1 TABLE OF CONTENTS

4.5 Errors in 2012 Baseline Data

................................ ................................ ................................ . 2 4.6 Rate

- to

- mass Conversion

................................ ................................ ................................ ...... 35 4.7 state flexibilities

................................ ................................ ................................ ................... 133 4.7.1 Opportunities to adjust the goals

................................ ................................ .................... 134 4.7.2 Stranded assets/stranded investments

................................ ................................ ............ 169 4.7.3 Other

................................ ................................ ................................ ................................ . 238 4.8 Other goal

- setting approaches

................................ ................................ ........................... 308 4.9 Choice of Baseline Other than 2012

................................ ................................ .................. 3682 4.5 ERRORS IN 2012 B ASELINE DATA

Section 4.5 covers public comments related to errors in the 201 2 baseline data in relation to the computation procedure of the final and interim goals.

Commenters have raised a number of issues related to this subsection which are organized by topics (comments) below. Responses are provide d for these topics.

Comment 1: The EPA should provide more information about the baseline calculations

. Response 1: The EPA made the underlying data available at both proposal and again in final. This data can be found in Appendix 1 of the CO2 Emission Performance Rate and Goal Computation T S D for CPP Final Rule and a description of its derivation found in Appendix 9

. The underlying unit

- level, state

- level, and regional level data are available along with the calculations so any stakeholder can replicate The EPA’s calculations. The EPA made all the information on calculating state

- level generation totals available i n Appendix 1, A ppendix 7, and the 2012 baseline data at proposal. This was available in the docket and on the EPA’s website

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

Commenter s stated EPA must provide more informat ion on its methods and rationale in calculating 2012 electricity generation data for the states.

Commenter s added EPA has not provided sufficient information on how it derived the final
state

- wide generation totals based on the spreadsheet listing unit

- le vel 2012 electricity generation data nationwide. The commenter s stated NDEQ has been unable to reproduce the precise totals in megawatt

- hours that match EPA's numbers, without this information, the NDEQ cannot confirm the accuracy of EPA's findings or accu rately assess the potential impact of the Clean Power Plan on regulated sources. The commenter s request ed that EPA provide the raw data, spreadsheet calculations, and detailed methodology and procedural information demonstrating how it derived each state's 2012 electricity generation numbers, as this will increase the credibility and transparency of the Clean Power Plan by allowing NDEQ to reproduce and verify EPA's findings and input data; if there are inconsistencies or errors, NDEQ requests an opportunit y to make corrections.

Comment 2: General Errors in baseline

Response 2: The EPA appreciates the information regarding corrections to the baseline values. Please see sections VI and VII of the final rule preamble of the CPP and the CO 2 Emission Performan ce 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:3 Commenter s stated the EPA misstates the emission rate using EPA published technical data and its own calculation formula; the 2012 base year should be 1255 pounds of CO2 per megawatt

hour not 1234. Commenters stated t he 2030 target for Delaware should be 890, not 84 1. Commenter s stated the coal model is wrong.

Comment 3: The use of 2012 as the baseline limits flexibility

Response 3: See Section VI of the Preamble for the EPA’s discussion why it relied on 2012 data as the starting point for forming its baseline. The EPA believes starting with 2012 data and only making limited adjustments uses the best available historical data and most accurately reflects an appropriate baseline from which to evaluate BSER potential

. See the Chapter 2 of the GHG A batement TSD for the EPA’s discussion about use of regional interconnections to assess potential heat rate improvements and the potential impact of new air pollution control devices to comply with other Federal pollution control requirements, including the Mercury and Air Toxics Standards

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

Commenter s stated the use of 2012 as a baseline does not recognize either the unusually mild 2011 /2012 winter, which reduced overall demand, or the temporar ily very low price of natural gas, which caused a considerable customer switching from coal

- fueled power generation to optional to sources fueled by natural gas. The commenter s said the four Building Blocks EPA defines as its Best System of Emission Reduct ions are based upon arbitrary and hypothetical estimates of reductions, not realistically achievable; multiple states including Kansas and Texas have already provided comments on the Clean Power Plan that seriously question whether heat rates improvement i n Building Block #1 reductions are achievable, given their coal plants already operate in the most efficient manner; further, generators in Illinois and other states are concerned that compliance with additional environmental requirements as a result of th e Mercury and Air Toxics Standards will cause heat rates to deteriorate and net power output, per ton of carbon emitted, to decline. The commenter s said the combined result of a non

- representative baseline year, together with the overstatement of reduction potential under the Best System of Emission Reductions, effectively limits compliance strategy to a reduction in coal

- fired generation; thus states do not have the flexibility in compliance represented by EPA.

Comment 4: The EPA should make corrections t o the baseline values

. Response 4: The EPA appreciates the information regarding corrections to the baseline values. Bayfront Unit 5 was not included because, according to EIA data, the unit used less than 10% fossil fuel. Useful thermal output is not included in the quantification of BSER in the final rule. Affected sources would be responsible for all emissions regardless of their useful thermal output activity or biomass use. The EPA added categories indicating units that were under constr u ction

or commenced operations in 2012. Please 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 Final4 Rule supporting the final CPP for more information about the final goals and how they were calculated.

Bayfront was not included as a likely affected unit because of data on its capacity and its fuel use. However, this does not constitute a final applicability determination. See section VII .E of the preamble regarding state goal adj ustments.
The following are summaries of the specific public comments under this comment:

Wisconsin

Commenter s stated EPA needs to make the following additional corrections to the data used in calculating Wisconsin's baseline.

A. EPA should includ e Bayfr ont unit 5, operated by Northern States Power Wisconsin, in the baseline; this unit fired both coal and natural gas in 2012, generating 6,214 MWh of electricity and emitting 5337.8 tons CO2, based on EPA's Acid Rain Program database for 2012.

B. EPA must remove MWh and CO2 emissions resulting from biomass fuels fired with fossil fuels at Manitowoc Public Utilities unit 9 ; commenter s provided Table 4. Generation and emissions data for Manitowoc Public Utilities unit 9.

C. EPA should include useful t hermal output (UTO) in 2012 for the following power plants in Wisconsin, as part of the data derived using the eGRID methodology and used in the goal calculation:

• Manitowoc Public Utilities

• Valley

• West Campus Cogeneration Facility;

Also note that in the Octo ber 2014 notice of data availability for the proposed rule, when seeking comment on including 2010 and 2011 as part of the baseline, EPA included UTO in 2010 and 2011 for these plants in the eGRID methodology.

D. EPA should remove MWh and CO2 emissions re sulting from biomass fuels fired from the baseline at Wisconsin combined heat and power (CHP) and industrial generators; commenter s provided Table 5: Generation data for biomass at Wisconsin CHP and industrial generators.

Oregon

Commenter s s ought clarific ation regarding whether investments made under Oregon's CO2 Standard (ORS 469.503) were taking into consideration when determining Oregon's 2012 baseline under the proposed Clean Power Plan.5 South Dakota

Commenter s stated EPA’s use of 2012 data, in its proposal, as the criteria for establishing state goals fails to recognize carbon dioxide reductions achieved before 2012 and results in disparities of impact from one state to another; South Dakota is especially negatively affecte d for several

reasons.

Commenter s stated South Dakota's total energy production in 2012 was one of the highest on record; therefore, the mandate to increase renewable energy generation and decrease usage through energy efficiency mechanisms (goals that ar e tied to the state's total generation in 2012) is more onerous than the mandate would be using a multi

- year approach or if EPA had used another year as the baseline.

Commenter s stated South Dakota's on e natural gas combined cycle plant was under construction in 2012 ; despite the fact that it operated at less than a 1 percent capacity factor for the year; EPA considers it an existing unit under its proposal. The commenter s said using data from an earlier year would reduce this plant's impact on Sou th Dakota's state goal or eliminate it from being considered as an operational unit depending on the year selected.

Commenter s stated wind generation in South Dakota drastically increased between 2008 and 2012; by using 2012 data to create the criteria fo r the state goal, South Dakota receives no credit for the dramatic increase of renewable energy added to the state's generation portfolio prior to 2012. The commenter s said if EPA had used 2010 data to calculate state goals, the goal for South Dakota would be approximately 1,148 pounds of carbon dioxide per megawatt

- hour; Building block 2 would continue to be a factor in the equation because EPA includes natural gas combined cycle plants that were already planned. The commenter s said this plant was already planned, as evidenced by Basin Electric Power Cooperative's submission of an air quality permit application for the plant in 2009.

Commenter s stated if EPA had used 2005 data to calculate state goals, the goal for South Dakota would be approximately 1,627 pounds of carbon dioxide per megawatt

- hour, which is consistent with EPA's goals for many other states. The commenter s added there would be continuity between the data used to calculate state goals and EPA's goal of reducing carbon emissions by 2030 from carbon emissions levels recorded in 2005; in this case, building block 2 is eliminated because the natural gas combined cycle plant was not planned in 2005.

Commenter s recommend ed EPA recalculate state goals based on calendar year 2005 electrical productio n and sales data instead of 2012.

Kansas

Commenter s recommend ed that non

- Kansas wind be subtracted out from total state electric generation to estimate its RE target, the same process should be carried out for setting the baseline CO2 emission rate, whic h EPA calculated as 1,940 lbs/MWh (1,939lbs/MWh using corrected 2012 data). The commenter s said the corrected Kansas 2012 baseline CO2 emission rate, after data correction and accounting for wind generation owned by non

- Kansas entities, comes to 2,088 lbs/ MWh.6 Comment 5: Planned retirements

. Response 5: As explained in the CO 2 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 following are summaries of the specific public comments under this comment :

Commenter s stated the units for which retirement decisions have already been made for VA include:

• Chesapeake Units 1, 2, 3, 4_12

• Yorktown Units 1 and 2_13

• Clinch River Unit 3_14

• Glen Lyn Units 5 and 6_15

Th e commenter s said the electric generation and carbon emission levels from these four coal

fired EGUs were included in Virginia's baseline 2012 carbon emissions rate; however, EPA did not include the planned retirement of these EGUs when calculating Virgini a's emission reduction target. The commenter s said combined, these units represented 2,391,610 megawatt hours ("MWh") of generation in 2012, including 16 percent of the carbon emissions and 17 percent of the electric generation in Virginia's coal

- fired EGU fleet.

The commenter s said applying these retirements to Virginia's 2012 baseline emission rate results in a decrease from 1,438 lbs/MWh to 1,383 lbs/MWh, a reduction of 55 lbs/MWh; it should be noted that this reduction is larger than the emissions rate reduction for EPA's building block 1 (6 percent heat rate improvement at existing coal

- fired EGUs), which reflected a reduction of 49 lbs/MWh. The commenter s said thus, simply continuing on course with the plan to retire these units would reduce Virginia' s 2012 emissions rate by more than EPA's application of building block 1; this demonstrates that the assumed reductions from Virginia's coal

- fired EGUs are achievable.

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 6: Units that were out of service or retired

. Response 6: See section VI of the final rule preamble of the CPP and the CO2 Emission Performance Rate and Goal Computation TSD for CPP F inal R ule for an explanation on why the EPA believes unit

- level variation does not impact its regional calculations, and why the EPA relied on a historical baseline rather than a proje cted future

- year baseline that projected behavior post inventory turnover

.7 EPA notes that there are both NGCC and coal units that retired in 2012, but that are still in EPA 2012 baseline reflecting the ir reported generation and emission from that year. EP A discussed in the CO2 Emission Performance Rate and Goal Computation T S D for CPP Final Rule why it was not removing scheduled retirements from its baseline. It appreciates the comment on 55 MW Hansel as one of the unique NGCC units that retired in 2012. EPA notes there were many more fossil steam units that retired in 2012. More units of each technology will retire before the first year of compliance in 2022. Consistent with its approach to remain with a historical baseline and not begin projecting the impact of retirements in its baseline, EPA leaves these units in its baseline. Commenter s suggest that 55 MW of capacity from Hansel therefore overstates BB2. However, EPA believes its decision on retirement treatment has the opposite impact. I t is

con servative to leave the units in the baseline. If it removed Hansel, to be consistent it would also need to remove the fossil steam generation already scheduled for retirement (and therefore no longer around to absorb incremental NGCC generation). As stat ed above, EPA steers clear of attempting to adjust f or retirements. If the EPA chose to go the route expressed by commenter s , the e ffect would likely be one of a more stringent impact, not less stringent, as the amount of incremental generation potential removed from the baseline would be drastically smaller (one 55 MW plant in the east) relative to the amount of fossil steam.

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

Commenters stated EPA also errors in its treatment of "existing" units that were out of service, or retired in 2012.

Commenter s added units that were out of service during 2012 may report artificially low capacity factors because they did not accumulate a full year of operating data by the end of that
yea r.

Commenter s added units that retired in 2012 would appear to have capacity available for re

dispatch that will not actually be available to displace coal generation in the future.

Commenter s added retired units should not be included in state goal calc ulations; Plant Hansel was included in Florida's goal calculation despite the fact that the facility retired in 2012; if a unit is no longer in operation then it is impossible to dispatch.

Comment 7: Canceled, indefinitely postponed, no longer in resource plan, or that construction had not been commenced units, should be included in baseline

Response 7: 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

. Plant Washington is not considered a likely affected units in EPA BSER quantification. However, this does not constitute a final applicabily determination.

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

Commenter s stat ed canceled, indefinitely postponed, no longer in resource plan, or that construction had not been commenced projects, and should be included in baseline.8 Commenter s stated the Plant Washington project was mistakenly excluded from Georgia's baseline calcul ation due to EPA's assumption that the project has been "canceled" or "indefinitely postponed". The commenter s said that P4G executed contracts for the purchase and erection of the Plant Washington boiler prior to the publication of the New Source Proposal and that the development of the project is continuing to this day. The commenter s added that on October 15, 2014, the Director of the Georgia Environmental Protection Division ("GAEPD") issued a final permit amendment extending the construction deadline u nder Plant Washington's PSD permit until April 2016. The commenter s stated that the New Source Proposal expressly exempts Plant Washington as one of three projects from coverage because as currently designed they could not meet the proposed standard of 1,1 00 pounds of CO2 per gross megawatt

- hour (lb. CO2/MWh) because they were not sited or designed to incorporate carbon capture sequestration ("CCS") technology. The commenter s added since Plant Washington was excluded from coverage under the New Source Propo sal, there is currently no proposed greenhouse gas standard of performance applicable to the facility if the Existing Source Proposal does not apply; that being so, EPA would be required to complete a site

- specific rulemaking, or to make a case by case det ermination, before a standard could be applied to the facility. The commenter s concluded given these uncertainties and the advanced stage of Plant Washington's development, estimated emissions from Plant Washington as currently permitted should be included in the baseline.

Comment 8: Offline units should be included in the 2012 baseline calculation

. Response 8: As described in preamble section VI, the EPA has made an adjustment to the 2012 data to account for the Sherburne County Unit 3 outage. Its final coal steam generation estimate for baseline is consistent with levels observed in years where Sherburne County Unit 3 is operating.

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

Commenters stated the Northern States Power Minnesota (Xcel Energy)

- Sherburne County

- Unit 3

- 0RIS 6090 938 MW (nameplate capacity) coal

- fired electric generating unit was out of service during the entire calendar year 2012 due to an explosion in 2011 in the turbine as the unit was returning to servi ce after an outage. The commenter s said the unit was off line for about 2 years while repairs were made, and did not return to full service until January 2014 where it will be used henceforth. The commenter s stated that the average generation from 2009 to 2011, the three years prior to the explosion, is the best approximation of likely generation at Sherco Unit 3 in the year 2012, that is, 5,492,640 MWh releasing a total mass of 5,775,175 tons of CO2, as calculated from the monthly data reported to the CAMD database for this unit. The commenter s added the selection of these years reflects generation during the recession (2009) as well as the increasing reliance on wind generation by Xcel to meet its renewable energy generation required by Minnesota statute. The commenter s stated since reaching full capacity in January 2014, the unit has operated at an average monthly load of 469,000 MWh, which represents an annual average generation of 5,630,000 MWh, thus the MPCA's recommendation is a slightly conservative b ut reasonable approximation of likely 2012 generation at Sherco 3.9 Commenter s were aware that EPA's baseline emissions data did not include the emissions from Xcel Energy's Sherburne County Generating Station ("Sherco") Unit 3 because Sherco Unit 3

was no t operating in 2012 due to an unexpected outage. The commenter s said there are other, more minor, data errors identified in Minnesota's data set, and the commenter s assume d that other states have identified certain data errors and are likely to request cor rections or updates. The commenter s said Clean Power Plan stakeholders in Minnesota have held many discussions about how to best account for these necessary data corrections; although we are not advocating for any particular data correction approach, the c ommenter s recognize d that some corrections may occur and we simply urge EPA to protect the overall Clean Power Plan target, and the individual state targets, as much as possible when adjusting for these errors in its final rule.

Comment 9: Units that were off

- line for most or all of the baseline year/ not operational in 2012

Response 9: In the final CPP quantification of BSER, the EPA has made adjustments to the
state

- level data for Minnesota recognizing the significance of the Sherco unit 3 outage highli ghted below. See preamble section VI and the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule for a description on how the EPA tested for and identified significant outages that warranted an adjustment to state

- level totals

.
The Kemper facility is maintained in the baseline as it is a likely affected source as identified by the commenter s . The EPA recognizes the 2012 baseline did not provide accurate emission and generation data for the facility given it’s commence operation date . Therefore, the EPA used assumptions for plant

- level operation consistent with the expectations by the facility owners and on which it proposed and took comment

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

Commenters stated EPA should address corrections related to affected units that were off

- line for most or all of the baseline year.

Commenter s added EPA did not adjust for extended outage periods. The commenter s stated Unit 3 at Xcel Energy's Sherburne County Generat ing Station, the largest electric generating unit in Minnesota, was offline for the entirety of 2012 due to a major unplanned outage. The
commenter s added in Kansas, Westar Energy experienced extended outages for half of its coal

fired fleet in 2012; durin g these extended outages, Westar Energy was installing pollution control equipment (electrostatic precipitators (ESPs), fabric filter baghouses, wet limestone scrubbers, selective non

- catalytic reduction (SNCR), etc.) in order to ensure compliance with oth er Clean Air Act obligations.

Commenter s added for Mississippi's 2012 baseline emission rate, EPA included emissions from the Kemper Integrated Gasification Combined Cycle (IGCC) plant as "other emissions" and "other generation" in the goal computation ta ble; although this plant satisfies the definition of an existing affected source, the plant was not operational in the proposed 2012 baseline period; therefore, this plant provides no credible emissions or operational data towards establishing standards fo r existing units. The commenter s recommend ed these units be removed from the goal computation table.10 Commenter s stated the proposed target emission rates set for Minnesota under the Proposed Rule are arbitrary and capricious because they are based on faul ty data and erroneous assumptions resulting from the use of 2012 as the baseline year; specifically, Sherco 3

- the largest coal

- fired plant in Minnesota

- was offline during the entirety of 2012; as a result, the plant's generation capacity and emissions levels were not factored into EPA's baseline assumptions. The
commenter s said in light of EPA's flawed assumptions, compliance with the Proposed Rule's emission reduction goals for Minnesota would likely require retirement of Sherco 3 not long after its co

- owners invested $21 million in efficiency upgrades, and spent an additional $200 million repairing the facility after a turbine failure in 2011; this would result in a significant stranding of assets.

Commenter s stated on November 19, 2011, Sherco 3 expe rienced a catastrophic failure as the unit was being returned to service following a turbine efficiency upgrade; the event caused extensive damage to the turbine, generator, exciter, and some associated plant systems, and resulted in the facility being off line for the remainder of 2011, the entirety of 2012, and the majority of 2013 while repairs were made. The commenter s said the nearly two

- year

- long restoration of the facility was completed on October 27, 2013, at a cost exceeding $200 million; the plant resumed full commercial operations in January 2014.

Commenter s stated because EPA used 2012 as the baseline for the Proposed Rule

- a year when Sherco 3 was completely out of service

- its starting assumptions for coal

- fired generation in Minnesota are fu ndamentally flawed; the EPA erroneously attributed a negative generation capacity of

- 55,562.0 MWh to Sherco 3, with a mere 131.3 tons in emissions. The commenter s said by contrast, from 2009 to 2011, Sherco 3's average generation was 5,492,640 MWh, releas ing a total mass of 5,775,175 tons of CO2. The commenter s said it is highly likely that, for Minnesota to meet the Proposed Rule's mandatory goals of 873 and 911 pounds of CO2/MWh, both of which are based on the faulty assumption that Sherco 3 does not gen erate power, the facility would have to be off

- line for most of each year; unfortunately, this would likely force Sherco 3 to retire prematurely, as it would be uneconomic to operate a baseload generation unit like Sherco 3 so infrequently, particularly af ter the unit has undergone a capital

- intensive environmental retrofit to comply with unrelated EPA rules. The commenter s said this result would strand the millions of dollars that SMMPA and, in turn, its members, have invested in the facility. The commente r s said as EPA is aware, baseload generating units like Sherco 3 are planned, designed and built to last a long time, and they are capital

- intensive undertakings, the costs of which are recovered during a long period of years; if a generating unit that tak es years and millions (if not billions) of dollars to build is forced to prematurely close when it has not yet reached the end of its useful life, the owners of that unit are left with stranded assets. The
commenter s said in this case, if Sherco 3 is force d to retire prematurely, not only would SMMPA be left with a stranded asset, but it would also have to incur additional costs to either build another baseload unit or enter into PPAs with other utilities to provide the same energy that Sherco 3 now provide s. The commenter s said it would be unfortunate if SMMPA's multi

- million dollar investment to serve its members and the continued viability of its primary and most efficient source of baseload electric energy were jeopardized because of EPA's patently flawe d assumptions about the emissions levels in Minnesota.

Commenters stated one of Minnesota's newest and most efficient coal power plant (Sherco 3) was offline during all of 2012, due to a major outage. The commenters said Minnesota's historic11 coal generatio n data relied upon in developing the rule is therefore abnormally low and must be adjusted to include the energy produced by the 884 megawatt plant in a typical year. The commenters said based on some preliminary calculations and the base line for Minnesot a coal generation the plant produces a substantial change in Minnesota's interim and final goals.

Comment 10: Unit s that came online during, and were operational for only part of, 2012

Response 10: As described in section VI of the preamble, the EPA is adjusting the baseline data to account for the likely affected units that commenced operation in 2012. This adjustment (made at the state

- level) substitutes in higher utilization assumption consistent with the incremental impact of a full year oper ation rather than lower utilization observed in 2012 due to partial year operation. The EPA made this adjustment to address the concerns expressed in the comment below. The states in which the EGUs mentioned below are located now have generation and emis sions values assumed commensurate with a full year of baseline operation of the under construction units typical for that technology

. When assessing the incremental generation and emission to add to a state’s baseline for under construction sources, EPA w as mindful of comments that noted there would be some replacement effect to this incremental capacity. Some commenters suggested using a baseline value utilization of only 15% for particular under construction NGCC as the rest would have a replacement imp act rather than an incremental impact. Some commenters suggested using a higher capacity factor. EPA had assumed an incremental impact on states generation for under construction NGCC at proposal of 55% utilization (and 70% for the under construction Kem per unit). At proposal , EPA had looked at (and docketed) data on the 2012 utilization of NGCC that had commenced operation in the previous five years. 2012 was a year when the NGCC units had a particular incentive to operate more given lower natural gas prices. EPA felt the 55% utilization rate was in line with historic data and a reasonable capacity factor to assume when estimating the incremental impact on baseline data. EPA recognized that some newly under construction NGCC may operate at utilizatio n rates greater than 55% in some cases, but also recognizes that some of this generation may offset existing 2012 generation and not reflect a purely incremental change to the baseline. EPA also performed a 10

- year look back in the final rule to complemen t the 5

- year look back at proposal. Based on all of these factors and comments, EPA determined that the proposed 55% utilization for under construction NGCC capacity was reasonable estimate when estimating the incremental impact on a state’s 2012 data.

Li kewise, commenters noted that although EPA had identified no under construction coal units in p ost

- 2012 years at proposal, that there were a several coal plants that commenced operation partway through 2012 and therefore the 2012 annual data was not repres entative. In response to these comments, EPA adjusted its baseline approach in this final rule for states to better reflect the incremental impact of these under construction coal EGUs. EPA had to derive a similar capacity factor assumption for newly cat egorized under construction coal units in the final rule. It used a similar approach to that which it had used at proposal for under construction NGCC. It looked back at a significant sample size (greater than 30 units) of relatively new coal units and
t heir utilization in 2012. Because fewer coal units have come online in the last five years relative to NGCC, EPA had to rely on a 10

- year lookback to get a reasonable sample size. At proposal,12 EPA had used heat input and maximum hourly heat input capacit y to estimate capacity factors and retained it when beginning its assessment of reasonable coal utilization rates (EPA had used this data as the “commenced commercial operation” data point was not readly available in the 2012 data file) . The 10 year look back using this metric suggested a 60% capacity factor. EPA considered this, along with comments that pointed out that under construction capacity would have some replacement value instead of incremental value. EPA took all of this in to account along with the notion that these coal EGUs were located in coal intensive regions or states that had some coal retirement s scheduled to occur. As discussed in section VI, EPA did not want to project where under construction generation would pot entially replace 2012 generation. EPA recognizes that some of these coal units do and likely will continue to operate at capacity factors greater than 60% utilization, but it determined that 60% utilization was a reasonable estimate to utilize given the r esulting generation and emission s were assumed to be incremental to the 2012 data

. EPA also notes that 60% was within the range of 2013 net capacity factors provided by commenter for the coal units that had commenced construction in 2012.

These types of c onsiderations were necessary as EPA tried to reconcile the commenter s support to continue to use a historical dataset for its baseline , but also to reflect the remaining affected EGU s that were still under construction in 2012 . One alternative would be to use a projected model baseline that estimated the incremental versus replacement impact of these sources. However, as described in preamble section VI and supported by commenters , EPA continued to use a historical baseline for its final rule analysis.

Finally, for the handful of under construction coal plants, EPA conservatively assumed the state average coal emission rate for existing units as the emission rate for the under construction sources. This is consistent with EPA’s proposed treatment of und er construction NGCC. EPA recognizes that some of these coal facilities (e.g., Edwardsport) will likely operate at emission rates well below this state average value. However, EPA took the conservative approach to estimating emissions from these under co nstruction fossil steam sources to be consisistent with its proposed approach, support from from comments to use such an approach for under construction coal units, and to avoid potentially understating the emission rates expected from the under constructi on units.

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

Commenters stated partial year operation of new units in 2012 affected state baseline emissions.

Commenter s stated EPA should give such units the benefit of at least a 55% capacity factor, which EPA presumes for NGCC capacity that was under construction in 2012.

Commenter s added EPA did not adjust for these partial year operations. The commenter s stated in Arkansas the newly

- constructed Turk Power Plant came on

- line an d operated for only nine days in 2012. The commenter s said in Idaho, Idaho Power's new Langley Gulch NGCC came on

line half

- way through 2012; due to start up and the partial year operation, Langley Gulch had only a 20 percent capacity factor. The commenter s added because of Idaho's emission goal of 228 lbs/MWh, it will be impossible for Idaho Power to increase utilization of its most efficient unit to offset the declines in imported coal

- fired generation from other states.13 Commenter s added many of the EGUs that EPA has classified as "existing" for the purposes of

re

- dispatch under Building Block 2 did not commence commercial operation in 2012 at all. The
commenter s stated EPA incorrectly assumes that these units were available to provide generation throughou t the year but operated at a zero percent capacity factor, meaning that their entire capacity was available for re

- dispatch under Building Block 2. The commenter s said the Agency's faulty analysis added substantial amounts of NGCC generation to the state g oal calculation for Alaska, California, Florida, Louisiana, and Utah

- and as a result, inappropriately reduced generation from Subpart Da units in equal amounts. The commenter s stated these units should have been considered to be "under construction" and unavailable for redispatch in state goal calculation.

Commenter s added South Dakota's Deer Creek Station appears to have a 1 percent capacity factor based on nameplate capacity, but in fact did not begin commercial operation until August 2012.

Commenter s added the state goals for California, Colorado, Connecticut, Georgia, Idaho, Mississippi, North Carolina, Ohio, and Tennessee (and potentially others) all include artificially low 2012 generation levels from NGCC units that commenced operation during that year. The
commenter s stated for nearly all of these units, the annual capacity factor increased significantly during the following full year of operation. The commenter s added North Carolina's Dan River facility commenced operation in December 2012 and re ported an annual capacity factor of only 1 percent, but reported a 73.2 percent annual capacity factor the following year.

Commenter s added as described in the Marchetti Report, for Florida, EPA's value for existing NGCC capacity incorrectly includes the 1,210 MW Cape Canaveral NGCC facility (which did not begin commercial operation until April 2013) and the 122.4 MW Orlando Cogen facility (a compressed storage facility).

Commenter s added as described in the Marchetti Report, EPA's goal calculation for No rth Carolina includes "existing" NGCC capacity from the 691.1 MW Dan River facility, which only commenced operation in the last month of 2012, and the 1068 MW Lee Combined Cycle Plant, which did not provide any generation to the grid until 2013.

Commenter s added the proposed Rule's current baseline year (2012) does not include annual emissions from the John W. Turk, Jr. Power plant; the plant was placed in service in December 2012.

Comment 11: Under construction Units

Response 11: Under construction units are identified in Appendix 1 and 2 of the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule. The Dresden unit is categorized as under construction based on comments that the EPA treat units commencing operation in 2012 as under co nstruction. The Dresden facility is not double counted in the final CPP rule inventory of likely affected units

.14 Cheyenne Prairie Generating Station capacity assumed in building block two has been adjusted down to the reported net summer capacity value wh ich is more closely aligned with the
commenters ’ value

.
The Moselle units 1 and 2 constitute the 150 MW of identified under construction NGCC capacity in Mississippi.

The EPA has categorized Cane Run facility as a likely affected unit that is under constru ction based on the under construction status reported in the 2013 EIA

- 860 form and based on Louisville Gas and Electric public statements (and comment) regarding the construction start of the facility such as those available at https://lge

- ku.com/our

- compa ny/power

- plants

- and

compressor

- stations/cane

- run

- generating

- station/cane

- run

- updates

. In regards to the applicability status of the Orlando Cogeneration unit

, EPA left the unit in the baseline inventory as a likely affected units upon review of its status in other EPA air programs, the size of the unit, and the amount of net electricity generation of the unit. However, EPA notes that this does not constitute a final applicability determination. See section VII of the preamble for further discussion.

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

Commenters stated the treatment of certain under

- construction EGUs contains errors.

Commenter s added least one NGCC unit

- Ohio's Dresden Energy Facility

- is double

- counted as b oth existing and under

- construction in 2012, meaning that a portion of its generation is re

dispatched twice in the goal calculation.

Commenter s added American Electric Power's ("AEP") NGCC plant in Dresden , Ohio and American Municipal Power's NGCC plant in Fremont, Ohio both operated for 11 months in 2012; EPA, however, incorrectly concluded that those plants operated for a fraction of that time; as a result, Ohio's actual NGCC generation in 2012 was much higher than is reflected in EPA's calculations for Ohio. The commenter s added equally important, EPA assumed that 539 MW of new NGCC capacity is "under construction" in Ohio; however, that figure is attributable to the AEP Dresden plant, which is already fully operational and has been accounted for in the existing NGCC calculations. The commenter s said the correct value of NGCC capacity "under construction" in Ohio is 0 MW; EPA significantly overstated the potential for redispatch to NGCC units in Ohio, resulting in more stringent emission standards for Oh io.

Commenter s stated the Dresden Plant was operational on January 31, 2012; therefore, the
commenter s asserted that there were no under

- construction NGCC units in 2012 and that the value in the goal setting calculation should be 0 MW for Ohio.

Commenter s added the amounts of under

- construction capacity listed for California, Colorado, Florida, Mississippi, and North Carolina are also questionable, and the fact that EPA is unable to identify any under

- construction units in those states by name suggests th at development of those units is too uncertain to rely on those units for re

- dispatch.15 Commenter s stated the EPA lists 1,157 MW of unspecified under

- construction capacity for Florida as described in the Marchetti Report.

Commenter s added EPA included NGC Cs under construction in state goal calculations subsequently making emission rate goals more stringent, particularly in North Carolina. The
commenter s said first, EPA assumed NGCCs under construction will meet the operational applicability criteria. The c ommenter s said second, EPA assumed NGCCs under construction will operate at a 55 percent average capacity factor in the absence of this proposal. The
commenter s said finally, EPA did not identify the specific NGCCs under construction in each
state.

Commen ter s added EPA cannot and should not incorporate NGCCs that are under construction into state goal calculations; for an NGCC to become an affected source it must supply "one

- third or more of its potential electric output...to a utility distribution system on a three

- year rolling average basis." The commenter s said EPA has not provided any data to support that NGCCs under construction will meet the proposed applicability criteria because it is not possible for EPA to predict the future electric output of uni ts that are not commercially online and EPA must remove these units from state goal calculations.

Commenter s added EPA did not identify the unit names that are under construction further complicating the inclusion of these units. The commenter s said for example, one can surmise that Florida's unit under construction is Riviera ; however, the capacity that EPA used does not match Riviera's actual capacity of 1,212 MW. The commenter s said the only under construction unit that Southern Company could identify in North Carolina is L.V. Sutton with a capacity of 622 MW, which leaves 1,627 MW of unidentified under construction capacity in North Carolina. The
commenter s said EPA should omit or clarify these data anomalies.

Commenter s added EPA has mistake nly identified the Under Construction Capacity of the Cheyenne Prairie Generating Station as 220 MW. The commenter s said as constructed and put into operation on October 1, 2014, the net output of the combined cycle (NGCC) unit is 95 MW; which is the net o utput adjudicated and authorized for inclusion in rate base in proceedings recently concluded before this Commission. The commenter s said although the name plate capacity of the unit is 100 MW, its capacity has been adjusted to account for the fact that it will be operated at over 6000 feet above sea level, as both elevation and air density affect output. The
commenter s said Wyoming's target should be corrected to accurately reflect the 95MW net output.

Commenter s identified an error in the data used to cal culate Mississippi's 2012 baseline emission rate. The commenter s said EPA identified a 150 MW NGCC believed to be under construction and included its projected emissions in the goal computation table, the commenter s ha ve been unable to identify this unit a nd is unsure of its existence; therefore believe its inclusion to be in

error.

Commenter s stated Building Block 2 includes the re

- dispatch of a separate category of units that EPA determined were "under construction," but that had not commenced operation as of January 8, 2014

- the effective date of proposal for the 111(b) guidelines. The commenter s said EPA's approach for re

- dispatching these "under construction" units assumes that these facilities are16 intended to be constructed to meet a demand that is e quivalent to a 55 percent capacity factor; based on this assumption, EPA calculated that 15 percent of this "under construction" capacity would be re

- dispatched under Building Block 2.

Commenter s stated EPA determined that nine states had NGCC units that were "under construction"

- a determination that has been found to be incorrect for each of the nine states. The commenter s said for five of nine states, the units determined to be "under construction" by EPA represent "potential" units identified within E PA's NEEDS database and Integrated Planning Model; NEEDS describes the potential units as follows: "'Potential' units refer to new generating options used in IPM for capacity expansion projections of the electric industry... whereas potential units are end ogenous 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." The commenter s said these "potential" units do not exist and therefore cannot represen t 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, not existing, source requirements; as such, these "potential" units should not b e considered in Building Block 2. The
commenter s added for the remaining four states, inaccuracies in the "under construction" capacity identified are largely a result of the EPA incorrectly representing the disposition 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; the one "under construction" facility in Kentucky is the Cane Run project, which has yet to receive an air permit and has not yet

commenc ed construction.

Comment 12: Units that do not meet the applicability criteria should not be included in state goal calculations; NGCCs not meeting the "one

- third" sales criteria and/or the 219,000 MWh
net

- electric output criteria

. Response 12: The EPA believes that non

- cogen eration NGCC facilities greater than 25 MW likely meet the final rule applicability provisions and are thus included in the baseline

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

Commenter s stated EPA misapplied Building Block 2 to non

- affected NGCCs based on the proposed applicability criteria. The commenter s said the Agency did not complete an evaluation of NGCCs on a three

- year rolling average

- basis. The commenter s evaluated the 2010, 2011, and 2 012 eGrid generation data for the NGCCs that EPA included in the goal calculations for select states; several NGCCs did not meet the Agency's proposed "one

- third" sales and/or 219,000 MWh output criteria on a three

- year rolling average basis. The commenter s removed these units from the goal calculations; and all other factors affected by the removal of these units were adjusted accordingly, such as historic NGCC generation, the NGCC emission rate, and the NGCC nameplate capacity. The commenter s provided a t able (Table 13) of the NGCCs not meeting the "one

- third" sales criteria and/or the 219,000 MWh net

- electric output criteria.17 Comment 13: Incorrect inclusion of co

- generation units that do not meet the definition of an affected source

Response 13: The EPA has revised the proposed goals to not include useful thermal output in sub category

- specific emission performance rate calculations or state goals. Moreover, EPA has reviewed the comment and made corrections to Lamar Stall, Louisianna 1 units, Perryville u nits, and Washington Parish based on the commenter s feedback.

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

Commenter s stated the inclusion of co

- generation units that do not meet the definition of an affected source was incorrect.

Comment 14: Unpermitted sources should be removed from baseline

Response 14: The EPA agrees Washington Parish should be removed from the bas eline. It is now listed as “ EXCLUDE ” in column A of The EPA’s Appendix 1 of 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 un permitted sources should not be included in EPA's computations. Commenter s stated the Washington Parish Energy Center was first permitted on June 25, 2000, however, construction of the facility was never completed. The commenter s added 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 stated the facility remains unpermitted as of today, and therefor e should be removed from EPA's computations.

Comment 15: Incorrect inclusion of natural gas steam plant emissions with co

- located gas steam units

Response 15: T he EPA has attributed the emissions from the Arsenal Hill Units 6A and 6B to the J Lamar Stall units per the comment

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

Commenter s stated the CO2 emissions attributed to the company's Arsenal Hill natural gas steam plant in Louisiana were mistakenly included with those fr om the co

- located gas steam units at the Arsenal Hill Plant.18 Comment 16: Incorrect inclusion of units that are natural gas steam boilers or simple cycle units

Response 16: T he EPA has made adjustments to the baseline based on this comment and attachment. This revised unit

- level data is available in Appendix 1 of the CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule. As discussed in Sections IV and VI of the preamble, the EPA does view some of oil gas steam boilers as being likely affected sources based on the unit characteristics. As noted in Section VI of the final rule preamble , no simple cycle units are viewed as being likely affected sources and none are included in the baseline in this final rule

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

Commenter s stated the inclusion of units that are natural gas steam boilers or simple cycle units was incorrect.

Commenter s added another data quality concern pertains to EPA's confusion regarding the configuration and operation the AEP Arsenal Hill and J. Lamar Stall ("Stall") generation units in Louisiana. The commenter s said the Arsenal Hill plant is a natural gas steam boi ler unit that was commissioned in 1960; the Stall plant is a natural gas combined cycle unit commissioned in 2010 that consists of two combustion turbines and heat recovery steam generator trains that supply steam to a common steam turbine. The commenter s said the Stall plan is co

- located at the Arsenal Hill facility; both units are covered under the same Title V operating permit, which identifies the Arsenal Hill unit as 5A and the two Stall combustion turbine units as 6A and 6B. The commenter s said the Cl ean Air Markets Division database identifies CO2 emissions from the units using a common Arsenal Hill facility name (e.g. Arsenal Hill 5A, Arsenal Hill 6A, and Arsenal Hill 6B). The commenter s said this nomenclature led to emissions from the facility being incorrectly considered in the Louisiana state goal calculations. The commenter s provided a table identifying the error and correct values. The commenter s said CO2 emission data used by EPA to calculate the proposed Louisiana state goal should be updated t o accurately reflect the emissions associated with the Arsenal Hill and Stall units; specifically (if EPA continues to use the building block approach and 2012 data), the CO2 emissions data for Arsenal Hill should be revised to 38,301 tons (from 1,484,758 tons); for the J. Lamar Stall facility, the CO2 emission data should be revised to 1,446,457 tons (from 1,462,385.1 tons). The commenter s provided

a summary of other data discrepancies in Appendix B to their comments. The commenter s said EPA must correct these issues and perform a thorough quality assurance check of all the data inputs and calculations used to calculated the state goals.

Comment 17: BB1; heat rate improvements

Response 17: See section V.C. of the final rule preamb le of the CPP for the EPA’s response to this comment and more information about Building Block 1 and the CO 2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP for the final goals.19 The following are summaries of the specific public comments under this comment:

Commenter s stated owners of generating units have deployed heat rate improving technologies as usual business practice; with fuel as the largest variable operating cost component, deriving even small savi ngs provides payoff over time. The commenter s said the pace of technology deployment

- and the specific means themselves

- differs from those proposed by EPA. The
commenter s said the key differences are in the means selected and the payoff anticipated; the heat rate reducing actions described by EPA have all been broadly used in industry

- for those actions where the pace of application is low, it is usually because cost is prohibitive or that application is not feasible. The commenter s said many unit owner s or operators employ industry and supplier "best practices" to improve unit heat rates; that many owners have implemented these heat

- rate improving techniques means the 2012 baseline for EPA's analysis already includes CO2 reductions due to heat rate impr ovements listed by EPA.

Commenter s added discussions with numerous owners show many heat rate

- improving options are already consistently deployed as matter of conventional practice; for example, one large multi

- state system owner has deployed, or has plans to deploy, steam turbine upgrades on over 90% of the 2016 planned generating capacity. The commenter s said the investments are mostly distributed from 2003 through 2016; steam turbine upgrades represents the most significant heat rate improvement option a vailable to industry, thus units that have already deployed turbine upgrades receive no credit and have limited options to meet the rule. The commenter s said as a consequence, the CO2 emission baseline for 2012 includes for many units the payoff of investm ents made in recent years.

Commenter s stated in setting each state's target goal for CO2 emissions, EPA uses Building Block 1 to reduce emissions of CO2 from the 2012 baseline. Building Block 1 assumes an average efficiency increase of 6% for each coal pla nt by reducing the heat rate (btu/kw) by 6%; EPA bases this assumption on a study conducted by Sargent and Lundy in 2009 to assess available heat rate improvement at coal plants in the United States; EPA further assumes that 2% of the efficiency increase c omes from physical changes, such as equipment upgrades, and 4% of the efficiency increase comes from changes in operational practices. The commenter s said these assumptions are flawed; where available, many coal units, such as Independence Unit 2, already have undertaken efficiency improvements; the turbine for Independence Unit 2 was upgraded prior to the 2012 baseline. The commenter s said because EPA's proposal uses a certain, single

year baseline, this unit gets no credit for reducing its CO2 emissions p rior to the baseline and is, in fact, penalized, because now the unit must implement additional measures to further reduce CO2, and these measures likely will have a higher marginal cost than the actions already taken. The commenter s said similar projects, such as the installation of intelligent soot blowers, the operational improvement of feedwater heaters, the installation of improved fan blades, and the installation of neural networks, frequently took place at coal units across the nation prior to the 20 12 baseline.

Commenter s stated the foundation for EPA's BSER

- its 2012 baseline

- is unreasonable and arbitrary. The commenter s said opportunities for improving heat rate efficiency have already been captured by generators in Texas and elsewhere prior to 2012, mainly due to participation in competitive, wholesale markets that dispatch from lower cost units. The commenter s said these heat rate improvements that have already been implemented are not accounted for in the analysis20 for building block 1. The com menter s said within building block 1, EPA relies on a database (National Electric Energy Data System ("NEEDS") database) of the existing power plant fleet, including coal

- fueled, natural gas

- fired, and other units. The commenter s said utilizing the NEEDS d atabase as referenced by EPA within the proposal, there was approximately 314 gigawatts ("GW") of coal

- fueled generating capacity operating in 2012. The commenter s said of the 314 GW of coal

- fueled capacity, approximately 207 GW was operating in a competit ive wholesale energy market as of 2014, representing approximately 65% of the coal fleet. The
commenter s said due to the nature of the competitive wholesale energy market (i.e. plants that are more efficient are dispatched more than units that are less eff icient), many of the coal

- fueled power plants would have likely already implemented many of the heat rate improvements to improve the plants' economic position in the market. The commenter s said NERC has confirmed this for U.S. units and, as confirmed by ERCOT, Texas EGUs in particular have aggressively pursued efficiency improvements already, and thus the heat rate improvements EPA assumes cannot be achieved from existing EGUs. The commente r s said Texas Public Utilities Commissioner Kenneth W. Anderson, Jr. affirmed this for Texas in recent legislative testimony: "ERCOT's competitive market has in effect, already been implementing Block 1 for over a decade. By using 2012 as the base year, Te xas gets no credit for having already achieved a significant amount of EPA's Block 1 goals." The commenter s said a major expense in generating electricity is fuel; wherever possible, the commenter s (and other market participants) have looked for and adopte d efficiency measures to reduce the amount of fuel used to generate electricity, thus heat rate improvements are not available for additional reductions.

Commenter s stated that Clean Water Act Section 316(b) regulations were finalized in May 2014, and some units could be required to go from once through cooling to closed cycle cooling. The

c ommenter s stated that if this is required, new cooling towers will be needed and other compliance controls could include fish screens, new intake structures, and fish ha ndling systems which could increase heat rate. The c ommenter s stated that these heat rate degradations have not been included in the 2012 heat rate baseline for Building Block 1.

Comment 18: BB2 NGCC errors

Response 18: See section V.D. of the final rul e preamble of the CPP for the EPA’s response to this comment and more information about Building Block 2 and the CO 2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP for the final goals.

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

Commenter s stated individual utilities have identified specific errors made by the EPA on the amount of NGCC capacity that could be redispatched in submissions to their public service commissions. The commenter s said for example, Southwestern Electric Power Company (SWEPCO) in comments to both the Louisiana Public Service Commission and the Public Utility Commission of Texas on the Proposed Guidelines identified several steam electric and simple

- cy cle units that are not NGCC units, as well as the inclusion of a cogeneration unit that does not meet the definition of an affected source under the Proposed Guidelines. The21 commenter s said the erroneous inclusion of these units adds almost 7.7 million MWh of excess natural gas

- fired generation into the denominator of the calculation of Louisiana's state goal; this excess generation represents almost 20 percent of Louisiana's redispatched NGCC generation under Building Block 2.

Commenter s added for those un its that began operation after 2012, the EPA needs to shift them to NGCC capacity "under construction." The commenter s said in terms of units that have been either out of service or have/will be retired, EPA should remove them from the 2012 baseline, because they inflate the amount of NGCC capacity available for redispatch. The commenter s said also, the EPA needs to remov e all non

- affected units from the 2012 baseline, such as those identified by SWEPCO; these erroneous inclusions inflate the amount of NGCC generation that is included in calculation of the state goals in Building Block 2, resulting in greater amounts of

co al and O/G steam generation being displaced in a particular state.

Commenter s noted several discrepancies with the treatment of the Dresden Plant, a 539 MW nameplate capacity NGCC facility in Ohio. The commenter s said firstly, it appears that the unit

was "double

- counted" in the re

- dispatch calculations; that is, the generation of the Dresden Plant was counted as an existing unit, but the 539 MW of nameplate capacity were dispatched as an "under

- construction" unit. The commenter s underst ood that the Dresden Plant became operational on January 31, 2012, and is therefore not to be treated as an "under

- construction" unit in the re

- dispatch calculation. The commenter s added the 2012 EIA

- 923 report incorrectly published the net generation data for only November a nd December 2012 for these units; net generation for this facility in 2012 was 2,599,011 MW

- h, and not the incorrectly published 470,486 MW

- h used in the goal setting calculations. The commenter s said via stakeholder outreach to American Electric Power, th e commenter s w ere provided corrected generation data for the Dresden facility, as well as AEP's correspondence with EIA to correct the publication issue.

Comment 19: Planned re

- dispatch

Response 19: As explained in the CO2 Emission Performance Rate and Goal Computation TSD for final CPP, the EPA did not adjust the baseline based on scheduled or planned retirements or conversions

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

Commenter s stated under building block 2, EPA evaluated the re

- dispatch of existing natural gas EGUs and assumed that such EGUs would operate at a 70 percent capacity factor; this 70 percent assumption reflects plans that Virginia's utilities already have in place. The commenter s said for example, ex cluding the units for which generation contracts with Dominion will expire in the next few years (Hopewell and Doswell), the average capacity factor for existing natural gas EGUs in Virginia was already 71.6 percent in 2012.

Commenter s added EPA assumed t hat a state's generation can only be re

- dispatched to this 70 percent level if there is enough historical fossil generation to be displaced; in 2012, existing natural gas EGUs in Virginia were operating at an average capacity factor of 60 percent; thus,22 Vi rginia would require an increase of 6.2 million MWh to achieve a 70 percent capacity factor. The commenter s said since Virginia's 2012 coal and steam generation was 14.8 million MWh, there is already sufficient generation to allow for re

- dispatch of the st ate's natural gas EGUs up to the 70 percent assumption.

Commenter s stated the 70 percent natural gas capacity assumption is also reasonable in light of existing pipeline capacity; according to the EIA, the total capacity of the gas pipelines delivering in to Virginia is 8,011 MMcf per day, which includes 1,800 MMcf per day of pipeline capacity entering Virginia from the Cove Point LNG terminal. The commenter s said the 70 percent capacity assumption would increase the level of total gas delivered to customer s during the peak month from 1,485 MMcf per day to 1,583 MMcf per day; even subtracting the 1,800 MMcf per day of gas inflow capacity from the LNG terminal and the 2,175 MMcf per day that flows out of Virginia to other markets, the average daily amount of pipeline capacity available to supply Virginia markets would still be more than two and a half times the peak month gas use (approximately 4,000 MMcf per day of capacity vs. approximately 1,600 MMcf per day of consumption); thus, existing pipeline capacity should be able to accommodate the additional capacity at existing natural gas EGUs.

Commenter s stated Synapse Energy Economics analyzed the 2012 U.S. electric dispatch system and evaluated the available, unused natural gas generation that could feasibly displace coal

- fired generation on a region

- by

- region basis; parts of Virginia are in three different sub

- regions: SRVC, SRTV, and RFCW. The commenter s said the Synapse analysis indicated that each of these three regions could exceed EPA's natural gas re

- di spatch target of 70 percent and could, under the assumptions modeled, reach an 80 percent capacity factor.

Commenter s stated as such, based on utility plans and the reasonableness of the assumption as applied to Virginia, the commenter s included the 70 percent assumption in their calculations; as with EPA's calculation, the increased capacity from existing NGCC units were assumed to operate at the average historical emissions rate of 903 lbs/MWh; applying this assumption results in a decrease from 1,383 lbs/MWh to 1,245 lbs/MWh, a reduction of 138 lbs/MWh.

Comment 20: Nameplate capacity

Response 20: The EPA relies on net summer capacity for building block two and BSER quantification in the final rule. See section V.A of the final rule preamble of the CPP for more information

. EPA has changed the capacity on the Beatrice unit, although it no longer relies on nameplate capacity for BB2 quantification.

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

Commenter s stated the interim and final state targets increase when select unit data errors are corrected. The commenter s used the goal calculation spreadsheet provided by EPA and replaced the state's NGCC nameplate capacity with the appropria te net summer capacity while holding all other assumptions constant; this change increased final goals: six percent for Alabama; 14 percent for Florida; three percent for Georgia; two percent for Mississippi; and four percent for North Carolina.23 Commenter s added EPA erred by re

- dispatching to the nameplate capacity of NGCCs; EPA should have used net summer capacity to represent accurately the generation potential from NGCCs. The commenter s said EPA's use of nameplate capacity is in direct conflict with the capacity of existing generating units included in NEEDS v.5.13 and used in IPM modeling, for example, Base Case v.5.13. The commenter s said per EPA, the NEEDS unit capacity values implemented in EPA Base Case v.5.13 "reflect net summer dependable capacity" to the extent possible. The commenter s said EPA further defines "net summer dependable capacity" as "the net capability of a generating unit in megawatts (MW) for daily planning and operation purposes during the summer peak season, after accounting for st ation or auxiliary services."

Commenter s stated in quantifying the amount of energy that could be generated from existing NGCC units in Nebraska, the EPA, while using the correct nameplate capacity for the steam turbine at NPPD's Beatrice Power Station, us ed incorrect data for the nameplate capacity for both Combustion Turbine 1 (CT1) and CT2 at the Station. The commenter s said the correct nameplate capacity for each of CT1 and CT2 is 76.6 MW. C ommenter s said with these corrections, the total nameplate capa city for Beatrice Power Station should be 247.1 MW.

Comment 21: Incorrect net generation data

Response 21: Based on comments, the EPA is treating units that commenced operation in 2012 as under construction and estimating generation and emissions of a capacity factor assumption of 55% for NGCC units. Therefore, the EPA’s baseline and BSER quantification no longer relies on the EIA 9 23 generation data

– which commenter s assert ed was incorrect

- for the Dresden facility

. Also, Red Oak Power is included in the inventory of likely affected units in the final CPP rule

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

Commenters stated the incorrect net generation data was used in the baseline NGCC capacity calculation.

Commenter s stated the 2012 EIA

- 923 report incorrectly published net generation data for AEP's Dresden NGCC plant by only including two months of generation. The commenter s said this plant was actually operated for 11 months, so its actual generation was much higher than is reflected in EPA's calculations, resulting in a significant error in EPA's calculation of the Ohio state goal. NGCC capacity in Ohio, based on data in the 2012 EIA

- 923 report.

Commenter s added EPA relied upon the 2012 EIA

- 923 report for generation data, which incorrectly reported the generation for the Dresden NGCC unit as 470,486 MWh, instead of the 2,599,011 MWh the unit act ually generated. The commenter s said in reviewing the error, it was determined that AEP had correctly reported the generation to the EIA, however a publication error by EIA led to the 923 report only reporting generation data for November and December of 2 012. The commenter s said AEP notified EIA of this publication error on August 21, 2014; at the request of EIA, AEP resubmitted the 2012 generation data for the Dresden plant on August 27, 2014. The commenter s said AEP followed up with EIA on September 3, O ctober 16, and24 most recently on November 19, 2014, regarding the status of revising and republishing the 2012 EIA

- 923 report with the corrected information. The commenter s said EIA's most recent response on November 20, 2014 indicates that the agency is ta rgeting "mid

- January" of 2015 for the revision.

Commenter s stated EPA's spreadsheet titled "20140602tst

- plant

- level

- data

- unit

- level

- inventory" failed to include the Red Oak Power generation facility. The commenter s said based on EIA data, this NGCC facilit y generated 5,083,335 MWhrs in 2012. The commenter s added the facility reported 2,171,353 tons of CO2 to EPA's Clean Markets Division in 2012. The
commenter s said EPA must revise the baseline calculation to include this facility.

Comment 22: NGG C errors; combined cycle units used for cogeneration purposes

. 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. The EPA no longer quantifies us eful thermal output in its BSER quantification, and believes this may address the
commenter s concern.
The following are summaries of the specific public comments under this comment:

Commenter s note d that there appears to be an inconsistency in the way that the Sum of Carbon Dioxide (tons), Sum of Electric Generation (MWh) and Sum of Net Energy Output (MWh) in the Natural Gas Combined Cycle (NGCC) data for Algonquin Windsor Locks in the 2012 Plant level data for likely covered fossil sources (Goal Computatio n TSD Data File

- Appendix 7) spreadsheet was calculated, as compared with the data for Capitol District Energy Center. The
commenter s said on the Unit

- Level Inventory (Goal Computation TSD Data File

- Appendix 7) spreadsheet, the Carbon Dioxide (tons), El ectric Generation (MWh) and Net Energy Output (MWh) data for the STG was not added to the Carbon Dioxide (tons), Electric Generation (MWh) and Net Energy Output (MWh) data for the GTG for Algonquin Windsor Locks; however, the GTG and STG Carbon Dioxide (to ns), Electric Generation (MWh) and Net Energy Output (MWh) data for Capitol District Energy Center were added together. The
commenter s said both facilities have combined cycle units that are used for cogeneration purposes. The commenter s recommend ed that t he Carbon Dioxide (tons), Electric Generation (MWh) and Net Energy Output (MWh) data be calculated on a consistent basis for Algonquin Windsor Locks and Capitol District Energy Center; the commenter s realize d that if a data correction is warranted, it will likely not impact Connecticut's final state goal.

Comment 23: Rebalance generation

Response 23: For the EPA’s response to this comment, see the CO 2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP.

The following are summaries of the specific public comments under this comment:25 Commenter s recognize d that the EPA would likely be interested in "balancing" the assignment of generation at Sherco 3 by eliminating generation elsewhere. The commenter s stated it would not be correct to simply assume that Sherco 3 generation could be replaced by adjusting generation at other Minnesota coal plants, or to remove generation from combined cycle plants in an effort to "rebalance" generation. The commenter s added Xcel En ergy responded to an inquiry from Minnesota's Department of Commerce, the state authority charged with reviewing electric utility rate requests: "... Given the dynamic nature of generation systems and the need to make multiple purchase decisions instantane ously in order to respond to load variations, it is impossible to manually determine what energy source was deployed in place of an out

- of

- service plant..."

Commenter s suggested that EPA conduct an ex post modeling exercise using an electricity system disp atch simulation model to evaluate which generation resources would be pushed out of the dispatch order if units certain units had run in 2012, and adjust all generation accordingly.

Comment 24: Nuclear plant closed post 2012; recommendations for adjustin g baseline

Response 24: The EPA understands the unique circumstances of the The Kewaunee Nuclear Plant closure. It has not made an adjustment to the baseline or the final Wisconsin state goal

. EPA has consistently used a 10% threshold when considering s imilar adjustments for unit outage or hydro concerns. While it recognizes the immediate impact on fossil generation in 2013, the first year of compliance in the final CPP had been moved to 2022

– which provides more time for changes in the states power su pply. Moreover, the EPA notes that there are significant capacity additions in the same region that are accounted for elsewhere in the baseline thay could conceivably be providing replacement generation for scheduled closures such as this one. For more i nformation about how the final goals were calculated please see 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 stated Kewaunee Nuclear Plant closed in May of 2013; the loss of Kewaunee's generation (it provided 7.3% or 4.5 million MWh of Wisconsin's electricity generation in 2012) resulted in other generators (mostly fossil) filling the void. The comment er s said any historical baseline that EPA could choose based on currently available data would include generation from Kewaunee and thus would not truly represent Wisconsin's power sector going forward. The
commenter s said because of the loss of this carbo n

- free generation source, it will be impossible for the state to attain the emissions levels achieved in 2012 without dramatic actions; accordingly, EPA must adjust Wisconsin's 2012 baseline to account for the loss of generation from Kewaunee. The commente r s said EPA has already adjusted Wisconsin's nuclear goal in building block 3 by eliminating Kewaunee's generation from the 2012 baseline for purposes of that building block. The commenter s request ed that the EPA treat the closure of Kewaunee consistently in each building block of the rule by adjusting the 2012 baseline to exclude the generation previously attained from that unit.26 Commenter s stated there are four different ways were investigated by wh ich EPA could adjust Wisconsin's baseline and goals to account for the retirement of Kewaunee. These approaches include:

1. Assuming the generation would be replaced by coal;

2. Assuming the generation would be replaced by a combination of coal and natural gas ;

3. Assuming the generation would be replaced by a combination of coal, natural gas and renewables; and

4. Using a 12

- month baseline from July 2013 to June 2014 to represent how the power sector actually functioned after Kewaunee closed.

Commenter s stated el ectricity sales remained flat from 2010

- 2013, but overall fossil generation in Wisconsin increased significantly from 2012 to 2013, and all of this increase can be correlated with replacement of Kewaunee's power. The commenter s said because sales were simi lar in 2011 and 2013, the commenter s compared fossil generation in 2013 (when Kewaunee operated on a much smaller scale as it was shutting down) with that in 2011 (when it was fully operational) to determine the proportion in which NGCC and coal units ramp ed up during this time. (2012 was excluded because gas prices were so low that year.) The commenter s used the amount by which in

- state renewable generation expanded from 2012 to 2013 (2012 was used in this case because RE generation would not be directly a ffected by natural gas prices). The commenter s said the combination of expanded fossil generation and additional renewables accounts for 99% of the needed expansion.

Comment 25: Nuclear in base year

Response 25: Nuclear generation is not part of BSER qua ntification in this final rule. See section V.A of the final rule preamble for discussion of nuclear generation and the final BSER determinattion . See section VIII of the final rule preamble of the CPP for a discussion on how it
may be used in compliance.

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

Commenter s stated EPA specifically requests comment on the timing aspect of whether nuclear uprates and similar zero

- emission source additions to generation should be allowed to count toward a state's compliance with 111(d) goals and indicates some flexibility to this baseline year approach, likely because of the long time horizon and significant expense of planning and constructing a nuclear uprate. The commenter s said EPA als o indicates that states are given and should exercise flexibility in development of 111(d) plans that incentivize fossil emission reductions (such as those that may be created through nuclear uprates).

