's carbon emissions numerator. The commenter s said this second propos al 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 emissions reductions, as displacing the highest

emitting resources first would be the most cost

- effec tive option; to expand upon this, if carbon cost were accounted for in generation dispatch decisions, as it may be in some regions as part of implementation of BB2, many 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 renewable
energy.

Commenter s added in setting state goals, the Proposed Rule treated incremental renewable energy (in Building Block 3) and energy efficiency (in Building Block 4) as additional
meg awatt

- hours that would be added to the denominator of the rate formula; the Proposed Rule would count new renewable generation and energy efficiency as though they will result in more total generation, but with the same overall total carbon emissions. The commenter s 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 the num erator. The commenter s said EPA should adopt this alternative approach.

Commenter s added valuing incremental renewable energy and energy efficiency as avoided emissions, rather than as additional generation, better aligns both with EPA's rationale for the "best system of emission reduction" and with how the interconnected electricity system works. The commenter s said as EPA recognized, increased renewable electricity "provides electricity that can be substituted for generation from more carbon

- intensive EG Us" and ideally reduces CO2 emissions because it "replaces predominantly fossil fuel

- fired generation." The commenter s said similarly, additional energy efficiency programs are intended to reduce generation from existing fossil fuel generation, and therefo re should reduce overall CO2 emissions. The
commenter s said in most cases, when states add renewable generation and energy efficiency, the electric system dispatches less fossil generation and thus reduces the mass of emissions; thus, in setting state emis sions rate goals, EPA should value these measures as emissions avoided, rather than simply treat them as additional generation without a corresponding adjustment to emissions in the numerator. The commenter s said this approach also is more consistent with EPA's approach to Building Block 2, in which existing NGCCs are assumed to replace existing fossil generation that is more carbon

- intensive, and the numerator of the goal

- setting formula is adjusted correspondingly. The commenter s said in both cases, a red uction in emissions rate occurs because higher

- emitting sources are dispatched 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 themselves, but as means to achieve emissions reductions; EPA should value these components of Building Blocks 3 and 4 in the way that is most consistent with that ultimate goal.

Commenter s stated as noted in EPA's Notice of Data Availability Released o n October 27, 2014 (79 FR 63882

- 01) EPA must fix the formula for calculating state targets to properly account for448 reductions from renewable energy and energy efficiency. The commenter s 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.

Commenter s stated in order to accurately and fully realize carbon reduction gains that can be achieved through the adva ncement of renewable energy and energy efficiency, EPA must properly calculate state targets to completely account for the emissions reductions from these sources. The commenter s said EPA correctly acknowledges in its October 27, 2014 Notice of Data Availa bility that its original formula used in the proposed does not properly account for the emission reductions generated by renewable energy and energy efficiency.

Commenter s stated in the original formula, EPA adds new MWhs of renewable energy generation an d efficiency savings to the formula, but then fails to reduce corresponding carbon pollution that will be avoided from displaced fossil fuel based generation; the formula does not account for the reduction in generation at coal and gas power plants that wi ll occur when additional renewable energy sources are added to the grid and when demand reductions occur as a result of energy efficiency measures. The commenter s 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.

Commenter s urge d EPA to adopt the Alternative Goal

- setting Equation Approach for renewable energy, outlined in the October 2 8, 2014 Notice of Data Availability. The commenter s said specifically, EPA should displace fossil fuel

- fired generation in order of emissions rate when calculating state targets to reflect increases in renewable energy & energy efficiency. The
commenter s s aid doing so would help to strengthen Iowa's targets, according to analysis by the
commenter s : Using the M.J. Bradley & Associates' Clean Power Plan Evaluation Tool and selecting the "Alternate Goal Setting Equation (BB3&4) Approach , Option 3 (RE/EE Repla ces 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 commenter s said this strengt hening is necessary and significant to ensure Iowa is required to make meaningful carbon reductions under the proposed rule.

Commenter s agreed that EPA's methodology of setting targets for Block 2, on the one hand, and Blocks 3 and 4, on the other, built i n an assumption 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 the result of increased RE and EE. The
commenter s fur ther agree d that EPA should remedy this 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 more stringent.

Commenter s stated the power sector is moving to cleaner 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 inc orporate this displacement benefit as other stakeholders have noted [in reference to the NODA]. The
commenter s 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 needed for reliability. The commenter s said the goal

- setting equation should reflect the myriad of benefits that this transition creates. The
commenter s said as other stakeholders ha ve suggested renewable energy and energy efficiency should be added to both the numerator and denominator of the goal

- setting equation, so that 1 megawatt

- hour of renewable energy displaces 1 megawatt

- hour of fossil generation. The
commenter s said either u sing 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 more expensive fossil generators.

Commenter s support ed the Notice of Data Availability (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

- dispatching to natural gas combined cycle (NGCC) and the commenter s believe d this method should be utilized to achieve 40% reductions by 2030.

Commenter s stated EPA should ensure that the calculation of state targets fully reflects the role of renewable energy and energy efficiency in reducing carbon pollution. The commenter s said the original formula used in the p roposed rule failed to account for the reduction in 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 commenter s said when EPA sets final state targets, it sh ould use the corrected formula proposed in its October 27, 2014 Notice of Data Availability.

Commenter s stated the proposed goal

- setting formula treats additional natural gas generation as replacing coal

- fired generation, but treats energy efficiency and r enewable energy as merely adding to the overall pool of electricity generation rather than displacing anything. The
commenter s said the EPA requested comment on whether it should change how energy efficiency and renewables are counted in calculating state targets [NODA]; the commenter s said, it should; renewables and efficiency should be treated as replacing fossil

- fuels, in the order of carbon

- intensity.

Commenter s stated this modification is one of the most important steps the agency should take before f inalizing the rule; treating efficiency and renewables as adding to the generation pool rather than displacing carbon

- intensive fuels results in targets that are far too modest, vastly understating the potential of the two policies that should be the cente rpieces of the rule. The
commenter s said reducing carbon emissions is the entire 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 carbo n

- emitting sources. The commenter s 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 for reducing emissions. The commenter s said the agency rightly includes renewable energy and efficiency in the Clean Power Plan precisely because they can displace electricity generation from fossil fuels; moreover, as the agency recognizes, that is typically what happens at present; fossil

- fu el generation is usually displaced first because it has higher variable costs than other forms of generation.450 Commenter s stated this change in calculating state goals would significantly strengthen the Clean Power Plan; as proposed, the Plan would reduce cumulative U.S. emissions from 2012 to 2029 from 21.5 billion short tons to 18.2, a difference of 3.3. The commenter s said if the targets are calculated by assuming that efficiency and renewables will displace fossil fuels, beginning with the most carbon

- i ntensive, the Plan would reduce cumulative CO2 emissions by more than twice as much

- by 7.2 billion short tons, to 14.3; similarly, the proposal would reduce annual CO2 emissions by 330 million short tons in 2029 compared to 2030 (from 2,153 to 1,823). The
commenter s said the alternative formula would reduce 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.

Commenter s stated on October 30, 20 14, EPA released a Notice of Data Availability (NODA) that addressed a concern expressed by several stakeholders

- both net renewable energy exporters and importers

- that there is a tension between setting state renewable energy targets based on in

state renewable assets while also allowing states to count imported renewable energy towards compliance. The commenter s said to address the concern, stakeholders have proposed an alternate approach whereby a state's goal would be adjusted to consider its relativ e opportunities for developing out

- of

- state RE resources; this would "better align RE targets with the proposal to allow the use of certain out

- of

- state renewables for compliance." The commenter s said in the NODA, EPA solicits comments on this alternate ap proach. The commenter s support ed the stakeholders' proposed approach, and in general applauds EPA's efforts to consider the best mechanisms for including interstate renewable energy generation in states' compliance schemes.

Commenter s stated a careful anal ysis of the emission reduction opportunities in each of the four blocks identified by EPA demonstrates that even greater 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 efficiency.

Commenter s stated in its October 27, 2014 Notice of Data Availability, EPA explains that the original formula used in its proposed rule failed to correctly account for the emission reductions generated by renewables and energy efficiency; as EPA explains, the formula used in the proposed rule failed to account for the reduction in 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 commenter s 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.

Commenter s stated it is important that the final rule reflect a formula th at adequately counts the effects of renewable generation and energy efficiency on fossil generation, as proposed in the October 27, 2014 Notice of Data Availability.

Commenter s stated the EPA should adjust its formula for calculating state targets to full y reflect the emissions reductions achievable in a cost

- effective way through renewable energy and demand

- side energy efficiency measures. The commenter s said the EPA explained in its October 27, 2014 Notice of Data Availability that the formula used in it s initial proposed rule failed to451 correctly account for emissions reductions that can be achieved through use of renewables and energy efficiency programs. The commenter s said EPA explained that the formula used in the proposed rule failed to accurately ac count for reductions 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 commenter s said in issuing its final rule EPA should use that corrected formula; doing so will ensure that the targets each state must meet fully reflect the potential for reductions in emissions that can be cost

- effectively achieved through the use of renewables and improved demand

- side energy efficiency.

Commenter s stated EPA failed to properly account for 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 gene ration from these resources into the denominator of the lbs/MWh emissions rate. The commenter s said EPA should adopt the methodology set forth in the NODA to fully capture the emissions

reduction benefits of these resources.

Comment 2: NODA; support; redu ce 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 the proposal, modified as described in the NODA. See sec tions V.A., V.D., V.E, and VI of th e 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:

Commenter s stated the approach in EPA's NODA could help mitigate the significant disparity between state goals as proposed in the rule, but only if EPA reduces the NGCC generation of states with existing higher amounts of NGCC capacity. The commenter s said this may not be true for tribal lands. The commenter s said EPA should 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 distribut e the burden of switching to more natural gas generation to all states, and allow states to maintain a more appropriate resource mix. The commenter s also believe d making the corrections to the goal calculations would accomplish a more realistic and balance d approach.

Comment 3: NODA

- Further refinements

Response 3: The EPA is adopting the alternative approach from the proposal, modified as described in the NODA. See sec tions 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 Commente r s strongly oppose d the suggestion by certain commenters described in the NODA that further refinements to the analysis of the potentially interrelated, cumulative, theoretical impacts of the four building blocks must be fully reflected in the determinatio n of the state targets. The commenter s said instead, in order to satisfy Section 111(d), such targets must reflect the degree of emission reduction that has been reasonably determined to be available by the affected sources, must fully address the complexi ties 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 devise Emission Guidelines that are not fully prescribed in ever y detail by the state targets established by EPA.

Comment 4: NODA

- short term relief for states

Response 4: The EPA has adopted different interim goal dates, and revised its approach to incorporating Building Block 3 in a manner more like 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 supporting the final CPP for more information.

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

Commenter s stated the NODA released in late

- October represents the most significant change to EPA's proposal; the NODA raises numerous issues, including potential changes to the 2020

- 2029 glide path, revisions to the CO2 performance goal

- setting formula, and regional and/or "holistic" approaches to calculating the Building Block 2 and Building Block 3 assumptions. The
commenter s said in short, the NODA could result in some short

- term relief for the states, but with ult imately lower rate

- based goals through "potential renewables" and "holistic gas" analysis.

Comment 5: NODA; formula for goal calculation issue; goal setting equation

Response 5: The EPA is adopting the alternative approach from the proposal, modified as described in the NODA. See sec tions 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:

Commenter s stated EPA is additionally seeking comment on changes to the goal calculation formula. The commenter s said presently, for Building Block 2 (shift production to NGCC), the proposed formula offsets 1 MWh of fossil steam generation and corresponding emissions from the 2012 baseline levels for every 1 MWh of incremental NGCC generation (subtracting emissions from the numerator and generation from the denominator), reflecting the assumption that the shift to NGCC generation will replace fossil steam generation; however for Building453 Blocks 3 and 4, the formula adds Renewable Energy and Energy Efficiency to 2012 baseline generation in the denominator, but does not subtract or off set emissions in the numerator. The
commenter s said EPA is requesting comments on two alternatives:

1. Replace all historical fossil generation on a pro rata basis by assuming Renewable Energy and Energy Efficiency generation directly replaces 2012 fossil generation in proportion (i.e., pro rata coal and gas) to their historical generation; or

2. Prioritize replacement of historical fossil steam 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 Efficiency to gas turbine generation and emissions.

Commenter s stated their concerns with either of these methodologies ar e similar. The
commenter s said the EPA assumes that all Renewable Energy and Energy Efficiency generation will displace existing fossil emissions, which would not necessarily be the case; in the triennial Integrated Resource Plan (IRP) filing process requi red by the Kentucky Public Service Commission, the commenter s include Energy Efficiency and DSM program as resources to meet future energy requirements from consumers. The commenter s said for IRP purposes, these resources serve to avoid the construction of new electric generating resources rather than reduce utilization of existing fossil generation. The commenter s said the proposed formula changes for the goal calculation therefore would penalize the state's existing Energy Efficiency programs.

Commenter s stated the NODA also requests comment on two additional and more stringent methods for calculating the state goals; both approaches would ratchet down state goals even beyond the amounts originally proposed; however, EPA does not recalculate state goals un der these new methods or propose any specific changes to the proposed standards. Commenter s stated these new approaches only make a bad proposal worse and compound the errors in EPA's methodology. The commenter s said under them, EPA would use additional re newable generation under building block 3 and avoided generation under building block 4 to reduce fossil generation below the 2012 levels; this reduction in fossil generation would be in addition to that amount mandated under building block 2. Commenter s s tated EPA does not give any examples of how this would work in any particular state or demonstrate that such an approach could work; given that building block 2 is a significant driver of Texas's goal, EPA's proposal in the NODA that would require addition al ratcheting under building blocks 3 and 4 would only ensure that no coal generation is left to dispatch; nor would such an approach address growth in the system and the economy, and one could expect that grid stability issues would be even further exacer bated.

Commenter s stated neither of the two options to further remove fossil generation from the goal

setting calculation is appropriate or reasonable. The commenter s said in the June proposal, the renewable generation and energy consumption reductions wer e simply added to the denominator of the state goal formula. The commenter s said the first option for an alternative treatment of this incremental increase in renewable generation and energy consumption reductions would be to assume that it directly replac es the 2012 fossil generation levels and the corresponding emissions on a pro rata basis across generation types. The commenter s said EPA fails to provide actual calculations demonstrating what the effect of this change would be; the commenter s said this

c hange would yield more stringent state goals. The commenter s 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.

Commenter s stated EPA suggest s the calculation could be revised by prioritizing the replacement of historical fossil steam generation; incremental increases in renewable generation and energy consumption reductions would first replace coal

- fueled steam generation below 2012 levels
rat her than all fossil generation on a proportional basis. The commenter s said any remaining increase in renewable generation and energy consumption reductions would replace gas turbine generation and the corresponding emissions. The commenter s said such an a pproach would only make explicit EPA's apparent goal in this exercise: establish a hard deadline beyond which no coal

- fueled units could operate. The commenter s said mandating shutdown of the very existing units for which EPA is supposed to be demonstratin g a technology that can reduce emissions is ludicrous and well outside EPA's authority under Section 111. The commenter s said with only 66.7 terawatt hours of coal generation left after the re

- dispatch under building block 2, the removal of coal from the g oal setting equation would occur by 2026 with greater than 90% gone by 2025. The commenter s said EPA has no authority to mandate the shutdown of EGUs under the guise of an emission standard.

Commenter s stated the NODA seeks comment on whether EPA should al ter its goal computation methodology by reducing generation more dramatically from existing fossil fuel

- fired EGUs (as compared to the Proposal). The commenter s said in the 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 corresponding emissions (in the numerator) from the 2012 baseline levels for every 1 MWh of incremental NGCC generation. The commenter s said that calculation leav es the total level of overall generation in a state unchanged after implementation of Building Block 2. The commenter s said for Building Blocks 3 and 4, incremental RE and EE in the Proposal does not reduce the 2012 baseline levels of fossil generation or remove the corresponding emissions; instead, incremental RE or EE is added to the denominator of the goal formula. The commenter s said now, in the NODA, EPA solicits comment on an alternative approach where incremental RE and EE would replace generation fr om fossil fuel

- fired sources in the goal calculation. The commenter s said this would be accomplished by backing out 1 MWh of fossil generation 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 in the numerator. The commenter s said two different approaches for revising the state goal formula 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 steam 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.

Commenter s stated EPA correctly recognizes that adopting this alternative approach would necessarily increase the stringency of the state goals (approach (ii) is even more stringent than approach (i)) and costs of the proposed guidelines. The commenter s said the app roach would necessarily further reduce the share of a state's generation that could come from existing fossil fuel

- fired EGUs; in states where that generation would already be significantly reduced under the Proposal, this alternative approach could elimin ate coal

- fired generation completely.455 Commenter s oppose d this alternative approach. The commenter s said EPA utterly lacks the authority to establish section111 performance standards based on reduced utilization or retirement of a source. The commenter s sa id if EPA desires to pursue this change in the Proposal

- it has not proposed in the NODA to pursue such change

- it must undertake a thorough evaluation of the costs and other implications

- particularly reliability

- pursuant to sections 111 and 307(d)(3 ) of the CAA, and allow for proper notice and comment on the proposed change and its ramifications. The commenter s said at this point, 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 encourage further development of additional fossil generation, which might be needed if incremental RE and EE are used to retire existing fossil generation. The commenter s said doubtless, this is not the co nsequence intended by EPA. The
commenter s said EPA should not pursue such an aggressive

- and under the CAA, unjustified

- strategy.

Commenter s stated EPA's Notice of Data Availability ("NODA") provided additional information on several topics raised by st akeholders. The commenter s said the NODA provides alternative methodologies for calculating the state goals by applying incremental RE and EE reductions to lower fossil generation below 2012 levels in the goal calculation. The commenter s said the EPA propo sed two different approaches for revising the state goal

- setting formula using this methodology : the first option would replace all historical fossil generation on a pro rata basis; the second option would prioritize replacement of historical fossil steam generation. The
commenter s said although the EPA describes the methodology 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. T he commenter s said it appears, however, that either option will result in more stringent state goals. The commenter s 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 pr operly so that it might comment intelligently on them. Accordingly, the commenter s urge d EPA not to adopt either option as part of the final rule, unless more information and time is provided to address adequately any issues that these new options present as to the application and results.

Commenter s stated U.S. EPA proposes two alternatives in the NODA:

1) Replace all Historical Fossil Generation on a Pro Rata Basis. The state goal formula assumes a constant level of fossil generation equivalent to 2012 l evels; instead of adding incremental EE/RE to the denominator, 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. EPA acknowledges this does not chang e the incremental generation levels for Building Blocks 3 and 4 but it will yield a more stringent state goal by replacing fossil steam and NGCC generation in proportion. The commenter s disagree d with this approach.

− U.S. EPA acknowledges that the approach under the June 18, 2014 proposal and this alternative both replace generation; however in the June 18, 2014 proposal, new generation is replaced while under this alternative, existing generation is replaced. The commenter s said this approach would assume456 generation remains constant with 2012 levels indefinitely into the future and that will not be the case; this acts to artificially lower state goals based upon a false presumption. The commenter s said U.S. EPA states the June 18, 2014 proposal scenario imp licitly assumes significant increases in existing fossil generation beyond 2012 levels absent Building Block 3 and 4; the
commenter s disagree d with the basic premise.

− - U.S. EPA is proposing under Building Block 2 that existing NGCC must be utilized at 70% . The commenter s 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 possible citizen suit because they cannot or do not operate at 70% capacity. The commenter s said this alternative presumes that owners of existing NGCC would be placed in that exact situation; by lowering the rate with this type of assumption, the only method states will have to meet the overly stringent state goal rate would be to decrease utilization of coal power plants even further as well as NGCC. The
commenter s 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 respec t to stranded assets and the ability for states to consider remaining useful life will be further compounded with such an alternative.

2) Prioritize Replacement of Historical Fossil Steam Generation

− As a second alternative, U.S. EPA proposes to first rep lace fossil steam generation with EE/RE below 2012 levels rather than all fossil generation on a pro rata basis; after all fossil steam generation is replaced, any remaining incremental EE/RE would replace gas turbine generation levels. The
commenter s said U.S. EPA cannot assume EE/RE will replace generation in a manner which U.S. EPA proposes in this alternative; the
commenter s cannot contemplate the method in which compliance with such a requirement would be accomplished and U.S. EPA has offered no inform ation regarding how it would be implemented in a plan. The commenter s said U.S. EPA is attempting to control the electricity generation system in a manner that will lead to severe reliability issues. The commenter s stresse d the need for a diversified and r eliable generation system. The commenter s said while theoretically this may appear to have merit, practically this approach cannot work; U.S. EPA cannot have evaluated the ramifications of such an irrational alternative. The commenter s said U.S. EPA cannot propose 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 obsolete quickly under this proposal.

The commenter s said U.S. EPA's language detailing these alternate EE/RE approaches, wherein higher intensity generation would be displaced by incremental RE and EE generation or demand457 red uction, is incredibly vague. Based on this vague language, the commenter s w ere able to assemble at least four separate alternative goal

- setting scenarios based on particular interpretations of this language. The commenter s said depending on the interpretat ion, 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 eliminated by 2026. The commenter s said this proposal is not practical and U.S. EPA cannot p ossibly demonstrate that this concept is feasible; such results clearly call for more detailed language regarding these alternate approaches, accompanied by detailed calculations from U.S. EPA demonstrating how these alternate goals might be applied in eac h state. The commenter s said absent that, the language provided is far too vague for the commenter s to make meaningful comment, except to point out the impracticality of meeting the goal.

Commenter s stated the final mass

- based goal is computed by multiplyi ng 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 thousand metric tons) are 79,112 (interim) and 75,116 (final).

Commenter s analyzed both methodologies proposed by U.S. EPA; the commenter s contend ed that bot h approaches are flawed, first and foremost, by the reliance of setting mass

- based targets using CO2 intensity goals from the June 18, 2014 proposal; those CO2 intensity goals were derived using flawed datasets, incorrect capacity data, unreasonable region al averaging in the development of RE and EE goals, amongst other errors and flawed assumptions. The
commenter s said these concerns overlay and exacerbate any and all other issues identified with U.S. EPA's rate

- to

- mass conversion methodologies.

Commenter s stated the primary concern with the first methodology is the static nature of fossil generation coupled with the annually decreasing intensity targets. The commenter s 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 interim and final goals; thus, states would gain almost no flexibility in choosing a mass

- based compliance plan following this methodology. The
commenter s also identified that under

- construction natura l gas generation was included in U.S. EPA's calculations, but dispatched at a 55% capacity factor. The commenter s said this is markedly different than the approach taken under the 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 commenter s said this would imply that U.S. EPA's mass target under this approach is not equivalent to a comparable rate

- based target. The
commenter s note d that U .S. EPA accounted for existing 2012 renewable generation, but did not do so for existing 2012 EE measures; this was not described in U.S. EPA's most recent TSD. The
commenter s can only speculate that existing EE measures were not accounted for in U.S. EPA' s calculations due to the significant difficulty in measuring and verifying EE measures.

Commenter s stated the second methodology proposed by 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 that U.S. EPA recognizes the need to account for demand growth in the development of a mass

- based compliance path, the commenter s d id not458 believe, as stated previously, that a regional growth

- r ate should be applied. The commenter s 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 commenter s could find no additional information to verify this new 2012 s ales figure. Commenter s added 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 calculations 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 the proposal, modified as described in the NODA. See sec tions 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:

Commente rs d id not support the alternate approaches presented in Section III.C.1 of the Notice of Data Availability (NODA) issued on October 30, 2014.

Commenter s stated these approaches make the ambitious 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. The commenter s said for GA, the approach proposed in the NODA: Reduces the final goal; in combination with Building Block 2 redispatch, red uces fossil steam generation (an 83% reduction); also Georgia EPD has estimated 2030 state

- wide demand based on EIA's 2014 Annual Energy Outlook (AEO) projections for the southeast (see Table 4 of this comment letter); commenters believe that all of the 20 12 fossil

fired generation will be needed to meet demand in 2030 and that the new approaches described in the NODA are unrealistic for Georgia. The commenter s said in summary, the alternative approaches presented in the NODA make Georgia's goal much more s tringent and they assume a reduction in fossil steam generation that would seriously compromise the state's dispatch flexibility. The commenter s added they do not reflect expected demand growth in Georgia and other southeastern states and the need to retai n 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.

Commenter s added EPA should not adopt either approach presented in th e NODA, as both would overestimate the potential emissions reductions from RE and EE because they erroneously assume that RE and EE can replace dispatchable fossil generation. The commenter s said adding RE and EE to a utility system does not directly displ ace existing fossil generation; variable energy resources are inherently different than traditional resources like coal and gas generation. The commenter s 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 commenter s said these renewable resources need to459 be backed

- up when they are not operating, but EPA does not address how this can be accomplis hed without reliance on some fossil generation.

Commenter s added regarding the consistent calculation of all Building Blocks, it is altogether appropriate to assume that existing NGCCs could replace 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 that these measures can replace coal generation

on a one

- for

- one basis. The commenter s said renewable 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 commenter s said revising the state goal formula in this manner would significantly increase the stringency of the rule under the NODA approaches. Th e commenter s said for these reasons, EPA should not adopt either approach for RE and EE to replace existing fossil generation.

Commenter s added the NODA solicits comment on EPA's goal

- setting methodology but does not actually propose this change in the NODA, and EPA cannot finalize it as part of any final emission guidelines. The commenter s oppose d this approach for three reasons: (1) EPA h as no authority to establish a standard of performance based 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 required by sectio n 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 reducing fossil fuel

- fired generation because it would have the counterintuitive effect of encou raging the construction of new fossil fuel

- fired EGUs.

Commenter s added this displacement of emissions from 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 ra tio of renewables to fossil fuel fired generation, the increased stringency is very significant to the point of being infeasible.

Commenter s recommend ed a modification to the NODA displacement assumption so that the final targets reflect what is reasonably achievable by the states; specifically, while the displacement concept is contemplated by both the NODA and by the rate

- to

- mass translation TSD, Maine strongly recommends that EPA adopt the displacement methodology in only one context so as to prevent a d uplicative counting of fossil fuel displacement. The commenter s said in order to maintain consistency across rate

- based and mass

- based approaches, EPA should provide states opting to pursue a mass

- based approach with the opportunity to justify the appropri ate amount of fossil generation that should be displaced (rather than apply an assumption that all incremental EE and RE will displace 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 projections, thereby alleviating the need to include a calculation

- based displacement assumption as part of those states' respective targets. The commenter s said to implement this approach, EPA c ould publish a final rate target for all states, which is inclusive of the displacement assumption; 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 e missions cap.460 Commenter s added the NODA, while addressing desired transparency, also introduced undesirable new options not contained in the original proposal, which have stimulated additional uncertainty, potential flux regarding reliability assurance 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 result if the NODA options were included in the final rule.

Commenter s add ed further reducing coal

- fired electricity generation in such a manner would make the emission reduction targets even less achievable and would exacerbate the grid reliability challenges identified above; such an approach fails to account for important dif ferences between the Building Blocks. The commenter s 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 pursuant to Building Blocks 3 and 4. The
commenter s said first, EPA includes each State's existing renewable energy capacity in Building Block 3; those facilities are already producing electricity alongside coal

- fired EGUs and, as a result, cannot be called upon to displace coal

- fired electricity generation. The commenter s said second, by incorporating new renewable energy generation and energy efficiency measures into its BSER analysis, EPA necessarily accounts for new electricity demand that will occur over the same time period. The commenter s said EPA cannot simply assign all new electricity generating capacity (and efficiency

- induced demand reductions) toward the displacement of coal

- fired electricity generation without considering how States will meet new demand; this is particular ly true for States that already have RPS and EERS programs in place and are relying on them to meet at least a portion of the growth in electricity demand.

Commenter s added EPA's NODA proposes to use incremental renewable energy generation and DSEE savings from Building Blocks 3 and 4 to displace 2012 generation from affected fossil fuel

- fired EGUs in state goal calculations, acknowledging that this approach would make state goals even more stringent; this alternative approach is based on erroneous assumptions and a misunderstanding of the purpose and roles of the types of generation in Building Blocks 3 and 4. The commenter s said renewable energy generation and DSEE en ergy savings do not serve the same purpose as existing fossil fuel

- fired generation and thus cannot reliably or cost

- effectively replace that generation; for these reasons, it is imperative that EPA not incorporate this newly proposed goal setting methodol ogy into its final rule.

Commenter s stated EPA requested comment on whether the goal

- setting calculation should "back

- off" fossil generation in response to the addition of the renewable energy and energy efficiency building blocks. The commenter s strongly disagree d 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 commenter s said while renewable energy and energy efficiency have some im plications for the utilization 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 generation is not practical.

Commente r s added EPA has not attempted to evaluate how such an approach would affect the operation and reliability of the grid as dispatchable fossil resources are needed to support voltage, frequency, capacity needs and enable renewable technologies to be deploye d. The
commenter s said under the proposed revision to the state goal calculation, some states (e.g.461 Washington, Idaho, Oregon, Maine) would be left with zero fossil fuel

- based generation, which significantly impairs the ability of operators to maintain rel iability. The commenter s said if this proposal was expanded further as contemplated within the NODA, and building blocks 3 and 4 were applied to reduce fossil

- steam generation preferentially, such as is done with building block 2, all fossil

- steam generati on would be lost in 21 states

- even while existing NGCC capacity would be assumed to run at a fixed capacity factor. The commenter s said EPA has not performed any analysis to suggest that the grid could function without these critical capacity resources; as such, this potential alternative goal calculation approach should be rejected.

Commenter s added EPA's NODA, published on October 30, 2014, increased, rather than decreased, the confusion and uncertainty regarding the goal calculation methodology, and ad ded data to the record but failed to provide any insight on the impacts of using alternative base years, multi

- year averaging, or changing the goal calculation by reducing fossil generation rates as renewable and energy efficiency measures are implemented during 2020

- 2029. The commenter s 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 string ency of the state goals, but EPA provided no insight into what those impacts would be. The commenter s said the two exceptions to this general rule are the Option 2 state goals, and the goal calculations provided that rely solely on implementation of blocks 1 and 2, both of which were provided in the initial proposal; none of the alternatives described in the NODA have been used to calculate new state goals. The
commenter s said there are multiple combinations of the alternatives proposed by EPA, and the
outc ome of each combination can result in unpredictable impacts on the ultimate obligations of the states

- obligations that EPA says represent immutable standards against which any plan submitted by the state will be judged.

Commenter s stated the EPA's possib le approaches to adjust the state goal calculation methodology for Blocks 3 and 4 discussed in the October 30 NODA would result in severe impacts on states, in particular the prioritized adjustment approach in which EPA would take generation and CO2 emissi ons out of the calculation for coal

- fired EGUs first before other sources. The commenter s said the prioritized adjustment approach would zero

- out all of Texas' coal

- fired EGU generation for purposes of calculating the state goal, further restricting the st ate's ability to consider the remaining useful life of the facilities and result in substantially more retirements of coal

- fired EGUs.

Commenter s stated in the proposed rule, the EPA's state goal calculation applies Block 2 differently from Blocks 3 and 4 ; in Block 2, the EPA shifted generation from coal

- fired EGUs and other higher emitting sources to NGCC units without changing the total generation in the state; under Block 3, EPA added renewable generation without taking away generation or the correspond ing CO2 emissions, increasing the total generation 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 commenter s said in the October 30 NODA, the EPA takes comment on ways to change the state goal calculation to make the adjustments for Blocks 3 and 4 similar to Block 2; specifically, the EPA would remove the amount of generation from fossil fuel

- fired EGUs in the denominator of the equation, a nd the corresponding CO2 emissions in the numerator, that is equivalent to the incremental renewable energy generation under Block 3 and incremental energy savings from Block 4.462 Commenter s stated the TCEQ opposes any such adjustment, and in particular, th e prioritized approached being considered by the EPA in which the adjustment would take away generation and CO2 emissions from coal

- fired EGUs first. The commenter s said because the incremental increase in renewable energy and energy efficiency savings ass umed by the EPA under Blocks 3 and 4 for Texas is greater than the residual coal

- fired EGU generation assumed after re

dispatching under Block 2, the effect of the prioritized adjustment approach would be to zero

- out all Texas' coal

- fired EGU generation fo r state goal calculation purposes. The commenter s said all oil and natural gas steam EGU generation would also zero

- out under this approach. The
commenter s estimate d that such an adjustment would result in a final state goal for Texas of approximately 540

- 550 lb/MWh; additionally, the commenter s estimate d that 21 other states would be similarly impacted by having all coal

- fired EGU generation assumed to be removed by the prioritized adjustment approach discussed by the EPA in the October 30 NODA. The

comm enter s said nationally, applying this adjustment would result in the state goals being based on an assumed reduction in coal

- fired EGU generation across the country of approximately 60%, substantially more than the 26% that the proposed state goals are bas ed 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 reliability; 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 goal would be founded on an assumption that all coal

- fired EGUs in the state would out

- of

- service by 2029, including EGUs which have only recently come online.

The commenter s also oppose d the proportional adjustment approach being considered by the EPA for adjusting the state goal calculations for Blocks 3 and 4; if based on a post

- Block 2 re

dispatched generation mix, the TCEQ estimates the proportional approac h would reduce the state goal for Texas to approximately 720 lb/MWh; while the proportional approach is expected to have a lesser impact on the state goal than the prioritized approach, the effect still makes the state goal more stringent and the TCEQ main tains the final state goal proposed for Texas is already infeasible.

Commenter s stated that the CO2 emission rate target proposed for Pennsylvania is already too stringent; therefore, any proposed methodology changes in the NODA that result in more stringe nt goals should not be considered.

Commenter s 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 commenter s said for Washington this would reduce the state's final target from 215 lbs/MWh to an estimated 27 lbs/MWh; in essence, this would set Washington's target
to zer o. The commenter s d id not support this alternative methodology; and notes that the proposed approaches for building blocks three and four already "zero out" the emissions from all fossil fuel generation in the state, even if a one

- for

- one substitution does not occur. The
commenter s continued because renewable energy is dependent on some load

- following fossil resources to shape and firm intermittent resources, the conceptual foundation for this approach is lacking. The commenter s said EPA has been clear to d ate that the "building block" approach is a methodological approach to generate a fair and equitable implementation of the BSER for setting emission rate goals for states; it is not a rigorous modeling approach, which seems to be the463 direction of this sugg ested modification. The commenter s said the "building block" approach meets its purpose of balancing simplicity, fairness, and policy neutrality, and should not be stretched to cover compliance approaches.

Commenter s oppose d the adjustments for making Bloc ks 3 and 4 similar to Block 2 in the state goal calculations presented in the NODA. The commenter s said the prioritized adjustment would have the effect of zeroing out all coal

- fired as well as oil and natural gas steam generation for state goal calculatio n purposes. The commenter s estimate d this adjustment would drastically alter Texas's final goal to approximately 540

- 550 lbs/MWh. The commenter s said this outcome would have an even more detrimental effect on reliability than the 791 lbs/MWh emissions goal proposed in the original rule; the commenter s strongly urge EPA to reject this modification to the state goal calculation.

Commenter s stated in the alternative methods outlined 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 generation along with a significant amount of existing NGCC generation. The commenter s said this is not a realistic or a reasonable outcome. The
commenter s s aid 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 commenter s said this is equivalent to 26% of the generation su pplied by the affected fossil EGUs in 2012. The commenter s said all of the coal and oil

- fired units would be replaced and the existing NGCC fleet would be operating at a 13% capacity factor. The
commenter s 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% capacity factor; this could result in the shutdown of many NGCC units in New Jersey, resulting in greater reliance on out

- o f

- state coal units, resulting in higher CO2 and NOx emissions; this is not a reasonable outcome.

Commenter s stated EPA has further expanded the potential to target Texas' coal

- fired generation in its NODA, with requests for comment on proposed plans to req uire reductions in fossil

- fuel generation at a prorate rate as new renewable energy resources are developed and end

- user efficiency gains are achieved. The commenter s said one of these proposals includes requiring coal

- fired generation to be offset first, then other forms of fossil

- fuel generation would be targeted; this is an unacceptable approach; it would drive even greater reductions in coal generation, and associated mining, leading to additional economic harm and impacts to electric reliability; it wo uld also lead to greater risks to reliability, as less electricity would be available to meet rising demand.

Commenter s stated regarding the Notice of Data Availability on October 28, 2014, the
commenter s d id not believe that any of the adjustments to the timing of the "glide path," nor the use of 2012 as the baseline year, nor changes to the rate

- based computation methodology are necessary. The commenter s said the proposed CPP in its original form represents a bold yet viable pathway for achieving the nati on ’ s, and our state ’ s, energy, economic and environmental goals. The commenter s support ed the original proposed Plan as it stands without the need for significant changes as represented in the Notice of Data Availability.

Commenter s stated EPA should not c onsider changing the goal setting formula as suggested in the NODA; the suggested changes make the goal calculations more complicated by allocating464 emission reductions to particular generators but do not address the effect of where emissions will actually be reduced.

Commenter s added in the Notice of Data Availability (NODA) published on October 30, 2014, EPA solicited comment on stakeholder feedback suggesting changes to the proposed formula to establish state goals; according to the NODA, some stakeholder s have argued that incremental renewable energy and energy efficiency displaces existing fossil generation rather than incremental generation from existing sources. The commenter s said if the finalized Clean Power Plan agreed with stakeholders on this poin t, state goals would become significantly more stringent in all states, including Oregon. The commenter s stated their experience with renewable energy and energy efficiency demonstrates that the formula EPA initially proposed more accurately accounts for e missions reductions. The commenter s said energy efficiency and renewable energy in the commenter s ' system serve to meet load growth and hence avoid new generation and emissions. Commenters stated that i n 2014, the commenter s forecast weather

normalized net load growth of approximately 1%, after accounting for 1.5% in annual incremental energy efficiency on the commenter s ' system; in other words, this year the
commenter s ' load has grown by 1% even after achieving an impressive amount of energy efficiency. Th e commenter s use d renewable energy added to the commenter s ' system to comply with Oregon's RPS to meet the load growth the commenter s experience d after energy efficiency. The commenter s ' experience suggests that stakeholder arguments on the goal

- setting eq uation are unfounded. The commenter s said EPA's proposed goal

- setting equation, in which incremental renewable energy and energy efficiency serves to avoid future emissions rather than reduce historic baseline emissions, is the correct approach.

Commenter s 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 commenter s d id not suppor t the change to the state goal calculation described in the NODA.

Commenter s stated EPA's October 28 Notice of Data Availability (NODA) seeks comment on whether each state's goal should reflect displaced fossil generation from assumed levels of increased r enewable energy generation and demand side savings. The commenter s said the NODA mentioned four options for treating displaced fossil generation; the
commenter s support ed the original approach proposed in June in which increased renewable energy generation and demand side savings would not displace existing fossil generation.

Commenter s stated EPA should not consider changing the goal setting formula as suggested in the NODA. The commenter s said the suggested changes make the goal calculations more complica ted by allocating emission reductions to particular generators but do not address the effect of where emissions will actually be reduced.

Commenter s stated a pro rata, direct replacement methodology represents a significant change from the initial goal

- set ting formula. Commenters stated 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 formula would yield more stringent state goals." T he commenter s said this may well offset, or even exceed, any interim benefit obtained from potential changes to the glide path calculation; moreover, it places utilities in a difficult and465 unprecedented situation. The commenter s said a utility must conduct , evaluate and approve long

term resource planning in a world driven by a CO2 performance goal predicated on a formula that directly interchanges baseload generation for intermittent generation or potential reductions through energy efficiency.

Commenter s stated from an institutional standpoint, the potential one

- for

- one tradeout of baseload resources for renewable and energy efficiency resources taxes the ability of state air regulators beyond the breaking point. The commenter s said while a state air regu lator 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 task its air regulator with becoming a totalistic electric resource planner, or not. The commenter s said further, as state

- specific legal analysis shows, in most cases the air regulator does not have state law authority to author and enforce a plan usi ng Building Blocks 2, 3 and 4 in any event.

Commenter s stated a CO2 performance goal calculated under the NODA tilts toward greater involvement of PUCs with their relative expertise with regard to system reliability, cost recovery issues and resource planning in evaluating state plans. The commenter s said it further underscore the need for some type of adjudicatory process or contested case proceeding for state plans that allows these types of issues to be fully

- and publicly

- vetted. The commenter s said, the political economy of state regulation may not admit the PUC/air meta

- regulator from coming into being; traditionally, non

- jurisdictional municipal and cooperative utilities have an abiding allergy to PUC regulation; investor

- owned utilities may prefer PUC primacy because of experience and the ability to ens ure rate recovery. The commenter s said for restructured markets, the NODA continues to push toward a multi

- state plan (the NODA pushes vertically

- integrated states to multi

- state solutions too, see infra.). The commenter s said multi

- state solutions suffer from many of the same political economy infirmities between the states; state interests for a Section 111(d) plan are rivalries ; not cooperative. The commenter s said to be enforceable, Compact Clause issues must be addressed.

Commenter s stated there are s everal problems with this approach; first, the EPA has no authority to establish a standard of performance under section 111 based on reduced utilization (or retirement) of a source; second, if the EPA wishes to pursue such a dramatic change in its Propose d Guidelines, it must undertake a thorough evaluation 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 commenter s said it is highly likely that here will be significant costs, including additional stranded assets, as well as additional threats to the reliable supply of electricity , and added i t is not possible to evaluate these issues without the additional analyses that EPA has failed to undertake. The commenter s said third, beyond the likely very high additional costs, this alternative approach seems at odds with the EPA's apparent overarching goal of reducing generation from all fossil fuel

- fired EGUs because it would have the counte rintuitive effect of encouraging the construction of additional new fossil fuel

- fired EGUs relative to the EPA's June 2014 Proposed Guidelines. The commenter s said according to the EPA, the rationale for its proposed goal computation 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 meet future generation needs, while leaving the existing fossil EGUs to continue serving existi ng (i.e., pre

- 2012) load demand. The466 commenter s 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 t he incremental RE and EE encouraged by the Proposed Guidelines is dedicated to meeting historical demand, any post

- 2012 increases in demand will need to be met by other sources, most likely fossil fuel

- fired EGUs because the proposed goals for RE and EE

un der Building Blocks 3 and 4 are already extremely aggressive. The commenter s said therefore, a likely outcome of the alternative approach discussed in the NODA would be to encourage the use of new fossil generation to satisfy future demand rather than RE

- a policy outcome that seems to be at odds with the EPA's overall goals.

Commenter s stated the revised approaches would make state goals significantly more stringent; both proposals are unsound and should not be adopted. The commenter s 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 fossil fuel EGUs will depend on at least two factors: demand for electricity and the attributes (including dispa tchability) of the new generation source. The commenter s said although electricity demand growth has been slow in recent years, demand could well increase if state or national economies improve, if weather patterns change, or if new technologies (such as e lectric vehicles) 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 demand

- predicts an annual increase in demand growth of 1% through 2040, which will require the addition 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 opera ting costs are usually the lowest

- cost source of electricity; therefore, it is reasonable to expect that the addition of some incremental generation will displace future generation increases from existing sources, rather than reducing existing sources' gen eration levels below historic levels. The
commenter s said however, in cases where the required 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 t o historic levels (note that because of the interstate nature of the electric grid, the generation that will be dialed back may not be located in state that implemented the increase in NGCC, RE, nuclear, or EE generation or savings).

Commenter s stated the ability of any given source of generation to displace generation from another source will depend in large part on the attributes of the incremental generation source and the characteristics of the existing system; thus, 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 turbines that are generally excluded from the Proposed Rule). The commenter s said the reason f or this is that natural gas turbines are uniquely capable of quickly ramping up and down to coordinate with fluctuating generation from intermittent renewables; coal and nuclear generation, on the other hand, are less likely to be displaced by the addition of new non

- dispatchable resources. The commenter s 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 commenter s said the location and timing of the incremental generation will also affect the kind of generation it displaces, if any; for example, incremental RE or EE that is loc ated 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 commenter s said by the same token, wind or EE measures that operate at night or during periods whe n natural gas prices are low, are likely to reduce the need for baseload generation such as coal, nuclear or hydroelectric generation rather than NGCC generation.

Commenter s stated if EPA persists 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); this evaluation must be supported by detailed modeling analyses or other data in support of the agency's conclusions. The commenter s stated if EPA fails to conduct such an analysis to justify the achievability of the state goals, EPA shoul d assume that all additions of incremental generation or EE displace future demand in the state. The commenter s said because EPA cannot show with any certainty that increased NGCC, RE, nuclear, or EE generation will necessarily displace generation from aff ected 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 units when adding in generation from additional NGCC, R E, nuclear, or EE measures in the goal

- setting calculation. The commenter s said therefore, EPA should not implement the proposal discussed in the October 2014 NODA. The
commenter s added EPA should revise its initial proposal to conform its approach to buil ding block two with its approach to building blocks three and four; EPA can do so by adding generation and emissions from increases in redispatch to the numerator and denominator without reducing historic generation from coal

- fired units in step two of the goal computation method.

Commenter s f ound the NODA approach problematic because, data about technical potential does not factor in many restrictions, which could lead to RE targets that may not be feasible to achieve.

Commenter s stated in its Notice of Da ta Availability, EPA proposes various goal computation methods that would directly replace existing fossil generation with new renewable energy generation or energy efficiency savings. The commenter s disagree d with these methods that would make the current unattainable targets even more stringent, and therefore EPA should decline to adopt these goal

- setting formula adjustments. The commenter s asked if States are forced to eliminate a MWh of fossil fuel

- fired baseload generation for each MWh of intermittent renewable generation or each increase in energy efficiency, 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 electricity. The commenter s said worse than failing to respond to reliability concerns raised by the proposed rule, these methods would exacerbate them by replacing reliable baseload generation with intermittent renewables or unpredictable energy efficiency improvements.

Commenter s stated this revised approach, which would make state goals significantly more stringent, should not be adopted because it does not represent (or even approximate) the emission reductions that are achievable through application of BSER. The commenter s 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 emissio ns of affected EGUs. The468 commenter s said contrary to the assumptions that underlie 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 dire ctly displace one MWh of generation from an existing affected EGU in the same state; for example, 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 commenter s said similarly, incremental RE or EE could displace the need to import power from neighboring states, to construct new NGCC capacity, or to operate non

- covered units such as peaking cycle simple cycle combustion turbines or hydroelectric energy facilities. The commenter s said under each of these scenarios, the addition of new, incremental RE and EE would n ot allow a state to reduce the emissions of affected units in the state. The commenter s 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 genera tion below baseline, EPA would violate the requirement that state emission guidelines must reflect the application of BSER.

Commenter s stated adopting the NODA goal computation methodology would lead to unreasonable goals for states like Washington and Id aho, which would be expected to achieve statewide CO2 emission rates of 0 lbs. CO2/MWh by 2030; in other words, this approach would completely tie the hands of regulators and utilities in Idaho, Washington, and perhaps other states: no matter how much RE, EE, or nuclear energy these states are able to add in the future, it will be mathematically impossible to achieve a 0 lbs./MWh emission rate without closing all of their existing fossil EGUs. The commenter s said for these states, and perhaps others, the Pr oposed Rule's much

- touted "compliance flexibility" would be a total fiction. The commenter s 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. The commenter s said EPA should not adopt the NODA's alternative approach to computing each state's emission rate goal.

Commenter s stated EPA should not adopt either approach to change the proposed numeric formula; both approaches would overestimate the potential emissio n reductions from RE and EE because they incorrectly assume that RE and EE can replace baseload fossil generation. The
commenter s 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 reliable delivery of electricity to consumers.

Commenter s stated [Replacing all Fossil Generation Prevents the Reliable Operation of the Interconnected Power System] the two revised approaches for calculating the state goals forwarded in the NODA are predicated on the incorrect assumption that all historic fossil generation could be replaced by renewable generation and decreased consumption. The
commenter s sai d while not discussed explicitly in the 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 these states would have to cease all ope ration of existing base load fossil generation. The commenter s said neither EPA nor any stakeholder can demonstrate that, at present, the interconnected power system can be operated reliably without these critical base load resources; moreover, new renewab le wind and solar resources are variable in nature and need to be backed

- up when they are not operating. The commenter s said EPA does not address how such back

- up can be accomplished without reliance on at least some469 fossil generation. The commenter s 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 commenter s said RE and EE cannot provide key services provided by baseload resources that are essential for maintaining reliability, including frequency response, voltage support, load and resource balancing and inertia. The commenter s said the NODA does not address how the alt ernate approaches to the numeric goal setting calculation would take into consideration these reliability considerations or how the interconnected power system could operate without fossil

- based base load resources. The commenter s said EPA cannot use a num eric formula that creates state goals that are inherently at odds with the reliable operation of the interconnected power system.

Commenter s stated the proposed state goals

- which would be less stringent than goals calculated using either approach discus sed in the NODA

- will result in a dramatically changed electricity generation mix that has significant implications for reliability. The commenter s said as NERC notes, the proposed guidelines "introduce potential reliability concerns that are more impactf ul than prior environmental compliance programs due to the extensive impact to fossil

- fired generation... the ongoing transformation to the resource mix and corresponding impacts on [essential reliability services [ERS]] required to maintain a reliable [bu lk power system]. The
commenter s said NERC identified two categories of reliability implications for the proposed
state

- specific emission rate goals: 1) direct impacts to resource adequacy and electric infrastructure; and 2) impacts resulting from the chan ging resource mix that occur as a result of replacing retiring generation, accommodating operating characteristics of new generation, integrating new technologies and imposing greater uncertainty in demand forecasts. The
commenter s said if the proposed goa ls, 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 with RE and EE sources must raise more significant concerns. The commenter s said EPA has not addressed how the alternative approaches to calculating the state goals are consistent with the reliable operation of the interconnected power system; the potential reductions achievable by Building Blocks 3 and 4 cannot be measured in a vacuum. The commenter s said EPA's approach to calculating the state goals must consider the potential impact the resulting goals would have on the interconnected power system.

Commenter s stated [Limiting the Reliable Integration o f New RE Generation into the Grid] RE and EE not only cannot replace base load fossil generation in providing essential reliability services, but also place additional reliability demands on the interconnected power system and system planners. The commente r s said as NERC notes, the proposed guidelines seek to more than double the energy capacity that currently is provided 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 commenter s said these demands, which must be met to ensure the reliable integration of variable renewable resources in to the grid, are met only by fossil

- based resources. The commenter s said the proposed guidelines could prohibit the building of new natural gas

- based units in some states because the emission rate goals are less than the emission rate to permit these units under CAA section 111(b). The commenter s said under the alternate approaches to calculating state goals, many state goals would become470 increasingly more stringent, further limiting the future construction of new units to support renewables integration.

C ommenter s stated [Building Block 2 Reductions Compared to Reductions Achieved by Building Blocks 3 and 4] while these comments raise significant concerns about the level of re

dispatch that is possible under Building Block 2, 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 generation from coal

based steam EGUs in the proposed goal computation equation. The commenter s 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 le vel of reliability as coal

- fired units because onsite fuel storage is not available. The commenter s said it is appropriate to have different approaches to the different Building Blocks when calculating the state goals, as this recognizes the role that diff erent measures can play in the reliable operation of the interconnected power system.

Commenter s stated the proposed approach to the numeric goal calculation is inconsistent with how utilities forecast load; as in the proposed numeric calculation, increme ntal RE and EE serve to meet (or avoid) load growth, avoiding new generation and the related emissions. The
commenter s said incremental RE and EE are used to reduce future demand and emissions, not typically reduce historic demand and emissions.

Commenter s 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 2029 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 overly a mbitious RE and EE mandates). The
commenter s said it is apparent that this approach ignores the multitude of projections by experts in the field, including the Energy Information Administration (EIA), the North American Electric Reliability Corporation (NE RC), and the various Regional Transmission Organizations (RTO); electricity demand will increase, and generation will necessarily increase to meet this growing demand. The commenter s said this TSD suggests that U.S. EPA is placing a limit on generation. In deed, the document itself states, "the first concept is to recognize that the deployment of BSER measures will reduce generation from affected fossil fuel fired sources." The commenter s said U.S. EPA cannot legally limit electricity generation and usage un der a Section 111(d) regulation.

Commenters stated EPA issued a Notice of Data Availability ("NODA") on October 28, 2014; the NODA seeks comment on a variety of proposed changes to the states "goal" setting without providing a revised rule or the associate d time to fully comment on the proposed changes. The commenters said in the case of Wyoming, these potential "changes" may result in a significant further increase in the stringency of any final Wyoming and Montana compliance obligation, and with any incre ase to the stringency of the standard comes the incremental and unavoidable costs of compliance.

Commenters were concerned about the significant impact of the very recent additional EPA proposal for creating a minimum value of re

- dispatched coal to non

- ex istent 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 "goa l" which replaces coal

- fueled generation pro

- rata or prioritizes the re

- dispatch of coal

- fueled generation based on historic emissions. Commenter s said in addition to the issues noted above as to the fundamental concerns associated with the Proposed Rule, EPA's NODA also discusses that the anticipated emission rate reductions calculated under building block 2 are inconsistent from state to state because certain states have little or no NGCC affected EGUs. Commenter s said EPA then asserts that one way to add ress 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 existing NGCC units this floor could be achieved through the construction and utilization of new NGCC units. Commenter s 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 premised 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.

Commenter s stated in the NODA, EPA briefly discusses the concept of using a regional approach to the redispatch of coal generation to natural gas generat ion 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 individual state goals, or how regional NGCC resources would be allocated in the context o f individual state compliance determinations. The
commenter s said given the lack of detail (or support) in the NODA, the commenter s cannot meaningfully comment on this concept; because EPA lacks the authority to require re

- dispatch, it is precluded from se tting standards in any final rule utilizing this approach.

Commenters object ed to the lateness of the NODA

- raised issues in the comment period for the Proposed Rule. The commenters said it is especially concerning that EPA would seek comment on changing t he goal without providing a new proposed rule; instead, EPA merely states "this adjustment to goal

- setting formula would yield more stringent state goals."

Commenter s stated to modify the calculations to further reduce existing generation in the manner
sug gested by the NODA would be tantamount to dedicating all assumed incremental renewable generation and assumed incremental energy efficiency to displace generation from EGUs identified by EPA; thus, to the extent that load growth 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 equation for establishing Mandatory Goals results in a megawatt

- hour denominator for each State that is greater than the associated 2012 baseline generation from the EGUs; as such, the June 2014 approach effectively assumes that the resources reflected in the building blocks are serving existing load as well as some level of load growth.

Commenter s stated fu rther reducing generation from EGUs in the manner suggested by the NODA would, as a practical matter, result in cuts to existing generation much more drastic than anything contemplated by the Proposed Regulation. The commenter s said this scenario would
gre atly exacerbate cost and reliability concerns. The commenter s said in Virginia's case, the adjustment suggested by the NODA would produce Mandatory Goals that effectively represent 52% (interim) and 75% (final) reductions in the 2012 levels of EGU 9 genera tion. The472 commenter s said such reductions obviously were not evaluated in any reliability analysis comparable to what federal law requires because they would undoubtedly produce capacity reserve deficiencies and the need for substantial transmission reinfo rcements, among other reliability concerns. Indeed, reductions of this magnitude are not contemplated in any of the analyses, technical support documents, or other information accompanying the Proposed Regulation. The commenter s said such reductions would 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 commenter s urge d the EPA to not modify its goal

- setting formula in suc h a manner to effect further reductions in the Mandatory Goals.