Commenter s stated the inflexible use of 2012 as a single year baseline for a nuclear uprate (even the "end of the base year") is problematic. For example, the commenter s completed the construction portion of a 178 MW uprate of its Grand Gulf Nuclear Station ("GGNS") near Port27 Gibson, Mississippi in June 2012 at an approximate cost of $874 million; from June until September 2012, GGNS continued to operate at its pre

- uprate capacity while finalizing preparations for movement to the higher (post

- uprate) capacity; GGNS b egan operations at its uprated capacity in September 2012; however, as part of the extended power uprate project, the
commenter s included an operational flexibility power flow mapping design called MELLA(plus). The inclusion of MELLA (plus), and operation under the parameters it allows, requires an additional operating license modification approval by the Nuclear Regulatory Commission. The commenter s submitted its MELLA (plus) license request change as a part of the extended power uprate project in the firs t quarter of 2014 and expects NRC approval in May 2015; these activities have delayed final close

- out of this project.

Commenter s stated there is no basis for disallowing the states that use GGNS's capacity and electricity the benefit of applying 178 new MW of zero

- emission electricity toward their compliance demonstrations merely because the construction phase of the extended power uprate project ended in September 2012 rather than in January 2013, or in February 2014, especially since other phases of pro ject approval by the NRC have taken until after January 2014 (the rule proposal date). The commenter s said this is the type of issue that should be left to the discretion of the state in developing its section 111(d) plan and, indeed, in "establishing stan dards of performance" under section 111(d)(1)(A). The commenter s said the substantial investment

backed decision, made by the commenter s and the co

- owners of GONS and approved by state utility regulators through the issuance of a certificate of public conv enience and necessity, likely has avoided or displaced significant fossil emissions and will continue to do so for many years to come. The commenter s said states should be given the flexibility to use a variable baseline year when determining which zero

- em ission projects can be used for compliance demonstrations.

Commenter s stated the rule as it is currently structured would almost entirely discount the clean energy contributions (nearly 2/3 of the carbon free energy in the US) of our current nuclear
energy facilities and effectively penalize states that have new plants under construction. The
commenter s ask ed how is it possible that the formula for calculating the "baseline" emissions profile of each state specifically excludes operating nuclear plants; the commenter s said the formula must treat clean energy generators equally and include 100% of their output in the baseline calculation.

Comment 26: The EPA should remove all the non

- fossil generation from the BSER baseline
year

. Response 26: The final rule does not include any non

- fossil sources in its baseline value of emissions and generation from likely affected EGUs . However, the 2012 unit

- level sheet does provide information on approximately 20,000 units

– including non

- fossil units

– but the designat ion of “exclude” in column A indicates that they were not included in the baseline totals relied on as the starting point for deriving sub category

- specific rates

. The following are summaries of the specific public comments under this comment:28 Commenter s stated EPA has included non

- hydro renewables and a portion of nuclear power in calculating the 2012 state emission rates; we encourage EPA to examine the benefits of removing all the non

- fossil generation from the BSER baseline year starting point in the formula.

Comment 27: The EPA should include all the non

- fossil generation from the BSER year

Response 27: The adjusted baseline value shown at proposal and referred to here by
commenter s did reflect some of the existing non

- fossil technologies. See s ect ion VIII of the final rule p reamble of the CPP for more discussion on what measures and sources may be counted towards compliance in the final CPP Rule

. The final rule does not include any non

- fossil sources in its baseline value of emissions and generati on from likely affected EGUs . However, the 2012 unit

- level sheet does provide information on approximately 20,000 units

– including non

- fossil units

– but the designation of “exclude” in column A indicates that they were not included in the baseline total s relied on as the starting point for deriving subcategory

- specific rates

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

Commenter s stated EPA's baseline does not include existing renewables, energy efficiency, and nuclear . The commenter s said when 2012 generation from other sources

- in particular, existing

non

- hydropower renewable energy generation and approximately 6% of total nuclear generation is taken into account, the baseline for North Carolina is much lower: 1,646 lbs/MWh. The
commenter s said EPA refers to this as the "adjusted baseline." The commenter s said the adjusted baseline shows how far North Carolina had already gone toward achieving its target in 2012 (it does not, however, include energy efficiency saving s as of 2012); North Carolina has progressed even farther toward its Clean Power Plan target since 2012.

Comment 28: Renewable Portfolio Standards

Response 28: See s ection V.E of the final rule preamble of the CPP for a discussion on building block three and RE potential assumed in quantifying BSER

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

Commenter s stated EPA explains that Block 3 focuses on renewable energy requirements "established through Renewable Portfolio Standards (RPS), which provide specific quantifiable RE generation requirements over time." The commenter s said generally speaking, an RPS

r equires a retail seller of electricity to supply its customers with a specified percent of its electricity originating from documented renewable energy sources; states generally have jurisdiction over retail sales within their borders.

Commenter s stated E PA started its Wyoming calculation with the wrong number, applied an unrealistic growth factor and reached a wrong conclusion. The commenter s said EPA relied on Energy Information Administration (EIA) data for Wyoming wind facilities to quantify Wyoming's 2012 renewable energy generation of 4,369,107 MWh. The commenter s said EPA then applied an annual escalator of 6.095% to this base number beginning in 2017; the escalator is said to reflect past performance in an eleven

- state region designated as "the West ." The29 commenter s said the resulting Block 3 portion of Wyoming's overall goal reaches 9,427,996 MWh in 2029.

Commenter s added the EPA did not determine what portion of the 4,369,107 MWh was Wyoming consumption subject to Wyoming jurisdiction over retail s ales; with or without an RPS, Wyoming RE consumption would be the outer limit of achievable MWh consistent with an RPS theory.

Commenter s added to derive a number for renewable energy sold at retail in Wyoming, Commission staff reviewed the same EIA data u sed by EPA; for 2012, the format of this data was entries listing Plant ID number, Plant Name, Operator Name, Operator ID number, State, and Net Generation in Megawatts. The commenter s said Commission staff verified the EIA totals for Wyoming wind plants, and readily found internet information to link listed facilities to their ownership and to the location where each facility's generation was consumed.

Commenter s added PacifiCorp facilities accounted for 3,753,653 MWh of the 2012 total (about 86%); the Com mission confirmed its understanding that PacifiCorp treats this renewable production as a system asset for the utility's six

- state system; as such, retail customers in all six states receive an allocated share of the electricity from the Wyoming wind gener ators connected to PacifiCorp's system. The commenter s said Commission staff determined the Wyoming share of wind production using a factor which four of the six PacifiCorp states used in 2012 to allocate system costs among themselves. (The 2012 allocation factor for Wyoming was 15.5220%; for Utah, 42.8146%; for Oregon, 25.9294%; for Washington, 7.9620%; for Idaho, 5.7832%; for California, 1.6015%. Less than 0.4% was allocated to another entity.) The commenter s said the factor reflects energy use and system demand, i.e., the system infrastructure required to meet peak demands in each state. The commenter s provided a table showing when wind generation is used in state or is exported.

Commenter s added in these calculations, an Exchange refers to an agreement to purchase 100% of the power of a wind facility; however, if PacifiCorp does not need all the power being produced, it may give some power back to its counter

- party in a different period. The
commenter s said for example, when the facility is not running, the counter

- party may give power back to PacifiCorp; the Exchange MWhs are a balance which accounts for these gives and takes; PacifiCorp also receives Network Resource designation for such generation, and as such sinks 100% of the output into Network Loa d.

Commenter s concluded the base for calculated growth of Wyoming renewables should be retail sales of 666,212 MWh, not total renewable generation of 4,369,107 MWh; using EPA's annual growth factor of 6.095%, the 4,369,107 MWh grows by 5,058,889 MWh to rea ch the total of 9,427,996 MWh in 2029. The commenter s said this number comprises the single largest component of EPA's goal for Wyoming, and is large enough to frustrate any conceivable state effort to comply with that goal.

Comment 29: The EPA incorrectl y accounts for baseline renewables in its goal

- setting calculation

.30 Response 29: The EPA agrees with the commenter s that the final rule should rely on incremental RE instead of including existing RE. See section V .E of the final rule preamble of the CPP for a description of the other changes to building block 3 . This change obviates many of the commenter s’ concerns about baseline RE levels including biomass. It also obviates the concern regarding ownership

- based versus location

- based assignme nt of existing RE

. 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 specific public comments under this comment:

Commenter s stated the propos ed rule creates a disconnect in the accounting of renewable energy between goal

- setting and compliance; for the purpose of determining state goals. The
commenter s said EPA assigned existing renewables to the state in which they are physically located, rath er than the state whose utilities own or purchase the output from these facilities; however, for compliance purposes, EPA proposes that "consistent with existing state RPS policies, a state could take into account all of the CO2 emission reductions from re newable energy measures implemented by the state, whether they occur in the state or in other states." The commenter s said as a result, some existing renewable facilities will be applied to one state for goal

- setting purposes, but to another state for comp liance purposes.

Commenters stated it is not clear whether Wisconsin utilities will be able to take credit for behind

- the

- meter facilities. The commenter s said a significant portion of the renewable energy in Wisconsin's baseline is from behind

- the

- meter facilities owned by industrial customers

- primarily black liquor recovery and woodwaste

- fired boilers owned by paper mills. The
commenter s said Wisconsin utilities typically do not purchase renewable energy credits ("RECs") from these facilities; if tho se RECs are sold to entities in other states, those states, rather than Wisconsin, would be able to take credit for these behind

- the

- meter facilities for compliance purposes, although the RECs are counted against Wisconsin in setting the baseline.

Commen ter s were concerned about how EPA will treat biomass facilities. The commenter s said over half of the renewable energy in Wisconsin's baseline is from biomass facilities; while EPA considered these facilities to be carbon

- free for the purpose of setting th e state's goal, EPA has not yet determined in the proposed rule how to treat these facilities for compliance purposes. The
commenter s said EPA's November 19, 2014 guidance memorandum on biogenic CO2 emissions appears to support the treatment of certain biomass feedstocks as being carbon neutral, implying that CO2 emissions may be assigned to biomass facilities utilizing other feedstocks , contrary to the assumption in the goal

- setting calculation. The commenter s added the revised Framework for Assessing Biogenic CO2 Emissions from Stationary Sources, on which the guidance memorandum is based, remains a draft document subject to revision.

Commenter s note d that there are currently, and will continue to be, certain percentages of renewable generation purchased under green pricing programs. The commenter s said in these programs, customers choose to pay a premium above their retail rate for el ectricity from renewable resources. The commenter s d id not believe that this renewable generation should be included in the baseline as existing renewables or assumed to be available for compliance, since31 it is being purchased by customers with the intent that it be in excess of what is required to meet regulatory requirements.

Commenter s realize d that it will be difficult for EPA to resolve all of these issues with existing renewables as part of its calculation of state goals for the final rule. The comme nter s said a better approach that EPA should adopt is to exclude existing renewables from the goal

- setting calculation and recalculate state goals based on the appropriate level of incremental renewables to be added by each state; thus, while state goals w ould be higher (and seemingly less stringent) than under the method in the proposed rule due to the exclusion of existing renewables from the goal

- setting formula, existing renewables would not be eligible to be used for compliance purposes. The commenter s said as a result, the stringency of the target would not actually be affected; in effect, existing non

- hydro renewables would be treated the same way as existing hydro and the non

- at

- risk portion of existing nuclear facilities. The commenter s said while t hese existing facilities would be expected to continue operating and providing carbon

- free generation, only new renewable and nuclear facilities could be credited for compliance purposes.

Commenter s stated in conjunction with the exclusion of existing ren ewables from the goal setting calculation, a method to provide states with partial credit for early action would be to allow states to take credit for a portion of their existing renewables for compliance purposes in achieving the state's goal; states coul d be allowed to take credit for generation from renewable facilities that are in excess of the state's renewable portfolio standard requirements.

Commenter s stated f or the purpose of determining states' goals, EPA assigned existing renewables to the state in which they are physically located, rather than the state whose utilities own or purchase the output from those facilities; however for compliance purpose the EPA is proposing that "... consistent with existing state RPS policies, a state could take into account all of the CO2 emission reductions from renewable energy measures implemented by the state, whether they occur in the state or in other states." The commenter s said this will result in the output from some existing renewable facilities being appli ed to one state for goal

- setting purposes, and to another state for compliance purposes.

Commenter s stated EPA's methodology fails to sufficiently recognize early action for states that have already supported renewables independently or through Renewable E nergy Standards (RES) or Renewable Portfolio Standards (RPS) programs.

Commenter s stated EPA's determination of regions for renewable energy goal setting was arbitrary, using Regional Transmission Organization (RTO) and North American Electric Reliability Corporation (NERC) regions as a general guide. The commenter s said EPA used the average RPS requirement of the five states with an RPS requirement in their nine

- state "North Central Region" to arrive at a 15 percent "Effective RE level". The commenter s sai d 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.

Commenter s stated in its October 28, 2014 Notice of Data Availability (NODA), E PA states: "some stakeholders have highlighted that the state physically hosting the RE generation in question approved its siting, issued its permits, and may make other claims as to having supported its development and operation and, thus, has a stake in such renewable resources". The32 commenter s said while it is true, that a host state issued permits and supported development, it is doubtful they have any legal claim to the resulting energy production and related environmental attributes. The commenter s s aid they also neglect to recognize that the host state benefits from economic activities such as direct/indirect jobs along with local sourcing of materials related to both initial project development (local economic impacts of RE are touted in DOE & NREL studies of RE development), as well as the ongoing economic benefits of landowner lease payments, labor related to project operations and maintenance, and payment of annual property taxes on generators and related facilities.

Commenter s stated for example, WPS owns the 99 Megawatt Crane Creek wind farm located in Riceville Iowa; the project is located on agricultural land owned by 42 participating property owners. The commenter s said in 2014, WPS paid a total of $391,000 in compensation to property owners i n the form of lease payments; over the expected 30 life of the project, WPS will pay just short of $17 million in lease payments to property owners; WPS paid $768,000 property taxes to local units of government in 2014.

Commenter s stated over the next 20 y ears WPS estimates it will pay $25

- $30 million in local property taxes. The commenter s said the truth of the matter is that $42

- $47 million of direct payments into the local economy will be paid by WPS Wisconsin and Michigan electric ratepayers over the ne xt twenty years; those same electric ratepayers will have to fund the replacement RE under the proposed regulations which credits Crane Creek's 315,656 MWh of annual generation to Iowa's baseline rather than Wisconsin's baseline.

Commenter s stated EPA has expressed concern with the interstate transfer of RE and the potential for double counting, and appears to propose that such transfers could only occur under a multi

- state plan. The commenter s asserted existing regional tracking systems which are in widesp read use around the country can be adapted to keep track of MWhs, and prevent double counting of RE used for compliance as part of a state's 111(d) SIP.

Commenter s stated that if an electric customer pays for renewable generation, they should receive credi t for both state and federal compliance purposes and the EPA should correct the accounting for out of state renewable resources in the state goal calculation during the development of the final rule.

Commenter s stated there are numerous problems with the baseline renewables used by the EPA in its goal

- setting calculation. The commenter s said one specific issue for Wisconsin is that a significant portion of the renewable energy in Wisconsin's baseline is from beh ind

- the

- meter facilities owned by industrial customers (primarily black liquor recovery and wood

- waste

- fired boilers owned by paper mills). The commenter s said Wisconsin utilities generally do not purchase renewable energy credits (RECs) from these facilit ies, so it isn't clear that they would be able to take credit for these facilities for compliance purposes. The commenter s recommend ed EPA should exclude from the 2012 baseline used for setting state goals any renewables not eligible for state Renewable En ergy Standards (RES) or Renewable Portfolio Standards (RPS) compliance, such as industrial behind

- the meter sources.33 Comment 30: Calculating Renewable Energy Generation

Response 30: See s ection V.E of the final rule preamble of the CPP for a discussion on building block 3 and RE potential assumed in quantifying BSER

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

Commenter s concurred with EPA's suggested floor for a renewable energy generation baseline, using 2012 figures. The commenter s said there is a clear public policy imperative to generate increased levels of renewable energy, consistent with the Administration's Climate Action Plan, and broader policies in place both at the Federal and State levels . The commenter s said a state's reported 2012 fossil fuel generation should not be treated as a ceiling for its renewable energy generation target as the relative economics of many technologies are changing rapidly. The
commenter s said careful attention mu st be paid to adhere to a policy and accounting standards that ensure renewable energy generation increases using highly transparent, accurate and recent baseline levels as well as levels of new generation. The commenter s said due to wide variations in per formance, nameplate capacity alone is not a sufficient basis on which to account for emissions reductions from renewable energy generation. The commenter s recommend that certified annual energy estimates be used to ensure emission reductions.

Comment 31: Errors using electric output and net energy output for coal plants

. Response 31: In this final rule, the EPA relies on net electric output. At proposal, the EPA was folding useful thermal output into the goal and the use of net energy output. Based on comments, the EPA no longer folds useful thermal output into its BSER quantification, but states are still permitted to use it when demonstrating compliance. As a consequence, the EPA is relying on net electric output in the denominator per the commenters ’ suggestion

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

EPA appears to have made an error calculating Unadjusted (baseline) CO2 emission rate for coal EGUs. According to TSD

- Goal Computation:

CO2 Emission Rate = ((c oal gen. * coal emission rate) + (NGCC gen * NGCC emission rate )

+ ...) / ( coal gen. + NGCC gen + ...)

The commenter s said in Appendix 7, EPA assigned coal generation to equal "electric output"; however, the coal emission rate is based on "net energy output" (total CO2 emissions divided by net generation) instead of "electric output" (total CO2 emissions divided by elect ric output). The
commenter s asserted that EPA has interchanged the electric and net generation in the goal computation for coal; the commenter s asserted the correct method is to use a coal rate based on "electric output."

The commenter s said in North Caro lina's case, EPA used a coal rate of 2,0441b/MWh (104,197,978,000 tons CO2 divided by 50,970,369 MWh net energy output); instead, EPA should have used 2.0591b/MWh (104,197,978,000 tons CO2 divided by 50,607,838 MWh34 electric output). The commenter s said thi s error correction applies nationally to all coal plants with CHP capability, where generation is reported in terms of "electric output" and "net energy output."

Comment 32: Errors in baseline "Sales" data used in setting EE target under Building Block 4

Response 32: See section V of the final rule preamble of the CPP for an explanation of why BB4 demand

- side energy efficiency is not included in the final rule. This comment

- driven change between proposal and final makes the above BB4 concern obsolete

.

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

Commenter s stated Building Block Four goals were set by using 2012 utility sales; EPA calculated the total sales of "bundled" and "delivered" from "regulated" and "unregulated" utilities. The commenter s said included in the sales was a "utility" named "Adjustment 2012" which reported 40,368 MWh. The commenter s said these sales, however, are a summation of the total sales from "unregulated" utilities already reported and used in t he baseline determination. The commenter s said the data attributed to "Adjustment 2012" does not represent actual sales of electricity; accordingly, "Adjustment 2012" represents a double counting and should be removed from Connecticut's 2012 baseline utili ty sales. The commenter s realize d that this data correction will likely not impact Connecticut's final state goal significantly.

Commenter s identified several problems with the EE data reported to EIA that have a small impact on the size of Wisconsin's EE goal. The commenter s said the Focus on Energy program slightly underreported savings from the program and several utilities over

- reported their EE savings (i.e., reported savings that had already been reported by the Focus on Energy program. The commenter s provided Table 10 , which shows d ifferences between Wisconsin's energy efficiency savings reported to EIA and best estimates from the Public Service Commission of Wisconsin for 2012. The commenter s said these reporting issues have been addressed and will not occur in future years, but Wisconsin encourages EPA to work with EIA to clarify reporting instructions to utilities and co

- ops to ensure that similar errors do not occur in the future. The

comme nter s said when the reported values are corrected, Wisconsin's overall goal becomes slightly less stringent. Commenter s provided Table 9 , which shows c orrections to Wisconsin's goals from correcting energy efficiency data.

Commenter s stated in the TSD spre adsheet, "20140602tsd

- state

- goal

- data

- computation", EPA uses a value of 83.97% for Wisconsin's state generation as a percent of sales; however, when attempting to reproduce this value using data from EIA, calculated 86.15%. The
commenter s ha ve not found an explanation of how EPA calculated this value. Commenter s provided Table 11 , which shows c alculation of state generation as % of sales for Wisconsin. The
commenter s said EPA should either use the value determined by Wisconsin or explain how they calculated their value and justify why this value is more appropriate than the one calculated by the state.35 Comment 33: Artificially high electricity consumption baselines will generate false credit for emission reductions under the Clean Power Plan

. Response 33: The EPA does not agree with the commenters that the baseline will generate false credit for emission reductions. Moreover, it has change d the way it applies building block three (as described in preamble section VI that address the commenters concern. Pl ease see the CO 2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP for more information about the goals and section VIII of the final rule preamble of the CPP for more information about state plans and complianc e.
The following are summaries of the specific public comments under this comment:

Commenter s stated artificially high electricity consumption baselines will generate false credit for emission reductions under the Clean Power Plan; the EPA's Clean Power Pl an relies on the AEO2013 reference case forecast in two key places. The commenter s said if states are allowed to use the EPA's basic approach to calculating energy efficiency in state plans, then they will measure actual electricity sales against an artifi cially high baseline; thus, they would receive credit for efficiency improvements that would have occurred in the absence of the Clean Power Plan, in addition to those caused by the state plan. The commenter s said for the same reasons, a state that adopts an equivalent mass

- based standard for new and existing sources that is based on the AEO2013 reference case will face an artificially lenient target. The commenter s said because the projected electricity sales are biased upwards, such a state will face an o verly generous target; as a result, theses states would receive credit for efficiency improvements that would have occurred in the absence of the Clean Power Plan, in addition to those required by the state plan.

4.6 RATE

- TO

- MASS CONVERSION

Section 4. 6 covers public comments related to the rate to mass conversion of the final and interim 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.

C omment 1: Support for mass based goals

. Response 1: The EPA agrees with commenters and has provided both rate

- based and mass

based goals in the final rule to allow states to choose the approach that is most appropriate for affected EGUs in their state

.

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

Commenter s support ed EPA's effort to make it easier for states to use a mass

- based goal instead of an emission rate

- based goal, if that is their preference. The commenter s said mass

- based goals36 may make it easier for states to maximize the use of cost effective demand reduction strategies such as programs to deploy more energy efficiency, CHP and direct use

- particularly if states enter into multi

- state regional plans that allow crediting programs that reduce demand from customers located in one state for electric grid power served by EGUs in another state; this better recognizes the regional nature of the electricity markets and dispatch.

Commenter s stated as a theoretical matter, the commenter s support ed the concept of a mass

based emissions target; such an option would provide States with additional flexibility in developing their implementation plans. The commenter s said a mass

- based approach may facilitate the use of of fsets and other compliance options that may prove helpful in lowering the overall cost of the rule.

Commenter s added in the Preamble, the EPA states that it would allow a state to convert its rate

based goal to a mass

- based goal. The commenter s strongly s upport ed the ability for states to
convert to a mass

- based goal. The commenter s said a mass

- based goal may facilitate consistency with California's existing, multi

- sector, mass

- based GHG reduction program.

Commenter s noted that EPA may set rate

- based goals and allow for conversion to mass

- based goals. The commenter s noted that in the Proposed Rule, the EPA expresses each state's emission guideline, or required level of emission performance, as an emission rate, namely pounds of CO2 per net megawatt hour (lb s/MWh). The commenter s noted that the Proposed Rule expressly permits, but does not require, states to translate their "rate

- based" goals to equivalent "mass

based" goals (for example, tons/year), 79 Fed. Reg. at 34893

- 94, giving states flexibility to

acco mmodate and account for a wide variety of emission reduction strategies. The commenter s stated that the appropriateness of issuing state

- specific emissions guidelines as rate

- based goals is fairly standard and uncontroversial, as should be the option for s tates to translate "rate

- based" goals to equivalent "mass

- based" goals. The commenter s interpreted that section 111(d) condones use of either metric as the "standard of performance." The commenter s stated that nothing in the statute's language restricts th e agency to use of any one measure, neither runs afoul of case law, and the EPA has used both standards in the past. The commenter s stated that giving states flexibility to convert rate

- based goals to mass

- based goals accommodates a wide variety of emissio n reduction strategies, allowing states to fulfill their role under section 111(d) to develop effective implementation plans. The commenter s explained that mass

- based emissions are the currency of existing multi

- state trading programs. Without that currenc y, the commenter s stated that it would be difficult for states to determine how to integrate their various standards of performance into a unified portfolio, for purposes of allotting emissions shares to states and to entities within those states. The comm enter s stated that use of a common currency will make it easier to expand the scope of any regional trading program, whether to include a new state participant or another sector of carbon

- emitting sources. Even where a state does not participate in a regio nal trading program, the commenter s stated that use of a mass

- based standard may allow it greater flexibility to incorporate demand

- side efficiency measures and increased reliance on low

- and zero

- emitting sources into its plan. In other words, the comment er s noted that it creates opportunities for a state to diversify its portfolio of plan components, regardless of whether a particular component is itself federally enforceable. At bottom, the commenter s argued that states should be allowed to choose the cu rrency that will best suit their needs, including those that enable coordination with neighboring states and participation in regional emissions control programs. The commenter s noted that EPA requests comment on whether it should37 provide a "presumptive tr anslation" from rate

- based to mass

- based goals, or whether the agency should instead provide "guidance" for states to follow in making the switch. The commenter s noted that EPA also recently issued a Notice and accompanying technical support document
conta ining information regarding two possible methodologies that states can use to translate emission rate

- based goals to mass

- based equivalent goals. The commenter s stated that with respect to the translation issue (and disregarding the technical merits of the EPA's specific proposals), the commenter s saw no legal issues with the range of translation options the EPA has proposed

- from providing a "conversion table" of sorts, to allowing states to determine their own translations

-- so long as the result is subje ct to the agency's review and approval, and so long as that approval is contingent on a determination that the state's mass

- based goal would achieve the equivalent in stringency, including compliance timing, to the state

- specific rate

- based goal set by the EPA

.
Commenter s stated EPA itself recognizes the consistent success of mass

- based programs in reducing emissions efficiently, citing to Title IV of the CAA, the NOX SIP Call, CSAPR, RGGI, and the California Cap

- and

- Trade Program. The commenter s said beyond their track record at delivering reductions at least cost to ratepayers, mass

- based programs are far easier to implement than programs designed to achieve rate

- based goals because they avoid the need to "credit" the reductions achieved at the affected EGUs through RE and EE programs.

Commenter s stated accounting for compliance with a mass

- based goal poses no such risks of incorrect crediting: The methods for measurement of emissions from affected EGUs are well established under both 40 CFR Par ts 75 and 98 and thereby provide a much greater degree of accuracy and consistency among states in monitoring achievement of their respective goals; in other words, a ton of emissions emitted by one affected EGU is equivalent to a ton that is not emitted f rom another EGU. The commenter s said despite the rigorous evaluation, measurement and verification ("EM&V") methods described by EPA as evolving throughout the country in recent years, EM&V methods are subject to significant variation and inaccuracy; as EP A notes with respect to EE measures, "all energy savings values are estimates of savings and not directly measured." The commenter s said in contrast, the emissions reported under 40 CFR Parts 75 and 98 are direct measurements and are not subject to the sam e degree of variation or inaccuracy as the adjustments that need to be quantified to demonstrate compliance with a rate

- based goal through reliance on RE/EE measures.

Commenter s stated a mass

- based approach avoids regulating parties other than the affecte d EGUs; because the emission reductions resulting from re

- dispatch of existing NGCC, RE, and EE measure are reflected directly in the mass CO2 emissions of affected EGUs, no explicit crediting of these measures is necessary; nor would the entities implemen ting such measures need to be subject to potential liability under the CAA if the state's affected EGUs fail to achieve the mass

- based goal. The commenter s said therefore, a mass

- based goal approach provides the opportunity for a more limited role for EPA in state energy policy.

Commenter s strongly support ed states' endeavoring to implement mass

- based goals to achieve the Clean Power Plan.

In a subsequent comment submitted, the commenter s applauded EPA's November 6, 2014 release of the Rate

- to

- Mass Notice and supporting TSD. The commenter s viewed this TSD as an38 illustrative methodology and had no comment on the particular assumptions underlying the calculation of the mass

- based goals given in the document. The commenter s commended the Agency's provision of additional clarity to states at this early stage as they begin to consider possible approaches for individual and multi

- state plans.

Comment 2: Support for rate based goals, clarifications needed

. Response 2: The EPA has given careful consideration to all of the comments in designing the methodology to calculate the mass

- based goal for the final rule. The EPA provides the calculation of a mass

- based goal directly in the rule in response to comments that includes the following considerations

. See secti on VII of the preamble for further discussion.

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

Commenters support ed the ability to convert the rate

- based goals into mass

- based goals, but stated there needs to be some clarifications.

Commenters urge d EPA to provide clear and simple guidance for states to use in translating a
rate

- based goal to a mass

- based goal

Comment er s stated EPA should allow a state the flexibility to use a reasonable estimate of future generation from affected units, including utilization of the values the EPA assumed in its development of the target emission rates, to determine their mass cap.

Co mmenter s stated EPA should allow a state to multiply its baseline fossil generation by the final goal emission rate to establish emission caps; if a state elects to utilize such a simplified and conservative approach, EPA should expressly state that such a n approach would be approved.

Commenter s added if the state desires to take other factors into account, EPA's guidance should specify acceptable analytical methods and tools for making the projections, as well as default input assumptions for key paramete rs that will likely influence projections, such as electricity load forecasts and projected fossil fuel prices; states should be allowed to deviate from these default methods and assumptions with justification.

Commenter s added following the guidance woul d provide a streamlined path for the EPA approval of emissions projections, but would still allow states the flexibility to use other approaches, subject to EPA review; this guidance should ensure that all actions that reduce CO2 emissions are counted unde r a mass

- based program, and should clarify how to measure and include avoided CO2 emissions from RE, EE and other similar measures in a mass

- based
program.

Commenter s added EPA should allow states to rely on unit retirements occurring after the baseline y ear(s) to meet Section 111(d) goals; EPA must acknowledge that any EGU that a company or state has agreed to retire may be included in a state's "reference case." The
commenter s stated the generation from the reference case would then be used to determine the

mass

- based goal; if the retirement is not built into the reference case, then the lower generation39 and emissions rate would result in a lower mass

- based target. The commenter s said this would help ensure that utilities and states that have voluntarily planned retirements of existing coal plants are not penalized by that action.

Commenter s added clear guidance from EPA would promote faster action on multi

- state compacts; cooperating states will be required to create new trading programs, and a clear
met hodology for conducting the conversion of an emission rate goal to a mass

- based goal will facilitate this process.

Commenter s added EPA guidance also would help reduce litigation over state plans; if EPA does not clearly outline a methodology for states t o translate a rate

- based goal to a mass

- based goal, there will be litigation over the conversion on a state

- by

- state basis. The commenter s stated such litigation will cut into the short time in which states are required to submit and implement their compli ance plans, greatly hindering efforts to implement CO2 emission reduction measures.

Commenter s added the November 6th guidance does not seem to provide clarity as to how a state is to make the rate to mass conversion; the guidance on its face appears to re sult in emissions rates and mass target that are not consistent with the Proposed Rule. The commenter s stated these different mass

- targets and implied emissions rates result in very different "glidepaths" for State Plans to achieve compliance with the Prop osed Rule. The commenter s ask ed for clarity, consistency, and simplicity from EPA in its final guidance on rate to mass conversions to allow states, as they are formulating their State Plans, to fully understand their choice in rate

- based or

mass

- based gli de paths so they, and entities responsible for reliability can better gauge the possible reliability effects. The commenter s stated states should not be left guessing as to what constitutes an acceptable rate to mass conversion only to find their assumptio ns later questioned during EPA review of a submitted State Plan; moreover, as noted previously, given the disparate impacts on a regional dispatch and siting of new generation of use of different rate and mass targets and different methodologies for the co nversion of one to another, clarity in this area is especially important as states and regions analyze their compliance options.

Commenter s added EPA should provide a clear process for states to propose alternative mass budgets that states can demonstrate are comparable to the prescribed rate

- based goals.

Commenter s added EPA should recognize that mass budgets provide a level of environmenta l certainty that rate

- based goals do not provide and EPA should make it as easy as possible for
states to convert rate

- based goals to mass

- based budgets.

Commenter s added EPA should provide greater guidance on how EPA will ensure that the rate

to

- mass co nversion does not weaken targets.

Commenter s added New Units should be Included in Rate

- to

- Mass Conversion; if states choose to include new units in their compliance plans, then those units should be included in calculations converting rate

- based targets to mass

- based targets. The commenter s stated unless EPA incorporates new plants in the rate

- to

- mass conversion, RGGI's mandatory emission reduction targets will be difficult to compare with EPA requirements. The commenter s added new plants meeting EPA's 1 11(b) requirements may provide emission reduction40 opportunities under non

- RGGI approaches, and this potential should be reflected in mass

- based targets.

Commenter s added because the rule includes obligations that extend to 2030 and beyond, it is critical b oth to develop a reasonable estimate of growth in electricity demand and a process for recalibrating the mass

- based standard over time if projections about demand growth prove to be incorrect; projections of future demand growth are further complicated by their overlap with EPA's expectations regarding demand

- side energy efficiency, which will also affect future growth.

Commenter s added a straightforward conversion from rate to mass is not possible here because the denominator in EPA's calculation of the r ate

- based limit includes several components that reflect avoided emissions rather than electricity generation.

Commenter s added for some categories such as nuclear generation, only a portion of electricity generation is included, complicating the conversi on process.

Commenter s added in the first rate

- to

- mass conversion approach

- a mass

- based target applicable only to existing power plants

- is a viable option only if EPA requires mechanisms to ensure that the mass

- based emissions limit is not achieved simp ly by reducing generation from covered sources and increasing generation at new plants built in the state, an outcome through which the targets could ostensibly be met without achieving actual emission reductions equivalent to those that would be achieved under a rate

- based system.

Commenter s added in the second rate

- to

- mass approach

- a mass

- based target that is "inclusive of new fossil fuel

- fired sources"

- is a preferable option and should be the default approach. The
commenter s said this approach avoids the complication of tracking excess new fossil generation; and the critically important aspect of this approach is the determination of the level of demand growth. The commenter s said this determination must be subject to a uniform methodology established by EPA. The commenter s said an excessive projection of demand growth will weaken the target and void the required equivalency between the rate

- based and mass

- based targets; even states that are not attempting to weaken their target will inevitably face pr essure to adopt an overly optimistic demand growth projection consistent with the state's aspirations for future economic development. The commenter s added EPA must adopt a consistent and unbiased demand growth projection and we suggest that EPA use of the EIA projection.

Commenter s added EPA performed modeling using the Integrated Planning Model to project future generation and CO2 emissions for the compliance period and provided unit

- specific "parsed files" for the years 2020 and 2025. The commenter s aske d if EPA has considered whether the parsed files for each year of the compliance period (i.e. 2020

- 2029) would be helpful or necessary to determine CO2 emissions from 111(d) affected units during the compliance period, and whether states could use these fi les as a proxy to determine a mass

- based goal comparable to the rate

- based goal set by EPA.

Commenter s stated the new TSD for conversion of rate

- based goals to mass

- based goals is helpful, but does not lay out the criteria for approvability by the USEPA wh en submitted as part of a state plan. Commenters stated t his guidance is still lacking.41 Commenter s asked if EPA could choose a specific state and walk through their methodology for the two approaches to translating rate targets to mass targets, including i dentifying alternative inputs or data sources that states could use.

Commenter s asked if EPA would look to translate a state's rate

- based target to a mass

- based target in the event that the Agency imposes a federal implementation plan.

Commenter s stated th e proposed regulatory language for the 111(d) rule describes the process for converting a rate

- based goal to a mass

- based goal at 40 C.F.R. 60.5770. The commenter s asked if a state plan incorporates exactly one of the methodologies and mass

- based targets f rom EPA's goal translation TSD, is the state's mass

- based goal presumptively "equivalent" to the rate

based goal, as the regulations require; if not, what else would a state need to do to show it has an approvable mass

- based goal.

Commenter s appreciate d EP A responding favorably to the request to release a more simplified methodology for the states to convert to a mass

- based goal if they believe it will provide more flexibility for development of their SIP. The commenter s said a mass

- based approach has many advantages including providing certainty that reductions actually occur; it also gives an advantage to non

- emitting resources. The commenter s said for states and utilities with significant hydro power resources, the ability to approach carbon reduction wit h a massed

- based approach provides a great opportunity for leveraging the value of excess hydro that might be available at certain times of the year. The commenter s added the mass

- based goal will better capture the wider range of energy efficiency strategies available, particular those outside the utility sector, such as building codes and appliance standards. The commenter s said given the advantages of this approach , the commenter s are concerned that the current methodology results in overly stringent targets and may discourage states from choosing it as a compliance approach. The
commenter s said EPA should ensure there is no penalty for using this approach, economic growth should be accounted for and states should be able to adjust their goal based on a significant change in circumstance such as a severe drought.

Commenter s stated exogenous drivers are highly uncertain over the timeframe of the Proposed Rule (i.e., 1 5+ years), the commenter s suggest ed that the EPA clarify how and when states can revise their mass

- based goals if expectations regarding key exogenous factors turn out to be meaningfully different. The commenter s said such revisions can help ensure that eq uivalent stringency between rate

- and mass

- based goals is maintained, as intended, and make it easier for states to seriously consider opting for mass

- based approaches by reducing some of the risk associated with mass

- based goals.

Commenter s stated the EPA has proposed that the rate

- based CO2 emission performance goals may be converted to mass

- based emission performance goals; the EPA provides an explanation in the "Projecting EGU CO2 Emission Performance in State Plan Technical Support Document" of how suc h a translation would be made. The commenter s said while the explanation in the TSD is a less than clear explanation of how the translation should be performed, based on comments made by EPA staff on this matter it would appear that what the EPA contemplat es is that states wishing to make a rate

- to

- mass translation would employ a model such as IPM or other similar type model to project a state's compliance with its rate

- based limits and pull from the model output for each year from 2020 to 2029 the total pr ojected CO242 emissions for the universe of affected sources, with the result being the state's equivalent mass

based cap. The commenter s said assuming this is generally correct, the procedure in Section 60.5770317 of the proposal would appear to contradict this approach. It states that "(3) The conversion must represent the tons of CO2 emissions that are projected to be emitted by affected EGUs, in the absence of emission standards contained in the plan, if the affected EGUs were to perform at an average lb. CO2/MWh rate equal to the rate

- based goal for the state identified in Table 1 of this Subpart." The commenter s said while it may not be what the EPA intended, this language could be interpreted as directing a state to multiply the MWh generation projected by a model by the state's emission rate goals for each year and that would be the equivalent mass

based cap, which would yield a very low cap number. The commenter s d id not believe this is the EPA's intent, but given the lack of clarity in the Technical Support Document it is not possible to know with certainty what the EPA intends.

Commenter s stated given the tremendous interest in understanding what the proposed rate

- based goals might translate into on a mass basis, especially given the significant bar riers to implementing the proposed program on a rate basis and the likelihood that many states may default to a mass

- based approach, the EPA needs to do a much better job of communicating precisely how it is proposing the translation be performed. The comm enter s said the EPA must also ensure that the regulatory language in any final guidelines is completely aligned with the approach the EPA envisions, or at least does not lock states into a single approach. The
commenter s said any translation procedure must provide for the capturing of the emission reduction benefits of coal units retired after the baseline period; in other words, emissions from coal units that were in the baseline and factored into state goal calculations and are either actually retired aft er the baseline period or retired by a model being used to project emissions for the purpose of developing a mass caps, must be captured in the mass limits. The commenter s said failing to include emissions from the coal units that were included in the base line and state goal calculations but whose operation and emissions were not captured in the rate

- to

- mass translation procedure would mean that coal units retired after the baseline period would not contribute a single ton toward a state's compliance under a mass

- based approach; in other words, the procedure must reflect an assumption that all coal units included in the baseline are assumed to continue to operate when performing a rate

- to

- mass translation.

Commenter s stated the TSD issued by the EPA in Nove mber 2014 appears to be an attempt to address the rate

- to

- mass translation issue, but is less than helpful guidance regarding what the EPA might consider to be an acceptable rate

- to

- mass translation procedure; for example, it is unclear how the EPA's refer ence to the calculation

- based approaches described in the TSD as "illustrative" should be interpreted. The commenter s said the EPA fails to state that EPA would accept the described translation approaches and the resulting mass

- based caps if states were to use them as the basis for establishing a mass

- based plan; in addition, if states are not bound to use either of the described approaches to establish a mass

- based plan, it is uncertain if the cap numbers that result from the illustrative calculations woul d be binding on a state. The
commenter s said additional guidance from EPA is necessary; assuming that EPA would approve a conversion based on the illustrative calculations put forth in the TSD, it is unclear what happens if a state wants to develop a mass

- based plan but does not want to do so based on the use of the approaches described in the Agency's November TSD, because they result in cap levels that are believed to be too stringent. The commenter s said the EPA fails to identify available options for st ates; since the EPA omitted mention in the November 2014 TSD of the43 modeling

- based translation approach it attempted to describe in the Projecting EGU CO2 Emission Performance in State Plan TSD, it is unclear if EPA is still considering such an approach as a viable option. The commenter s said if this original approach is no longer being considered by the EPA, a justification for this decision needs to be communicated to stakeholders; the EPA needs to provide a much fuller discussion of the modeling approach or approaches it envisions that would allow states to adequately evaluate their use as an option for establishing a mass

- based plan.

Commenter s stated EPA allows the states to use either mass

- based or rate

- based goals; but there is lack of direction and guidance from EPA on how mass

- based goals should be calculated. The
commenter s said more details are needed so that the states and utilities can determine which method is more advantageous and flexible to achieve the final CO2 emission reductions. The

comm enter s said on November 6, 2014, EPA released additional information on mass and rate based goals; the commenter s are evaluating and may make additional comments.

Commenter s stated EPA's current TSD does not adequately consider demand growth; the existing source mass cap is developed relative to 2012 generation levels and fails to consider demand growth at all. The commenter s said the mass cap that factors in new units is generically based on the Energy Information Administration's (EIA's) 2013 Annual Energ y Outlook (AEO2013) where EPA assigns an annual average growth rate based on regional demand projections in order to calculate projections of future demand. The commenter s said in practice, electric utilities would not apply a generic approach in the devel opment of integrated resource plans; this approach also fails to consider the interconnected nature of the bulk power system by assuming all increased demand growth would be provided solely by new NGCCs. The
commenter s recommend ed that EPA consider these a dditional factors when it issues its final guidelines and provide revised estimates of state

- specific presumptive mass caps from those issued in the TSD.

Commenter s support ed the EPA's proposal in the preamble to the rule to establish a mechanism for conv erting the rate

- based goal into a mass

- based goal; in so doing, EPA is proposing to apply a "proxy emission limit" to a reference case scenario, which projects the total mass of CO2 emissions for affected EGUs if those EGUs were to implement the entire app licable state CO2 emission rate goal in the absence of any other enforceable measures or requirements. The
commenter s said EPA's initial proposal does not provide enough specificity to allow states to determine how the rate

- to

- mass conversion would be impl emented. The commenter s are still reviewing EPA's November 6, 2014 information on rate

- to

- mass conversion, and reserve the right to comment at a future date on the proposed methodology. The commenter s urge d EPA to clarify and simplify the proposed rate

- to

- mass conversion process, and to do so in a manner that ensures full credit is provided for retirement of existing fossil generation and reduced utilization of existing coal

- fired generation. The commenter s said specifically, EPA should consider a "safe har bor" rate

- to

- mass conversion methodology under which (1) the state projects the average business

- as

- usual output (in GWh) from affected units in the state for the interim ten

- year compliance period and for the first final goal compliance year, multiplied b y (2) the state's interim goal (over a ten

- year period) or final goal, as those goals are adjusted to reflect any building block changes.44 Commenter s stated EPA has proposed that each state may convert its rate

- based CO2 emission performance goal to a mass

- based emission performance goal; EPA should preserve this option in the final rule, and should also allow states to switch between rate

- based and mass

- based emission performance goals as desired. The commenter s said EPA provides two TSDs regarding how such translations could be made. The commenter s said while the TSDs are less than clear, in one TSD EPA appears to be contemplating that states wishing to make a rate

- to

- mass translation would employ IPM or a similar type of model to project a state's complian ce with its rate

- based limits and pull from the model output for each year from 2020 to 2029 the total projected CO2 emissions for the universe of affected sources. The commenter s said these projected CO2 emissions would be the state's equivalent mass

- base d cap. The commenter s said in the other TSD, EPA simply appears to use historic generation for existing sources and also offers an alternate method that includes a single average annual growth rate if new fossil fuel

- fired sources are included. The comment er s said that generation is multiplied by the state's rate

- based goal to determine the equivalent mass

- based goal. The commenter s said the conversion from a rate

based emission performance goal to a mass

- based emission performance goal is a desirable optio n that should be retained for the states, and each state should be permitted to determine exactly how such a conversion is made; however, EPA should also provide clearer guidance on the criteria for acceptable conversion options. The commenter s said a helpful step would be for EPA to provide examples of the necessary modeling analysis for each state and provide detailed guidance for public review and comment.

Commenter s recommend ed that EPA augment the current guidance it has offered on mass

- bas ed conversion to at a minimum include the following: 1 ) in

- depth discussion of the attributes of

mass

- based vs. rate

- based approaches to implementing carbon emissions standards, including side

- by

- side comparison as supported by the economic literature; 2 ) a regulatory impact analysis including detailed, realistic modeling of scenarios for the of mass

- based vs. rate

- based approaches given the actual configuration of power markets faced with state

- by

- state implementation 111(d); 3 ) A simplified step

- by

- step r e

- calculation for a sample jurisdiction [replicating the step

- by

- step approach EPA took for Ohio in its Goal Computation technical support document] for different types [including EPA's simplified calculation

- based approaches for ( 1) "existing sources" and ( 2) "existing and new sources."] Of mass based budgets, with further explanation for how projections from electric sector models may be used in place of inputs from the goal computation calculation.

Commenter s strongly support ed EPA's guidance on how to c onvert emission

- based standards to

mass

- based standards, as this provides stakeholders with a clear and more environmentally certain goal. EPA should provide clear guidance to states with how a mass

- based standard affects compliance options, particularly w ith respect to any interstate impacts on emission reductions, if
any.

Commenter s stated EPA has proposed the Clean Power Plan based on a rate

- based CO2 limit, with the option available to convert that limit to a mass

- based one. The commenter s said it is

es sential that clear and concise direction be provided by EPA; even after the release of its Rate to Mass Technical Support Document and related data files, the calculations are still confusing, and raise questions as to whether the mass

- based goal is more s tringent than the rate

- based goal. The
commenter s said the release of this information has been welcomed, but it was so long in coming that state agencies and the regulated community have had little time to fully analyze the45 information to evaluate the pot ential alternative mechanisms to implement and measure compliance.

Commenter s stated EPA needs to provide clearer guidance on how the state can establish and comply with a mass emissions cap. The commenter s ha ve made large investments to reduce CO2 emissio ns, and plans to do still more by retiring existing coal units, increasing its reliance on renewable energy, and investing more in energy efficiency. The commenter s asserted that it could meet a reasonable mass based emissions cap; however, the proposed ru le provides insufficient guidance on how states are to establish a mass based cap and whether an individual company or political subdivision could separately establish and comply with a mass based cap.

Commenter s stated EPA does not factor in the ability f or increased utilization of existing sources in calculation of the mass equivalent; the commenter s request ed that EPA clarifies that when states choose to do a mass

- based translation the states will have the option to include reasonable demand growth gener ation from existing affected EGUs.

Commenter s stated viewed from the perspective of using RGGI as a compliance mechanism, a number of improvements should be made to the proposed rule, including:

a) EPA should ensure that the methodology for translating rate

- based targets to mass

- based targets is clear and EPA should work with states to help set these targets; states in the RGGI region have years of experience using extensive modeling to help set r easonable emissions caps and this experience should be brought to bear in setting the final mass

- based targets; states should also be able to bring their own credible information to bear during the translation process.

b) EPA should give states the option for including new EGUs in CPP compliance plans; and if the new EGUs are included, then their emissions should be factored in the calculations converting rate to mass

- based targets.

c) EPA should recognize that RGGI's "program review" has allowed for much needed adjustments to the mass

- based cap; during the RGGI design process, NEMA stakeholders encouraged these reviews to help regulators respond to unforeseen circumstances; a similar mechanism should be adopted in the CPP final rule to allow for periodic adjustments to the

mass

- based cap and further input from the states.

Commenter s asserted that an equivalent mass

- based target can simplify compliance calculations and should be available as an option. The commenter s support ed the inclusion of a mass

- based option, the methodology to calculate that target and to determine compliance must be clear and unambiguous. The commenter s said without clear standards, there will be overwhelming pressure for each state to interpret the guidance in the most advantageous m anner; this will result in a patchwork of programs with varying stringency. The commenter s said as inconsistent methodologies within a given market or trading region could influence costs and impact dispatch order, it is particularly important to be consis tent on this level if not nationwide.

Commenter s stated EPA has recently issued guidance on conversion of the rate

- based goals to

mass

- based goals, but additional questions remain; for example, demand growth calculation methodology should not rely on nati onal defaults when better data is available nor should states be able to adjust their assumptions to t the desired outcomes. The commenter s said the46 methodology selected should consider the current best practices in demand modeling, reflect the latest data available from transmission organizations, and be developed after a collaborative process involving the EPA, other states, and other stakeholders. The commenter s said should EPA determine that sufficient data is available, establishing a presumptive mass

- based goal along with more detailed guidance would be reasonable; however, the
commenter s recommend ed EPA conduct additional outreach to stakeholders and consider a supplemental comment period limited to this issue.

Commenter s stated that i f the EPA is to accept mass

- based conversions from the final rate established by the EPA, the EPA must provide modeling, data sources, default input assumptions, and guidance to the states on what would be acceptable methods and data sources to convert the state's rate t o an equivalent mass of CO2. In addition, the commenter s stated that the EPA must describe to states under what circumstances the EPA would approve a change in a

mass

- based plan. The commenter s asserted that states should have the flexibility to allocate a s they choose the amount of emissions to each year during the 2020

- 2029 compliance period from the 10

- year interim mass total

.

The commenter s stated that requesting a presumptive translation of the rate

- based goal to a mass

based goal should not be seen as a commitment to a mass

- based plan or to EPA's presumptive mass caps. Instead, the commenter s stated that the provision of presumptive translated goals by the EPA would help inform a state's decision

- making process in developing its plan. Should a state choose to adopt the EPA's presumptive values, the commenter s stated that these values should be acceptable to the EPA when a state submits its plan. The commenter s requested that the final EPA rule should provide a presumptive translation of its final and interim rate

- based goals to mass

- based goals

.

The commenter s suggested that the EPA also provide guidance on acceptable analytical methods and tools for translating rate

- based goals to mass

- b ased goals and provide guidance on appropriate default input assumptions and key parameters. The commenter s suggested that states that submit a mass

- based plan should be allowed to revise annual mass caps, if needed based on changes in load demand, so long as the overall emission rate for affected facilities meets the emissions targets proposed by the EPA.

Commenter s stated EPA should clarify methodologies for translating the rate

- based targets to

mass

- based targets and simplify the use of regional programs like RGGI for compliance. The
commenter s said as part of the rate

- to

- mass conversion process, EPA should allow states to consider the potential impact of the electrification of the transportation sector on emissions from affected sources under the CPP.

Co mmenter s request ed that guidance be provided to the regional EPA offices to ensure that approved mass based targets achieve at least an equivalent reduction from 2005 emissions from affected sources as modeling indicates would be achieved by the proposed r ates.

Commenters recommended EPA develop rate

- to

- mass translation approaches that maintain flexibility on the methodology and data used to determine the translation, recognize the complexity and geographic connectedness of the electric grid, and provide en ough oversight to ensure a meaningful equivalency of stringency between the rate

- based and mass

- based47 approaches. The commenters added the RGGI states firmly believe that a mass

- based approach represents the most cost

- effective method to demonstrate compli ance with the CPP, and a simple translation methodology could facilitate this outcome by lessening administrative costs and uncertainties associated with the conversion process. The commenters suggest ed that EPA continue to analyze options for developing a simple translation approach, or at least streamlining aspects of the process.

Commenter s added if EPA wants to define a specific approach to make this conversion, it should do so in rule, not guidance; this section would be the appropriate location to spe cify a conversion approach. The commenter s stated if EPA wants to continue to allow states to utilize only an outline of an approach to the conversion, EPA needs to make it clear to the EPA Regional office reviewers that the method proposed in the TSD is n ot a requirement or a preferred approach.

Commenter s added EPA still has not provided adequate and definitive guidance on how a state would translate emission guidelines into mass emission caps under the proposed rule; therefore, states are forced into ev aluating overly complex calculations and compliance scenarios. The
commenter s said States and utilities are already struggling with this complexity and need a simple, uniform framework that would allow for least

- cost compliance; a holistic design approach should be used that can more easily account for reductions associated with RE, EE, and unit efficiency actions. The commenter s support ed EPA's intention to grant states flexibility on methods to allow multi

- state electrical systems to demonstrate complianc e; this should include a broad suite of options including bi

- lateral agreements, trading of clean energy, renewable energy and avoided CO2 tons from EE, however, more time needs to be provided to do this.

Commenter s added a mass

- based standard may have be nefits over rate

- based, including ease of compliance determinations and facilitating trading programs; the TSD will help Colorado in weighing the merits of rate

- versus mass

- based standards. The commenter s stated the presumptive goal approach allows states to include a different goal in their plans with a demonstration on why their goal is more appropriate than EPA's. The commenter s stated Colorado appreciates EPA's ongoing effort to provide supporting information and options to states, and requests that th e final rule continue to provide states with broad flexibility to develop

mass

- based standard conversion methodologies that consider state

- specific needs.

Commenter s added a mass

- based option would limit overall carbon emissions, consistent with California 's larger climate goals, and would likely be easier to monitor and enforce given many of our existing climate programs are mass

- based. The commenter s said mass

- based systems may also help better support regional planning, since ton

- based accounting is a re latively straightforward way of addressing effects on emissions from power transfers across state lines. The commenter s stated mass

- based accounting may also, as a result, help reduce the need for standardized monitoring and verification systems in regiona l planning. The commenter s added a careful analysis will be needed to determine the best approach for California; U.S. EPA provided some guidance on converting rate

- based targets to mass

- based, however, the language, as proposed, leaves room for multiple i nterpretations CARB staff has requested U.S. EPA to provide some specific examples of how they would perform this conversion.

Commenter s recommend ed that in establishing methodologies for rate

- to

- mass based conversions, the EPA work with those mass

- based s tates with substantial experience in modeling48 and analyzing CO2 emissions, such as the RGGI states, and that EPA be guided by a set of principles aimed at achieving the best outcome; these principles should include:

• Collaboration in working with states, i ncluding sufficient stakeholder input, and a process that takes into account state recommendations, rather than EPA simply specifying mass

based targets for each state.

• Flexibility for how states may include energy efficiency in their compliance plans,

ac knowledging that different states have different levels of experience with evaluation, measurement and verification.

• Fair, consistent and equitable treatment among and between states.

• Transparency and clarity in what is required and documented.

• Simplici ty in what is required of states to not over

- burden them.

• Credibility of the process and the results by, as cited by the RGGI states, not arriving at a final rule that is "too open

- ended," and which would allow states to "game the system."

Commenter s adde d EPA should provide for a mass

- based emission budget compliance option, either by articulating the standard as a mass

- based emission budget, or providing a mechanism for translating from a rate

- based standard to a mass

- based emission budget. The commenter s said such a methodology could apply an emission rate to the projected or historic generation from covered power plants in a state; for example, under a projected generation approach, modeling would be used to project how a state's generation from covered sources would change over a period of time, and then the EPA emission rate would be applied to that projected quantity of electricity generated; using such an approach would take into account changes in demand, and would therefore be more comparable to us ing a rate

- based standard, where the emissions are proportionate to demand. The commenter s said EPA could require states to reduce or offset the projected demand growth with readily available energy efficiency improvements (e.g., one percent annually); thi s approach could potentially involve a "true

- up" as well

- a review of whether actual changes in demand and related factors are consistent with projected changes, and a potential adjustment to the budget to reflect those changes. The commenter s said under such an approach, it would be appropriate to require new sources to be subject to the new source standard as part of their New Source Performance Standard compliance obligation, as using projected generation to compute a state's emission budget would inher ently reflect any new generation required to meet changes in load; such an approach was proposed by EPA in the Clean Air Mercury Rule. 70 Fed. Reg. 28622 (May 18, 2005). The commenter s said a system

- wide approach to reducing emissions includes reducing el ectricity demand through energy efficiency or displacing demand for fossil fuel

- fired generation through additional zero

- carbon energy; therefore any projection of demand change or "true

- up" should reflect those anticipated electricity savings or displacem ent. The commenter s said if a historic generation approach is used, a state's emission budget would be based on the amount of emissions that would have occurred in a baseline year if the state's power plants had generated the same amount of electricity as they did during the baseline year, but had emitted at a target emission rate. The
commenter s note d that under these approaches, the emission budget would represent an49 aggregate budget for all covered sources in a state; states choosing to use the emission budget would be required to meet the standard in the aggregate, could use all cost

- effective measures

- such as efficiency, renewables, end

- use controls, carbon capture and sequestration

- to obtain the necessary reductions, and could allow averaging of em issions or trading of emissions allowances; or a state could join a regional market

- based program, and could demonstrate compliance if the group of states collectively met the states' aggregate mass

- based standard. The
commenter s said if EPA articulates th e standard as a rate

- based standard, and if EPA's methodology for translating from a rate

- based standard to a mass

- based standard involves accounting for projected changes in generation from covered sources, the methodology should be transparent and consis tent; the methodology should start with reliable, existing federal data sources, including the Clean Air Markets Division emissions database and the EIA Annual Energy Outlook. The commenter s said EPA should also allow states to seek to use their own data, but EPA should require states to rigorously substantiate any changes to projections based on other, non

- federal data sources. The commenter s said for a simplified example, assume that the standard is 1100 lbs/MWh (the proposed rate for new coal plants), and that state "X" has one gas plant and one coal plant, each of 500 MW; in the hypothetical base year of 2013, the gas and coal plant togethe r generate 7 million MWh of electricity and emit 5.2 million tons of CO2, at an average 2013 rate of 1500 lbs/MWh; the state's cap in 2025 would assume the same generation

- 7 million MWh

- and multiply that by the 2025 rate

- based standard

- 1100 lbs/MWh. T he
commenter s said this yields a cap of 3.8 million ton per year, 27 percent less than actual emissions in 2013; note that this method could be adapted to accommodate different rates for different fuels or plant types, such as those proposed in the new pla nt standard. The commenter s said EPA should consider providing guidance for how a state can provide a rigorous demonstration of changes from specific factors, for example if a state is projecting significant increases in electricity demand due to increased electric vehicle deployment as a result of state policies that are not reflected in federal projections.

Comment 3: The EPA should consider commenter s’ recommendations to the conversion of rate based goals to mass based goals

. Response 3: The EPA has given careful consideration to all of the comments in designing the methodology to calculate the mass

- based goal for the final rule. The EPA provides the calculation of a mass

- based goal directly in the rule in response to comments that includes the foll owing considerations

. See section VII of the preamble for further discussion.

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

Commenter s stated we would urge EPA to take two additional steps in the final rule: 1) provide a

s tep

- by

- step re

- calculation for a sample jurisdiction for different types of mass

- based budgets, and 2) offer further explanation for how projections from electric sector models may be used in place of inputs from the goal computation calculation. The comme nter s salute d the EPA's inclusion of a complete dataset to support the two examples of conversion to a mass

- based budget for the rate

- based standards included in the proposed Section 111(d) guidelines. The
commenter s urge d that in the final rule EPA (as it did in the original goal computation technical support document for the state of Ohio) provide a written step

- by

- step deconstruction of the50 conversion process, culminating in the state mass

- based budgets. The commenter s said such a demonstration would eli minate the need to trace development of the components of the building blocks through the formulas in each cell of the accompanying spreadsheet. The commenter s said EPA elected to use a "calculation

- based" approach to mass

- based conversion in the revised T SD which relies on the data used in computing the building blocks components of the final state goals. The commenter s sympathize d with EPA's concern not to tie the hands of the states in planning for mass

- based programs by being overly prescriptive here; however, the
commenter s asserted that EPA should provide general guidance as to how forecast information could be used to generate mass

- based budgets. The commenter s said as one plausible guideline which could improve the reliability and consistency of CO2 budgets generated using forecast information, EPA should recommend that the states choose to rely on forecast models which are

mo st commonly relied upon to produce planning studies in their region.

Commenter s stated to be a viable option, the rate to mass conversion must be redesigned; the Clean Power Plan proposed for Wisconsin results in CO2 emission reductions which exceed the national goal of a 30 percent reduction from the 2005 CO2 emission level. The com menter s said in November 2014 the EPA provided a technical support document on how to translate the Clean Power Plan emission rate

- based CO2 goal to a mass

- based equivalent; for Wisconsin the "Final Mass Equivalent

- Existing Affected Sources" limit was re ported as 25,275 thousand metric tons and the "Final Mass Equivalent

- Existing Affected and New Sources" limit was reported as 28,102 thousand metric tons.