Commenter s stated under this NODA, U.S. EPA is taking it a step further by now suggesting that

co

- firing of natural gas might be a practical option for consideration in goal setting. The

comme nter s said U.S. EPA bases this new consideration on stakeholder's identifying the co

benefits of: reducing NOx, SO2, particulate and hazardous air pollutant emissions; providing additional operational flexibility for coal

- fired units 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 commente r s said this suggestion faces the same problem as this entire proposal in that it is not practical, feasible or technically achievable to require coal

- fired EGUs to use natural gas when there may not even be sufficient supply. The commenter s said this

cann ot be a serious consideration when U.S. EPA has not even performed an analysis of technical feasibility or subsequent impacts on system reliability and natural gas costs. The
commenter s said U.S. EPA cannot use the co

- benefit of reducing pollutants unrelat ed to the pollutant addressed by this proposed regulation, CO2, as justification for establishing a BSER. The commenter s said if U.S. EPA is going to seriously consider a co

- firing approach, it must abide by the APA and conduct a detailed analysis and re

- p ropose this element.

Commenter s stated any further downward adjustment in the emissions rate goals will intensify reliability and excessive cost impacts of the CPP; EPA cannot legally lower emissions rate goals any further.

Commenter s stated the EPA offers several alternatives 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 building blocks. The commenter s strongly
oppose d th e option of setting the BSER as only the first two building blocks55 (p.34836), because it would exclude the potential for renewables and efficiency to deliver significantly greater emissions reductions at reasonable cost.

Commenter s stated the impact of t he NODA's two proposed calculations

- both of which require states to reduce coal

- based generation in proportion to incremental gains in renewable energy

based generation and incremental emission avoidance supplied by increased energy efficiency

would be to reduce the amount of coal

- fired generation states can rely on to meet electricity demand. Commenter s said as with its proposed modification to Building Block 2, the NODA broadens the reach of its compulsory CO2 emission reduction provisions in a way that c ompels a fundamental redesign of the electric generation system in North Dakota. Commenter s 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. Commenter s said the tremendous amount of development taking place in western North Dakota Bakken oil fields is expected to increase power demand by more than 2,000 MW over the next several years. See Kadrmas , Lee and Jackson, Inc., Power Forecast 2012: Williston Basin Oil and Gas Related Electrical Load Growth Forecast 18

- 19 (October 2012). Commenter s 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 Reasonably 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

sec tions 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 fo llowing are summaries of the specific public comments under this comment:

Commenter s 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 substantial amounts of uncertainty into the Proposed Rule. The commenter s said the press release accompanying the document states that such notices "do not change a proposal." The commenter s said the NODA opens up the possibility of measuring attainment regionally rather than statewide. The commenter s said the Proposed Rule itself was quite clear that emissions would be measured statewide; such last

minute 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, combin ed with their neighbors. The
commenter s said indeed, the NODA acknowledges this dilemma and explains that EPA has no good answer for the problem of states isolated by regional pacts. The commenter s said EPA solicits comments on how the BSER is calculated f or 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.

Commenter s stated in a belated response to widespread criticism for the flaws in the Proposed Rule, EPA released a Notice of Data Availability (NODA) for the Proposed Rule (Docket No. EPA

- HQOAR

- 2013

- 0602; FRL

- 9918

- 53

- OAR; RIN 2060

- AR33) on October 28, 201 4, soliciting comments on additional matters included in the Proposed Rule. The commenter s said the press release accompanying the document states that such notices "do not change a proposal." The commenter s said the NODA introduces substantial amounts of uncertainty into the Proposed Rules, for example opening up the possibility of measuring attainment regionally rather than statewide.175 The Proposed Rule itself was quite clear that emissions would be measured statewide.176 Such last

- minute shifts only wo rsen the situation for states, who cannot even plan ahead to know whether they will be measured on their own or, for example, combined with their neighbors. The commenter s said indeed, the NODA acknowledges this dilemma and explains that EPA has no good an swer for the problem of "Balkanization": the prospect of states isolated474 by regional pacts. The commenter s said an individual state would be forced into a pact with other states or regulated on its own while other states combine with neighbors to average o ut their emissions. The commenter s said the NODA does not at any point change the binding nature of the state goal determined by EPA. The commenter s said EPA solicits comments on how the BSER is calculated for each state, tacitly acknowledging that its num bers 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.

Commenter s stated EPA has requested comment on n umerous alternative approaches to setting BSER, computing state goals, and implementing state plans in both the October 2014 NODA and the Proposed Rule itself. The commenter s said the sheer number of alternatives and the uncertainty involved in predicting how each alternative

- both alone and in combination with other alternatives

- would affect states and EGU owners is more reminiscent of an advanced notice of proposed rulemaking than a proposed rule. The commenter s said more importantly, the proposal of a ll of these alternatives

- some of which could significantly affect state goals and EGU obligations

- fails to provide sufficient notice to the public to enable commenters to provide meaningful comments. The commenter s said unless EPA provides additional n otice of the potential impact of these alternatives and their effect on stakeholders, EPA should not adopt these alternatives; to do so would violate the spirit of CAA section 307(d), which requires EPA to specify the basis of its decisions in order to pro vide the public with sufficient notice and opportunity to comment.

Commenter s stated in the event the NODA approach is pursued, the commenter s urge d the EPA to provide stakeholders the opportunity to comment on this issue.

Commenter s stated the issues pres ented in the NODA have far ranging implications; in fact, EPA acknowledges that the various alternative approaches the Agency is now contemplating in the NODA could fundamentally alter the proposed emission guidelines and lead to more stringent goals for a ll or some states. The commenter s said EPA also recognizes that many issues in the NODA

- and the four Building Blocks generally

- "interact with each other." The commenter s said until EPA provides greater certainty on its preferred approach, states and im pacted stakeholders cannot determine the ultimate stringency of a state's final goal; because of this fundamental ambiguity, EPA cannot finalize any of the changes discussed in this NODA without issuing a supplemental regulatory proposal that clarifies the Agency's position and provides the basis and purpose for its approach as required by Section 307(d)(3) and the APA. The
commenter s added in addition, the myriad of questions contained in the NODA confirms that EPA has not collected sufficient technical da ta to analyze the impact of the proposed guidelines; it is improper for stakeholders to comment on incomplete concepts that are devoid of contextual background and contain vague set of criteria.

Commenter s acknowledge d and appreciate d the issuance of the N otice of Data Availability (NODA) issued October 28, 2014, and the Notice of Additional Information Regarding the translation of Emission Rate

- Based CO2 Goals to Mass

- Based Equivalents issued November 6, 2014. While the commenter s will be addressing some o f the recently

- released information, given the late issuance of the new information against the comment deadline of December 1, 2014, commenters stated the comments on this additional information should be considered only preliminary since it is not feasib le 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 commenter s further note d that subsequent 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 considerations; if the Clean Pow er Plan proposal were to be altered in any significant way and/or the state goals were to be materially different than the original proposal, then the commenter s respectfully request ed a subsequent review and public comment period be offered after such cha nges are incorporated.

Commenter s stated EPA's last

- minute NODA only adds to the confusion and fails to remedy the flaws in EPA's original proposal. The commenter s said 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 commenter s said indeed, EPA acknowledges t hat many of the concepts in the NODA would affect the stringency of the rule; however, EPA does not provide a quantification of how the state goals would change nor does it provide information indicating that EPA has evaluated the feasibility of the revisi ons, such as through modeling.

Commenter s stated EPA is coming to grips with the many infirmities and fundamental flaws in its original existing source proposal and attempting 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 commenter s said to make matters worse, the NODA suggests substantive changes but does not provide any new proposal or changes to its original proposal

- only a series of qu estions about topics that EPA apparently did not consider before and has no coherent view on how to proceed now. The commenter s said the timing of the NODA is also prejudicial to the vast majority of stakeholders other than perhaps the selected stakeholder s that EPA is choosing to address. The commenter s said EPA is suggesting substantive changes to the rule but only providing 32 days to comment, a clearly insufficient time to fully review and develop thoughtful and meaningful responses to the new concepts and data. The commenter s said the NODA also necessitates a further extension of the comment deadline on the original proposal so that commenters can attempt to understand how the NODA would affect the comments already under development.

Commenter s stated even in the limited time available, EPA's misconceptions are apparent in the NODA. The commenter s said the NODA provides discussion and requests comment around three specific areas: the 2020

- 2029 glide path, certain aspects of the building blocks, and impl ementation of the goal

- setting equation; but without sufficient information about the how EPA would revise its goal calculation and any analysis of how these undefined changes would affect electricity generation, grid reliability, and cost, the commenter s can only provide limited general comments regarding these options. The commenter s said should EPA decide to alter its original proposal in any way based on information in the NODA, it is required by the CAA to issue a new proposal and seek public comment.

Commenter s stated U.S. EPA has yet to provide stakeholders with a legitimate and workable approach that stakeholders can provide meaningful comment on regarding a rate

- to

- mass476 conversion. The commenter s said U.S. EPA must re

- propose an approach that addres ses stakeholder concerns and questions including the legality of the entire approach.

Commenter s expect ed that EPA will make substantial changes to the proposal as necessary based on data and technical corrections and in response to public comments. The c ommenter s said states and other stakeholders deserve the opportunity for further review and comment after significant changes, such as adjusted goals and fundamental changes to the building blocks methodology and framework of the rule. The commenter s stron gly suggest ed that EPA issue a Notice of Data Availability (NODA), or multiple notices as needed, that provides any corrections and the adjusted goals for review and comment several months prior to rule finalization.

Commenter s stated EPA's NODA seeks comment on a variety 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 potential "changes" may result i n a significant further increase in the stringency of any final Colorado compliance obligation, and with any increase to the stringency of the standard comes the incremental and unavoidable costs of compliance.

Commenter s were concerned about the signific ant impact of the very recent additional EPA proposal for creating a minimum value of re

- dispatched coal to non

- existent NGCC power plants
or to co

- firing natural gas in existing coal

- fired boilers. The commenter s said further, EPA is proposing another pot ential means for increasing the stringency of a state "goal" by adding incremental renewable energy and EE to the "goal" which replaces fossil generation pro

- rata or prioritizes the re

- dispatch of fossil generation based on historic emissions; in addition to these substantive infirmities in the NODA, the commenter s object ed to the lateness of the NODA

raised issues in the comment period for the Proposed Rule. The commenter s said it is especially concerning that EPA would seek comment on changing the goal wi thout providing a new proposed rule; instead, EPA merely states "this adjustment 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 a nd adopting the alternative approach from the proposal, modified as described in the NODA. 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 s upporting the final CPP for more information.

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

Commenter s stated in the NODA published on October 28, 2014, EPA solicited comment on a variety of issues in addition to commenti ng on the June 18, 2014 proposal regarding carbon emission guidelines for EGU units. The commenter s provide d comment in the paragraphs below on issues brought forth in the NODA.477 Commenter s stated regarding Building Block 2 and NGCC re

- distribution, EPA so licited 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 solicited comment on what this value should be, and how this approach (to add a minimum requirement for stat es that currently have little or no NGCC capacity) should relate to the proposed approach in the June 18, 2014 proposal. The
commenter s d id not believe there should be a minimum value as a floor regarding a generation shift of current fossil fuel generatio n to NGCC; this 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 authority under Section 111(d) of the CAA. The
commenter s believe d if EPA is going to continue with the methodology of Building Block 2, EPA should only use the output of CPGS (95 MW) in this step of the proposal.

Commenter s stated EPA requested comment on various issues regarding the costs and potential benefits of co

- firing natural gas at existing coal plants. The commenter s believe d requiring any

co

- firing at any existing coal plants is another obstruction to both innovation and flexibility in meeting the proposed requirements of this rule.

Commenter s stated EPA also reques ted comment and justification on several assumptions regarding a new, regionalized approach for RE generation that has been suggested in other comments. The commenter s believe d it is impractical to justify a change to regional groupings when the data used for individual states is in question; additionally, the commenter s were not able to comment on other stakeholder proposals that involve Wyoming, as such proposals will not be available until after the comment period. Therefore, the commenter s d id not have the best available data to accurately determine any potential regional groupings in just over a month, when EPA has had over a year to develop and hone the regional groupings utilized in this proposal. The commenter s said to further comment on ot her potential groupings that EPA is seeking comment on, the commenter s believe d that any 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 commenter s said in continuing the regional grouping of states, the commenter believe Wyoming should not be grouped with other states for purposes of NGCC, RE development, or a combination thereof, due to Wyo ming's unique energy portfolio, current infrastructure, and land ownership issues. The
commenter s believe d any change to the regional grouping of states is inappropriate and only adds further obstacles to state flexibility. The commenter s said EPA should f ocus on ensuring the NGCC and RE potential in each individual state is correct.

Commenter s believe d any changes to the current BSER structure in the original proposal requires this proposal to be re

- proposed for additional comment; EPA may not ask for add itional comments on alternate methodologies so late in the commenting period without allowing additional time for a thorough evaluation. The commenter s believe d there should be more time to respond to these additional requests for comment, which stem from earlier comments by other stakeholders responding to this proposed rule; to ask 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 Availability ("NODA") on October 28, 2014; the NODA seeks comment on a variet y of proposed changes 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 furt her increase in the stringency of any final North Dakota compliance obligation, and with any increase to the stringency of the standard comes the incremental and unavoidable costs of compliance.

The commenters were concerned about the significant impact o f the very recent additional EPA proposal for creating a minimum value of redispatched 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 incre asing the stringency 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 based on historic emissions. In addition to thes e substantive infirmities in the NODA, the commenter s object ed to the lateness of the NODA

raised 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 p roviding a new proposed rule. Instead, EPA merely states "this adjustment to goal

- setting formula would yield more stringent state goals."

The commenters stated their position on issues raised 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 compliance with the interim goal.

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

4. Any final rule must allow states to consider remaining useful life and other factors in applying standards of performance to any particular source.

5. EPA has not undertaken the technical or economic analyses req uired to adjust the Building Block 3 and 4 methodologies.

6. EPA cannot reply on an unidentified "regional approach" to calculating renewable energy requirements in any final rule.

7. EPA lacks the legal authority to establish emission 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 lignite

- fired units in No rth Dakota have co

- fired with natural gas, and, to our knowledge, 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 has particular ly not been "adequately demonstrated" to be considered BSER.479 9. EPA cannot proceed with utilizing a regional approach for Building Block 2 without providing greater specificity and undertaking the required technical and economic analyses.

10. The comment ers believe d EPA must provide greater specificity regarding the impacts of utilizing baseline data from 2010 and 2011 on individual state requirements

Comment 9: NODA

- BB 3 & 4 Calculation

Response 9: The EPA is adopting the alternative approach from th e proposal, modified as described in the NODA. See sec tions 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:

Commenter s stated the NODA requests comment on how the goal

- setting calculation should be implemented with respect to the application of building blocks 3 and 4; the USEPA propose s either replacing 2012 fossil generation on a pro rata basis or prioritizing replacement of 2012 coal

- fired generation for goal setting. The commenter s said both approaches assume that incremental renewable energy generation and generation avoided through energy efficiency measures are equivalent to fossil generation; however, neither RE nor EE can be used to meet baseload requirements because of their variable nature and can only supplement existing fossil fuel

- fired generation. Therefore, the commenter s support ed the use of a goal

- setting equation that applies RE and EE to the denominator.

Commenter s did not recommend that EPA change the approach used to estimate a state's RE for goal setting, other than making the refinements in the methodology described previously in these
comments.

Commenter s added EPA's approach to including Building Blocks 3 and 4 in the goal calculation as proposed on June 18, 2014, is more appropriate than the alternatives proposed in the NODA. The commenter s said as EPA indicates, its original approach allows states to use EE and RE to offset load growth that may result in increase d usage of the affected EGUs. The commenter s said in Arizona, which is a growing state with population expected to grow by 36 percent from 2012 to 2030, accounting for such growth is important. The commenter s said since EPA has not provided for any other a llowance for load growth in the goal calculation, the
commenter s believe d that EPA's original approach at least provides for some level of growth in the goal setting.

Commenter s stated it would be inappropriate to adjust the EPA's proposed goal calculation to assume the displacement of fossil generation with energy provided by Blocks 3 and 4. The
commenter s said first, EPA cannot assume that variable renewable generation and energy efficiency have equal capability in replacing base load power resources; sec ond, this poses480 significant risk to reliability because of the role that fossil

- fuel generation supports in the interconnected bulk power system including: resource adequacy; load balancing, and supporting ancillary grid services for voltage and frequency response; third, the EPA has not demonstrated that this qualifies as BSER, let alone is technically feasible. The commenter s 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 goals should not assume incremental renewables and energy efficiency replace fossil generation using either methodology (pro

- rata or prioritization).

Commenter s stated in the October 2014 NODA, the EPA requests comment on a n alternative approach to calculating state goals in which generation from incremental EE and RE (in Building Blocks Three and Four) would be assumed to displace historic fossil

- fueled generation. The
commenter s said this revised approach would make state 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.

Commenter s stated under the EPA's regulations, state emission gui delines must "reflect" the application of the BSER. The commenter s interpret ed this requirement to mean that the quantification of state emission goals must accurately reflect the degree of emission reductions from existing EGUs that can be achieved in rea lity through application of the BSER Building Blocks. The commenter s 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 re gional load growth, the attributes of the existing electricity generation and transmission system, and the attributes of each particular Building Block measure.

Commenter s stated for example, if electric load increases significantly in the future due to

e conomic growth or new technologies (such as electric vehicles), the addition of incremental NGCC or RE generation or implementation of additional EE savings could have little or no effect on emissions from existing EGUs

- especially if load growth equals or exceeds the additional expected generation from the BSER Building Blocks; on the other hand, where the proposed increases in NGCC, RE, nuclear, and EE generation exceed expected system

- wide electrical demand, it is reasonable to assume that some existing f ossil generation will be reduced below historic levels so that electrical supply and demand remain in balance.

Commenter s stated the system's attributes will also have a significant effect on the ability of the Building Blocks to reduce emissions; for exa mple, because electricity markets operate across numerous states, the addition of NGCC or RE generation 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 generation 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

- fired or NGCC EGUs.

Commenter s stated thus, the ability of each Building Block to reduce emissions from affected EGUs is highly dependent on the attributes of the system in which it operates, the timing, location, and characteristics of the Building Block measure, and other factors suc h as weather, technology, and economic growth; rather than attempting to project or quantify each of these variables, the EPA's initial approach to quantifying what emission reductions may be achievable481 reflects a reasonable assumption that future increase s in NGCC generation will tend to reduce coal

- fired emissions below baseline, whereas incremental RE and EE will, on average, enable the generating system to meet future increases in electricity demand, but will not significantly reduce the emissions of ex isting EGUs below historic levels. The commenter s 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

amou nt of existing fossil generation in the state. The commenter s said this assumption is unlikely to be reflected in states' actual emission performance. The commenter s added it would lead to the arguably undesirable result that states like Washington and Ida ho would be expected to achieve an emission rate of 0 lbs. CO2/MWh by 2030. The commenter s said the EPA should retain its original proposal for quantifying the expected emission reductions from application of the four Building Blocks, and should not adopt the alternative discussed in the October 2014 NODA.

Commenter s stated EPA should not implement either of the alternative proposals for changing the accounting of building blocks #3 and #4 mentioned in Sections III.C.1.a and III.C.1.b of the October NODA. The commenter s said EPA's primary proposal in the June draft rule is an oversimplification of the electricity sector because it implicitly assumed that increased renewable electricity and energy efficiency generation are used to offset future increases in electricity generation from existing fossil generating units; however, it's a superior option to the alternatives proposed in Section III.C.1 of the October NODA.

Commenter s stated it would be a mistake for EPA to interpret increases in renewable energy and energy efficiency generation as decreases in generation from existing fossil generation for the setting of state carbon emission rate targets without also incorporating electricity generation growth into the model; there is little proof that either ren ewable electricity generation or energy efficiency reduces generation from existing power plants; instead, both resources are more likely to avoid increases in electricity generation from fossil fuel

- fired power plants.

Commenter s stated it would be a gro ss oversimplification of the electricity sector to assume that new renewable energy and energy efficiency generation can offset fossil generation on a one

- to

one basis because of the different characteristics of the resources; for instance, most renewable energy generation is variable depending upon the natural resource being utilized and is not dispatchable, limiting its ability to completely replace most coal and natural gas combined cycle generation that operates as baseload electricity generation. The c ommenter s said similarly, the impacts of energy efficiency are typically felt differently throughout the day, depending upon the type of efficiency measure implemented and when during the day and year it has the most impact on electricity consumption.

Com menter s stated using either alternative proposal from Section III.C.1 would require EPA to tailor assumptions for each state to anticipate what percentage of future electricity consumption growth would be met from existing electricity generating 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 ge neration in the state and/or region. The commenter s said the end result would be a significantly more complex 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 commenter s said EPA should stick to the simple methodology used in the draft rule for how to treat building blocks 3 and 4.

Commenter s stated in the October 28 NODA, EPA requests 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 fossil generation in the building block calculation; some EPA stakeholders claim that this approach would more closely align incremental renewable energy and energy efficiency with increased natural gas dispatch under Building Block 2 that replaces existing coal generation. The commenter s said in other words, EPA is requesting comments on approaches that would not just add incremental renewable energy and energy efficiency to the denominator of the state goal

- setting formula, but that would simultaneously offset fossil steam generation and emissions from the denominator of the formula. The commenter s said this proposed approach would reduce emissions in the numerator without adding (or adding only a portion) of the incremental renewable energy or energy efficiency to the denominator. Commenter s oppose d this type of approach to calculating state goals for incremental renewable energy, because new renewable energy sources (and energy efficiency) compete against new generation to accommodate load growth (i.e. incremen tal generation) and belongs only in the denominator of the goal

- setting equation without a corresponding reduction in the emissions from the numerator. The commenter s said if there were emissions associated with new incremental generation from one of the b uilding 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 the Clean Air Act Section 111(b) standards for new sources and would therefore fall outside the calculation methodology for determining a state's emission reduction goal using the best system of emission reduction for existing sources. The commenter s said essentially, incremental renewable energy and energy efficiency offset incremental load grow th and emissions that would otherwise be addressed by new fossil generation plants, whose emissions standards would fall outside the authority of the proposed rule for existing sources. The commenter s said applying this rationale would allow only the incre ased utilization of existing natural gas generation 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.

Commenter s stated EPA should a ssume that incremental 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 measures displace fossil generation at all. The

co mmenter s said EPA solicits comment on approaches to apply generation from building blocks 3 and 4 to reduce fossil generation in the goal calculation; they discuss approaches to displace either historical fossil generation on a pro rata basis or prioritizi ng fossil steam generation and also ask whether incremental RE and EE should first be assumed to displace future growth in fossil generation. The commenter s said if EPA assumes 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 energy sources (i.e., new fossil generation) before displacing any existing generation. The commenter s said an alternative means of determining how RE and EE d isplaces generation is to 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 commenter s 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 commenter s said it is completely unrealistic to assume these measures would preferentially displace coal steam generation; RE generation is inherently intermittent and tends to displace other, more easily dispatchable electricity sources such as NGCC units instead of baseload coal power. The
commenter s said EPA often assumes that NGCC units are the marg inal units on the grid, so it is more likely that incremental RE and EE would displace these units; at the very least, EPA should assume that incremental RE and EE displace fossil generation on a pro rata basis. The
commenter s added if EPA uses any calculations of future 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 commenter s said MISO, the Midcontinent ISO th at 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 EIA's estimates for the MRO East region. The
commenter s said the ISOs and RTOs are in the best position to f orecast future growth, and EPA should rely on them for any growth rates used. The commenter s said this question also highlights the importance of EPA conducting a system

- wide analysis of the impacts of applying all of the building blocks together rather th an the piecemeal analysis they have done.

Commenter s stated EPA seeks comment is how Building Blocks 3 and 4 are treated in setting the state emission goals in the NODA. The commenter s said Building Block 3 involves EPA's treatment and assumptions regardi ng 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
commenter s said in the Proposed Rule, electricity generated by RE is added to a state's baseline (2012) genera tion level; this number is then divided into the state's GHG emissions to produce an emission rate goal, expressed in lbs CO2/MWh. The commenter s said as more RE generation is added to the generation (denominator), with no change to the emissions (numerato r), the effect is to make the emission rate goal more stringent. The commenter s 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; th at reduced consumption (MWh) similarly is added to the denominator, making the emission rate goal more stringent.

Commenter s stated EPA notes that it had received comment from some stakeholders suggesting that EPA should adjust the numerator and denominat or 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 whether EPA should (1) presume that coal

fired generation is displaced fi rst, or (2) use an average emission level based on all fossil generation; the effect of either would be to make both interim and final state emission rate goals substantially more stringent.

Commenter s object ed 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 commenter s said EPA has set unrealistic RE goals; EPA projects an RE growth rate for Mississippi, Louisiana, and Arkansas ba sed on a regional average that ignores the lack of RE potential in these states. The commenter s said in the 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 effecti vely is mandating. The commenter s ha ve been implementing EE programs in some of its states for many years and, contrary to EPA's assumption, load and electric demand continue to484 increase. The commenter s said assuming that the EE programs will reduce existi ng fossil generation is simply wrong; at most, EE will slow the growth in electricity demand over the next decades. The commenter s said as for RE, EPA's projections of RE potential are dramatically overstated. The commenter s state d simply do not have such RE potential; thus, for EPA to presume that hypothetical (but unattainable) RE generation will reduce existing fossil generation would be arbitrary and capricious.

Commenter s stated EPA seeks comment on whether it should presume that emissions from coal

f ired generation should be preferentially used when adjusting the numerator or whether some weighted average of all fossil emissions should be used. The commenter s said EPA should do neither; however, if EPA elects to adjust the numerator, EPA must recogniz e 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 suggests, based on the fact that "because fossil steam generation has higher carbon intensity, it should be replaced before NGCC generation." The commenter s said thus, as RE comes online, the units that will be backed off generally will be legacy oil and gas steam units, peaking combustion turbine units, NGCCs, and then baseload coal units; in some cases, where few peaking and NGCC units are available, load

following coal units may be used to reduce generation.

Commenter s stated EPA's NODA published on October 30, provides another approach to the goal setting calculation that would include accounting for displacement of fossil generation by renewable generation (Block 3) and energy efficiency (Block 4); the NODA (79 Fed. Reg. at 64,552) seeks comment on alternative approaches whereby incremental renewables and energy efficiency would (1) be assumed to replace 2012 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 displace fossil steam generation below 2012 levels first and then replace all fossil
ge neration pro rata. Commenter s believe d it would be inappropriate to adjust the EPA's proposed goal calculation to assume the displacement of fossil generation with energy provided by Blocks 3 and 4. The commenter s 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 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 d ata file provided 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.

Commenter s stated as of 2029, the EPA's goal calculation spreadsheet show s a nationwide total of approximately 313.6 million MWh of incremental RE 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. Commenter s stated the analysis in the EPA's rate

- to

- mass tr anslation 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 commenter s said however, thi s 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 net of the effect of energy efficiency measures. Commenter s stated since the Block 4 calcul ation determines the total, rather than incremental, 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 o f the energy from Blocks 3485 and 4 will be required to serve new load, leaving little or no energy available to displace existing fossil generation. The commenter s said as a result, EPA should retain its treatment of Block 3 and 4 energy, as originally propo sed.

Commenter s stated in the event that EPA nonetheless determines that some or all of the energy from Blocks 3 and 4 should displace fossil generation in the goal

- setting calculation, EPA's spreadsheet analysis is too simplistic to accurately account fo r the interaction between the four blocks used to achieve the CO2 rate goal. The commenter s said it is one thing to simulate re

dispatch from coal and oil/gas steam EGUs to NGCCs in a simple spreadsheet, since these are dispatchable resources which can ope rate at intermediate or baseload duty cycles; however, it is entirely different to include renewables and energy efficiency, which are typically non

dispatchable.

Commenter s stated the alternative approach that the Agency presents in the NODA

- to apply
g eneration from building blocks 3 and 4 to reduce fossil generation below 2012 levels in the goal calculations

- would only serve to exacerbate the infeasibility and inflexibility of the currently proposed performance goals, and should therefore not be inco rporated. The commenter s said while fossil fuel generation is a steady source of base load power, renewable energy generation is intermittent and there are not sufficient EE reduction opportunities to make up for loss of base load power, taking into accoun t the projected increase in electricity demand.

Commenter s stated both proposals [2 options for revising the goal calculation methodology presented in NODA] are unsound and should not be adopted. The commenter s said in reality, the effect that additional g eneration from existing or new NGCC 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 ge neration source. The commenter s said first, although electricity demand growth has been slow in recent years, demand could well increase if state or national economies 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 conservative assumptions about economic growth and other factors leading to increased demand

- predicts an annual increase in demand growth of 1% through 2040, which will require the addition of 351 GW of new electric generating capacity nationwide. The commenter s said 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 electricity; therefore, it is reasonable to expect that the addition of some incremental generation will displace future generation increases from existing sources, rather than reducing existing sources' generation le vels below historic levels; however, in cases where the required 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 b ecause of the interstate nature of the electric grid, the generation that will be dialed back may not be located in state that implemented the increase in NGCC, RE, nuclear, or EE generation or savings).

Commenter s stated second, the ability of any given source of generation to displace generation from another source will depend in large part on the attributes of the incremental generation source and the characteristics of the existing system; thus, for example, incremental resources such as wind and solar power

- as well as some EE measures

- will preferentially displace natural486 gas generation (including generation at simple cycle turbines that are generally excluded from the Proposed Rule). The commenter s said the reason for this is that natural gas turbi nes are uniquely capable of quickly ramping up and down to coordinate with fluctuating generation from intermittent renewables. The commenter s said coal and nuclear generation, on the other hand, are less likely to be displaced by the addition of new non

- d ispatchable 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 well as some geothermal and biomass facilities, because each of these facilities also is capable of operating on a baseload basis. The commenter s said the location and timing of the incremental generation will also affect the kind of generation it displaces, if any; for example, incremental RE or EE that is located in an are a that is mostly served by NGCCs is far more likely to displace that NGCC generation than it is to displace far

away coal fired generation. The commenter s 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 hydroelectric generation rather than NGCC generation.

Comm enter s 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 attempts to quantify o r predict the level of increased demand states will face in the future, or to evaluate whether the implicit assumptions about demand are accurate. The commenter s said similarly, both approaches fail to quantify the likely impact of implementing each partic ular 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 commenter s said EPA's failure to examine the actual impacts of implementing the BSER as p roposed renders this aspect 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 commenter s said if EPA persists in computing state goals base d 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 gene ration and consumption profile of the state). The commenter s said this evaluation must be supported by detailed modeling analyses or other data in support of the agency's conclusions.

Commenter s stated if EPA fails to conduct such an analysis to justify t he achievability of the state goals, EPA should assume that all additions of incremental generation or EE displace future demand in the state; because EPA cannot show with any certainty that increased NGCC, RE, nuclear, or EE generation will necessarily di splace 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 units when adding in generati on from additional NGCC, RE, nuclear, or EE measures in the goal

setting calculation; therefore, EPA should not implement the proposal discussed in the NODA. The commenter s added EPA should revise its initial proposal to conform its approach to building bl ock two with its approach to building blocks three and four; EPA can do so by adding generation and emissions from increases in redispatch to the numerator and denominator without reducing historic generation from coal

- fired units in step two of the goal c omputation method.487 Commenter s stated it would be inappropriate to adjust the EPA's proposed goal calculation to assume the displacement of fossil generation with energy provided by Blocks 3 and 4. The
commenter s said little, if any, of the Block 3 and 4 en ergy would be available to displace fossil 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 dat a file provided 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.

• As of 2029, the EPA's goal calculation spreadsheet shows a nationwide total of approximately 313.6 million MWh of incremental RE 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.

• 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.

• However, this comparison understates the amount of additional genera tion 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 commenter s said since the Block 4 calculation determines the total, rather than incremental, potent ial 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 3 and 4 will be required to serve new load, leaving little or no energy available to displace existing fossil generation. As a result, EPA should retain its treatment of Block 3 and 4 energy as originally proposed.

The commenter s said in the event that EPA nonetheless determines that some or all of the energy from Blocks 3 and 4 should displace fossil generation in the goal

- setting calculation, EPA's spreadsheet analysis is too simplistic to accurately account for the interaction between the four blocks used to achieve the CO2 rate goal; i t 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 renewa bles and energy efficiency, which are typically non

- dispatchable.

Commenter s stated in its original Proposal, EPA determined that states should be able to reduce their carbon intensity by "re

- dispatching" coal and natural gas units in favor of more gas
gen eration and less coal generation; with respect to 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 calculations. The commenter s sa id EPA recently released a Notice of Data Availability that asks whether that displacement should be required. The commenter s oppose d that approach; due to EPA's aggressive assumptions in its building block analysis, the goals are already far more stringen t than necessary or appropriate, and applying a displacement approach to building blocks 3 and 4 would only increase that stringency488 even further. The commenter s said if EPA does decide to require the improvements expected under building blocks 3 and 4 to displace fossil generation, 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 assumption, despite the requirements likely to be impose d under EPA's Proposal.

Commenter s stated in its NODA, EPA acknowledges widespread concern with the goal

- setting calculations from blocks 3 and 4, and seeks comment on whether it should revise its computations. The commenter s said under EPA's original prop osal, addition of one MWh of natural gas generation would "back off" a MWh of coal 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 o ff" generation from fossil resources. The commenter s said EPA is requesting comment on whether it should change the way it calculates state goals such that EPA would "back off" additional fossil generation as additional MWh of new renewable energy and ener gy efficiency are added to the system; such a change will have the effect of making all state goals more stringent than they already are, and will exacerbate the inherent unfairness of the goal computations.

Commenter s stated EPA should adopt the alternati ve (technical and economic) renewable energy Building Block 3 approach included in a June 2nd Technical 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
commenter s said the regionalized NODA technical and economic approach is vastly superior to the other proposed methods for calculating renewable energy's contribution for state targets'; howeve r, EPA should make improvements to this approach 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 begi n with current, real

- world data on the cost of renewable energy technologies;

3. For projecting changes in the economics and performance of renewable energy through the year 2030, EPA should rely on the detailed and thoroughly peer

- reviewed cost and perfo rmance projections developed through the Department 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 renewable curtailment that could occur at extremely high renewable energy penetrations;

5. Changes to the generation mix and other power system changes that are expected to occur betwe en now and 2030, including those that are triggered by the provisions of489 111(d) itself, should also be included in the analysis of the economics of higher renewable penetrations; and,

6. Because many planned transmission lines will have been placed in ser vice by 2020, they should also be included in EPA's analysis.

Commenter s stated EPA's NODA provides another approach to the goal setting calculation that would further include accounting for displacement of fossil generation by renewable energy ("RE") gene ration (Building Block 3) and energy efficiency ("EE") (Building Block 4). The
commenter s said the NODA seeks comment on alternative approaches whereby incremental renewables and energy efficiency would (1) be assumed to displace 2012 fossil steam generati on 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 displace fossil steam generation below 2012 levels first and then utilize any remaining RE and EE to displace NGCC generation. The
commenter s believe d it would be inappropriate to adjust the EPA's proposed goal calculation to assume the displacement of fossil fuel generation with energy provided by Building Blocks 3 and 4. The commenter s said little, if any, of the Bui lding 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 calculat ion spreadsheet and the data file provided 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 spreadshe et shows a nationwide total of approximately 313.6 million MWh of incremental RE generation and 380.6 million MWh of EE avoided generation, for a total of 694.2 million MWh of energy from Building Blocks 3 and 4. The commenter s said 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 Building Blocks 3 and 4; howev er, 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 net of the effect of energy efficiency measures. The commenter s said since the Bui lding Block 4 calculation determines the total, rather than incremental, potential for energy efficiency, existing energy efficiency measures must be removed from the AEO forecast, resulting in higher load growth than assumed by EPA; as a result, it is lik ely 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 available to displace existing fossil fuel generation.

Commenters stated EPA should revise its target

- setting formula to correct ly account for emissions reductions from energy efficiency resources. The commenters said EPA failed to properly account for energy efficiency in the target

- setting formula; rather than backing out the equivalent level of existing fossil

- fired generation t hat 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 informat ion released in its NODA to capture the emissions

reduction benefits of efficiency programs.490 Commenter s stated EPA failed to properly account for energy efficiency and renewable energy resources in the goal

- setting formula; rather than backing out the equi valent level of existing fossil

- fired generation that these resources would displace, EPA simply added the generation from these resources into the denominator of the lbs/MWh emission rate. The commenter s said EPA should adopt the methodology set forth in the NODA to capture the emission

- reduction benefits of these resources fully.

Commenter s stated in the Proposed Rule EPA calculates a reduction in states' overall CO2 emission rates premised on increased renewable energy usage and energy efficiency measure s; as part of this calculation, EPA maintained fossil fuel generation levels constant at 2012 levels. The
commenter s said in the NODA EPA states that certain commentators have argued that EPA should have assumed a corresponding reduction in fossil fuel gen eration similar to the methodology used in Building Block 2, and requests comments on whether this alternative methodology should be used in calculating state requirements in the final rule. The commenter s said this methodology would result in significantl y more stringent emission limits for states; this in tum would necessitate additional premature retirements 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 with variable energy resources. The
commenter s said to date, EPA has not undertaken any technical or economic analysis of the impact of these more stringent emission requirements; accordingly, EPA has not in any s ense "adequately demonstrated" that these new limits, and the alternative Building Block 3 and 4 methodologies on which they are based, represent the "best system of emission reduction" as required under the Act. The commenter s said therefore, EPA is precl uded 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 it fails to reveal portions of the technical basis for a proposed rule in time to allow for meaningful commentary.") (quoting Connecticut Light and Power Compan y v. Nuclear Regulatory Commission, 673 F.2d 525, 530 (D.C. Cir. 1982).

Commenters provided comments that are somewhat outside the scope of this section. The
commenters stated they think that the goal setting formula should correctly account for emission reductions.

C ommenters commented that the EPA failed to properly account for energy efficiency and renewable energy resources in the goal

- setting formula. The commenters explained that, rather than backing out the equivalent level of existing fossil

- fired generation that these resources would displace, the EPA simply added the MWh of generation or energy savings from these resources into the denominator of the lbs/MWh emissions rate. The commenters stated that the EPA should adopt the methodology in line wi th the information released in its NODA to fully capture the emissions

- reduction benefits of these resources.491 Commenters stated that in the NODA, EPA proposes to adjust state goals to incorporate reductions in fossil generation as a result of increased ut ilization 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 EPA thus proposes two ways to calculate a generation shift resulting fro m 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 requests comment on which approach better r eflects the BSER. Commenters said that in their view, neither approach reflects the BSER and EPA should not adopt either one. Commenters said that BSER is a system of emissions reduction

- it is not a system of generating

- source elimination, nor is it a sy stem 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 in the final rule. Commenters said that EPA explains that the change in methodology propos ed 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 effi ciency are equivalent to fossil generation. Commenters said in reality, incremental renewable energy and energy efficiency cannot meet baseload requirements due to the variable nature of these resources. Commenters said the best system of emission reductio n is most appropriately based on a system that augments

- not replaces

- historical fossil generation. Commenters said this allows states to achieve meaningful emissions reductions by prioritizing operation of less carbon

- intensive resources while using ba seload fossil generation to backstop functionality and reliability of the national 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 in generation under building blocks 2 and under blocks 3 and 4. Commenters sa id 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 system. Commenters said in contrast, as fuel is re

dispatch ed from coal

- fired EGUs to Natural Gas Combined Cycle EGUs, generation is assumed to be offset. Commenters said that Minnesota's Clean 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 offset first from those sources with the highest carbon intensity rather than on a pro rata basis. Commenters said only after those sources have been completely offset with renewable energy and energy efficiency would offsets move to less intense sources such as gas t urbines.

Commenters stated that these amendments to the way EPA calculates goals under building blocks 3 and 4 would result in more stringent targets, which, as discussed above, are necessary to achieve more meaningful emissions reductions.492 Commenters argu ed that regarding EPA's NODA proposal 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 and calculate the resulting state goal under the CPP did not assume that all renewable energy and energy efficiency displaced fossil

- fueled generation. Commenters said instead EPA simply added all renewable energy and energy efficiency to the denominator, regardless of whether it displaced fossil source s, 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 towards compliance, the state goals must be revised accordingly.

Comment 10: NODA

- 2nd App roach Concerns

Response 10: The EPA is adopting the alternative approach from the proposal, modified as described in the NODA. See sec tions V.A., V.D., V.E, and VI of the final rule preamble of the CPP and the CO2 Emission Performance Rate and Goal Comput ation TSD for CPP Final Rule supporting the final CPP for more information.

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

Commenter s stated EPA notes in the NODA that some stakeholders have suggested that EPA should revise the goal

- setting equation to reflect a consistent approach to accounting for incremental generation from existing NGCC, incremental renewable generation, and energy efficiency savings; specifically, some stakeholders have suggested that state goals should reflect the potential for renewable and energy efficiency to displace existing fossil steam generation. The commenter s said in their discussion of the alternative 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 generation below 2012 levels and then replace gas turbine generation if any incremental renewable and energy efficiency remain.

Commenter s 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

- s ide energy efficiency measures are implemented. The commenter s said renewable generation and energy efficiency may displace fossil MWhs or other zero

- carbon sources. Therefore, the commenter s would oppose altering the building block formula to first replac e fossil steam generation below 2012 levels and then replace gas turbine generation if any incremental renewable and energy efficiency remain. The commenter s said regardless of the formula used in the final rule, it is essential that EPA ensure that each s tate 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 consider limits to the amount of renewable generation and energy efficiency relative to the amounts in the proposed rule to account for the increased stringency. The commenter s said under the proposed or alternative goal

- setting methodology, we encourage EPA to consider reliability impacts given the interactions among the building blocks.493 Commenter s stated the second approach suggested in the NODA would set a minimum level of

re

- dispatch for states with little or no NGCC capacity, regardless of the currently available NGCC capacity in each state. The commenter s said although EPA asks for comment on a wide range from zero to 55 percent, the NODA specifically identifies a level of 12 percent, the value of the lowest quartile from EPA's prior analy sis on how much each state's generation would shift from higher

- emitting generation to lower

- emitting generation under the proposed Building Block 2 methodology. The commenter s generally support ed the concept of applying a minimum level of re

- dispatch; how ever, the commenter s ha ve many issues related to EPA's assumed dispatch to natural gas potential under BSER Building Block 2. The commenter s said for those reasons, if EPA were to set a minimum dispatch level across all states for purposes of mitigating co ncerns regarding the disparity of dispatch requirements across different states, this approach should not be additive to the amount of dispatch EPA has already assumed in states above this minimum threshold. The commenter s said to the extent EPA adopts thi s approach, the
commenter s request ed that EPA reduce the coal

- to

- gas shift in state goals for states that currently have higher amounts of NGCC capacity and set more moderate dispatch goals in those states so that the total nationwide amount of dispatch re quired 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 the proposal, modified as described in t he 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 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:

Comment er s stated EPA has asked for comments on an alternative approach to setting renewable energy targets that is based on each state's renewable energy technical potential and realistic development rates and that takes into consideration market and economic fa ctors. The
commenter s said the alternate method for Building Block 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 study, mu ltiplied by a benchmark development rate percentage equal to the average development 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 bu ilt with a defined savings or avoided cost of 530/MWh; the target is then set as the lesser of the two. The commenter s said EPA's alternate proposed approach addresses some of the key flaws in the proposed approach, at least in concept. The commenter s supp ort ed a state

- by

- state assessment of RE technical and market potential.

Commenter s 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 commenter s said just as EPA should evaluate the scope and net effect of a state's RPS, it should also acknowledge that, in a state that has already taken494 steps to develop renewable energy, it is a mistake to bel ieve that future increases in the renewable portion of an energy portfolio will occur along a linear, each

- step

- is

- the

- same

- as

- the

last, path. The commenter s said because of the variable, weather

- dependent, and unpredictable generation patterns of wind and solar facilities (the most common and scalable renewable technologies), the growth of renewables in a portfolio is accompanied by an ever

- intensifying set of operational, dispatch, and transmission challenges; whereas one or two wind farms in a traditiona l fossil

- or hydro

- based portfolio may be incorporated into that portfolio with relative ease, a 20%, 30%, or 40% level of renewables in a portfolio brings new operational demands and sizeable investments in ancillary support, such as for energy imbalance and regulation and frequency response. The commenter s 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 reco gnizes previous renewable development on a state

by

- 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 in the NODA. See sect ions 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:

Commenter s stated EPA released a Notice of Data Availability (NODA) on October 27, 2014 in which 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 existing power plants, and whether and how this should be incorporated into the numeric calculation of state targets. The
commenter s believe d it is re asonable for the EPA to assume that a portion of the generation provided by incremental energy efficiency and renewable 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 growth (i.e., growth in the demand for energy services), and a portion will be used to displace historical generation from existing power plants.

Commenter s suggest ed a methodology where it is first assumed th at incremental energy efficiency and renewable generation offsets new fossil generation, with any remainder displacing historical generation from existing power plants. The commenter s support ed the option presented in Section C(a) of the NODA where remaini ng 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 decisions about displaced generation are made for both ec onomic and environmental reasons.

Commenter s stated EPA should ensure the calculation of state targets fully reflects the ability of renewable energy and energy efficiency to reduce carbon pollution. The commenter s said while the EPA proposal correctly fin ds that efficiency and renewable energy directly reduce fossil495 generation, the formula used to set state targets does not reflect this reality. The commenter s said when EPA adds new renewables generation and efficiency savings to the formula it does not

re duce tons of carbon pollution from fossil generation; this minimizes the impact of renewables and efficiency on emissions and leads to weaker emissions goals, particularly in the later years of the plan. The commenter s said altering the formula would deliver better emissions reductions and create more incentives for investment in sustainable energy technologies. The
commenter s note d 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 commenter s hope d that the revised approach will be adopted in the final rule. The commenter s believe d that these improvements to the Clean Power Plan will strengthen the plan and deliver better lon ger term results to the economy. The commenter s said as evidenced 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, well

paying jobs for Americans. The commenter s said with better incentives for renewable energy and energy efficiency as a compliance pathway, the Clean Power Plan will help ensure U.S. leadership in the growing dollar 250 bil lion global clean energy market.

Comment 13: Oppose alternative RE approach, support NODA methodology

Response 13: 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 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:

Commenter s stated EPA should not use the alternative method for calculating building block #3 that it is outlined in the Alternative RE Approach Technical Support Document (TSD). The
commenter s said the alternative approach, which relies on estimating building block #3 based on the technical and market potential for renewable electricity in each state, is flawed because it does not take into consideration transmission and grid balancing constraints. The commenter s said many regions of the country with significant tec hnical potential for renewable energy generation lack the necessary transmission capacity necessary to deliver the renewable electricity generation to areas of significant electric load; as a result, EPA's alternative approach overestimates the economic po tential for developing more remote areas of significant renewable energy potential. The commenter s said under the alternative approach, Montana would have a goal of generating eight times as much renewable electricity 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 impractical, both technologically and economically, especially if EPA decides to require renewable electricity to be consumed in the state in order to demonstrate compliance. The commenter s said given that a large percentage of Montana's electricity generation and consumption comes from hydroelectricity, EPA's alternative renewable electricity goal would actually exceed the perc entage of the state's retail electricity consumption that is generated from fossil fuels. The commenter s said if EPA is to use technical and market potential to estimate a state's renewable electricity generation potential, it should use a496 regionalized app roach, like the one described in the October 28th Notice of Data Availability (NODA); however, in

- state electricity demand and out

- of

- state transmission capacity will still need to be factored into a regionalized technical and market potential target in or der 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 the 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:

Commenter s recommended EPA should allow states to credit end use efficiency measures that reduce demand on the carbon

- free hydroelectric power system and subsequently offset fossil fuel generated power as emission reduction measures in a state compliance plan. Comme nter s stated energy efficiency reduces the need to generate electricity. Commenter s stated economic dispatch of generating resources generally means that resources 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. Commenter s stated even when energy efficiency is acquired in an Oregon utility territory served by the carbon emission

- free FCRPS, that reduction in demand will re duce output from fossil

- fuel generation throughout region. Commenter s stated EPA should allow Oregon to credit these energy efficiency investments in its compliance plan.

Commenter s 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 efficiency measures result in reduce emi ssions from fossil generation within the entire WECC region. Commenter s 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 investments on the hydroelectric power system regardless of whether the emission reductio ns are directly attributable to in

- state fossil

- fuel generation resources. Commenter s stated this approach allows for continued recognition of energy efficiency measures' influence on the carbon intensity resource mix within the WECC region and signals tha t energy efficiency, investments that affect demand on the hydroelectric power system should continue in Oregon.

Commenter s stated that the October 30, 2014 NODA describes comments EPA has received that propose calculating building blocks three and four b y assuming incremental renewable energy and energy efficiency would displace existing levels of fossil generation rather than growth in demand for fossil generation. Commenter s did not support this approach. Commenter s stated this alternative method would result in rate targets with unrealistic compliance expectations, for example, a state could have a zero or even a negative rate

- based target, and yet serve load with a substantial amount of fossil

- fuel generation. Commenter s stated the approach to calculat ing497 building blocks three and four in EPA's June 2, 2014 proposal of the Clean Power Plan appropriately accounts for incremental RE and energy efficiency.

Commenter s stated EPA's proposed numeric approach to calculating state goals should not assume tha t incremental RE and EE replace fossil generation below 2012 levels because this approach ignores the role of base load generation in ensuring the reliable operation of the power system. Commenter s stated EPA should not adopt either approach, pro rata repl acement or prioritization replacement, to change the proposed numeric formula when calculating final state goals. Commenter s stated both approaches overestimate the potential emission reductions from RE and EE because they incorrectly assume that RE and EE can replace base load fossil generation. Commenter s stated that at this time, neither 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 g rid services that are fundamental to ensuring the reliable delivery of electricity to consumers.

Commenter s stated EPA cannot assume that renewable generation and energy efficiency can replace all fossil generation because this will prevent the reliable operation of the interconnected power system. Commenter s stated the two revised approaches for calculating the state goals forwarded in the NODA are predicated on the incorrect assumption that all historic fossil generation could be replaced by renewable generation and decreased consumption. While not discussed explicitly in the NODA, commenter s indicated 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 or even lower, meaning that these states would have to cease all operation of existing base load fossil generation. Commenter s stated neither EPA nor any stakeholder can demonstrate that, at present, the interconnected power system can be operated rel iably without these critical base load resources. Moreover, commenter s noted that renewable wind and solar resources are variable in nature and need to be backed

- up by dispatchable resources when they are not operating. Commenter s stated EPA does not addr ess how such back

- up can be accomplished without reliance on at least some fossil generation.

Commenter s stated fossil

- based base load units play a critical role in ensuring the reliable operation of the bulk power system and cannot be replaced on a MW f or MW basis by either renewable generation or EE measures. Commenter s stated RE and EE cannot provide key services provided by base load resources that are essential for maintaining reliability, including frequency response, voltage support, load and reso urce balancing and inertia. See generally ERS Report; see also Initial Reliability Review at 13.

Commenter s 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 for reliability. Commenter s stated NERC identified two categories of reliability implications for the proposed state

- specific emission rate goals: (1) direct impacts to reso urce 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 generation, integrating new technologies and imposin g greater uncertainty in demand forecasts. See I d. Commenter s stated EPA has not addressed how the alternative approaches to calculating the state goals are consistent with the reliable operation of the interconnected power system. Commenter s indicated th e potential reductions achievable by Building Blocks 3 and 4 cannot be measured in a vacuum. Commenter s stated EPA's approach to calculating the state goals must consider the potential impact the resulting goals would have on the interconnected power syste m.

Commenter s stated, for example, while EE provides benefits to the grid, the services EE provides are different and have very different performance parameters. Commenter s stated EE cannot provide reliable operation services and, therefore, are not a p erfect substitute for "steel in the ground" generation resources. Commenter s noted PJM has attempted to address performance limitations inherent in demand response (DR) products by setting limits on the amount of DR procured in its forward capacity market (see PJM Interconnection, 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 tha t may challenge ongoing reliable system operations. Commenter s stated the impacts of DR and EE modeling practices and assumptions on reliability planning studies are still evolving, but it is widely recognized that they cannot be treated as direct replacem ent for generation resources.

Commenter s stated 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 system could ope rate without fossil

- based base load resources. Commenter s stated EPA cannot use a numeric formula that creates state goals that are inherently at odds with the reliable operation of the interconnected power system.

Commenter s noted that with respect to whether EE displaces coal vs. natural gas, nuclear or renewable energy generation, EPA seeks comment on how to account for the fact that EE programs may displace emissions from non

- affected EGUs such as nuclear, gas or renewable units. Commenter s stated t hat implementation of effective EE programs that actually reduce demand for electricity results in a reduction of whatever generation provides their power. Commenter s stated that this means EE programs indiscriminately displace generation of any type, incl uding EPA's preferred non

- CO2 emitting generation. Commenter s stated as we mentioned earlier, EPA seems to ignore that impact when setting the state goals.

Commenter s stated that EPA incorrectly assumes savings from energy efficiency programs displace fos sil generation and CO2 emissions and, rather, EPA would assess the impact of efficiency programs through reduction in electricity sales and estimate the impact of efficiency programs at the statewide

- level, rather than at the plant

- level because it is impo ssible to determine whether a particular generator's electricity sales were reduced due to energy efficiency. Commenter s noted that EPA cannot assess whether the megawatts from energy efficiency displace fossil generation or renewable generation. Consequen tly, c ommenter s stated that it is uncertain whether energy efficiency actually reduces CO2 emissions

- which is the basis for including efficiency a best system of emission reduction measure in the proposed rule.499 Commenter s noted the state goal setting for mula currently assumes a constant level of generation from fossil

- fuel sources even as incremental renewable energy and energy efficiency is added to the system, but in contrast as fuel is re

- dispatched from coal

- fired EGUs to Natural Gas Combined Cycle EG Us, generation is assumed to be offset. Commenter s agreed that EPA must offset fossil fuel generation as incremental renewable energy and energy efficiency added to the system to accurately reflect the reality of what will happen as the CPP is implemented. Commenter s believed that generation should be presumed 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 energy effici ency would offsets move to less intense sources such as gas turbines.

Comment 15: Adjust the goal

- setting formula for calculating building block three of the BSER to reflect the reduced utilization of affected fossil fuel

- fired units through displacement by renewable energy; make BB2 and BB3 consistent.

Response 15: The EPA is adopting the alternative approach from the 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 Performa nce 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:

Commenter s stated when incorporating increased utilization of existing natur al gas combined cycle (NGCC) facilities into building block 2, in the 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 commenter s said in contrast, for building block 3 related to renewable energy, despite the fact that adding renewable 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 ge neration emissions rate numbers in the numerator, which has the effect of artificially weakening the proposed emission performance standards. The commenter s said as discussed in the NODA, and consistent with EPA's approach in block two, in calculating buil ding block three of the BSER, emissions and MWhs 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

- c arbon generation.

Commenter s encourage d EPA to review the numeric formula for calculating each state's rate

based goal to ensure consistency in the application of BSER for building block 2 compared with building blocks 3 and 4. The commenter s said this app roach is identified in the Notice of Data Availability and would better reflect likely reductions from fossil steam generation than the proposed approach. The commenter s said modifying the rate

- based calculation in this way would also provide consistency w ith the treatment of building blocks 2, 3 and 4 as proposed by EPA in the Translation of the State

- Specific Rate

- Based CO2 Goals to Mass

- Based Equivalents technical support document.500 Commenter s stated in the NODA, EPA noted that its original proposal treat ed renewable energy resources (BB3) differently from redispatch to natural gas generators (BB2) when building the target. The commenter s said as the NODA suggests, renewable energy actually operates to reduce dispatch from other generators, just as shiftin g to gas generators would; therefore, the two building blocks should be calculated in the same way

- by reducing tons of carbon dioxide from the numerator, not only adding megawatt

- hours to the denominator.

Commenter s stated when incorporating increased utilization of existing natural gas combined cycle (NGCC) facilities into building block 2, in the 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, for building block 3 related to renewable energy, despite the fact that adding renewable 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 numbers in the numerator, which has the effect of artificially weakening the proposed emission performance standards. The commenter s said as discussed in the NODA, and consistent with EPA's approach in block two, in calcula ting building block three of the BSER, emissions and MWhs 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.