Commenter s stated in 2005 the Clean Power Plan units included in Wisconsin utilities' reports to
t he Acid Rain Program had total CO2 mass emissions of 45,299 thousand metric tons; based on the 2005 Wisconsin CO2 emissions, the "Final Mass Equivalent

- Existing Affected Sources" limit of 25,275 thousand metric tons represents a 44 percent reduction from the 2005 CO2 emissions and the "Final Mass Equivalent

- Existing Affected and New Sources" limit of 28,102 thousand metric tons represents a 38 percent reduction from the 2005 CO2 emissions. The
commenter s said both reductions are greater than the objecti ve to reduce 2005 emission by 30 percent; this demonstrates the complexity of first developing a CO2 rate goal and then developing a rate to mass conversion methodology that results in a reduction in the state's CO2 mass emissions that meets the design tar get.

Commenter s stated in order to have a viable option for a compliance goal that more accurately tracks the CO2 mass emission reduction objective, the EPA should develop the CO2 mass reduction goal based on the stated goal of reducing the 2005 CO2 emiss ions from affected units by 30 percent in 2030; therefore the sum of the states CO2 mass limits should sum to 70 percent of the states' 2005 CO2 mass emissions. The commenter s said the only potential area of disagreement would be the allocation between sta tes, since each state's share of the total United States emissions was likely different for 2005 compared to 2012, which is the year EPA used to apportion state

- by

- state emission reductions. The commenter s said to address this concern, a mass limit for eac h state could be developed by comparing a 3

- year average ratio of the individual state's CO2 mass emissions to the national total; this ratio could then be applied to the national 2005 CO2 mass emissions and then reduced by 30 percent.

Commenter s stated t his will result in a CO2 mass limit for each state whose sum will equal the CO2 mass emission reduction objective; this approach to establishing a viable mass

- based CO251 reduction removes the uncertainty associated with converting from a CO2 rate goal to a CO2 mass limit which is inherent in the current EPA proposal. The commenter s said even if the EPA were to clarify exactly how to convert a state's CO2 rate to a CO2 mass limit, to the degree the conversion depends on a forecast of energy usage the conversi on would be froth with uncertainty making it difficult for states to develop their implementation plans.

Commenter s added for instance, in its current emission rate form the rule relies on modeling of long term Mwh generation from the state's generating u nits; long term forecasts are uncertain and are dependent on a number of factors such as load growth, market prices, unit availability, and the particular model selected for the forecast. The commenter s said this uncertainty would result in the state not k nowing whether or not the EPA will approve the state's conversion of the CO2 rate to a mass limit until after the state has filed its implementation plan; also, since the state specific CO2 rate is a function of the assumed state specific renewable energy and energy efficiency targets, there is the potential for arguments being made about the equity of the assumed levels of renewable and energy efficiency targets. The commenter s said states with more aggressive renewable and energy efficiency targets could raise the issue of whether or not their target CO2 rate is "fair"" compared to those states which have less aggressive renewable and energy efficiency targets.

Commenter s support ed EPA developing as a compliance option, presumptive mass caps because it wo uld reduce uncertainty surrounding the initial development of mass caps by states. The
commenter s said EPA should clearly articulate how the mass caps were developed and provide an opportunity for public notice and comment before the final rule is released ; in addition, states should have the opportunity to develop their own mass caps to replace the presumptive EPA mass caps if they have reasonable justification to do so. The commenter s said the state should be the entity to determine how new units are acco unted for in the state's plan. The commenter s said the final rule should include off ramps which could take the form of relaxed CO2 mass limits; these off ramps could be utilized in the event of either a reliability issue or economic hardship.

Commenter s s upport ed the state's ability to convert the rate based goals to mass based goals; however the commenter s are concerned that the proposal would ignore

- in fact punish

- states' clean energy leadership. The commenter s said EPA does this by using a 2012 bas eline and setting more stringent targets for states that have retired coal plants, invested in renewable energy, and implemented customer energy efficiency programs than for states that have done less in these areas; this sends exactly the wrong message to states who acted early and customers who have paid for these clean energy investments, asking them to pay relatively more for future reductions. The commenter s said with regard to the period between now and 2020, the proposal creates perverse incentives t o delay further action until 2020; fortunately, there are several simple, targeted changes to the rule that can improve the proposal's treatment of early action. The
commenter s recommend ed that EPA in the final rule:

• Recognize the retirement of coal plant s occurring prior to 2012 by exempting from Building Block 2 the capacity of coal retired and replaced with natural gas combined cycle (NGCC) units on the same site;52 • Account for the effect of renewable energy on the dispatch of NGCC plants, by recalculati ng NGCC capacity factors to what they would have been without renewable energy leadership before applying Block 2;

• Allow leading renewable states to bank renewable energy prior to 2020 for use in meeting their 2030 compliance obligations, and in general c reating stronger incentives to continue renewable energy and energy efficiency leadership before 2020.

Commenter s stated EPA offers a general approach to making the conversion from a rate goal to a

mass

- based goal, but does not specify methods and assumpti ons required to ensure consistency across states, including preventing states from choosing assumptions that would result in a more favorable mass

- based goal. The commenter s said many states are also looking for more clarity and guidance on their mass

- base d goal so that they can begin to think about whether a mass

based approach would offer a viable compliance pathway and whether or not to coordinate with other states; in some cases, if the decision is left to states, this will trigger internal "due process " procedures.

Commenter s stated Bruce Phillips, a Director of the Northbridge Group, identified some issues to consider in defining the methodology for translating the rate standard to a mass

- based goal and described several alternatives; in particular, E PA can facilitate adoption of a mass

- based goal by translating the standard for states and ensuring the resulting state emissions limits are neutral (or attractive) relative to rate goals. The commenter s said other considerations include maintaining the en vironmental integrity of the rule (achieving a 30 percent overall reduction in emissions) and administrative feasibility; options for converting from a rate to mass standard include:

• EPA defines the mass

- based standard using Integrated Planning Model (IPM ); EPA uses IPM to estimate future generation and determines state mass

- based goals by plugging in the applicable assigned state emissions rates for covered units; States would have the option to challenge and refine the assumptions, likely requiring EPA t o rerun the model; this approach is rigorous but could lead to a problematic federal

- state process; while some states (e.g., RGGI) are familiar with IPM, others may find the model less transparent than other alternatives.

• EPA computes the mass

- based stand ard based on forecasted or historic data; either would be less rigorous than IPM but would provide greater transparency and still foster consistency across states.

• EPA computes the mass

- based standard based on forecasted data; for states expecting load gr owth, a forecast methodology would result in a more generous mass

- based standard; according to EIA's business

- as

- usual projections (not including a carbon price), on average, coal and natural gas generation is expected to grow by 12 and 23 percent respecti vely between 2012 and 2020 due to a 17 percent increase in electric load (If a carbon price were included in the load forecast, load might increase more slowly, so the advantage of using a forecast methodology would be less.)53 • EPA computes the mass

- based st andard based on historic data; this method is more objective than forecasted data, but unless adjustments are made, would result in a stricter limit than a standard based on forecasts; in a separate presentation, Tom Curry, a Vice President with M.J. Bradl ey & Associates, presented a series of options to define a mass

based standard using calculations based on historic rates of generation (MWh); specifically , he adjusted the mass calculation [state goal * historic fossil MWh] by adding in elements of EPA's building blocks (in MWh); each addition would essentially increase the effective mass based standard; using this approach, it is possible to approximate the overall compliance emissions limit that would result from multiplying the state emission rate goals by projected electric generation from affected units based on an IPM model forecast; however, the impacts at the state level would differ depending on the relative importance of the different building blocks in setting state level goals; this approach

wou ld tend to disadvantage states expected to experience higher levels of business

- as

usual growth in fossil generation.

• EPA issues analytic guidance to states and the states estimate the mass

- based standard using a growth model such as ERTAC; EPA reviews th e analysis and either approves or disapproves the goal; both the process of EPA developing guidance and states undertaking modeling can be slow; use of different forecasting tools would result in inconsistency across states.

• States choose their approach w ithout specific guidance; EPA reviews the analysis and either approves or disapproves the goal; this would also be slow as states navigate through the options and would result in inconsistency across states.

The commenter s said one additional option that was suggested would involve having EPA simply indicate that states adopting a mass

- based standard would need to achieve a set reduction in emissions (e.g., 30

- 40 percent).

Commenter s recommend ed that any mass

- based goal conversion process account for key uncertainties with periodic updates of key factors, notably:

• the extent to which power sector emissions and emission rates may increase from the use of electricity as a transportation fuel.

• Economic and demographic growth through 2030;

• The relative level o f imported and exported power, which affects in

- state emissions.

Comment 4: The EPA's Method for Converting Rate

- Based Goals to Mass

- Based Goals Is Unjustified and Arbitrary

Response 4: The EPA has converted the rate

- based goals to mass

- based goals

. See section 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 the final mass

- based goals

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

Commenter s stated the notice is unclear as to whether in EPA's view the proposed methodologies would be mandatory or optional if finalized. The commenter s said on one hand the notice states that the two methods are "illustrations of two potential options" that States may choose; on the other hand, the notice also states that methodologies employed in translating a rate into a mass goal must achieve "...the equivalent in stringency." The commenter s said the proposal's requirement that a S tate's rate

- to

- mass conversion must result in tonnage limits "equivalent in stringency" to that determined under the proposed methodologies indicates that, in EPA's view, methods a State employs cannot diverge from the methods described in the referenced t echnical support document (TSD), because otherwise the calculated tonnage goal would be inconsistent with the calculations required by the TSD and possibly not as "stringent." The commenter s stated regarding EPA's authorities under Section 111(d), the meth odologies proposed here can only serve as guidelines for States and cannot be binding on States. The
commenter s said EPA cannot displace authorities granted States under section 111(d) to establish performance standards; the establishment of a tonnage goal based on EPA

- selected methodology would thus unlawfully usurp state authority and discretion; EPA's proposed methods can only serve as guidance to states and not requirements.

Commenter s added EPA cannot regulate new sources as existing sources under Sec tion 111(d); thus, to mandate tonnage limits on for new fossil fuel sources as part of a Section 111(d) plan, as EPA proposes in its new source rate to mass

- based methodology, is plainly unlawful.

Commenter s stated very recently, in November 2014, EPA issu ed a Technical Support Document that sets forth two "illustrative calculation

- based approaches for translating the Clean Power Plan (CPP) emission rate

- based goals to a mass

- based equivalent." The commenter s said in the first approach, EPA derives the mass

- based equivalent that would apply to existing sources, while in the second it derives the mass

- based equivalent that would apply to new and existing sources. The commenter s said EPA bases its "illustrative" calculations on several concepts, the first of w hich is that the "deployment of BSER measures will reduce generation from affected fossil fuel

- fired sources." The commenter s said no justification or basis is provided for this conclusory statement, however. The commenter s said EPA uses that conclusion to justify omitting the generation from EE, incremental RE (that above 2012) and under construction nuclear in its [mass = CO2 emissions rate * generation] calculation. The commenter s said as EPA notes in the Translation TSD, this approach is directly contra ry to the approach taken in the goal calculation for the June 2014 Proposal.

Commenter s stated addressing the two approaches in reverse order, EPA has no authority under this Proposal

- meant to establish guidelines for existing EGUs

- to impose limits (h ere an emissions cap), on new EGUs; thus, the second approach cannot be justified under current law and should not be proposed or pursued further by EPA. The commenter s said the first approach suffers a similar fate, albeit for different reasons; first, EP A provides absolutely no basis for concluding that EE, incremental RE or under construction nuclear will replace

- on a 1

- for

- 1 basis

- historical fossil fuel

- fired generation; nor has EPA provided any analysis that would justify this approach

- completely contrary to that taken in the Proposal

- as part of the BSER for fossil

- fuel fired EGUs. The commenter s said failure to provide the basis for a determination of BSER renders this approach completely arbitrary and unjustified. The commenter s said EPA's55 app roach in the Translation TSD makes the CO2 ton cap significantly more restrictive than the
rate

- based goal in the Proposal; if a state were to use this approach, it would clearly result in reduced operations of fossil fuel

- fired EGUs relative to the Propos al, exacerbating concerns of stranded investments and system reliability that are already acute under the existing Proposal. The commenter s asked where are the Agency's analyses of the costs associated with this new approach, or the potential effects this increased stringency could have on electrical system reliability. The commenter s added other obvious problems exist with the Translation TSD; for example, EPA has no authority to include within its emissions guidelines any of the measures in Building Block s 2, 3 or 4. The commenter s said EPA's approach unfairly penalizes those entities (states, utilities and state citizens) that have nuclear units under construction, EPA's Translation TSD fails to comply with existing law. The commenter s said EPA must under take the proper analyses, as part of a formally proposed rule

- which the Translation TSD is not

- that evaluates, and justifies, within the context and bounds of CAA section 111, a cap on CO2 emissions for the source categories to be regulated under CAA s ection 111; until that happens, EPA has failed to comply with CAA sections 111 and 307(d); it should either withdraw the Translation TSD or undertake the proper analyses to support a formal proposal that reflects its contents.

Comment 5: General criticism /questions of conversion

. Response 5: The EPA has converted the rate

- based goals to mass

- based goals . See section 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 the final mass

- based goals

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

Commenter s stated because of the complexity of t his nation's interdependent electricity grids and the dynamic nature of our energy markets, we are uncertain whether historically

- based generation and capacity data can serve as the most reliable basis for building projections necessary to complete the tra nslation process. The commenter s added a simple conversion process could yield results that do not account for the dynamics that result directly from the complexity and interconnectedness of the electric grid.

Commenter s stated electricity system modeling offers crucial insights pertaining to how the system will respond to changes in policy or market forces, especially related to the type and location of generation among states. The commenter s said while a modeling

- based approach would add cost and complexi ty to the translation process, EPA could address these issues by leveraging the large body of modeling experience and expertise that exists within EPA and the various state and regional organizations that routinely model the electric sector to support plan ning efforts, and by providing resources and technical assistance to states completing the
rate

- to

- mass conversion process.

Commenter s added supplementing the June proposed rule, EPA issued a technical document in November that provides two possible option s for translating rate

- based goals to a mass

- based equivalents, including tables of two of these approaches. The commenter s added they support EPA's effort to provide a more straightforward translation method based on the rate

- based targets56 and historic da ta, however, requiring multiple model runs to derive a mass

- based goal adds significant complexity to the state planning process, and they believe would discourage the adoption mass

- based targets.

Commenter s added rate targets may have some advantages ove r mass based targets. The
commenter s stated California is unique in that policies are being implemented to greatly increase the deployment of electric vehicles and the infrastructure necessary to support them; in addition, some local air districts are look ing at greater electrification of residential, commercial, and industrial sectors to minimize fuel combustion and its associated emissions. The commenter s stated these policies are likely to result in the need for more generation capacity; although some of this capacity will likely be served by new facilities not subject to section 111(d), some may come from existing facilities. The commenter s stated a rate

- based metric addresses this situation by providing some flexibility, allowing for growth in output wh ile limiting carbon intensity.

Commenter s stated EPA has not provided a transparent, replicable method to allow translation of the proposed rate

- based goal to a mass

- based goal

Commenter s added the rate to mass conversion is a vital consideration in the de velopment of a state or regional plan to comply with the proposed regulation; EPA's failure to timely provide a methodology by which to make this conversion prevents states, industry, and the public from adequately reviewing and commenting on the proposal.

Commenter s added EPA has failed to propose any methodology, only provide "two illustrative calculation

- based approaches" for translating the rate

- based goals to mass

- based goals.

Commenter s added the agency displays the mass as metric tons rather than c onventional short
tons.

Commenter s added the "illustrative" rate

- to

- mass translation approaches that EPA provided in the TSD do not follow the original proposal.

Commenter s added EPA has essentially set conflicting goals for the states: rate

- based goals in the original proposal and significantly more stringent mass

- based goals later published in the November 6, 2014 TSD.

Commenter s added the agency sets forth the former goals with an iron hand, admonishing states that any variance will be met with harsh skepticism; then, with but little reference to comments already received, the agency does an about

- face and publishes an illustrative approach to calculating mass

- based goals that varies significantly from its original proposal.

Commenter s added for consi stency with the original proposal, EPA cannot set a mass

- based goal that would be lower than the base year fossil fuel emissions (after the application of Building Block 1).

Commenter s added the EPA cannot tinker around the edges of an unsound proposal to make it more to its liking.57 Commenter s added the entire original proposal should be set aside permanently, or at least until the EPA can come up with proposed guidelines that are consistent with its legal authority and that are feasible through real "ach ievable" and "adequately demonstrated" BSER rather than wishful thinking.

Commenter s added the proposal should have been an Advance Notice of Proposed Rulemaking rather than a Notice of Proposed Rulemaking. States, industry, and the public have been depriv ed of an opportunity to comment on whatever rate to mass methodology EPA decides to finalize.

Commenters stated EPA's proposed translation of emission rate

- based CO2 goals to mass

- based equivalents are inconsistent with methods utilized to determine state rate

- based goals. The commenters stated for the denominator, the rate goal computation essentially incorporates the projected future sum total of all the MWhs of all the sources in Building Blocks 1

- 3, as well as the MWhs associated with energy efficiency measures, while backing out the MWhs associated with future projected loss of coal

- fired dispatch in the numerator; the result is a maximization of goal MWhs and a minimization of CO2

- based MWhs resulting in a stringent rate

- based goal. The commenters said however, the proposed method to convert a rate

- based to mass

- based goal employs presumptions that are opposite of those employed in the goal computation. The commenters said here, EPA's proposed method backs out non

- CO2 based MWhs that are included in the rate

- based goal computation, yielding a mass

- based computation process that would always result in fewer tons in a rate to mass conversion than if the MWhs in the rate

- based goal computation were utilized instead. The commenters said the most straightforw ard approach that is consistent with the method used in the goal calculation for a rate to mass conversion is to use the product of the goal

- computed MWHs (the denominator) and the goal

- calculated CO2 rate/ MWh.

Commenter s added the 60.5770(a ) ( 3) provision of the 111(d) proposal states "The conversion must represent the tons of CO2 emissions that are projected to be emitted, in the absence of emissions standards contained in the plan, if the affected EGUs were to perform at an average lb CO2 /MWh r ate equal to the rate

- based goal for the state identified in Table 1 of this Subpart." The commenter s said it does not make sense to apply the average lb CO2 /MWh rate equal to the
rate

- based goal for the state identified in Table 1 of this Subpart to "aff ected EGUs" when calculating the mass based goal since the rate

- based goal was calculated based on the generation from "affected entities", not "affected EGUs". The commenter s said that "affected entities" should replace "affected EGUs" in the provision ci ted. The commenter s asked if EPA intended to set a mass based goal by having "affected EGUs" perform at an average lb CO2 /MWh rate equal to the rate

- based goal for the state identified in Table 1 of this Subpart. The commenter s said if this was EPA's inte ntion, it should be noted that Georgia's rate

- based goal is 834 while our coal emissions rate (after HR improvement) and NGCC emissions rate are 2157 and 841 lbs/MWh, respectively; even if we dropped coal generation to 0, we would be left with an equivalen t emissions rate of 841; this would fail the equivalency test in paragraph (a ) ( 3). The commenter s said there are a number of other states in this same circumstance. The commenter s asked what does "in the absence of emission standards contained in the plan " mean; is EPA saying that, for purposes of the calculation, all predicted electrical demand (i.e., generation) would be assumed to be from affected EGUs.58 Commenter s added there have been reports that EPA staff has endorsed a method for calculating the ma ss

- based goal that involves taking the EPA/IPM Option 1 CPP modeling results and adding up the emissions from the affected units. The commenter s asked if EPA could elaborate on how this method relates to the method specified in proposed 60.5770(a ) ( 3)

- ta king the projected generation of affected units and multiplying it by the rate

- based goal.

Commenter s stated in the NODA, EPA has provided additional guidance on two possible approaches to converting rate

- based goals to mass

- based goals; because state agen cies are in the best position to evaluate and direct the future course of their electricity sector and their economy, EPA should allow states to convert their rate

- based goals into mass

- based equivalents. The
commenter s said states should be authorized to initially identify appropriate factors, assumptions, and inputs for this conversion and to calculate interim and final mass

- based goals that match the emission performance that would be expected under a rate

- based approach; EPA should not calculate mass

- ba sed equivalents for the states.

Commenter s stated the two optional approaches for converting rate

- based goals to mass

- based goals that EPA outlines in the Rate

- to

- Mass Technical Support Document (TSD) are flawed for at least three reasons. The commenter s said both approaches reflect unreasonable assumptions about the effect that incremental RE, EE, and nuclear generation will have on affected EGUs' generation and emissions. The commenter s said both of the TSD approaches would adjust 2012 affected unit gene ration below baseline by assuming that the addition of incremental sources of

zero

- carbon generation will reduce the utilization of affected fossil EGUs. The commenter s said however, it is incorrect to assume that the addition of a MWh of incremental RE, E E, or nuclear generation will reduce the output of existing fossil units by the same amount. The commenter s said numerous factors

- including future demand growth, the attributes of the electric system, and the interconnected nature of the electric grid

- affect the extent to which addition of new generation can displace existing fossil generation.

Commenter s added the approaches outlined in the TSD are inconsistent with the rate

- based goal computation approach in the Proposed Rule; under EPA's initial proposal, the addition of incremental RE, EE, and under

- construction nuclear generation would not be assumed to displace existing fossil generation. The commenter s said under the alternate approaches discussed in the Rate

- to

- Mass TSD, by contrast, the addition of this incremental generation is assumed to reduce generation from existing fossil EGUs. The commenter s said because these two methods are inconsistent, it would be unreasonable for EPA to convert state goals from rates to masses using the methodology in the Rate

- to

- Mass TSD.

Commenter s added both approaches fail to adequately consider the impact of future demand growth on affected units' abilities to reduce emissions; the TSD's first proposal for calculating

mass

- based equivalents would not incorporate any future load growth into the projection of a

mass

- based equivalent; this result is clearly arbitrary. T he commenter s said by failing to incorporate any assumptions about how electricity demand may increase in future years, EPA would effectively prohibit states from meeting new electricity demand with additional generation from existing units, which are some of the most reliable, proven, and low

- cost generation sources available. The commenter s said EPA's second option under the Rate

- to

- Mass TSD incorporates one basic assumption about increased electricity demand, based on EIA regional projections; however, t his load growth assumption may be unreasonably low in many parts of the country, if59 economic growth increases substantially beyond current expectations. The commenter s said therefore, this option, too, could lead to severe implementation and reliability di fficulties if load growth is greater than a state or EPA projects in calculating the mass

- based equivalent.

Commenter s added rather than effectively prohibiting states from increasing generation from
cost

- effective, reliable existing units to meet new dem and, EPA should defer to states' reasonable projections of future demand in calculating mass

- based goals. The commenter s added EPA should revise its guidance to align with its assumption in the Proposed Rule that the addition of incremental RE, EE, and nuc lear generation does not displace historic fossil generation. The
commenter s said because states' initial load growth projections could underestimate the amount of load growth that the state will experience during a compliance period, EPA should provide a mechanism for a state to revise its mass

- based goal based upon a showing that these and other assumptions the state may have used to convert goals from rates to masses were incorrect.

Commenter s stated a state should be able to use EPA's IPM base case for 2020 and 2030 to convert its rate into a mass

- based standard; however, a state would need the "parsed" files to do so. The commenter s ask ed why did the EPA not run all the parsed files necessary for States to estimate their mass

- based standards.

Commenter s stated the premise for the translation is made clear by EPA. "The conversion must represent the tons of CO2 emissions that are projected to be emitted by affected EGUs, in the absence of emission standards contained in the plan, if the affected EGUs [elec tric generating units] were to perform at an average lb CO2/MWh rate equal to the rate

- based goal." (Federal Register, Vol. 79[117]; 34953) The commenter s stated the "In the absence of emissions standards" implies that we need a business

- as

- usual (BAU) pro jection of generation by affected EGUs. The commenter s said EPA already has deployed Integrated Planning Model (IPM) version 5.13 to project a Base Case for the power sector through 2030. The commenter s said the confusion arises from whom are the affected EGUs EPA's formulation of the rate

- based goals partly resolves the confusion; it is located on page 18 of the Goal Computation Technical Support Document.

• rate goal [lbs/MWh] = emissions from existing fossil [lbs] / ( generation from existing fossil +

• ge neration from at

- risk nuclear +

• generation from projected renewables +

• projected demand savings from energy efficiency) [MWh]

The commenter s said a little algebra translates a rate goal to a mass goal; the denominator in the formula is projected generati on from affected EGUs under BAU conditions plus projected energy efficiency; the product of the rate goal and the denominator is the mass goal.

The commenter s said the rate goal comes from EPA, but generation by affected EGUs must be produced by a model; different models produce different projections, so allowing states to choose a model effectively invites them to manipulate the stringency of the rule. The60 commenter s said if they choose a model that projects a high level of generation then emissions will be higher and costs lower than if they choose one that projects less generation. The
commenter s said EPA can simultaneously obviate this potential for manipulation and the burden they place on themselves to accept or reject the models chosen by the states if they employ a model themselves to project generation and make the rate

- to

- mass conversion

.
C ommenter s stated the principal concern is that the two alternatives discussed in the Rate

- to

Mass TSD are inconsistent with the rate

- based goal computation approach in the Proposed Rule. The commenter s said under EPA's initial proposal for calculating rate

- based goals, the addition of incremental RE, EE, and under

- construction nuclear generation would not be assumed to displace existing fossil generation; by contrast, the approaches discussed in the Rate

- to

- Mass TSD would reduce the expected level of genera tion during a given compliance year by the amount of incremental zero

- carbon generation EPA projects a state could obtain under building blocks three and four. The commenter s said these approaches are inconsistent with each other; as a consequence, the int erim and final goals computed using these approaches would not be equivalent with each other.

Commenter s added the assumption that the addition of each MWh of incremental RE, EE, or nuclear generation will reduce the output of an existing fossil unit in t he same state by the same amount is incorrect for a number of reasons. The commenter s said the two approaches discussed in the Mass

- to

- Rate TSD both rely on this incorrect assumption. The commenter s said were EPA to issue a final rule that relies on such a n assumption in calculating mass

- based emission budgets or in dictating guidelines for states to follow in calculating their own budgets, this approach would effectively make unworkable any mass

- based program that a state may wish to develop for achieving its applicable emission goal under the Clean Power Plan. The commenter s said given the many administrative and flexibility benefits of a mass

- based program, the loss of this implementation option would have the unfortunate effect of increasing the administ rative challenges and burdens states will face in implementing their applicable state goals.

Commenter s added both of the proposed rate

- to

- mass conversion methodologies discussed in the TSD fail to adequately take into account the impacts that future dema nd growth could have on affected units' abilities to reduce emissions. The commenter s said the first proposed methodology discussed in the Rate

- to

- Mass TSD would not incorporate any future load growth into the projection of a mass

- based equivalent limits i mposed states; the consequence of this oversight is that EPA would effectively prohibit states from meeting new electricity demand with additional generation from existing affected power plants. The commenter s said in many cases, these existing generating units are likely to be the most reliable, low

- cost generation sources available; moreover, as EPA recognizes, application of the building blocks

- particularly building block two

will lead to significant spare capacity at coal

- fired EGUs. The commenter s said under a rate

based approach, this excess capacity could still be used to meet future demand as long as states deploy additional low

- carbon generation to balance out the higher emissions from these units; however, under the first mass

- based conversion meth odology discussed in the TSD, states would be unable to increase these units' utilization rate to meet new electric demand, because the level of the cap would be set under the unrealistic assumption that demand growth will either be zero or will be met ent irely by other sources of generation that are not regulated under the applicable state plan (e.g., peaking

- cycle simple cycle combustion turbines, imported generation from neighboring states, or new fossil or zero

- carbon generation). The commenter s said th e net effect61 of this approach would likely be to increase the cost of meeting new electrical demand, reduce economic growth, and potentially increase the number of stranded assets due to the premature shutdown of the nation's coal

- fired generation fleet; m oreover, if new demand is met by other fossil resources (such as new fossil

- fueled facilities or electricity from fossil generators in neighboring states) rather than lower

- carbon resource (which are typically more expensive), the emissions effect of cappi ng state emissions could be completely negated.

Commenter s added the second option for converting rate

- based goals to mass equivalents discussed in the Rate

- to

- Mass TSD does incorporate some assumptions about increased electricity demand; however, the com menter s are concerned that the proposed load growth assumptions could be unreasonably low in many parts of the country if economic growth increases substantially beyond current expectations (as our members and their families hope it will), or if future tec hnologies such as electric vehicles increase electricity demand significantly. The commenter s said without further changes, both approaches would artificially constrain economic growth, lead to more stranded assets, and raise electricity costs while potent ially having no effect on emissions. The commenter s added this second option requires state to include new power plants as affected units in a regulatory program that is limited to the regulation of existing sources; the approach therefore is contrary to t he requirements of the Clean Air Act, which expressly excludes "new sources" from the statutory definition of "existing source" for purposes of regulation under section 111.68.

Commenter s ha ve reviewed EPA's Translation of the Clean Power Plan Emission Rat e

- Based CO2 Goals to Mass

- Based Equivalents TSD (November 2014) and supporting documents, and disagrees with its methodology and calculations. The commenter s said this methodology severely underestimates the allowable amount of CO2 emissions based on each state's emission rate in the proposed Clean Power Plan. The commenter s said for example, in the TSD's supporting Rate to Mass Translation Data File, in sheet "Mass Equivalents

- States, Opt1," column CB, the sum of all states' emissions is equal to approxi mately 1.34 billion metric tons, or 1.48 billion tons. The commenter s said the correct tonnage for each state can be easily calculated from the emission rates as shown in the Goal Computation TSD supporting document, Goal Computation

- Appendix 1 and 2. Th e commenter s said the emission rate calculation is simply the emissions (in pounds), divided by the energy (in MWh). The commenter s said using column AZ of sheet "Appendix 1

- Proposed Goals," and removing the denominator results in the appropriate pounds of CO2 for each state based on the proposed emission rates. The commenter s said one can then convert pounds to tons by dividing by 2,000. The commenter s said the sum of all states' emissions is equal to approximately 1.82 billion tons, or approximately 23% higher than what EPA uses when doing the translation. The commenter s said because EPA's method of converting the emission rate to a mass value as proposed in EPA's November 2014 Translation of the CPP Emission Rate

- Based CO2 Goals to Mass

- Based Equivalent s TSD underestimates the mass emissions tonnage by almost 20%, the commenter s support ed setting the mass

- based equivalent limits on the CO2 values used in the numerator of the state goal calculations as found in the document Goal Computation

- Appendix 1 a nd 2 spreadsheet.

Commenter s stated has the following comments and questions:

1. The commenter s recommend ed that EPA check its spreadsheets62 2. The commenter s recommend ed developing this approach without the spreadsheets in mind; make this approach clear to som eone trying to duplicate the method outside of the rulemaking proposal.

3. The commenter s recommend ed making it very clear how EPA intends existing and incremental RE and EE to be treated when converting the BSER goal from rate to mass for both approaches, e xiting only and existing plus new generation.

4. The commenter s d id not have sufficient time to comment on the many other methods proposed in the TSD.

5. The commenter s note d that more sophisticated methods for the conversion will take extensive analysis and c omplicated modeling tools which a) the commenter s may not have access to and b) may not have sufficient time to perform, given that EPA has given states one year to make this decision and present its methodology for inclusion in the initial state plan subm ittal.

6. EPA estimates the incremental generation in 2029 to be 18,323,738 MWh; it adds this value to the existing generation in 2012; it then applies the BSER rate to all generation. The commenter s ask ed does this approach assume all the added generation, 167,369 GWh, is generated by the existing fleet plus some additional renewables; or does EPA assume that new sources subject to 111b will be required to meet this projected demand; if 111(b) sources are required to meet the demand, the
commenter s recommend ed that EPA modify this approach.

Commenter s stated this rate

- based approach would impermissibly force the retirement of a significant portion of West Virginia's coal

- fired units, which currently provide 97 percent of West Virginia's electric generation. The commenter s said in order to comply with the rate

- based proposal by 2020, West Virginia would have to replace 43.5 percent of its generation through fuel switching to lower CO2 emitting fuels (that emi t at the same rate as NGCC units), or replace 20.4 percent of its generation with renewables (zero

- emitting sources), or some combination thereof. The commenter s said such an approach is not realistic, nor is it feasible to assume that companies would be i n a position to cost

- effectively replace anywhere from 20 to 44 percent of their generation within less than 6 years. The commenter s said to put this in perspective, the required level of reduction would require the installation of 15

- 500 Megawatt (MW) N GCC units by 2020, or the installation of nearly 2,500

- 2 MW windmills, or some combination thereof.

Commenter s noted that the proposal would allow states to adopt either the rate

- based goal as determined by EPA or an "equivalent" mass

- based target. Howev er, the commenter s indicated that the proposal discussion of this topic is vague and does not provide clear guidance as to how to translate the proposed rate

- based goals into mass

- based goals

. The commenter s argued that translating from a rate

- based to mas s

- based target appears to require complex and resource intensive modeling that may be beyond the capability of many states to undertake and complete in the timeframe that will be needed to inform the state plan development.63 Commenter s stated whatever met hod for converting rate to mass EPA approves must be able to account for reductions of emissions in one state may drive emissions up in another state within the same RTO. The commenter s said for example, if a coal plant in one state is retired, an existing natural gas EGU may replace that generation; this effect is encouraged by Building Block Two of the CPP, but if the states are not in a multi

- state plan such a result would be discouraged by the state in which the existing natural gas generation facility resides.

EPA has made assumptions in the rate to mass conversion that may or may not hold true.

Commenter s stated EPA uses the proposed rate

- based goal which incorporates numerous assumptions to calculate a mass

- based goal that includes even more assumptions; so the question must be asked, "Who is penalized if all of the assumptions are not realized." The comm enter s said unfortunately, it will be the states and the individual utility companies that will be forced to offset EPA's assumptions because ultimately the burden of compliance lies with the company. The commenter s said other assumptions included in this mass

- based conversion that may or may not hold true are:

• The continuing operation of existing resources under building block three (RE and at

- risk nuclear) is not assumed to affect historical generation levels.

• Inclusion of existing and incremental non

- f ossil generation connected to building blocks three and four is necessary to fully define the mass equivalent generation level.

• To quantify a sales level for all future years, the annual average growth rate is applied to each jurisdiction's historical 201 2 power sector sales.

• Transmission losses are assumed to be 7.5%

• Under construction NGCC EGUs are assumed to operate at a 55% capacity factor to satisfy future demand requirements.

The commenter s said the mass

- based goal calculation is based on so many assumptions that it is inevitable some or all of these assumptions will not hold true; the inherent uncertainty is something that EPA should carefully consider. The commenter s said if the overall purpose is to reduce carbon emissions by 30% from 2005, then this objective should be applied uniformly across all states.

Commenter s stated that EPA's initial guidance was vague as to the methodology for converting
rate

- based goals to mass

- based goals. The commenter s interpreted EPA's methodology to require
a stat e to model a reference case scenario that does not include EPA's proposed guidelines and any existing state requirement or future state requirements that could include measures that might otherwise count towards compliance in a state plan (e.g., incrementa l measures from an existing energy efficiency standard or RPS are not included in the reference case scenario). The
commenter s stated that results from the reference case scenario include generation levels (MWh) from affected sources. The commenter s stated that generation from affected sources is totaled for the appropriate compliance year, and EPA's state emission rate goal is applied to the total generation from affected sources to produce a mass

- based number.64 Commenter s noted that in an attempt to provi de clarity, EPA published additional information on November 13, 2014, regarding the conversion of emission rate

- based CO2 goals to mass

- based equivalents and EPA provided two additional methodologies for potential use in making rate

- to

mass conversions. T he commenter s noted that the first methodology adjusts the historical (2012) generation from affected sources based on the application of EPA's Building Blocks to develop a mass equivalent generation level. Specifically, the commenter s stated that EPA redu ces generation from affected sources due to the assumed levels of incremental renewable energy and under construction nuclear (Building Block 3) and incremental DSEE (Building Block 4). The
commenter s noted that the adjusted generation from affected source s is then added to the total generation from Building Blocks 3 and 4 and multiplied by EPA's proposed emission rate

- based goals to produce mass

- based equivalent goals. The commenter s noted that EPA's second methodology follows a similar approach but incorp orates incremental demand levels from new generation in developing a mass equivalent generation level.

Commenter s expressed numerous concerns with EPA's illustrative conversion methodologies including: (1) the inappropriateness of using a single baseline y ear (2012); (2) the presumption that incremental renewable energy, under construction nuclear, and incremental DSEE will displace generation from affected sources; (3) the inherent uncertainty of future demand; and (4) the economic consequences of unpredic table and volatile fuel prices

. Regarding their first concern, the commenter s stated that any single

- year baseline is not representative of historical and future operations of affected sources. Specifically, the
commenter s stated that generation from affected sources in 2012 was atypical due to historically low natural gas prices and diminished demand. The commenter s stated that using 2012 as a baseline to establish an emission rate

- or mass

- based program results in overly stringent goals.

Regarding their second concern, the commenter s stated that EPA is incorrect to assume Building Blocks 3 and 4 will displace generation from affected sources. The commenter s explained that while new generation may, at times, be built to rep lace existing generation, more often it is built for other reasons. The commenter s stated that one of the primary purposes of building new generation facilities is to meet increasing electricity demand. The commenter s provided that Georgia Power's Plant Vo gtle Units 3 and 4 are prime examples of constructing new units to meet load growth. The commenter s stated that Georgia's under construction nuclear, Plant Vogtle Units 3 and 4, were explicitly approved by the Georgia PSC and the NRC to serve future demand in Georgia, which flatly contradicts EPA's attempt to replace existing generation with the generation from these units.

According to commenter s , as discussed in the NRC's final environmental impact assessment for the Construction and Operating License for Plant Vogtle Units 3 and 4, "[a] certification for construction of the proposed Units 3 & 4 was approved by GPSC . . . [and] specifically found that: [t]here will be a need for new base

- load generation in Georgia during the 2016 to 2017 timeframe . . . [a nd] [d]emand side management programs do not eliminate the need for new base

- load generation." As a result, the commenter s stated that the NRC and the Georgia PSC explicitly have determined that Plant Vogtle Units 3 and 4 were needed to meet future demand. The commenter s asserted that to repurpose these units into replacements for existing fossil fuel

fired generation by making Georgia's goal more stringent would severely risk the provision of reliable and cost

- effective power to Georgia's electricity custo mers.65 Regarding their third concern, the commenter s stated that DSEE (Building Block 4) is dependent on customer behavior and is not guaranteed. As a result, the commenter s stated that it serves a different purpose than existing fossil fuel

- fired generati on, which is capable of being called upon to meet customer demand. Moreover, the commenter s stated that this overall approach contradicts the Agency's proposed emission rate

- based goal computation when it assumes displacing generation from Blocks 3 and 4 a nd does not reflect real world demand increases when it locks in a baseline.

Regarding their fourth concern, the commenter s stated that EPA is not capable of making
accurate state

- level assumptions for electricity demand growth and fuel prices both of whic h have significant ramifications in establishing emission reduction goals. The commenter s noted that the Agency itself notes the "central importance" of these assumptions while highlighting the "uncertainties about future demand, inventory of EGUs and the relative amounts of generation among EGUs in light of, for example, fuel costs..."

For these reasons

, commenter s argued that EPA cannot and should not provide states with binding rate to mass conversion methodologies and mass

- based goals (or rate

- based go als for that matter). The commenter s contended that states are best equipped at developing goals that appropriately reflect the historical and future operations of affected sources within their boundaries. The commenter s stated that based on the face of se ction 111(d), EPA must uphold the authority and flexibility already provided to states to establish standards of performance and compliance options

.
Commenter s stated the mass

- based goal should be calculated as the product of the affected entity emissions rate (from Blocks 1

- 4 of the Goal Computation TSD) and the projected 2030 affected entity generation; the final year generation used for the mass

- based goal should be based upon nationally recognized demand projection data such as EIA's Annual Energy Out look (AEO).

Commenter s stated EPA did not assume any reduction in affected unit generation due to the deployment of building blocks three and four; however, in both approaches in the "Rate

- to

Mass" TSD, EPA does reduce affected unit generation in the goal setting methodology due to building blocks three and four. The commenter s stated this is not a valid approach; these resources do not directly displace existing fossil generation, and this change would significantly change the stringency of the proposed r ule invalidating EPA's cost and impact analysis. The
commenter s stated EPA should not adjust affected unit generation in the goal

- setting methodology for building blocks three and four.

Commenter s stated in both approaches in the "Rate

- to

- Mass" TSD, EPA as sumes generation from existing affected units is not adjusted for demand growth for future compliance periods, and that all demand growth is accommodated by generation from new generating sources. The
commenter s stated this is inconsistent with the rate

- ba sed approach in the proposed rule and not reflective of how power systems are operated. The commenter s said under a rate

- based standard, higher levels of generation with no change in unit efficiency do not impact unit emission rates; fossil

- fueled generati ng units are primarily dispatched based on cost with no bias due to unit age. The commenter s said assuming generation from existing units does not increase due to demand growth is not equivalent to the rate

- based goals, but results in a much more stringent approach than the rate

- based approach in the proposed rule. The commenter s said mass66 equivalent methodologies should be based on projected future emissions from affected units that include increased generation due to demand growth for generation from thos e units.

Commenter s said, specifically in the rate

- to

- mass conversion context, states should have the flexibility to include generation from new fossil units if they choose, EPA should afford this flexibility whether a state chooses to comply with a rate or mass equivalent standard.

Commenter s stated that EPA's illustrative rate

- to

- mass translation in its November 2014 TSD failed to account for the complexity of regional electricity resource changes expected between 2012 and 2030. The commenter s offered that, in conducting the translation between the rate

based targets and a mass

- based emissions cap, there may be some apparent value of providing a simple calculation

- based methodology, such as the approach illustrated by the recently released RTM TSD. However, the commenter s contended that the approach outlined by the proposed CPP is not especially conducive to a simplified calculation

- based translation methodology. The
commenter s noted specific concern regarding the complexity of this nation's int erdependent electricity grids as well as the dynamic nature of our energy markets, which both contribute to the resulting inability of historically

- based generation and capacity data to provide reliable analyses of projected fuel mixes for individual state s that participate in larger market structures. The commenter s asserted that electricity system modeling offers crucial insights pertaining to how that system will respond to changes in policy or market forces. The commenter s added that the accuracy of mod eling results are only as reliable as the underlying assumptions, and therefore they recommended that EPA prescribe rebuttable presumptions for input source data, such as reliance on the ISO/RTO load forecasts and interconnection queues to determine firm r etirements and firm builds, as well as Annual Energy Outlook projections for fuel prices.

Commenter s suggested that EPA clarify that, for purposes of the rate

- to

- mass translation, underlying renewable energy and energy efficiency state policies should not be included in the baseline. The commenter s added that, to require state renewable energy and energy efficiency policies to be modelled in the baselines essentially takes away the benefits of those programs during the compliance period for states that impl ement these very programs which EPA hopes to encourage states to undertake.

Commenter s stated that, while a modeling

- based approach for the rate

- to

- mass translation is most appropriate due to the system

- wide structure of the CPP, a calculation

- based method ology for the rate

- to

- mass translation could be appropriate if EPA corrects for the apparent double

counting of fossil fuel displacement. They further explained that fossil fuel displacement may be already accounted for in the calculation of a state's rate and then EPA would potentially count that displacement again in the rate

- to

- mass translation.

Comment 6: The EPA should clarify that the examples presented in the TSD are not the only methods to convert the rate based goals to mass based goals

. Response 6: The EPA has converted the rate

- based goals to mass

- based goals . See section 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 the final mass

- based g oals

. The following are summaries of the specific public comments under this comment:67 Commenter s stated in its final rule, EPA should state explicitly that these examples are not the only ways in which the conversion may be performed; the TSD states: "The concepts and considerations presented in this section should not be viewed as prescriptive; rather, these concepts represent one particular way of constructing an approach that is capable of translating the form of the rate

- based goal to a mass

- based equiv alent." The commenter s said while this conveys the intention to allow states to use other methods to translate rate

- based goals to a mass

based equivalent, the commenter s request ed that EPA state clearly in the final rule that the examples included in the TSD are not the sole options for mass

- based emission limits, should not be interpreted as a cap on emissions if a state adopts a mass

- based approach, and that states retain the aut hority to adopt other methods to translate their rate

- based goals into mass

- based limits.

Commenter s stated the Proposed Rule did not establish presumptive mass

- based goals for states; EPA has since released the Mass Conversion TSD with two [potential] met hodologies for making rate

- to

- mass translations that could be considered equivalent to the proposed rate

- based goals. The commenter s said EPA made clear upon publication of the Mass Conversion TSD that the published mass

- based equivalents are merely illust rative. The commenter s said EPA should reiterate in the Final Clean Power Plan that states have the option, upon submission of their plans, to propose adjustments to the methodology used by EPA in establishing the example

mass

- based goals to account for ci rcumstances where the underlying assumptions are inaccurate or fail to account for particular circumstances, e.g., the unexpected retirement of a nuclear generating unit or increases in generation necessitated by initiatives to expand the electrification

o f the transportation sector as a means of attaining the ozone NAAQS. The commenter s said to encourage states to proceed with the development of mass

- based programs and so as not to limit the creativity of states in designing the best programs for their sta tes, EPA should make clear that, if it should find a state plan deficient in some respect, including in a state's translation of its
rate

- based goal into a mass

- based goal, the immediate remedy would not be wholesale rejection of the state plan and imposit ion of a federal implementation plan ("FIP"), but a more measured process that provides the state the opportunity to correct any deficiencies, while proceeding with implementation of plan. The commenter s said this process has worked well for several decade s in EPA's review and approval of SIPs submitted under Section 110 of the CAA. The commenter s said given Section 111(d)'s requirement that EPA follow its long

- established practice for reviewing SIPs under Section 110, EPA should make clear in the final rul e that it will similarly provide for limited approval and disapproval of plans where deficiencies are correctable and specifically where a state's translation of its rate

- based goal to a mass

- based goal is deficient due to some methodological flaw.

Commenter s agree d with EPA that a mass

- based target should be equivalent to a rate

- based target, and should not in any way penalize or reward states that choose one approach over the other; it will be crucial for owners of affected units to ascertain with certainty whether or not the existing RGGI mass caps will match the interim rate targets or the final rate targets. The
commenter s appreciate d the additional clarification provided in its November 6th Technical Support Document (TSD), but believes that the analysis presented by EPA in the end may penalize states that convert to a mass

- based target, as states may wish to do to adopt RGGI as a compliance mechanism. The commenter s recognize d EPA intended that the example mass

- based equivalents in the Technical Support Document are not required emissions limits nor should they be interpreted as a cap on emissions; they are only two of many ways to translate from a rate

-68 based goal to a mass

- based equivalent, and urges the EPA to accept a more accurate rate

- to

- mas s translation from states as they file implementation plans. The commenter s also request ed that the EPA specify that its mass

- based target as part of the November 6th TSD would not preclude the EPA's ability to recalibrate New York's adjusted emission rate target, as such an adjustment will be necessary as EPA responds to comments on the proposed rule. The commenter s said regardless of how EPA proceeds with respect to the rate

- to

- mass conversion calculation, all targets should be recalculated to address cha nges made to the rate

- based targets as a result of this comment process and upon adoption of the final rule.

Commenter s stated EPA should make the computation of the mass

- based targets as simple as possible to reduce uncertainty for states taking the pref erred compliance path; for example, as an alternative to the multiple scenarios suggested in the proposed rule, the EPA might allow states to adopt a mass emissions reduction at the percentage reduction required under the rate

- based formula, so that Arkans as could opt to reduce average emissions in 2020

- 2029 by 41% from 2012, and reduce emissions by 44% for 2030 and beyond.

Commenter s ha ve carefully reviewed the Technical Support Documents describing the requirements for state compliance plans and convertin g rate

- to

- mass; and agree with EPA that a

mass

- based target should be equivalent to a rate

- based target, and should not in any way penalize or reward states that choose one approach over the other. The commenter s said it will be crucial for owners of affec ted units and grid operators to ascertain with certainty whether or not the existing RGGI mass caps are comparable to the interim rate targets or the final rate targets. The
commenter s appreciate d the additional clarification provided in its November 6th T echnical Support Document ("TSD"), but believes that the analysis presented by EPA in the end may penalize states that convert to a mass

- based target, as states may wish to do to adopt RGGI as a compliance mechanism. The commenters recognize d EPA intended that the "example mass

based equivalents in the Technical Support Document are not required emissions limits nor should they be interpreted as a cap on emissions. They are only two of many ways to translate from a rate

- based goal to a mass

- based equivalent ," and urges the EPA to accept a more accurate
rate

- to

- mass translation from states as they file implementation plans. The commenters also request ed that the EPA specify that its mass

- based target as part of the November 6th TSD would not preclude the EPA' s ability to recalibrate New York's adjusted emission rate target, as such an adjustment will be necessary as EPA responds to comments on the proposed rule. The
commenter s said regardless of how EPA proceeds with respect to the rate

- to

- mass conversion calc ulation, all targets should be recalculated to address changes made to the rate

- based targets as a result of this comment process and upon adoption of the final rule.

Commenter s appreciate d the release of EPA's TSD entitled "Translation of the Clean Power Plan Emission Rate

- Based CO2 Goals to Mass

- Based Equivalents," which provides examples of the ways in which a state may translate its rate

- based standard into a mass

- based standard; however, EPA should state explicitly in its Final Rule that these examples are not the only ways in which the conversion may be performed. The commenter s said the TSD states, "The concepts and considerations presented in this section should not be viewed as prescriptive; rather, these concepts represent one particular way of con structing an approach that is capable of translating the form of the rate

- based goal to a mass

- based equivalent." The commenter s said while this conveys EPA's intent that states may use other methods to translate its rate

- based standard to a

mass

- based equ ivalent, the commenter s request ed that EPA state clearly in the Final Rule that69 the examples included in the TSD are not the sole options for mass

- based emission limits, should not be interpreted as a cap on emissions if a state adopts a mass

- based approac h, and that states retain the authority to adopt other methods to translate their rate

- based standards into mass

- based limits.

Commenters asserted that the conversion guidelines are inadequate. Commenter s argued that the guidelines do not indicate what mo deling assumptions are acceptable. Although the EPA described how rate

- to

- mass based goal conversions could be made in the Technical Support Document, this commenter s asserted the EPA should provide further guidance on what could be a workable system outs ide of the approach provided in the Technical Support Document. Commenter s felt the EPA had not allowed sufficient time for stakeholders to review the guidance released on November 6, 2014.

Commenter s appreciate d the release of EPA's TSD entitled "Transla tion of the Clean Power Plan Emission Rate

- Based CO2 Goals to Mass

- Based Equivalents," which provides examples of the ways in which a state may translate its rate

- based goal into a mass

- based goal; however, EPA should clarify in its final rulemaking that t hese examples are not the only ways in which the conversion may be performed. The commenter s said the TSD states, "The concepts and considerations presented in this section should not be viewed as prescriptive; rather, these concepts represent one particul ar way of constructing an approach that is capable of translating the form of the rate

- based goal to a mass

- based equivalent." The commenter s said while this conveys EPA's intent that states may use other methods to translate its rate

- based goal to a mass

based equivalent, the commenter s request ed that EPA explain clearly in the final rule that the examples included in the TSD are not the sole options for mass

- based emission limits, should not be interpreted as a cap on emissions if a state adopts a mass

- ba sed approach, and that states retain the authority to adopt other methods to translate their rate

- based goals into mass

- based limits.

Comment 7: The EPA should provide an equivalent mass emissions rate goal conversion

. Response 7: The EPA has carefully considered the comments and has provided a calculation of the mass

- based goal directly in the final rule

. See section VII of the preamble for further discussion.

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

Commenter s st ated plans based on converted mass emission rate goals may provide states and regulated entities a more straightforward and enforceable implementation option. The
commenter s were concerned that the proposed rule does not provide state goals as both a lb/MW h emission rate and as a ton/year mass rate, and remains concerned despite the recent release of further technical support document (TSD) guidance from the EPA. The commenter s said without EPA providing clear unambiguous conversion guidance, or preferably providing presumptive equivalent mass emission goals, states and affected entities cannot adequately evaluate planning options. The commenter s advocate d for a straightforward equivalent emission rate to mass conversion procedure.70 Commenter s added EPA shoul d also provide detailed calculations of an equivalent mass emission standard.

Commenter s stated the proposed rule requires a state that elects to use mass

- based goals rather than rate

- based goals to produce a "reference case" forecast of generation by affe cted EGUs through 2030; this forecast would be done at the time a state's plan is prepared, and would determine the state's mass

- based compliance goals for all compliance periods. The commenter s said preparing an accurate forecast this far in advance would be extremely problematic. The
commenter s recommend ed that the EPA should provide "presumptive" translations of rate

- based goals to mass

- based goals for each state, because it would reduce uncertainty surrounding the initial development of mass caps by sta tes. The commenter s said along with these mass cap values, the EPA should also provide detailed guidance, including examples, on their proposed method for developing these using a reference case scenario. The commenter s said based on their review, states s hould be allowed to either adopt the presumptive translation, or propose an alternative mass

- based goal as part of the state plan process based on unique circumstances and local resource plans. The commenter s said in order to make a mass

- based approach an attractive alternative to a rate

- based approach, EPA should provide a process that allows states to adjust their mass

- based goals factoring changes that occur after the generation projection is originally made with appropriate supporting justification.

Com menter s recommend ed that any rate

- to

- mass translation approach accepted or adopted by EPA must reflect the complexity and geographic interconnectedness of the electric grid, while also providing sufficient oversight to ensure equivalent stringency between the rate

- based and

mass

- based approaches.

Commenter s stated the EPA has proposed allowing the use of a mass

- based approach; EPA should provide the presumptive translations using its techniques for each state in the final rule. The commenter s added, it should offer to provide the aggregated multi

- state intensity and mass

based values for the states considering a multi

- state agreement.

Commenter s urge d EPA to further define the methodology for establishing mass

- based goals and provide specific examples on how the mass

- based goal might be calculated for a particular state. The commenter s said providing additional guidance will ensure that there is consistency in development of mass

- based budgets amongst the states. The commenter s added it will be important for the states and stakeholders to have more certainty regarding the approvability of a calculated mass

- based goal and, in the first instance, evaluating whether it is appropriate for any particular state to establish a mass

- based goal.

Commente r s stated as written EPA's proposed methodology for converting rate

- based targets to

mass

- based targets is vague, and could lead to mass

- based goals that are more stringent than rate

based goals. The commenter s said in the rule EPA states generally that a mass

- based CO2 emission performance goal is calculated by projecting the tons of CO2 that would be emitted during a state plan performance period by affected EGUs in the state if they hypothetically were meeting the state rate

- based CO2 emission performanc e goal for affected EGUs. The
commenter s said EPA next explains that when demonstrating projected emission performance under a mass

- based plan, a state would project the CO2 emissions outcome that would be achieved under the suite of requirements, programs and measures in its state compliance plan.71 The commenter s said EPA needs to provide more clarity on how the rate to mass

- based conversion works and provide specific mass targets. The commenter s said otherwise the state should be given broad flexibility to determine this factoring in reliability and cost issues. The
commenter s said it is important, that when converting between emission rates and mass, there must be logical consistency. The commenter s said policy desires cannot overlook valid logic in the ma thematical conversion between the emission rate and mass, and this may be seen as an arbitrary distinction by the courts.

Commenter s request ed the agency's guidance on how the states convert the pounds per megawatt rate from the proposed guidelines to an annual tonnage rate.

Commenter s request ed the EPA to provide a mass

- based formula and calculations for CO2 for all the states.

C ommenters recommended the EPA should develop directions for states to follow when setting a

mass

- based limit, including periodic adjustments to correct for imperfect load

- growth forecasts. Commenters asserted that mass

- based limits must be based on consistent and transparent assumptions and that mass

- based targets must be comparable to the rate

- based targets.

Commenter s asserted t he method used to set the mass

- based limits should not penalize early action and should minimize the likelihood that states will define business

- as

- usual assumptions that will result in a higher mass

- based standard.

C ommenters requested EPA provide mass

- b ased standard calculations so that states can better evaluate the impact of the rule and to get a better sense of what methodologies for calculating the

mass

- based state goals would be acceptable to EPA.

Commenter s fe lt the material released by EPA on Jun e 2nd provides insufficient information for
states. C ommenter s recommend ed EPA provide non

- binding, illustrative examples of how states could convert their rate

- based goals to mass, including the underlying calculations and assumptions.

Commenter s recomme nd ed these directions include designation of factors (e.g., rate of economic growth) and consistent data sources that would allow for conversion of an emission rate target into an emission budget.

Commenter s agreed with the EPA's description of what is re quired under "Identification of Affected Entities and Plan Inclusion," with the exception of the mass

- based conversion elements. The commenter s stated that to ensure consistency and acceptance of a state plan by the EPA regional offices, it is incumbent up on the EPA to provide the proper tools to translate from rate

based to mass

- based goals. The commenter s opposed requiring the state to use a proprietary model to make such a translation. The commenter s stated that use of a proprietary model obfuscates the translation process, is not a transparent process as part of the rulemaking, and would make it impossible for some states to make this translation because of existing laws governing such transparency. The commenter s supported a simplified method for this t ranslation of rate

- based to mass

- based goals.72 Commenter s stated the discussion in the Proposed Emission Guidelines on converting state emission rate goals into a mass emissions "cap" is vague and overly complicated; in addition, this guidance appears to r equire complex and resource intensive modeling that may be beyond the capability of many states to undertake or complete in a timely manner to inform the plan development process. The commenter s said at the same time, such a conversion is vital to assessin g the potential viability of existing and/or future interstate emissions trading programs that EPA acknowledges may be a more cost effective method of compliance for some states. Commenter s recommend ed that EPA develop a simple and straightforward presumpt ive method for performing the rate

- to

- mass conversion that utilizes existing data and tools. The commenter s said a number of readily available sources of data on demand growth and emissions projections are currently available to the states such as the Ener gy Information Administration (EIA) and the state emissions projection tool developed by ERTAC. The commenter s recommend ed , however, that EPA allow states to apply equivalent methods of rate

- to

- mass conversion upon an appropriate demonstration in their state plans.

Commenter s recognize d that EPA provides some guidance on how to convert a state

- specific
rate

- based goal to an equivalent mass

- based goal in section III.B of EPA's "Projecting EGU CO2 Emission Performance in State Plans" Technical Support Document; however, additional guidance is needed. The commenter s said one of the first questions a state must answer when develo ping its implementation plan is whether the state wishes to comply with a rate

- based or

mass

- based emission goal; any conversion from a rate

- based to mass

- based emission goal is critical and must be done with accuracy and transparency. The commenter s said it is imperative that states have this guidance as soon as possible, and definitely before the rule is finalized.

Commenter s stated at a minimum, EPA should provide states with detailed directions, equations, and examples explaining how states can convert EPA's proposed state goals to mass

- based goals; it would also be extremely helpful if EPA provided this guidance via some type of electronic calculation tool. The commenter s said this would also provide more consistency among the states' rate

- to

- mass conv ersion.

Commenter s stated EPA should perform a presumptive translation of the state

- specific rate

based CO2 emission performance goal to an equivalent mass

- based goal for all states and for multi

- state regions; this should include default modeling assumpt ions and the results of modeling runs for a Reference Case Scenario and an EPA Mass

- Based CO2 Emission Goal Policy Scenario, as described in section III.B of EPA's "Projecting EGU CO2 Emission Performance in State Plans" Technical Support Document. The com menter s said EPA's translation should include a clear description of how the conversion was done so that states may easily replicate EPA's work. The commenter s said State plans should be allowed to include a mechanism to recalculate the mass

- based goal dur ing the compliance plan based on demand growth and other factors.

Commenter s request ed that EPA clearly outline the steps for translating an emission

- rate goal into a mass

- based goal. The commenter s said these changes would result in state goals that more accurately reflect real

- world operations, properly reward early actors and incentivize early actions in the future, and facilitate faster compliance by states electing to employ a mass

- based
program

.73 Comment 8: The EPA should provide a single translation methodology of rate

- based to mass

based goals for all states to follow

. Response 8: The EPA has carefully considered the comments and rather than providing a methodology that each individual state would have to employ to translate the rate

- based goals to

mass

- based goals , the EPA provides the calculated mass

- based goal s directly in the final rule. The methodology and date for the calculation are described in detail in section VII of the final rule preamble of the CPP and the CO 2 Emission Performance Rate and G oal Computation TSD for CPP Final Rule.

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

Commenter s stated EPA provides a general discussion of how states might convert a rate

- based goal to a mass

- based goal, but does not propose a specific methodology. The commenter s said failure to provide a specific methodology for all states to follow creates the po tential for inequity among states that choose to translate their rate goals to mass

- emission goals using difference methodologies.