Commenter s stated when incorporating increased utilization of existing natural gas combined cycle (NGCC) facilities into building block 2, in the 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, for building block 3 related to renewable energy, despite the fact that adding renewable energy to the grid also backs down fossil units, EPA proposed only addi ng the MWhs of renewable energy into the denominator and not changing the fossil generation emissions rate numbers in the numerator, which has the effect of artificially weakening the proposed emission performance standards. The commenter s said as discusse d in the NODA, and consistent with EPA's approach in block two, in calculating building block three of the BSER, emissions and MWhs 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.

Commenter s stated the formula the EPA developed for calculating the adjusted emissions rate is inconsistent in its treatment of zero

- carbon generating sour ces and does not adequately account for expected emissions reductions from developing those resources. The commenter s recommend ed that the EPA improve the consistency in the emissions rate formula by treating Building Blocks 3 and 4 similar to Building Blo ck 2.

Commenter s stated the EPA also requested comment in the NODA on whether Building Blocks 3 and 4 should be treated in the same manner as natural gas fuel switching in Building Block 2 by counting the emission reductions for renewables, nuclear, and e fficiency in the numerator of the emission rate formula rather than just the generation in the denominator. The
commenter s agree d with this approach as these technologies are clearly reducing CO2 by displacing fossil generation and it's a more consistent a nd equitable approach with how natural gas fuel switching is treated; however, only the CO2 reductions from new and incremental renewables (including hydro), nuclear and efficiency should be counted, as the CO2 reductions501 from existing renewables (includin g hydro),nuclear and efficiency are already embedded in the baseline emissions and generation mix. The commenter s believe d that the incremental generation from zero carbon options should be assumed to displace fossil fuels (and the associated CO2 emissions ) on a pro

- rata basis, which is a better representation 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 the 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 Computation TSD for CPP Final Rule supporting the final CPP for more information.

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

Commenter s stated contrary to the fundamental electric 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 commenter s said for some states, the result is that strict application of building blocks 3 and 4 w ould require the development of significantly greater amounts of energy than what is projected to be needed to serve load in that state; as a consequence, this surplus energy would need to be exported to other states where the energy could be consumed. The commenter s said even though EPA proposes to allow renewable energy to be credited from out of state 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 utilize building blocks 3 and 4 as a way of reducing the state's emission rate. The commenter s said even if Wyoming were to aggressively pursue new renewable development that it may claim for compliance purposes, the inst ate demand would not be sufficient to consume this incremental 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 BSER formulation is s imply not available for Wyoming or similarly situated states. Commenter s stated EPA has recognized this issue in the NODA and proposes two different approaches for revising the state goal

- setting formula to address this concern; however, EPA's options do n ot effectively address the load and resource balance requirement issues. The commenter s 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 generati on with renewable and 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 influence the energy displaced by additional renewables and energy efficiency. The commenter s said to develop a realistic and achievable emissions reduction goal that incorporates energy displaced by additional renewables and energy efficiency, EPA would need to consider the generation resources that would actually be displaced as a result of additional deployment of renewables and energy efficiency, as may be determined via utility resource planning and system operations modeling. The commenter s said this would necessarily include the assessment of resources across state borders. The commenter s502 said the actual result of EPA's proposed additional layer of specificity in calculating the goal (assuming, unrealistically, that energy will be displaced from a limited type of resources located inside the borders of a parti cular state) would make the state goals less achievable; it would also severely limit the compliance flexibility that EPA has stated it intends to provide. Commenter s stated to address the issues related to the mismatch between resources and load, EPA shou ld not develop more prescriptive and aggressive emission reduction goals, but rather should allow states and operators the flexibility, for compliance purposes, to credit renewables and energy efficiency across their system(s) via resource planning and com pliance 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 the proposal, mod ified as described in the NODA. See sect ions 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:

Commenter s 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 commenter s said EPA improperly assumes that RE and EE directly replaces in

- state "affected" fossil fuel

- fired generation. The commenter s are seriously concerned about the potential displacement of fossil generation with the RE and EE components of the BSER evaluation. The commenter s said Building Block 2 in the CPP completely eliminates the small portion of fossil fuel

- fired steam generation within the state of New Jersey; the redispatch of existing NGCC capacity only brings the state average NGCC capacity factor to approximately 44%. The commenter s said the displacement of any additional fossil fuel

- fired generation by the RE and EE components would decrease the operation of the state's NGCC existing capacity and, dependent on the RE methodology selected by EPA, this decrease could be significant.

Commenter s stated the RPS methodology results in the 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

- o f

- 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 commenter s said wind is more likely to be located in the Midwest, Central and South Ce ntral regions

- areas with significant amounts of coal

- fired generation. The commenter s said due to its production characteristics, wind is more likely to displace base load and load following plants; the marginal plants during off

- peak hours are most vuln erable to being displaced by wind

- in the Midwest this would be mostly coal, but may also impact nuclear and NGCCs during some hours. The
commenter s said in general wind is less reliable than solar, and ramping (variations across hours) can be significant

- causing a need for spinning reserves / fast response resources to maintain grid reliability.503 Commenter s stated the regional potential methodology outlined in the NODA results in the displacement of approximately 5,559,000 MWhrs in 2030. The commenter s said a large portion of the RE generation to satisfy this target would be from out

- of

- state sources (including wind capacity); this causes the displacement of fossil generation to occur in another state.

Commenter s stated the in

- state potential methodology (Alternative) results in the displacement of 1,372,000 MWhrs in 2030; this consists solely of solar resources. The commenter s said solar has a different production profile than onshore wind (PJM summer capacity va lue of 38%); solar production is highest during summer and shoulder months and least during winter months. The
commenter s said fixed tilt solar photovoltaic ("PV"), if optimized for annual production (facing south), will peak at noon; if optimized for peak demand (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 commenter s said solar is more likel y to be located in eastern PJM because eastern PJM states have the largest solar mandates / subsidies, with New Jersey, Maryland, 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 commenter s said due to its production characteristics, solar would impact both load following and peaking plants

- mostly gas

- fired generation. EPA's assumption that RE generation could direct ly impact "affected" fossil unit generation is incorrect.

Commenter s stated regarding the displacement of fossil fuel

- fired generation through EE programs, EPA's assumption is flawed in two ways; first, similar to RE, EPA cannot assume that EE programs wi ll directly displace "affected" fossil unit generation under the CPP. The
commenter s said EE programs could potentially displace generation from simple cycle combustion turbines or new plants not covered by the rule, especially during the summer season;

se cond, for those states that are net importers of electricity, the displaced generation may come from out

- of

- state sources. The commenter s said under EPA's BSER analysis, implementation of Building Block 4 would result in an additional displacement of 5,889 ,520 MWhrs in New Jersey.

Commenter s stated in New Jersey, implementation of BSER along with displacement through RE and EE could lead to absurd results; in total, the displacement of NGCC generation in New Jersey could range from a high of 14,756,271 MWh rs to 5,980,805 MWhrs. The commenter s 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 displacement through RE and EE could result in up to a 65% reduction in EPA's proj ected generation from existing NGCC generation in New Jersey. The commenter s said a reduction of this magnitude could result in the retirement of the majority of existing NGCC EGUs in New Jersey because it can be assumed that NGCC CHP plants would continue to operate. The commenter s said this raises significant concerns regarding reliability because all of the baseload and load following fossil fuel

- fired EGUs could be eliminated in the state of New Jersey. The commenter s said EEI describes the critical rol e fossil

based 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 response, voltage support, load and resource balancing and inertia."504 Commenter s stated under the NODA approach, it is assumed new sources contribute an amount of incremental generation that is equivalent to projected demand growth; note that it is assumed under both approac hes that incremental resources under Building Blocks 3 and 4 replace historical generation from affected fossil fuel

- fired sources so those incremental resources are unavailable to meet new demand. The commenter s said to calculate future demand, U.S. EPA

u ses the EIA 2013 Annual Energy Outlook (AEO2013) growth rates based on regional demand projections. The commenter s said U.S. EPA calculates projected sales for future years by multiplying 2012 historical sales by the regional annual growth rate for that ye ar. The
commenter s said projected sales are then converted to incremental generation, giving consideration to under construction NGCC and transmission losses. The commenter s said this generation is then added to the generation level for existing affected s ources quantified. While the commenter s believe d that accounting for demand growth will be a critical factor in developing mass

- based compliance approaches, this co

- proposed approach is flawed. The
commenter s d id not agree with the application of regional average growth rates. The commenter s said U.S. EPA must allow states the flexibility to determine their individual state's potential growth; furthermore, U.S. EPA must include the flexibility for states to alter their goals if circumstances warrant.

Commen ter s stated that while EPA considers the displacement 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 effici ency per Building Blocks 3 and 4. The commenter s stated that in practice, these measures, which have zero fuel costs, would indeed displace fossil generation, which does have fuel costs. The
commenter s noted EPA has requested comment on this issue in its r ecent 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 generation.

Response 18: The EPA is adopting the alternative approach from the proposal, modified as des cribed in the NODA. See sect ions 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:

Commenter s stated in the NODA, EPA discusses some stakeholders' desire to have EPA set state goals by requiring 100% of the EE and RE building blocks to replace existing fossil generation; in the NODA, EP A acknowledges that this methodology will be significantly more stringent and less cost effective than the original proposal.

Commenter s stated experience does not demonstrate that 100% of EE and RE measures are displacing existing fossil generation. Sign ificantly, Connecticut is a net exporter of electricity in a deregulated regional power market; accordingly, market forces and energy demand outside of Connecticut determine the amount of generation

- including fossil generation

- that operates in505 Connecti cut. The commenter s said in 2012, approximately 17% of Connecticut's generation served load outside the state's borders.

Commenter s stated conceivably, Connecticut could reduce its in

- state demand to zero but its generation fleet could still run to serve load in other states. The commenter s 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 contemplated in the rule. The commenter s said the two method s proposed to establish RE targets are based upon state potential and regional RPS requirements. The commenter s said proposed EE goals were developed based on the level of efficiency achieved by leading states; requiring all states to implement RE and EE t o 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
commenter s said for these reasons, Connecticut believes 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 discussed in the NODA.

Commenter s added to the extent that EPA includes a requir ement 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 consider factors such as growth in energy demand and net imports and exports.

Commenter s added Connecticut objects to the assumption 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 demonst rated.

Comment 19: NODA; It is unlikely that Building Blocks 3 and 4 will meaningfully displace existing fossil fuel

- fired generation.

Response 19: The EPA is adopting the alternative approach from the proposal, modified as described in the NODA. See se ct ions 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 comme nts under this comment:

Commenter s stated EPA's NODA provides another approach to the goal setting calculation that would further include accounting for displacement of fossil generation by renewable energy ("RE") generation (Building Block 3) and energy e fficiency ("EE") (Building Block 4). The
commenter s said the NODA seeks comment on alternative approaches whereby incremental renewables and energy efficiency would (1) be assumed 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 displace fossil steam generation below 2012 levels first and then utilize any remaining RE and EE to displace NGCC generation.506 Commenter s believe d it wou ld be inappropriate to adjust the EPA's proposed goal calculation to assume the displacement of fossil fuel generation with energy provided by Building Blocks 3 and 4; little, if any, of the Building Block 3 and 4 energy would be available to displace foss il 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 provided 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. The commenter s said as of 2029, the EPA's goal calculation spreadsheet shows a nationwide total of approximately 313.6 million MWh of incremental RE generation and 380.6 million MWh of EE avoided generation, for a total of 694.2 million MWh of energy from Building Blocks 3 and 4. The commenter s said 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 perc ent 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 net of t he effect of energy efficiency measures. The commenter s said since the Building Block 4 calculation determines the total, rather than incremental, potential for energy efficiency, existing energy efficiency measures must be removed from the AEO forecast, r esulting in higher load growth than assumed by EPA. The commenter s 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 available to displace existing fos sil fuel generation.

Comment 20: NODA

- regions approach

Response 20: The EPA is adopting the alternative approach from the 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 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:

Commenter s stated EPA attempts to address some of these 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 commenter s said one approach would be to apply there

- dispatch from coal to NGCC on a regional basis rather than a state

- by

- state basis. The commenter s said EPA asks for comment on the appropriate regional framework and how to allocate the regional goals to individual state; (EPA is a lso soliciting comment on 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 commenter s said these regional co ncepts 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 commenter s said these concepts are complicated and will require more than the mere 45 days EPA has allotted for response to the NODA. The commenter s 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 on these alter native regional approaches (and other changes EPA has discussed in the NODA) through an ANPR or extend the conm1ent period on the current proposal to allow additional time to respond to the NODA.

Commenter s stated the NODA requests comment on two variation s to EPA's proposed approach to quantifying the level of reductions that are achievable from building block two and the RE component of building block three, in which EPA would calculate the amount of additional NGCC or RE generation on a regional basis an d 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 expected emission reductions from these building blocks among the state s in the region. The commenter s 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 commenter s suggest ed that the EPA provide additional detai ls about these proposals, and solicit additional comment, before selecting these alternatives in the final rule.

Commenter s were unable to take a position in favor or against EPA's alternative proposal raised in Section III.B.2 of the October NODA regardin g a regionalized approach to setting state renewable energy targets without first understanding 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 instead of renewable electricity generation, then each states' share of the regional renewable energy target should be based on retail sales in the state rather than generation. The commenter s said 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 electricity expor ting states with more aggressive renewable energy targets than renewable electricity importing states.

Commenter s stated if EPA opts to use the regionalized renewable energy target methodology outlined in Section III.B.2 of the October NODA, EPA should fa vor the creation of larger regions, such as North American Electric Reliability Corporation (NERC) regions, for setting regional renewable energy targets to better capture the significant amounts of electricity, and in particular renewable electricity, tha t travel long distances from their generating source to their eventual purchaser and consumer. The commenter s said if selected, the regionalized approach to setting state renewable electricity targets should be applied to all renewable electricity generati on, both existing and new, in order to reflect that purchasers of existing renewable energy generation are often not in the same state that the electricity is generated in and that this is likely to continue to be the case going forward with future renewab le energy developments.

Commenter s stated EPA should not incorporate existing hydropower generation into the alternative regionalized renewable electricity target methodology outlined in Section III.B.2 of the October NODA; the inclusion of existing hydro power will only add further complexity or variability to the renewable energy targets, particularly in any smaller geographic regions where good and bad hydro years could create boom and bust renewable electricity years for the entire region.508 Commenter s we re concerned about the lack of detail on the reallocation criterion for apportioning target RE generation to states within a region.

Commenter s stated in its October 28, 2014, NODA, EPA requests feedback on third option for setting RE targets, a proposed " regionalized approach". The commenter s 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 reapportion ing state RE targets within given regions and justification for those criteria.

3. What components of state RE targets should be regionalized under such an approach.

Commenter s stated EPA requested comment on the concept of aggregating RE generation pote ntial across states within regions, and then reapportioning the aggregate identified RE generation to individual states. The commenter s said 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

- state plan deadline. The commenter s said EPA suggests in its NODA that regional structures could be informed by existing regional constructs such as NERC regions or the Federal Energy Regulatory Commission (FERC) Planning Regions, RTOs and current regional renewable energy credit tracking systems. The
commenter s said th e idea of using an existing organizational footprint established on some other technical, economic, or political basis to determine RE potential for goal setting purposes should be dismissed out of hand. The commenter s said if one accepts the premise that a state's RE potential should be used for RE goal setting, the number of regions (and within those regions, sub

- zones), would need to be much greater than currently proposed.

Commenter s stated in the Midwest, RE technical potential is primarily a function of wind resources; in fact, EPA's own alternative RE technical potential approach reported very little, if any, contribution from Solar PV to Wisconsin's RE goal achievement. The commenter s said in reviewing the National Renewable Energy Laboratory's Wind Resource Map, it is readily apparent that wind resources in EPA's proposed North Central Region are starkly different both East to West and North to South. The commenter s suggest ed that EPA's North Central Region should be divided into three to four sub

- z ones for RE goal setting purposes. The
commenter s propose d that Wisconsin and Michigan would comprise one of those sub

- zones; this is not to say that Wisconsin would not consider acquiring or supplying RE resources to states in the region for state plan de velopment purposes, for to do so may trigger a violation of the Dormant Commerce Clause. The commenter s also suggest ed that state RE goals be informed by current state renewable portfolio standards in that they reflect a feet on the ground technical and

ec onomic assessment of RE development potential.

Commenter s 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 commenter s said the final 111(d) rule, accordingly, must use a metric that regionalizes state goals, with hydro and biomass correction; any renewable goals must be regionalized to be fair to states with existing renewables that serve regional needs.509 Commenter s stated relative to Building Blocks 2, 3, and 4, the original proposed rule utilized inputs and assumptions for existing and potential resources for reduction of CO2 from affected electric generating units on a state

- specific basis to develop a state

- specific target emission rate. The commenter s said th e concepts of the NODA do not change the inputs and assumptions for each state; however, the NODA applies them on a regional basis instead of a state

- specific basis. The commenter s said the shift from a state implementation plan to more of a "regional impl ementation plan" is to "levelize" the emission targets both regionally and nationally. The
commenter s said one of the proposed regional options in which Kentucky is listed is in the SERC Region along with Illinois, Tennessee, Missouri, Alabama, Georgia, No rth Carolina, South Carolina, and parts of Louisiana, Virginia, and Arkansas. The commenter s said this inflates the average amount of NGCC and renewable energy that could be applied to the state's 2030 goal calculation.

Commenter s stated the regional consi derations offered in the NODA relative to renewable energy (Building Block 3) would change the original renewable energy target for Kentucky. The
commenter s said the NODA would increase the renewable energy component from Building Block 3's target calculat ion from 2% up to 13% for the state. The commenter s said in comments filed by EPRI in the docket for this rule, EPRI accurately points out that assuming state equivalency for regional calculations of renewable resources is problematic. The commenter s said each state has drastically different renewable resource potential. The commenter s added the concerns regarding transmission capacity and double counting for importing renewable energy from the original proposal is clearly exacerbated by the regional approa ch in the NODA. The
commenter s said EPA should not adopt a regional approach in the calculation of Building Block 3 effects on Kentucky.

Commenter s 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 commenter s believe d the energy efficiency component was overstated by at least 75% based on Kentucky's energy efficiency potential identified by th e Cadmus study; increasing the calculation for Kentucky to 13% will be even more problematic for the state. The commenter s urge d 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 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 Fina l Rule supporting the final CPP for more information.

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

Commenter s stated EPA seeks comment overall on an appropriate regional structure to use in determining the frameworks and the appropriate manner in which goals can be derived under510 building block 2 and allocated to states; apparently, some stakeholders have expresse d concerns that disparate impacts could create distortions in the electricity markets. The commenter s said as an initial matter, the rule is unclear as to whether 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 can be evaluated.

Commenter s believe d that states should have the option 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 impediments that would need to be addressed. The
commenter s said for example, the proposal contemplates an allocation of responsibility for the revised targets; such an approach w ill necessarily create winners and losers and thus is likely to be unworkable. The commenter s said in any event, FERC has responsibility over both the electricity markets via the RTOs and the reliability of the grid.

Commenter s 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 address stakeholders' stranded investment concerns. The com menter s said "Book life" is a regulatory accounting 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 commenter s believe d that remaining useful lif e 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 operation. The commenter s said EPA correctly recognizes the CAA's requirement to develop guid elines based on the remaining useful life of affected units; however, in imposing interim targets, the proposal ignores this statutory requirement and will result in the retirement of coal units prior to the end of their remaining useful life in order to a chieve such interim targets. The commenter s said the only ways to properly incorporate the remaining useful life of affected units is to eliminate the interim targets altogether and allow states to address remaining useful life in their individual state pl ans.

Commenter s stated in the NODA, EPA explores setting state level renewable energy (RE) targets based on regional potentials for RE; EPA reports that stakeholders are interested in target setting methodologies that take into account interstate exchange s of RE. The commenter s said one proposed method involves setting regional RE targets which would then be apportioned to each state. The commenter s said EPA specifically requests comment on different methods for apportioning RE targets to states such as pr oportional to total state electricity sales; however, the methodology used to set renewable energy targets under a so

- called "regionalization" approach fails to contain sufficient detail or information to evaluate the regulatory, financial and achievabilit y implications of such an approach.

Commenter s stated there are a number of legal and technical infirmities associated with the concept of using RE to set targets under the rule and a regionalization approach merely compounds those problems; specifically, based on an analysis of the example provided by the EPA, the renewable responsibility for Missouri would nearly double under this alternative and be about 8 times more than what is included in the current goal setting for Missouri; thus, this proposal wil l unnecessarily increase the cost of the rule.511 Commenter s stated while EPA attempts to address concerns arising from its originally proffered approach, it raises an entirely new set of problems and exacerbates problems with the originally proposed approac h; for example, any allocation method chosen will simply create new sets of winners and losers, and thus merely shift grievances rather than eliminate them.

Commenter s stated the third general area of interest in the NODA is alternatives for calculating
g oals under building blocks 3 and 4; stakeholders on this topic are critical that EPA's method for calculating goals under blocks 3 and 4 are different from those under block 2. The commenter s said specifically, that under block 2, EPA assumes that NGCC gen eration offsets coal

- fired generation; this is accomplished under block 2 by discounting CO2 and megawatt

- hours (MWh) from coal generation and adding in CO2 and MWh from NGCC unit increased utilization. The
commenter s said in building blocks 3 and 4, EPA d oes not assume that RE and EE replace coal generation and only adds MWh into the denominator of the goal setting calculus.

Commenter s believe d this proposal is flawed on multiple levels: first, it incorrectly assumes that RE will replace fossil generation MWh for MWh; in reality, 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 envisioned by EPA incorrectly assumes that the value
to t he system of each MWh of RE is equal to fossil fired generation

- but it is not. The
commenter s said that RE and fossil generation are not equal is demonstrated by how RE is counted when determining capacity value in RTOs; specifically, 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 dependable capacity) which varies by plant but is in the range of 80

- 95% of its nameplate capacity. The co mmenter s added since RE is intermittent and less reliable than fossil

- fired generation, 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 clearly flawed; moreover, such an approach would serve to only increase the cost of the rule for both Missouri and Illinois.

Comment 22: NODA

- Computation of Energy Savings Credits

Response 22: The EPA is not including Building Block 4 in the goal calculations for the final CPP rule. See section V.A of the final rule preamble for more information.

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

Commenter s support ed the proposed approach of adding energy efficiency savings to the denominator if a state chooses to comply through the rate based approach; this approach is simpler and likely to be more accurate than estimating the CO2 emissions reductions from energy eff iciency policies and programs and subtracting this from the numerator, given the uncertainties regarding the actual time of energy savings and defining which specific power plants cut their generation as a result of end

- use energy savings. The commenter s s aid 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 efficiency initiatives that tend to reduce the operation of cleaner power plants.512 Commenter s stated in applying energy savings credits to the denominator in the emissions rate calculation, end

- use energy savings should be adjusted upwards to account for electricity losses in the transmission and distribution grid (i.e., to represent electricity s avings at the point of generation). The commenter s said this should be allowed for electricity savings from both utility and non

- utility energy efficiency programs; furthermore, these T&D loss adjustments should be based on actual values for a utility or a state.

Commenter s stated in the Notice of Data Availability (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 the ir CO2 emissions rate calculation would reduce fossil generation from existing power plants, and whether and how this should be incorporated into the numeric calculation of state emissions rate targets. The
commenter s believe d it is reasonable for the EPA to assume that a portion of the generation provided by incremental energy efficiency and renewable 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 growth (i.e., growth in the demand for energy services), and a portion will be used to displace historical generation from existing power plants. The commenter s suggest ed a methodology where it is first assumed that incremental ene rgy efficiency and renewable generation offsets new fossil generation, with any remainder displacing historical generation from existing power plants. And regarding the latter, the
commenter s support ed 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 where decisions about displaced generation are made for both eco nomic and environmental reasons.

Commenter s stated for the determination of energy savings credits, it is essential that the EPA define whether utilities and other energy efficiency program implementers are supposed to use gross energy savings or net ener gy savings in determining 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 states. The commenter s said the EPA has
propos ed using net savings to calculate credit towards state emissions rate targets; net savings include estimates of and adjustments for free riders and in some cases spillover effects; gross savings exclude these factors. The commenter s 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 commenter s recommend ed that the EPA base the computation and credit on gross energy savings rather t han net energy savings for the following reasons:

• Actual CO2 emissions reductions result from gross energy 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 they play in reducing emissions, when the emissions rate approach is used; States and utilities will benefit from the CO2 emissions reductions due to gross energy savings under a mass

- based approach, and the same basis for savings should be used under a r ate

- based approach.

• Some utilities only calculate gross savings, and not 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 report gross savings in response to energy savings standards or goals based on gross savings.

• Net

- to

- gross savings ratios are imprecise and not consistent from utility

- to

- utility; furthermore, net

- to

- gross savings ratios are rarely estimated or applied to non

utility efficiency policies and programs including building energy codes, state appliance standards or public sector energy efficiency programs.

• Gross savings are easier to determine than net savings a nd will facilitate states implementing, and receiving credit for, a wide range of energy efficiency policies and programs; States will not have to deal with the challenging question of estimating net savings resulting from building codes, state financing o r financial incentive programs, public sector energy efficiency programs, and the like

- a question they have no experience or interest in addressing; requiring states to estimate and report net savings from non

- utility programs would increase EM&V costs and lead to greater uncertainty and inconsistency 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 substanti al "spillover effects" (i.e., energy savings stimulated by a policy or program outside of direct participation in the policy or program) that may be uncertain or of questionable validity; by definition spillover effects are excluded from the determination of gross energy savings.

• Many states define their energy efficiency standards 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 savings for t he purpose of complying with state standards or goals; in general net savings are determined by first estimating gross savings for a program, and then applying a net

- to

- gross energy savings ratio to this value.

Commenter s stated it should be acknowledged that there are a limited number of efficiency programs where commonplace savings evaluation techniques yield net rather than gross energy savings; in particular, this is the case for behavior change programs where savings from a treatment group is compared to savings from a control group. The commenter s recommend ed 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.

Comme nter s stated in calculating gross energy savings, 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 market impacts by increasing the availability of certain energy efficiency measures, ed ucating consumers, influencing codes and standards, and other techniques such as those practiced by the Northwest Energy Efficiency Alliance (NEEA). The commenter s said the impacts of market transformation programs often extend in514 time beyond the program i mplementation period. The commenter s said the EPA should allow states to implement and receive energy savings credits for market transformation programs, and should issue a specific protocol for evaluating the energy savings impacts of such efforts; this
p rotocol can and should be based on existing impact evaluation methodologies such as those used by NEEA.

Commenter s stated if the EPA agrees to use gross savings, gross savings should be used consistently in the Building Block 4 input to the emissions rate reduction goals, state plans for achieving the Clean Power Plan targets, and the energy efficiency credits claimed during the implementation period. The commenter s said utilizing gross savings will increase the credit utilities and states receive for Buil ding Block 4 savings by 10

- 15% relative to utilizing net savings; in other words, 1.5% savings on a net savings basis is equivalent to about 1.65

- 1.7% savings on a gross savings basis. The commenter s said thus, if the EPA accepts the recommendation to move from net energy savings to gross 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 from the combination of utility and no n

- utility
programs.