Commenter s added EPA's suggested approaches to setting a mass

- based standard specified in the technical support document "Tra nslation of the Clean Power Plan Emission Rate

- Based CO2 Goals to Mass

- Based Equivalents" both prevent the concern about states gaming their business

as

- usual forecast and also avoid having business

- as

- usual forecasts lock in planned mitigation measures in to the baseline; however, the second approach, the "Final CPP Mass

- Based Equivalent for Affected and New Sources" that factors in projected growth in regional electric generation may be closer to achieving equivalency with the rate

- based methodology, which allows for growth in electric generation so long as the emission rate is achieved. The commenter s said to support consistency in how states set their mass

- based standards, we urge EPA to specify a preferred methodology such as the "Final CPP Mass

- Based Eq uivalent for Affected and New Sources." The commenter s said this methodology calculates the mass

- based standard through a series of calculations that are based on historic (2012) generation levels. The commenter s said by specifying a single method based on a fixed set of parameters and not using state

- generated modeling, this approach prevents gaming and also avoids the issue of whether to assume planned clean energy capacity in the forecast; moreover, using a methodology such as this one that accounts for growth in electric generation to meet growth in demand will help avoid a situation where states opt for a rate

- based goal in lieu of a mass

- based standard only because the goal itself is seen as easier to achieve.

Commenter s stated EPA should provide an ac ceptable method for translating the rate

- based goals within the rule to a mass

- based goal; this will prevent misinterpretation and miscalculation between and among states that discuss entering into a multi

- state or regional plan. The
commenter s said it wou ld also allow for a comparable standard between different states and ensure that multiple entities involved will arrive at the same goal after conversion. The74 commenter s said EPA should not allow different methodologies for conversion when the goal calcula tion methodology is consistent for all states.

Commenter s stated EPA should translate its rate

- based goals into mass

- based goals; it has already described, in broad terms, methods for states to make the translation, but the incentive for states to inflate their mass goals when translating is unavoidable. The commenter s said a single standardized method for translation written by EPA would clear up confusion and remove the inevitability of goal inflation if states do the translations themselves.

Commenter s s tated EPA provides a general discussion of how states might convert a rate

- based goal to a mass

- based goal, but does not propose a specific methodology; failure to provide a specific methodology for all states to follow creates the potential for inequity a mong states that choose to translate their rate goals to mass emission goals.

Commenter s stated EPA should develop a mass

- based calculation and formula for states to
use; Minnesota's regulators, like those in many other states, will be working on developin g a

mass

- based formula. The commenter s said EPA should develop a mass

- based calculation and formula for all 50 states to use, to ensure uniformity and fairness among the states.

Comment 9: The EPA should provide guidance to states; provide examples; wor k with states

Response 9: The EPA has converted the rate

- based goals to mass

- based goals . See section 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 the final mass

- based goals

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

Commenters stated EPA should develop a collaborative process with states and regions to develop mass

- based targets

Commenter s added EPA should wor k together with states and regions in order to make the rate

to

- mass translation based on assumptions and policy decisions as recommended by the individual
state.

Commenter s added while the EPA must include clear methodologies in the final rule to ensure
t he credibility of each state's rate

- to

- mass translation, the states should retain a substantial role in the process.

Commenter s added the EPA should endeavor to provide as much support to the states as possible, including providing resources to states in the form of both technical and analytical resources and modeling costs; moreover, the analytical support the EPA provides should cover both the process for converting rate

- based targets to mass

- based targets, as well as subsequent modeling and other efforts used by states or regions to demonstrate compliance equivalency.

Commenter s added EPA must ensure the integrity and credibili ty of each state's rate

- to

- mass translation; if the process outlined in the final rule is too open

- ended, then it could create75 opportunities for states to "game the system" by, for example, building unreasonable assumptions into their projections. The comm enter s added this could have the effect of reducing the level of stringency for a state, in terms of the required level of emission reductions.

Commenter s added States will need to have input on factors such as growth rate, as well as how the addition of incremental renewable energy and energy efficiency affect existing and new fossil generation and net imports based on the market dynamics of their individual electricity systems. The commenter s said EPA should allow states to justify reliable growth rates, based on projections such as those developed by ISOs for planning purposes.

Commenter s added the EPA should also work with states to ensure that the growth factor accounts for an individual state's projected increase in electricity use resulting from pol icies to reduce GHG emissions from other sectors through electrification, such as electric vehicles and heat pumps.

Commenter s added we encourage U.S. EPA to continue to assist states in determining the best calculation methodology when converting between these two metrics, and take into account each state's unique circumstances. The commenter s stated U.S. EPA should ensure that the resulting demonstration is fair and equitable, regardless of whether a state chooses to comply with the rule using a rate

- base d or mass

- based metric. The commenter s said they believe d that regardless of the metric used to demonstrate compliance, the rule's rigor should be maintained, and ask U.S. EPA to ensure that any approvable calculation methodology account for this rigor.

C ommenter s stated EPA offers the opportunity for states to adopt mass based plans and multi

state plans as compliance vehicles. The commenter s said single and multi

- state mass based plans, like RGGI, can provide a means to mitigate the impacts of the percei ved ""cliff" in the Interim Compliance Period. The commenter s suggest ed that EPA develop guidance and provide assistance to states seeking to create mass based plans with a particular focus on preserving the stringency of Interim Targets and ensuring compl iance with them. The commenter s said should the Clean Power Plan become subject to protracted legal challenges that delay implementation, EPA should apply enforcement discretion with respect to compliance with Interim Targets.

Commenter s added if EPA is to accept mass

- based conversions from the final rate established by EPA, EPA must provide modeling, data sources, default input assumptions, and guidance to the states on what would be acceptable methods and data sources to convert the state's rate to an
equ ivalent mass of CO2; in addition, EPA must describe to states under what circumstances EPA would approve a change in a mass

- based plan.

Commenter s added EPA should provide as much support to the states as possible in terms of technical and analytical resou rces, including modeling.

Commenter s added EPA has proposed that each state may convert its rate

- based CO2 emission performance goal to a mass

- based emission performance goal; EPA should preserve this option in the final rule, and should also allow states to switch between rate

- based and mass

- based emission performance goals as desired. The commenter s said EPA provides two TSDs regarding how such translations could be made; while the TSDs are less than clear, in one TSD EPA appears to be contemplating that states wishing to make a rate

- to

- mass translation would employ76 IPM or a similar type of model to project compliance with their rate

- based limits and pull from the model output for each year from 2020 to 2029 the total projected CO2 emissions for the univer se of affected sources. The commenter s said these projected CO2 emissions would be the state's equivalent mass

- based cap. The commenter s said in the other TSD, EPA simply appears to use historic generation for existing sources and also offers an alternate method that includes a single average annual growth rate if new fossil fuel

- fired sources are included; that generation is multiplied by the state's rate

- based goal to determine the equivalent mass

- based goal. The
commenter s said the conversion from a rate

- based emission performance goal to a mass

- based emission performance goal is a desirable option that should be retained for the states, and each state should be permitted to determine exactly how such a conversion is made; however, EPA should also provide clearer guidance on the criteria for acceptable conversion options. The
commenter s said a helpful step would be for EPA to provide examples of the necessary modeling analysis for each state and provide detailed guidance for public review and comment.

Comm enter s added many states have unique features (transmission constraints, reliability requirements, etc.), and these unique features suggest that a relatively simple EPA methodology for converting from a rate

- based goal to a mass

- based goal is not likely to provide enough clarity to states that wish to avail themselves of employing the option of a mass

- based target. The
commenter s call ed for strong collaboration between EPA and each state that chooses to employ a

mass

- based emission rate; in developing this collaborative process, EPA should provide as much support to the states as possible in terms of technical and analytical resources and in terms of modeling.

Commenter s support ed EPA's proposal to allow states to convert their rate

- based goals to mass

based goals. The commenter s said EPA issued a technical support document, Technical Support Document: Projecting EGU CO2 Emission Performance in State Plans, which generally outlines a possible methodology for converting each State's CO2 emissions rate goal into a CO2 tonnage limitation. The commenter s said EPA subsequently released a technical support document, Translation of the Clean Power Plan Emission Rate

- Based CO2 Goals to Mass

- Based Equivalents, which includes two proposed approaches for how states could convert from a rate

based to a mass

- based goal. The commenter s said the first approach describes the mass equivalent generation level developed for existing affected sources on ly and the second approach describes the mass equivalent generation level developed for both affected and new fossil fuel

fired sources. While the commenter s appreciate d that EPA has provided this additional guidance, the commenter s request ed that EPA cont inue to work with states in the determination of their appropriate mass equivalents to EPA's rate goals.

Commenter s stated States need clarity on a range of other issues before beginning work on compliance plans; as a preliminary matter, states need furthe r guidance on how to translate the emission rate goals into mass

- based goals as the form of the goal could be the most important a decision a state has to make. The commenter s said the recently released TSD by EPA regarding the translation for emission rat e

- based goals to mass

- based equivalents did not provide sufficient clarity. The commenter s said all other state plan considerations will be affected by the form of the goal that the state is aiming to achieve.

Commenter s request ed that EPA publish an illu strative rate

- to

- mass conversion calculation which demonstrates serving increased load from existing resources. The commenter s ha ve a77 strong preference for a successful mass

- based program under the Clean Power Plan. The
commenter s said on November 6, EPA r eleased the supplemental documents to illustrate translating emission rate goals to mass goals; the two examples are not suited to Colorado, because they do not provide for allocating mass to existing units to serve incremental growth. The commenter s said this issue is of particular concern in Colorado where incremental demand for new generation is second only to Arizona. The commenter s recommend ed that states have the flexibility to calculate rate

- to

- mass conversion periodically, based on actual demand or population growth.

Commenter s stated EPA's proposal reflects the reductions on a rate

- based (carbon intensity) approach, but also provides that states can adopt the rate

- based form of the goal established by EPA or an equivalent mass

- based approach. While the mass

- based approach may not be a viable option for all states, the commenter s anticipate d that most states will utilize a mass

- based approach due to the greater flexibility available under such an approach, as well as the ease in enforcement and implementation. The commenter s said the Proposed Rule contemplates options for states to convert th e rate

- based emission goals into a mass number; in order to ensure that this option is meaningful and workable, more detailed guidance to states is helpful on how the conversation from rate

- based to mass

- based would be implemented. The commenter s said in N ovember TSD, EPA provided "two potential options that implementing authorities may choose to adopt if they elect to use a mass

- based form of the emission rate

- based goal. The
commenter s appreciate d EPA's further clarity regarding potential conversion optio ns, as well as the agency's acknowledgment that the "mass

- based equivalent metrics presented in the TSD are not required mass

- based emission limits that implementing authorities must meet." The
commenter s said the methodology employed by the states needs t o be uniform and consistent, and ensure comparability between the two approaches, and while the further guidance on this matter is helpful, it is incomplete in several respects. The commenter s said the additional guidance in the alternate proposals do not adequately address the manner in which the final conversion methodology takes into account external factors such as how electrification of the transportation and industry sectors would impact EGUs; indeed, as currently drafted, the mass

based approach woul d disadvantage states with aggressive transportation electrification goals, or in the alternative, disincentivize the adoption of zero

- emission vehicle programs. The
commenter s said without further clarity on this issue and guidance on ways to account for such factors, states would be limited in their ability to ascertain the best approach for their own needs, and further hampered in the development of regional or multi

- state plans. The commenter s said EPA should acknowledge the inclusion of these external factors in each state's final calculations of a mass

- based approach.

Commenter s urge d EPA to provide clear and simple guidance for states to use in translating a
rate

- based goal to a mass

- based goal; for example, EPA should expressly allow a state, in dete rmining its mass cap, the flexibility to use a reasonable estimate of future generation from affected units including utilization of the values the EPA assumed in their development of the target emission rates. The commenter s said EPA should expressly conf irm that such a simplified and conservative approach would be approved, if selected by a state; if the state desires to take other factors into account, EPA's guidance should specify acceptable analytical methods and tools, as well as default input assumpt ions for key parameters that will likely influence projections, such as electricity load forecasts and projected fossil fuel prices. The commenter s said States should be allowed to deviate from these default methods and assumptions as long as78 they provide a reasonable justification; following the guidance would provide a streamlined path for EPA approval of emissions projections, but would still allow states the flexibility to use other approaches, subject to EPA review. The commenter s said this guidance sh ould ensure that all actions that reduce CO2 emissions are counted under a mass

- based program. The commenter s said importantly, EPA should expressly allow states to rely on unit retirements occurring after the baseline year(s) to meet Section 111(d) goals and allow the state to include emissions from those facilities in the "reference case" regardless of the reason for retirement of those units.

Commenter s stated the proposed Clean Power Plan provides states with the flexibility to translate rate

- based goal s (lb CO2/ MWh) to mass

- based goals (lb CO2) and explicitly provides RGGI states the option to develop a multi

- state plan that establishes a regional mass

- based emission performance level designed to meet the requirements of the proposal. The commenter s

sa id because the RGGI program is already established, approval for RGGI on a regional basis as complying with the Clean Power Plan will reduce the cost of achieving state goals and reduce the compliance burden for affected EGUs that are regulated by RGGI and already making significant strides in reducing regional CO2 mass

- based emissions. The commenter s encourage d EPA to work with individual states and RGGI to develop mass

- based regional targets that ensure compliance with the state

- specific rate

- based goals proposed by the rule.

Commenter s stated EPA must provide clear and rigorous guidance to ensure that a state plan adopting a Mass

- based approach is equivalent to the rate

- based target.

Comment 10: The EPA should allow states to convert rate

- based goals to mass

- based equivalents

. Response 10: The EPA has converted the rate

- based goals to mass

- based goals

. See section 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 fi nal CPP for the final mass

- based goals

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

Commenter s stated that EPA should allow states to convert rate

- based goals to mass

- based equivalents . The commenter s noted that EPA proposes to allow states to select a mass

- based goal in place of EPA's proposed rate

- based emission targets. 79 FR 34892. The commenter s noted that i n addition, EPA has provided additional guidance on two possible approaches to converting
rate

- based go als to mass

- based goals.

The commenter s noted that b ecause state agencies are in the best position to evaluate and direct the future course of their electricity sector and their economy, EPA should allow states to convert their rate

- based goals into mass

- based equivalents. The commenter s suggested that s tates should be authorized to initially identify appropriate factors, assumptions, and inputs for this conversion and to calculate interim and final mass

- based goals that match the emission performance that would be expected under a rate

- based approach. The commenter s argued that EPA should not calculate mass

- based equivalents in place of states.79 The commenter s stated that the two optional approaches for converting rate

- based goals to mass

based goals that E PA outlines in the Rate

- to

- Mass TSD are flawed for at least three reasons. First and most importantly, the commenter s stated that both approaches reflect unreasonable assumptions about the effect that incremental RE, EE, and nuclear generation will have on affected EGUs' generation and emissions. The commenter s noted that both of the Rate

- to

- Mass TSD approaches would adjust 2012 affected unit generation below baseline by assuming that the addition of incremental sources of zero

- carbon generation will reduce the utilization of affected fossil EGUs. The commenter s contended that it is incorrect to assume that the addition of an MWh of incremental RE, EE, or nuclear generation will reduce the output of existing fossil units by the same amount. The commenter s st ated that numerous factors

- including future demand growth, the attributes of the electric system, and the interconnected nature of the electric grid

- affect the extent to which addition of new generation can displace existing fossil generation.

Second, the commenter s stated that the approaches outlined in the Rate

- to

- Mass TSD are inconsistent with the rate

- based goal computation approach in the Proposed Rule. The
commenter s noted, under EPA's initial proposal, the addition of incremental RE, EE, and unde r

construction nuclear generation would not be assumed to displace existing fossil generation. The
commenter s stated that under the approaches discussed in the Rate

- to

- Mass TSD, by contrast, the addition of this incremental generation is assumed to reduce generation from existing fossil EGUs. Because these two methods are inconsistent, the commenter s argued that it would be arbitrary and capricious for EPA to convert state goals from rates to masses using the methodology in the Rate

- to

- Mass TSD.

Third, the commenter s stated that both approaches fail to adequately consider the impact of future demand growth on affected units' abilities to reduce emissions. The commenter s stated that the Rate

- to

- Mass TSD's first proposal for calculating mass

- based equivalents would not incorporate any future load growth into the projection of a mass

- based equivalent. This result is clearly arbitrary according to the commenter s . The commenter s stated that by failing to incorporate any assumptions about how electricity demand may increase in future years, EPA would effectively prohibit states from meeting new electricity demand with additional generation from existing units, which are some of the most reliable, proven, and low

- cost generation sources available. The commenter s stat ed that the EPA's second option under the Rate

- to

- Mass TSD incorporates one basic assumption about increased electricity demand, based on EIA regional projections. [Rate

- to

- Mass TSD at 6.] However, the commenter s stated that this load growth assumption may be unreasonably low in many parts of the country, including South Carolina, if economic growth increases substantially beyond current expectations. According to the
commenter s , this option, too, could lead to severe implementation and reliability difficul ties if load growth is greater than a state or EPA projects in calculating the mass

- based equivalent.

Rather than effectively prohibiting states from increasing generation from cost

- effective, reliable existing units to meet new demand, the commenter s sugg ested that EPA should defer to states' reasonable projections of future demand in calculating mass

- based goals

. In addition, the
commenter s suggested that the EPA should revise its guidance to align with its assumption in the Proposed Rule that the addition of incremental RE, EE, and nuclear generation does not displace historic fossil generation

. Finally, because states' initial load growth projections could under

estimate the amount of load growth that the state will experience during a compliance period, the
commenter s suggested that EPA should provide a mechanism for a state to revise its mass

- based80 goal based upon a showing that these and other assumptions the state may have used to convert goals from rates to masses were incorrect

.

Commenter s st ated the methodologies shared in the November 6, 2014 technical support document, "Translation of the Clean Power Plan Emission Rate

- Based CO2 Goals to Mass

Based Equivalents," is illustrative and can serve as a guide for considerations states should

accou nt for when converting between rate

- and mass

- based goals. The commenter s said the first option is based solely on historical generation and does not account for increased demand; it also does not account for the consumption vs. production inconsistencies. The commenter s said the second option does account for growth, but incompletely accounts for those inconsistencies. The
commenter s said assuming this fundamental inconsistency is addressed in the Final Rule, EPA should clarify that the options presented i n all of the technical support documents are not exhaustive of the possibilities for appropriate and approvable plans regarding rate to mass translations. The commenter s said rather, the rule should explicitly allow states to adopt a methodology that takes into account the various considerations alluded to in those documents, as long as the derivation of the mass

- based goals are at least as stringent as the rate

- based goals and uses a methodology that is transparent and consistent with the goal setting meth odology.

Commenter s stated EPA's issuance of additional information on November 13, 2014, also contributes to the multitude of issues contained in EPA's Proposed Rule; for example, EPA identifies two methodologies that may be used when converting a rate

- ba sed goal to a mass

based form. The commenter s said EPA should not tie the States' hands with binding rate

- to

- mass conversion methods and mass

- based goals. The commenter s said decisions regarding the development of goals that take into consideration the his torical and future operations of affected sources are best left to the States; EPA must provide States the authority and flexibility, as required in Section 111(d), to make these determinations.

Commenter s stated states need the flexibility to be able to d evelop both a rate

- based or mass

based approach for the plants/utilities in their state; this allows states to take into account the individual situations of the utilities and their resources in that state. The commenter s said it shouldn't matter whether d ifferent approaches are applied to utilities in the state as long as states can demonstrate that the emissions achieved by their state plans would be equal to or less than a
rate

- based or mass

- based approach set at the state level. The commenter s added in determining whether to pursue a multi

- state approach and, if so, in developing that approach, it is important for states to understand how the different rate

- based or mass

- based approaches can be work in a common plan and, whether it will be workable to ha ve both rate

- and mass

- based approaches in a multi

- state plan.

Commenter s stated EPA should provide "presumptive" translations of rate

- based goals to mass

based goals for each state; along with detailed guidance, including examples, on their proposed metho d for developing these using a reference case scenario. The commenter s said based on their review, states should be allowed to either adopt the presumptive translation, or propose an alternative mass

- based goal as part of the state plan process.

Commenter s stated EPA should confirm that states can implement EPA's proposed Clean Power Plan through mass

- based goals developed based on a reasonable estimate of future generation81 levels to ensure the stringency of the mass

- based goals is equivalent to the propose d rate

- based goals.

Commenter s recognize d and appreciate d that the examples provided in EPA's rate

- to

- mass conversion guidance are merely "illustrations of two potential options that implementing authorities may choose," and encourages EPA to further confi rm that important flexibility in its final rule preamble and response to comments. In particular, the commenter s ask ed EPA to expressly confirm that states seeking to apply a growth factor in their rate

- to

- mass conversion calculations need not regulate new sources under Section 111(d) because those sources will already be regulated under EPA's Section 111(b) standards of performance. The commenter s said EPA should also recognize that states are in the best position to identify an appropriate growth factor t o use in the conversion formula; moreover, EPA should allow states to re

- calculate their

mass

- based goals in the event the assumptions underlying that growth factor change over time or allow states to index the mass

- based goal to actual electricity demand to ensure the mass

- based goal remains appropriate and consistent with reliable electricity production and distribution. The
commenter s said only by allowing states to include an appropriate and flexible growth factor in their rate

- to

- mass conversions will the mass

- based goals truly be equivalent to the rate

- based goals that EPA has proposed.

Commenter s stated the proposed rule allows states to convert their rate

- based emission targets to

mass

- based targets (e.g. tons of CO2 per year), however the methods fo r converting to a mass

based target are not clear in the proposed rule language and the November 2014 EPA Technical Support Document (TSD) on the translation of CPP rate

- based state goals to mass

- based does not clarify the uncertainty. The commenter s said that the proposal suggests three possible methods for converting from rate

- based targets to mass

- based targets, and the November 2014 EPA TSD provides a fourth method; each method results in a different mass

- based target with significant difference between the targets for each method. The commenter s said despite EPA's attempt to clarify the rate to mass conversion, ambiguity in the conversion methodology remains for states to clarify. The commenter s said each state will have the responsibility to demonstrat e equivalency between EPA's rate

- based target and an equivalent mass

- based target, and then choosing whether its compliance plan will be based on rate

- based or mass

- based targets. The
commenter s said states should be allowed to propose an approvable method to convert from rate to mass that is based on state

- specific parameters (e.g. demand growth and incremental demand for new generation) that may impact the conversion calculation; in addition, the criteria for EPA approval of a state's rate to mass convers ion should be provided in the final rule, especially since the proposal suggests that economic modeling of future generation scenarios may be required to establish mass based targets for a state. The commenter s said economic modeling opens up many question s in regards to the assumptions used in developing the models, and states need to be assured of EPA's acceptability of these assumptions in developing mass based targets. The
commenter s said EPA must provide flexibility to the states to incorporate appropr iate and realistic assumptions into the forecast growth model.

Commenters supported mass

- based limits but recommended the EPA allow states to adjust their

mass

- based goals based on changes that occur after the demand and generation projections are made in order to make the mass

- based approach an attractive alternative to a rate

- based approach. These commenters also noted that allowing adjustments to be made to mass

- based limits would make mass

- based limits comparable to the rate

- based limits.82 Commenter s s uggested that factors such as Gross State Product, the relative price of natural gas versus coal, and the national average level of GHG emissions efficiency (CO2/GDP) could be used to stipulate how the state's overall cap would be adjust over time. The com menter s noted that if GSP increases, then the mass

- based limit would also be increased. The commenter s also noted that if gas prices increase significantly, then it would be appropriate to increase the mass

based limit but if gas prices stay low or decreas e, it may be appropriate to reduce the mass

- based limit. The commenter s believed that any set of predefined adjustments could be made, but recommended the adjustment variables should be outside the control of the state to avoid states from "gaming the syst em."

Commenters recommended mass

- based goals be adjusted to allow for increased use of electric vehicles. Commenter s w ere concerned that without the ability to adjust mass

- based goals, the rule would discourage the adoption of electric vehicles.

Comment 11: The EPA should provide specific mass

- based goals for each state

. Response 11: The EPA agrees with commenters and provides the mass

- based goal for each state in the final rule along with documentation of the methodology and data used for the setting the goal

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

Commenter s request ed that EPA provide proposed specific mass

- based emission goals similar to the rate

- based goal. The commenter s stated the process of each state th at wishes to use a mass

based emission goal to formulate and submit its own goal calculations for analysis and approval by the EPA places additional burden on the states and puts them at risk of implementing a long

term compliance plan based on an emission goal that may ultimately be disapproved by EPA. The commenter s stated different states may use different methods for calculating mass

- based goals, resulting in several different methodologies that would be difficult to compare, analyze, and verify. EPA ha s issued guidance on potential approaches that states may use to calculate

mass

- based goals, however, this guidance is not a substitute for specific EPA

- prescribed mass

based goals, and does not address the aforementioned perils of relying on individual st ate methodologies or the burden that this places on the states. The commenter s stated using EPA

prescribed mass

- based goals would ensure that a uniform approach is applied to each state; provide a more stable foundation for state compliance plans; and allo w for a straightforward comparison between mass

- based goals and rate

- based goals. The commenter s said this will enable each state to make a more informed decision as to which compliance option works best for them, provide better insight into EPA's assumpti ons for future generation and energy mix, and make the final Clean Power Plan more transparent and less burdensome to the states.

Commenter s asked if USEPA can provide states with CO2 reduction interim and final goals in terms of mass

- based requirements, w ith detailed calculations showing step by step how the goals were arrived at, all assumptions used, and include supporting information and data used. The
commenter s asked if EPA will identify a preferred rate to mass conversion methodology and if USEPA is unable to provide states with more guidance on mass

- based goals, then why not.83 Commenter s added EPA should provide states with their CO2 emission reduction goals in terms of mass

- based requirements, with detailed calculations showing step by step how the g oals were arrived at, including all assumptions used and all supporting information and data. The
commenter s said this information will assist states in evaluating and comparing state compliance approaches and associated impacts. The commenter s request ed t hat USEPA provide states with the aforementioned data and information for its final rate

- based goals; note that Illinois appreciates the recent USEPA guidance on rate

- based to mass

- based conversion.

Commenter s stated the EPA is proposing to give states the option to convert its rate

- based goal
to a mass

- based goal. The commenter s said New York State, the other RGGI states, and other affected states should collaborate with the EPA and have input and active participation in the calculation process to convert their emission rates to a mass

- based approach, so that the EPA would accept the outcome of the calculation.

Commenter s stated in order to facilitate such discussions amongst states interested in pursuing regional approaches, the commenter s urge d the EPA to publish and release mass

- based targets to accompany the rates

- based targets included in the proposed rule; doing so will reduce the uncertainty for state regulators, giving both the RGGI [Regional Greenhouse Gas Initiative] states and other state a cleare r picture of their mass

- based obligations as they weigh compliance options and engage in regional conversations.

Commenter s stated EPA should provide a comparison of rate

- based and mass

- based carbon reduction numbers and see how those stack up and which on e would be better for a state to comply with.

Commenter s stated that the EPA should include mass

- based targets in the final rule and that any state plan using a rate

- based approach should be evaluated to determine whether rate

- based limit is equivalent to the mass

- based limits in the rule. Such a check is necessary, the commenter s argued, to prevent potential gamesmanship that could occur if states are allowed to choose between mass

- and rate

- based standards because of the potential for states to manipulat e its calculated emissions rate. Commenter s noted that the EPA has published three different calculations of the mass

- based limits that correspond to each state's rate

- based limit. The
commenter s w ere concerned that states would choose the least stringent emissions goal and as a result the 30% reduction target would not be achieved. The commenter s recommended the EPA either incorporate mass

- based limits in the rule or assess each state's plan against the mass

- based limit calculated using the "existing plus new EGU" approach.

Commenter s stated that EPA should either create requirements for translating rate

- based targets
to mass

- based targets, or should simply do the calculations itself. According to th e commenter s , many states may choose to take a mass

- based approach, so it is important to ensure that the calculations are done in a fair and consistent manner across the country. Although the "Projecting EGU CO2 Emission Performance in State Plans" Techni cal Support Document sketches out on a high level the procedure for translating the rate

- based target to a mass

- based goal, the commenter s contended that the results of the calculation could still vary drastically based on the assumptions made in projectin g the reference case and policy scenarios. The
commenter s noted that the "Translation of the Clean Power Plan Emission Rate

- Based CO2 Goals to Mass

- Based Equivalents" technical support document provides two "potential" methods84 for making the calculations b ut note that they "should not be viewed as prescriptive." p. 3, n. 5. The commenter s suggested that EPA should go further and either calculate the mass

- based targets for states that choose to take that approach, or set out a clear and detailed mandatory
pr ocess for making the calculations

.

Commenter s stated EPA requested comment on whether it should provide a presumptive translation of rate

- based goals to mass

- based goals for all states, for those who request it, and/or for multi

- state regions. The comment er s said EPA should provide a goal for each state, regardless of whether it is requested, and for multi

- state regions upon request. The commenter s said further, in the process of setting mass

- based goals, the calculations should account for projected incre ase in electrical demand, as a rate

- based approach would similarly allow for increase in demand. The commenter s said EPA should rely on projected demand as determined by the agency closest to the electrical industry, which, for Kansas, would be the Kansas Corporation Commission. In addition to the NODA, the commenter s encourage d EPA to release additional rate versus mass calculations prior to the release of the final rule so states would have the opportunity to comment on the calculation and EPA the opportu nity to make adjustments in the process.

Commenter s stated the guidance in both the Proposed Rule and Notice is not clear; in order for states to make decisions on which performance goals to use, EPA needs to provide in the Final Rule clear mass

- based per formance goals on a state by state basis that match the rate

- based goals listed in the Proposed Rule.

Comment 12: The EPA should allow states to take either a rate

- based or mass

- based goal

. Response 12: The EPA agrees with commenters and provides states the flexibility to choose a
rate

- based or mass

- based goal for purposes of demonstrating compliance with the state plan. As is mentioned in section 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

, affected sources and regulating authorities will have the option to use mass

- based programs and measures to demonstrate compliance with a rate

- based goal, as w ell as rate

- based programs and
measures to meet a mass

- based goal

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

Commenter s stated allow states to take either a rate

- based or mass

- based approach to achieving state goals.

Commenter s support ed certain elements of the Proposed Rule and would like to see the option of Rate

- Based or Mass

- Based Approach retained in the final rule. The commenter s asserted that it is appropriate for states to have the option of a rate

- based or a mass

- based approach; each state's situation is unique and it is appropriate to allow states to determine the best way to achieve their state goals.

Commenter s stated EPA should acknowledge states' authority to set each utility's CO2 goal based on the avera ge emission rate of the utility's affected units in the state and the state goal,85 giving utilities the option of either a rate

- based or mass

- based approach. The commenter s said under this approach, each state will assign to the individual utility that has (or utilities that have) affected unit(s) in their state the CO2 emissions reduction goal established by EPA. The
commenter s said that goal will be stated as both a rate

- based goal and a mass

- based goal, and the utility will have the option to choose which approach it will use for its system compliance in that state. The commenter s said this goal will be imposed as a limit that must be achieved by the utility within the state, and may be accomplished by averaging the goal across each of the affected EGUs a utility has located in the state (its utility portfolio within the state). The
commenter s said it also avoids an outcome requiring non

- emitting utilities in the state to undertake expensive RE or other investments to benefit emitting utilities at the expen se of non

emitting utility rate

- payers.

Comment 13: The EPA does not provide the flexibility needed to the states

. Response 13: The EPA has converted the rate

- based goals to mass

- based goals. See section 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 the final mass

- based equivalents.

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

Commenter s stated under the Proposed Rule, states must select either a rate

- based or mass

- based emission goal; EPA claims that this mandate provides flexibility to the states, however this is not the case given that EPA requires t hat any mass

- based goal must be equivalent to the rates the Agency would prescribe.

Commenter s stated EPA is suggesting a basis for conversion from emission rate to mass

- based standards for state level compliance that, as presented, requires assignment of assumed future levels of renewables and energy efficiency (EE) deployment. The commenter s said renewable energy and EE measures are already proposed under EPA's Best System of Emission Reductions proposed Blocks 3 and 4 for establishing state emission rate target stringency and compliance, so substitution of renewables and customer EE when establishing Block 2 contributions to state target stringency negates the compliance flexibility that might otherwise be available. The
commenter s said different CPP

- affe cted utility units will experience unique location and business structure impacts from conversion of compliance targets between rate

- based and mass

based equivalent standards, depending on factors such as the nature and degree of state regulation or existe nce of merchant power markets for electricity supply.

Commenter s stated the emission rate to mass

- based translation proposed by EPA does not provide the level of flexibility that EPA touts or is needed by states, due to an overly restrictive translation th at results in a lower cap than the comparable rate

- based runs analyzed by EPA.

Commenter s stated the process for the rate

- to

- mass translation was originally laid out in the Projecting EGU CO2 TSD; this original rate

- to

- mass translation was confusing and e ven contradictory. The commenter s said much of the confusion originated from the fact that the BSER rate as determined by EPA is not a rate that can be applied to fossil units alone, but that86 requires obtaining credits from energy efficiency and renewable energy measures; therefore, one could not simply take the BSER rate and multiply it by the amount of existing or forecast generation from affected (existing and under construction) fossil sources.

Commenter s stated in its subsequent notice of additional i nformation regarding translation of emission rate

- based CO2 goals to mass

- based equivalents, 79 Fed. Reg. 67,406 (Nov. 13, 2014) ("November 13 Notice"), EPA developed two methods for potential use in making rate

- to

- mass translations; the first is based on historical data and applies to existing EGUs only; the second is based on a combination of the first method to calculate the cap for existing units and a second method that uses a projection of future forecast electric load to develop a mass

- based equivale nt for new sources, as certain states may want to include new sources under the cap in their state plans as well.

Commenter s stated in comparing the translated mass

- based caps that EPA identified in its document "mass_equivalent_table_

- _where_you_live_

- _n ov_6_2014.xlsx" to the effective mass

based emissions for existing EGU's coming out of the tradable rate standard runs that were included in the Regulatory Impact Analysis accompanying the CPP proposed rule, it is clear that the translated caps that EPA ha s now proposed are lower than the emissions out of the BSER
rate

- based modeling runs by a factor of approximately 20%.

Commenter s stated it is imperative that EPA reconsider the methodologies outlined in the November 13 Notice and continue to work with stakeholders on a reasonable translation methodology; additional consideration is critical given the significance to any state that will employ a mass

- based compliance approach and also given that the November 13 Notice was published for comment only 10 business days before the close of the comment period.

Commenter s welcome d the flexibility the draft guidelines give states to convert rate

- based state goals to mass

- based state goals. The commenter s said in this context:

• EPA should recognize that a mass

- based approach provides a level of environmental certainty that a rate

- based standard does not.

• EPA should consider allowing states ap propriate flexibility when converting from rate to

mass

- based budget that reflects this environmental benefit over a rate

- based approach.

• EPA should not discourage states from converting to a mass

- based goal by requiring a
rate

- to

- mass conversion that dis advantages states that choose to convert to a mass

- based goal.

• States choosing a mass

- based approach should be required to evaluate their emissions budgets at prescribed intervals and adjust, if necessary, enabling budgets to be increased or decreased whe n significant deviations occur from the assumptions used to create the projected budgets.

• States that choose to proceed with a mass

- based approach and make new natural gas plants subject to that mass

- based approach should be allowed to account for those n ew plants in their rate to mass conversion methodology.87 • In the final guideline, in addition to the rate

- based goal, EPA should provide: "Presumptive" mass

- based budgets for each state and then allow states to propose an alternative mass

- based budget or to accept either the required rate

- based goal or EPA's presumptive mass

- based budget; and A clearer, step

- by

- step explanation (including a sample calculation) of how a state could come up with a mass

- based budget.

Comment 14: The EPA should provide states t he flexibility to apply equivalent methods of rate

to

- mass conversions so long as the annual mass

- based compliance "true

- up" continues to demonstrate compliance with the state's rate

- based target each year

Response 14: The EPA has converted the rate

- based goals to mass

- based goals. See section 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 the final mass

- based equivalents.

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

Commenter s noted that EPA released a technical support document on November 7, 2014, less than one month before the close of the public comment period for the proposed guidelines, through which it solicits comment on two approaches that states could use to convert r ate

- based targets to equivalent mass

- based goals. The commenter s noted that the document included mass

based tonnage targets for each of the states under each approach. The commenter s reviewed this additional information and offered the following observati ons:
According to the commenter s , EPA states in the document that the mass

- based emission targets calculated under each approach should not be interpreted as emission caps

. The commenter s inquired, if this is the case, does that imply emissions in the sta te could exceed, for example, the

mass

- based target calculated for 2030 in subsequent years as long as the 2030 rate

- based target is met, or would a state be required to do such a conversion annually, or would the states actually be tied to the mass

- based targets every year going forward (that is, the projected mass

- based tonnage target based on the 2030 emission rate target and included in state plans submitted in the 2016

- 2018 time frame would in effect cap emissions beginning in 2030 and each year therea fter). The commenter s requested EPA provide clear guidance on this matter

. According to the commenter s , it appears that the "future growth" approach (the second approach) would capture new generation based on 2013 EIA projections. Under this approach, the
commenter s noted, emissions from new units, which are already covered under section 111(b), would need to be accounted for in demonstrating compliance with the mass

- based target. The
commenter s argued that this approach will be problematic and unworkable in states, such as Virginia, where the rate

- based target is more stringent than the NSPS established for new sources. The commenter s noted there would be no incentive for a state like Virginia to set a

mass

- based equivalent goal that factored in future, ne w generation unless the Virginia rate

- based target is modified to a level that is no more stringent than the standard for new sources under section 111(b). For this reason and reasons previously noted in these comments, the commenter s requested that EPA ac knowledge the disadvantage the proposed methods the Agency proposes to88 use to set emission targets creates in states with emission rate targets below the standard set for new sources in 111(b) and to adjust state targets accordingly.

According to the comm enter s , the suggested "future generation" approach also appears to assume that future renewable generation and energy efficiency measures will displace a certain amount of existing generation. The commenter s indicated that this approach, in effect, appears to directly apply the methodology for using Building Blocks 3 and 4 to displace existing generation that was put forth in the recently

- issued NODA. However, it was not clear to the commenter s , from either the explanation or specific examples provided in t he TSD, how much of existing generation new renewable and energy efficiency measures are assumed to displace. The
commenter s noted that some renewable resources are not dispatchable due to the intermittent nature of these resources and must be backed up wi th dispatchable capacity from fossil fuel

- fired sources. The commenter s further noted that, although dispatchable, biomass (to the extent it would still be considered a renewable resource under EPA guidelines) is a limited resource. The
commenter s noted th at energy efficiency measures have similar variability. According to the
commenter s , while they may be based on the installation of increasingly more efficient equipment, the use of such equipment by households, businesses and industries will be variable

a nd driven by factors other than energy use alone. The commenter s therefore requested EPA to abandon this approach.

The commenter s stated that, since EPA's intent with establishing rate

- based targets is to presumably factor in future expected growth, the c ommenter s d id not believe that mass

- based targets calculated off of a growth projection to 2030 (or 2025) under state plans developed in the 2016/2017 time frame should be treated as hard emission caps. The commenter s requested that EPA provide the states flexibility to apply equivalent methods of rate

- to

- mass conversions so long as the annual mass

- based compliance "true

- up" continues to demonstrate compliance with the state's rate

- based target each year

.

Comment 15: Regional capacity; mass rates for regi ons
Response 15: The EPA has converted the rate

- based goals to mass

- based goals. See section 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 the final mass

- based equivalents.

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

Commenter s stated PJM's analysis of its original interpretation of the rule found substantially a higher mass

- based regional cap than that reflected in EPA's TSD. The commenter s asked if EPA has reviewed that analysis, and can the Agency explain the difference in the approach.

Commenter s stated under a regional implementation plan, each state's rate

- based carbon intensity goal will be converted to a mass

- based goal based on the state's projected future generation; the resulting mass

- based emission caps for each state will be aggregated into a total emission cap for the region that will be auctioned to affected compliance entities and third

- parties. The

co mmenter s said under this approach, it is critical that a) each state's rate

- based goal is a value89 that accurately represents the potential of that state to reduce carbon emissions, and b) each state's rate

- to

- mass conversion is based on a precise projectio n of future generation within that
state.

Commenter s stated the EPA issued a Technical Support Document (TSD) to address the Translation of the Clean Power Plan Emission Rate

- Based CO2 Goals to Mass

- Based Equivalents in November 2014; this TSD provided st ates with an example methodology for rate

to

- mass conversions and the resulting state

- specific mass

- based CO2 goals for 2030 using this methodology. The commenter s said it is understood that a rate

- based goal allows for future growth within a state or regi on, without additional upfront work to establish the projections of future growth. The commenter s said it can be challenging, however, to come up with a strategy to demonstrate compliance with rate

- based goals in future years; conversely, mass

- based goals are easy to comply with, but present challenges during the planning phases in order to establish a goal that is first equivalent to the rate

- based goal, but that also accounts for future demand increases.

Commenter s agree d with the EPA's most basic explan ation of the rate

- to

- mass conversion, which indicates that a state's 2030 CO2 mass

- based goal will be the result of the state's 2030 rate

- based CO2 goal multiplied by the state's generation. The commenter s said EPA's method for computing the state's genera tion level is based on historical (i.e., 2012) generation with no growth, assuming that future demand in years up to and beyond 2030 will be the same as the demand in 2012. The commenter s asserted that this generation level should reflect a state's forward

- projected generation up to and beyond 2030, to account for load growth during that period.

Commenter s added the EPA manipulates the state's generation level by applying adjustments based on the CPP building blocks; the EPA is selective in its inclusion o f building blocks for the state's generation level adjustments, applying only a subset of building blocks to the generation level and doing so in a manner that is inconsistent with the core methodology used in the original
rate

- based goal

- setting formula. The commenter s said for example, adjustments based on the assumption that new incremental renewable resources and energy efficiency goals will be met are included, and they displace fossil generation as opposed to being included in addition to fossil gener ation as they are in the rate

- based goal

- setting formula. In general, the commenter s consider ed the EPA's aggressive assumptions of generation levels to account for the building blocks to be incompatible with the rate

- to

- mass conversion process, bearing in mind that this generation level will be multiplied by a CO2 rate that is already reduced to reflect the application of all of the building blocks.

Commenters anticipate d that RGGI will opt to use a more sophisticated and accurate model to support the tra nslation of rate

- to mass

- based goals within the region; however, in lieu of a regional approach, it is evident that the mass

- based translation provided by the EPA is not a realistic or workable approach for use in New England or New Hampshire.

Commenter s stated EPA should specifically clarify that, for purposes of the rate

- to

- mass translation, underlying RE and EE state policies should not be included in the baseline given that any impact on regional dispatch attributable to these complementary policies i s not within the appropriate scope of the rate

- to

- mass translation.90 Comment 16: The Proposed Rule does not provide either clarity or incentives for states to
convert to mass

- based standards or to engage in regional compliance

Response 16: The EPA has converted the rate

- based goals to mass

- based goals . See section s VII and VIII 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 the final mass

- b ased equivalents and more information about compliance

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

Commenter s stated conversion to a mass

- based standard is an essential step toward regional planning and compliance; if s tates want to participate in a regional approach, or continue a regional approach that is already in place (such as the nine

- state Regional Greenhouse Gas Initiative), they must be able to convert to a mass

- based standard; to attempt regional compliance th rough an averaging of individual state rates is complex and likely infeasible. The commenter s said the Proposed Rule is not clear on what mass

- based conversion protocol would be acceptable to EPA, and, importantly, how it can provide for load growth. The c ommenter s said when a rate

based standard is used, no explicit provision for load growth is needed; it can be accommodated within the rate

- based formula; but load growth must be explicitly accounted for as part of a

mass

- based conversion formula, or else t he mass

- based approach would be materially less attractive to pursue; however, the Proposed Rule is not clear on what provisions for load growth in a mass

- based conversion would be acceptable to EPA, and it appears that the simple approach
to a mass

- based approach of multiplying a state's interim or final standard rate by the MWhs from existing generating units in the 2012 base year would make no provision at all for load growth. The commenter s said this ambiguity disadvantages the mass

- based conversion opt ion.

Commenter s added without a clear provision for load

- growth, the use of the mass

- based conversion option becomes very problematic, and this will in turn discourage regional planning; EPA must remove this disincentive to regional compliance. The commen ter s said regional compliance offers many advantages and, as long as it is a voluntary option, it should be encouraged; in fact if the disincentives to regional compliance are not removed in the final rule, the results could be highly detrimental to the co ntinued operation of organized electricity markets, which have been a proven source of great efficiency and benefit to customers; that would be a major and unnecessary step backwards. The commenter s said without mass

- based regional compliance, generators t hat currently participate in regional (multi

- state) economic dispatch will have to change their method of participation, reducing dispatch efficiencies and possibly constraining the RTO's ability to redispatch to maintain reliability; in contrast, under a regional mass

- based approach, an RTO can factor environmental adders into the economic dispatch, ensuring that the most cost

- effective way of meeting the mass

- based standard is achieved while maintaining reliability. The commenter s said EPA's supplemental technical support document on rate

- to

- mass conversion, released November 6, 2014, is not particularly helpful; it provides two examples of an approach to rate

- based to mass

- based conversion, both of which are complex and difficult to understand; more impor tantly, the proposed "opt

- in" conversion approach appears to require greater emissions reductions in some states than EPA's own IPM modeling indicates that the rate

- based standard would require. The commenter s said91 this inconsistency will likely pose a barrier to regional compliance; for example, EPA's data suggests that the rate

- based approach would be less stringent than the mass

- based standard for seven of the fifteen MISO states, and the mass

- based approach would be less stringent for the remaining eigh t states. The commenter s said gaining support for a regional compliance approach will be even more difficult with such conflicting incentives; such a disincentive for mass

- based conversion, and hence for regional compliance, represents a huge flaw that mus t be remedied. The commenter s said there is no basis for requiring more stringent reductions under a mass

based approach than under a rate

- based standard in any state; the mass

- based approach should be transparent and of comparable stringency. The commente r s said if the mass

- based conversion is disadvantaged, the result is likely to be not just lack of regional compliance, but significant disruptions in regional power markets.

Commenter s support ed EPA's commitment to encouraging multi

- state GHG reduction p rograms, such as RGGI, the Rule should build upon and reflect the successes of RGGI and other similar
programs; in particular, the commenter s urge d EPA to adopt a formula to translate its rate

- based goal to a mass

- based goal to foster the creation of more regional carbon trading programs or other multi

- state cooperative efforts.

Comment 17: The EPA should provide guidance to the regional the EPA offices

. Response 17: The EPA has converted the rate

- based goals to mass

- based goals . See section 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 the final mass

- based equivalents. The EPA will provide guidance to the regional the EPA offices as necessary.

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

Commenter s request ed that guidance be provided to the regional EPA offices to ensure that approved mass based targets are adequately protective, equitable, reflect the realities of an integrated electric power grid.

Comment 18: The EPA should develop a method of conversion that is more comparable to the method for computing the existing rate

- based goals

. Response 18: The EPA has converted the rate

- based goals to mass

- based goals. See section 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 the final mass

- based equivalents.

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

Commenter s recommended that EPA develop a method of conversion that is more comparable to the method for computing the existing rate

- based goals. The commenter s stated Section III of EPA's Emission Performance TSD appears to be proposing a method that is based on different92 assumptions than the rate

- based goal and based on more extensive analysis than the rate

- based goal; the degree of flexibility allowed in the m ethod as proposed seems to allow for potential wide variability in the resulting mass

- based goal determination, whereas EPD believes that determination of a compliance goal should be repeatable and uniform. The Goal Computation TSD does not "consider trea tment of eligible 'on

- the

- books' state requirements, programs and measures included in the state plan" as is discussed in the Emissions Performance TSD for determining a mass

- based goal; therefore, the Emissions Performance TSD seems to contemplate

more ex tensive analysis for determining a mass

- based goal than was performed for the rate

based goal. The commenter s said the inclusion of "on

- the

- books state requirements, programs and measures" in formulating the "Reference Case Scenario" and the "Goal Policy S cenario" of Section III.B of the Emission Performance TSD appears to make the underlying assumptions for the mass

- based goal more restrictive on emissions than the assumptions for the rate

- based goal. The commenter s added the contemplation of "programs and measures included in the state plan" to calculate the mass

- based goal implies that the state will already have an approved state plan prior to calculating the mass

- based goal; this seems to confuse the establishment of a mass

- based goal with the emissions performance projection (proposed rule section 60.5740(4)) that is required to demonstrate that a state plan will meet its goal; obviously, states will need to have an established goal before they can put together the state plan programs and measures that will project compliance with the goal.

Commenter s added the Translation TSD produces a generation level that is not equivalent to the generation used to set the rate

- based goal or the generation projected using AEO's demand forecast, resulting in a signif icant under

- calculation of Georgia's mass

- based goal. The
commenter s stated the goal translation methodology should be corrected to produce a mass

based goal that is equivalent to a state's rate

- based goal; to accomplish this equivalency, the two computati ons must use the same generation level for the final goal year.

Commenter s added a mass

- based goal appears to be able to simplify much of the compliance work associated with this rule

- particularly if states were to choose to implement trading programs ( single and/or multi state) for compliance; however, we are concerned that the method identified by EPA in its November 13 notice seems to increase the stringency of Minnesota's final target from the rate

- based goal identified in the original proposal. The commenter s stated they believe d that the rate

- based target would require an approximately 40% reduction in CO2 emissions, while the mass

- based method identified by EPA would result in a 50% or greater reduction. The commenter s said if approvability of mass

- based targets in state plans is dependent upon some level of adherence to EPA's calculation method, we believe that the mass

- based approach could simply cease to be a viable option for many states

- thereby eliminating much of the flexibility upon which s uccess of EPA's Clean Power Plan is based. The commenter s stated EPA should either be very flexible in considering state methodologies for rate

- to

- mass target calculations in its plan review process, or should simplify its methodology and ensure that it

re sults in equivalent stringency between the two approaches.

Comment 19: The methods used in TSD are inconsistent with the rate

- based calculation used in the proposed rule

.93 Response 19: The EPA has converted the rate

- based goals to mass

- based goals. See s ection 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 the final mass

- based equivalents.

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

Commenter s added many reviewers of the proposed rule have asked how states could convert an emissions rate to a mass based rate as an alternative goal; although the EPA recently released a notice of data availability (NODA) entitled Addi tional Information Regarding The Translation of Emissions Rate Based CO2 Goals To Mass Based Equivalents on November 13, 2014, the
commenter s ha ve not had adequate time to determine the usefulness of this information prior to the comment deadline. From the commenter s ' preliminary review, the proposed mass

- based targets for South Carolina (two were provided) appear to be inconsistent with the very calculation that was used by EPA in setting the rate

- base goal. The commenter s said the EPA should continue eval uating this approach since a mass based alternative compliance scenario may be very useful to states and possible regional compacts.

Commenter s added the approaches outlined in the Rate

- to

- Mass TSD are inconsistent with the
rate

- based goal computation appr oach in the Proposed Rule. The commenter s said under EPA's initial proposal, the addition of incremental RE, EE, and under

- construction nuclear generation would not be assumed to displace existing fossil generation. The commenter s said under the approaches discussed in the Rate

- to

- Mass TSD, by contrast, the addition of this incremental generation is assumed to reduce generation from existing fossil EGUs. The commenter s said because these two methods are inconsistent, it would be ar bitrary and capricious for EPA to convert state goals from rates to masses using the methodology in the Rate

- to

- Mass TSD.

Comment 20: The proposed rate

- to

- mass conversion formula does not accurately translate a state's rate

- based emissions goal to an equa lly

- stringent mass

- based emissions goal; Maintain Equivalent Stringency and Account for Uncertainty when converting from a Rate

- Based to a Mass

- Based Goal

Response 20: The EPA has converted the rate

- based goals to mass

- based goals. See section 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 the final mass

- based equivalents.

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

Commenter s stated to set a mass

- based emissions goal, a state's projection of generation by affected EGUs under a reference case scenario would be multiplied by the state's rate

- based goal for the applicable compliance period; this method does not accurately translate the rate

- based goal to an equally

- stringent mass

- based goal. Commenter s added for example a state's existing nuclear generation will already be fully accounted for in the reference case scenario. Commenters stated the nuclear plants w ill not be able to increase their output by 5.8 percent for compliance purposes, as would be presumed by the proposed formula. The commenter s said94 similarly, since existing renewables will be included in the reference case scenario, they would not be avail able to offset generation by affected EGUs for compliance purposes, as would also be presumed by the proposed calculation.

Commenter s added EPA's Rate

- to

- Mass TSD proposes an alternative formula for converting
rate

- based goals to mass

- based goals. The com menter s said in the formula provided in the TSD, a state's mass

- based goal would be determined by multiplying its rate

- based goal by a quantity referred to as the "Mass Equivalent Generation Level." The commenter s said the Mass Equivalent Generation Level, as defined in the TSD, includes at

- risk nuclear generation and generation by existing renewables, as well as projected generation by affected EGUs. The
commenter s said the use of this formula appears to accurately translate a rate

- based goal to an equally

- stringent mass

- based goal; however, since the text of the proposed regulation itself specifies the use of the incorrect formula, the proposed regulation must be revised to incorporate the corrected conversion formula. The commenter s appreciate d the guidan ce provided in the Rate

- to

- Mass TSD, however is concerned that EPA is using this TSD to correct an apparent error in the original proposal without a clear indication to commenters and stakeholders that there was an error or that the TSD is substantively re vising this aspect of the proposal.

Commenter s stated that when converting a rate

- based goal into a mass

- based goal, the goal should remain as achievable in its mass

- based form as it was in its rate

- based form. The
commenter s said from the analyses they ha ve seen, there are a wide variety of approaches to converting to a mass

- based goal, which yield a wide variety of results. The commenter s said specifically, the Proposed Rule should create an equal degree of stringency between rate

- and

mass

- based approach es when accounting for Building Blocks 3 and 4.

Commenter s stated the rate

- to

- mass conversion methodology proposed by the EPA results in a

mass

- based target for New Hampshire that is more stringent than the rate

- based goal used to derive it.

Commenter s stated the EPA issued a Technical Support Document (TSD) to address the Translation of the Clean Power Plan Emission Rate

- Based CO2 Goals to Mass

- Based Equivalents in November 2014; this TSD provided states with an example methodology for rate

to

- mass con versions and the resulting state

- specific mass

- based CO2 goals for 2030 using this methodology. The commenter s said it is understood that a rate

- based goal allows for future growth within a state or region, without additional upfront work to establish the projections of future growth; it can be challenging, however, to come up with a strategy to demonstrate compliance with rate

- based goals in future years. The commenter s said conversely, mass

- based goals are easy to comply with, but present challenges durin g the planning phases in order to establish a goal that is first equivalent to the rate

- based goal, but that also accounts for future demand increases. Based on the commenter s ' review of the methodology presented in the rate

- to

mass conversion TSD, the EPA established a mass

- based

- goal for New Hampshire that was neither equivalent to the rate

- based goal nor adjusted to account for future demand increases.

Commenter s support ed that EPA's final guidelines maintain either the emissions rate or mass

based comp liance options; however, additional clarification is necessary beyond that provided in the TSD to better define the mass

- based approach. The commenter s said of primary concern, the

mass

- based approach should not be more stringent than an emission rate appr oach. The95 commenter s said when comparing actual CO2 mass emissions to the presumptive mass caps for existing units as listed in the TSD, this results in a larger percentage reduction at the state

- level than what would be needed on an emissions rate basis; in addition, the mass cap with new units is also more stringent for Iowa compared to the emission rate final goal. The commenter s provided Table 9 (titled: “ EPA Proposed Clean Power Plan Emission Rate Goals ”) and Table 10 (titled: “ TSD Calculated Mass Cap Final Goals ”)

.
Commenter s support ed EPA's decision to allow states to convert their rate

- based goals into

mass

- based goals, but disagrees with the illustrative examples that EPA provided in its recently released guidance. So long as the option remains avai lable to states for use only in their sole discretion, the commenter s support ed EPA's decision to allow the conversion of its proposed
rate

- based goals into mass

- based goals using an appropriate conversion methodology. The
commenter s also generally support ed EPA's decision to provide non

- binding guidance to assist states in determining an appropriate and approvable means of converting the rate

- based goals into mass

- based goals' however, the commenter s d id not support the approach illustrated in EPA's conver sion guidance because it uses a different generation level than EPA assumed in its original rate

- based proposal, which results in far more stringent goals that are not equivalent to EPA's original proposal. The commenter s said EPA's original proposal relie d on an equation that determined generation based on the sum of 2012 generation and all incremental renewable generation, nuclear generation, and energy efficiency improvements required under the Proposal; in contrast, the primary option in EPA's guidance utilizes 2012 generation alone

- without any incremental changes

- to calculate a mass

- based goal. The commenter s said although EPA's guidance contains several complicated formulae, all of the variables in those formulae cancel each other out, leaving noth ing but 2012 generation in the calculation (EPA allows states with under construction nuclear and NGCC units to count that additional generation, but Louisiana is not one of those states). The commenter s said by using a 2012 generation value that does not account for any incremental changes, the resulting mass

- based goal is far lower than it should be to approximate EPA's originally proposed rate

- based goals. The commenter s d id not support this illustration in EPA's guidance because it would essentially pro hibit any load growth and require all new incremental changes in the generation mix to displace fossil generation, and is therefore inconsistent with the Proposal. The commenter s said EPA's guidance does contain a second option that allows for the use of a more appropriate generation level in determining mass

- based goals by including a growth factor; however, that approach still is not equivalent to the generation level utilized in EPA's original proposal, and therefore does not result in "equivalent" goals , which EPA claims are necessary for states to employ the mass

- based option. The
commenter s added, EPA's guidance seems to suggest that a growth factor would only be appropriate if states require newly constructed units to fall under the mass

- based goal as well, something that the Clean Air Act clearly forbids, as noted above; therefore, even the more reasonable second option of EPA's guidance fails to provide an appropriate illustration of how states can convert their proposed rate

- based goals into mass

- ba sed goals. The commenter s said EPA should withdraw its guidance on develop new guidance that results in mass

- based goals that are equivalent to EPA's proposed rate

- based goals. The commenter s ask ed EPA to confirm that the illustrations provided in its rece ntly released rate

- to

- mass conversion guidance are just that

- illustrations only

- and do not represent the only means by which a state may take advantage of the flexibility provided by a mass

- based approach.96 Commenter s stated carbon trading systems like RGGI could greatly benefit states in their compliance with the CPP and allow for reinvestment in a cleaner, more efficient electricity system. The commenter s said by establishing a standardized rate

- to

- mass conversion methodology, EPA will facilitate the f ormation of compliance systems like RGGI throughout the country by providing states with certainty and clarity they need to create state

- specific and regional caps on CO2 emissions. The commenter s were encouraged by EPA's Notice of Data Availability ("NODA ") released on November 6, 2014, which proposed guidance to states on
rate

- to

- mass target conversion and urges EPA to include these or similar mass

- based targets in its final rule.

Comment 21: November 6, 2014 Technical Support Document (TSD) titled "Tran slation of the Clean Power Plan Emission Rate

- Based CO2 Goals to Mass

- Based Equivalents"; Comments/Concerns

Response 21: The EPA has converted the rate

- based goals to mass

- based goals. See section 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 the final mass

- based equivalents.

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

Commenter s stated the TSD's first method, based on 2012 data, intended to produce a mass

based equivalent metric that applies to existing affected EGU's only. The commenter s said for Colorado, this method produced a final mass equivalent rate of 25,335 metric tons. The
commenter s asserted , after evaluation, that in performing this calculation the EPA mistakenly multiplied the 2012 Adjusted Affected Fossil Generation total by the 2020

- 2029 lb/MWh goals to determine the mass rates for these compliance periods, rather than by the Blocks 1 and 2 adjus ted lb/MWh rate for 2012.

Commenter s stated the TSD's second method is based on a combination of the 2012 data and projections of future electric demand. The commenter s ha ve a number of concerns with this method: First, it utilizes future electric demand assumptions that are different from those used in the lb/MWh goal determination; Second, the electric demand growth rate assumptions are just that

- assumptions

- from which absolute goals are produced; and, third , the administration of this second method will be needlessly controversial and complex.

Commenter s added it was beneficial for the EPA to release the technical support document that translates rate

- based goal to a mass

- based equivalent; the calculation is more straightforward when the translation method based on the rate

- based targets and historic data is used rather than requiring multiple model runs to derive a mass

- based goal. The commenter s were concerned that some of the numbers appear to be more stringent and encourage the Agency to ensure t he final targets are reasonable. The commenter s said mass

- based regulatory approaches have been shown to be highly effective in addressing conventional air pollutants emissions as well as under RGGI for carbon emissions, and we think such approaches should be encouraged. The commenter s

were in support of EPA offering mass

- based equivalents that allow for the inclusion of both new97 and existing sources; like the RGGI program, a more rational and cost

- effective market response can result if both new and existi ng sources are subject to the same regulatory program and market signals.

Commenter s added there were errors in U.S. EPA's Nov. 6, 2014 addendum providing new guidance for converting target emissions rates to mass emissions targets; specifically, in

conver ting pounds to tons, US EPA relies upon a figure of 2204.62, whereas the original June 2 Notice of Proposed Rulemaking relied upon a figure of 2,000. The commenter s said consequently, there is a large rounding differential by using a weighted average emiss ion rate to

re

- dispatch NGCC plants in building block 2. The commenter s said by applying a 70 percent capacity factor to each NGCC unit individually (as opposed to all generation units at once), there is a difference of over 5 million tons of CO2 emissions . The commenter s said the mass

- based calculation also omits EE within the spreadsheet; as a result of this omission, the formula US EPA relies upon adds and subtracts the same value for EE in the same equation, i.e. Ohio Final Mass Equivalent Generation Le vel= Historical Effected Fossil Generation (plus) Incremental RE (minus) Under Construction Nuclear (minus) Incremental EE (plus) Incremental EE.