Commenter s stated it is also important for utilities, other program implementers, and those conducting energy efficiency program evaluations to establish an accurate baseline to measure savings against. The commenter s said the EPA sho uld ensure that states and utilities utilize best practices in determining baselines, and in this regard we recommend that the EPA endorse the guidance regarding selecting baselines in the SEE Action Network's Energy Efficiency Program Impact Evaluation Gu ide. The commenter s said this Guide was developed by leading energy efficiency impact evaluation experts, is highly credible, and is widely used and referred to in the energy savings evaluation work. The commenter s said providing guidance concerning baseli nes that differs from these well

- established best practices 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 inclu de nuclear

Response 23: The EPA is not including Nuclear in the goal calculations 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:

Commenter s stated the EPA addressed the inconsistent treatment of renewable energy and energy efficiency when it published a Notice of Data Availability (NODA) in October 2014; it noted that renewable energy and energy efficiency can be used to reduce fossil generat ion and hence also emissions; and the NODA also provides a second option for using RE and EE to displace fossil fuels. The commenter s recommend ed a variant that would use energy efficiency to displace generation on a pro rata basis and renewable energy to displace fossil fuel generation starting with coal and then oil and gas boilers, with any remaining RE to be used for displacing515 NGCC generation. The commenter s said the calculation methods published for comment in the NODA deal only with RE and EE to disp lace fossil generation; they do not explicitly deal with nuclear energy. The commenter s said this omission of nuclear is appropriate since the CPP has noted that "nuclear generating capacity is also relatively expensive to build compared to other types of generating capacity, and little new nuclear capacity has been constructed in the U.S. in recent years." The commenter s said nuclear should not be part of the best system of emission reductions.

Commenter s stated so far as nuclear energy is concerned, the EPA should estimate generation in each year based on the reactors that are expected at 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 generat ion by about 30 percent in the year 2030 compared to 2012. The
commenter s said nuclear energy should not be part of the best system of emission reduction.

Comment 24: NODA

- BB1 HRI

Response 24: See section V.A and V.C of the preamble for further dis cussion of building block

one and the GHG Mitigation Measures TSD.

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

Commenter s stated the NODA also requests comment on whether EPA should phase in Block 1 heat rate improvemen ts for coal

- fired units; this approach does not address the issue that heat rate improvements are best addressed on a unit

- by

- unit basis, thereby making any assumed approach by EPA to phase

- in these reductions arbitrary and generic. The commenter s said to appropriately phase

- in heat rate improvement projects EPA should allow for state plans to develop this schedule by conducting case

- specific analyses. The commenter s provided Appendix D that includes supporting information related to these technical issues including work practices conducted by Alliant Energy and summaries describing the potential impacts of load, cycling and degradation.

Comment 25: NODA

- EPA Should Incorporate Co

- Firing With Natural Gas and Other Types of Fuel Switching in Building Block 1

. Response 25: See sections V.C. and V.D. of the final rule preamble 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:

Com menter s stated in the Goal

- Setting NODA, EPA also requests comments on whether it should consider re

- dispatch from steam generation to existing NGCC units, re

- dispatch to new NGCC units, or co

- firing natural gas in existing coal

- fired boilers in calculatin g 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 commenter s said EPA suggests that this could be516 accomplished by establishing a minimum percentage for di spatch switching from coal

- fired generation for Building Block 2, which would increase 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 higher ranked coal or biomass), as well as conversion, should be considered as part of the BSER, generally, including in Building Block 1.

Comm enter s agree d that co

- firing with natural gas and converting coal units to natural gas units are feasible mechanisms to reduce CO2 emissions that are frequently being implemented today even without a price on carbon emissions; therefore, EPA should consider these mecha nisms for emissions reduction in the BSER and increase the stringency 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 fr om coal

- fired power plants attributable to measures that can be implemented at those plants.

Commenter s stated as EPA notes, industry is currently rapidly converting or replacing the existing coal

- fired fleet to utilize natural gas or to allow co

- firing of existing boilers with natural gas; as of January 2013, well before the proposal of the Clean Power Pla n, plants representing 5,384 MW of coal

- fired capacity located in five NERC regions were involved in conversion projects; since that time, additional conversion plans have been announced; likewise, a number of existing coal

- fired power plants have made cha nges or announced plans to accommodate co

firing so that they can run on natural gas, coal, or both.

Commenter s stated repowering and co

- firing projects are occurring today without regard to a specific federal requirement to reduce CO2 emissions from exis ting sources; dramatically lower natural gas prices and increased development of shale gas resources arising from directional drilling capability have made these projects more feasible; co

- firing also reduces maintenance requirements and increases operatio nal flexibility by allowing the coal

- fired plants to increase and decrease their output more readily to respond to changes in load demand. The commenter s said many companies initiating these projects have indicated that they are using natural gas conversio n or co

- firing as low

- cost mechanisms to reduce emissions of conventional and hazardous air pollutants to comply with the requirements 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 include increased natural gas use through co

firing and conversion as cost

- effective mechanisms in dete rmining BSER.

Commenter s said the widespread availability of shale gas means that co

- firing and conversion is available, or could be available, at coal

- fired units located across the continental U.S.

Commenter s said the availability of nearby existing pi pelines 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 have been announced, including FERC

- regulated interstate pipelines, intrastate public utility commission

- regulated pipelines, and unregulated pipelines characterized as "gathering lines."; in addition, FERC certificates pipelines relatively quickly

- based on data other commenters have amassed, we understand pipelines generally proceed from application to in

- service in under 16 months.517 Commenter s added temporary changes in natural gas demand such as that created by last winter's polar vortex should not exclude co

- firing as a basis for setting multi

- decade average emission reduction goals; b ecause 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 vortex; indeed, the additional f lexibility provided by dual

- fuel units can enhance reliability.

Commenter s stated although EPA has suggested that co

- firing could be considered as a part of the goal

- setting for Building Block 2, the better approach is to consider natural gas co

- firing, l ike other available forms of fuel switching, as part of Building Block 1. The commenter s said fuel switching and materials separation are well

- established mechanisms that must be considered under other Clean Air Act provisions in establishing technology

- ba sed, unit level emissions limitations; like heat rate improvements, fuel switching occurs "inside the fence" through modification of the existing individual unit. The commenter s 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 steam) to another type (NGCC).

Commenter s added because eff iciency improvements and co

- firing can occur on the same unit, employing both measures will produce greater emissions reductions than applying either measure alone; while emission reductions from these two methods will overlap to some degree, considering b oth techniques will still lead to more reductions at the unit than six percent on average, and thus will result in more stringent state goals. The commenter s said while EPA will need to assess the degree of additional emissions reduction that can be achiev ed through co

firing, there are many coal

- fired plants located over shale plays, and these units could use natural gas for 20 percent to 100 percent of their operation in less than two years, based on the pipeline construction timeframe discussed above and more thoroughly in other organizations' comments. The commenter s said this revision to Building Block 1 would also help address the disparity in emissions reduction goals between states with little existing NGCC capacity but significant coal

fired capacit y, since it would have a proportionately larger impact on the emissions goals for the states with limited excess NGCC capacity.

Commenter s stated EPA should consider co

- firing and other fuel switching strategies as one of the mechanisms that it might empl oy in determining what emissions reductions can be achieved under Building Block 1, and it should calculate revised 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 Commenter s stated reg arding the proposed glide path for emission reductions, the EPA asks for comments on ways to adjust interim goals that include a phase

- in of block one and two specific approaches for a phase

- in of block two: (1) developing a phase

- in schedule on the basis of whether and to what extent any additional infrastructure 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. Commenter s appreciate d the EPA's considerati on of reliability implications associated with the currently proposed glide path and willingness to consider ways to adjust the glide path. The commenter s d id not believe that the approaches for which the EPA seeks comments in its NODA do enough to address reliability concerns; the commenter s remain concerned with the timing of the EPA's proposed schedule. The commenter s said the current schedule of issuing a final rule by June 2015, allowing 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 commenter s said it takes about eighteen months to evaluate transmission needs for a set of modeled as sumptions and it has taken as much as eight and a half years to study, plan for and construct transmission facilities. The commenter s said while adjusting interim 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 appropriate infrastructure needed before the issuance of the final CPP by June 2015. The commenter s said reliability 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 c onsideration, reliability will be at risk for interim goals established to begin in 2020. The commenter s continue d to believe that the best way to address the reliability concerns expressed in its initial comments and those expressed by others is to extend the imposition of interim goals from 2020 to at least 2025.

Commenter s added a reliability safety valve would allow system operators and planners to maintain reliability by evaluating and addressing reliability issues on a state

- by

- state basis both durin g and after the development of state plans; inclusion 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 plans.

Commen ter s stated EPA's proposals to reduce fossil

- fuel generation by the pro

- rata amount of new renewable energy generation violates the CAA and would trigger serious reliability concerns. The commenter s said stakeholders have allegedly "raised concerns that th e proposed numeric formula for calculating each state's goal is 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] gen eration avoidance under building blocks 3 and 4," and therefore, have "suggested an alternative approach of applying generation from building blocks 3 and 4 to reduce fossil generation below 2012 levels in the goal calculation." The commenter s said to addr ess these "concerns," EPA has outlined two proposals where "incremental RE and EE explicitly replaces generation from fossil fuel

- fired sources in the goal calculation;" one proposal includes replacing all historical fossil

- generation on a pro rata basis a nd the other proposal includes replacing historical fossil

- generation, but prioritizing the replacement of historical fossil

- steam generation. The commenter s said the underlying "concerns," and EPA's proposals to address them, are fundamentally flawed, leg ally invalid, and would create significant reliability concerns in numerous states. The commenter s said for example, under Block 3 of EPA's existing Rule Proposal methodology, Texas is expected to519 increase renewable generation by a staggering approximately 52 million MWh, comparing 2012 to 2030 totals; this is after Block 2 is supposed to leave only

- 67 million MWh of coal generation in 2020. The commenter s said either of EPA's two pro

- rata proposals would leave very little existing coal generation in Texas . The commenter s said this is especially true under the proposal where coal

- generation is targeted first. The commenter s said while EPA admits that these changes would reduce emissions targets, precise reductions are unclear; this makes it impossible for s takeholders to effectively comment on EPA's proposals. The commenter s said though, it appears that only roughly 15 million MWh of coal generation

- and likely even less

- would remain if EPA implemented these pro

- rata proposals; this would create extreme r eliability concerns. The commenter s said netting out coal

- generation 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 Rule Proposal's requirements are implemented. The commenter s said already, the Southwest Power Pool ("SPP") and ERCOT are predicting electric shortfalls under the Clean Power Plan as proposed. The commenter s said losing an additional 52 million MWh of base

- lin e and affordable coal would severely exacerbate these reliability concerns. The commenter s said either pro

- rata proposal would effectuate the apparent underlying goal of EPA's Rule Proposal and BSER methodology

- the shutdown of coal generation in the U.S. and in states with diverse energy supplies, such as Texas, Louisiana and Mississippi; however, EPA has no basis or right to take these actions. The commenter s said EPA does not have the authority to require even 1 MW of coal

- generation to shut down as a m eans 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 units

- or any existing source

- under the CAA.

Commenter s stated throughout the Section 111(d) proposal and NODA, it is apparent that the proposals have been designed as though the electric generation system and both short and long

term electricity demand can be predicted and controlled to a very small degree of variation. The
commenter s said these additional proposals and alternatives do not consider the actual dynamic infrastructure that is needed to keep electricity reliable and affordable. The commenter s said the best energy forecasters at the Energy Information Agency 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 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.

Comme nter s do not appear to disagree with EPA proposed categorization of Cane Run unit 7 as an existing unit. EPA maintains this likely affected EGU categorization for the unit in the final rule.520 The following are summaries of the specific public comments under this comment:

Commenter s stated in the NODA, EPA requests comment on whether it should change the proposed goal computation methodology to address stakeholder concerns about the feasibility of implementing all of building block two by 2020. The comme nter s said if EPA decides to set interim 10

- year goals in addition to final 2030 targets (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, in cluding reductions from heat rate improvements, redispatch, and "under

- construction" nuclear energy. The commenter s said EPA's assumption that all emission reductions from building blocks one and two and under construction nuclear can be implemented by 202 0 is not adequately supported by the record; moreover, the use of this assumption in EPA's goal

- setting computation will lead to overly stringent front

- loaded interim goals. The
commenter s said meeting these overly stringent goals will require a significan t number of early retirements of coal

- fired EGUs, will increase the cost 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 suc h 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 commenter s said as with RE and EE, EPA should gradually phase in the emission reductions it projects for building blocks one and two and under

- construction nuclear over the 10

- year interim compliance period. The commenter s said a gradual phase

- in of these emission reductions would give states, utilities, and EGU ope rators more time to make the investments in new equipment, transmission, and pipeline capacity that will be necessary to achieve EPA's projected reduction targets without compromising reliability and with fewer shocks to electricity related jobs. The comme nter s 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 the basic purposes of the Proposed Rule nor compromise its environment al integrity.

Commenter s stated Building Block 2 that EPA utilized in the original proposal implements a shift of generation to existing natural gas combined cycles assuming an increase from a national average utilization factor of 55% to 70%. The commente r s said Cane Run 7 is the only affected unit in Kentucky under Building Block 2, the generation shift is only assumed to be 2% of total fossil fired generation for the state. The commenter s said the concepts for consideration in the NODA expand the utiliza tion of natural gas to include co

- firing natural gas, in addition to eliminating more existing coal

- fired generation to be replaced by new NGCC. The commenter s said the NODA discusses increasing the gas re

- dispatch/utilization for Kentucky's goal calculati on and considers a range for a regional shift of between 12% and 55%. The commenter s said at the minimum value, which EPA discusses in the NODA, Building Block 2 for Kentucky's calculation would increase the loss of existing coal generation from about 2% u p to 12% and potentially as high as 45%. In addition the commenter s 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 commenter s 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," wh ich stated: "... the EPA concludes that the power industry in aggregate can support higher gas consumption without the need for any major investments in pipeline infrastructure. However, here are a few critical areas that likely will need additional521 capita l investments." The commenter s said further, NERC states: ""Timing of these investments is also critical as it [can] take three to five years to plan, permit, sign contract capacity, finance, and build additional pipeline capacity, in addition to placing r eplacement capacity (e.g., NGCC/CT units) in service. The proposed CPP timelines would provide little time to add required pipeline or related resource capacity by 2020."

Commenter s stated the interim rates are based on the assumption that, while increase d renewable energy and energy efficiency will be gradually phased in during the interim period, affected EGU s will be able to fully implement Building Blocks 1 and 2 by 2020. The commenter s said in the NODA, however, EPA acknowledges that full implementat ion of Building Block 2 by 2020 may not be technically achievable. The commenter s said, re

- dispatching from coal to existing NGCC is not simply a matter of turning down one resource and turning up another; significant infrastructure development both in ter ms of new gas lines and new transmission lines must occur in order to accomplish this strategy; this infrastructure development is costly and takes significant time, particularly in light of the political and legal barriers to building new gas pipelines an d electricity transmission lines. Commenter s stated in the Proposed Rule, EPA fails to account for the challenges associated with building all of this new infrastructure. The
commenter s said to rectify this shortcoming, EPA needs to re

- assess whether the 7 0% NGCC utilization assumption is realistic. The commenter s said at the very least, EPA needs to build additional time into the rule to account for the need to build new pipelines and transmission capabilities. The commenter s said the simplest and most pru dent 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 Building Block 3 that realistically accounts for the time that it will take to b uild additional infrastructure needed to meet the 70% assumption set forth in the Proposed Rule.

Commenters stated that, EPA's NODA recognized a number 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 treatment in the state goals it has proposed that exists between states with significant amounts of NGCC capacity and states with little or no NGCC capacity. Commenters agreed with EPA that should 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 sources for states containing some fossil steam generation. Commenters said that this approach veers off into illegal territory because the Proposed rule dictates how existing generation is dispatched and direct some states to build certain types of generation tha t presently do not exist. Commenters said this type of "system" has not been "adequately demonstrated".

Commenters stated, in the Notice of Data Availability (NODA) issued on October 30, 2014, EPA requests comment on using NGCC to reduce CO2 emissions fr om 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 unlawful for EPA to require the construction of new generation assets as part of BSER for existing sources. Commenters said, additionally, requiring522 co

- firing is tantamount to fuel switching, which EPA 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 dramatic changes that the facility then becomes subject to double

- regulation under Section 111(b).

Com menters stated, EPA also seeks comment on whether 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. Commenters said, section 111(d) only provides authority for the establishment of state

- specific standards 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 Bl ock 2 for multi

- state regions would thus be unlawful.

Comment 28: NODA

- Phasing in the Increased Utilization of Existing 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 rule preamble of the CPP and the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP f or more information.

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

Commenter s 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 structure of the numeric calculation for establishing the state goals assumes that all changes in dispatch between existing coal

- and gas

- based units has occurred by 2020; this front

- loads reductions related to Building Block 2, creates significant technical challenges and limits state flexibility in designing compliance plans. The commenter s said to address these concerns, EPA suggests that Building Block 2 reductions could be phased in; in the NODA, EPA seeks comment on two approaches for creating a phase

- in schedule for Building Block 2. The commenter s said the first would examine whether, and to what extent, any additional natural gas pipeline infrastructure is needed to support increased use of existing natural

- gas based generation; the second would consider the boo k life of existing generation assets, including any major upgrades to the assets, like pollution control retrofits.

Commenter s stated as a preliminary matter, phasing in reductions under Building Block 2, similar to the phase

- in of reductions under Build ing Blocks 3 and 4, could address some of the

near

- term compliance challenges discussed in these comments for some states. The commenter s said in general, phasing in these reductions is more reasonable than assuming that all changes in dispatch between coa l

- and gas

- based occur before 2020. The commenter s 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 changes or create new programs; a phase

- in of Building Block 2 reductions could allow for the necessary expansion of natural gas infrastructure523 to support increased utilization of existing NGCC units and could provide competitive markets time to review and adjust market rules, if needed.

Commenter s stated it is not clear from the NODA exactly how EPA would structure a phase

- in schedule for Building Block 2. The commenter s said under the first option, EPA would account for the needed expansion in natural gas pipeline infrastructure, but the Agency has not provided any details as to how the Agency would determine which states need new capacity and how quickly it could be built; at minimum, EPA should recognize that it takes three to five years to plan, permit, sign contract capacity, finance and build a dditional pipeline capacity; however, in general, it is difficult to see how the Agency could determine a phase

- in rate for new pipeline capacity that would make sense for each state or accurately reflect state

- specific infrastructure circumstances. The co mmenter s said eliminating the interim goal so that states can determine the most appropriate phase

- in schedule for Building Block 2 reductions would be simpler and better address state

- specific concerns.

Commenter s stated EPA's second approach, which woul d focus on the remaining book life of existing coal

- based units, also could be a useful way to address glide path concerns in some states and would, as EPA notes, avoid stranding investments recently made in pollution control retrofits for coal

- based units . The commenter s 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 commenter s said consistent with the
requ irements of section 111(d), EPA should recognize the remaining useful life of units, including recent upgrades and major pollution control 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 investments, it would not address the 2020

- 2029 concerns of many other states with respect to the assumed changes in dispatch between coal

- and
gas

- based units. The commenter s said in particular, it woul d not address any of the natural gas infrastructure concerns identified by electric utilities and states. The commenter s said if EPA determines to recognize remaining useful life when calculating state goals under Building Block 2, it should be coupled wit h other approaches to address 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

- 2029 and illustrative phase

- in emission values for 2022

- 202 4, 2025

- 2027, and 2028

- 2029. See section I.A. 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 specifi c public comments under this comment:

Commenter s stated in the October 28, 2014 Notice of Data Availability (NODA), the EPA acknowledged stakeholder concerns regarding the rigidity of the 2020 to 2029 glide path, and requested additional stakeholder commen ts to ensure that the overall framework includes sufficient flexibility. The commenter s said the EPA presented two suggestions for addressing the524 glide path implementation in the NODA; the first approach the EPA requested comment on was the option to allow credit for early CO2 emission reduction. The commenter s said in theory, this approach is appropriate and would recognize the steps already taken by those states or EGU's that were engaged in early

- action to reduce CO2; however, 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 commenter s 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 would in fact be "credited" for those emissions by default when calculati ng their emission rates for compliance in 2020. The commenter s 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 performed prior to 2012; since the EPA's g oal

setting formula applies building blocks to each state's 2012 carbon emission rate, states that took action to reduce CO2 emissions prior to 2012 are forced to further reduce carbon emissions with the same intensity as states that have not already made investments in carbon reduction. The
commenter s urge d the EPA to consider early

- action credit for those CO2 reductions that occurred prior to the EPA's selected baseline year of 2012. The commenter s said their early actions include the economic

- based trans ition of coal 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 Unit 2 in 2008, and the conversion of Schiller Station's 50 MW coal

- fired EGU to a biomass

- fired EGU via the Northern Wood Power Project in 2006.

Commenter s 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 flexibility so states could have a reasonable glide path to compliance with final goals. The commenter s said to ha ve several

concerns regarding this perceived flexibility, or lack thereof; U.S. EPA states there is flexibility to include certain pre

- 2020 reductions or states could implement goal requirements early to reduce the amount of reductions needed during the interim period. The commenter s raise d several concerns regarding the use of pre

- 2020 reductions that include inconsistencies and confusion over which reductions are appl icable and with respect to U.S. EPA's overestimation of the availability of early reductions to be achieved. The commenter s said stakeholders expressed concerns specifically with respect to the difficulty 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 coal

- fired units; the co mmenter s share d these concerns. The commenter s said therefore, U.S. EPA is seeking comment on two additional adjustments to the interim goal calculations to allow a more gradual phase

- in of Building Block 2. The commenter s said to ha ve concerns over infras tructure capabilities and reliability considerations. The commenter s said U.S. EPA proposes the methodology could be adjusted to account for how quickly additional infrastructure could be developed; U.S. EPA is proposing two parameters for consideration. T he commenter s said defining the amount of utilization shift that can occur by 2020 and defining how quickly that amount could grow until full utilization could be achieved; yet, U.S. EPA did not provide any indication of who would determine an adjustment d ue to reliability concerns was warranted, how the adjustment would be determined, and when would this process occur. The commenter s said such an analysis is beyond the scope of U.S. EPA or the state's ability. The commenter s added while it is obvious that there is a525 necessity for such a consideration, this further reinforces the notion that U.S. EPA is attempting to control the entire electricity generation, transmission, and distribution system through a Section 111(d) proposal.

Commenter s appreciate d that EPA's NODA has sought comment 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 path earlier which serves only to make the goals more stringent and impracticable by requiring action in an even shorter time frame. The
commenter s said for each state with an affected EGU, EPA mandates that states begin meeting the interim goals in 2020 and meet the targeted reduction goal for the state by 2030; additionally, beginning in 2030, the targeted greenhouse gas emission standard must continue to be met continuously and indefinitely, regardless of growth o r other outside impacts. The commenter s 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 int erim goals of the glide path demonstrate this shortcoming.

Commenter s stated the recently

- released NODA recognizes 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 shift in generation assumed under building block 2 by 2020...requires states to achieve such a significant portion of the required CO2 emission reductions early in the interim period that it defeats the intended purpose of providing states flexibility in how they may achieve the required emission reductions. In additional, we have heard that there may be technical challenges associated wi th achieving all of the reductions that state would be required to make as early as 2020, when the interim period commences."

Commenter s stated because of these concerns, EPA is interested in considering additional stakeholder ideas, such as those regardi ng the 2020

- 2029 glide path, to ensure that the final guidelines provide states with flexibility to address concerns about the timing of reductions, can develop cost

- effective compliance plans and can respond to unexpected demands on the power system. The commenter s 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 reduce emissions and would eliminate the significant technical challenges associated with requiring the majority of the reductions to be achieved on or before 2020. The commenter s said it also would allow 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.

Commenter s stated in the NODA, EPA discusses two ways of addressing concerns raised by stakeholders about the glide path: 1) allowing states 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 Building Blocks 3 and 4. The commenter s said each of these options, could address some of the concerns about the 2020

- 2029 glide path that have been raised by states and electric utilities; however, neither provides states the same flexibility to design cost

- effective compliance plan s that are consistent with the technical realities of shifting526 generation between existing coal

- and gas

- based units that would be provided by eliminating the interim goals.

Commenter s stated in the Proposed Rule EPA Sets interim CO2 emission rate require ments for each of the states for the period from 2020

- 2029. The commenter s 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 commenter s 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 commenter s agree d with these concerns and requests that EPA eliminate the interim goals so that states, companies, and entities overseeing the operation of the country's electric generation and transmission system have adequate time to assess the massive changes to the system that EPA is proposing and ensure that consumers continue to have access
to reliable, affordable power.

Comment 30: NODA; Use of 2012 as a single data year for baseline; releasing data for 2010 and 2011.

Response 30: See section 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:

Commenter s stated in its recent NODA, EPA seeks to address stakeholder concerns over the use of 2012 as a single data year for calculating interim and final goals by releasing data for 2010 and 2011 and asking if a different single year or combination of years should be used. The
commenter s said while, in general, the use of additional years in the baseline may in some cases reflect reductions that have already been made, providing this conceptua l alternative does not resolve the concerns stated above. The commenter s said given the multi

- year projections EPA is trying to make, using only three years of historical data is not sufficient to capture recent reductions; however, meaningful comment on t his concept is practically impossible to develop with only a thirty

- day comment period left to evaluate and no specific numeric proposal on which to comment. The commenter s said EPA should provide a more thorough explanation of how the goals would be modif ied and extend the comment period for the NODA.

Comment 31: NODA and Mass Based Calculations

Response 31: See section VII of the final rule preamble of the CPP and the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting t he final CPP for the EPA’s response to this comment.

The following are summaries of the specific public comments under this comment:527 Commenter s stated EPA has issued a NODA and Mass Based Calculation supplements to the CPP. The commenter s said in the NODA , EPA is taking comments on the "Implement of Goal

- Setting Equation" which questions the proposed numeric formula for calculating each state's goal. The commenter s stated EPA states that for building block 2, the formula subtracts 1 MWh of fossil steam ge neration and corresponding emissions from the 2012 baseline levels for every 1 MWh of incremental NGCC generation; however, from renewable energy (RE) and energy efficiency (EE), the formula adds incremental RE and EE to the baseline generation levels in t he denominator of the formula but does not reduce the 2012 baseline levels of fossil generation in the denominator. The commenter s said by implementing this change, it will make the standard more stringent (lower) than the original lb/MWhr rate stated in t he proposed rule. Commenter s stated EPA then developed mass based calculations for 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 commenter s said i t appears that EPA has accepted this comment prematurely without comments on the NODA's change to the calculations. The commenter s said when the mass based limit is calculated for Louisiana, it is a 52% reduction in CO2 emissions based on 2013 data and a 5 4% reduction from 2012 baseline emissions; the rate based reduction is 40% from 2012 to 2030; thus, EPA has required the state to make even further reductions compared to the rate based equation, if the mass based calculations are used. The commenter s said in regards to the NOD A's Implementation of Goal

- Setting Equation, it is uncertain to the
commenter s if EPA's intended goal is to be consistent, as there are a number of major assumptions that are inconsistent in this proposed rule. Commenter s said for ex ample:

• The IPM does not provide an hourly dispatch model, which is how the real world of electric utilities works' therefore, the additional infrastructure and generation sources that would be required to simultaneously meet reliability standards and the CPP are not included.

• The IPM shows a natural gas usage of 14 trillion cubic feet in 2030 at a 70% NGCC factor; the EIA data shows 9 trillion cubic feet. It is unknown how, or if, the natural gas cost could be impacted.

• For Building Block 1, the heat rat e improvements were based on gross heat rate; however, the rate based calculation was based on the 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 f ired unit in Louisiana provides energy to Arkansas, then it is charged against the state of Louisiana, not the receiving state of Arkansas.

• New NGCC is not included in the rate equation yet new renewables and Energy Efficiency are used.

• No hydro generati on is included, yet almost all other sources of fossil fuel and renewables are included.528 • There is a mis

- match between EPA's 19% nationwide reduction 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 wi ll have to go through a legislative, regulatory, and/or legal process to accomplish the goal, which is not at all a certainty.

Commenter s stated in the recently released technical support document [NODA] in which EPA calculated potential total mass CO2 emissions for each state, EPA also calculated total mass CO2 emissions for each state assuming that new NGCC can be counted for mass emissio ns approach compliance. The commenter s stated that there is no place in a mass

- based approach for new units of any kind, but particularly not new NGCC. The commenter s said as EPA has consistently explained, the mass

- based approach allocates mass emissions limits to existing fossil units only; new units must only meet the 111(b) New Source Performance Standards (NSPS) if applicable. The commenter s support ed keeping new NGCC and all other forms of new generation separate from existing fossil generation subjec t to the total mass limits.

Comment 32: NODA

- results in goals more stringent than NSPS

Response 32: 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 r ule 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 stringency of state goals and NSPS rates as the two metri cs are not apples

- to

- apples. The metric for the NSPS limits are different than the metric for the Existing source limits and should not be compared to each other.

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

Commenter s stated in the alternative methods outlined in the NODA, the underlying algorithm that combines all four building blocks provides a state

- wide emission rate target that is even more stringent than EPA proposed for existing and new power plants; that is not a realistic or reasonable outcome. The commenter s said to highlight the extreme nature of this final result, New Jersey has calculated a final goal of 336 lb/MWh 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
commenter s said when viewed from a statewide performance perspective, as appropriate with CO2, EPA is requiring more stringent emission reductions from existing sources than new sources; specifically, EPA is su bjecting existing sources to a standard that is 66% to 69% more stringent than it is proposing for new sources; this is not a reasonable outcome.529 Comment 33: NODA

- B ank early emission credits for use during the 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:

Commenter s stated another way that EPA could provide credit for early action would be to allow emission reductions that occur before 2020 to be "banked" and counted toward compliance with state goals. The commenter s said as EPA recognizes in the NODA, stakeholders h ave suggested that allowing states to bank early emission credits for use during the interim compliance period could mitigate the negative impacts of EPA's proposed 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 commenter s recommend ed that EPA revise its unreasonable assumptions about the timing of these building block measures to allow for a more gradual implementation period, the comment er s also support ed allowing states to count early reductions toward compliance with the interim goal.

Commenter s support ed the proposal contained in the October 2014 NODA that would allow states to take credit for early actions that achieved emission reduc tions. The commenter s said providing full credit for these early actions recognizes the important emissions reductions states have already achieved and it continues to incent incremental reductions between the date of the proposal and the date of complianc e. The commenter s support ed 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 should not need to relate directly to the proposed building blocks so long as they contribute to achieving a state's emissions target. The
commenter s said for example, development of renewable energy and implementation of energy efficiency programs, as identified in Building Blocks 3 and 4, will certainly continue prior to 2020 and should be credited towards compliance with the 2030 targets.

Commenter s stated EPA should also ensure that states receive full credit for their current energy efficiency savings under the proposed rule. The commenter s said like r enewable generation, energy efficiency savings do not displace fossil fuel

- fired generation demand under the EPA's proposed goal

- setting calculations. The commenter s said in order to capture the true potential of cost effective, energy efficiency measures, the commenter s encourage d 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 energy demand with added energy efficiency.

Commenter s sta ted 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 commenter s said EPA also notes that the proposed guidelines seek comment on whether credit for certain pre

- 2020 reductions could be used to reduce the overall amount of reductions that need to be achieved during the interim period; the NODA also seek comment on whether states could choose early530 implementation of state compliance plans, which would allow states to achieve the interim goals by making some reductions earlier. The commenter s said EPA asserts that either of these approaches would allow states to phase in reductions.

Commenter s stated allowing states to recognize early 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 commenter s said as EPA notes, it is important to recognize early reductions so as not to create disinc entives for pre

- 2020 reductions; the final guidelines should recognize that states have the flexibility to recognize early reductions. Commenter s stated this flexibility does not address fully the concerns about the interim compliance goal and the magnitud e of reductions that are required before 2020. The
commenter s said EPA notes that allowing states to credit 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 d emand

- side [EE] projects already under development and scheduled to be implemented prior to 2020 or by expediting other projects." The commenter s said while states may be able to use some reductions from RE and EE measures, it is unlikely that these reduct ions would be significant enough to offset the need to increase significantly utilization of existing NGCC units to meet the interim goals. The commenter s said credit for early RE and EE reductions also does not address infrastructure concerns or other tec hnical challenges associated with increasing the utilization of existing NGCC units. The commenter s added given the timing challenges states face in submitting timely compliance plans for EPA approval, it is unlikely that states would be able to begin comp liance plans early in order to take advantage of pre

- 2020 reductions. The commenter s said if states would like to do so, the final guidelines should make it clear that this is an option; providing this flexibility, however, does not obviate the need to eli minate the interim compliance goals.

Comment 34: NODA

- way BSER applied in calculation of goals

Response 34: The EPA is adopting the alternative approach from the proposal, modified as described in the NODA. See sect ions 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:

Comment er s said the NODA explored the possibility of changes to the manner in which the BSER is applied during the calculation of the state performance goals. The commenter s urge d the Agency to ensure the application of the BSER to calculate state performance sta ndards does not exacerbate existing problems with the rule as originally proposed. The commenter s said any changes to the formula that would be premised on the capacity for energy efficiency programs to replace existing capacity are not realistic in relati on to the best practices model EPA has established. The commenter s said the programs and measures 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 w hen calculating state performance goals is illogical. The
commenter s said any changes that result in a more stringent energy efficiency requirement would only intensify the underlying challenges of the proposal. The commenter s said the existing formula alr eady raises concerns that a more holistic policy structure, which supports innovation and assures cost effective solutions will be elusive under the Clean Power Plan. The commenter s said state capacity to implement sufficient measures to comply with state performance goals will be stretched to the limit and these measures, regardless of their cost effectiveness, will be viewed as necessary. The commenter s said a more stringent energy efficiency requirement and subsequently a more stringent performance stand ard will exacerbate rather than mitigate implementation issues.

Comment 35: NODA

- Tribes & Territories oppose approach

Response 35: The EPA is adopting the alternative approach from the proposal, modified as described in the NOD A. See sections V.D., a nd 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:

C ommenter s oppose d the alternative approach for the goal

- setting equation that would treat RE and energy efficiency ("EE") in Building Blocks 3 and 4 in a similar manner to the transfer of coal

- based load to natural gas in Building Block 2. The commenter s s aid RE and EE should not be treated in a similar fashion for two main reasons. The commenter s said first, both coal and natural gas generation are dispatchable, which is not the case with RE or EE; therefore, absent widespread use of energy storage that is not envisioned, RE and EE are not comparable to NGCC. The commenter s said second, for those jurisdictions with available NGCC, a transfer from coal to existing NGCC could potentially be implemented quickly; those locations could achieve reductions from 2012 emission levels in a time frame where CO2 emission reductions

can be directly tied to the reduced coal generation. The commenter s said deployment of RE and particularly EE, on the other hand, require much longer 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 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 t he final goals and how they were calculated.532 The following are summaries of the specific public comments under this comment:

Commenter s stated that it can be reasonable to assign states different starting and ending points for emission rate reductions, p articularly during an initial period of carbon regulation; such an approach takes into account the diverse characteristics of geography, policy and existing generation portfolios in the different states; over the longer term, however, all costs are variabl e costs. The commenter s said to the degree that states transition away from carbon

- intensive generation, states should move towards a lower mean carbon emissions rate, and disparities reflected in historic policy differences also should narrow. The comment er s said a rule taking into account (indeed, promoting) this longer

- term shift in technology should not permanently establish very high allowed emissions rates for some states, and low ones for others; from the start, it should be designed to mitigate extr emes, and to include mechanisms for adjustment towards a reasonable lower mean. The commenter s said the narrowing of real

- world disparities in emissions rates under rule implementation is itself a reasonable basis to mitigate the extreme
state

- by

- state dif ferences in emissions rate goals under the Proposed Rule.

Commenter s stated it is reasonable and necessary for EPA to adjust its goal

- setting formula in ways that tend to bring "outlier" state goals towards the mean, that provide more time and/or flexibil ity for those states with large goals to comply, and that establish clear and definite pathways for multistate cooperation or interstate compliance. The commenter s thus provide d the following general recommendations regarding the goal

- setting formula:

• EPA should consider setting upper (and possibly lower) 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 consider establishing a longer compliance period, and particularly a less stringent interim goal, thereby allowing states a reasonable opportunity to plan for major changes; alternatively, or in addition, EPA could establish a ramp

- rate for its assumptions about redispatch from c oal to gas, as further detailed below, to allow a more realistic timeframe for public utility planning.

• EPA should establish a suite of "safe

- harbor" compliance strategies, including particularly multistate or national compliance strategies (such as stan dard recognition of a Purchased Power Agreement for RE and a recognized RE credit market strategy) to help avoid conflict between states and to promote compliance generally.

Comment 37: Alternative approaches

- RGGI Program Example

Response 37: The EPA a ppreciates the RGGI Program as an example for changes to the goal calculation equation. 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 f inal 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:

Commenter s stated in response to the release of a Notice of Data Availability (NODA) from EPA on October 28, 2014, the commenter s recommend that EPA "follow the RGGI example". The commenter s said the RGGI Program was amended by:

1. Lowering the regional 2014 cap to 91 million tons (2012 baseline);

2. Maintaining the original 2.5 percent per year reduction to the regional RGGI cap for the years 2015 through 2020;

3. Applying budget adjustments to draw down the private bank of allowances that were allowed to be carried forward into the program in 2014 (representing early reductions from the former, higher original baseline); and

4. Retaining a 3

- year compliance period, although interim compliance periods were added.

Commenter s stated from 2010 to 2011 to 2012, RGGI total emissions declined each year; for the amended 2014 regional cap, RGGI States chose 2012 as a baseline, resulting in the most stringent (lowest) cap level. The commenter s said EPA's NODA provides data for 2010 and 2011; if EPA were to allow states to choose an alternative 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 proposed 2012 baseline. The commenter s said also, an alternative baseline would create an inequity between RGGI States, all of which would contin ue to implement the RGGI Program based on a 2012 baseline, and non

- RGGI States, all of which could choose a less stringent baseline. The commenter s recommend ed that EPA retain the originally proposed 2012 baseline; some stakeholders have expressed concern that goals based on a single year baseline do not account for year

- to

- year variability in emissions. The
commenter s said the RGGI Program provides compliance flexibility by implementation of a 3

- year compliance period, rather than basing the regional cap on a 3

- year average. The commenter s recommend ed that EPA also implement a 3

- year compliance period in order to addre ss stakeholder concerns.

Comment 38: Alternative approaches

- PA Whitepaper

Response 38: The EPA appreciates the PA Whitepaper recommendations to the goal calculation equation. 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:

Com menter s stated EPA's draft rule proposes a number of approaches for Pennsylvania to achieve a very aggressive reduction target of 32% below 2012 levels, based on a number of assumptions, including that existing plants can (and will) become significantly mo re efficient,534 that existing and new natural gas plants can (and will) run significantly more often, and that Pennsylvania can (and will) deploy considerable renewable assets and energy

- efficiency measures beyond those already required by law. The commenter s said each of these "building blocks" will come with a cost; there remain significant questions as to the ability of Pennsylvania to comply with this target without additional shutdowns of coal

- fired facilities. The commenter s said the proposal put forwar d by EPA is unlike any other emissions reduction strategy ever developed, and we believe the sort of approach envisioned in a recent Pennsylvania DEP whitepaper [Recommended Framework for the Section 111 (d) Emissions Guidelines Addressing Carbon Dioxide S tandards for Existing Fossil Fuel

- Fired Power Plants. Pennsylvania Department of Environmental Protection, April 10, 2014. http://www.elibrary.dep. state.pa.us/dsweb/Get/Document

- 100322/2700

- UK

DEP4446%20combined.pdf ], where achievable reductions at fossil

- fuel generating plants are identified, with so

- called "outside the fence" measures made available

- but not required

- to achieve compliance, is a m ore 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 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:

Commenter s recomm end ed that EPA consider other options that states could choose as an alternative.

Commenter s stated one approach would be to eliminate the renewable energy "penalty" for early (pre

- 2012) movers that EPA effectively uses when calculating states' 2012 emissi ons rates. The
commenter s said under this approach, early moving states 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 more than other states.

Commenter s added another approach would be to allow states to meet an alternative goal that reflects significant investments in renewable energy, which could be voluntarily utilized in lieu of the cited BSER. The commenter s said it is obvious to look at renewable energy, as these sources are truly carbon neutral, and investments in these sources result in significant carbon reductions; this compliance option could be based on the idea that a certain percent of the electric
g enerating fleet must be carbon neutral. The commenter s said this simple alternative emissions cap would reward early actions by setting a reasonable carbon pollution standard that broadly requires a percentage of renewable generation based on a baseline ye ar; for example, 25% from 2012 baseline levels by 2030. The commenter s said this simple approach would focus exclusively on zero carbon resources and allow states to simply and efficiently meet their goal by demonstrating a certain percentage of renewable energy; and, because natural gas combined cycle turbines are needed to support high penetrations of variable renewable sources, such an535 approach would have the added effect of automatically promoting re

- dispatch to natural gas, and other efforts that refle ct the state's commitment to addressing greenhouse gases. The commenter s said in Colorado's experience, efforts that willingly and intentionally go beyond federal regulatory requirements are often more likely to succeed, achieve real reductions and do so

e arlier than mandated requirements; ultimately, such efforts can be more beneficial for the environment and public health.

Commenter s added EPA's final rule should appropriately include an alternative compliance demonstration that is simpler than the propos ed BSER, while still arriving at the policy goals set forth in EPA's proposal. The commenter s believe d that such alternatives could provide flexibility and simplicity, reward early movers, level the playing field, and address technical feasibility and
cost issues, all while signaling support for other early emission reduction efforts.

Commenter s added in finalizing the Clean Power Plan, when applying a corrected, consistent displacement approach for calculating state goals, EPA may also consider whether adj ustments to any other building block parameters are appropriate; for example, EPA could consider inclusion of new NGCC units in calculating state targets, 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 strengthening the emissions outcome between 2020 and the final compliance date.

Comment 40: Alternat ive approach

- mass

- based allowance trading system.

Response 40: The EPA appreciates the mass

- based allowance trading system recommendations to the goal calculation equation. Please see section VII of the final rule preamble of the CPP and the CO2 Emissi on Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP for more information about the mass based final goals and how they were calculated.

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

Com menter s stated a mass

- based allowance trading system provides the most effective, efficient, and affordable approach to implementing EPA's state goals for this industry. The commenter s stated EPA should provide states with incentives to adopt mass

- based al lowance trading systems with a cap.

The commenter s propose d a simple and transparent approach 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 method ology ("GDC"). The commenter s said this methodology was developed for CATF by NorthBridge, and is more fully described in its whitepaper Bruce Phillips, "Translating Emission Rate Goals into Mass Goals under the Clean Power Plan," dated December 1, 2014. T he commenter s said specifically, under the CATF/Northbridge suggested approach, 2012 retail sales are grossed up to account for lines losses, reflecting total 2012 generation, to which a [business

- as

- usual] BAU load growth rate (between 2012 and 2030) is536 a pplied; this produces an estimate of total state generation needs for 2030. The commenter s said the 2012 retail sales assumptions in these calculations are taken from the GDC and the load growth data are taken from the EPA's Integrated Planning Model cases issued as part of its June 2014 Regulatory Impact Analysis. The commenter s said this approach to incorporating load growth factors in the goal development process is analogous to the EPA's approach taken in the NOx SIP call.

Commenter s added next, demand and supply resources are deployed sequentially to meet total state generation needs; all four building blocks, along with generating resources not covered under the CPP, are represented in this analytical process; in this way, working back through the
app lication of the building blocks, total resources are balanced with total energy demands, and the utilization of existing affected sources is reduced.

Commenter s added finally, to create the state's emission budget, the amount of energy produced by each fo ssil source covered under the rule is multiplied by the average state emissions rate for that fossil source in 2012. The commenter s said the one exception to this process is the coal emission rate, which is assumed to be 6 percent lower than 2012 levels co nsistent with building block 1 of the GDC.

Commenter s said this methodology is a "first principles" approach to mass

- based calculation; it starts with fundamental generation demand and resource data, along with the building block assumptions used by EPA i n the GDC process, using them to determine the EPA's proposed emission rate goals. The commenter s said because it is based on complete and balanced estimates of electric demand, energy efficiency and generation in future policy years, it is simple, intuiti ve, and fully transparent; and, because it relies on the same assumptions and calculation process used by the EPA, the resulting annual CO2 mass goals are consistent with the EPA's definition of BSER and equivalent to the proposed rate goals.

Comment 41: Alternative approaches

- include federally enforceable shutdowns into goals

Response 41: The EPA appreciates the recommendation to include federally enforceable shutdowns into the goals. Please see sections VI and VII of the final rule preamble of the CP P 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 com ment:

Commenter s stated EPA assumes that in

- state natural gas combined cycle (NGCC) units will be preferentially dispatched before in

- state coal units; this approach is not a concern for Washington as part of the final goal in 2030, as long as Washington h as a mechanism to address changes to in

- state emissions caused by out of state coal plant closures; however, EPA's dispatch assumption creates challenges for meeting Washington's interim goal for 2020

- 2029.

Commenter s stated Washington's only coal power pl ant, 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 consequence of the law and other binding documents (including the SIP), the plant has full legal authority and a contractual obligation to operate and provide power to in

- state utilities through the end of 2025. The commenter s stated the law requires one unit to cease operation by the end of calendar year 2020 and the other u nit 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 Washington SIP; as part of the SIP, this closure schedule is also directly enforceable by EPA and private c itizens.

The commenter s 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 a ll 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 commenter s added specifi c to Washington, we have evaluated the effects of including the operation of the Centralia Power Plan on the interim goal; using the EPA goal setting spreadsheet (including EPA's proposed NGCC emission rate), we have estimated that Washington's interim goa l would increase from 264 lbs/MWh to 3411bs/MWh; the final goal would remain unchanged as a result of this request.

The commenter s stated the operation of this coal plant, whether at the capacity factor achieved in 2012, the levels in other years, or the company's expected 84

- percent capacity factor, will tend to increase the CO2 emissions used to calculate the interim emission stand ard for Washington. The
commenter s said with the 2025 closure of this plant, Washington will eliminate its in

- state coal based emissions, which supports the goal of the proposed rule. The commenter s said their requested modification would only affect the i nterim 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 commenter s added EPA could adjust the interim emission standards of other states i n 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 enforceable requirements that Centralia has; such an adjusted approach should still achieve the 2030 goal, even i f the interim goal is modified.

The commenter s 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 o f natural gas generation in 2029. The commenter s 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 commenter s 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 Coope rative Utility" Category538 Response 42: The EPA appreciates the recommendations to the goal calculation equation for a small public and cooperative utility category . 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:

Commenter s stated if EPA creates an alternative category 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 participating in the general state p lan.

The commenter s said the alternative state plan would require the qualifying small public or cooperative utility to undertake the following during the Interim Goal period:

• Achieve all reasonably cost effective heat rate improvements on any non

achiev ing 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 efficiency 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 cooperative 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 calculation equation. 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 suppo rting 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:

Commenter s stated as large as the benefit cost ratio is in the EPA analysis of Opti on 1, when these modifications are made to the economic analysis, the potential benefits of a well

- designed, least cost performance standard will exceed the costs by a much greater margin than EPA's Option 1 analysis suggests. The commenter s said when the economic analysis is corrected and a539 third, "high" reduction rule analyzed, the higher standard will be very attractive. The commenter s said whether or not EPA adopts the higher standard, having the more rigorous analysis of a higher standard available wou ld 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 targets

Response 44: The EPA appreciates the recommendations to the goal calculation equation to set tighter emission targets . 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 C PP for more information about the final goals and how they were calculated.

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

Commenter s constructed a Climate Protection Scenario in order to illustrate that the EPA can set

muc h 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 S cenario:

• AEO 2014 projection for fossil

- fuel

- based electricity generation and also the overall national total for affected generation in 2030.

• 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

- based wind since t hese have low CO2 costs that are much lower than new nuclear; assume that in the near

- term distributed solar will also be part of the implementation of the plan.

• Maintained the groupings of the states chosen by the EPA for renewable target setting; select ed the highest renewable portfolio standard in each group as the target for each state.

• Adopted the goal set out in the 2012 Executive Order by President Obama that called for "a national goal of deploying 40 gigawatts of new, cost effective industrial CH P in the United States by the end of 2020."

• Reduced nuclear power according to the present license expiry dates.

• Kept overall natural gas use a little below 2012 levels.

• In calculating the target rates, adopted a variant of the approaches published by
t he EPA in its October 2014 Notice of Data Availability.540 Commenter s stated in the IEER Climate Protection Scenario, renewable energy targets were set through a stepwise process:

1) using the EIA generation data from all renewable energy sources (wind, sola r 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 cap 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 renewable energy target for e ach of the regions; these percentages are: East Central

- 20%, Northeast

- 40%, North Central

- 30%, South Central

- 20%, Southeast

- 20%, West

- 33% and a note that Maine target includes hydropower.

3) applied these fractions to the projected sales for 20 30 after adjusting for the projected efficiency improvements to obtain a target for renewable 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 20 12 level (available in the EIA's 2014 Annual Energy Outlook).

4) starting from 2017, assumed that RE generation in 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 t he previous year.

Comment 45: EPA hould adopt UAMPS' Retirement Calculation Methodology for Coal Plants Retired Before 2030

Response 45: The EPA appreciates the recommendations to adopt the UAMPS’ retirement calculation methodology for coal plants reti red before 2030. 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 c alculated.

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

Commenter s stated The CPP acknowledges the need to provide compliance credit for the retirement of affected EGUs subject to the Proposal, but the Proposal lacks defi nition on how compliance credit will be recognized by EPA in its approval process of State plans. The
commenter s request ed that EPA adopt UAMPS Retirement Calculation Methodology as described below; adoption of UAMPS' Retirement Calculation Methodology wil l provide States with the guidance necessary for States to compile an approvable State plan and help reduce the likelihood of disapproval actions. The commenter s said the UAMPS Retirement Calculation541 Methodology strives to more accurately reflect the actual reductions achieved from affected EGUs while achieving the primary goal of reduced CO2 emissions set forth in the CPP. The
commenter s 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) are 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; Power plant X is replaced with a new 1,200 MW NGCC, but be cause new units are not affected EGUs, these emissions are not included in Utah's compliance calculation; by utilizing Utah's affected EGU MWh from 2012 (including MWh from Plant X and Y), Utah achieves an emissions rate of 1,189.97 lb/MWh, surpassing EPA' s set target by 132.07 lb/MWh. The commenter s believe d this 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 commenter s said removing the MWh associated with these plant retirements fails to accurately reflect the CO2 emission reductions 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 proposed target of 1322 lbs of CO2/MWh. The
commenter s said it should be noted that these plant retirements would result in Utah achieving its State goal under a mass

- based approach assuming a target 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 conversion from rate

- based to mass based ; EPA needs to reconcile how a State's decision to adopt a rate

- based versus a mass

- based approach may result in the State being deemed not to be in compliance with its proposed goal.

Comment 46: Subsequent NODA needed to evaluate alternative scenarios

Respons e 46: The EPA appreciates the recommendation to publish an 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 rule preamble of the CPP.

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

Commenter s stated the proposal did not include any information on how a Federal Implementation Plan (FIP) might be structured and implemented. The commenter s said it is appropriate to include language in a subsequent Notice of Data Availability (NODA) regarding this issue so that states can take this into consideration in evaluating alternative scenarios for states to comply with the final rule.

Comment 47: T he EPA should allow states to utilize non

- BSER mechanisms 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 Final Rule supporting the final CPP for more information about the final goals

, how they were calculate , and state compliance plans

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

Commenter s stated EPA's 111(d) proposal allows states to "include measures in their plans beyond those that the EPA included in its determination of the BSER." The commenter s said for example, non

- BSER compliance options could include a ffected unit

- specific measures to further reduce emissions and/or measures that would result in reductions at non

- affected units. The
commenter s support ed this flexibility and agrees these types of measures may be appropriate to include in a state plan to achieve CO2 emission reductions 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 V II 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:

Commenter s stated an alternative approach to setting 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 this information in determining improvement potential for that state and use this potential for calculating the state goal. The comme nter s said in some states, this may result in an even higher heat rate improvement then calculated, as some coal

- fired EGUs may be able to exceed the estimated six percent increase in heat rate. The
commenter s said if this type of approach based on more in

- depth analysis is used however, it should also account for other opportunities to increase efficiency in goal setting (e.g. environmental dispatch of existing units, or increased co

- firing of natural gas); ultimately, this could result in greater emission reductions from this Building Block, especially for states who have not taken any actions prior to 2012 to improve or upgrade their coal

- fired EGUs. The
commenter s said this may also be an opportunity for the EPA to recognize the early action of
some stat es that many utilities and state regulators are concerned with.

Commenter s stated EPA has invited comment on whether they should consider re

- dispatch to new NGCC resources (as opposed to existing, under

- utilized NGCC resources), the potential to

co

- fire w ith natural gas at existing coal

- fired EGUs, or convert coal to natural gas at existing coal

- fired EGUs. The commenter s recommend ed that the EPA recognize these pathways as compliance measures explicitly, and to consider them in setting carbon reduction go als, as they are already being deployed across the country. While the commenter s t ook the position that the existing proposal allows states to pursue these compliance measures as options, and EPA should consider these three pathways as part of the BSER for Building Blocks 1.543 Commenter s’ analysis has shown that an environmental dispatch, that is, the re

- dispatch of generation from less

- efficient to more efficient coal

- fired EGUs, could alone account for a 5% improvement in Wisconsin overall emissions per un it 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.

Commenter s stated the method employed by the EPA to calculate the renewable energy goal for each state is based on a regional average of existing 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 respective states. The commenter s said that a technical potential analysis would be more appropriate in setting the renewable energy goal for each state, as it does a better job at accounting for the specific circumstances for each state and better illustrates the enormous pote ntial that Wisconsin and states have to develop their own renewable energy resources.

Commenter s stated as a baseline, endorses the Union of Concerned Scientists' "Demonstrated Growth Approach" to the renewable energy aspect of Building Block 3. The comme nter s said this entails: (1) setting a national benchmark renewable energy growth rate of 1% of electricity sales/year based on demonstrated growth in the states from 2009 to 2013; (2) full compliance with existing RPS standards; and (3) accounting for act ual and expected renewable energy growth between 2013 and 2017. The commenter s said states 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 propos al, but is still easily achievable by the states. The
commenter s would at least like to see this approach adopted by EPA in setting Building Block 3.

Commenter s stated that EPA is undervaluing the potential of renewable energy as a compliance measure. The commenter s said EPA's technical

- economic analysis of renewable energy potential does not use the most recently available data, which 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 energy as a compliance measure will increase and greater emissions reductions can be achieved.

C ommenter s stated other approaches to setting the renewables portion to the state targets, such as the Union of Concerned Scientists' (UCS) demonstrated renewables growth approach, show double the amount of renewable energy potential using the correct data for renewable energy. The commenter s said the UCS demonstrated growth approach would improve on the EPA's proposed approach by incorporating the following core components:

• Setting a national renewable energy growth rate benchmark based on demonstrated gro wth in the states from 2009 to 2013

• Assuming full compliance with current state RES policies, 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 commenter s said the UCS state

- level renewable energy 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 is technically feasi ble

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 Goal Computatio n 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:

Commenter s 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 commenter s suggest ed if no additional HRI is technically feasi ble at a unit, the Final Rule should recognize such unit as having already met BSER, and such unit should be excluded from the state reduction goal calculation as is currently the case with nuclear generation.

Comment 50: Alternative approach

- BB1

- modi fied and reconstructed 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 t he CO2 Emission Performance Rate and Goal 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 un der this comment:

Commenter s stated U.S. EPA took a different approach under the modified and reconstructed proposal to at least acknowledge unit specifics should be considered; specifically, U.S. EPA proposed two options, both considering unit specifics. The commenter s said first, U.S. EPA proposed to use a unit

- specific rate, either the single best annual emission rate or the best three consecutive year average emission rate, based on unit

- specific data from the 2002 to the point of modification. [79 FR 3 4987, 34974] The commenter s said U.S. EPA then proposed a 2% HRI be added to that rate. While the commenter s did not agree with this approach, it is a step in the right direction of considering unit

- specifics that U.S. EPA has not taken under this proposal . The
commenter s said second, U.S. EPA proposed the emission limit for modified sources would be545 determined by the Section 111(d) implementing authority based on the sources expected performance after implementing unit

- specific EE improvements taking into account what is technically feasible. [79 FR 34965, 34988] Commenter s assert ed this is the exact provision that should be occurring under this Section 111(d) plan. The commenter s believe d this type of flexibility is what is necessary in order to address issues that will arise as states develop and implement Section 111(d) plans. The commenter s 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 economically feasible at a particular unit given the history of what efficiency improvements have already been completed. The commenter s said approaches under the modifie d and reconstructed proposal, 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 application of studies and averaging historical rates with out any consideration for unit

- specific feasibility is wrong, unworkable and can lead to individual facilities in some cases being imposed with requirements that are beyond the BSERs.