Commenter s appreciate d EPA providing an example of rate to mass conversion; it is useful to have an illustrat ive calculation, and we appreciate that EPA has noted this is not the only way states could create an approvable mass budget. The commenter s support ed allowing states the option to use a simple mass

- based approach to developing their emission control plans . The
commenter s said in some circumstances, a mass

- based approach may allow states to avoid some of the implementation issues described elsewhere in these comments, including our concerns related to EPA's role in state energy planning and EM&V under an en ergy efficiency
program; however, it is challenging to digest a complex TSD released only 15 business days before comments are due. The commenter s said EPA should provide more time to review and comment on the proposed TSD. The commenter s said as a prelimi nary matter, any mass conversion approach should provide full credit to the same emission reduction initiatives that would help a state meet the rate

- based target. The commenter s support ed EPA's approach of providing a pathway rate to mass conversion, while also providing states the ability to suggest other reasonable methods to convert their rate

- based targets to mass targets. The commenter s said the states may be able to develop and propo se other reasonable, and possibly improved, methods to translate rate targets to mass targets; this option may alleviate preliminary concerns we have with the proposed translation method, such as the assumption that energy efficiency and renewables displac e only existing generation, and the assumption that new NGCCs ought to receive tons under a mass cap based on their state's allowed emissions rate, regardless of whether that rate is 500 lb/MWH or 1500 lb/MWH. The commenter s said as EPA correctly notes in the Projecting EGU CO2 Emission Performance in State Plans TSD, projecting generation and emissions over time requires reliance on often uncertain projections of future energy and economic conditions, including energy consumption, fuel prices and economic growth. The
commenter s said in the mass conversion, EPA should provide states periodic opportunities to revise their generation forecasts and mass budgets in light of changed circumstances; furthermore, the method should allow states to employ the degree o f modeling sophistication they choose based on local conditions and state resources.

Commenter s added s tates, throughout the comment period, have asked for clarity around the conversion of the rate

- based state goal to a mass

- based goal; on November 13th on ly 9 business98 days prior to the deadline for submitting comments on the proposed guidelines, EPA issued the long

- requested additional information and required that any comments on the additional information be submitted on December 1, 2014. The commenter s stated ha ve not had the opportunity to evaluate the additional information such that it could provide sufficient comment; further, at this point, it is not clear as to how a state would set enforceable CO2 emission limits at affected EGU s to accurately re flect measures in building blocks 3 and 4 using a rate

- based standard and EPA's formula application of BSER to set state goals does not provide any guidance. The commenter s added EPA indicates, throughout the state plan considerations section of the propos ed guidelines, that a state could, theoretically, set the emission limits at the affected EGUs, but then "credit back" the value of emission reductions provided by other implementing measures in the state plan. While the commenter s underst ood how this may be possible to do in a state plan for approvability, it is still unclear as to what a state would be required to do, in the compliance period, if the other implementing measures were delivering what was projected in the state plan, but the affected EGUs we re still exceeding the emission limits. The commenter s asserted this may very likely occur and recommends that EPA provide more detail and guidance as to what evaluations the state would be required to do to diagnose the problem, what corrective

measures m ay be required and what will be expected of a state and/or utility and/or other entity should the state plan's "other implementing measures" deliver as projected in the plan, but the affected units emission limits still be exceeded. The commenter s also req uest ed additional clarity with regard to what the "state commitment" option might look like in a state plan and what it would mean in terms of liability for the state. The commenter s said EPA indicates that the state commitment may open states up to citize n suits, but the commenter s ask ed what about federal enforcement from EPA; the commenter s ask ed would EPA exercise this option.

Commenter s stated the November 6, 2014 supplement included a Technical Support Document to explain how EPA devised the mass

- base d goals for each state; EPA introduces a complex calculation that is difficult to interpret. The commenter s said the end result is a more stringent

mass

- based goal than what would be logically surmised from the calculation that was used to determine the ra te

- based goal. The commenter s said in reaching Step 5 of EPA's calculation for South Carolina after applying the four Building Blocks the equation for the final state goal is as follows: 30,352,595 tons CO2/78,661,778 MWh = 772 lb CO2/MWh South Carolina ra te

- based goal. The commenter s said based on EPA's own formula and calculation above, one would expect the mass rate of CO2 for South Carolina to be 30,352,595 tons rather than the 17,433,977 tons (15,816,000 metric tons) to 24,266,032 tons (22,014,000 metr ic tons) listed in EPA's November 6, 2014 document.

Commenter s added the two optional approaches for converting rate

- based goals to mass

- based goals that EPA outlines in the Rate

- to

- Mass TSD are flawed for at least three reasons. The
commenter s said first and most importantly, both approaches reflect unreasonable assumptions about the effect that incremental RE, EE, and nuclear generation will have on affected EGUs' generation and emissions. The commenter s said both of the Rate

- to

- Mass TSD approaches would adjust 2012 affected unit generation below baseline by assuming that the addition of incremental sources of zero

- carbon generation will reduce the utilization of affected fossil EGUs. The commenter s said it is incorrect to assume that the addition of an MW h of incremental RE, EE, or nuclear generation will reduce the output of existing fossil units by the same amount. The
commenter s said numerous factors

- including future demand growth, the attributes of the99 electric system, and the interconnected nature o f the electric grid

- affect the extent to which addition of new generation can displace existing fossil generation.

First Approach

Commenter s added the first approach does not assume any growth in generation occurs at existing units, which is an importan t omission for states like California, whose existing low average capacity factor NGCC units may be deployed more in the future. The commenter s said by failing to reflect potential growth in generation at existing NGCC units, this approach establishes mass goals that may not be equivalently stringent with rate goals. The
commenter s recommend ed that the EPA modify the first approach to assign some of the potential increased generation associated with expected load growth to existing units for states such as California with relatively low NGCC capacity factors.

Commenter s added the first approach does not factor in growth in the conversion process. The
commenter s asserted that EPA should allow states to incorporate state

- specific assumptions about future polic y scenarios that would increase demand in the calculation of their mass

- based goals.

Commenter s stated Option 1 of EPA's recently proposed guidance appears to provide a complicated formula for converting a "rate

- based" goal into a "mass

- based" goal; specif ically, the guidance recommends that states begin with 2012 fossil generation, subtract incremental renewable energy and energy efficiency expected under EPA's Clean Power Plan, and then add back all renewable energy and energy efficiency; however, many of the variables included in EPA's formula cancel each other out. The commenter s said for instance, while one step subtracts incremental renewable energy and energy efficiency from 2012 fossil generation, that incremental generation is simply added right bac k in the next step, as part of adding back all renewable energy and energy efficiency (including incremental); in addition, EPA's starting point for the analysis

- 2012 fossil generation

- is little more than total generation minus existing renewable generat ion, but that existing renewable generation is also added right back in the later step that adds back all renewable and energy efficiency generation. The commenter s said Table 1 of EPA's guidance confirms that EPA's analysis ends where it begins; in column 1, EPA identifies 2012 fossil generation, but that value is nothing more than 2012 total generation minus 2012 renewable generation, which is found in column 3; thus, adding columns 1 and 3 results in total 2012 generation, but that also results in the sa me value found in column 5 that EPA refers to as "Final Mass Equivalent Generation Level" because the values in columns 2 and 4

- incremental renewable generation and energy efficiency

- are subtracted in one step and added back in another, cancelling each o ther out.

Commenter s stated because EPA's "Mass Equivalent Generation" is nothing more than 2012 total generation, the formula that EPA offers in its guidance can be mathematically reduced to the following simple calculation for converting EPA's proposed 2030 goal into a mass

- based 2030 goal using option 1; 2012 total generation x 2030 "rate

- based" goal = 2030 mass

- based goal. The commenter s said in doing so, EPA's option 1 illustration fails to allow for any load growth

- essentially assuming that 2030 generation will be equal to 2012 generation; not only is that assumption unrealistic, the practical effect of that assumption is to force incremental renewable energy and energy efficiency improvements to displace fossil fuel

- fired generation,100 which is inconsistent with the manne r in which EPA developed the rate

- based goals in its initial June 2014 proposal. The commenter s said in its original proposal, EPA did not assume that incremental renewable and energy efficiency increases (building blocks 3 and 4) will displace fossil gene ration, but instead simply added that generation to the denominator of its goal calculation; but EPA's rate

- to

- mass guidance would require that incremental generation to displace fossil generation, and thus result in far more stringent goals than originall y proposed. The commenter s said as such, option 1 of EPA's rate

- to

- mass guidance does not result in an equivalent mass

- based goal and is therefore inconsistent with EPA's own requirement that mass

based conversions are only authorized "as long as the trans lated goal achieves the equivalent in stringency."

Second Approach

Commenter s added the EPA's second proposed approach includes a projection of future generation based on regional annual average growth rates from the EIA's 2013 Annual Energy Outlook (AEO) . The commenter s said while this approach better captures some of the key exogenous factors, it does not address potential changes in the level of imports. The
commenter s suggest ed that the EPA explicitly address each of the key exogenous factors that will influence the mass goals, including economic growth, transportation electrification, and level of electricity imports and exports. The commenter s said each of these factors will have a meaningful influence on expected mass emissions and so should be incor porated into the analysis used to convert from a rate goal to a mass goal in order to maintain equivalent stringency. The commenter s said for example, in California, and especially in the South Coast Air Basin, aggressive implementation of transportation e lectrification is a major strategy to meet federal criteria pollutant standards and Zero Emission Vehicle goals; such expected electrification should be incorporated into the analysis used to convert from a rate

- to a mass

based goal.

Other

Commenter s added the second approach factors in growth and includes existing affected and new sources. The commenter s said the proposed second approach includes growth numbers per Energy Information Administration's Annual Energy Outlook 2013; however, the document does not incorporate California's transportation electrification goals. The commenter s said in the State of California, aggressive implementation of transportation electrification is a major driver to meet federal criteria pollutant standards and meet the State's emission goals for CO2 and other GHGs. The commenter s asserted that EPA needs to allow for adjustments be made to the mass

based goal for any state to account for such major increases in demand growth

- particularly when the increased electric dema nd will result in an overall net reduction in GHG emissions within the state. The commenter s urge d EPA to explicitly address efforts such as California's to reduce CO2 emissions (with co

- benefits of criteria pollutant emissions reductions) through transpor tation electrification in its approval of state emissions projections.

Commenter s stated EPA offers as a second option an alternative approach to converting rate

based goals to mass

- based goals that would include a growth factor in the calculation, referr ed to as "incremental demand for new generation." The commenter s said the growth factor provided for New Mexico of 1.31 percent annually appears appropriate in light of recent growth estimates101 developed by the NMPRC; however, EPA's guidance suggests that s tates wishing to include a growth factor in their mass

- based goal conversions would also include any newly constructed units in determining compliance with the mass based goal. The commenter s said EPA describes its option 2 illustration as appropriate for use "in the event that an implementing authority may want to include new sources of generation units compliance approach." While the commenter s support ed the use of a reasonable growth factor in converting a rate

- based goal into an equivalent

mass

- based go al, EPA's suggestion that states may utilize a growth factor "in the event" they choose to regulate new sources under Section 111(d) could be misread as a requirement to regulate new sources under any mass

- based goal that accounts for growth; however, any such requirement would exceed EPA's authority under Section 111(d). The commenter s said Section 111(a) defines "new sources" and "existing sources" to be mutually exclusive, and Section 111(b) only applies to new sources, while Section 111(d) only applies to existing sources; as such, EPA cannot require an overlap between those programs that would regulate the same unit under both provisions at the same time.

EPA should provide more time for review and comment on 11/6/14 TSD.

Commenter s stated the EPA pro vided additional information on November 6, 2014 to give more insight and guidance on the Translation of the Emission Rate

- based CO2 Goal to the Mass

- based equivalents. The commenter s said Arkansas and many other states had been requesting this information for months; the late addition of this information left the states without sufficient time to fully evaluate this translation and try to determine which approach would be best for the state. The commenter s said this information and translation will impact our review of the rule and how it is implemented. The commenter s request ed additional time to review and comment on the translation and also for flexibility from EPA in converting the rate

- based to mass

- based goals.

Commenter s recommend ed the EPA use its o wn "Goal Computation Data File Appendix 1 and 2" to calculate state by state mass emission caps. The commenter s said the EPA released the carbon dioxide caps, in metric tons, for 2030, Nov. 6, and requested comments on the calculation methodology. The comm enter s said the EPA "translation for existing affected and new sources" caps average 19% lower than the caps calculated from the detailed state data file, but range up to 35% lower. The commenter s said just the total metric ton caps were released with the comment they were calculated by multiplying emission rates by generation rates in megawatt

- hours for each state. The commenter s said emission rates and generation rates were released in June in a technical document titled "Goal Computation Data File Append ix 1 and 2"; it is a spreadsheet with data and formulas for each state. The commenter s note d that the total carbon emission goal from existing power plants in the EPA proposed Clean Power Plan, State Option 1 for 2030, in Table 10, page 548, is 1,701 milli on metric tons. The commenter s said caps calculated from the data file, which leaves out small exempt power plants, totaled 1,653 million metric tons, and is consistent with Table 10; however, the EPA translation totaled only 1,345 million metric tons.

Comment 22: Interpretations of rate to mass goal conversion

. Response 22: The EPA has converted the rate

- based goals to mass

- based goals. See section VII of the final rule preamble of the CPP and the CO 2 Emission Performance Rate and Goal102 Computation TSD for CPP Final Rule supporting the final CPP for the final mass

- based equivalents.

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

Commenters stated the language on constructing mass

- based greenhouse gas (GHG) emissions red uction targets is ambiguous.

Commenter s added the proposed rule and supporting documents contain language that leave open a variety of possible interpretations on how to construct mass

- based targets from the established rate

- based targets. The commenter s stated EPRI examined three possible interpretations resulting in three different mass targets which can differ by as much as 30% from one another implying dramatically different CO2 mitigation paths.

Commenter s added the first interpretation is based upon two paragraphs found in the "20140602tsd

- projecting

- eguco2emission

- performance.pdf" Technical Support Document:

" A mass

- based CO2 emission performance goal is calculated by projecting the tons of CO2 that would be emitted during a state plan performance period (e.g., 2020

- 2029, 2030

- 2032) by affected EGUs in the state if they hy pothetically were meeting the state rate

- based CO2 emission performance goal for affected EGUs established in the emission guidelines. The translation of a rate

- based goal (express ed in lb CO2/MWh of useful energy output from affected EGUs) to tons (expressed as total tons of CO2 emissions from affected EGUs over a specified time period) is based on a projection of affected EGU utilization and dispatch mix." (p13)

" A Mass

- Based CO2 Emission Goal Policy Scenario. This projection scenario is used to transl ate a rate

- based goal to a mass

- based goal. The scenario applies a
rate

- based CO2 emission limit to affected EGUs that is equivalent to the state

specific rate

- based lb CO2/MWh emiss ion goal in the EPA emission guidelines. The CO2 emissions from affected EGUs projected during the specified plan performance period in this scenario represents the translated mass

- based CO2 emission performance goal for the state plan. To construct this s cenario, this emission limit is added to the underlying reference case scenario described above." ( P 15

- 16)

The commenter s stated it appears that the mass

- based target should be constructed by creating a model of the future which projects capacity and gene ration mix subject to the constraint that covered units meet the EPA rate

- based target by state; from this model, the CO2 emissions from covered units can be calculated, and this would form the mass

- based target by state. The
commenter s said this first int erpretation has the property of 'equivalence of CO2 emissions from covered units', so that covered CO2 emissions (as modeled) would be the same if the state were using rate

- based compliance or mass

- based compliance. (This does not imply that total CO2 emis sions, including emissions from new units, would be the same). The commenter s said however, the language of the proposal itself seems to imply more support for a second, more stringent interpretation.103 Commenter s added the second interpretation can be infer red from section 60.5770(3) of the proposal itself:

" The convers ion must represent the tons of CO2 emissions that are projected to be emitted by affected EGUs, in the absence of emission standards contained in the plan, if the affected EGUs were to perfor m at an average lb CO2/MWh rate equal to the rate

- based goal for the state identified in Table 1 of this Subpart." (Federal Register, Vol. 79(117) p34953)

Given this language, and from the example constructed in page 16 of the '20140602tsd

projecting

- eguc o2emission

- performance.pdf' Technical Support Document, the construction of the mass

- based target can be interpreted as constructing a reference case, extracting generation from covered units, and simply multiplying that generation by the EPA target rate to get mass

based target emissions for covered units. The commenter s said the second interpretation implies, for most states, a mass

- based target that is strictly lower than the first interpretation; this is because the second interpretation applies the EP A target rate (which is the average of emissions from covered units + renewables + some nuclear + energy efficiency) only to generation from covered units (and not renewables, nuclear, or energy efficiency). The commenter s stated the mathematics of this ca lculation imply that the resulting emissions target must be lower than if the target were achieved by running a model with the rate as a constraint (in which case capacity and dispatch from covered units and renewables and nuclear and energy efficiency cou ld be modified to meet the constraint). The commenter s stated the only exceptions would be for states for whom the economics are such that they would not build additional renewables or energy efficiency under a rate

- based target. The commenter s provided th e following example:

" Consider the hypothetical example of State Z. Assume State Z has been set a target of 334 lb/MWh by 2030. Now suppose that the state is projected in the reference case to generate 1,000MWh of NGCC generation at 500lb/MWh, and 500MWh o f renewables in 2030, due to local RPS policies already on the books. The 2030 average emissions rate would then be: (1000*500 / (1000 + 500)) = 333 lb/MWh which meets the target rate, so State Z is already in compliance with the Clean Power Plan. Note tha t emissions from covered units are 500,000 lbs. Under the second interpretation, however, the mass

- based target for this state would be 1,000MWh * 0.334 = 334,000 lbs. In other words, the state meets the rate

- based target in the reference case but would ha ve to do more to reach compliance with the 'equivalent' mass

- based target."

The commenter s said it is unlikely that any state with significant potential for renewables, nuclear, or energy efficiency would consider a mass

- based target under this interpreta tion; the differences between mass

- based and rate

- based compliance are such that EPA's use of the word

" equivalent " seems incongruous. The commenter s said it may be that the second interpretation is incorrect due to the definition of 'covered units', and a third interpretation is in order.

Commenter s added the third interpretation is identical to the second, except that the term

" covered units " includes both existing fossil and renewables and covered nuclear and energy efficiency. The commenter s said the mass

- based target would be calculated by taking reference generation from covered existing fossil units, renewables, covered nuclear, and energy104 efficiency, and multiplying that by the target rate; this interpretation would resolve the paradox

ar ising in the hypothetical example from interpretation 2, as State Z would now be compliant under both rate

- based and mass

- based targets. The commenter s said this third interpretation would have a stronger claim to equivalence, as the target rate is applied to the same set of units as was used to calculate the target rate in the first place.

The commenter s added these three interpretations lead to very different mass

- based targets by state; given the differences between these three sets of mass

- targets and given the uncertainty around the context and use of the word 'equivalence' in the proposal, they stated EPRI recommends that EPA define a consistent way to calculate 'equivalence' of the rate

- based target and mass

- based target.

Commenter s interpreted the p roposed rule section 60.5770 as describing the following calculation: Mass goal = (emiss. rate based on EGUs + nuclear + RE + EE) x (generation from EGUs) [Method 1] the resulting mass goal for Method 1 will be erroneously low.

Commenter s added the calcul ation should be performed as: Mass goal = (emiss. rate based on EGUs + nuclear + RE + EE) x (generation from EGUs + nuclear + RE + EE) [Method 2]

Commenter s agree d with the EPA that a mass

- based goal should be equivalent to a rate

- based goal, and should no t penalize or reward states that choose one approach over the other; by ensuring that rate

- and mass

- based goals are equivalent, states will have greater flexibility to satisfy the objectives of the Clean Power Plan. The commenter s said in its simplest for m, a rate

based goal can be calculated as:

Mass / Generation Equivalents = CO2 Emissions Rate

Commenter s stated in this form, "Generation Equivalents" includes electric generation output from affected EGUs, new renewables, new energy efficiency, and at r isk nuclear generation; in calculating an equivalent mass

- based goal all "Generation Equivalents" should simply be moved to the other side of the equation as follows:

Mass = CO2 Emissions Rate * Generation Equivalents

Commenter s stated if the values for the "CO2 Emissions Rate" and "Generation Equivalents" remain the same, then the mass that can be emitted should also remain the same, regardless of whether a rate

- based or mass

- based compliance metric is used; however, the convers ion method outlined in the EPA's Technical Support Document issued in November 2014, would limit the amount of "Generation Equivalents" used to develop the state's rate

- based goal, thereby lowering the amount of emissions that may be emitted by affected EG Us in the state. Commenter s said the EPA incorrectly assumes that energy efficiency and renewable generation will reduce EGU output on a one

- for

- one basis. The commenter s said for states like New York, where the sites most suitable for further development of renewables are geographically removed from the load centers, this is not the case; moreover, intermittent renewable resources must be backed up to a significant degree by units that can quickly replace their generation output, which are most often fossi l fuel units. The commenter s said EGU output is not replaceable on a one

- for

- one basis with renewables and energy efficiency. Commenter s stated most of the existing renewable generation resources in New York are north and west of the major load centers in the state, and this is the105 region most suitable for further development of renewable resources; transmission capacity from this area to the area of greatest demand in the southeast is limited, and a one

- for one offset of renewable energy for downstate EGUs cannot be achieved. Commenter s added the dependence of renewable generation on variable natural forces does not allow it to meet demand all the time; its intermittency makes it an unsuitable replacement to the fossil fuel units that provide spinning

reser ves that are needed to maintain reliability across the state and especially in New York City; therefore, intermittent renewable resources must be backed up to a large extent by dispatchable units, which typically operate on fossil fuel. The commenter s said EGU output is not replaceable

on a one

- for

- one basis with renewables and energy efficiency.

Commenter s stated the inability of renewable generation or energy efficiency to offset affected EGU generation on a one

- for

- one basis is demonstrated by the NYISO 's 2010 wind generation study ("NYISO Wind Study"). The commenter s said it was found that 8,000 MWs of installed wind would produce 21,829.3 GWhs of wind, but would only displace 15,500 GWhs of fossil fuel. The commenter s said this means that 100 MWhs of w ind generation in New York displaces only approximately 71 MWhs of fossil fuel generation. The commenter s said on a capacity basis, the NYISO Wind Study found that 1 MW of wind is equivalent to approximately 0.2 to 0.3 MWs of conventional generation. The c ommenter s said this requires that 75% to 80% of the nameplate capacity of wind generation be backed up by conventional, dispatchable generation in order to maintain reliable electric service. The commenter s said while the NYISO Wind Study does not directly address the displacement of affected EGUs by the Building Blocks of the Clean Power Plan, it shows that New York cannot sustain a one

- for

- one displacement of EGUs by renewable
resources; instead of using a one

- for

- one displacement, the EPA should allow St ates to use all "Generation Equivalents" that are available.

Commenter s stated revising EPA's rate to mass conversion guidance to be consistent with the emission tonnages used in EPA's rate

- based limitation calculation; currently, the guidance for

mass ca lculation excludes incremental renewable energy, the five nuclear power plants under construction, and EE savings. The commenter s said if one corrected the flaws in the building block rate calculation and applied the same generation components (affected fo ssil fuel generation+ under construction NGCC +new nuclear+ preserved nuclear+ EE savings), Colorado's mass based limitation would be set at 31.889 million metric tons, rather than the overstated 25.335 million metric tons in 2030 as is currently set for C olorado.

Comment 23: The EPA should incorporate a variability adjustment into the mass

- based goal calculation

. Response 23: The EPA has converted the rate

- based goals to mass

- based goals. See section 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 the final mass

- based equivalents.

The following are summaries of the specific public comments under this comment:106 Commenter s stated EPA should adjust for variability in the conversion of rate

- based goal to

mass

- based goal to address the stringent mass

- based equivalents resulting from EPA's proposed approach in the TSD. The commenter s added in general, EPA's choice of a 2012 baseline does not appear to have a significant impact on the calculation of the rate

- based targets, however, on a mass basis, the choice of a baseline year can have a significant influence on the resulting goal. The commenter s recommend that EPA provide a "variability adjustment" in calcu lating the

mass

- based equivalents, whether it applies to existing sources or both new and existing sources.

Comment 24: Periodic Review/ Mid

- course adjustments

Response 24 : U nder 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 standar ds 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 publ ic comments under this comment:

Commenter s recommended that EPA consider an explicit mechanism for periodic review and "reset" of the program to adjust for unanticipated events and opportunities; EPA should recognize and allow the currently established res et process used by RGGI as a means of possible mid

- course corrections for the existing source performance standards to ensure mass

- based targets remain comparable to the rate

- based alternative.

Commenter s stated EPA has proposed that a state could use a m ass basis rather than an emission rate basis for its state plan and also provided an outline of how to convert the 2030 emission standard to annual mass emissions. The commenter s stated the outline proposes using a projection of the 2030 load or generation rate for the state and multiplying that by the emission standard; and the EPA has issued a TSD describing translation of this outline. In Washington the projections of load growth are typically only reliable for 10 years into the future (and often
wrong o ver the last 15 years); a 15 and 20

- year projection may be made, but the confidence in these are low. The commenter s stated to establish the mass limit, EPA is suggesting that states project the 2030 load in 2015 using a well educated guess of load 15 year s into the future. The
commenter s said the states are then beholden to comply with that mass rate even if the load forecast is wrong; as drafted, EPA would not allow the state to modify the plan to match the actual load, expecting states to implement additional renewable resources, energy efficiency measures and other methods to make up the difference. The commenter s recommended that EPA allow states to make "mid

- course" adjustments to the state plans to accommodate changes in load growth between 2016 and 2030.

Commenter s stated if a stat e opts to take the mass

- based approach and submits a state plan to EPA in 2016, the states should be afforded a technically justified reprieve in the future, should it be obvious that the original mass

- based goal is no longer reasonable. The commenter s wer e concerned that continued economic development in the State could result in unanticipated107 demand growth and related emissions, making it difficult to meet mass

- based goals; this holds true should a state utilize the calculation which relies upon the emiss ions from both affected existing and new sources. In essence, states will be pigeon

- holed by a mass

- based goal developed prior to such unforeseen state growth. The commenter s said increased generation makes it more difficult to comply with mass

- based limit s verses rate

- based limits; the rule should not become just a test of a state's ability to prognosticate future economic conditions; therefore, states should be afforded the opportunity to provide to the EPA an alternative/corrected mass

based goal.

Comm ent 25: Commenter s asked if the mass

- based goal could be taken as the CO2 emissions remaining after implementation of BSER Blocks 1 and 2.

Response 25: The EPA has converted the rate

- based goals to mass

- based goals. See section VII of the final rule pream ble of the CPP and the CO 2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP for the final mass

- based equivalents.

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

Comment 26 : Ne w NGCC in conversion calculation; apply a uniform emission rate for new generation

Response 26: The EPA has converted the rate

- based goals to mass

- based goals. See section VII of the final rule preamble of the CPP and the CO 2 Emission Performance Rate an d Goal Computation TSD for CPP Final Rule supporting the final CPP for the final mass

- based equivalents.

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

Commenter s stated in its guidance to states on calculating mass

- based equivalent targets, EPA uses each state's 2029 target as the emission rate to be applied to both existing generation, as well as new generation. The commenter s said a state with a rate

- based goal below the emission rate of new natural gas combined cycle (NGCC) units would be penalized by including new resources in its mass

- based target; conversely, a state with a rate

- based target significantly above the emission rate of NGCC would benefit from inc luding new resources in its target, because the additional emissions added to the target for each MWh of generation would exceed the emission rate of new generation. The commenter s recommend ed that EPA require that all states apply a uniform emission rate for new generation in converting to a mass

- based cap; given that EPA has promulgated emission standards for new fossil resources under section 111(b) of the Clean Air Act, the emission rate used should be consistent with these standards.

Comment 27: RE & EE108 Response 27: The EPA has converted the rate

- based goals to mass

- based goals . See section 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 the final mass

- based equivalents.

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

Commenter s identified issues with the displacement of existing fossil generation by RE and EE generation in the conversion from rate

- based to mass

- base d standards.

Commenter s stated in order to maintain consistency across rate

- based and mass

- based approaches, the displacement of existing fossil generation by incremental RE and EE generation should apply only to the computation of the target rates. The commenter s stated the EPA should provide states opting to pursue a mass

- based approach with the opportunity to justify the appropriate amount of existing and new fossil generation that should be displaced (rather than apply an assumption that all incremental RE and EE will displac e existing fossil fuel

- fired generation).

Commenter s stated in an EPA example of how to convert the rate

- based performance requirement to an equivalent mass

- based standard, the calculations show that EPA's BSER for existing EGUs presumes that all growth i n renewable generation displaces generation from existing EGUs, rather than avoiding new fossil generation. The commenter s added this is not a realistic assumption for Florida; consequently, EPA overstates the level of future renewable generation reasonabl y attributable to existing affected EGUs. The commenter s said if EPA continues to include renewable generation in establishing emission standards, then it should explicitly set standards for renewable generation that directly displaces existing affected EG U generation.

Commenter s stated EPA's TSD for "State Plan Considerations" includes a section on "Incorporating End

- Use Energy Efficiency and Renewable Energy Programs and Measures under a Rate

- Based Approach. ” in a footnote for that section, EPA states "th e EPA is also proposing that RE and demand

- side EE measures could be used under a mass

- based portfolio approach in an approvable state plan. However, the focus of this section is limited to application of such measures under a rate

- based approach." The com menter s asked if the Agency plans to provide similar information for a mass

- based approach.

Commenter s stated in the original proposal, EPA's goal

- setting equation adds incremental RE and EE to the 2012 baseline generation (in the denominator of the formul a) but does not affect fossil generation or emissions; in the NODA, EPA proposed two different approaches for revising the goal

- setting formula in which incremental RE and EE replace 2012 fossil generation. The commenter s said in the rate

- to

- mass goal tran slation TSD, incremental RE and EE generation replace historical fossil generation, which is similar to the NODA approaches. The
commenter s asked if EPA's rate

- to

- mass translation TSD approach intended to be equivalent to the rate

- based limits established in the original proposal or is it intended to be equivalent to rate

based limits that would be determined using one or both of the approaches included in the NODA.109 Commenter s stated the assumption that 100% of EE and RE directly replace existing fossil
gen eration should not be included in the rate to mass conversion as it was in the technical support document released on November 6, 2014.

Commenter s said EPA states that new resources (incremental RE and EE) under Building Blocks 3 and 4 are expected to redu ce generation from affected fossil EGUs. The commenter s said the state of Georgia has pointed out to EPA how that approach differs from the approach taken by EPA in calculating the BSER rate goals. The commenter s ha ve determined, from examining the actual spreadsheets developed by EPA, that that approach is not what is happening in the calculations; the equation subtracts out both incremental RE and EE; however, it then adds back in, what they call, BSER RE and BSER EE. The commenter s said per EPA's definit ion in the TSD and what is in the spreadsheets, BSER is existing plus incremental. The commenter s said the equation effectively cancels out incremental RE and EE; one ends up adding only existing RE and existing EE (technically); however, since existing EE was never really included in EPA's BSER MWhs for EE, the EE terms are equal and completely cancel each other out. The
commenter s said the spreadsheet equation actually looks up the same value twice and subtracts it first, then adds it back in. It is not c lear if this is intentional or an error. The commenter s said these errors are carried over into the projection of generation approach because it starts with the 82,030,617 MWh and adds incremental required generation to it.

Commenter s added there are addit ional errors in the calculation of incremental required generation. The commenter s said the method uses the incremental increase in sales as a surrogate for the incremental increase in generation; the 2012 sales is first increased by 7.51% for transmission losses to translate sales into generation; then, it is grown using the regional growth rate. The commenter s said the difference between 2012 actual generation and the grown value is the incremental required generation. The commenter s said while, this appr oach is valid, the value for 2012 sales includes both 2012 sales plus 2012 EE MWh; this value also inherently includes the existing RE values. The commenter s said it is not clear why EPA does not include EE in the existing generation approach and does use it in the projection approach. The commenter s asked what is EPA's intention by first subtracting out incremental RE and EE and then adding back in "BSER RE" and "BSER EE"; this appears to be a relic of the spreadsheet and not a real approach. The commenter s said EPA needs to clarify when it is appropriate to include existing EE and RE and not worry about what the terms are called in the rule or the spreadsheet.

Commenter s stated energy efficiency can and should be explicitly credit in both rate and mass bas ed compliance systems; either system can work with the appropriate policy design.

Commenter s appreciate d that EPA responded to the popular request for guidance on the rate to mass target conversion calculation by issuing a TSD. The commenter s asserted the re is an error in the approach the TSD takes to ''quantifying a generation level for use in the translation to a

mass

- based equivalent for existing affected sources." The commenter s said according to the TSD and associated Excel spreadsheet, incremental re newable energy (RE) and generation avoided through energy efficiency (EE) are subtracted from a state's fossil generation in each compliance year; however, this does not match the approach EPA took in setting each state's target emission rate in the Propos al. The commenter s said in Appendix 1 of the Goal Computation TSD, target emission rates are calculated by dividing 2012 fossil emissions by total generation in the target year, which includes 2012 fossil generation, at

- risk nuclear, and EE and RE in the t arget year;110 there is no downward adjustment to fossil generation to account for incremental EE and RE. Commenter s stated this results in mass targets that are too low because the amount of generation in each state for each year is lower than it should be a ccording to the Goal Computation TSD. The commenter s acknowledge d that the NODA suggests adjusting the Proposal such that RE and EE are assumed to displace fossil generation rather than supplement it, which seems to be the approach taken in the Rate

- to

- Mas s TSD; however, the result is a mélange of one approach to setting a rate

- based target and an incompatible approach to calculating an amount of generation to which that rate based target should apply. The commenter s added this approach does not allow for e xisting NGCC capacity to be ramped up to meet growing demand, which could easily happen in a state like California where NGCC capacity is projected to be below 70 percent after building block 2 is applied according to the Goal Computation TSD. The commente r s request ed that EPA ensure consistency across these methodologies.

Comment 28: Emission Vehicle

Response 28: The EPA has converted the rate

- based goals to mass

- based goals. See section 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 the final mass

- based equivalents.

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

Commenter s stated a number of states have programs that promote clean vehicles, and that will result in reductions of carbon pollution and other air pollutants; this includes the Zero Emission Vehicle (ZEV) regulations

- which require that zero

- emission vehicles constitute a percentage of vehicle sales

- and a supporting memorandum of understanding (MOU) that have been adopted by eight states. The commenter s stated the MOU establishes a collective target of placing 3.3 million zero emission vehicles on the road by 2025; the majority of the vehicles will be plug

- in electric vehicles. The commenter s said shifting to these electric vehicles from conventional petroleum

- fueled vehicles will significantly reduce overall carbon pollution in our states, but it will also affect electricity demand. The commen ter s urge d EPA to work with the MOU states to identify a rigorous load

- growth projection or methodology that takes into account any projected load changes from these regulatory ZEV programs for the purposes of translating from a rate

based state goal to a mass

- based emission budget.

Modifying the conversion to mass based goals to Not Discourage Promotion of Electric Vehicles

Commenter s asserted that the Proposed Rule should be modified to be "EV neutral" in a state that adopts a mass

- based goal, neither enc ouraging nor discouraging state EV policies; the objective is to remove the CO2 emissions liability associated with the increased electric load due to the adoption of EVs. The commenter s recommend ed that this objective be met by the EPA allowing states to adjust their mass

- based goals to reflect actual electric vehicle load.

Commenter s propose d adjusted mass

- based goals would be calculated as follows:

M t = M + (E actual ) * R avg111 Where:

M t is the adjusted mass

- based emission goal M is the unadjusted mass

- based goal adopted by a state pursuant to the final EPA Rule E actual is the incremental actual transportation sector electrification load, subtracting out transportation load incorporated into M R avg is the state's average target CO2 emissions rate (either the interim or final rate)

The commenter s said this approach does not exclude transportation electrification load from the compliance demonstration; it simply allows a state's mass

- based goals to be adjusted based upon the actual electricity consumption of EVs , consistent with the underlying goal of meeting the
rate

- based targets set for the state.

The commenter s said under this approach, the EPA will in principle have to adopt a procedure to estimate the transportation electrification load contained in each st ate reference scenario. The
commenter s said for the illustrative approaches described in the November 6 supplemental guidance, the electrification load is so small that in practice it may be possible to treat this as di minimus; for other approaches that m ay be adopted by individual states pursuant to the final EPA rule, procedures would need to be adopted assuring that assumed transportation electrification load is reported.

The commenter s said EPA will also need to adopt procedures for how actual transportation electrification load will be measured; in the long

- term, with the expansion of smart grids and communication between vehicles and the grid it may be possible to directly measure thi s load; however, there are reasonable procedures that could be adopted for estimating the load until direct measurement is possible. The commenter s describe d one methodology; that is not meant to be prescriptive, but rather is illustrative, meant to demons trate that it is feasible to correct for transportation load; other methodologies may also be feasible:

• The first step would be for a state to use its vehicle registration database, which includes data on make, model and year, to identify all of the light duty battery electric vehicles (BEVs) and plug

- in hybrid electric vehicles (PHEV) in operation in a particular year.

• For each BEV, the Office of Transportation and Air Quality at the US EPA tracks the electricity use per mile; for the 2014 model year, ener gy use varies from the most efficient BEV, a BMW i3 at 0.27 kWh/mile, up to a Toyota Rav4 EV at 0.44 kWh/mile.

• The next step would be for a state to estimate the average number of miles driven per vehicle; the average number of miles driven per vehicle can be calculated using data available from the American Community Survey or the US FHWA Highway statistics database; this could be done using statewide averages, or by using more fine

- grained data which incorporates different travel behavior in different met ropolitan areas across a state.

• Then the formula for calculating the total electricity load of BEVs is as follows:

E = Σ e i x n i x T

Where:112 E is the actual light duty BEV load

e i is the efficiency of vehicle i in kWh/mile;

n i is the number of vehicle i registered in the state T is the annual average number of miles driven per vehicle

The commenter s said for PHEVs an analogous calculation would be performed, supplemented by use of either survey data or a representative sample o f vehicles tracked by onboard telematics to determine what percentage of PHEV miles are traveled in all electric mode.

The commenter s said heavy duty vehicles would require a different measurement technique; the energy consumption of these vehicles will be heavily influenced by how heavily they are loaded; because electric trucks and buses will have very specific niches, the use of average vehicle miles travelled data would be inappropriate; however, these uses will likely be in areas such as ports, urban d elivery vehicles, intermodal centers, and urban transit routes, where almost all charging will occur at a relatively small number of company owned charging locations, unlike the dispersed residential charging that will dominate the light duty sector. The c ommenter s said this makes tracking the actual electricity consumed feasible through metering at these locations.

Commenter s stated since opting for rate

- based goals would not disfavor the adoption of electric vehicles or similar technologies, it is appropr iate to revise the Proposed Rule to ensure that states can opt to implement mass

- based goals without creating such disincentives. The commenter s said it should be noted that states adopting mass

- based goals could, if inclined to do so, use unrealistically high projections for EV adoption as justification for plans incorporating higher rates of CO2 emissions than would otherwise be permissible. The commenter s recommend ed that the Proposed Rule be revised to require that states adopting mass

- based goals adjus t those goals at the end of each compliance period to account for any divergence between projected and actual levels of adoption of EVs and similar technologies (such as heat pumps) that reduce overall CO2 emissions.

Comment 29: Remove the "At

- Risk" nucle ar generation from the goal setting methodology

Response 29: The EPA has converted the rate

- based goals to mass

- based goals . See section 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 the final mass

- based equivalents.

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

Commenter s stated the overall experience o f Connecticut (and the other RGGI states) demonstrates that a mass

- based approach to emission reductions can incentivize economic otherwise viable nuclear resources to remain online by increasing the competitiveness of legacy nuclear resources with fossil fuel

- fired EGUs (which should increasingly reflect a carbon price in their offerings).113 Comment 30: Firm Builds and Retirements

Response 30: The EPA has converted the rate

- based goals to mass

- based goals. See section 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 the final mass

- based equivalents.

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

Commenter s stated the /"Pr ojecting EGU CO2 Emissions Performance in State Plans" TSD indicates that firm builds and retirements should be taken into account when converting a rate

based goal to a mass

- based goal. The commenter s said it is possible at the time of the conversion that a utility may have announced plans for a unit to retire by a certain date, and the retirement may even be in the utility's integrated resource plan, but there is no legal/enforceable requirement for the unit to actually shutdown by that date (if circumsta nces change it may not). The commenter s asked if there a trigger that makes an announced/planned retirement "firm" such that it would need to be considered when converting a rate

- goal to a mass

- goal.

Comment 31: Load Growth

Response 31: The EPA has conve rted the rate

- based goals to mass

- based goals. See section 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 the final mass

- based equivalents.

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

Commenter s stated in particular, we agree with EPA that where load growth is included, it should generally be based on EIA's Annual Energy Outlook; however, instead of using the 2013 AE O as EPA proposes, we recommend that the final rule be based on the most recent AEO, which will be the 2015 version due to be published around the beginning of the year. The
commenter s said if the load forecast overestimates load growth, then the mass

- base d targets could be easier to meet than the rate based targets. The commenter s said these types of disparities could lead to gaming and provide incentives to use exaggerated forecasts. The
commenter s said forecasting is an imperfect science, therefore we re commend that a state forecast of electricity load growth should be considered reasonable if it is no greater than what EIA estimates. The commenter s said furthermore, to correct for imperfect forecasts, states that opt for mass

- based targets should periodi cally revise their mass

- based targets to reflect actual electric load growth.

Commenter s supported EPA's approach to converting rate

- based to mass

- based limits provided in the technical support document "Translation of the State

- Specific Rate

- Based CO2 Go als to Mass

- Based Equivalents," because it provides states clarity and flexibility in calculating mass

based goals. This commenter s also supported the EPA's decision to allow states to develop their own alternative methodologies because it account for the diversity among states. However, this
commenter s also recommended the EPA allow states to adjust the mass

- based limits to account114 for load growth. Failure to account for load growth, the commenter s argued discourages states from adopting a mass

- based approach.

Commenter s stated that federal efficiency standards will reduce electricity use in all states and thereby lower CO2 emissions, helping those states which choose mass

- based targets to meet th eir targets. However, the commenter s indicated it is reasonable to assume that the EPA will base the determination of mass

- based goals (or give states a methodology to do the calculation) that takes into account projected load growth out to 2030.

Commenter s stated that the federal efficiency standards will reduce future electricity use in all states and thereby lower CO2 emissions, helping those states that choose mass

- based targets to meet their targets. However, commenter s noted the EPA has given states a n option for determining mass

- based goals that takes into account projected load growth out to 2030 in the "Translation of the Clean Power Plan Emission Rate

- Based CO2 Goals to Mass

- Based Equivalents" Technical Support Document issued in November. Commente r s noted that load growth projections made by the EIA and used by the EPA do take into account federal appliance efficiency standards that have already been adopted. Commenter s also noted that load forecasts for 2030 have been reduced due to the effects of federal efficiency standards, leading to lower

mass

- based goals when the rate goal is multiplied by the projection of future electricity generation. So, commenter s concluded that, in effect, federal appliance and equipment efficiency standards will help s tates meet mass

- based goals that have been adjusted downwards to account for federal standards, assuming states select this option that includes projected load growth or some variation of it.

Comment 32: The EPA should incorporate growth needs into the m ass

- based goal

. Response 32: The EPA has converted the rate

- based goals to mass

- based goals. See section 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 the final mass

- based equivalents.

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

Commenter s stated their main concern with the development of a mass

- based goal is the recognition by EPA that "growth" needs to be incorporated into a mass

- based goal. The
commenter s said the growth assumption for a state like Montana needs to incorporate the fact
t hat growth occurs not only within the state but also as growth in the export of electricity to other states. The commenter s d id not feel that one methodology can accurately be described by EPA for all states in converting from a rate

- based to a mass

- based goal.

Commenter s added EPA must understand that the Technical Support Document developed for illustrative purposes for rate

- to mass

- based conversion penalizes states that are net exporters of electricity. The commenter s said Montana, in developing its own rate

- to mass

- based tool, fully expects that growth will also occur in demand for that portion of the electricity generated in the state that is exported; therefore, EPA must maintain flexibility for states to propose ap proaches where all generation in the state increases and not just electricity used for in

- state demand. The115 commenter s said EPA must also realize that this exported electricity demand could be satisfied with Montana generation by either EGU MWhs or by rene wable generation and therefore, Montana disagrees that new renewable generation necessarily replaces EGU MWhs. The
commenter s said as long as the rate or equivalent mass target is satisfied through the energy mix, the state plan should be satisfied.

Commen ter s added both approaches fail to adequately consider the impact of future demand growth on affected units' abilities to reduce emissions. The commenter s said the Rate

- to

- Mass TSD's first proposal for calculating mass

- based equivalents would not incorpora te any future load growth into the projection of a mass

- based equivalent. The commenter s said by failing to incorporate any assumptions about how electricity demand may increase in future years, EPA would effectively prohibit states from meeting new electr icity demand with additional generation from existing units, which are some of the most reliable, proven, and low

- cost generation sources available. The commenter s said EPA's second option under the Rate

- to

- Mass TSD incorporates one basic assumption about increased electricity demand, based on EIA regional projections; however, this load growth assumption may be unreasonably low in many parts of the country, including South Carolina, if economic growth increases substantially beyond current expectations; th erefore, this option, too, could lead to severe implementation and reliability difficulties if load growth is greater than a state or EPA projects in calculating the mass

- based equivalent.

Commenter s added rather than effectively prohibiting states from in creasing generation from
cost

- effective, reliable existing units to meet new demand, EPA should defer to states' reasonable projections of future demand in calculating mass

- based goals. The commenter s stated that in addition, EPA should revise its guidance to align with its assumption in the Proposed Rule that the addition of incremental RE, EE, and nuclear generation does not displace historic fossil generation. The commenter s said because states' initial load growth projections could under

estimate the am ount of load growth that the state will experience during a compliance period, EPA should provide a mechanism for a state to revise its mass

- based goal based upon a showing that these and other assumptions the state may have used to convert goals from rate s to masses were incorrect.

Comment 33: Demand growth projection in mass rate goals

. Response 33: The EPA has converted the rate

- based goals to mass

- based goals. See section 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 the final mass

- based equivalents.

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

Commenter s stated EPA must define a uniform electricity demand growt h projection that can be used in a rate

- to

- mass conversion, the commenter s recommend ed that the Energy Information Agency (EIA) projections are the maximum demand growth that can be included. The
commenter s said the level of demand growth must be subject to a uniform methodology116 established by EPA; an excessive projection of demand growth will weaken the target and void the required equivalency between the rate

- based and mass

- based targets. The commenter s sa id even states that are not attempting to weaken their target will inevitably face pressure to adopt an overly optimistic demand growth projection consistent with the state's aspirations for future economic development.

The commenter s commissioned analysi s from M.J. Bradley and Associates of past electricity demand and energy forecasts from a range of planning entities, including EIA, the California Energy Commission (CEC) and some of the ISO/RTOs; they summarize their findings as (also presented in Append ix 9A of comment):

• Generally speaking, EIA, CEC and RTO's all consistently overestimate both demand and consumption, although estimates tend to get more accurate the closer the estimate is made to the target year.

• Forecasts made before 2009 tend to be se veral more percentage points off than later year estimates, likely because they do not account for the economic downturn.

• For all RTOs/ISOs, both peak demand and annual consumption dropped markedly from 2008

- 2009.

• Forecasts for demand four years prior ra nge from an overestimate of 14 percent to an underestimate of 1 percent; forecasts one year prior range from an overestimate of 11 percent to an underestimate of 6 percent.

• Forecasts four years prior overestimate annual consumption by 2 percent to 10 perc ent; forecasts one year prior range from an overestimate of 8 percent to an underestimate of 2 percent.

The commenter s said there are many reasons for utilities and system planners to overestimate energy growth including: 1) a desire to ensure peak demand and energy use are easily accommodated (reliability) and 2) the opportunity to use demand and energy forecasts to justify new generation, transmission and distribution investments that increase a utility's rate base and increase earnings for shareholders. The commenter s said the use of energy forecasts in setting a

mass

- based target is extremely likely to increase the estimate of emissions in the future and lead EPA to establish a target that is inflated and easier to achieve than anticipated by EPA and the ir modelers. The commenter s said EPA must adopt a consistent and unbiased demand growth projection, and suggests that EPA use current EIA projections. The commenter s said EPA should describe this forecast as conservative and not allow states and companies to develop alternative forecasts, which would provide significant opportunity for gaming and which EPA should assume are inflated in their current form. The commenter s said they support the EPA's continued flexibility in the state emission reduction planni ng process under section 111(d), but EPA must clearly define the method for converting rate

- based targets and requirements for existing source

only mass

- based caps in order to ensure that equivalent emission reductions will be achieved.

Commenter s stated E PA states that any mass

- based limit must be equivalent to the rate

- based goals determined by EPA for states. The commenter s said in order for this to be true, states must117 be able to project growth in electrical demand when making this conversion. The comme nter s said the rate

- based form of the goal doesn't place any limits on electrical demand, so this demand may continue to grow significantly and may be met by any combination of existing and possibly new units, as long as the state can meet its rate goal; t herefore, EPA must allow states to project demand growth for existing units for the entire compliance period (extending beyond 2030) when converting to mass

- based limits.

Commenter s stated EPA stated in its June 2014 proposal and accompanying documentatio n that states may project growth when making the rate

- to

- mass calculation. The commenter s asserted this is an essential part of any equivalent rate

- to

- mass conversion; however, the language in these documents was unclear about how to apply the projected gr owth in calculating an equivalent mass cap. The commenter s said EPA's November 13, 2014 TSD on translating state

- specific
rate

- based CO2 goals to mass

- based equivalents also failed to provide this clarity. The
commenter s said neither of the scenarios discu ssed in EPA's November TSD allows for growth for existing units

- one scenario projects no growth for existing units, while the other assumes that all growth will be taken up by new units, which will be regulated under the mass cap; neither of these scenar ios is fully equivalent to the rate

- based standard.

Commenters said s tates should be allowed to include electricity demand growth when converting
rate

- based limits to mass

- based limits

. Commenters asserted that states must be able to account for electrici ty growth when converting rate

- based goals to mass

- based limits for existing power plants. Commenter s noted that the rate

- based goals do not place any limits on electricity production and that electrical demand may continue to grow significantly and may be met by any combination of existing and new units. These commenters also recommended the EPA allow states to project demand growth for existing units for the entire compliance period (extending beyond 2030) when converting to mass

- based limits. The comment ers believe d growth projections to be an essential part of any equivalent rate

- to

- mass conversion and feel the EPA should provide additional guidance on how to apply projected growth when calculating an equivalent mass

- based limit. Commenter s noted that no ne of the scenarios discussed in EPA's November TSD allows for growth for existing units.

Comment 34: Generation level

Response 34: The EPA has converted the rate

- based goals to mass

- based goals. See section 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 the final mass

- based equivalents.

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

Commenter s stated the existing affected source approach from the rate

- to

- mass goal translation TSD produces a generation level (and CO2 mass) for GA that is 28% less than the generation (and CO2 mass) used to set the rate

- based goal in the original rule proposal. The commenter s ask ed how can a translated mass

- based goal be equivalent to the rate

- based goal if it does not use the same generation level.1 18 Commenter s stated on November 6, 2014, EPA issued a technical support document offering guidance for states to convert EPA's rate

- base d goals to mass

- based goals (EPA's "Conversion Guidance"). The commenter s said the Conversion Guidance recognizes on page 1 that the formula for converting a rate

- based goal into a mass

- based goal simply requires the multiplication of the emission rate goa l by a specific generation level to determine mass emissions; however, EPA's Conversion Guidance uses a different generation level than EPA assumed in its original rate

- based proposal, which results in far more stringent goals.

Commenter s stated EPA's ori ginal proposal relied on an equation that determined generation by adding incremental renewable generation, nuclear generation, and energy efficiency improvements to 2012 generation; however, the primary option in EPA's Conversion Guidance utilizes 2012 ge neration alone

- without any incremental changes

- to calculate a mass

- based goal. The commenter s said although EPA's guidance contains several complicated formulae, the variables in those formulae cancel each other out; without the incremental generation changes accounted for in EPA's original rate

- based proposal, the mass

- based goal relies on a lower generation value, thus resulting in a lower mass

- based goal than would be expected if the goal were truly equivalent to EPA's rate

- based goal.

Commenter s st ated because EPA's Conversion Guidance requires the calculation to be made based on 2012 generation alone, instead of the generation relied upon in EPA's original proposal (2012 generation plus incremental changes), EPA mass

- based interim limitation for th e affected units is 214,771,000 metric tons more stringent than the tonnage limitation used in the EPA rate

based calculation. The commenter s said the final limitation for affected units is also 308,867,000 metric tons more stringent than the mass emission s used in the final state rate

- based calculation; as a result, EPA has arbitrarily changed its calculations to set an even lower limit than EPA calculated as BSER. The commenter s provide d a chart showing a CO2 mass limits comparison for affected units.

Commenter s stated EPA's Conversion Guidance does contain a second option that may be intended to allow for the use of a more appropriate generation level in determining mass

- based goals by including a growth factor; however, that approach still is not equi valent to the generation level utilized in EPA's original proposal, and therefore does not result in "equivalent" goals, which EPA claims are necessary for states to employ the mass

- based option. The
commenter s added, EPA's Conversion Guidance seems to sug gest that a growth factor would only be appropriate if states require newly constructed units to fall under the mass

- based goal as well, something that the CAA clearly forbids. The commenter s said EPA's growth factors are low; if growth is higher than EPA projects, the mass

- based limits will again be overly stringent; therefore, even the second option of EPA's Conversion Guidance is arbitrary.

Commenter s agree d with the EPA's most basic explanation of the rate

- to

- mass conversion, which indicates that a stat e's 2030 CO2 mass

- based goal will be the result of the state's 2030 rate

- based CO2 goal multiplied by the state's generation. The commenter s said EPA's method for computing the state's generation level is based on historical (i.e., 2012) generation with no growth, assuming that future demand in years up to and beyond 2030 will be the same as the demand in 2012. The commenter s asserted that this generation level should reflect a state's forward

- projected generation up to and beyond 2030, to account for load growth during that period.119 Commenter s stated the EPA manipulates the state's generation level by applying adjustments based on the CPP building blocks; the EPA is selective in its inclusion of building blocks for the state's generation level adjustments, a pplying only a subset of building blocks to the generation level and doing so in a manner that is inconsistent with the core methodology used in the original
rate

- based goal

- setting formula. The commenter s said for example, adjustments based on the assumpt ion that new incremental renewable resources and energy efficiency goals will be met are included, and they displace fossil generation as opposed to being included in addition to fossil generation as they are in the rate

- based goal

- setting formula. In gene ral, the commenter s consider ed the EPA's aggressive assumptions of generation levels to account for the building blocks to be incompatible with the rate

- to

- mass conversion process, bearing in mind that this generation level will be multiplied by a CO2 rate that is already reduced to reflect the application of all of the building blocks.

Commenter s stated on November 6, 2014, EPA released a technical support document ("TSD") for the CPP titled "Translation of the Clean Power Plan Emission Rate

- Based CO2 Goa ls to Mass

- Based Equivalents." The commenter s said the TSD provided two conceptual examples to convert the emission

- rate based goals to mass

- based equivalents (caps). The commenter s said EPA's examples were extremely simplified and failed to take into cons ideration the complexities of regional energy markets. The commenter s said EPA's analysis is flawed because EPA assumes in the Adjusted Affected Fossil Generation equation that incremental RE and EE in a state's goal would directly displace that state's in

- state generation. The commenter s said a large portion of the RE component in New Jersey's target using either the RPS or the regional potential methodologies comes from out of state resources; therefore, the generation that would be displaced is more like ly to be located in a state closer to the actual RE source. The commenter s added the displacement may include sources that are not "affected units" under the CPP (e.g., simple cycle combustion turbines). The commenter s said a similar argument can be made f or displacement through EE programs, especially where a state is a net exporter of electricity. The
commenter s added EPA's examples fail to take into consideration increases to existing fossil fuel

- fired generation due to pending power plant closures and i ncreases in demand due to other environmental objectives (e.g., increased deployment of electric vehicles). The commenter s asserted that the methodology to convert to a mass

- based equivalent should be based on 2012 historical fossil generation in order to receive credit for fossil plant retirements after the baseline period while allowing for future increase fossil generation where necessary (e.g., nuclear plant retirements, increased deployment of electric vehicles).

Comment 35: The EPA should be receptiv e to alternative methods for converting rate

- based goals to mass

- based goals

. Response 35: The EPA has converted the rate

- based goals to mass

- based goals. See section 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 the final mass

- based equivalents.

The following are summaries of the specific public comments under this comment:120 Commenter s appreciate d EPA's recent Rate to Mass Technical Support Document released on November 6, 2014, on converting the rate based targets to annual mass equivalents. The
commenter s encourage d EPA to be receptive to alternative methods

- as EPA has indicated in the guidance that it would be

- provided that such methods provide adequate justification and support for the data and assumptions used to develop states' mass based targets.

Commenter s stated given the risk of forecast error, the commenter s asserted that the EPA should revisit its dete rmination of equivalent mass

- based targets for new and existing sources. The
commenter s said the Agency should evaluate whether the AEO2013 reference scenario is the best approach to generating an equivalent target. The commenter s suggest ed two potential

a lternatives here:

• Alternative #1: Use observed trends in electricity consumption; one option to reduce forecasting error is to use some period of current and/or future trends in electricity consumption to establish the equivalent mass

- based standard; exam ples include the trends in electricity observed from 2005 to 2012, 2012 to 2020, or some other combination of current and/or historical periods.

• Alternative #2: Wait to forecast future trends; the EPA could also choose to use a different forecast generate d closer to the time of regulation; the Agency could, for example, adopt the reference scenario from a future Annual Energy Outlook issued just before 2020; or it could generate its own scenario, if none is available.

The commenter s said both approaches r educe the risk of forecasting error by basing the quantification of an equivalent mass

- based target on data observed, or forecasts made, closer to the time of regulation. The commenter s said while both approaches introduce a new kind of uncertainty

- the p recise quantification of an equivalent target

- these uncertainties may be tractable in those states with an interest in pursuing a mass

- based target, who presumably have studied their expected future electricity sales and emissions trends in greater detai l; on the other hand, these alternatives could produce an undesirable incentive for states to increase consumption in the coming years in order to produce high baseline scenarios. The commenter s said whether these alternatives or others are preferable from the EPA's perspective, the
commenter s suggest ed that additional analysis is needed in order to be certain that mass

- based targets under the Clean Power Plan will generate real emission reductions.

Comment 36: Translating Emission Rate Goals to Mass Goal s Under the Clean Power Plan

Response 36: The EPA has converted the rate

- based goals to mass

- based goals. See section 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 t he final CPP for the final mass

- based equivalents.

The following are summaries of the specific public comments under this comment:121 Commenter s submitted a whitepaper to offer several ideas for how the EPA might further help states understand the choice bet ween rate and mass goals and facilitate states choosing the mass goal option.

Commenter s stated this methodology first determines the total demand for generation resources in each state in a future year absent the CPP policy; then calculates the mix of ene rgy efficiency and generation sources required to satisfy this demand under the CPP policy; finally, the resulting mix of fossil generation and carbon emissions from the fossil sources covered under the rule determine the mass goal for each state.

Comment er s stated initially, 2012 retail sales, grossed up to account for line losses and reflect total 2012 generation, are escalated by a business

- as

- usual (BAU) load growth rate; this produces an estimate of total state generation needs for 2030 of approximately 4,587 TWh. The
commenter s said the 2012 retail sales assumptions in these calculations are taken from the EPA's 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 ; 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 stated 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 rule, are represented in this analytical process; in this way, total resources are balanced with total energy demands.

“ First, the total BAU state generation needs i n 2030 are reduced by the state's energy efficiency (EE) resource potential (Building Block 4) as specified in the GDC. This results in an estimate of the total amount of energy demand in each state that is to be met with generating sources. This amount is 4,206 TWh.

Next, total net energy demand is reduced by qualifying renewable energy resources (Building Block 3) as specified in the GDC.

Following that, a block of energy from generating sources whose emissions are not covered under the rule are deducted . These include nuclear, hydro

- electric, uncovered fossil, and net interstate imports or exports.

The generation from all of these (except new nuclear) is assumed to remain constant over time. The amount of energy from these fixed resources is calculated f rom GDC data by deducting 2012 coal, NGCC, oil/gas steam, other covered generation, and existing renewable energy from total 2012 sales.

For states with expected new nuclear generation, the amount of generation from these new sources is then added to this block of energy.

The last remaining block of demand is met by covered fossil generation (coal steam, NGCC, oil/gas steam, and other covered generating units 11). Generation from NGCC capacity is122 deployed first up to a maximum capacity factor of 70% consistent with the EPA's GDC methodology. Any remaining energy needs are met from existing coal and oil/gas steam in proportion to the 2012 generation levels from these two sources. This process incorporates Building Block 2 by dispatching NGCC to its max imum potential before coal.

This analytical process so far has produced estimates of the energy mix required to satisfy electric demand in a future year.

Finally, to create the state's emission budget, the amount of energy produced by each fossil

source c overed under the rule is multiplied by the average state emissions rate for that fossil source in 2012. The one exception to this process is the coal emission rate, which is assumed to be 6% lower than 2012 levels consistent with Building Block 1 of the GD C.

This results in the estimated covered emissions shown in Figure 3 below. The total U.S. covered emission estimate of 1,543 million metric tonnes is a 21 percent reduction relative to 2012 levels. ”

Commenter s stated this methodology is a "first principle s" approach to mass translation in that it starts with the fundamental demand, resource data and building block assumptions used by the EPA in the GDC process to determine the EPA's proposed emission rate goals. The commenter s said structured on complete a nd balanced estimates of electric demand, energy efficiency and generation in future policy years, it is simple, intuitive, and fully transparent; because it relies on the same assumptions and calculation process used by the EPA, the resulting mass goals a re consistent with the EPA's definition of Best System of Emission Reduction (BSER) and equivalent to the proposed rate goals.

National Results

Commenter s stated this methodology yields an estimate of total U.S. covered emissions when all state budgets are summed across the country of 1,543 million metric tonnes. The commenter s said this aggregate estimate is quite close to the EPA estimates of 2030 covered emissions in its June 2014 Regulatory Impact Analysis and November 2014 mass translation TSD; this

me thodology produces an estimate that is 1.2 percent below the EPA's TSD estimate and 3.6 percent below the EPA's Regulatory Impact Analysis estimate. The commenter s said the small difference in results between this and the EPA's national estimate from the T SD is caused by several factors, most of them quite small. The commenter s said the largest is that this methodology reduces the amount of fossil generation that may be re

- dispatched when incremental building block resources (energy efficiency, renewables a nd new nuclear) exceed load growth. The commenter s said technical modifications to this methodology could potentially further reconcile this estimate with the EPA's TSD and Regulatory Impact Analysis estimates.

State Results

- Comparison to Emission Rate R eductions

Commenter s stated as a general matter, the percentage reduction in tons tends to be less than the percentage reduction in emission rates; some states that have been focused on the magnitude of the emission rate reduction implied by the EPA's prop osed rate goals issued in June 2014 may find this of some interest.123 The commenter s said the states tend to cluster themselves into three groups that provide some insight into the underlying assumptions. Most states, have tonnage reductions that are lower i n percentage terms than the emission rate reductions, however two groups of other states stand out.

1. The group of states where the percentage reduction in tons in greater than the percentage reduction in rates. The states in this group include Connecticut, Massachusetts, Maine, New Hampshire, New York, Rhode Island and South Carolina. Importantly, this is due to the assumptions underlying the calculations, specifically a low rate of load growth, limited coal generation, relatively ambitious building block as sumptions or a large contribution from new nuclear generation. The large share of gas in the BAU energy mix limits the rate reduction, while load growth and relatively large abatement assumptions still result in large tonnage reductions.

2. The group of state s

- California, Idaho, Kentucky and South Dakota

- also stands out, but for somewhat different reasons; these states all have mass goals that are higher than 2012 emission levels. The commenter s said the reasons for this are also tied to the underlying loa d growth and building block assumptions; these states share a combination of relatively high load growth assumptions and/or relatively limited building block assumptions (and so relatively limited emission abatement assumptions.)

State Results

- Comparison to IPM Modeling Results

Commenter s stated another comparison of interest to some stakeholders may be how these mass goals compare to the results of IPM modeling. The commenter s said a general pattern emerging from this comparison is the notably greater va riability in tonnage results from the IPM modeling than the mass goals; this is likely due, at least in part, to the changes in interstate power flows and in

- state generation expected to occur over time both without the CPP and also due to the CPP, and the impact of those changes in state emissions. The commenter s said these changes are reflected in the IPM modeling results but not the spreadsheet based mass translation methodology; one consequence of this is that any disparity in mass goals across states w ill tend to be lower under this type of spreadsheet

- based mass translation method than one based on fundamental market modeling that captures the impact of interstate power flows on unit dispatch and state emissions.

Commenter s stated this comparison also illustrates the trade

- off between the emissions reductions expected from the rule and the flexibility given to states in setting their own mass goals. Both options may have merits, yet in a given state there is sometimes a material discrepancy between the goals produced by the two methodologies. The commenter s said with the flexibility to choose a translation methodology, each state would have an incentive to choose the methodology that permits the greatest level of emissions and the smallest emission reduc tions. As an example, if all states are permitted to choose a mass goal based on either IPM results or this spreadsheet methodology, the mass goal for the Lower 48 states would effectively be 1,677 million metric tonnes; this result is higher than if eithe r of the two options were used for all states and would achieve a 13 percent reduction from 2012 levels rather than 17 or 20 percent under a single approach.

State Results

- Comparison to November TSD Goals124 Commenter s stated consistent with the fact that the total national results were quite similar, the results for most states are generally similar as well; there are however a number of states where the two goal estimates vary more significantly. The commenter s said on a percentage basis, the largest of these are South Carolina, New York and New Hampshire. The commenter s said this methodology reduces the amount of fossil generation re

- dispatched when incremental building block resources (energy efficiency, renewables and new nuclear) exceed load growth; i n contrast, the TSD accounts for imbalances in load and resources by effectively reducing the contribution of all sources on a pro rata basis; and on an absolute basis, the single largest difference is for Texas; this is caused by the same issue, as well a s the large size of Texas.

Commenter s stated this whitepaper illustrates how a small number of state

- specific assumptions, primarily the size of each BSER building block and the rate of load growth, drives the mass goals; it also highlights the value of fo cusing policy discussions on these few assumptions as a primary means to address concerns regarding the level of state

- specific goals and any disparity of goals across states; more complex translation methodologies may obscure these fundamental factors. Th e commenter s said any changes to the EPA's proposed building block assumptions or GDC calculation process made in the final rule could be readily incorporated into this rate to mass translation methodology.

The Importance of Building Block and Load Growth Assumptions

Commenter s stated it is important to understand the reasons why the mass goals turn out as they do; in fact, a small number of state

- specific assumptions, primarily the size of each BSER building block and the rate of load growth, are the prima ry drivers of mass goals. The
commenter s said the simplicity and transparency of this methodology highlights this point and the value of focusing policy discussions on the reasonableness of those assumptions and whether they should be modified. The comment er s said other more complex translation methodologies may obscure these most fundamental assumptions and unnecessarily divert the policy discussion away from what most matters; further, this type of translation methodology can be readily refined if and whe n the EPA modifies its building block and other assumptions underlying the goal development calculations.

Conclusions

Commenter s stated all this points to the importance of facilitating state compliance through mass goals rather than rate goals and focusin g on mass goals that cover both existing and new sources, not just existing sources; relying on a rate to mass translation methodology that is simple, intuitive and transparent; and focusing policy discussions regarding the appropriate level of mass goals on a small number of key factors including the building blocks and load growth.

Comment 37: The proposed rule requires a state electing to use mass

- based goals to commit to a projection of future electrical needs too far in advance

. Response 37: The EPA has converted the rate

- based goals to mass

- based goals. See section VII of the final rule preamble of the CPP and the CO 2 Emission Performance Rate and Goal125 Computation TSD for CPP Final Rule supporting the final CPP for the final mass

- based equivalents.

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

Commenter s stated the proposed rule requires a state that chooses to use mass

- based goals rather than rate

- based goals to produce a "reference case" forecast of generation by affected EGUs through 2030. The commenter s said the state would complete this forecast at the time it prepares its plan, and this forecast would determine the state's mass

- based compliance goals for all compliance periods. The commenter s said preparing an accurate forecast that far in advance, however, would be extremely problematic; for example, a future breakthrough in battery technology that markedly increases the adoption of electric vehicles could result in significant additional electrical load that c ould not be anticipated at the time the forecast is prepared. The
commenter s said EPA should allow states to adjust their mass

- based goals based on changes that occur after the generation projection is originally made; this would make a mass

- based approach more attractive as an alternative to a rate

- based approach.

Comment 38: The EPA should provide additional guidance for state that choose to use multistate plans for mass

- based goals

. Response 38: The EPA has converted the rate

- based goals to mass

- based goals. See section VII of the final rule preamble of the CPP and the CO 2 Emission Performance Rate and Goal Computat ion TSD for CPP Final Rule supporting the final CPP for the final mass

- based equivalents. See section VIII of the final rule preamble of th e CPP for more information regarding multistate plans. The EPA will provide guidance to states using multistate plans for

mass

- based goals as necessary

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

Commenter s stated fo r those states that do pursue multistate plans that require conversion to a

mass

- based number across states, the commenter s recommend ed that EPA provide additional guidance as to how groups of states might approach such a calculation or provide the technic al assistance to perform the conversion for the states.

Commenter s were interested in understanding whether multi

- state coordination would reduce costs and bring other benefits to their states compared to a single

- state approach. The
commenter s s ought clar ification from EPA on how EPA proposes to calculate mass

- based goals. The commenter s said as states consider the various options for 111(d) compliance, it is essential that we have a better sense of what methodologies for calculating mass

- based state goals EPA would accept. The commenter s said the material released by EPA on June 2nd does not provide enough information for states to evaluate the consequences of considering a mass

- based approach. The commenter s request ed that EPA issue non

- binding, illustrat ive examples of how states could convert their rate

- based goals to mass, including the underlying calculations and assumptions.126 Commenter s stated to the greatest extent possible, EPA should facilitate and encourage multi

state carbon market compliance opti ons; a key component of this facilitation involves establishing standardized targets or calculation methods for converting the EPA's proposed rate

based targets into mass

- based targets. The commenter s said EPA's current proposal contains state compliance g oals expressed in a rate

- based format of pounds of CO2 emissions per megawatt

hour of electricity generation (lbs/MWh); the EPA allows states to convert this lbs/MWh ratio into a mass

- based target expressed in millions of metric tons of CO2, but does not p rovide a standardized conversion method. The commenter s said this allows for inconsistencies and confusion among states that wish to convert to a mass

- based target; not providing a standardized method may also allow for states or their generating units to game the system and dilute their goals during the conversion process. The commenter s added states wishing to establish multi

state compliance plans and/or carbon trading markets would benefit from standardized rate

- to

mass conversion instructions; this wou ld provide certainty and consistency, which helps ensure that states equally share in the challenges and benefits of participating in multi

- state compliance and/or carbon markets. The commenter s said establishing a mass

- based "cap" on CO2 emissions is the foundation to creating a carbon market such as a cap

- and

- trade system.

Commenter s suggested that calculating a multi

- state, mass

- based goal by aggregating individual
state mass

- based goals would be simpler than requiring a methodology that includes modeling projected emissions from the entire region

. The commenter s stated that this would allow the multi

- state goal to be adjusted more easily if a state joins or leaves the program. The commenter s noted that EPA proposes that a multi

- state mass

- based go al be based on translation of an aggregation of the state

- specific rate

- based CO2 emission performance goals, and seeks comment on options for calculating a weighted average rate

- based emission performance goal for multiple states. The commenter s encourage d EPA to provide states the additional option to calculate a multi

- state mass

- based goal by aggregating individual mass

- based state goals

.

Commenter s provided an example of four states working together on a multi

- state plan and questioned if compliance would be based on the average (or weighted average) goal of the four states, or if every state must meet its individual goal through working with the other states.

Commenters stated that regional compliance will require translation of state rate

- based tar gets or

mass

- based targets to multi

- state targets to determine compliance on a regional/multi

- state basis. Commenters noted that the EPA's guidance to states on methods to convert rate

- based targets to

mass

- based targets is a helpful step forward. Commente rs stated that more guidance will need to be provided to states to help them demonstrate equivalence and understand how multi

- state compliance options would work across rate and mass

- based boundaries.

Comment 39: AEO2013 reference scenario for future elec tricity consumption

. Response 39: The EPA has converted the rate

- based goals to mass

- based goals. See section 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 the final mass

- based equivalents.127 The following are summaries of the specific public comments under this comment:

Commenter s are concerned about the use of electricity consumption forecasts from the reference scenario in the Annual Energy Outlook 2013 ("AEO2013") from the U.S. Energy Information Administration ("EIA"). The commenter s said this report is based on output from the Nat ional Energy Modeling System ("NEMS"), the EIA's primary national forecasting and policy analysis model. The 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. The commenter s said for over a decade, NEMS has significantly overestimated national electricity sales.

Commenter s stated the AEO2013 reference scena rio drives the EPA's determination of equivalent mass

- based standards for new and existing sources. The commenter s said for states that elect a mass

- based target that includes both new and existing power plants, the EPA provides an "illustrative approach" to demonstrating equivalence with the default rate

- based targets; the EPA selected the corresponding regions in the EMM module of NEMS and applies the average regional electricity consumption growth rate from the AEO2013 reference case over the period 2012 to 2029 to each state. The commenter s said the EPA then calculates incremental demand for new generation by subtracting historical 2012 sales from these NEMS

- derived projections for the year 2029, adjusted for transmission losses and natural gas

- fired pow er plants already under construction. The commenter s said the Agency then adds this incremental demand to existing sources, building block 3 contributions (new renewable energy and avoided nuclear retirements), and building block 4 contributions (energy ef ficiency), generating a total called the "Final Mass Equivalent Generation." The commenter s said finally, the EPA calculates the equivalent mass

- based target by multiplying the Final Mass Equivalent Generation (MWh) by the default rate

- based targets (lbs C O2/MWh) to generate an equivalent mass

- based target (lbs CO2); thus, the EPA's treatment of incremental new generation is based on the AEO2013 reference scenario projections.

Comment 40: Import/export patterns among states

Response 40: The EPA has conver ted the rate

- based goals to mass

- based goals. See section 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 the final mass

- based equivalents.

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

Commenter s stated when the Clean Power Plan was announced in June 2014, EPA issued proposed carbon reduction goals using a rate approach (i.e., in lbs/MWh), but gave states the option t o convert these rate

- based targets to mass

- based targets (pounds of CO2). The
commenter s said on November 6, 2014 EPA released further guidance on how states might translate the rate

- based goals to mass

- based equivalents; two agency proposed two approaches : one focused on existing units alone, and another that accounts for load growth and includes emissions from new or incremental fossil fuel generation. The commenter s said the "Existing128 Affected Sources" approach calculates a generation level for each stat e based on existing 2012 fossil, renewable, and at

- risk nuclear generation, and multiplies this value by the previously determined rate

- based target to develop a goal in metric tons of CO2. The commenter s said the "Existing Affected and New Sources" approa ch is more complicated, accounting for load growth and including new fossil

- fuel fired sources. This approach projects sales based on region

- specific load growth rates from the EIA's 2013 Annual Energy Outlook, adjusted for transmission losses, and adds th ese adjusted sales to the generation assumed for the "Existing Affected Sources" approach. The commenter s said this approach assumes that all new or incremental generation to meet load growth comes from new fossil generation within the state in question. B oth approaches calculate a "mass equivalent generation level" in MWh, and multiply this by the EPA's rate

- based target to calculate a mass

- based target in metric tons of CO2. By 2030, the "Existing Affected Sources" approach requires a reduction in 2012 em issions by 608 million metric tons nationwide (31 percent of 2012 emissions). The commenter s said in contrast, by 2030, the "Existing Affected and New Sources" approach requires a reduction in 2012 emissions by 391 million metric tons nationwide (20 percen t of 2012 emissions). The commenter s said required emission reductions in the "Existing Affected and New Sources" approach are smaller because it accounts for new generation required to meet growing load. The commenter s said this simplified approach does n ot account for changes in import/export patterns among states, and assumes renewable energy and energy efficiency displace generation exclusively within the state in question. The commenter s said a more accurate approach would use a detailed hourly product ion cost model to assess such changes on a going

- forward basis, but this type of analysis is time and resource intensive.

Comment 41: Who should translate the states' assigned rate

- based goals into mass

- based goals

- the states or the EPA

- and how

. Response 41: The EPA has converted the rate

- based goals to mass

- based goals. See section 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 the final mas s

- based equivalents.

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

Commenter s stated the translation of a rate

- based state goal into a mass

- based state goal is intended to produce an equivalent value; however, depending o n which assumptions and methodology are applied, a variety of outcomes is possible. The commenter s said these potential differences impact the stringency of what is required within each state to implement Section 111(d); the commenter s ask ed if the stringe ncy can vary based on available methodological choices, is there truly an "equivalent" value. The commenter s said although conceptually simple

- Emission Rate (lbs/MWh) * Generation (MWh) = Mass Emissions (tons)

- there are at least three thorny aspects to the translation from rate to mass in practice.

1. Future generation is unknown; like equating speed and distance when time is undefined, converting an emissions rate to an equivalent mass of emissions for a future year is challenging because the amount of f uture electricity generation is unknown.129 2. Measures that will be enforceable under the state plan are to be excluded from the projection scenario; EPA proposes the use of a projected scenario to convert from rate

- to

mass

- based goals and proposes that any p rograms that will be enforceable under the state plan should be excluded from the scenario; this sets up a decision making loop, where the goal conversion is dependent on decisions to be made in developing a state plan to implement the goal.

3. The state goa l is not an emissions rate; the conversion is further complicated because the state goal is not in the form of a simple emissions rate; in setting up a mechanism to credit what is, in essence, a mass

- based quantity (the CO2 emissions avoided through variou s actions that offset generation and emissions from affected fossil

- fired generators), EPA created a new metric for state goals.

The commenter s said this quasi

- emissions rate includes adjustments to account for CO2 avoidance from renewable energy, a portion of nuclear energy, and end

- use energy efficiency measures; the quasi

- emissions rate means it is not mathematically correct to simply multiply the rate times generation to get mass emissions, as suggested in the equation above; this adds another twist to an already challenging problem of determining the appropriate generation for converting the rate

- based goal to a mass

- based goal.

The commente r s said such uncertainty has the potential to create confusion, lead to delays, and produce inequalities across states; given the tight timing, the importance of state

- specific analysis to develop an implementation plan that meets state objectives, and the time required for potential collaboration with stakeholders, legislatures, and other states, it would be detrimental to find out years into that effort that EPA did not find the translation to a mass

- based goal approvable.

The commenter s said states and stakeholders would benefit from upfront clarity regarding an acceptable methodology and assumptions, as well as an opportunity to comment on the proposed conversion in a transparent way and before all of the detailed work is done to analyze, negotiate, and develop a plan; thus, it would be beneficial for EPA to clarify both (a) the proposed methodology for converting from rate

- to mass

- based goals and (b) the result of applying the methodology to calculate mass

- based state goals, subject to a public notice and comment period.

Comment 42: Who should translate the states' assigned rate

- based goals into mass

- based goals

- the states or the EPA

- and how

. Response 42: The EPA has converted the rate

- based goals to mass

- based goals. See section VII of the fina l 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 the final mass

- based equivalents.

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

Com menter s stated although EPA recognizes the benefits of market

- based mass emissions programs, there are many questions that it will need to address to support the use of mass130 emissions targets for 111(d) compliance; while some anticipated that EPA would rel ease a mathematical calculation for translating the rate targets to mass emissions targets, EPA instead released several technical support documents, including one that discusses potential analytic approaches for translating from the rate

- based emissions g oal to a mass

- based goal,[Projecting EGU CO2 Emission Performance in State Plans TSD] and projecting the emissions performance that would be achieved through state plans.

Commenter s added the modeling described by EPA in the technical support document req uires a state to develop assumptions and projections for electricity, load growth, cost and performance of electric generating technologies, and transmission capability and expansion; electricity system modeling is regularly done but is no small task and s tates would not only be developing assumptions for their state, but also other states in their region or power pool. The commenter s said while the state

- specific burden is lessened for states developing multi

- state plans, assumptions still be need to be made for neighboring states to those in the multi

- state plan. The
commenter s ask ed how much will these assumptions vary in different state modeling and how could these differences impact the mass emissions translation across states; one thinks EPA will want some consistency in modeling approaches, resource and load, and new transmission build assumptions.

Commenter s added the modeling process includes a reference case, alternatively called a baseline case, and a mass

- based emissions policy scenario where the mass emissions target is generated by applying the rate

- based goals; there is also a state policy plan case. The
commenter s said c larity on which current state policies and plans are included in the reference case versus the state plan case is necessary; EPA must provide that clarity in a way that does not penalize early movers. The commenter s said if an early mover's energy efficien cy, carbon reduction, and renewable energy programs are incorporated into the reference case, it follows that all on

- the

- books programs are taken as part of the baseline introducing a serious first

- mover penalty.

Commenter s stated another area for clarific ation is the calculation of a regional target from individual state rate targets. The commenter s asked if modeling is necessary to determine the emissions targets, do states model the individual state rate targets, or model a regional target to determine t he mass emissions; should the regional target be weighted by each state's contribution to fossil fuel generation (111[d] affected generation) or total generation; should this be based on past generation (e.g., 2012 generation), or projected future generati on (e.g., 2030 generation). The commenter s asked what about 111(b) new sources and the translation to mass emissions; where do they fit into the translation to mass if the EPA state rates targets are for 111(d)

- affected
sources; presumably, new sources are excluded unless a state opts to include them, in which case, presumably, the new sources would be counted in the rate and mass calculations for those 111(b) sources a state opts into its 111(d) program. The commenter s said while these questions need to be addressed, EPA should be commended for developing a rule that raises these issues and recognizes the diversity of state energy policies to achieve real and cost

- effective carbon reductions.131 Comment 43: Who should translate the states' assigned rate

- based goals into mass

- based goals

- the states or the EPA

- and how

. Response 43: The EPA has converted the rate

- based goals to mass

- based goals. See section VII of the final rule preamble of the CPP and the CO 2 Emission Performance Rate and Goal Computation T SD for CPP Final Rule supporting the final CPP for the final mass

- based equivalents.

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

Commenter s support ed market solutions as the best means to drive emission reductions at th e lowest cost to the economy; enabling states to convert the proposal's rate

- based goal to mass

based goals is a necessity if states are going to be able to harness many of the flexibilities the proposal contemplates. The commenter s said currently, the mos t effective programs being implemented by states are the cap

- and

- trade programs of California and RGGI, as well as the utility planning approaches utilized by Colorado and Minnesota. The commenter s said having a

mass

- based goal is an important starting poi nt for other states to be able to contemplate whether these types of approaches would be the best method for complying with the Clean Power Plan.

Commenter s stated as the proposal's technical support document recognizes, there is not a simple method for ma king the conversion; a state must undergo a very complex and expensive modeling exercise to determine the mass

- based equivalent to the proposal's goals. The commenter s said unfortunately, because of the amount of effort and resources a state would have to expend to simply determine whether a mass

- based goal would be a workable approach, the commenter s

are concerned that states will forego that option. The commenter s asserted that the lack of mass

based equivalent goals is a major barrier to regional cooperation. The commenter s said due to the
state

- specific nature of the proposed goals, it is very difficult for states to discuss a regional approach without having a means to m ake an "apples to apples" comparison of their states' reduction requirements. The commenter s said the agency should assist states with translating the plan's rate

- based goal to a mass

- based goal by providing a presumptive translation for all states or simp ly providing standardized guidance on the analytical tools and assumptions needed for making the conversion. The commenter s asserted this information is needed, and has written EPA requesting that the agency provide presumptive mass

- based standards for eac h state. The
commenter s asserted this information will inform many states' and businesses' comments on the rule, and it should be provided while they have an opportunity to respond during the formal commenting process. The commenter s recognize d that develo ping this conversion requires several specific assumptions to be made as part of the modeling process; this is why the information should be provided while the comment period is still open, and why the goals should be "presumptive." The commenter s said if a state would like to challenge any or all of the assumptions that drive the outcome of the conversion, the state should be able to run their own numbers and justify why the assumptions should be different; the point is to start the conversation for states and regions to utilize all of the cost

- saving, flexible options a mass

- based standard can offer.

Comment 44: Tribes & Territories

- Support for conversion to mass

- based goal

.132 Response 44: The EPA appreciates the comments of support for conversion to mas s

- based goal. The EPA has converted the rate

- based goals to mass

- based goals. See section 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 the final ma ss

- based equivalents.

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

Commenter s stated in regards to the supplemental proposed rule, supports the ability to convert the Navajo Nation rate

- based goal to a mass based goal, a nd the ability of the Navajo Nation to enter into multi

- jurisdictional agreements with other jurisdictions, including states, to allow for the trading of emission credits.

Commenter s asserted that a mass

- based cap is appropriate for the Navajo Nation.

Comm enter s recommended the EPA codify mass

- based goals for tribal and territorial goals because they believe this approach would facilitate quantifiable, non

- duplicative, permanent, verifiable, and enforceable CO 2 reductions at designated facilities.

Comment 45: Tribe & Territories

- Impacts of mass

- based goal conversion

. Response 45: The EPA has converted the rate

- based goals to mass

- based goals. See section 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 the final mass

- based equivalents.

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

Commenter s said EPA states in the Supplem ental Proposal that it expects no additional cost or benefit associated with compliance with the emission rate goals on the Navajo Nation. The
commenter s said this is because EPA does not expect any additional emission reductions, as "The EGUs in the Navaj o Nation's area of Indian country are already expected to meet the proposed goals through compliance with other regulations...if the goal is converted to a mass

based goal". The commenter s point ed out that EPA's assumption that there is no cost associated with compliance with the goals is fully dependent on a fair and equitable method of converting the rate

- based goals to a mass

- based goal. The commenter s said there would certainly be costs, although no benefit, associated with compliance with the rate

- base d goals as proposed for the Navajo Nation.

Comment 46: Tribes & Territories

- The Generation output for purpose of converting to a Mass

Based Standard should reflect a representative five year period of operations

Response 46: The EPA has converted the rate

- based goals to mass

- based goals . See section VII of the final rule preamble of the CPP and the CO 2 Emission Performance Rate and Goal133 Computation TSD for CPP Final Rule supporting the final CPP for the final mass

- based equiv alents.

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

Commenter s stated the Supplemental Proposal anticipates that, instead of a rate

- based standard, a plan could convert the goals expressed under the Proposed Rule and th e Supplemental Proposal into a mass based standard. The commenter s said one suggested approach for deriving a mass

based standard would be to apply the Interim and Final goals (expressed in a rate of lbs/MWh) to the historic operating level determined in t he baseline period for purpose of establishing the proposed carbon dioxide goals. The commenter s said in its November 2014 Technical Support Document on conversion to mass

- based standard, EPA applied the 2012 Bonanza generating output of 3,090,432 MWh, the lowest output reported under EIA Form 923 data during any of the 10 years 2009

- 2013. Instead, the commenter s urge d EPA to apply a representative output level reflecting the generation output over a recent five (5) year period in converting a rate

- based

ca rbon dioxide standard to a mass

- based standard for the Uintah

- Ouray reservation. The
commenter s said because Bonanza is the only generating unit located in the Uintah

- Ouray reservation, and because 2012 constituted a very non

- representative year for genera ting output at the unit, in converting the rate

- based standard to an alternative mass

- based standard, EPA should use a multi

- year average approach; the commenter s urge d that a representative 5 year average output level of generation output be utilized in c onverting to any mass

- based standard.

Comment 4 7 : The EPA should allow states to adopt mass

- based limits that incorporate emissions from new sources

Response 4 7 : The EPA has provided a mass

- based goal in the final rule and allows states to consider new sources in demonstrating compliance in the following manner described by
commenters

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

Commenter s suggested the EPA should provide an alternative mass

- based target that incorpor ates emissions from new sources. C ommenter s noted that states could then choose to submit plans that include new sources if that approach is appropriate to their circumstances.

4.7 STATE FLEXIBILIT IES

Section 4. 7 covers public comments related to the st ate flexibilities related to the final and interim goals.134 4.7.1 Opportunities to adjust the goals

Section 4.7.1 covers public comments related to opportunities to adjust the goals in relation to state flexibilities.

Commenters have raised a number of issues related to this subsection which are organized by topics (comments) below. Responses are provid ed for these topics.

Comment 1: States should develop interim goals and timetables

Response 1: The EPA has modified the interim goals in response to comments and our further consideration. The interim period covers the years 2022

- 2029 and includes illustrative interim emission values for the periods of 2022

- 2024, 2025

- 2027, and 2028

- 2029. States have the flexibility to use different steps than those included in the final rule if the state demonstrates in its state plan that the values chosen for the 3, 3, and 2 year increments are equivalent to the interim goal included in the final rule for the 2022

- 2029 period. See sectio n VII of the final rule preamble for discussion of the statewide goals and section VIII discusses flexibility in demonstrating compliance pathways in state plans

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

C ommenters i ndicated that states should be able to develop their own interim goals. Commenter s stated that the 2020 interim goal doesn't provide enough time for an orderly transition to the 2030 target, and that the EPA must allow states to determine the interim goal

. Commenter s indicated this would allow a glide path to the 2030 target in a way that ensures reliability and reduces rate shock.

Commenter s indicated that the EPA should provide flexibility to states to develop their own interim targets that are reasonab le and cost effective, but will still ensure progress is made during the interim period and the final goals are met by 2030. Commenter s said that the earliest the EPA would approve a Missouri plan is June 2017 which leaves less than three years from the d ate of approved plan and the start of the interim goals. Commenter s indicated that they are concerned about the long project lead times needed to permit, construct, and begin operating new natural gas units and pipeline capacity. Commenter s indicated tha t if new transmission lines or natural gas pipelines are needed, these projects can take seven to ten years to complete. Commenter s said that because each state will have unique circumstances with transmission and capacity issues, the EPA must provide states flexibility to modify interim goals, especially if new infrastructure is needed to comply with the goals.

Comment 2: Interim goal should be eliminated, won't affect compliance with final goal135 Response 2: The EPA has modified the interim goals in response to comments and further consideration. The interim period covers the years 2022

- 2029 and includes illustrative interim emissio n values for the periods of 2022

- 2024, 2025

- 2027, and 2028

- 2029 , s ee section s I.A. and VII of the final rule preamble of the CPP for more information

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

C ommenters state d that th e interim average compliance goal should be eliminated, and indicates it would not affect compliance with the final goal.

Commenter s indicate d eliminating the interim 2020

- 2029 goal would give states sufficient flexibility to design workable compliance pla ns which establish reasonable compliance glide paths consistent with ensuring reliability and protecting consumer interests. Commenter s said this would allow states to ensure that there is sufficient time to complete needed infrastructure development (incl uding electric and/or gas transmission) in order to provide reliable power, and would reduce concerns regarding the system impacts of abrupt shifts in dispatch between existing coal

- and gas

- based units. Commenter s indicated it would eliminate conflicts be tween the timing of the interim period and legislative calendars, market rules and utility investment schedules, and it also would recognize and value reductions achieved since 2012, encouraging early action where possible.

Commenter s state d that the propo sed 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 ommenters said the EPA can and should use the proposed approach to
state plans to ensure that state plans and emission reduction glide paths are designed to meet

--- and do actually achieve

--- the 2030 goals, with the ability to make corrective actions or allow for alternative compliance paths if new technologies or market condit ions change requirements. Commenter s said the proposed regulation does not specify acceptable corrective measures, but suggested that the use of coal ash as a substitute for Portland cement in concrete manufacturing is an ideal measure that a state should promote as a "corrective measure".

Commenter s stresse d that even without the interim average compliance goal, the EPA would be able to disapprove proposed plans and glide paths that do not meet the minimum requirements and that do not demonstrate satisfac torily how the 2030 goals will be achieved. Commenter s indicated that other elements of the EPA's proposed approach to state plans ensure that states make reasonable and verifiable progress toward the 2030 goal, report that progress to EPA and take correct ive measures if needed. Commenter s said that ultimately, if states do not show progress toward the 2030 goal, EPA could call for a state to revise its compliance plan or implement its own federal plan.

Comment 3: Interim compliance goal should be elimina ted, and states should be allowed to determine their own reduction glide paths and milestones to achieve the 2030 goals, subject to EPA approval. States should be given the flexibility to modify compliance plans and glide paths to address changing technol ogy and the needs of the interconnected power sy stem.136 Response 3: The EPA has modified the interim goals in response to comments and further consideration. The interim period covers the years 2022

- 2029 and includes illustrative interim emission values for the periods of 2022

- 2024, 2025

- 2027, and 2028

- 2029. States have the flexibility to use different steps than those included in the final rule if the state demonstrates in its state plan that the values chosen for the 3, 3, and 2 year increments are equ ivalent to the interim goal included in the final rule for the 2022

- 2029 period. See section VII of the final rule preamble for discussion of the statewide goals

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

Commenter s sa id eliminating the interim compliance goal and allowing states to determine their own reduction glide paths and milestones to achieve the 2030 goals, subject to EPA approval, would provide states with flexibility in designing their state plans to reduce em ission rates. Commenter s said this approach would allow states to determine not only which actions and measures to pursue to reduce emission rates, but also to choose a reasonable schedule for implementing those measures consistent with providing safe, rel iable, affordable, and environmentally responsible power to customers. Commenter s said once approved by EPA, a state's plan, including the emission reduction glide path, would become federally enforceable. Commenter 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. Commenter s said ultimately, if states could not show reasonable progress toward the 2030 goal, EPA would have the authority to call for a state to correct its plan or issue a federal plan of its own.

Commenter s said this approach may allow states sufficient time to complete infrastructure 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. Commenter s said it would eliminate conflicts between the timing of the i nterim period and legislative calendars, market rules, and utility investment schedules.

Commenter s said eliminating the interim compliance average goal does not require a fundamental altering of the proposed guidelines. Commenter s said instead, the propos ed guidelines are already 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. Commenter s said the EPA can and should use the proposed approach to state plans to ensure that state plans and emission reduction glide paths are designed to meet and achieve the 2030 goals.

Commenter s said states should not be limited to modifying plans only to address the failure of a plan element to perform as projected. Comm enter s said states need the flexibility to modify compliance plans and emission glide paths to address changing technology and the needs of the interconnected power system. Commenter s said as EPA notes, as long as states can continue to demonstrate that pl ans are designed to achieve the 2030 goals, states should be able to propose modifications. Commenter s said the EPA should clarify the proposed regulation accordingly.137 Comment 4: The EPA should allow states to tailor compliance timelines to their unique circumstances by eliminating interim targets if state can demonstrate sufficient progress towards 2030 goal. Interconnected electric system is very complex and many aspects of proposal haven't fully considered the complexities

. Response 4: The EPA has mod ified the interim goals in response to comments and further consideration. The interim period covers the years 2022

- 2029 and includes illustrative interim emission values for the periods of 2022

- 2024, 2025

- 2027, and 2028

- 2029. States have the flexibility t o use different steps than those included in the final rule if the state demonstrates in its state plan that the values chosen for the 3, 3, and 2 year increments are equivalent to the interim goal included in the final rule for the 2022

- 2029 period. See s ection VII of the final rule preamble for discussion of the statewide goals

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

Commenter s said at its most basic level, use of the four building block as a mechanism to comply wi th the emission targets is achievable if EPA provides relief on the interim targets. Commenter s said if such relief is not provided NC energy believes that implementation of BSER must be carefully examined for feasibility. Commenter s said though EPA acknowledges and discusses the complexity of the interconnected electrical system in its 111(d) proposal, NV energy believes many aspect of the proposal have not sufficiently considered fundamental principles of wholesale energy markets, r esource dispatch and operations, reliability requirements, and integrated resource planning.

Commenter s said it is key to the success of this proposal that these issues be addressed in greater depth and with greater flexibility in terms of both the time and application of EPA's Building Blocks to accommodate the complexity of the interconnected electric system. Commenter s said flexibility in development of state milestones and glide paths to meet the 2030 target would also serve to reduce the potential fo r retirement of assets prior to the end of their remaining useful lives, thus minimizing cost and impacts to consumers.

Comment 5: Interim goal requires very steep reductions in emissions in too short an amount of time, and such steep reductions early i n the program could preclude opportunities to implement more cost effective strategies that require more time to ramp up. Interim goals should be eliminated if a state is able to demonstrate sufficient progress towards the 2030 goal

. Response 5: The EPA ha s modified the interim goals in response to comments and further consideration. The interim period covers the years 2022

- 2029 and includes illustrative interim emission values for the periods of 2022

- 2024, 2025

- 2027, and 2028

- 2029. States have the flexibil ity to use different steps than those included in the final rule if the state demonstrates in its state plan that the values chosen for the 3, 3, and 2 year increments are equivalent to the interim goal included in the final rule for the 2022

- 2029 period. See section VII of the final rule preamble for discussion of the statewide goals

. The following are summaries of the specific public comments under this comment:138 Commenter s said the interim goal requires too steep a reduction in emissions in too short an

a mount of time, and therefore interim goals should be eliminated if a state is able to demonstrate sufficient progress towards the 2030 goal. Commenter s said that there are limits to amount RE and EE that can be developed in timeframe allotted, and said if RE projects trigger the NEPA process (likely as >80% of Nevada is federal land), approval for projects could take years.

Commenter s said under the current 111(d) proposal, the methodology for establishing the interim emission rate goals requires that emiss ion reductions occur by 2020 in an amount equal to the BSER Building Block assumptions for 6% heat rate improvements and increased utilization (re

dispatch) of existing natural gas resources. Commenter s said in states currently using coal or oil fired reso urces, this methodology results in a dramatic reduction in emissions that must be implemented by 2020. Commenter s said the consequences of these dramatic reductions are exacerbated when considering that a state's plan may not be submitted for approval unti l 2018 and approved by EPA until 2019. Commenter s said Nevada and other states may find it difficult to meet their interim goal in 2020 and such steep reductions early in the program could preclude opportunities to implement more cost effective strategies that require more time to ramp up.

Commenter s said all coal and other steam boiler generation in Nevada is completely displaced by 2020 as result of EPA's target setting exercise. Commenter s said thereafter, additional emission reductions needed to achieve the proposed rate are based solely on the BSER assumptions for increased renewables and energy efficiency. Commenter s said while NV Energy acknowledges EPA's suggestion that states have the flexibility to meet the glide path in ways other than the immedia te displacement of coal/steam generation, doing so is simply not achievable in Nevada during the short timeframe allotted. Commenter s said there are practical, technical and economic limitations to the quantities of renewable energy and energy efficiency t hat could and would need to be permitted and developed by 2020 to support the continued operation of coal and steam boilers in Nevada.

Commenter s said renewable energy development is further challenged in Nevada because more than 80% of the state is compr ised of federal land. Commenter s said as a result, any new generation or transmission projects, including renewable resources, have a high probability of triggering the National Environmental Policy Act (NEPA) process directly or through a connected action , and once NEPA is triggered, it can take years to complete the process before a Record of Decision is obtained and construction begins.

Commenter s said NV Energy recommends that EPA should allow states to tailor their compliance timelines to their unique circumstances by eliminating the interim targets if a state is able to demonstrate sufficient progress toward the 2030 goal. Commenter s said by eli minating the proposed interim target, or at a minimum, allowing all Building Blocks to be phased in over the full compliance period, states could develop an approvable plan to meet the 2030 emissions rate goal on a smoother and less disruptive implementati on schedule while still achieving EPA's ultimate intent.

Comment 6: Commenter s said the state goals should be recalculated to accurately reflect the limitations on NGCC redispatch and build up in each state.139 Response 6: The EPA has recalculated the propo sed goals. See sections V.D., VI, and VII of the final rule preamble of the CPP and the CO 2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP for more information about Building Block 2 and the final goals.

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

Commenter s said in the alternative, states should be directed to set emission reduction goals for the affected EGUs in their state that would reflect whether re

- dispatch or build

- out is available.

Comment 7: Existing EE programs should be recognized and rule should make it easy for such programs to scale up if needed and give them credit for early action; should increase flexibility of State Plans so after final goals are incor porated can change plan

. Response 7: The EPA has determined that demand

- side EE programs (proposed building block 4) are not a component of the final BSER. See section V.A of the preamble for discussion of this issue

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

Commenter s state d that existing state and utility EE programs should be recognized if they utilize EPA

- approved or equivalent measurement and verification protocols and standards, and the rule should make it easy for such programs to scale up if needed and give credit for "early action." Commenter s said these programs may include, but not be limited to: utility demand

- side management (DSM) (or incremental DSM depending on "credit for early action"), energy efficien cy (EE) requirements (or incremental EE depending on "credit for early action"), EE carve out for ratepayer funded rebates/incentive, other highly efficient energy

- efficient appliances and equipment upgrades not included in existing programs or in states w ith no programs, and innovative energy savings programs such as tree planting.

Commenter s said although the Proposed GHG Rule is clear in that the EPA is not mandating the method an individual state must use to reach the proposed CO2 goals, it is clear tha t the proposed Florida State target of a 38% reduction in CO2 emissions, regardless of the method or combination of methods chosen by Florida, will impact cost recovery/rate impact, thereby impacting Florida's citizens. Commenter s said of particular concer n to Florida's ratepayers is that comments by EPA officials during press conferences indicate that, once a State incorporates the Final Goals into an EPA approved State Plan, the resulting targets, and their corresponding costs, will be inflexible.

Comment 8: States should be authorized to adapt final plans in future as conditions change. Sec tion 111(d) doesn't require "anti

- backsliding" restrictions. Should be able to take into consideration remaining useful life and electric system reliability

.140 R esponse 8: The EPA will allow states, via State Plan submittal or revision, to adjust their state wide rate or mass goals per unit inventory changes. If applicability review or formal applicability determinations change the status of units in regards to th eir inclusion or exclusion in the state’s affected population, the state may adjust the goal. See section VII of the final rule preamble of the CPP for more information.
The EPA recognizes the need for states to be able to revise their plans. Plan modific ation provisions are in section VIII.E.7 of the CPP final preamble.
With respect to the comments on remaining useful lif e, see the response to comment 2 in section 4.7.2.
With respect to comments on reliability, see preamble sections II.C and VIII.G.2.

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

Commenter s said states should be given broad flexibility to adapt their final plans in the future as conditions change. Commenter s said in particular, because CAA Section 111(d) does not require that "anti

- backsliding" restrictions be adopted as part of a final rule, EPA should not include such a provision, particularly here where EPA offers no support for it. Commenter s said not including this restriction would increase states' f lexibility by removing an unnecessary constraint on their broad authority to implement the federal emissions guidelines. Commenter s said part of that broad authority should be to make pragmatic adjustments as circumstances change so long as they achieve th e applicable state emission rate goal consistent with the guidelines.

Commenter s said among the pragmatic adjustments that CAA Section 111(d) grants states is the authority to establish performance standards that take into consideration the remaining usef ul life existing sources. Commenter s said another important factor for states and affected stakeholders to consider will be the impacts of the proposed CO2 guidelines on the bulk electric system reliability. Commenter s said providing states with flexibilit y to adjust their compliance plans to meet their targets while assuring reliability is not compromised will reduce costs and potential adverse effects on electric customers.

Comment 9: Existing EGU state goals must be periodically reviewed and adjusted

Re sponse 9 : 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:141 Commenter s stated that the EPA must finalize a commitment to periodically review and adjust the CPP State Goals. Commenter s indicated that the EPA has ample authority to finalize a commitment for periodic review (and adjustment, if needed) of the Clean Power Plan (CPP).

Commenter s stated that Section 111(d) does not contain an explicit requireme nt for periodic review of the existing source performance standards

- however, the purpose of the statute, its relationship to section 111(b) which does require review every eight years, along with its reference to a section 110 procedure, and longstandin g EPA interpretations requiring periodic review, give the Agency ample authority to finalize a commitment for periodic of the CPP.

Commenter s said that for new sources, the Administrator must "at least every 8 years, review and, if appropriate, revise the [performance standards]." Commenter s said that in the CPP proposal, EPA recognizes that this "requirement provides for regular updating of pe rformance standards as technical advances provide technologies that are cleaner or less costly." Commenter s stated that this same principle applies to the CPP. Commenter s said that all of "section 111 was intended to assure the use of available technology and to stimulate the development of new technology." Commenter s stated that in order to be consistent with the track of the new source standards, and continue to promote new technology for pollution control on sources as they age, the CPP similarly must be periodically updated. Commenter s stated that there is support for this idea in section 111(d), which requires the EPA to "prescribe regulations, which shall establish a procedure similar to that provided in [section 110] under which each State shall submi t to the Administrator a plan." Commenter s said that this includes a cross reference to the requirement to revise state plans "from time to time as may be necessary to take account of revisions of such national primary or secondary ambient air quality stan dard or the availability of improved or more expeditious methods of attaining such standard." Commenter s indicated that while CO2 is not a criteria pollutant, the language in CAA section 111(d) requiring a "procedure similar to that provided by section [11 0]" may be read to extend to all section 110 review requirements as well. Commenter s stated that therefore, state CPP plans must also be subject to review when section 111(b) standards are updated and incorporated in state SIPs.

Commenter s contend ed that this is consistent with EPA's longstanding regulatory framework. Commenter s said that the general 111(d) regulations require that, when corresponding new source standard of performance is proposed an emission guideline must also be proposed. Commenter s add ed that the 1975 preamble also states EPA's expectation that there will be subsequent plans submitted after the initial emissions guidelines are set.

Existing municipal waste combustion units precedent. Commenter s said that the EPA has previously conclude d that the periodic review associated with some NSPS is also applicable to an existing source performance standard promulgated under section 129. Commenter s said that existing solid waste combustion units are regulated under CAA section 111(d) with emissio ns limits based on CAA section 112 and must comply with all CAA section 129(a) requirements. Commenter s stated that Section 129 does include an explicit five

- year periodic review requirement for new sources, but not for existing sources. Commenter s added t hat however, when EPA finalized emissions guidelines for existing municipal waste combustors in 1991 under CAA sections 111(d) and 129, the Agency committed to review the standard four years from the142 date of promulgation as required by the CAA. Commenter s said that this review will include an assessment of such factors as the need for integration with other programs, the existence of alternative methods, enforceability, improvements in emission control technology, and reporting requirements.

Commenters sta ted p eriodic review would ensure emissions controlled to greatest degree possible. Commenter s said that the procedural reference to CAA section 110 and the regulations for adoption and submittal of state plans for existing sources provide the EPA with amp le authority to require periodic review of the CPP. Commenter s said further, the EPA has a history of including the CAA section 111(b) periodic review requirement when setting CAA section 111(d) emissions guidelines. Commenter s said that because the CAA i s silent regarding the periodic review of CAA section 111(d) standards, "the question is whether the agency's answer is based on a permissible construction of the statute." Commenter s said that an agency's interpretation is reasonable if it is not only a l ogical construction of the specific provision but also gives effect to the statute as a whole. Commenter s stated that the purpose of the section 111 is to apply the best system of emission reduction and "assure the use of available technology and to stimul ate the development of new technology." Commenter s contend ed that a periodic review of the CPP would ensure that CO2 from existing power plants are controlled to the greatest degree practicable and would spur innovation in pollution control. Commenter s urg ed the EPA to commit to a periodic review of these standards.

Comment 10: The EPA must allow states to adjust goals to allow for remaining useful life, practical constraints, and technical achievability

. Response 10: These guidelines do not provide for states to make additional goal adjustments based on remaining useful life and other facility

- specific factors because states can fully consider these factors in designing their plans. Section 111(d) requires that EPA’s emission guidelines permit the states to consider remaining useful life in applying standards of performance to particular affected EGUs, and does not call for facility

- specific remaining useful life considerations to be taken into account in determining the levels of emission performance tha t reflect the BSER. For additional response to concerns about remaining useful life, and about stranded assets, s ee the response to comments 1 and 2 in RTC chapter 4.7.2

.
The subcategory

- specific emission performance rates and state goals in the final emis sion guidelines are achievable. Since proposal, t he EPA has significantly modified its approach to defining the BSER and its method of calculating emission performance rates that reflect the BSER, as explained in final CPP preamble sections V

- VII and in VI II.G. The agency has modified the interim goals , including changing the start of the interim period from 2020 in the proposal to 2022 under the final guidelines, in response to comments and further consideration. The interim period covers the years 2022

- 2 029 and includes illustrative interim emission values for phasing in emissions improvements during the periods of 2022

- 2024, 2025

- 2027, and 2028

- 2029. States have the flexibility to use different interim step performance level s than those included in the f inal rule if the state demonstrates in its state plan that the values chosen for the 3, 3, and 2 year increments are equivalent to the interim goal included in the final rule for the 2022

- 2029 period.143 Regarding adjustments of state goals, s ee section VII of the final rule preamble for discussion of potential state plan adjustments of state goals

. See section VIII.G for explanation of why goal adjustments (which a commenter termed a “safety valve”) are not warranted for facility

- specific considerations such as remaining useful life. Also, see CPP final preamble section VIII.G for a description of a safety valve for addressing electricity reliability concerns under specified circumstances that is included in the final guidelines.

We explain our interpretation of remaining useful life in section VIII of the CPP final preamble and Section IX of the Legal Memorandum. We explain there that the guidelines do permit states to consider remaining useful life and other facility specific factors. The guidelines are desi gned to permit trading and the creation of interstate emission markets. We view the remaining useful life consideration as primarily regarding a concern for facilities with relatively short remaining useful lives and the potential that they may be required to install prohibitively costly pollution control devices (these guidelines to not impose such a requirement). Nonetheless, the agency also conducted a “stranded assets” analysis to determine if commenters’ concerns were correct that the rule would force widespread retirements of units with relatively long book lives. As explained in Section VIII.B.1 of the CPP final preamble, we found that this need not be the case. This of course may depend on how states choose to design their state plans, but it cannot be said that this rule requires the result. Insofar as this comment asserts that this rule will necessarily effectuate a regulatory taking, see the discussion of the Just Compensation Clause in the Legal Memorandum accompanying the final rule

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

Commenter s said the EPA's building block approach to establishing emission rate requirements for states is based on incorrect or inadequately tested assumptions regarding the generation an d distribution of electricity and the ability of particular sources and electric systems to meet the Proposed Rule's ambitious goals. Commenter s said to address these problems EPA must permit states to adjust their goals as necessary given: 1) the remainin g useful life of existing high carbon emitting sources; 2) practical impossibilities associated with infrastructure, legal or reliability constraints; and 3) the technical achievability of a given strategy as applied to a particular source or in the contex t of a particular set of circumstances. Commenter s also said states should have the ability to modify goals based on actual achievability.

Commenter s said the EPA's proposal has no safety valve for states confronted with physical or legal impossibilities, or for states confronted with assumed source efficiency gains that are not technically feasible. Commenter s said states have the statutory right and obligation to consider the remaining useful life of existing sources and protect their enormous capital in vestment from a governmental taking, which EPA's Proposed Rule will compel if not amended. Commenter s said moreover, EPA's proposal is largely built upon assumptions regarding redispatch and the ability of states to mandate new infrastructure and generatio n activities that are not always true.

Commenter s said the EPA is in no position, on a source

- by

- source basis, to know: 1) the role specific sources play in the community and in the local electrical markets; 2) the practical and legal constraints that exi st in some places to the construction of replacement generation; and 3) the presence or absence of the necessary state law to implement the building blocks. Commenter s said without giving states flexibility to address source

- specific concerns, EPA's144 Propos ed Rule may unconstitutionally commandeer state laws and work an unconstitutional taking by forcing the retirement of assets backed by decades of multi

- billion dollar investment.

Commenter s also stated that the final rule must specifically allow states to adjust compliance dates for individual generating units based on the remaining useful life of the facilities. Commenter s also stated that the timelines in the proposed regulation should be extended in order to provide sufficient time for development of ad ditional natural gas distribution infrastructure (e.g., pipelines).

Commenter s said the EPA must give a state the flexibility to establish its own standard of performance based on, among other things, the remaining useful life of the existing source to whi ch the standard applies, and indicated that the EPA cannot make the state goals rigid prior to a state completing its evaluation and drafting its Section 111(d) plan.

Commenters stated, throughout their comments is the recurring theme that EPA's proposed b uilding blocks are not achievable in practice. Commenters said, for example, Wisconsin argues that EPA did not consider what is achievable in practice for the specific units being controlled, when the interactions between building blocks are considered, or when applied to individual
states.
Commenters stated, EPA must consider all factors specifically dictated to EPA by Congress under Section 111(d) when setting the BSER and the resulting emission guidelines. Commenters said, these include such factors as c ost of achieving reductions and impact on energy requirements. Commenters said, a specific example for Wisconsin is their comment which argues that EPA did not consider the remaining life of coal fired EGUs when considering heat rate improvement capability . Commenters said, many of Wisconsin's EGUs considered for heat rate improvements under the proposed Clean Power Plan have already been converted to natural gas fired boilers or are otherwise slated for retirement in advance of the Clean Power Plan complia nce date.

Comment 11: The EPA should allow the phase

- in of compliance tools over the entire compliance period, and propose a compliance path to account for their circumstances. This would allow states to take into account remaining useful lives and retrofits and established early retirement dates on a timeline that works best for their circumstances

. Response 11: The EPA has modified the interim goals in response to comments and further consideration. The interim period covers the years 2022

- 2029 and includes illustrative interim emission values for the periods of 2022

- 2024, 2025

- 2027, and 2028

- 2029. States have the flexibility to use different steps than those included in the final rule if the state demonstrates in its state plan that the values chos en for the 3, 3, and 2 year increments are equivalent to the interim goal included in the final rule for the 2022

- 2029 period. See section VII of the final rule preamble for discussion of the statewide goals

. For additional response to this comment, see re sponse to comment 10 immediately above and to comments 1 and 2 in section 4.7.2.145 The following are summaries of the specific public comments under this comment:

Commenter s said if interim goals are adopted, they should take into account the remaining usefu l life of existing facilities, recent environmental retrofits, and established early retirement dates, and one way this can be achieved is by allowing the phase

- in of compliance tools over the entire compliance period.

Commenter s said as states contemplate ways to achieve the proposed interim goals, the lack of available compliance options may lead them to simply require the retirement of coal resources to achieve compliance. Commenter s said however, there are several reasons why this approach is contrary t o Section 111(d) of the Clean Air Act, which requires recognition of the remaining useful lives of resources, as well as other provisions of the Clean Air Act which may require the installation of major environmental controls or may have resulted in establ ished retirement dates for specific resources. Commenter s said to remedy this, EPA should allow states to tailor their interim goals for their unique circumstances, or, at a minimum allow the phase

- in of compliance tools over the entire compliance period.

Commenter s said in part to address issues related to the interim goals, EPA solicits comment in the NODA on two specific adjustments to the interim goal calculations, aimed at allowing a more gradual phase

- in of building blocks 1 and 2 during the 2020

- 2029 period. Commenter s said first, EPA proposes that a phase

- in schedule could be developed for building block 2 on the basis of whether, and to what extent, additional infrastructure improvements are needed to support increased deployment of natural gas

- fuel ed generation. Commenter s said second, EPA proposes that it could take into account the book life of generation assets, including the book life of major upgrades to the asset in determining the appropriate glide path. Commenter s recommended that EPA allow states to phase

- in all of the tools it chooses to use for compliance over the entire 2020

- 2029 compliance period, and said that EPA should not prescribe nor preclude any of these approaches.

Commenter s said the EPA should not attempt to develop standard or simplified assumptions to account for each state's need for additional natural gas infrastructure or the remaining book life of assets in each state. Commenter s said rather, EPA should allow states to propose a compliance path to account for their circums tances, which may include, among other things, the need for natural gas infrastructure development, existing lives of generation assets, and approved settlements for coal resource retirements. Commenter s said preserving this flexibility would allow states to take into account remaining useful lives and retrofits and incorporate compliance plans for other environmental programs on a timeline that works best for their circumstances while still meeting the 2030 goal.

Comment 12: States should have ability to adjust state goals and determination of acceptable performance to account for changes in load characteristics arising from shifts in demographics, productivity, and economic growt h

Response 12: See response 11 above

.146 Regarding the comment on the potential for economic growth to increase emissions, the agency notes that the emission guidelines allow states to adopt rate

- based regulatory approaches that limit emissions per unit of generation by affected sources. Also, the agency observes that zero

emitting el ectricity generation and increases in energy efficiency can meet electricity demand in a growing economy without increasing carbon emissions from electricity generation.

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

Commen ter s said states should have the ability to adjust state goals and determination of acceptable performance to account for changes in load characteristics arising from shifts in demographics, productivity and economic growth. Commenter s said for example, fo r purposes of demonstrating achievement, the CPP contemplates fluid year

- to

- year adjustments to reflect measured energy savings attributable to demand

- side efficiency efforts, and yet calls for rigid adherence to overall reduction goals established at the outset. (See , e.g ., Section I (A ) ( 1 ) ( c)). Commenter s said depending on the interaction of efficiency savings and load growth over time, even the successful deployment of planned measures may well produce results that deviate from projected reductions.

C ommenter s said load growth projections are premised on an array of assumptions regarding future conditions that may or may not track the actual course of events. Commenter s said in the event of stronger than expected industrial production, or greater incre ases in population, electric consumption will outpace projections no matter how well

- designed a state plan to limit carbon emissions may be or how diligently the measures are implemented. Commenter s said conversely, even without any planned measures, emiss ions would be reduced if industrial production deteriorates, plants close, and state population decreases, but such reductions would be directly contrary to the stated goal of supporting a vibrant and growing economy.

Commenter s said the EPA requested comm ent on how the consequences of a deficiency in performance should vary depending on the underlying reasons, acknowledging that "a possible scenario is that despite successful plan implementation, emissions under the plan turn out to be higher than projecte d at the time of plan approval because actual economic conditions vary from economic assumptions used when projecting emission performance." (See Section VIII ( B ) ( 2 ) ( e)). Commenter s said that possibility could arise, for instance, where a mass

- based goal is established or an emissions approach to measurement is utilized, and actual demand ends up exceeding projections due to greater productivity, industrial expansion or new employers deciding to locate in the state. Commenter s said a state should not be p enalized for success in achieving better than expected economic growth. Commenter s said productivity gains should be credited when assessing performance in the same manner and to the same degree that efficiency savings are computed.

Commenter s said the pr oposed rule provides no means of modifying the goals to account for major new industries or substantial economic development. The commenter s said Northwest Minnesota may see the development of two large nickel

- copper mines and a major steel mill in the ear ly 2020s. The commenter s said these projects will be going into an economically disadvantages area and are sorely needed to maintain a healthy economy in that part of the state. The commenter s said it would be very difficult, if not impossible, to accommod ate these major new loads and still achieve the very large reductions in CO2 emissions mandated for Minnesota147 under the rule. The commenter s said the rule must provide a mechanism for accommodating the effect of substantial new development.

Comment 13: Fi nal rule should allow states to exercise case

- by

- case flexibility to issue facility

specific variances and to adjust state targets. States should also have the ability to set emission performance standards and develop longer compliance times

Response 13: See Section VII for a discussion of how inventory applicability concerns and state goal adjustments may interact . See also response to comment 10 above.

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

C ommenters said that E PA should give states the ability to adjust not only the emission limits of the targets but also the dates for implementation.

Commenter s said that the approach of allowing states to exercise their discretion to apply less stringent standards and longer co mpliance schedules to individual facilities or "class of facilities," would be permissible under the proposed Clean Power Plan as well as under the variance authority of 40 C.P.R. Section 60.24(f). Commenter s said further, Birchwood Power feels that it is important for EPA to eliminate any confusion by specifically recognizing this authority in the final rule or accompanying materials as a viable option to avoid stranding assets. Commenter s said states are likely to have more comfort adopting such an approa ch if EPA speaks to it directly in the final rule.

Commenter s said existing IPP coal

- fired sources, like the Birchwood facility, are at risk of being retired before the end of their useful life, to the detriment of Virginia ratepayers, as well as the proje ct's investors, and EPA should use its authority under CAA section 111 (d) and 40 C.F .R. 60.24(f) to allow states to apply less stringent emissions standards or longer compliance schedules due to facility

- specific considerations, e.g., unreasonable cost o f control resulting from plant age, location or basic process design. Commenter s said if EPA were to recognize that states may utilize the CAA section 111 (d) exemption/variance authority for facility

- specific considerations and allow the state emission re duction target to be adjusted accordingly, reasonable state

- specific determinations can be fairly made and single asset entities can be protected on a case

- by

- case basis. Commenter s also indicated that in the final rule EPA should make it clear that they a re not limiting various compliance options, such as emission caps, hours of operation limitations or other mechanisms to achieve CO2 reductions.

Commenter s said EPA's final rule should allow states to exercise case

- by

- case flexibility to issue facility

- spe cific variances and to adjust their state targets during the variance period accordingly. Commenter s said states should also have the ability

- consistent with CAA section 111(d) and 40 C.P.R. 60.24(f)

- to set emission performance standards and develop lo nger compliance schedules, and indicated that anything other than that would impermissibly encroach upon authority the CAA expressly provides the states.

Commenter s said states should be able to make any "case

- by

- case" exceptions based on factors such as: (l) unreasonable costs of control resulting from plant age, location, or basic process148 design; (2) the physical impossibility of installing necessary control equipment; or (3) other factors specific to the facility (or class of facilities) that make appli cation of a less stringent standard or final compliance time significantly more reasonable.