Comment 51: Alternative approach

- BB2 EPA should impose a minimum 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 blocks. The EPA’s calculations of sub category rates does assume that fossil ste am generation will continue to operate in all Interconnections as the least stringent region used to set the sub category

- specific rates has a significant amount of fossil steam generation.

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

Commenter s believe d 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 commenter s said this would allow states such as Mississippi the ability to preserve some coal

- fired generation. The commenter s said a modified goal setting methodology with minimum state gas generation shares

- or alternatively, maximum coal generation shares or maximum average emissions rates

- would also provide real flexibility to states such as Mississippi to maintain some generation diversity and would help to minimize overall compliance costs because states would not be forced into potentially irr eversible actions to ensure compliance on a single

- state basis. The commenter s ha ve not evaluated what minimum share level could be appropriate, but believes such modification could increase true flexibility, enhance opportunities for coordinated state act ion, and decrease the overall economic burden of the Clean Power Plan, while maintaining overall emissions reduction goals.

Comment 52: Alternative approach

- Use of NSPS NGCC Rate in Goal Setting546 Response 52: The EPA’s use of historical NGCC emission rate is appropriate for estimating future annual NGCC emission rates. It disagrees that using a higher emission rate than reported is consistent with the notion of a Best System of Emission 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 spe cific public comments under this comment:

Commenter s note d that in places EPA has used an NGCC emission rate, in lb/MWh, in calculating the Interim and Final Goals for some states that is lower than the rate specified in EPA's pending NSPS for EGUs. The co mmenter s said in Arizona, EPA used an NGCC emission rate of 900 lb/MWh, based on the average performance of Arizona's NGCC units in 2012; the
commenter s believe d that this is unreasonable. The commenter s said for purposes of goal setting, an existing NGCC unit should not be expected to perform at a better level than a new, post

- NSPS unit with newer technology; even if the existing NGCC unit is temporarily exhibiting a better level of performance, it is not clear that such performance 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
commenter s believe d that use of the graduated NSPS rates would be b est, for purposes of simplicity in goal setting, the commenter s believe d that use of the 1,000 lb/MWh in the proposed NSPS would be an acceptable solution given that most NGCC units would be subject to the 1,000 lb/MWh limit if they had been constructed po st

- 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:

Commenter s ha ve reviewed the Union of Concerned Scientists' (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 reflects the current and projected market development trends for renewable energy (nationally and in the southeast); and, 3) is technically and economically feasible for southeastern utilities. The commenter s said UCS vi ewed the EPA Proposed and Alternative RE approaches as an underestimation of the actual potential RE can and should play in reducing U.S. carbon emissions from 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 benchmark based on demonstrated growth in the states from 2009 to 2013;547 • Assuming full compliance with current state renewable electricity standard (RES) polici es, as set by law, that require certain percentages of electricity to come from renewable sources; and

• Accounting for actual and expected renewable energy growth between 2013 and 2017.

The commenter s said UCS found that the national average annual increase for state renewable energy growth from 2007

- 2013 was about 1% of electricity sales per year, and therefore set that rate as the minimum growth rate that would be required starting in 2020. The comme nter s 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 growth rates from 2017

- 2030, up to 1.5%; further, states would have to meet the greater of two goals

- t he UCS growth rate or their individual RES target (if they have one), with an overall cap of 40% of any single state's electricity sales. The commenter s said another key difference in the UCS Approach compared to EPA's Approaches is that UCS used actual 20 13 data (including distributed generation) plus projected generation from utility

- scale solar and wind projects under construction through 2016, to determine each state' 2017 baseline generation levels.

Commenter s stated the U.S. has experienced a boom in renewable (particularly solar and wind) energy development over the past several years; this has been driven in part by policies, and largely by technology advancements and declining costs. The commenter s said a c ritical component to the UCS approach is in being more consistent 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 win d and solar projects under construction through 2016. The commenter s said further, RE growth rates are state

- specific (within the 1

- 1.5% range or based on existing RPS compliance rules), and are therefore not limited to any one state or region's RPS rules; this is particularly true for the Southeast, where there is only one state with an RPS, yet several other states are pursuing renewable energy independent of RPS mandates.

The commenter s said in the Southeast, the UCS Approach results in 14% of electrici ty sales being met with renewable energy by 2030, as opposed to 7% under EPA's Proposed Approach; the Southeast has more than enough technical potential from renewable resources to meet this level of penetration, and current market growth is already occurr ing.

The commenter s said solar energy development is booming 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 commenter s said some examples of minimum expected solar development in southeastern states

- note that North Carolina is the only state listed here with an RPS: North Carolina, the only of these states 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 close 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 nea rly 900 MW

- ac by the end of 2016; The Tennessee Valley Authority (TVA) has over 260 MW

- ac of solar installed or under contract, and assuming that solar programs remain at 2014 levels, TVA will have nearly 500 MW

- ac total by the end of548 2016; South Carolina recently passed the Distributed 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
commenter s were aware of substantial commercial solar development activities in Mississi ppi, Alabama, and Florida. The commenter s said the opportunity 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 RE generat ion level for the Southeast could be met with solar.

The commenter s said wind technology is already capable of meeting significant levels of the Southeastern electricity generation, due to currently available "Class III" turbines, and in fact developers h ave been prospecting these states over the past couple years; southern utilities are already purchasing over 2,500 MW of wind capacity from out

- of

- state projects, and transmission lines are in the process of being developed to transmit several gigawatts of wind to several southeastern territories.

The commenter s said biomass also represents a unique opportunity to leverage low

- emitting and dispatchable power production resources in the Southeast.

Commenter s stated EPA should amend the renewable energy goal

- setting methodology in the final rule so that the Clean Power Plan drives renewable energy growth in all states; Minnesota's RES requires 25% of retail sales for all but the state'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 Minnesota's renewable energy penetration goal at an unreasonable level of 15% by 2030; in other words, the Clean Power Plan does nothing to drive

rene wable energy development in Minnesota and instead acts to weaken Minnesota's overall target. Minnesota is not the only state in this position.

Commenter s urge d EPA to consider a renewable energy goal under building block 3 that considers historical perfor mances and also drives future change. The commenter s said as stated by the Union of Concerned Scientists ("UCS"), "the Clean Power Plan could deliver much deeper reductions in emissions, especially by taking greater advantage of cost

- effective renewable en ergy options." The commenter s said the UCS's "Demonstrated Growth" approach uses "the latest available market data, demonstrated rates of growth in renewable energy, and existing state commitments to deploy renewables."

Commenter s stated the UCS analysis showed that the levels of renewables reached through compliance with the Clean Power Plan are lower in 2020 than what the U.S. Energy Information Administration ("EIA") predicts would occur under a business

- as

- usual approach. The
commenter s said this circu mstance highlights the need for a more robust renewable energy goal under the Clean Power Plan; moreover, the Clean Power Plan's 2030 estimated reductions are only marginally higher than the EIA's projections. The commenter s said trends prove that we can d o better; in particular, Minnesota can do better and 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.

Commenter s stated although EPA inc luded an alternative approach to calculating the renewable energy portion of building block 3, EPA's alternative approach does not reach even the EIA's549 business

- as

- usual level of renewable energy generation in 2020 and results in a similar level of renewab le energy generation in 2030. The commenter s 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 of growth. The commenter s s aid this results in a renewable energy target under building block 3 that can drive states in the right direction. The
commenter s said a stronger renewable energy target based on what states can realistically achieve will demonstrate a state implementation pathway that promotes the type of energy infrastructure that will ultimately be needed to stabilize our climate; EPA should therefore prioritize renewable energy by making renewable energy targets stronger and more realistic.

Comment 54: Alternative app roaches

- 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:

Commenter s stated in setting rate targets, EPA should subtract emissions reductions due to energy efficiency (and renewable energy) from emissions in the numerator of the rate; when states are calculating rates from actual generation and emissions, electricity savin gs due to energy efficiency (and renewable energy) should be added to generation in the denominator of the rate. The commenter s said to the extent efficiency and renewables reduce use of the covered plants, adding them to the denominator of the rate underc ounts them. The commenter s said in setting the targets, the emissions reduction due to efficiency and renewables (beyond renewables in 2012) could be subtracted from the numerator. The commenter s said when calculating the emissions after redispatch (the nu merator of the target 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 assumed use of coal generation. The commenter s said the efficiency and renewables cannot result in negative covered generation, and one could assume a minimum amount of covered fossil generation will remain to help ensure grid reliability.

Commenter s stated a simpler alternative might be to calculate t he 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 generation is from the mix of coal and natural gas after redispatch. The commenter s 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:

Commenter s stated the following three alternative methods, all of which are as equally valid as EPA's, show just how unrealistic EPA's renewable goal is for South Dakota.

• The first method woul d be for EPA to sum the renewable 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 s econd method is to average the actual renewable energy production of the five states with renewable portfolios based on their actual renewable energy production in 2012; the average percentage of renewable energy production for the five states is 5.1 perce nt; 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 Region; this results in an average state goal of approxim ately 7.1 percent.

The commenter s said all three alternative methods produce a renewable goal for South Dakota that is far less than 15 percent and therefore allow for a greater likelihood of successful implementation; therefore, South Dakota suggests that EPA's calculation for renewable energy for South Dakota is seriously flawed and should be withdrawn. The commenter s 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 energy goals.

Co mment 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:

Commenter s see two potential ways to improve the proposal's approach to renewable energy.

1) Apply renewable targets to retail electric sales. The commenter s said EPA already used retail sales data in the application of Building Block 4; changing Building Block 3 t o a load

- based calculation would not dilute national emission reductions and would more closely align with existing RPS policies upon which the renewable assumptions are based. The
commenter s recommend ed keeping the regional renewable energy targets the sa me

- 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 commenter s said the goal

- setting calculation would assume that each state would meet half of its regional t arget by January 1, 2020, 75 percent of its target by January 1, 2025 and its entire regional target by January 1, 2030. The commenter s 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 sizeable chunks as a result of utility

- scale projects. The commenter s 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 d isruption 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 location of the generating units.

2) Recalculate Building Block 3 goals with proper data and attri bute renewable resources consistently. The commenter s said Building Block 3 could also be improved by changing two data sets; first, the hydropower on the Oregon/Washington and Oregon/Idaho border should be evenly split between the border states; this appr oach would be most consistent with EPA's proposed approach of applying regional targets based on the physical location of generation. The
commenter s said second, the 2012 stock of non

- hydro renewables in each state should be adjusted to be consistent with existing RPS policies; 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 be used to set Oregon's target. The
commente r s said data from the Northwest Power and Conservation Council on the recipient of

non

- hydro renewable energy generated in the Northwest is available. The commenter s said moreover, FERC Form 1 and FERC's Electric Quarterly Report contain the information ne eded to make most or all of the data corrections needed. The commenter s 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 issue 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:

Commenter s stated one way to address the exported renewables included in the 2012 state total is to simp ly count them in the calculation of Wyoming's goal compliance going forward, but without applying a growth factor; in other words, the 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 666,212 MWh escalated by 1% annually.

The commenter s said Wyoming would be indifferent to use of the second approach as long as variations in the exported renewables did not add to Wyoming's burden to increase renewables to meet the EPA goal. The commenter s said this could occur through fluctuations in output, through expiration of contracts, and through transfers of interests, among other possibilities; for example, if an existing purchase a greement expired and rights to the production were acquired by a purchaser out of state, the result may be to credit those renewables to a different state. The
commenter s said one way to address these possibilities would be by State

- proposed adjustments in filings demonstrating compliance; transfers could simply be retroactively eliminated from the552 state goal and increases in production could be retroactively added; the common thread in these adjustments would be the state's absence of control over the expo rted renewables.

The commenter s said without an adjustment to the compliance 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 reality of Section 111(d) compliance begins to press on utilities and states.

Comment 58: Alternative approach

- RE calculation that relies on a state

- by

- state evaluation

Response 58: See Preamble Section V.A.4.c for a discussion of the building block three quantification in the Final CPP. This fina l methodology 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 is assigned to different generating technologies.

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

Commenter s stated if U.S. EPA keeps building block 3, the commenter s prefer red the incorporation of an alternative RE calculation that relies on a state

- by

- state evaluation which considers each state's capacity for various types of RE measures. The commenter s said a state

by

- state approach, rather than a calculation that focuses on regional goals which may overestimate RE capacity in some states, would ensure that RE targets are more tailore d to each state's unique circumstances; however, the commenter s insist ed that state RE goals must be both attainable and realistic, both from a capacity and cost

- effectiveness standpoint.

The commenter s d id not support the RE approach suggested in U.S. EP A's Alternative RE Approach TSD; the calculation used in the alternative 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 inclu des a benchmark calculation based on the top third of states in a given type of renewable electricity. The commenter s said this is problematic because it may lead to unrealistic and unachievable RE goals. The commenter s said in Indiana's case, the alternat ive 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
commenter s said the final goal in the alternative RE approach is more than twice the RE nu mber in the original calculation. The commenter s d id not believe this goal is at all realistic, especially since Indiana currently has no way to mandate RE measures; further, due to the timing of the proposed rule and proposed date for state plan submittal , Indiana does not have the time to pursue legislative action in order to obtain proper authority to implement this Building Block. The commenter s stated they would prefer an alternative RE calculation that specifically focuses on each state's unique chara cteristics, rather than one that includes benchmarks or calculations based off of regional characteristics, to be incorporated 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:

Commenter s stated on page 34873 and 34875 of the preamble, EPA is taking comments on alternative approaches for setting state goals concerning demand

- side energy efficiency. The
commenter s disagree d with the use of building block 4 because neither EPA nor the states have the authority to make it enforceable; however, if EPA decides to implement building block 4, the 1.5 percent goal needs to be lowered because existing programs in South Dakota have shown that even 0.7 percent over a period of years is overly optimist ic.

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 to 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, t he EPA updated the methodology to gap

- fill generation data at plants where EIA data listed the net electricity generation as negative; perform e d additional quality assurance checks to examine units with unusually high or low CO2 emission rates (i.e., greater than 10,000 or less than 500 lbs. CO2 per MWh) ; added categories indicating units that were under construction or commenced operations in 2012; and used updated Part 75 emissions data

. As described in Appendix 9 of the CO2 Emission Performa nce Rate and Goal Computation TSD for CPP Final Rule , combined 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 proportion of nameplat e capacity. This approach was chosen given the best available data at the time

, 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 th e specific public comments under this comment:

Commenter s stated in EPA's "Data File: 2012 Unit

- Level Data using the eGRID Methodology" dataset, EPA used aggregate data rather than generator

- specific data for NGCC units, which may deviate from the methodol ogy described in the "Description of 2012 Unit

- Level Data using eGRID Methodology" Technical Support Document (hereinafter "TSD").5 54 Commenter s stated in analyzing EPA's "Data File: 2012 Unit

- Level Data using the eGRID Methodology" dataset, the commenter s n ote d that certain data elements appear to be derived without following the methodology (including the methodology for data priority) described in EPA's "Description of 2012 Unit

- Level Data Using eGRID Methodology" TSD.

Commenter s stated EPA aggregated Com bined Cycle Steam Part (hereinafter "CA") and Combined Cycle Combustion Turbine Part (hereinafter "CT") data before performing calculations instead of using available generator

- specific data or performing prime

- mover

specific calculations; this resulted in loss of generator

- specific accuracy and misapplication of data priority as described in the TSD at the following facilities:

• Dell Power Station generator units CTG1, CTG2, and STG

• Harry L. Oswald generator units 1

- 9

• Hot Spring Generating Facility CT1, CT 2, and Steam Turbine (hereinafter "ST")1

• Magnet Cove Gas Combustion Turbine (hereinafter "GCT")1, GT2, and ST1

• Pine Bluff Energy Center generator units CT01 and CT02

• Thomas Fitzhugh generator units 1 and 2

• Union Power Partners LP generator units CTG1

- CTG 7 and STG1

- STG4 52

Commenter s stated while this treatment of NGCC data may seem negligible at a facility level, the cumulative effect would have a 26 lb/MWh difference in Arkansas's final goal.

Commenter s s ought clarification on the rationale behind EPA 's departures in the methodology used to derive generation and emissions data for these units from the methodology as described in the "Data File: 2012 Unit

- Level Data using the eGRID Methodology" TSD. The commenter s said any necessary corrections to the d ataset should be made before this data is used in the final goal computation for Arkansas.

Commenter s stated some units in the eGrid database have CO2 emissions rates well beyond 3,000 lbs/MWh, given the CO2 emissions and net energy output data provided i n the file. The
commenter s ask ed 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 discussion why we relied on 2012 data as the starting point for forming its baseline. We did make some adjustments to reflect

commenter s’ concerns, and in the case of hydro

– these adjustments reflect data going back to 1990. However, in general, the EPA believed the rat e

- based nature and the regional nature of the sub category rate derivation make recent year data robust to random annual unit

- level variation. The EPA believes starting with 2012 data and only making limited adjustments uses the best555 available historical d ata and most accurately reflects an appropriate baseline from which to evaluate BSER potential.

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

Commenter s asserted EPA must provide greater specificity regarding the impacts of utilizing baseline data from 2010 and 2011 on individual state requirements.

Commenter s stated EPA has provided 2010 and 2011 operating data as a supplement to the 2012 year data used to establish the baseline in the Rule Proposal. The commenter s said t his is an insufficient amount of data, particularly for states like Texas, Louisiana and Mississippi with such large and diverse generation fleets. The commenter s said in EPA's other recent rulemaking, far more data was provided regarding historical operat ions

- at least five years. The commenter s said for a rule of this significance, operational and emissions data should cover many more years, in order to properly assess and determine a baseline; importantly, if EPA does desire to amend its baseline

- whic h affects every substantive requirement of the Rule Proposal

- it can only do so by issuing a new proposal and seeking full public comment on any changes.

4.4.6 Other

Section 4.4.6 covers all other public comments related to the proposed emission goals computation procedure.

Commenters have raised a number of issues related to 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 commenter s that under section 111(b)(1)(B), the EPA must review standards of performance for new sources every eight years. While there is no requirement that the EPA review standards of performance for existing sources under section 111(d), the EPA anticipates that changes to performance standards for new sources may prompt the EPA to review standards of performance for existing sources as well. Whether such coordination is warranted, however, will depend upon the nature of any changes proposed for new sources when the EPA conducts its periodic review.

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

Commenter s stated EPA should consider developing a time line and approach for periodically re

evaluating this regulation; similar to the 8

- year reevaluations 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 commenter s said this reevaluation might also provide a mechanism for updating the fleet of facilities subject to the regulation so that it does not gradually decline into irrelevance but instead continues to achieve significant emission reductions from fossil

- fuel power plants.

Commenter s stated a regular review of the "best system of emission reduction" should be conducted to ensure that EPA's plan prioritizes cost

- effective solutions that bring maximum pollu tion reductions while maintaining reliable electric service and minimizing harm to and costs of human health and the environmental impacts. The commenter s said this analysis will be critical as EPA establishes the next set of reduction targets post 2030.

C ommenter s stated the Proposal would be strengthened by a commitment from EPA to periodically reevaluate the state targets; while 111(d) of the Clean Air Act does not explicitly require this, other sections of the Clean Air Act do (111(b)(1)(B)) and there i s nothing prohibiting EPA from regularly updating performance standards for new sources as advances provide technologies that are cleaner or less costly. The commenter s said updating the BSER would support a "no backsliding" to ensure the standards sustain or increase the stringency of the goals. The commenter s added the impressive pace of technological advancement in renewable energy, clean distributed energy technologies, energy efficiency, and grid technologies provide another reason for reviewing and re vising the BSER and state targets.

Commenter s stated based on the experience of the Regional Greenhouse Gas Initiative (RGGI) program, periodic reviews of progress and targets are important to keep the program on track. The commenter s said this is especial ly true when, as 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 commenter s urge d EPA to have a required review of the overall program ta rget and each building block target four years after the 2018 regional SIPs are submitted, and at the time updated SIPs submitted are submitted in 2023.

Comment 2: Adjustments to goals to address errors in the EPA assumptions or new information/ Mid

- term review process

Response 2 : See Section VIII of the preamble and the discussion of the reliability safety valve

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

Commenter s stated EPA should allow that, upon a demonstration that significant transmission upgrades are reasonably necessary for a state to operate its NGCC fleet at the average annual capacity utilization rate within the Final Rule, and that no reasonably sufficient alternative is available to gain the same carbon reductions, its goal or interim goal should be adjusted to account for the time needed for such upgrades.

Commenter s stated the final goals need to include the flexibility necessary to adjust for any deviations that may occur between forecasted assumption s and actual conditions; the557 commenter s recommend ed EPA allow for interim and final 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.

Commenter s stated EPA's final rule should expressly permit a state to seek an adjustment of its 2030 emission performance target at any time to account for either late discovery of errors in EPA assumptions or material new information that becomes available to the s tate after the close of the comment period on the CPP. The commenter s said 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." T he commenter s said EPA's position is flawed for a number of reasons.

Commenter s stated on a fundamental level, EPA's proposal sets standards that are dependent not an a specific unit's control options, which are relatively ascertainable, but on the wide r ange of evolving energy system components, which require various energy supply and demand assumptions and are much less predictable. The commenter s said when asked by Congress about the possibility of an independent reliability study of the CPP, Federal En ergy 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 NGCC gener ation, and economic conditions such as fuel prices" and ""could be more speculative than informative, especially for later years." The commenter s said accordingly, EPA cannot "fix" a state's future target because it cannot predict the future; either an ove rly aggressive assumption or a change in circumstances affecting the availability of emission reduction opportunities could render the performance goal unachievable for a state; in that way, EPA's proposed refusal to allow later adjustments to the 2030 sta te goals could directly harm the affected EGUs subject to emission standards within a state and it could indirectly harm major consumers of electricity within a state, including NCC members.

Commenter s stated precluding later adjustments to a standard tha t 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 CP P targets unachievable (either by the state or by EPA exercising its federal implementation plan (FIP) authority).

Commenter s 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 commenter s said the data collection and analysis conducted for EPA's prop osal is massive in scope and far more complex than prior 111 rulemakings, given EPA's attempts to predict energy supply and demand. The commenter s said for these reasons, EPA must allow the states to work with EPA to regularly track and test the assumption s and to update the targets, accordingly.

Commenter s 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 difference. The commenter s said Section 111(d) of558 the Clean Air Act requires EPA to determine best system of emission reductions based on the best available data; Best available data does not include correcting errors in one building block by m aking up the difference using other building blocks. The commenter s said if a state can adequately demonstrate a building block used to establish the state's goal is in error, there is no authority in the Clean Air Act for EPA to require the states to demo nstrate 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 data or assumptions made by EPA are in error.

Commenter s stated the final rule should i nclude a mid

- term review process to ensure the target state goals and time line remains realistic and achievable without sacrificing the reliability, affordability, flexibility, and sustainability of the electricity market. The commenter s support ed includi ng 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 commenter s said EPA has made clear that the rule aims to provide flexibility to states and the c ommenter s believe d a mid

- term review of the goals is important to ensure that the rule works as intended.

Commenter s stated it most prudent for EPA to provide itself and all complying entities, including states, with the flexibility to adjust, or suspend t hose standards going forward if circumstances jeopardizing reliability so warrant. The commenter s said in order to preserve this flexibility, EPA should clarify in the Final Rule that the "binding nature" of the targets does not foreclose the potential for suspension or modification 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 interfere with strict achievement of a n average emissions rate or total mass determination for a given state during the compliance period.

Comment 3: Fly ash

Response 3: See Section VIII of the Preamble for a discussion of State Plan components relying on alternative compliance mechanisms.

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

Commenter s stated the amount of greenhouse gas generated by the combustion of coal for generation of electricity represents a gross quantity which must be reduced by the amoun t of fly ash used in cement production and concrete mixtures. The commenter s 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 t o produce Portland cement). 2 ) Reduction of greenhouse gas due to avoided landfill activities. The commenter s said according to the Waste Reduction Model (WARM) of the US Environmental 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 production and concrete mixtures.

Comment 4: Reducing water usage/ coal ash559 Response 4: While water usage optimization is not a component of BSER quantificatio n, the EPA believes the Clean Power Plan will encourage both 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 Reduction (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 system

wide impacts and least cost compliance mod eling.

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

Commenter s stated one key factor seems to be lacking sufficient coverage in the EPA Clean Power proposal; there is no attempt in the proposal to minimize the usage of wa ter and simultaneously balance the sources of energy generation to best reduce CO2; but this could be done as part of determining the best system for emissions reduction. The commenter s said in a state like New Mexico it would make sense to use more renewa ble zero emission to NOx contribution and thus less fossil fuel generation of electricity, thereby reducing the use of water.

Commenter s stated another key factor in determining the cost of the power plant is the final requirement for disposal of coal ash ; new regulations for coal combustion residuals could force further new investments in New Mexico to support coal fired plants.

Comment 5: Startup, Shutdown, or Malfunction (SSM)

Response 5: The periods of startup, shutdown, or malfunction are not exemp ted from the final goals.

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

Commenter s stated the proposed rule does not provide for exclusions from the CO2 emissions limit for periods of startup, shutdown, or malfunction (SSM). The commenter s said the CO2 emissions from an EGU during SSM events could be much higher than during normal
opera tions, if the emissions are measured on a lb/MWh basis, because there may be little or no electricity generated during such events. The commenter s recognize d that such events may be limited and ultimately may not have much effect upon 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. Th e commenter s said given the risk of elevated CO2 emissions (when measured on a lb/MWh basis) during SSM events, if EPA chooses to include such events in determining lb/MWh emissions, then the state goals that EPA promulgates should also reflect the impact of SSM events on lb/MWh emissions.

Comment 6: Use of Significant Digits in the EPA Calculations560 Response 6: The E xcel spreadsheets demonstrating the calculations provided as an appendix to the Goals Computation TSD at Proposal and the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule show the exact calculations and numbers if a stakeholder wishes to follow the math through. The EPA does not round calculations until it arrives at the final sub category

- specific interim and final emission rates. The nuclear assumption referenced is no longer included in BSER quantification as explained in Section V of the Preamble

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

Commenter s stated EPA's calculations of the state

- specific CO2 emission goals would be more transparent and easier to follow if EPA were more consistent in the use of signif icant digits in the proposed rule, technical support documents, and data files. The commenter s 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 wee ks of being unable to recreate EPA's calculations, the commenter s discovered that EPA used a value of 5.84264%, not 6%. The commenter s said had the percentage been used more consistently throughout the documents or more clearly noted, significant time and confusion could have been avoided. The commenter s said the same can be said of EPA's use of a North Central renewable energy goal of 1 5.114% in its calculations, when it is referred to in the proposed rule and technical support documents as 15%. The
commenter s encourage d EPA to revise the preamble and 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 developing state plans that are appropriate for each state.

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

Commenter s said that, the nontraditional nature of the rule in calculating the CO2 performance goal requires concomitant research into the regulatory institutional arrangements in states. Commenter s said, a traditional state

- level regulatory approach, with an enviro nmental regulator issuing an emission limit permit will no longer suffice, 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 the 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 Commenter s said that, in ensuring utility rates are set according to the "cost

- causer, cost

- pay er principle that costs are assigned to each class of customer (e.g., residential, commercial, and industrial) in accordance with costs incurred to provide service to the class. Commenter s said, anytime one class of customer pays more than its respective a llocated costs, the class is cross

subsidizing other classes. Commenter s said, the Proposed Rule sets an emission rate for all "affected EGUs" in the state, rather than the specific affected EGUs, cross

- subsidies may occur amongst ratepayers of the various utilities in the state. Commenter s 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 prove challenging.