Comment 14: Final rule should allow states to adjust both emission performance goals and the dates those goals would be implemented; in Florida the cost of CPP cou ld be reduced by >50% by avoiding stranded assets; Florida

Response 14: The CO2 rates and state goals in the final emission guidelines are achievable. The EPA has modified the interim goals in response to comments and our further consideration. The interim period covers the years 2022

- 2029 and includes illustrative interim emission values for the periods of 2022

- 2024, 2025

- 2027, and 2028

- 2029. States have the flexibility to use different interim step performance level s than those included in the final rule if the state demonstrates in its state plan that the values chosen for the 3, 3, and 2 year increments are equivalent to the interim goal included in the final rule for the 2022

- 2029 period.

See section VII

, of the final rule preamble for discussion of the statewide goals and potential adjustments

. For response to concerns about stranded assets, s ee the response to comment 1 in RTC chapter 4.7.2.
The following are summaries of the specific public comments under this comment:

Commenter s said that Florida and other states should be given the flexibility to address stranded costs by being allowed to adjust both emission performance goals and the dates those goals would be implemented. Commenter s said that the costs of the CPP to their consumers could be reduce d by over 50% by avoiding stranded assets.

Commenter s said that to comply with the FUA of 1978, many Florida utilities were forced to cancel planned gas

- fired units and replace them with coal

- fired units. Commenter s said that their utilities spend over $2 billion to upgrade the units to meet CAIR and CASPR, as well at the MATS rule, and the majority of their coal units carry significant debt and will not reach the end of their expected useful life before the implementation of the CPP. Commenter s said the proposed regulation would result in significant stranded costs to their utility customers, which will be reflected in increased electric rates.

Commenter s said while Florida consumer

- owned utilities produce about 20% of the state's energy, they produce abo ut 44% of coal

- fired energy. Commenter s said if EPA allows states to delay the implementation of the proposed ESPS to avoid stranded assets, we estimate that the costs of the CPP to FMEA utility customers could be reduced by over 50%. Commenter s said the C PP should provide sufficient flexibility to states to adjust both emission performance goals and the dates those goals would be implemented.149 Comment 15: States must have flexibility to adjust emission targets to avoid being locked into an approach that does not achieve the most desirable emission reductions and that does not account for circumstances that will change between now and the ultimate 2030 target date. EPA should ensure that procedures for plan modification requests by states are not onerous

R esponse 15: See section VII of the final rule preamble for discussion of when states may change their goals. Also see section VIII for discussion of state plans

.

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

Commenter s sa id because power generation and distribution in California involve so many different moving parts, from weather patterns to complex energy delivery systems, it is paramount that California retain its current flexibility to achieve its commitments under the proposed EPA Clean Power Plan by responding to changing conditions as it works towards the target reductions set by EPA. Commenter s said an EPA rule that eliminates such flexibility could have the unintended consequence of locking California into an approach that does not achieve the most desirable emission reductions and that does not account for circumstances that will change betwee n now and the ultimate 2030 target date.

Commenter s said states should not be locked into a particular path in their initial submissions where circumstances may later warrant a different approach. Commenter s said hence, during the interim period and after 2030, states should retain the ability to alter their previously

- approved plans to take new and significant factors into account, subject to showing that the states will achieve the necessary CPP targets. Commenter s said the EPA appears to adopt this appro ach in its proposal, see 79 Fed. Reg. at 34,917, 34954, proposed section 60.5785, but should ensure that procedures for plan modification requests by states are not onerous and that the Agency will be flexible itself in accommodating those requests. Commen ter s said for example, EPA should expressly recognize that economic conditions may exist in the future which may change assumptions and estimates regarding power generation, emissions and costs, just as it has when it considers situations where actual emis sions performance may not meet state goals. See 79 Fed. Reg. at 34,907

- 908 (recognizing that actual economic conditions may vary from economic assumptions used when projecting emissions performance and seeking comment on what consequences should follow if actual emissions exceed estimates).

Comment 16: The EPA should allow states to adjust their baseline and goals, especially any mass limits, in the future to reflect unexpected changes in the power sector. Without such adjustments, regional distortions in dispatch of generation may occur

. Response 16: See response 15 above.

The following are summaries of the specific public comments under this comment:150 Commenter s said that EPA should allow states to adjust their goals in the future to reflect unexpected c hanges in the power sector. Commenter s said state power sectors may undergo profound, unexpected changes after state plans are developed, such as reduction in hydropower generation due to a major drought, increased electrical demand due to unanticipated e conomic growth, or changes in state laws regarding RE and EE programs. Commenter s said the EPA should allow states to adjust their baselines and goals to ensure that state goals are as reasonable and flexible as possible and take changes to the power secto r into consideration. Commenter s said this issue is especially important for states that choose to comply via a mass cap. Commenter s said given the impossibility of accurately predicting anything a decade into the future, it is essential that EPA allows th ese states the option of adjusting their mass

- based goals if the projections of energy demand or generation made when crafting the plan prove to be inaccurate.

Commenter s said in addition to making it more difficult for a state to comply with a no

- longer

a ppropriate mass limit, failure to adjust mass limits could lead to serious distortions in dispatch of generation within a region and make it challenging for neighboring states to meet their own limits. Commenter s said this problem would likely be most seve re when neighboring states comply with different types of goals (i.e., mass

- versus rate

- based). Commenter s said for example, if one state has an overly restrictive mass cap and a second state, a neighbor of the first, complied via a rate

- based standard, d ispatch might be diverted to the second state rather than in the state who’s EGUs were approaching their mass caps. Commenter s explained this would require the second state to take additional, unplanned measures (RE, EE, etc.) to balance the increased CO2 emissions and comply with their rate

- based goal and may not lead to lower CO2 emissions overall.

Commenter s said ideally, EPA would allow states to adjust their baseline and goals at any time when they can demonstrate a reasonable need to do so. Commenter s said however, at a minimum, EPA should allow states to either adjust their goals periodically or demonstrate that their goals are still appropriate. Commenter s said Wisconsin successfully followed a similar approach to implementation of NOx allocations un der the Clean Air Interstate Rule (CAIR) and found that reallocating NOx allowances within our budget every five years provided additional certainty to utilities and allowed them to meet more reasonable limits.

Comment 17: State should be able to modify t argets and plan to reflect increased usage of existing NGCC units that offset permanent closure of out

- of

- state coal

- fired EGUs

Response 17: See section VII of the final rule preamble for discussion of when states may adjust their goals.

EPA took a regional approach to quantifying BSER in this final CPP. The NGCC rate derived reflects the expected increase in generation from NGCC block 2 . See response 15 regarding adjustments.

The following are summaries of the specific public comments under this c omment:151 Commenter s indicated that power plant decisions affecting a coal EGU in another state can affect NGCC operations in a given state, and this has implications for state plans and emission reduction targets.

Commenter s explained that for instance a m ajor coal fired power plant in Colstrip in Montana could potentially partially or completely cease operation over the next 10 years. Commenter s said that because all three of Washington's investor owned utilities own part of the plant, it is likely that th eir share of the generation capacity of this plant would be offset at least partially by existing combined cycle power plants located in Washington and Idaho. Commenter s explained that as existing combined cycle power plants ramp up, they could contribute extra emissions resulting in a higher lbs/MWh final emission rate, even though combined emissions from Washington and Montana would in fact decrease. Commenter s suggested that the EPA allow a state to modify its approved state plan and recalculate its emis sion standard to reflect the increased usage of existing NGCC units that offset the permanent closure of out of state coal EGUs. Commenter s indicated this would minimize the inherent penalty a state would face while remaining consistent with the overall go al of the proposal to ensure that greenhouse gases nationwide, not just within individual states, are reduced.

Comment 18: The EPA must clarify in the final regulation that states can modify compliance plans even if they are meeting goal

Response 18: See section V III

. B . of the final rule preamble of the CPP for the EPA’s response to this comment.

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

Commenter s stated that the EPA must clarify that states are not limited to modi fying plans only to address the failure of a plan element to perform as projected. Although the preamble clearly states that States can seek EPA approval for modified plans, the proposed regulation as written could be read to limit states' ability to prop ose modifications only where a modification is necessary in order to ensure that the emission performance goals will be met. Commenter s referred to proposed 40 C.F.R. Section 60.5785, 79 Fed. Reg. at 34,954 ("If one (or more) of the elements of the state plan set in Section 60.5740 require revision with respect to reaching the emission performance goal set in Section 60.5765 a request may be submitted to the Administrator indicating the proposed corrections to the state plan to ensure the emission performa nce goal is met.").

Commenter s stated that 79 Fed. Reg. 34,917 allows for states to propose modifications to approved plans to update or alter existing enforceable measures or add new enforceable

measures. Commenters stated t his is an important state flexibility as it allows states to address changing circumstances over the long life of compliance. Commenters stated i t is not likely that plans developed in 2016 would reflect the emission reduction options available in 2025, no r could they. Commenters stated p lans developed in 2016 also may not be able to appropriately address the requirements of the interconnected power system in the future. Also, commenters stated the implementation of the Building Blocks simultaneously will r equire fundamental152 changes in how the power system is operated and planned

--- many of these changes cannot be anticipated at the time state plans are submitted and before implementation has begun. Commenters stated n ew generation or energy storage technolog ies that provide a cleaner, more reliable or cost effective path to achieve the 2030 goals should be allowed to replace existing elements of the state compliance plan. Commenters stated a s EPA notes, as long as states can continue to demonstrate that plans are designed to achieve the 2030 goals, states should be able to propose modifications. [79 Fed. Reg. at 34,917 ("During the course of implementation of an approved state plan, a state may wish to update or alter one or more of the enforceable measures in the state plan, or replace certain existing measures with new measures. The EPA proposes that the state may revise its state plan provided that the revision does not result in reducing the required emission performance for affected EGUs specified in the o riginal approved plan.")]. Commenters stated t he EPA should clarify the proposed regulation accordingly.

Comment 19: Some sort of safety valve should be provided for states unable to fully comply with performance requirements

Response 19: See section V I II

. G . 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:

C ommenters state d that State Implementation Plans should be allowed to include some sort of of

f

- ramp or safety valve to guard against unforeseen impacts on reliability and
cost. Commenter s stated the safety valve provision would apply to those states that

- despite their best efforts

- cannot fully comply with the performance requirements. Commente r s said safety valve modifications could take the form of a relaxation of the performance requirements, exemptions for must run or critically needed units, or extension of time to meet the 2030 requirement. Commenter s stated that because the approach used to develop BSER is untested, the rule must contain such flexibility.

Commenter s said the IPM model is inadequate to fully assess system reliability impacts, and the EPA should include flexibility in the final rule for states and utilities to continue to ut ilize existing resource and transmission planning processes and tools to ensure reliability is not compromised as a result of complying with EPA's Clean Power Plan. Commenter s said in the event impacts to reliability are predicted, states should be allowed the flexibility to incorporate mitigation measures, including the time to implement such measures, into their state plans. Commenter s said if reliability impacts are encountered during implementation of state plans, EPA should allow a reliability safety v alve or variance process that suspends compliance for those states or entities which make adequate demonstrations.

C ommenters said that states should be allowed to incorporate safety values into their state plans that allow deviations from the state plan t o address situations where increases in the cost of electricity exceed a certain amount. Commenter s indicated that Missouri law requires the Air Conservation Commission to consider, among many other factors, the consumer impacts of applying an emissions s tandard and compliance schedule to an affected source, including any disproportionate electric rate impacts on low income populations. Commenter s indicated the153 regulation should allow States to consider such economic factors and extend deadlines or adjust target goals as needed to avoid excessive increases in electricity rates.

Commenter s said states should be granted a structured exemption to allow emissions in excess of their target levels for a declared emergency period such as 2014 Polar Vortex, a majo r nature gas transmission outage, or a long

- term forced outage of a zero

- emissions resource.

Comment 20: The EPA should establish an appropriate "safety valve" mechanism to adjust the stringency of the program if the assumptions relied upon in setting the goal prove not to be true or have changed due to unexpected circumstances. There also needs to be a mechanism to adjust for the shutdown of existing nuclear plants when their license extensions expire or other major energy development that may increase t he carbon intensity of a state's generating fleet

. Response 20: See section V I II

. G . 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 sai d the Proposed Rule takes the position that the emission goals are binding on the states, and that once finalized, states may not adjust the goals to make them less stringent. Commenter s said the number of assumptions made by EPA in calculating state goals , and the sensitivity of the goal to these assumptions, as well as the potential for force majeure events, dictates the need for an adjustment mechanism.

C ommenters said the EPA's state emissions goals are based on numerous assumptions and projections abou t the amount NGCC capacity, RE, nuclear energy, and EE that states and EGUs could implement in over the next 15 years. These commenters said it is very unlikely that any state can make all necessary corrections to these assumptions during the rulemaking pr ocess. These commenters said in addition, the achievability of the goals is also subject to numerous implicit assumptions about new transmission and pipeline capacity, technology improvement, and, in the case of mass

- based goals, limits on demand growth. T hese commenters said the sheer number of assumptions, and the sensitivity of state emission targets to these assumptions virtually guarantees that EPA's projections about what might be achievable for EGUs in any given state could be significantly incorrect . These commenters said finally, force majeure events, including unanticipated regulatory, weather, or other events outside the control of a state's EGUs could significantly disrupt a state's or EGU's ability to meet its emission target. These
commenters s aid for example, an earthquake or hurricane could lead to the extended shutdown of a large base load nuclear facility; similarly a large, unexpected cold

- weather event (similar to last winter's Polar Vortex) could constrain natural gas supplies and disrupt a state's plan to re

dispatch significant generation from coal to NGCC units.

C ommenters said the EPA should establish an appropriate "safety valve" mechanism to adjust the stringency of the program if the assumptions relied upon in setting the goal prove not to be true or have changed due to unexpected circumstances. Commenter s also said the final rule should establish an adjustment mechanism under which the EPA, on the basis of an application from a state, could (without having to reopen the rule) allow states to reflect a change in the154 underlying state goals. Commenter s said changes could include decreasing the stringency of the emissions rate goal or extending the compliance deadline for a particular state in order to mitigate any significant adverse re liability effects or to reflect changed circumstances that cannot feasibly be offset by other actions within control of the state.

Commenter s stated that EPA proposes to finalize the goal for each state as provided in the Proposed rule, but the EPA stated that adjustments to the goal may be appropriate based on comments that implementation of the building blocks at the levels envisioned by EPA is technically infeasible or too costly. The commenter s stated that the state emissions goals are based on numerous assumptions and projections on the future levels of NGCC generation, RE, and EE states and EGUs could implement in over the next 15 years. They also stated that the achievability of the goals is also subject to numerous implicit assumptions about new
tran smission and pipeline capacity, technology improvement, and, in the case of mass

- based goals, limits on demand growth. The commenter s recommended that the EPA establish an appropriate mechanism to adjust the stringency of the state emission goals if the as sumptions relied upon in setting the goal for a particular state prove not to be true or have changed due to unexpected circumstances.

Commenter s said states should have broad discretion to make any changes to their plans so long as they achieve the minimu m applicable state emission rate goal

- the minimum federal requirement. Commenter s said providing states with flexibility to adjust their compliance plans will allow states to respond to future constraints while minimizing cost and reliability impacts to electric customers.

C ommenters said in addition, there needs to be a mechanism to adjust for the shutdown of existing nuclear plants when their license extensions expire or other major energy development that may increase the carbon intensity of a state's generating fleet. Commenter s added that adjustment should also be allowed to account for an order by another federal agency or during drought

Comment 21: States should have the authority to increase emission rates because of new fossil fuel fired generation added during the time period January 1, 2012 through January 2014.

Response 21: See section VII of the final rule preamble of the CPP for more information about when a state may adjust its goals. The EPA has incorporated fossil fuel units that commenced construction prior to January 8, 2014 in its quantification of BSER. These values are also incorporated into the conversion to state and mass goals. Therefore, EPA does not believe a state would have the need to make any further adjustments on th is front.

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

Commenter s said the draft guidelines appear to create a window between January 1, 2012 and January of 2014 where new generation can come on

- line and the state not rec eive recognition for higher levels of emissions. Commenter s said generation that came on line during that period is not fully reflected in the baseline year. Commenter s said additional emissions during that period because of the plant will have to be fully absorbed by the state and the other generators

- those conditions could not have been foreseen even two or three years earlier. Commenter s suggested155 that the final regulation should allow states to increase emission rates because of new fossil fuel fired generation during this unaccounted period.

Comment 22: Goal adjustment should be allowed for more than just demonstration of increased
cost

. Response 22: See section VII of the final rule preamble for discussion of how states can adjust their goals.

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

Commenter s indicated that overall achievability, and not just cost, should be allowed to be considered in determining the need for target modification. Other commenters suggeste d that goals should be allowed to adjust based on other factors.

Commenter s state d that as written, the rule indicates that EPA will only modify a proposed target upon a showing that the cost to comply was significantly higher than that proposed by EPA. C ommenter s contend ed that overall achievability that does not adversely affect reliability is perhaps an even greater factor than just increased cost. Commenters stated o verall achievability can include matters such as: feasibility and effectiveness of a m easurement and verification protocol for EE; time needed to construct major transmission upgrades, regulatory approvals needed to ensure timely cost recovery of efficiency improvements at power plants; marketing of EE program, and the deployment and siting of new natural gas infrastructure and renewable resources. Commenter s state d that the proposed evidentiary burden for target modification in the proposed rule is too narrowly drawn and should be expanded to include more than just significantly increased costs.

Commenter s said that as required by the statue and existing regulations, States must be granted flexibility in establishing state goals that include goal adjustment based on state

- specific or unforeseen circumstances as well as consideration of specific facts applic able to designated facilities including remaining useful life. Commenter s indicated that the EPA allow states an opportunity to file for relief and for a change to interim or final goals if necessary, based upon changed circumstance or good cause shown.

C ommenter s recommended that the EPA set guidelines allowing each state the flexibility to tailor the requirements to address the unique characteristics of its energy infrastructure and maintain fuel diversity. Commenter s also said that the guidelines must respect the primacy of the states by allowing states to develop plans that establish performance standards and discretion and flexibility in establishing compliance mechanisms.

Commenter s stated that the EPA should allow states to modify their plans if the y wish to do

so. Commenter s indicated that they expected that states may wish to amend their plans so they can continue achieving the most cost

- effective emissions reduction possible, especially if new technologies become economically viable during the im plementation period.156 Commenter s indicate d that when economic conditions have changed substantially, or if growth assumptions have resulted in underestimating CO2 emissions due to robust economic activity, states should be eligible to revise state plans to more accurately reflect program costs and performance, and to reflect current conditions.

C ommenters indicated that in the event of a fundamental change in system configuration the EPA should allow states to adjust their goals. According to commenters such changes could result from unforeseen an d unavoidable loss of zero CO2 emitting generation resulting from nuclear or RE EGUs shutting down due to circumstances beyond anyone's control such as due to earthquake or tornado. C ommenters indicated that such adjustments would be necessary due to the higher fossil fuel consumption that would be required for some time as the system increases generation from existing power plants to continue to ensure reliability in the absence of a significant amount of energy and capacity.

Comment 23: The EPA should i nclude an explicit mechanism for updating state goals after rule is finalized

. Response 23: See response 22 above.

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

C ommenters said that the goals set by the EPA may need to be changed after each state has had an opportunity to conduct a state

- specific analysis. Commenter s stated that EPA should include an explicit mechanism for updating state goals after the final rule. The commenter s noted that EPA's state goals are based on n umerous questionable assumptions and projections about the amount of heat rate improvements, NGCC capacity, renewable energy, nuclear energy, and energy efficiency that states and EGUs could implement in the future. The commenter s stated that the achievabi lity of the goals is also subject to numerous implicit assumptions about new transmission and pipeline capacity, technology improvement, and, in the case of mass

- based goals, limits on demand growth. The commenter s stated that the sheer number of assumptio ns, and the sensitivity of state emission targets to these assumptions virtually guarantees that EPA's projections about what might be achievable for EGUs in any given state could be significantly incorrect. The commenter s stated that force majeure events, including unanticipated regulatory, weather, or other events outside the control of a state's EGUs could significantly disrupt a state's or EGU's ability to meet its emission target. The commenter s noted that for example, an earthquake, hurricane, or cybe r

- attack could lead to the extended shutdown of a large baseload nuclear facility; similarly a large, unexpected cold weather event (similar to last winter's Polar Vortex) could constrain natural gas supplies and disrupt a state's plan to redispatch signif icant generation from coal to NGCC units. The commenter s stated that despite the substantial likelihood that the assumptions underlying EPA's determination of state goals will turn out to be significantly incorrect, EPA has failed to provide an explicit me chanism for adjust state goals to address unanticipated difficulties in meeting the goals. The commenter s stated that if EPA persists in requiring state emission rates to be no less stringent than the EPA guideline, EPA should provide an explicit mechanism for states to request a change to their emission target after finalization of the Proposed Rule. The commenter s stated that EPA should also include a specific157 safe harbor mechanism for states and EGUs that would excuse their failure to meet the federal
go al in cases of force majeure.

Comment 24: Flexibility for unforeseen circumstances, as it relates to RGGI

Response 24: The EPA maintains that the final rule provides ample flexibilities to states. States are allowed to use the BSER measures, or other measures in their state plans to comply with the goals ; t here are flexibilities within the BSER measures and how they are executed ; and s tates also have non

- BSER measures at their disposal. See sections V.A and VIII.A of the final rule preamble of the CPP for more information.

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

Commenter s said that in several sections of the proposed rule EPA uses the Regional Greenhouse Gas Initiative (RGGI) as an example of how a multi

- state or mass

- based approach to reducing emissions can be successful and economically sustainable, and the EPA indicates that RGGI participation may be used as a component of a state's or region's compliance plan. Commenter s stressed that membership in RGGI is vo luntary, and is a cooperative effort between member states. Commenter s said that the EPA has not considered the possibility that a member state may withdraw from the group at any time, and thereby alter the effectiveness of the compliance plan for the rema ining members. Commenter s asked "If the actions required of members are part of an enforceable compliance plan, and the region or group is thrown out of compliance by the action of one member state, would the remaining member states then be subject to fede ral enforcement action, despite the fact that the non

- compliance was due to action by a different state."

Commenter s indicated that the EPA must incorporate provisions into the final rule to allow states the flexibility necessary to respond to unanticip ated circumstances. Commenter s stated that flexibility is needed in cases where markets are impacted by extreme weather events, fuel shortages or other events beyond the control of states or sources, and that provisions are needed to avoid conflicts betwee n a mandate for compliance and the necessity of assuring continued reliability of the electric power grid. Commenter s indicated that providing a framework for states to develop compliance plans that incorporate sufficient flexibility is an essential compon ent of the future stability and reliability of power grid operations. Commenter s stated that the proposed rule must acknowledge that factors beyond a state's control may affect compliance, and must provide a mechanism to allow states sufficient flexibilit y to respond to such circumstances.

Comment 25: To simplify the adoption of Regional Greenhouse Gas Initiative (RGGI) as a compliance mechanism for CPP, final rule should contain a reset provision similar to that in RGGI program

. Response 25: The EPA is f inalizing sub category

- specific emission performance rates, rate

based, and mass

- based state goals as explained in section s VI and VII of the final rule preamble

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

C ommenters said to simplify the adoption of RGGI as a compliance mechanism, the final rule should contain a reset provision similar to that in the RGGI program.

C ommenters said the RGGI states constructed the program at the outset with the understanding that any pion eering effort could require change over time. These commenters said for this purpose, the original agreement among the states called for a program appraisal, or "reset", at specific time intervals, and said the reset provision was intended to ensure that t he program could adjust to changing circumstances and forestall unintended consequences. These commenters said in the reset process completed in 2013, for instance, a series of public and transparent studies revealed that the original emissions cap (and as sociated allowance budgets) was no longer relevant to the circumstances "on the ground" due to extensive natural gas use, successful energy efficiency and renewable energy programs, and economic shifts. These commenters said these same studies indicated th at in order for the emission allowance price to have an effect on generator decision

- making, a process for bringing banked allowances into the marketplace was needed. These commenters said these and other changes to the program were executed in all the
par ticipating states during a two

- year process.

C ommenters said similarly, EPA should recognize in its final rulemaking that there are changes in the electric power market that are unforeseen at the present time, and that states that adopt a

mass

- based Existi ng Source Performance Standard compliance approach should be provided with an opportunity to revisit the mass

- based cap chosen in their state plans on a periodic basis. These commenters said for example, the feasibility of electric transportation may impro ve dramatically with specific advances associated with battery technology, and in such a case, electric demand could increase significantly even as economy

- wide emissions may plummet. These commenters said RGGI states should have an opportunity to revisit their electric sector emission caps to respond to such an environmentally

- positive development. These commenters said in the same manner, sudden changes in natural gas prices, or the unexpected loss of a significant portion of the nuclear generation fleet may lead to a need to reset the carbon dioxide emission cap to avoid unsustainably high power price impacts. These commenters said finally, a change in the number of states participating in the RGGI program may trigger a recalibration of the program so tha t it continues to serve as a 111(d) compliance mechanism; the EPA should recognize that this outcome is also unforeseen at the present time.

Comment 26: Small electric providers

Response 26: Small electric providers are subject to the same source category rates as all other providers if they meet applicability criteria established in Section IV.D

. However, states have the flexibility to distribute reductions among its EGUs in the manner it best sees fit. Please see

se ction XII.C. of the preamble for more i nformation regarding the impact to small entities

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

C ommenters indicated small electric providers have special considerations.159 Commenter s said that in June 2011, EPA convened a Small Entity Representative (SER) panel with respect to its rulemaking on NSPS for new and existing units. Commenter s indicated that this process was held pursuant to the requirements of the Small Business Regulatory Enforcement and Fairness Act (SBREFA), which is intended to provide small businesses flexibility in meeting federal regulations. Commenter s said that though this process was not completed by EPA in 2011, Commenter s filed comments that are relevant in this proceeding. According to c ommenter s , m ore than 90 percent of public power utilities qualify as small businesses under SBREFA. Commenter s indicated that they also offers these comments for review under the Regulatory Flexibility Act (RFA) and calls for consideration by the EPA, as well as by st ate agencies, of the many special governance issues, bond, debt management, and local governmental obligations that are to be considered under the RFA.

Commenter s stated that the rule must provide the flexibility necessary to ensure that small electric pr oviders

- most of which are cooperatives or municipal systems that tend to have very small generation fleets largely dependent on a single plant

- have compliance options that are achievable, to avoid putting them at a disadvantage. Commenter s suggested th at state agencies may want to set up subcategories or special practices and other measures to address unit concerns, and in particular, those utilities with small single units. Commenter s said that these should include unit

- by

- unit determinations by state agencies that factor the size of unit, age, remaining useful life, and feasibility of the reduction measures since they cannot easily accomplish the reduction goals. Commenter s said that in addition to the pollution reduction methods, state agencies should allow for reasonable methods of monitoring and verification for energy efficiency to avoid measures that are very burdensome and/or expensive for very small utilities. Commenter s pointed to the analysis provided by Professor Bradford Cornell for FTI Consulting that addresses the unique impacts of CO2 reduction measures for public power (municipal and electric coop) as well as some other for profit utilities.

Commenter s stated tha t, instead of allowing states to conduct a unit

- by

- unit analysis to determine what they can reasonably achieve in emission reductions, the EPA proposed to establish statewide goals that assume all sources can achieve the goal. The commenter s explained that , if the state determines that a cooperative or other utility cannot achieve the prescribed goal, other utilities would need to make up the difference, and that this removes any incentive for a state to fairly evaluate what an individual utility could achi eve and set its requirement accordingly.

Commenter s indicated that specifically, the EPA needs to be aware of the fact that there are numerous small municipal systems that have only one generation resource under 100 MW today. Commenter s said that the implications for those communities under the Proposed Rule are particularly grave as those municipal systems do not have the flexibility to rely on other units.

Commenter s indicated that since Section 111(d) calls for the consideration of c ompliance costs, the EPA must take into account the unique impacts that any final rule will have on public power utilities owning only coal

- fired power plants. Commenter s also suggest ed the EPA review 2014 paper written by Professor Bradford Cornell, for F TI Consulting, regarding the potential impacts to public power, rural electric cooperative utilities, and other utilities as a result of a regulatory system with no effective control technologies or other options to reduce CO2 economically.160 Commenter s in dicated that large utilities generally own numerous jurisdictional EGUs, and this variety of ownership in their generating fleet presents other advantages that small utilities simply cannot employ. Commenter s indicated that for example, they can implement both plant

wide and fleet

- wide measures to achieve emission reduction requirements. Commenter s stated that moreover, large utilities with multiple plants within their fleet can maintain flexibility to meet load from certain resources when output for jurisd ictional resources is necessarily reduced when achieving required emissions reductions. Commenter s indicated that because of these difference, states should be permitted and encouraged to shape their respective SIPs in such a way that assists small utiliti es to provide them with flexibility in implementing the Proposed Rule that is already inherent in large utilities' ability to implement the Proposed Rule. Commenter s said that increased flexibility will not soften the requirements of the Proposed Rule, but will instead afford the states the authority to revise certain requirements in addressing special considerations unique to small utilities.

Commenters said the EPA established four "building blocks" as their interpretation of the BSER which will be diffic ult for the cooperatives to meet. Commenters said that, even though the reduction goals vary considerably, the requirements give the states little leeway on how to achieve the EPA's goals. Commenters said the rural electric cooperatives' limited generation portfolio will be unable either cost

- effectively implement or technically achieve the building blocks because of their reliance on coal

- fired generation, and other practical realities limit cooperatives.

Commenters stated that, EPA has significant flaws in each of the building blocks that negate the EPA's perceived flexibility. Commenters said that, EPA needs to recalculates the goals for each state based on what building blocks each state can achieve. Commenters said this recalculation will help mitigate some of the changes faced by cooperatives and other utilities.

Comment 27: Unique challenges faced by small municipal utilities warrant adjustments to proposed rule

– the EPA must recognize states role in establishing targets and must limit BSER to the s ource

- specific technological and operational measures that Congress contemplated

. Response 27: Small municipal utilities are subject to the same final goals as all other utilities. Please see se ction XII.C. of the preamble for more information regarding t he impact to small entities

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

Commenter s said the challenges faced by small municipal utilities can be minimized by allowing states a role in developing emissions targets. Commenter s said as a small municipal utility whose principal generating resource is a single coal fired unit (Sherco 3) in which it owns only a minority stake, Southern Minnesota Municipal Power Agency (SMMPA) faces unique obstacles in complying with EPA's proposed Clean Power Plan while still providing its customers an affordable supply of energy. Commenter s said as drafted, the Proposed Rule will likely result in either the curtailment or shutdown of Sherco 3, which has historically provided approximately 2.5 million MWh of base load generation to SMMPA's members on an annual basis.161 Commenter s said the curtailment or shutdown of Sherco 3 would, at best, severely hamper SMMPA's ability to provide affordable power to its customer base and, at worst, frustrate that ability entirely. Commenter s said these outcomes can best be minimized, or possibly avoided altogether, by recognizi ng the States' assigned role in the process of establishing and applying standards of performance to existing sources and by limiting BSER to the source

- specific technological and operational measures that Congress contemplated and EPA has long recognized

Comment 28 : States must be able to update the mass goal based on the rate

- to

- mass conversion, if demand increases differently than projected

Response 28: The EPA is final i zing mass goals as explained in section VII of the preamble.

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

Commenter s support ed the concept of being able to convert from rate to mass to establish the state goal. Commenter s said that projecting the demand for electricity in a state 20 years from
now cannot be done with accuracy

- technology and electricity demand can change quite dramatically over such a long horizon. Commenter s said that for this reason and others, there may be hesitation to adopt a rate

- to

- mass goal conversion. Commenter s said that if the re is a provision for a mass

- based goal conversion there must also be an ability to update the mass goal based on the conversion, should the demand for electricity increase differently than projected.

Comment 29: Determination of RE potential and ability o f states to alter their renewable energy goals

. Response 29: The EPA has revised the proposed goals taking into consideration several RE adjustments brought up by commenters. See section V.E. of the final rule preamble of the CPP for more information abou t the changes to Building Block 3 and the CO 2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP for how the final goals were calculated.

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

Commenter s said that that there are significant logistical issues associated with adding new renewable resources which may preclude states from meeting the proposed goals. To address this uncertainty Commenter s requested that EPA include a provision allowing states to seek adjustments to their renewable energy goals in connection with the state plan development and approval process upon a demonstration that such goals are technically infeasible. Commenter s said such a provision would protect states and electricity consumers from unintended reliability issues or unreasonable costs associated with trying to meet a standard that is technically infeasible, while retaining EPA's ultimate authority to determine whether the goal revision is appropriate.

Commenter s said the EPA should allow states to determine their own renewable potential, including transmission availability, and integration schedules based on thorough state specific162 and regional analyses and interest fr om renewable developers. Commenter s said if states are not allowed to determine their own RE potential, then the EPA should evaluate the RE potential of each state independently.

Commenter s said because EPA accounted for hydropower production by includin g it in setting renewable energy and energy efficiency goals, EPA should not penalize states with hydropower by not allowing them to use hydropower for compliance. Commenter s said instead, EPA should give states the flexibility to use existing hydropower t o demonstrate compliance with the state goal.

Comment 30: States should have the authority and flexibility to adjust EE goals to reflect what is realistically achievable. If EPA uses proposed methodology for calculating EE savings, there must be a mecha nism for adjusting state rate goals if the import/export allocations between states change significantly

Response 30: The EPA has determined that demand

- side EE programs (proposed building block 4) are not a component of the final BSER. See section V.A of the preamble for discussion of this issue

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

Commenter s recommended that the EPA change the proposed rule to give states the authority and flexibility to consider regional custom er and energy demand profiles and accordingly adjust energy efficiency goals included in Building Block 4 to reflect what is realistically achievable.

Commenter s said EPA asks if states that are exporters, whether they should have to scale up the EE saving s to establish BSER in order to ensure all EE is included in BSER goals. Commenter s said this methodology requires that the remaining MWh of avoided generation due to EE be allocated to the various states from which North Carolina imports. Commenter s said using this approach to calculate BSER goals, which are fixed once the rule is promulgated, assumes that all states will maintain the same in terms of their import/export relationships through 2030. Commenter s said given the changes in generation, costs, an d usage that may develop as a result of this significant rule making, this assumption appears highly inaccurate. Commenter s said if EPA adopts such a methodology, NCDENR recommends providing a mechanism for correcting state CO2 rate goals if the import/exp ort allocations between states change significantly.

Commenter s believed that states should be able to adjust their EE goals over time. 23541 noted that it is impossible to predict what level of EE savings will be achievable on a sustained basis over decad es. Commenter s stated that at some point, states may reach a point of diminishing returns where achieving additional energy savings becomes cost

- prohibitive. Commenter s suggested that if a state discovers that it is reaching that point and can demonstrate this to EPA, EPA should allow the state to adjust our EE goal to be less stringent. Commenter s stated that having the ability to make this kind of correction would recognize the savings already achieved by leading states and make the EE goals more equitabl e among states.163 Comment 31: Commenter s said States should retain the flexibility to choose whether RE and Energy Efficiency (EE) measures should be subtracted from the numerator or added to the denominator.

Response 31: The EPA has determined that demand

- side EE programs (proposed building block 4) are not a component of the final BSER. See section V. A of the preamble for discussion of this issue. Renewable energy remains a component of the final BSER. S ee the CO 2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP for the final goals and more information on how they were calculated.

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

Comment ers stated t he Nevada Agencies favor s allowing states the flexibility to choose whether RE and EE measures should be subtracted from the numerator or added to the denominator.

Comment 32: State

- specific concerns and advances in technology may require goal adjustments

Response 32: The EPA maintains that the final rule provides ample flexibilities to states to comply with the goals and that adjustments are not needed. States are allowed to use the BSER measures, or other measures in their state plans to comp ly with the goals ; t here are flexibilities within the BSER measures and how they are executed ; and s tates also have non

- BSER measures at their disposal. See sections V and VIII.A of the final rule preamble of the CPP for more information. With respect to adjustments for hydro intensive states, EPA has incorporated this concern into adjusting its baseline levels for hydro intensive state and believes this will accommodate fluctuations in hydro generation in those states in future years , as discussed in
sect ion VII of the final rule preamble

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

Commenter s indicated that which compliance pathways are available to each state and to what degree varies significantly, and emphasized that each Western state has a very different profile when it comes to electricity production. Commenter s said that some western states rely heavily on hydropower and natural gas generation, while others generate electricity mostly from coal, and these differe nces translate into differences in appropriate compliance pathways.

Commenter s indicated that the EPA must be able to adjust the goals as appropriate under warranted circumstances. Commenter s indicated that because RE and EE technologies change over time, requiring 70 percent utilization of existing NGC under BB2 may not be necessary in the future. Commenter s said that similarly to assume that 40 year old nuclear plants can continue to operate indefinitely is unrealistic and inappropriate. Commenter s stat ed that to require permanence of programs of this nature is unreasonable and short

- sighted.

Comment 33: Grid reliability concerns164 Response 33: The EPA maintains that the final rule provides ample flexibilities to states to maintain grid reliability

. States are allowed to use the BSER measures, or other measures in their state plans to comply with the goals ; t here are flexibilities within the BSER measures and how they are executed ; and s tates also have non

- BSER measures at their disposal. See sections V and VIII.A of the final rule preamble of the CPP for more information.

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

Commenter s indicated that the final rule should specifically grant states some level of flexibility in achieving compliance if adjustments are needed to maintain grid reliability or respond to changes in energy market conditions.

Several commenters stated that the schedule should be extended to allow a reasonable opportunity for compliance to allow flexi bility for the continued operation of base load generation where it is needed to support reliability.

Comment 34: G eneral goal setting, prioritization and adjustment comments

Response 34: See preamble section VIII for a discussion of state flexibility in state plan submittal.
The following are summaries of the specific public comments under this comment:

Commenter s stated that the EPA should allow states to set less stringent performance standards and longer compliance schedules, and states should be given maximum flexibility by the EPA to implement CO2 performance standards for fossil

- fueled power plants within their jurisdiction.

Commenter s indicated that states should have a larger role in how the final emission targets are established because the goals will require states to make changes in the way they dispatch electricity and manage nuclear and renewable power assets. Commenter s said that states are in a better position to determine the feasibility of some of the EPA assumptions.

Commenter s suggested that EPA use a tiered

- set of higher

- to

- lower priorities for approving state implementation plans in an expanded set of building blocks for BSER measures. Commenter s indicated the EPA should place a higher priority on energy efficiency and substitution of coal and natural gas with clean energy generation sources of wind, polar photovoltaic, biomass, and biogas.

Commenter s strongly support ed the ability, given to states by the proposed rule, to administratively adjust the requirements for individual EGUs in their State plan.

Commenter s said the EPA should allow states to propose alternative timelines for meeting their interim targets if, and only if, a preexisting and binding compliance agreement involving an existing generating unit is in effect.165 Commenter s encouraged EPA to move forward with the CPP, but indicated that the state targets may have to be adjusted in a few years. Commenter s suggested EPA consider strengthening the regulation further.

Comment 35: Non

- transmission alternatives and tiered set of priorities

Response 35: The EPA is providing the states with a mple flexibilities to comply with the final goals. States are allowed to use the BSER measures, or other measures in their state plans to comply with the goals ; t here are flexibilities within th e BSER measures and how they are executed ; and s tates also have non

- BSER measures at their disposal. See sections V and VIII.A of the final rule preamble of the CPP for more information.

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

Commenter s suggested the EPA should encourage non

- transmission alternatives, and should develop a tiered

- set of priority steps for states to use in planning.

Non

- transmission Alternatives

. Commenter s suggested that an opportunity may exist for the EPA and the Federal Energy Regulatory Commission (FERC) to coordinate with the states through the requirement to develop state implementation plans to comply with the Clean Power Plan. Commenter s said that there may be some crosswalk opportunities with requirements for regional transmission planning under the FERC 1000 rule, which requires consideration of non

transmission alternatives (NTAs or Non

- Transmission Solutions) during regional transmission planning. Commenter s indicated that NTAs are resource s that can replace the need for additional transmission through energy efficiency, demand response, distributed generation, or centralized generation sited near load. Commenter s said that the additional benefits of NTAs are avoided energy costs, reduced wh olesale electricity costs, reduced air pollution and water usage, and avoided land use and siting issues. Commenter s indicated no ready source of funding or cost allocation methodology exists for non

- transmission issues, and suggested that the economic and environmental benefits of NTAs could be calculated under research and formulas developed during a collaborative step by EPA, FERC and the states. Commenter s said a memorandum of understanding between EPA and FERC with a linkage to language in the final ru les for the Clean Power Plan could simultaneously address gaps in grid reliability issues, regional energy planning (specifically transmission planning under FERC 1000), add a requirement to develop a calculation of costs and environmental benefits of redu ced air pollution (including greenhouse gas reductions) and reduced water usage from the greater use of NTAs, and some requirement for participation of public utility commissions and state air and water quality regulators to participate in mutual planning processes. Commenter s suggested that perhaps a portion of this work encouraging NTAs falls under the EPA creating in the final rule a tier

- system to prioritize a Best System of Emission Reduction (BSER).

Tier

- set of Priorities . Commenter s said the propose d building blocks to create a best system of emission reduction for the state implementation plans could recommend a tier

- set of priority steps as follows:

1. System

- wide energy efficiency measures166 2. Increased use of combined heat and power systems

3. Greater ut ilization of waste

- to

- energy generation options

4. Deeper utility market integration of distributed energy resources (DERs) particularly with increased use of microgrids, energy storage, and distributed generation of renewable energy sources such as wind, so lar, and biomass and biogas.

5. Demand reduction

6. Re

- dispatch from coal

- fired steam and oil/gas fired steam generation by increasing generation from existing natural gas combined cycle plants.

Comment 36: Comments specific to Alaska's situation

Response 36: The EPA is not including emission performance goals for Alaska in this final rule. See section VII of the preamble for discussion of this issue

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

C ommenter s contended that EPA should exempt Alaska from the rule and allow the state to continue with ongoing energy projects that are tailored to Alaska's unique circumstances focused on rural communities and non

- affected EGU's. The commenter s stated that federal i ntervention would only result in unintended financial consequences. The commenter s stated that Alaska's energy efficiency programs often focus on improving thermal, rather than electric, efficiency, and more than 35% of total renewable energy funding has g one to heat recovery and biomass heat projects. The commenter s added that thermal energy efficiency measures displace diesel fuel and reduce carbon emissions and also serves to reduce, rather than increase, costs to customers. The commenter s stated that in a typical Alaska household, 80% of the energy consumed is used for space and water heat and programs tend to be more successful as homeowners are more inclined to invest in energy efficiency measures that reduce thermal energy consumption. The commenter s added that in the arctic and subarctic climate, thermal energy has significantly greater import for health and human safety. The commenter s also added that Alaska's renewable energy and energy efficiency projects also often focus on communities with the hi ghest costs, which are rural communities. The commenter s stated that Alaskan consumers pay among the highest rates for heating and electricity in the country

- 50% higher than the U.S. average, and remote communities face greater challenges in ensuring elect ric service reliability. The commenter s stated that to be credited towards compliance with this Proposed Rule, energy efficiency measures must relate to electric energy produced at affected EGUs. The
commenter s contended that the rule will likely forcibly refocus state energy efficiency programs from thermal energy to electric generation. The commenter s added that because many rural communities are not connected to the "affected EGUs" the renewable energy and energy efficiency measures may not qualify for i nclusion in Alaska's State Plan. The commenter s contended that forcing Alaska to focus on reducing carbon emissions within the Rail belt could jeopardize funding for existing and future energy programs in rural communities where the state is partnering wit h Village Corporations, Tribal entities and Village Utility Cooperatives. The167 commenter s concluded that this result is inconsistent with EPA's environmental justice mandate to avoid disproportionately high and adverse human health or environmental effects on minority and low income communities. The commenter s also explained that Alaska cannot reduce carbon emissions from the specific "affected EGUs" in a timely manner without exorbitant cost or compromising reliability of electric service. The commenter s ad ded that Alaska's existing informal energy policy has the impact of reducing carbon emissions and the state supports several renewable energy, energy efficiency, and natural gas development programs that will not count toward compliance with the Proposed R ule because they impact non

- affected EGUs or target space heat, rather than electric, efficiency. The commenter s described the programs Alaska is running. The commenter s added that their Rail belt utilities are just completing a substantial upgrade of thei r generation fleet, resulting in substantial heat rate improvements. The
commenter s noted that there are limited carbon emissions from this sector in Alaska.

Comment 37: Commenters asserted that the Rule provides flexibility for states to meet their goals.

Response 37: The EPA agrees with the commenters that the final rule provides flexibility for states to meet their goals. Please 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 the final goals

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

Commenter s stated that they do not foresee any issue with s mall utilities in North Carolina unless the one NGCC unit owned/operated by a municipality that the commenter s identified unless the unit remains in the goal calculation. The commenter s noted that this unit actually operates as a peaking unit and should be excluded from the rule.

Commenter s stated that with the variety of compliance options, including energy efficiency and renewable energy, New York and other states will be able to meet their targets at low cost, while providing new options for consumers. T he commenter s noted that by driving investment in renewable energy and other advanced energy technologies, the Clean Power Plan will further accelerate the country's transition to a high

- performing grid that is efficient, reliable, resilient, flexible, cl ean, affordable, and consumer

- focused and to energy independence. The commenter s stated that the Proposal recognizes the value of advanced energy technologies for reducing emissions, especially wind energy, solar power, and hydropower and that the Proposa l is flexible enough to provide new business opportunities, spur investment, and encourage technology

neutral solutions to allow for competition in the marketplace, depending on how states choose to implement it.

Comment 38 : The EPA is attempting to restri ct the states' ability to challenge the EPA's assumptions in developing the state goals by refusing to change a state's goals even if the state shows a particular block is not feasible unless the state also proves that additional reductions from the other blocks are not feasible. The EPA's interpretation of FCAA section 111(d) is not correct. The EPA does not have the legal authority to require a state to go beyond BSER to meet a standard of performance in order to account for the EPA erring in its assumpti ons on one or more of the blocks.168 Response 38 : See Preamble section VII and VIII.
The following are summaries of the specific public comments under this comment:

Commenters stated, the EPA indicates in the preamble that if a state demonstrates that a part icular block is not feasible for the state to implement as the EPA assumed, the EPA would not adjust the state's goal to reflect that change unless the state also demonstrates that it could not get additional reductions from application of other building b locks, or in related, comparable measures (79 FR 34893). Commenters said, effectively the EPA is requiring states to reprove BSER for all four of its building blocks and beyond before admitting that the EPA has erred in its assumptions on any of the buildi ng blocks. Commenters said, the EPA attempts to support this position by claiming that the building blocks do not represent BSER themselves and only represent what the EPA considers to be a reasonable overall level of reductions. Commenters said, the build ing blocks are used to directly determine the state goals. Commenters said, the EPA cannot sever the link from the building blocks to EPA's BSER determination in such an arbitrary fashion and the EPA's interpretation of FCAA section 111(d) with regard to w hat represents BSER is flawed. Commenters said, the EPA's legal obligation under section 111(d) is to establish standards of performance for existing sources through the application of BSER. Commenters said, while the TCEQ maintains the EPA does not have t he legal authority to establish Blocks 2

- 4 as BSER, the clear application of section 111(d) in the context of the EPA's proposed rule is that the state goals would represent the standard of performance and the building blocks are what the EPA assumes are the application of the technology to achieve that standard of performance, i.e., what the EPA considers to be BSER. Commenters said, the EPA cannot require a state to go beyond BSER under section 111(d). Commenters stated that requiring a state to demonst rate that it cannot achieve additional reductions from the application of other building blocks requires states to go beyond BSER, since EPA represents each building block as an independent basis for emission reduction, that, when combined, result in an ap plied overall state goal. Commenters said, if, as the EPA contends, the building blocks do not represent BSER, then the EPA has not met its legal obligation to evaluate and apply BSER to set a standard of performance under the FCAA and the proposed rule is invalid and should be withdrawn.

Commenters stated, in the proposed rule, EPA suggests that "[a] state may demonstrate during the comment period that application of one of the building blocks to that state would not be expected to produce the level of emi ssion reduction quantified by EPA because implementation of the building block at the levels envisioned by EPA was technically infeasible, or because the costs of doing so were significantly higher than projected by EPA." [79 Fed. Reg. 34893 (June 18, 2014 )] Commenters said, EPA then declares it "expects that, for any particular state, even if the application of the measures in one building block to that state would not produce the level of emission reductions reflected in EPA's quantification for that stat e, the state will be able to reasonably implement measures in other of the building blocks more stringently, so that the state would still be able to achieve the proposed goal." Commenters said, this position lacks reason and only points to EPA's misguide d attempt to base the BSER on achievement of a total reduction in emissions rather than an accurate technical analysis. Commenters said, perhaps this position does not apply to South Dakota because they argue in these comments that all of the building bloc ks proposed for South Dakota are either technically infeasible or forecasted to be a higher cost than EPA projects, however, state goals as determined by BSER in the final rules169 should be based on sound technical analysis, not a sliding scale in order to r each a political target.

Comment 39 : Commenters argued that the EPA has implied that even if the BSER and state goals are not achievable by application of the four building blocks, EPA will not change the BSER because there may be other things that can be done to reduce emissions. Commenters argued that this approach is inconsistent with section 111 for EPA to select a BSER this is unachievable because section 111 requires EPA to determine controls that are adequately demonstrated and emission limitations that are achievable, meaning controls that a source must be able to install and be able to use to meet the resulting emission limitation, according to the commenters. Commenters stated, because the emission limitation is representative of what BSER can achieve, sources have always been free t o select alternate controls that meet the BSER limit, but it is contrary to the CAA to set a BSER that is not achievable with any of the controls available to the actual source of emissions.

Response 39 : EPA is finalizing subcategory

- specific emission perf ormance, rate

- based state goals, and mass

- based state goals and believes that all EGUs have compliance options available to meet its reduction obligation.

Comment 40 : States should hear utility petitions for accepting a unit as delivering adequate heat r ate performance and change the state’s target.

Response 40 : There are no unit

- level heat rate requirements in the quantification of BSER. It reflects the regional fleet reduction potential through a building block.

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

Commenters recommended that states be allowed to hear petitions from utilities for accepting a unit as delivering adequate heat rate performance, giving consideration to cost effective deployment of heat rate improve ment measures. Commenters stated that upon state approval of the unit's petition, the state's target would be adjusted to reflect the change in the state's Block 1 stringency.

4.7.2 Stranded assets/stranded investments

Chapter 4.7.2 covers public comments related to concerns that the proposed state goals would result in stranded assets and stranded investments. Many additional comments and responses on the topic s of stranded assets and remaining useful life are in RTC chapter 5. 11 ; there is substantial overlap among comments in chapters 4.7.2 and 5.11

. A few additional comments and responses on these topics are in the preceding section, RTC chapter 4.7.1. Note that some of these comments on stranded assets also discuss BSER issues that are not addressed here. For170 responses to those comments, see RTC chapters 3 and 4 , and sections V

- VII of the final CPP preamble

.

Commenters have raised a number of issues related to this subsection which are organized by topics (comments) below. R esponses are provided for these topics.

Comment 1: General; CPP will result in stranded assets/costs

Response 1: The EPA shares the goal of minimizing stranded assets. Although nothing in section 111(d) explicitly bars a guideline that results in some fa cilities becoming uneconomic before the end of their useful lives, the EPA nonetheless has striven to design the guidelines so as to give states flexibility to develop plans that allow power companies to recover their investments in generation units.

In re sponse to public comments, the EPA significantly revised its approach to BSER and goal

setting in the final rule, as explained in preamble sections V through VII. These changes, including moving the start date of the program from 2020 to 2022 and other im portant changes, ensure that CO 2 performance rates and state goals in the final guidelines are achievable considering cost

.
T he July 2015 docket memo titled “Stranded assets analysi s ” shows that the CO2 performance rates and equivalent state goals in the final guidelines can be met without the retirement of affected EGUs before the end of their book life, and without the retirement of affected EGUs before the end of the book life of capital

- intensive pollution control retrofits installed on those E GUs. Thus, the emission performance levels in the final guidelines provide state with sufficient flexibility to address stranded asset concerns.

See section I.A

, II.F

- G, V.A

- C , VIII.G

- H, X.C , XI.C

- E
, and XII.E of the final rule preamble of the CPP for addi tional response to this comment

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

Several commenters stated that the proposed rule will result in the stranding of assets

.
Commenter s stated the Proposed Rule will result in s tranded costs of approximately $3 billion; the basis for this conclusion is set forth in the Pace Study.

Commenter s stated the Fuel Use Act of 1978 made coal

- powered generating stations the only viable alternative at the time many of the rural cooperatives were constructing power facilities. The commenter s said the current proposed rule effectively requires a complete shuttering of all coal

- powered facilities in Arizona. The commenter s said this fails to recognize the capital investments that were incurred in order to comply with the Fuel Use Act that are still be paid off. The commenter s said if the proposal is finalized as written, the rural citizens of Arizona will be171 forced to shoulder additional financial burdens to comply with an administrative regulat ion that could change again when political whims shift. The commenter s said Arizona's citizens have a reliable and balanced portfolio of energy sources, which utilities here have worked diligently to create. The commenter s said this proposal will cost jobs, create uncertainty, and increase power rates across the state; Arizona's economy cannot withstand such an unfunded mandate.

Commenter s stated the EPA's goal

- setting methodology could result in significant stranded investments, which in turn would result in higher electricity rates for Members. The commenter s said NERA's estimates for the costs of the proposed rule are more realistic than those significantly underestimated by the EPA. The commenter s said NERC has raised serious concerns about potential reliability risks.

Commenter s stated EPA's goal

- setting methodology could result in significant stranded investments, which in turn would r esult in higher electricity rates.

Commenters stated that in spite of this clear congressional intent to regulate air pollution in a manner that avoids unreasonable economic impacts on entire industries, EPA's proposed rule would lead to significant strand ed costs as coal

- fired power plants

- many of which have recently invested in expensive upgrades

- are forced to retire under EPA's guidelines. Commenters said that EPA's own calculations assume that eleven states will be required to shut down every coal

f ired power plant in the state in order to comply with the state goal. Commenters said that several other states would be required to reduce coal generation by more than 50 percent. Commenters said that the state goals in the proposed rule, if adopted as EP A has formulated them, would require a reduction in annual electricity generation from existing coal units of more than 376 TWh, or of 25 percent versus the 2012 baseline. Commenters said that a reduction of this magnitude could lead to dozens of shutdowns of plants that have just recently made multi

million dollar investments in new pollution control technology to comply with EPA's MATS rule. Commenters said utilities that have invested in expensive emissions controls for mercury and other hazardous air po llutants will thus be faced with billions of dollars in stranded costs as a result of EPA's proposed rule. Commenters said that the imposition of such significant costs on owners of coal

- fired power plants is neither reasonable nor appropriate in light of the goals of the CAA.

Comment 2: States cannot determine remaining useful li fe, results in stranded assets

Response 2: Th e flexibility provided to states by the final emission guidelines enables states to consider remaining useful life of particular faci lities in designing their plans

. CPP preamble sections VIII(C) and VIII.G.1.(c)

- (f), and the “Legal Memorandum Accompanying Clean Power Plan for Certain Issues,” highlight that states have many options on how to design their plan requirements, and note va rious ways that states can take into account facility

- specific considerations in designing their plans.

In response to public comments, the EPA significantly revised its approach to BSER and goal

setting in the final rule, as explained in preamble section s V through VII. These changes,172 including moving the start date of the program from 2020 to 2022 and other important changes, ensure that CO 2 performance rates and state goals in the final guidelines are achievable considering cost, and leave room for sta tes, in practice, to consider facility

- specific circumstances such as remaining useful life.

The emission guidelines do not provide for states to make additional goal adjustments based on remaining useful life and other facility

- specific factors because st ates can fully consider these factors in designing their plans. Section 111(d) requires that EPA’s emission guidelines permit the states to consider remaining useful life in applying standards of performance to particular affected EGUs, and does not call f or facility

- specific remaining useful life considerations to be taken into account in determining the levels of emission performance that reflect the BSER.
For additional response to this and other comments on remaining useful life, including legal interp retation issues, see final CPP preamble section VIII.G.1, the “Legal Memorandum Accompanying Clean Power Plan for Certain Issues

, ” and RTC chapter 5.11. With respect to stranded assets, the EPA’s July 15 memorandum t itled “Stranded Assets Analysis ” shows that the national EGU performance rates in the final guidelines can be met without the retirement of affected EGUs before the end of their book life, and without the retirement of affected EGUs before the end of the book life of capital

- intensive pollution control retrofits installed on those EGUs. Thus, the final CO2 performance rates and state goals provide state with sufficient flexibility to address stranded asset concerns. See also the response to comment 1

, CPP final preamble section VIII.G and the l egal memorandum regarding stranded assets concerns.

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

Commenter s stated EPA notes that "under the proposed guideline, states would have the flexibility to adopt a state plan tha t relies on emission

- reducing requirements that do not require affected EGUs with a short remaining useful life to make major capital expenditures or incur unreasonable costs." The commenter s said EPA further states that "of the four building blocks consid ered by the EPA in developing state goals, only the first block, heat rate improvements, involves capital investments at the affected EGUs which, if mandated by a state rule, might give rise to remaining useful life considerations at a particular facility. " The commenter s said the agency believes that "the issue of remaining useful life will arise infrequently in the development of state plans to limit CO2 emissions from affected existing EGUs." The commenter s said therefore, EPA "purposes that the remainin g useful life of affected EGUs, and the other facility

specific factors identified in the existing implementing regulations, should not be considered as a basis for adjusting a state emission performance goal or for relieving a state of its obligation to d evelop and submit an approvable plan that achieves the goal on time."

Commenter s disagree d with EPA's factual assertions; for example the commenter s ha ve invested significant capital to comply with air emission standards; in reliance on the ability to re cover the costs of complying with those standards; with no consideration of useful life, units may be forced to retire, stranding the capital investment made to comply with other EPA rules, and increasing the cost to customers to comply with the CPP.173 Comm enter s stated EPA dismisses the statutory requirement to allow states to consider remaining useful life because states can employ Building Blocks 2 (natural gas re

- dispatch), 3 (renewable energy) and 4 (demand

- side energy efficiency) rather than Building B lock 1, thereby

- according to EPA

- allowing the state to allow EGU owners to avoid capital expenditures. The
commenter s said this decision effectively forces states to adopt specific control measures in violation of the "federalism bar." The commenter s s aid a state may want to employ Building Block 1, the only at

- the

- unit measure, but, knowing that EPA has dismissed remaining useful life considerations as "unnecessary," believe that it cannot employ Building Block 1 and, instead, must employ Building Bloc ks 2, 3 and 4. The commenter s said this determination denies a state "real choice" with regard to how it chooses to meet the goal because it cannot choose freely from among the BSER building blocks; for this reason, EPA, in dismissing its obligation to all ow states to consider remaining useful life, is violating principles of cooperative federalism.

Commenter s stated CAA section 111(d)(1)(B) requires that EPA's regulations: [S]hall permit the State in applying a standard of performance to any particular so urce... to take into consideration, among other factors, the remaining useful life of the existing source to which such standard applies. The commenter s said by its own terms, section 111(d) reflects an expectation that the application of BSER and standard s of performance must reflect a unit

- by

- unit analysis to determine which units can meet the proposed standards. The commenter s said despite the "remaining useful life" requirement in section 111(d), the Proposal deprives the States of their right to consid er the various statutory factors when setting the actual standards that are to apply to affected sources; instead, EPA proposes statewide, binding, nonnegotiable minimum emission targets that allow for at best minimal State consideration of unit

- specific f actors when determining how to apply EPA's guidelines to derive the actual standards that are to apply to the affected existing sources. The commenter s said the approach taken by EPA in the Proposal does not comply with the process required by section 111( d) and its implementing regulations. The
commenter s said EPA should withdraw this Proposal and issue a new one, limiting its actions to:

(i) Defining the procedures under which the States will develop and submit their section 111(d) plans; and

(ii) Ident ifying the BSER that has been adequately demonstrated.

Commenter s said the guideline should make clear that in setting the actual standards the States will be allowed to consider the various source

- specific factors referred to in the statute, including

co sts, feasibility and the remaining useful life of each existing source. If that were to occur, per the terms of the statute, the States would have a clear indication of the BSER and the requisite flexibility to apply that guidance on a case

- by

- case basis t o derive the appropriate standard(s) for each affected source. The commenter s said without a consideration of unit

- specific factors, the Proposal could

- according to EPA's own State Option 1 IPM modeling

- result in premature closures (like Plant Scherer Units 1 and 2), or substantially reduced operations (for Plant Wansley).

Commenter s stated Building Block 2 does not permit states to adequately take into consideration the "remaining useful life" of existing sources and "other factors" in setting perform ance standards as required by Section 111(d). The commenter s said implementation of Section 111(d) is based on the principle of cooperative federalism that underlies Section 110 and many other174 aspects of the CAA. The commenter s said EPA does not and cannot set national emission standards or establish the standards of performance for individual sources; instead, EPA is tasked only with the assignment to "establish a procedure" that the states can then rely on in setting the perfo rmance standards. The commenter s said the states rely on EPA's emission guidelines in preparing a plan submission, but are specifically allowed to consider "among other factors, the remaining useful life of the existing source." The commenter s said EPA has offered no justification that would excuse a state's failure to comply with an express requirement under Section 111(d).

Commenter s stated EPA contends that the structure of its rule allows states flexibility to consider remaining useful life for individ ual sources in the context of developing their State 111(d) plans; however, to the extent a State makes an adjustment to the standard of performance for an individual source, EPA requires states to make "compensating emission reductions" from other

sources : "Therefore, to the extent that a performance standard that a state may wish to adopt for affected EGUs raises facility

- specific issues, the state is free to make adjustments to a particular facility's requirements on facility

- specific grounds, so long as any adjustments are reflected (along with any necessary compensating emission reductions) as part of the state's Clean Air Act section 111(d) plan submission." The commenter s said thus, under the Proposed Rule, states would not be able to deviate from the proposed emission rate goals. The commenter s said this requirement is unprecedented and imposes improper constraints on the authority reserved to the states under Section 111(d) of the Act; the practical implication of EPA's "compensation" requirement and the accelerated compliance timeline imposed by the proposed "interim goals" is that states may be forced to (1) retire generating units ten or more years before the end of their remaining useful life, and, as a result, strand millions of dollars of assets that are dispatch

reliable, and (2) implement costly short

- term solutions in order to meet customers' energy requirements.

Commenter s stated EPA's continued implementation of Building Block 2 would have significant consequences for Montana

- Dakota and its customers. The commenter s said the Proposed Rule may force the premature retirement of the Big Stone Plant in South Dakota; Montana

- Dakota depends on the plant as a source of low

- cost reliable power. The commenter s said Big Stone is in the middle of insta lling a $384 million dollar Air Quality Control System (AQCS) required by an EPA rule establishing Regional Haze Program requirements for South Dakota. The commenter s said South Dakota determined that the AQCS project was cost

- effective for Big Stone consi dering that Big Stone is expected to operate for at least another 30 years; however, because Big Stone is the only coal

- fired electric generating unit located in South Dakota, it is unlikely that the state could make "compensating emission reductions" to a ccount for continued operation of Big Stone to allow for amortization of these investments over the remaining useful life of the unit.

Commenter s stated given EPA's proposed inclusion of avoided generation from coal

- fired EGUs as a primary component of it s defined BSER, stranded costs from premature closures of coal

fired generation must be considered "costs of control" that states can consider in making decisions in their state plan submission regarding standards of performance. The commenter s said the im pacts of closing these units long before the end of their remaining useful lives are sufficiently significant that it would be contrary to Section 111(d) to limit the states' ability to consider them. The commenter s said states should have the authority to consider whether (1)175 modifications to the timing of compliance or (2) the level of the state goal are necessary to avoid unreasonable economic consequences for power generators and their customers.

Commenter s stated the EPA's assessment of economic impac ts of the Clean Power Plan is plainly inaccurate; one of the major shortcomings is the failure of the proposal to account for the impact on utilities, consumers and the economy that result from stranded investments. The
commenter s said the proposal anticip ates (but underestimates) that it will force the premature retirement of "some" coal plants, as well as a reduction in the reliance on existing coal resources by shifting generation to natural gas and renewable resources. The commenter s said premature reti rement inescapably results in economic losses because useful life is properly thought of in terms of an asset's ability to yield on

- going economic value, so shutting down an electric generating facility prior to the end of its useful life is sure to result in losses for someone

- and ultimately the ratepayer.

Commenter s stated the useful life represents the period over which an asset is expected to provide value to its owner; in fact, the accounting assumption as to the useful lives of assets should be bas ed on economic and engineering studies, on experience, and on any other available information about an asset's physical and economic properties. The commenter s said in the case of public power electric utilities, the generating assets are, in effect, owned by the utility's customers, with the utility acting as their agent; so, customers bear the economic costs of ownership, but also realize the economic benefits. The commenter s said as long as the going

forward variable costs of producing electricity with t he coal plant are less than the all

- in costs (fixed and variable) of viable replacements (market purchases, or resource acquisitions), the plant will yield economic benefits for customers. The commenter s said if the plant ceases operation during its econom ically useful life, customers will suffer an economic loss from electric rates that will be higher than they would have been it if the plant continued to operate. The commenter s said the loss borne by customers will be the same irrespective of the debt

ser vice schedule.

Comment 3: During oil embargo Congress said only build coal

- fired plants, then federal and state regulations required massive investments in pollution control, now CPP will result in premature closings at great cost to consumers and decreas ed electric reliability. Premature closings will result in significant stranded assets which must be avoided, states should be able to adjust goals and implementation schedule, goal setting analysis must be recalculated imbedding into the model full econo mic return for investments

. Response 3: See res p onse to comment s 1 and 2 in this section (4.7.2)

. Regarding the comment that EPA could rerun modeled reductions for states in a building block approach imbedding into the model full economic return for these investments , the agency has performed an alternative analysis described in the July 2015 docket memo titled “Stranded assets analysis.”

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

Commenter s said utility specific analysis and the EPA's Regulatory Impact Analysis show that the shift to natural gas would result in the premature closing of many coal

- fired176 units. Commenter s said recently, utilities have spent billions of dollars for "state of the art" air pollution control systems to meet the emission limits of the Clean Air Interstate Rule (CAIR) and the utility MATS rule, and the EPA’s proposal does not take into account the billions in stranded costs for tho se units that will fall on consumers if those units are forced to prematurely shut down.

Commenter s said the EPA's failure to account for, and appropriately adjust states goals to reflect these commitments, is especially troubling since EPA provided no gu idance to utilities that undertook the significant investments required by MATS that it contemplated forcing the closure of these plants in the near term. Several commenters said Congress dictated during the oil embargo that utilities build coal

- fired gen erating units rather than oil or gas units, and other federal and state requirements have required massive investment in pollution controls for these same coal plants. Several commenters added the EPA is now proposing a regulation that will assure the prem ature closure of the coal units at great cost to consumers, and in a manner that threatens electric reliability. Several commenters indicated the EPA failed to include these stranded costs in the national cost assessment developed by EPA. Commenter s said failure to assess this cost impact is contrary to EPA's own guidelines which require the cost impact of a Section 111 proposal be assessed. Commenter s said the EPA's nod to the necessity of addressing stranded costs in the NODA is limited and fails to pro vide adequate guidance as to how EPA might propose to imbed into a 111(d) program a mechanism to address this critical issue.

Commenter s said that although the CAA requires consideration of remaining useful life, and the EPA Administrator said the rules would allow states to "avoid stranded costs", the proposed goal for South Dakota will likely result in the retirement of the state's single coal plant, resulting in stranded assets.

Commenter s said the Clean Air Act requires EPA to "permit the State in ap plying a standard of performance...to take into consideration, among other factors, the remaining useful life of the existing source to which such standard applies." Commenter s said within the proposed rule, EPA states, "because of the way state

- specific g oals have been developed in these proposed guidelines, remaining useful life and other facility

- specific considerations should not affect the determination of a state's rate

- based or mass

- based emission performance goal." Commenter s said EPA Administrator Gina McCarthy, in her testimony before the U.S. Senate Committee on Environment and Public Works, said the rules would allow states to "avoid stranded costs." Commenter s said despite this statement, the proposed goal for South Dakota will likely result in the retirement of the state's single coal plant. Commenter s said if the state goal is not set at feasible level, the result will be stranded assets in South Dakota, despite Administrator McCarthy's statement.

Commenter s said that in addition to not includ ing stranded costs in the assessment, the EPA also failed to assess the costs of building new gas pipelines and transmission lines that would be required by the closure of so many coal plants.

Commenter s said that the EPA must allow states the flexibility to adjust both the emission standards and implementation dates to assure that the state standards reflect a BSER that assures the reliability and security of the electric system while providing reasonably prices electricity to the consumer.177 Commenter s sa id even as the EPA is proposing a rule which establishes state

- by

- state reduction goals based on modeled closure of existing coal units, it is, at the same time, requiring emissions control projects for plants it presumes will close

- this is poor environm ental and energy policy. Commenter s stressed that utilities must be allowed to utilize investments for their full economic life in order to pay back financial obligations associated with these facilities and to capture appropriate economic return on that investment. Commenter s said that it would be appropriate for EPA to rerun modeled reductions for states in a BB approach imbedding into the model full economic return for these investments.

Comment 4: Rule will result in plant closures and associated str anded assets. Shutting down facility prior to end of its useful life will result in a loss, regardless of whether debt has already been paid. Their analysis indicates total cumulative losses due to early retirements of coal plants could range from $10 to $284 billion, with associated electric rate increases ranging from about 4 to 32 percent. Rule should be changed to allow states to accurately incorporate their own determinations of the remaining useful life of affected facilities into the development an d implementa tion of their compliance plans.

Response 4: See response to comments 1 and 2 in this section (4.7.2). See also section I.A, II.F

G, V.A

- C , VIII.G

- H, X.C , XI.C

- E , and XII.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 that it is generally expected that compliance with the emission goals contained in the Proposal will likely cause the premature ret irement of a significant number of U.S. coal

- fired generating plants. By the term premature, c ommenter s said they mean that the plants will be shut down before the end of their useful lives. Commenter s said certain stakeholders (e.g., electric utilities an d their customers and local communities) will suffer economic losses as a result. Commenter s said these losses include foregone economic value because the facility is no longer allowed to operate, as well as paying certain costs now "stranded" because the facility no longer produces the revenue to cover those costs. Commenter s said the notion that economic losses will result from premature retirement is inescapable because useful life is properly thought of in terms of an asset's ability to yield on

- going e conomic value. Commenter s said hence, shutting down an electric generating facility prior to the end of its useful life is sure to result in losses for someone. Commenter s said that the proposed regulation would force the retirement or restrict the use of plants, which would result in stranded assets.

Commenter s stated that CAA Section 111(d) (1)(B), permits states to take into consideration, "among other factors, the remaining useful life of the source" in developing their state compliance plan. Commenter s indicated however, in its construction of the building blocks and the resulting calculation of interim and final emission reduction goals, the EPA has substantially encroached on this state discretion, resulting in losses to the remaining useful life of g eneration sources and increased costs to consumers.178 Commenter s stated that like any long

- lived asset, electric generating plants require long

- term financing. Commenter s said it is sometimes mistakenly thought that an asset's useful life is directly related to the debt repayment or servicing schedule associated with its financing. Commenter s said that this in turn might lead some to conclude that retirement of an asset after the debt has been repaid somehow mitigates the economic losses attendant with retire ment

- this is not the case.

Commenter s indicated that there is no single, unambiguous way to precisely measure the useful life of an asset, but the underlying notion is that useful life represents the period over which an asset is expected to provide valu e to its owner. Commenter s stated that useful life is an economic concept with no necessary relationship to the period of debt service. Commenter s said that since total debt incurred represents a sunk cost that must be paid whether or not the asset remain s useful, the loss of economic value resulting from the premature retirement of an asset is unaffected by the debt service schedule. Commenter s stated that rather, useful life pertains to the time horizon over which an asset is expected to provide economic value to the owner.

Commenter s said that in the case of public power electric utilities, the generating assets are, in effect, owned by the utilities' customers, with the government entity acting as their agent. Commenter s stated that both the costs and t he benefits of asset ownership are conveyed to customers through their electric rates. Commenter s said that if the plant ceases operation during its economically useful life, customers will suffer an economic loss from electric rates that will be higher th an they would have been it the plant continued to operate. Commenter s emphasized that the loss borne by customers will be same irrespective of the debt service schedule.

Commenter s stated that on average, across the sector, approximately 40 percent of tota l electric output is produced from coal, with much higher percentages in some situations. Commenter s stated that this clearly constitutes a significant investment for these public power utilities and their customers, undertaken in anticipation of realizing long

- term benefits over the useful lives of the coal plants. Commenter s said that in many cases, unscheduled retirements over the next few years, related to the Proposed Rule, will truncate the expected benefit streams while the plants are still economic ally useful and thus result in significant economic losses to public power
customers.

Commenter s said that the useful lives of individual coal facilities will depend on a variety of factors, some of which may be unique to specific facilities. Thus, c omment er s said, it is difficult to offer a value that represents the remaining useful life of the combined public power coal fleet, but clearly the general expectation is that coal plants have very long useful lives. Commenter s said that a 2007 survey of 10 stat e utility commissions conducted by the Wyoming Office of Consumer Advocate found that respondents generally expected to see useful lives for coal plants in the range of 40 to 60 years. Commenter s said that similarly, data show that the average number of ye ars between the in

- service and expected retirement dates for coal plants owned by public power utilities is 35 years. Thus, c ommenter s stated, public power electric customers will likely suffer significant economic losses from the premature retirement of c oal facilities if the Proposed Rule is finalized.

Commenter s said that these early retirements will lead to higher electric prices related to replacement power costs, new capital investments, plant decommissioning costs, and possible179 credit downgrades. Com menter s indicated they have conducted some preliminary analysis to estimate the range of economic losses, and associated rate increases, faced by public power customers as a result of possible premature retirements of coal plans under the Proposed Rule.

Co mmenter s indicated that their analysis indicates that the total, cumulative losses could range from about $10 billion to about $284 billion, with associated electric rate increases ranging from about 4 to 32 percent. Commenters said that these values repre sent an indicative range of possible outcomes for the composite public power sector.

Commenter s said that many factors will affect the results including: the baseline level of electric rates before the coal plant retirements; long

- term natural gas prices; installed costs of replacement generation resources (e.g., NGCCs and gas pipeline and storage facilities); variable costs and operating characteristics of replacement facilities (including energy efficiency and increased utilization of existing gas plants ); the number of coal plants retired and associated electric output; long

- term coal prices; variable costs and operating characteristics of the coal plants subject to retirement; and the time horizon for the analysis, which reflects the remaining useful li ves of the affected coal plants. Commenter s indicated that one cannot predict precise outcomes with any degree of confidence, and the wide range of possible outcomes is cause for concern. Commenter s stated that it is not clear what the final impacts will b e, but under some plausible assumptions, they could be quite severe. Several commenters recommended that the proposed regulation be changed to allow states to truly and accurately incorporate their own determinations of the remaining useful life of affecte d facilities into the development and implementation of their compliance plans.

Commenter s stated to address stakeholder concern regarding limited cost

- effective options and stranded investments, U.S. EPA proposes to take into account the book life of the original generation asset, as well as the book life of any major upgrades to the asset, such as major pollution control retrofits. The commenter s said Ohio will have a well

- controlled coal powered EGU fleet as a result of the Mercury Air Toxics Standard (M ATS); it is illogical to expect these efficient and well

- controlled units to not be utilized after significant investments have occurred. The commenter s said U.S. EPA is seeking comment on how book life may be used to develop an alternative glide path to r eaching the final goal. The commenter s said when legally allowed, it is U.S. EPA's role under the CAA to establish the best system of emission reduction (BSER) for stationary sources and the states obligation to develop a plan based on BSER that sets a sta ndard of performance considering remaining useful life of those sources. The commenter s said U.S. EPA is again inserting itself into areas that have been governed by the Public Utilities Commission of the states by trying to develop a formulation of book l ife for power plants. The
commenter s said this is another example of U.S. EPA attempting to inject the federal government into the area that traditionally has been the states'. The commenter s said this approach only reinforces the concern of U.S. EPA attem pting to use Section 111(d) to usurp state authority.

Comment 5: If a coal

- fired generating facility is forced to retire early, there will be stranded
costs. If improvements were made to the coal

- fired plant to comply with regulations such as the regional haze regulation, these costs will also be stranded. The costs w ill be stranded regardless180 of whether any associated debt has been paid off, but stranded debt is most clearly demonstrated when facility has been financed with long

- term debt that is still being repaid. Generally public power utilities raise funds with l ong

- term debt in form of municipal bonds which can have maturities as long as 50 years. Due to these long maturities the consequences are more significant for public power or municipal utilities (compared to most investor

- owned utilities or merchant power plants) and therefore states should be allowed to set up subcategories or alternative regulatory compliance options for these types of utilities. EPA should give states flexibility to adjust both emission reduction goals and implementation dates

. Response 5: See response to comments 1 and 2 in this section (4.7.2)

. See also section I.A, II.F

G, V.A

- C, VIII.G

- H, X.C, XI.C

- E, and XII.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 said if the proposed rule forced the premature retirement of a coal generating facility, an electric utility's inability to recover the "legitimate, prudent, and verifiable cost" should be considered a stranded cost. Commenter s indicated that member com panies would be providing examples of stranded costs likely to result from the proposed rule, and discussed one such example to demonstrate their concerns.

Commenter s stated that if Laramie River Station (LRS), which serves consumers in several states, is forced to retire a unit or the entire plant, this will result in significant stranded investment. Commenter s indicated that currently, LRS is under a mandate from the EPA under the Regional Haze Rule to install Selective Catalytic Reduction (SCRs) on all three units at LRS, at a cost of $750 million to the project owners. Commenter s added that these investments must be made by 2019, a year before the start of the interim compliance period under the Proposed Rule. Commenter s said that if a unit at LRS is f orced to retire, $250 million of

consumer

- owned investment to meet Regional Haze rules will be stranded, on top of the economic value of the remaining useful life of the unit. Commenter s said that those costs will no longer be spread out over the 20 year r emaining life of LRS, but must nonetheless be recovered from consumers, a cost for which they will no longer receive any value. Commenter s emphasized that these stranded costs would exist whether the cost of financing a generating facility has been paid or is still being paid. Commenter s indicated that nonetheless, the existence of stranded cost is most clearly demonstrated when a facility has been financed with long

- term debt, intended to roughly match the useful life of the facility, that is still being repaid.

Commenter s explained that as state

- or locally

- owned, not

- for

- profit entities, public power utilities are limited in how they raise funds for long

- term infrastructure investments of all sorts, including electric power generation facilities and facility modifications

- generally pu blic power utilities raise these funds with long

- term debt in the form of municipal bonds. Commenter s said that municipal bonds are unique in that they tend to have maturities nearly twice as long as corporate bonds and generally are issued as a series of bonds with varying maturities, rather than a single maturity. Commenter s said that while the typical power

- related bond issue is relatively small, issuances financing electric generation or transmission projects generally total hundreds of millions or eve n billions of dollars and can have maturities as long as 50 years. Several commenters indicated that if a coal generating plant is retired early as a result of the proposed181 regulation, customers will be forced to pay for the cost of financing a new source of power generation, while also repaying the debt remaining on the retired plant (which could include debt associated with upgrades completed to comply with other EPA regulations such as Regional haze). Commenter s said that how to accurately account for such stranded assets is something that has, so far, not been addressed by the proposed rule, and that needs to be remedied in a way that accurately balances the utility's need for financial stability and the customer's need for reasonable rates.

Commenter s stated that the EPA should finalize a rule with an explicit opportunity for states to set up subcategories or alternative regulatory compliance options for public power or municipal utilities because municipal bonds tend to have maturities nearly twice as long as corporate bonds. Commenter s indicated that therefore, the consequences are more significant than for most investor

- owned utilities or merchant power plants. Commenter s contend ed that Section 111(d) expressly allows for state consideration of such factors.

Commenter s stated that the EPA must allow states the flexibility to adjust both the emission reduction goals and implementation dates to assure that the requirements on the state reflect a BSER that assures the reliability and security of the el ectric system while providing reasonably priced electricity to the consumer.

Comment 6: EPA should take into account book life of original asset and any upgrades as it relates to both interim and final goals. EPA should exclude from re

- dispatch any coa l

- fired generation with remaining book life as of January 1, 2030. Commenter s provide d definition of book life and examples of significant pollution controls, and identified the states with goals that would change as a result of such an exclusion. Incorpo rating this exclusion would translate into more reasonable, equitable goals, and still result in su bstantial emissions reductions

. Response 6: The EPA disagrees that the remaining useful life of particular facilities should be reflected in the CO2 emission rates and state goals established in the emission guidelines. Section 111(d) requires that EPA’s emission guidelines permit the states to consider remaining useful life in applying standards of performance to particular affected EGUs, and does not call f or facility

- specific remaining useful life considerations to be taken into account in determining the levels of emission performance that reflect the BSER.

See response to comments 1 and 2 in this section (4.7.2)

. See also sections I.A, II.F

- G, V.A

- C, VIII .G

- H, X.C, XI.C

- E, and XII.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 said in the NODA, the EPA acknowledges that "an additional way to address" concerns about stranded investments in connection with the interim goal "may be for the agency to take account of the book life of the original generation asset, as well as the boo k life of any major upgrades to the asset, such as major pollution control retrofits."182 Commenter s supported this alternative, but believes that it should be extended to address the final goal, as well as the interim goa l , because the potential for stranded investments does not go away at the end of the interim period. Commenter s said that many EGUs will have remaining book life in 2030, and in order to assure that the application of building block 2 does not result in premature closure of these plants, the EPA should adjust the redispatch calculation.

Commenter s said specifically, they propose that the EPA exclude from re

- dispatch any coal

- fired generation with a remaining book life as of January 1, 2030. Commenter s said book life would be defined as the per iod ending on the later of:

• 40 years after initial commencement of operation of the EGU; or

• 20 years after commencement of operation of significant air pollution controls.

Commenter s said for most plants, significant air pollution controls would consist of selective catalytic reduction systems (SCR), baghouses or flue gas desulfurization (FGD) systems. Commenter s said that for small utilities, as defined by the Federal Energy Regulatory Commission (FERC), significant air pollution controls would also includ e selective non

- catalytic reduction systems (SNCR) or electrostatic precipitators (ESP).

Commenter s indicated that this stranded investment exclusion would affect only those states where the amount of generation with book life remaining in 2030 exceeds the amount of re

dispatch assumed in building block 2. Commenter s said based on their analysis, if coal

- fired EGUs with remaining book life were excluded from re

- dispatch, the goals in eight states would increase: Arizona, California, Delaware, Florida, Missi ssippi, Nevada, New Hampshire and New Jersey. Commenter s indicated they used the Brattle data to calculate the approximate impact of the stranded investment exclusion on total CO2 emissions. Commenter s stated that in terms of the number of states affected and the total amount of CO2 reductions achieved, the impact of the proposal would be minimal.

Commenter s noted that the Brattle data did not account for small utility EGUs that would be excluded from re

- dispatch due to the installation of SNCR or ESP. Com menter s indicated that they are aware, however, that Apache Unit 3 would qualify for the exclusion on that basis and took that into account in calculating the impact of the proposal. Commenter s indicated that they do not believe that excluding small utilit y EGUs in other affected states would have a substantial impact on the CO2 reductions achieved.

Commenter s said that under their proposal, Arizona's final goal would be 955 lbs CO2/MWh, rather than the 702 lbs CO2/MWh originally proposed in the CPP. Commen ter s said the 34 % reduction in rate required of Arizona would still be substantial and would represent significant progress toward reducing greenhouse gas emissions. Commenter s added that at the same time, it would be much more reasonable and equitable, w hen compared to the reductions required of other states, than the 52 % reduction required in the CPP proposal. Commenter s said it would also be much more consistent with EPA's stated goal of establishing "reasonable rather than maximum possible implementat ion levels" for each building block

.183 Comment 7: Reduced use of very efficient coal

- fired units will result in these units being economically stranded. Instead, these units should be deemed as already meeting BB1 measures, and should be exempt from BB2; r educed use of any EGU with remaining life will result in stranded assets; one

- size

- fits

- all approach not appropriate

Response 7: The EPA disagrees that the remaining useful life of particular facilities should be reflected in the subcategory

- specific emission performance rates and state goals established in the emission guidelines. Section 111(d) requires that EPA’s emission guidelines permit the states to consider remaining useful life in applying standards of performance to particular affected EGUs, and does not call for facility

- specific remaining useful life considerations to be taken into account in determining the levels of emission performance that reflect the BSER. Permitting consideration of short remaining useful life by states is not a one

- s ize

- fits

- all approach.
See response to comments 1 and 2 in this section (4.7.2)

. See also section I.A, II.F

- G, V.A

- C, VIII.G

- H, X.C , XI.C

- E , and XII.E of the final rule preamble of the CPP for the EPA’s response to this comment

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

Commenter s said that the EPA states that EGUs have plenty of time to replace older generation with new generation, conduct co

- firing or fuel switching and conduct heat rate improvements and re

- dispatch in the meantime

- while they doubt that is the case with other EGUs, it certainly is not true for their utility . Commenter s stated that three of their four units are relatively new, having operated for less than 4 years, and these units have a projected li fe of 50 years, which means they will not be replaced until long after the target compliance date for this proposed rule. Commenter s said further, and more significantly, because these units are so new, they already operate with optimal heat rates.

Comment er s said the efficiency of these units is actually a benefit that the EPA could use, if the rule is properly revised, to help the state of Illinois achieve the goals that the EPA has set under Block 1. Commenter s stated that PSGC 1 and 2 already operate at a CO2 emission rate that outperforms the 6% USEPA goal by a significant amount, measured against the state coal

- fired fleet rate

- they are 14% more efficient than the state coal

- fired fleet average, as per Illinois EPA. Commenter s noted that Trimble Unit 2 is similar in terms of its emission rate and that Trimble 1, while not supercritical, is also very efficient compared to a fleet average. Commenter s said therefore, Illinois (and by extension the Commonwealth of Kentucky) can achieve a heat rate improve ment of their coal fleets under Building Block 1 by simply operating the PSGC and Trimble units to their maximum capabilities. Commenter s said their units already emit CO2 at a rate lower than what would be accomplished by the Block 1 measures, and accordi ngly, these units should be deemed as already meeting Block 1 measures.

Commenter s added that this, of course, presupposes that PSGC and the Trimble units will not be

re

- dispatched to lower and less efficient operating levels under the EPA's Block 2 approach. Commenter s said improving the states' coal

- fired resource heat rates requires the continued base

loading of these facilities and those efforts will be significantly impaired if these units are used to load

- follow other resources, as the EPA anticipates as a result of Block 2. Commenter s said184 conversely, providing some type of carve

- out for units that can, when base

- loaded, improve the states' positions in terms of CO2 emission, will not only help the state, but could avoid, to a great extent, our real concerns over these assets being economically stranded.

Several commenters indicated that even the reduced use of existing coal

- fired EGUs will result in stranded assets. Commenter s said even the ramping down of an EGU designed to be base

loaded results in a reduction in power sales. Commenter s said these sales are used to offset the fixed costs needed to operate the plant, and the reduction in sales results in an increase in costs to our members as fewer MWhs in sales must support the same amount of fixed costs. Commenter s added that on top of that, we must procure outside energy that would otherwise have been provided by the affected EGU. Commenter s said further, and more troubling, is the suggestion that an affected EGU install natural gas combined cycle ("NGCC") to offset its emissions, which creates another layer of financial burden

- additional debt to finance and build an NGCC facility compounded by the stranded cost that the operation of that new NGCC facility creates at the affected EGU.

Commenter s expressed grave concerns about the impact this rule will have given our oper ation inside multiple ISO markets. Commenter s said IMEA has invested significant economic resources into ownership in four EGUs which operate in energy markets regulated by Federal Energy Regulatory Commission ("FERC") under the Federal Power Act. Commente r s said in several instances, FERC has ruled that "one size fits all" is not the best approach for all the market regions. Commenter s said that the EPA's proposed implementation using Blocks 2 through Block 4 have taken that "one size fits all" approach wi thout analyzing the practical limitations of implementing these blocks in the entire country or the disruption the rule's approach promises in the operation of the capacity and energy markets operated by the ISOs.

Commenter s stated reducing usage of coal

- f ired EGUs lowers their efficiency and thus their
cost

- effectiveness, while potentially increasing emissions of ozone precursors. The commenter s said this creates pressure for early retirements, raising the risk of stranded assets and higher costs for elect ricity consumers.

Comment 8: CPP will prematurely retire many coal

- fired power plants, result in stranded investment cos ts and increased customer costs

Response 8: See response to comments 1 and 2 in this section (4.7.2)

. See section I.A, II.F

- G, V.A

- C, V III.G

- H, X.C, XI.C

- E, and XII.E of the final rule preamble of the CPP for the EPA’s response to this comment

. Additionally, see GHG Mitigation Measures TSD.

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

Power purchase agreements . Commenter s said the lack of cost recovery certainty will likely lead to increased financing costs in the future, increased customer costs, and possibly regulatory denial of power purchase agreements (PPAs). Commenter s said the problem for juri sdictional utilities results from the increased risk associated with recovery of PPA

- related expenditures through prudency reviews. Commenter s said the lack of cost recovery certainty will most likely result in less

- than

- optimal financing arrangements and increased customer costs as compared to existing coal

- fired electricity generation assets. Commenter s said this result could lead to185 regulatory denial of PPAs, giving rise to new regulatory proceedings to determine whether the actions of the jurisdictional utilities were prudent, including consideration of the economic consequences to customers from prematurely retiring coal plants. Commenter s said this regulatory dilemma subjects Tucson Electric Power (TEP) and its customers to unnecessary and potentially costly economic risk.

Arizona

- ROI . Commenter s said TEP has made significant investments in coal

- fired plants and related equipment in order to provide safe, reliable and cost

- effective electric service to its customers in Arizona. Commenter s said this i nvestment was premised upon TEP's opportunity to earn a reasonable return of and on its capital. Commenter s said Arizona is a cost of service jurisdiction, thus, utility rates are determined after consideration of costs, including capital costs required to provide electric service to customers. Commenter s said a critical component in establishing rates is determination of a reasonable Return on Investment (ROI).

Commenter s said although numerous factors are considered in this determination, there can be

no doubt that certainty of cost recovery is an important component. Commenter s said recovery of costs associated with generation and transmission assets utilized to provision electric service coincides with investor expectations, and the introduction of incre ased risk and uncertainty regarding cost recovery can subject a utility to increased financing costs. Commenter s said under a cost of service scenario, additional costs are ultimately borne by ratepayers. Commenter s said increased risk associated with an o verreliance on market

- based generation can have an adverse impact on TEP's ability to earn a reasonable return on its investment. Commenter s said the unfortunate effect of a lower ROI can be unfavorable financing terms, which result in higher utility rates . Commenter s said these adverse consequences can be avoided by not relying too much on a volatile electric generation marketplace. Commenter s said prematurely retiring used and useful electric generation assets would be an unreasonable and costly consequen ce of the EPA's Proposal.

Minnesota

- Sherco 3

. Commenter s stated the combined impact of Building Blocks 2 and 3 will require Sherco 3 (Sherco 3 is pulverized coal power plant with state

- of

- art air quality controls in Minnesota) to run less frequently, und er certain operating scenarios, it may become uneconomic to run the plant. The commenter s said to the extent that Sherco 3 is not dispatched often enough to generate a certain revenue stream, it may not make economic sense to continue the plant's operation s long

- term, thereby resulting in Sherco 3's premature retirement. The commenter s said this outcome would result in millions of dollars in stranded assets for which cost recovery will be a significant concern.

Arizona

- BB infeasibility leads to early reti rement . Commenter s stated EPA has proposed a 6% heat rate improvement. The commenter s said Arizona's coal

- fired EGU fleet is the sixth youngest in the nation; given the relatively young age of Arizona's coal

- fired EGU fleet, the efficiency improvements tha t have already been achieved, and another of other considerations, it is infeasible for Arizona utilities to improve coal unit heat rates by 6% under BB1. The
commenter s said prematurely retiring these coal

- fired EGUs by forcing ceased operation, before th ey are able reach their remaining useful life, will result in stranded investment costs that will be passed directly to Arizona electric customers.186 Florida

- >90% coal

- fired generation must be eliminated . Commenter s stated assessments for Florida have indi cated, that to achieve the emission cap, more than 90 percent of the current coal

- fired generation in the state, which produce about one

- third of the state's electricity, must be eliminated. The commenter s said the shutdown of those units well before the e nd of their useful life takes away the invest

- backed expectation without compensation; to achieve the state's goal, some less

- efficient gas

- fired generation must also be retired. The commenter s expect ed that three of its fossil fuel

- fired units would be re tired prematurely if EPA finalizes the rule as proposed. The commenter s said to replace the coal

- fired and less

- efficient generation, utilities must expand energy efficiency efforts; improve heat rates; import more power; and build new, lower

- carbon

emitti ng natural gas plants, nuclear plants, and renewable energy facilities.

Florida

- Gulf Power . Commenter s stated EPA’s compliance modeling retires 100% of Gulf Power's coal

- fired capacity

- Crist Units 4

- 7, Daniel Units 1

- 2, Scherer Unit 3 and Smith Units 1

- 2

- by 2018. The commenter s said these units total 2009 MWs net summer capability, represents 77% of Gulf's owned ge neration capability. The commenter s said for Florida as a whole, EPA's compliance modeling retires 6,358 MWs by 2020 of coal due to the Clean Power Plan proposal; additionally, 3,395 MWs of oil and gas retire by 2020 in Florida in EPA's modeling. The

comme nter s said adding the expected units retiring due to MATS, per EPA modeling, a total of 12,222 MWs of coal and oil/gas is retired by 2020. The commenter s said these retirements represent 21% of Florida's 2012 total generation capacity and 80% of Florida's 2012 coal capacity. The commenter s said the retirements in EPA's modeling would create stranded investments and significant replacement generation costs; furthermore, the time schedule of these retirements as contemplated by EPA's compliance modeling is un realistic due to the time required to build replacement generation, transmission, and natural gas pipeline infrastructure.

Virginia

- Birchwood . Commenter s stated the Birchwood facility has generated revenues under its power purchase contract that obligate s Birchwood to be available to deliver electricity. The
commenter s said payments made by Virginia Power under the contract are directly recovered from Virginia ratepayers, who are effectively amortizing the cost of building the facility over a 30

- year peri od. The commenter s said if Birchwood cannot be operated profitably under the Clean Power Plan program, it will be forced to retire before the end of its useful life, limiting the value Virginia ratepayers received for their investment.

Iowa . Commenter s sta ted EPA's reduction requirements for some states are effectively unachievable without the forced, premature retirement of some existing coal and natural gas

fired units that still have remaining useful life. The commenter s said this would result in strande d costs that would be borne by consumers through higher electric bills, as well as potential negative impacts on local reliability. The commenter s said it is unclear how this scenario would affect those members of Iowa Association of Municipal Utilities (I AMU) who own minority shares in generating plants.

Running coal

- fired plant not always economically feasible . Commenter s stated forcing changes in the operation of coal plants, especially retirements of coal units, will create stranded costs. The
commenter s said because there is no practical way to reduce the heat rate under building block 1, the only option remaining at a source is a drastic one: the owners are faced with the requirement to run the plant less or shut down one or more units entirely. The co mmenter s said the first option, running the plant less, will reduce the efficiency of the plant (and the heat rate, contrary187 to EPA's objective) and cause an increase in the operating costs, wholesale cost increases that will have to be passed on to our me mbers and their customer

- owners. The commenter s said further, as EPA itself acknowledges, if coal plants are dispatched as load

- following units, they will have higher heat rates when operated in this fashion and during periods of startup and shutdown. The commenter s said it is unlikely, however, that simply running the plant less will be sufficient to meet the CO2 emission reduction required of units, whether under the rate

- based or

mass

- based approach. The commenter s said if, instead, the owners are forced to shut down a unit prematurely, it will cause significant stranded costs and will run afoul of the directive of 111(d) to take into account remaining useful life, an express statutory mandate.

Arizona

- even relatively new plants will be forced to retir e

. Commenter s stated Arizona is home to some of the newest coal fired units in the country with the most recent units commencing operation as recently as 2009; these investments assume a long and useful life of 40 years or more. The commenter s said the app lication of building block 2 would require the retirement of virtually all if not all coal generation in the state by 2020, with no consideration to the useful life of the existing coal fleet. The commenter s said retiring these units far earlier than a rea sonable planned useful life would result in excessive stranded costs and ratepayers essentially paying twice for this generation capacity.

Investment expectations . Commenter s stated EPA specifically acknowledges in the Preamble to the proposed rule that co al has a place in the U.S. generation mix through 2030 and beyond. The
commenter s said the cooperative owners of clean coal generation facilities in Illinois have committed capital resources and taken on long term debt with the reasonable expectation that their units would be providing base load, reliable electricity for their members for decades in the future. The commenter s said they believed that this long term cost stability and reliability to be in those members' best interests; however, the requiremen ts of the proposed rule may strand those assets, especially in light of the failure to address the mis

- match between the "integrated grid" concept and the state jurisdictional issues. The commenter s appreciate d that how investment expectations in plants ar e impacted by the proposed rule was raised as an issue in the Notice of Data Availability ("NODA") issued on October 28th, as it is hard to overstate the significance of this issue. The commenter s hope d that EPA will work to avoid cutting short the useful life of generation resources that can still provide much needed base load generation well into the future and stranding those assets.

National cost assessment shortcomings . Commenter s stated the CPP emission reduction goals for the states are all based on four compliance building blocks (BBs) that were developed considering national and regional assumptions and costs that do not translate to states and utilities. The commenter s said the four BBs that are the basis of the mandatory standards for the
states a ssure that many utilities will have to prematurely shut down capital intensive, low cost coal plants, many with long remaining operating lives and unpaid debt, which will cause major stranded investment costs to consumers. The commenter s said these strande d asset costs were not included in the national cost assessment developed by EPA; EPA also failed to assess the costs of building new gas pipelines and transmission lines that would be required by the closure of so many coal plants. The commenter s said the four BBs approach threatens continuing electric reliability and assures that many states and utilities cannot meet the mandatory emission limiting goals in a cost

- effective manner.188 Regulatory taking . Commenter s stated because the proposal as it stands would likely result in the premature closure of existing power plants, the proposal's requirements would appear to be a regulatory taking requiring compensation because of the premature closures and uneconomic
curt ailment it will require.

Arizona

- severe impacts . Commenter s stated the retirement of some or all coal

- fired generating capacity in Arizona that would be necessary to meet the interim and final goals of the CPP would result in significant stranded asset v alue for utilities in Arizona. The commenter s said this stranded value is only exacerbated by recent investments in control technology and plant upgrades in recent years. The commenter s said depending on the treatment, these costs would be recovered throug h higher rates for Arizona customers. The commenter s said the stranded asset value under the building block scenario is estimated to be $3.8 billion in 2020 ($3.0 billion in 2013$), resulting from the retirement of all coal generation in the state. The com menter s said the ultimate treatment of these stranded costs could result in severe rate impacts for Arizona customers in or around 2020.

Not just and reasonable result . Commenter s stated EPA's proposal will not produce a just and reasonable result insofar as the emissions standards will accelerate the closure of coal

- fired generation.

MRES and Laramie River Station . Commenter s stated for MRES, the Clean Power Plan is likely to be costly; MRES only has one base load resource which is a coal plant, and no Nat ural Gas Combined Cycle (NGCC) capacity, MRES is left with few options to reduce CO2. The
commenter s said to entirely shut down all three units at Laramie River Station would cause MRES alone an increase in wholesale power costs of 65%, and would cause mem ber municipal utilities on average a 20% increase in retail rates to their customer

- owners. (That is not even considering what it would do to the costs for the other 5 co

- owners of the plant.) The
commenter s said if a less drastic approach were taken and o nly one unit at LRS were retired, it would cost MRES approximately 20% more or $35 million annually to replace the lost base load generation with lower emitting natural gas, assuming natural gas prices do not experience a rapid escalation. The commenter s s aid these costs are direct costs that would be felt by consumers in Iowa, Minnesota, North Dakota and South Dakota. The commenter s said if the owners of LRS are forced to retire a unit or the entire plant, this will result in significant stranded investmen t. The commenter s said LRS has a gross book value of about $1.2 Billion, and the Western Minnesota/MRES share of that is about $200 million. The commenter s said currently, LRS is under a mandate from EPA under the Regional Haze Rule to install Selective Ca talytic Reduction (SCRs) on all three units at LRS; this will come at a cost of $750 million to the project owners. The commenter s said for MRES, its share of this cost will be approximately $125 million, which will cause an increase in wholesale rates of 10%. The commenter s said these investments must be made by 2019, a year before the start of the interim compliance period of the Clean Power Plan. The commenter s said if forced to retire a unit, $250 million of

consumer

- owned investment to meet Regional Ha ze rules will be stranded, on top of the economic value of the remaining useful life of the unit. The commenter s said those costs will no longer be spread out over the 20

- 30 year remaining life of LRS, but must nonetheless be recovered from ratepayers, a c ost for which they will no longer receive any value.189 Miscellaneous . Commenter s stated Florida Municipal Electric Association (FMEA) members invested billions of dollars on new coal fired generation, because there was no other alternative for baseload gene ration. The commenter s said many of the utilities carry considerable debt on these coal fired units. The commenter s said the utilities recently spent $2 billion for new air pollution controls to meet the interstate rule and the utility max rules. The comme nter s said forcing these utilities out of service prematurely, will leave ratepayers with hundreds of millions of dollars in stranded costs; these costs do not appear to be taken into consideration in EPA's economic analysis.

Commenter s stated MEAC members have funded half

- a

- billion dollars of emissions

- controlled
state

- of

- the

- art controls for Georgia's coal

- generating resources based on recent federal and state rules. The commenter s said the proposal would also require reduced coal unit operations, potenti ally shutting these units down, which would strand the costs of these recent environmental investments and again raise the cost of electricity unnecessarily to Georgia's communities.

Commenter s stated based on EPA's calculations contained in the proposed r ule, Seminole's coal

fired generating facilities have been arbitrarily scheduled for retirement well before the end of their useful life, with no regard for economic hardship it will cause members and consumers. The
commenter s said in 1978, the U.S. enacte d the Power Plant and Industrial Fuel Use Act, which restricted new power plants from using oil or natural gas for power generation, and encouraged the use of coal; the Seminole's coal

- fired facility came online in 1984. The commenter s said Seminole has in vested more than $530 million in environmental control technology and recycling practices, $260 million of which was placed in service less than 5 years ago. The
commenter s said should the EPA's proposed carbon rule be finalized, these costly investments

w ill become stranded assets, and Seminole's coal

- fired power plants will be forced to closed, leaving 300 hard

- working, skilled employees without a job.

Comment 9: Plant operating at lower capacity than constructed for; not optimal; costs become stranded

R esponse 9: See section I.A, II.F

- G, V.A

- C, VIII.G

- H, X.C , XI.C

- E , and XII.E of the final rule preamble of the CPP for the EPA’s response to this comment

. Also, see response to comments 1 and 2 in this section

. In addition to the concern about operating coal less, EPA compliance modeling still anticipates that the remaining coal fleet operate at a high utilization level. There is no expection, assumption, or requirement that all coal units ramp down operation equally. EPA anticipates some of the reducti on in fossil steam will come through already scheduled coal retirements, while other untis remain online and operate in typical baseline fashion.

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

Commenter s stated the assumpti on of simply operating coal less is not necessarily efficient or practical. The commenter s said unlike most NGCC units, coal units don't use the fuel to operate the turbines that produce the electricity; rather, coal units use the coal to super

- heat water to create steam which is then used to operate the turbines and produce electricity. The commenter s190 said large conversions of water to steam cannot vary quickly throughout the day or "back

- off" when a certain emissions limitation is reached. The commenter s said this complex process requires planning a significant fuel to steam conversion, for a significant amount of power, for an extended period of time. The commenter s said the complex process to bring the water to the appropriate level of steam for producti on is the same process whether the plant is to operate for the next 25 hours or the next 2500 hours. The commenter s said the direction to simply operate a coal

- fired plant less, means that the plant would incur the same costs, start

- up time and wear and
te ar for less generation output as it would if it ran at full capacity; this means a higher cost to operate the plant and a less efficient use of the plant (i.e., a lower heat rate). The commenter s said if a plant is operating at a lower capacity than what i t was constructed for, it is not running at optimal capability and is therefore not recovering the cost to construct, operate, and maintain it; these costs then become stranded; and for customer

- owned utilities like municipals and cooperatives, the strande d costs become an additional and direct expense for the rate

- payer.

Comment 10: R apid forced retirement of coal

- fired units will cause significant stranded assets and may res ult in increased ratepayer rates
Response 10 : See response s to comments 1 and 2 in this section (4.7.2) , including the reference to the July 2015 docket memo titled “Stranded assets analysis

. ” See section I.A, II.F

- G, V.A

- C, VIII.G

- H, X.C, XI.C

- E, and XII.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 that if EPA does not modify the assumptions of Building Block 1 in the proposed BSER, the rapid retirement of coal

- fired generation due to the re

- dispatch envisioned in Building Block 2 would cause significant costs for Florida and its ratepayers in terms of stranded
assets. Commenter s said such rapid changes in the electricity mix raise the potential for significant stranded costs, which may have energy co st implications for California ratepayers. Commenter s added that due to the interrelated nature of the electricity grid, it is impossible for states such as California to implement the Proposed Rule in a vacuum; compliance challenges and constraints faced by neighboring or regional partners will also have a profound impact on California and the California utilities.

Commenter s indicated that the forced early retirements of four coal

- fired generating facilities in Wyoming would result in serious threats t o regional reliability and a financial catastrophe for ratepayers. Commenter s said as explained in our December 16, 2013, letter to Assistant Administrator McCabe, in 2020 the stranded investment for Dave Johnston will be $393,632,687; for Naughton, $326, 213,892; for Jim Bridger, $524,351,740; for Wyodak, $248,714,883. Commenter s indicated that in addition to the amounts listed at that time, Jim Bridger is undergoing investments in regional haze compliance which will add about $800 million of invested capi tal. Commenter s stated that these investments should have a depreciable life of at least 20 years. Commenter s stated the four plants are system assets, so Wyoming ratepayers would bear about 15.7% of those amounts. However, c ommenter s said since we believe such closures would have a wide economic impact and be accompanied by a broad191 impact on the coal industry, we also anticipate that there will be fewer ratepayers to shoulder these burdens, sending rates higher than the 15.7% would su ggest. Commenter s clarified that none of these calculations include the cost of constructing replacement generation or purchasing replacement power.

C ommenter s expressed concerns regarding possible stranded costs from early retirement of baseload units tha t have been substantially retrofitted within the last decade. The commenter s explained that of the remaining affected coal

- fired facilities in Minnesota, most, if not all, have had emissions reductions equipment installed within the previous ten years. The commenter s added that given the stringency of Minnesota' rate

- based standard, some coal

- fired resources would need to be curtailed too soon to recover their fixed operations and maintenance costs. The
commenter s stated that since these changes were made t o fully comply with existing EPA rules, and took into account the costs and useful life of the retrofits, early replacement will shift extra costs to ratepayers that can be avoided by careful, long

- term planning. The commenter s requested EPA clarify the ra te impact methodology for facilities that have had major equipment installations to comply with mercury, regional haze, and interstate air quality rules. The
commenter s noted that to properly estimate the rate impacts of early retirement, capital budgets f

or retired assets need

- to be modified to reflect a shorter operating life, and capital depreciation schedules changed to match the modeled retirement date. The commenter s added that the recovery of decommissioning costs would need to be adjusted so that su fficient funds would be available to remove and remediate the sites. The commenter s stated that this is unit

- specific information that does not appear to exist in EPA's technical support documents. The commenter s also stated that it will be easier to manag e stranded costs if the interim goal is eliminated. The
commenter s stated that alternatively, the final rule could provide states with the flexibility and authority to conduct its own unit

- level evaluations through IRP and rate cases so that state commissi ons could take depreciation adjustments and rate impacts into account when submitting a state compliance plan.

Commenter s stated the proposed rule is inconsistent with changes made in response to other EPA actions and risks stranding those investments. The commenter s said under the EPA's building block methodology, the commenter s would have to retire all of the coal

- fired resources covered by the EPA's plan for Arizona in order to comply with both the interim and final goals; under this scenario, The commen ters stated their reliance on natural gas would increase from 28 percent to 70 percent by 2020. The commenter s said the remaining 15 percent reflects the

c ommenters ’ ownership in the Navajo Generating Station and the Four Corners Power Plant, both located on Native American land and covered under a separate rulemaking.

Stranded assets

Commenter s stated EPA's CPP proposes that one of the coal fired plants in Missouri, built four years ago is projected to be closed permanently by 2020 while it still has sign ificant useful life, and long before the bonds used to build the plant are paid off. The commenter s said this plant operates at emission levels significantly lower than that normally projected for the U.S. Coal fleet. The commenter s stated have a significa nt fiduciary responsibility for the continued operation of these plants and believes it is essential that certain specific issues are fully explained and communicated within the docket governing this set of proposed guidelines.192 Comment 11 : Re

- dispatch wil l lead to forced early retirement of coal

- fired EGUs which will result in significant stranded costs resulting in FL ratepayers facing 25

- 50% rate increases which will be stifling to economic development; value of recent environmental upgrades will be lost ; EPA's treatment of G eorgia nuclear plants under construction is punitive; discussion of reasonableness of each of BB for JEA

Response 11: See response to comments 1 and 2 in this section (4.7.2)

. See section I.A, II.F

- G, V.A

- C, VIII.G

- H, X.C, XI.C

- E, and XII.E of the final rule preamble of the CPP for the EPA’s response to this comment

. EPA no longer includes the Georgia nuclear plants in its quantification of BSER. See section V.A of the final rul e preamble for discussion of nuclear generation and the BSER.

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

Re

- dispatch will lead to early retirement . Commenter s said that as proposed, the CO2 reduction requirements would effectively require JEA and other Florida utilities to retire generation assets prior to the end of their useful lives. Commenter s said their solid fuel facilities were designed and constructed to run as base load energy supply, meaning they perform at ver y high capacity factors. Commenter s said when the base load units are operated as designed, they achieve heat rate efficiency and low dispatch cost. Commenter s said by requiring significant re

- dispatch away from these base load units, the rule prevents the m from running as designed, further degrading efficiency and ultimately making continued operation of these units non

- economic. Commenter s said the rule forces early retirement in practice, even if it does not do so explicitly.

Commenter s said they have m ore than $1.5 billion in debt outstanding on solid fuel generating assets, amortizing over the expected useful life of those facilities to 2039. Commenter s said by forcing re

- dispatch and retirement of the units beginning in 2020

- the practical consequenc e of having to meet even the interim goal

- the EPA will leave JEA's customers holding a bill for $795 million in stranded costs.

Recent environmental upgrades and GA under

- construction nuclear . Commenter s said their unique geographic position results in a double penalization under the rule: not only will we be forced to comply with the Florida state plan for generating assets, but we also will be forced to comply with Georgia's state plan. Commenter s said two of JEA's key generating resources

- Plant Sch erer and Plant Vogtle

- are located in the state of Georgia, but supply or will supply substantial load in northeast Florida. Commenter s said Georgia's goal is all but impossible to meet with the continued operation of Plant Scherer, jeopardizing JEA's low est

- cost generating unit despite the installation of more than $597 million in state

- of

- the

- art pollution control investments for Scherer Unit 4 between 2007 and 2012, with JEA's share being $141 million. Commenter s said Georgia faces the further penalty o f including new nuclear plants under construction in EPA's formula for setting Georgia's goal rather than as investments to help meet the goal, thereby eliminating the future zero carbon benefit of Plant Vogtle when it comes online later this decade. Comme nter s said given the remaining risks inherent in a construction project of this magnitude and the uncertainty around ultimate schedule and cost, including these units as if they are already on

- line is punitive in a state that took proactive steps to reduce its carbon193 footprint ahead of any federal requirements. Commenter s indicated JEA entered a purchase power agreement for future Vogtle energy to increase fuel diversity and help reduce its environmental impacts.

Stranded cost recovery/rate increases/econom ic impacts . Commenter s said they optimistically assume that Florida's state plan would include a stranded cost recovery mechanism that would fairly apportion these extraordinary costs across all Florida ratepayers. Commenter s said with such a mechanism in place, and considering investments in replacement generating resources that would necessarily accompany the retirement of solid fuel resources, Florida ratepayers are facing average across the board rate increases of 25 to 50 percent which will be stifling to economic development in our state. Commenter s said while some states can comply with the EPA's proposed rule at very low cost, simply by retiring a single generating resource that was already slated for retirement (Washington), or continuing to operate substantially all solid fuel units with only hea t rate improvements imposed (Kentucky), Florida and other states face a true and extraordinarily expensive transformation in generating resources. Commenter s said the resulting rate impact will make the entire state uncompetitive from an economic developme nt perspective. Commenter s said as large projects compete for location sites in the U.S., states with

non

- disruptive compliance costs will be clear winners in economic development at the expense of those with very high compliance costs. Commenter s said giv en the importance of attracting new business to Florida for its overall economic growth, this paints a bleak picture for the foreseeable future, potentially increasing unemployment and handicapping economic prosperity for citizens of our state.

Applicabil ity of Building Blocks

. Commenter s discussed the applicability of each of the four building blocks to their facilities.

Building Block 1: All possible cost effective heat rate efficiency improvements have been made

- additional investment would not be eco nomic and would result in 1.5% HRI at best. Investing additional capital in units that under BB2 may only run at 10% of capacity, or be subject to early retirement, would be truly noneconomic.

Building Block 2 : JEA currently utilizes optimal economic disp atch for the generating fleet

- therefore any change in current dispatch decisions will result in more expensive power generation

Building Block 3: Renewables practical for FL have much higher cost per MWh than traditional units and do not provide base loa d capacity. Therefore, replacing solid fuel generation with RE would increase cost and decrease reliability.

Building Block 4. JEA has embraced EE over past decade and has achieved a cumulative 3.3% reduction in energy sales (2004 to 2013). Each JEA res idential customer, on average, is using 13% less than 10 years ago, and commercial customers are using 19% less electricity, on
average. By using base year of 2012 the CPP gives no credit for EE improvements already made. Because their EE/DSM program is mature, significant additional investment in demand side EE will likely not economically achieve results.194 Comment 12: Building Block 2 redispatch will cause shutdown of coal units that APCD have been recently put on for other regulations; causes stranded costs; EPA did not account for

Response 12: See response to comments 1 and 2 in this section (4.7.2)

. See also section I.A, II.F

- G, V.A

- C, VIII.G

- H, X.C, XI.C

- E, and XII.E of the final rule preamble of the CPP for the EPA’s response to this comment

. Additionally, see section V.D. of the preamble and the GHG Mitigation Measures TSD.

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

Commenter s stated BB No. 2 is designed to force load shifting from coal to gas

- fired generation for compliance and most of the reductions are front

- loaded to the 2020

- 2022 time period. The
commenter s said such a proposal creates winners (gas plant owners) and losers (coal plant owners) without regard to the real cost borne by consumers. The commenter s said utility specific analysis shows that the shift to natural gas would result in the premature closing of many coal

fired units; recently, utilities have spent billio ns of dollars for "state of the art'' air pollution control systems to meet the emission limits of the Clean Air Interstate Rule (CAIR) and the utility MATS rule. The commenter s said EPA's proposal does not take into account the billions in stranded costs for those units that will fall on consumers if those units are forced to prematurely shut down.

Commenter s stated EPA's failure to account for, and appropriately adjust states goals to reflect these commitments, is especially troubling since EPA provided no guidance to utilities that undertook the significant investments required by UMATs that it contemplated forcing the closure of these plants in the near term. The commenter s said the Federal government, which dictated that utilities build coal

- fired gene rating units and recently adopted rules that required massive investment in pollution controls for these plants, is now proposing a regulation that will assure their premature closure at great cost to consumers in a manner that threatens electric reliabili ty. The commenter s said failure to assess this cost impact is contrary to EPA's own guidelines which require the cost impact of a Section 111 proposal be assessed.

Commenter s stated EPA recognizes in the NODA released October 28, 2014, that stranded costs associated with existing fossil fuel electric generation projects is an appropriate and necessary component of a rational transition toward a lower carbon electric generation fleet. The
commenter s said unfortunately, EPA's nod to this issue in the NODA is limited and fails to provide adequate guidance as to how EPA might propose to imbed into a 111 (d) program a mechanism to address this critical issue.

Commenter s stated even as EPA is proposing a rule which establishes a state

- by

- state reduction goals ba sed on modeled closure of existing coal units, it is, at the same time, approving emissions control projects for plants it presumes will close. The commenter s said EPA cannot have it both ways; Utilities must be allowed to utilize investments for their ful l economic life in order to pay back financial obligations associated with these facilities and to capture appropriate economic return on that investment. The commenter s said given the massive investment occurring nationally to meet new, stringent emission s limits for EPA regulations, it would be appropriate for EPA to rerun modeled reductions for states in a building block approach imbedding into the model economic return for these investments.195 Commenter s reject ed the illusory flexibility EPA touts States have in this Proposed Rule. The
commenter s said after extensive analyses, discussions with state regulators, and participation in a variety of industry group discussions, the commenter s have concluded the real effect of this rule is a shift in generation away from the one and only coal

- fired plant that the commenter s own and operate to natural gas combined cycle ("NGCC") units. The commenter s said this inevitable shift in dispatch will result in a dramatically decreased capacity factor at the Charles R. Lo wman Plant ("Lowman"). The commenter s said as a result, additional capital investment at Lowman (to meet other capital

- intensive mandates such as the anticipated Effluent Guidelines and Coal Combustion Residuals rules, as well as normal investment in the u pkeep and reliability of any power facility) would not be economically feasible or justifiable. The commenter s said the prospect of abandoning a well

- maintained electric generating resource featuring state

- of

- the

- art air pollution control equipment as a re sult of a rule that will not have any effect on the global climate is nonsensical. The commenter s said ruining the viability of a well

- controlled, well

maintained coal plant under the auspice of setting guidelines for existing sources is certainly

reason e nough to abandon the rule.

Commenter s stated KMU's largest member, Kansas City BPU, is currently committed to a $250 million emission control project at its baseload coal

- fired power plant; similarly, the other five largest coal

- fired power plants in Kansa s have made and continue to make huge investments in criteria pollutant emission reduction equipment over the last several years. The commenter s said the investments have largely been made to comply with a variety of other EPA regulations such as the Cross State Air Pollution Rule, the Mercury and Air Toxics Rule, and Kansas City ozone maintenance plans; more than three billion dollars has either already been or will be spent. The
commenter s said due to the fact that investments of this scale are made over long periods of time, there exists a significant risk of stranded costs due to redispatch to non

- coal power supply sources under the Clean Power Plan. The commenter s said this change in redispatch would result in the under

- utilization of power plants that have recently undergone costly updates. The
commenter s said the proposed 111(d) rule would force upon utilities, wholesale customers, and Kansas citizens the burden of these stranded investments. The commenter s said municipal utilities are entirely consume r owned; as such, any stranded investments of a municipal utility come 100% out of the pockets of the utility customers and not from shareholders. The
commenter s said in addition, stranded costs are a huge issue for smaller municipal utilities. The
comment er s said if existing units cannot operate, it will no longer be cost effective to customers to keep the machinery; municipal utility customers invest millions every year to guarantee reliability and quality service.

Commenter s stated if a utility chooses to retrofit a coal plant to burn natural gas, the associated reduction in CO2 emissions should count towards meeting the EPA's proposed regulations; for example the City of Ames Electric Service is converting its 109 MW coal fired power plant to burn natur al gas to comply with other EPA regulations, including the Mercury and Air Toxics Standards rule. The commenter s said as acknowledged by the EPA, the cost of this conversion is considerable; if the City of Ames does not receive credit for the associated re duction in CO2 emissions, the utility would be forced to seek additional carbon reductions elsewhere, thus making the existing plant a stranded asset. The commenter s said this would place a significant burden on the utility's rate payers. The commenter s said Cedar Falls Utilities' Streeter Station Unit 7 has been a dual fuel, natural gas and coal, generator; however, in early 2014 Cedar Falls196 Utilities declared the unit a natural gas unit to comply with the EPA's Mercury and Air Toxics Standards rule.

Co mmenter s stated re

- dispatching Mississippi's natural gas, combined cycle fleet of 70 percent, would force the shut down of Mississippi's existing coal fleet. The commenter s said this would severely restrict fuel diversity and leave customers at the mercy o f ever

- volatile natural gas prices. The commenter s said it would force the retirement of the two large coal units at Plant Daniel in Jackson County, which is currently undergoing $660 million in investments to comply with the recently finalized mercury rul es. The commenter s said stranding these assets, would only further increase the cost for customers.

Comment 1 3: Investments made in coal

- fired EGU and environmental compliance projects, would result in stra nded assets; customers punished

Response 13: See response to comment s 1 and 2 in this section (4.7.2)

. See section I.A, II.F

- G, V.A

- C, VIII.G

- H, X.C, XI.C

- E, and XII.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 commen ts under this comment:

Commenter s said that as a municipal utility, JEA is tasked with the need to provide the community with the least cost electrical supply possible while still meeting all environmental regulations, and to that end, JEA has slowly and m ethodically updated its generating fleet, transitioning from oil fired steam units to gas conversions, to its first (modern) coal

- fired units, to gas fired CTs and one NGCC unit, and to (modern) petroleum coke (petcoke) and coal

- fired circulating fluidized bed (CFB) units.

Northside 1, Jacksonville, FL upgrades . Commenter s said in good faith JEA's customers invested $630M to re

- power two oil

- and

- gas fired units to coal and petcoke

- fired CFB boilers, including modifications to meet EPA rules. Commenter s said JEA's total investment in Northside 1 and 2 is currently almost one billion dollars. Commenters said this project, which entered commercial operation in 2002, was a DOE sponsored Clean Coal project which demonstrated the first large scale CFBs and se t a new standard for BACT. Commenter s indicated that the project resulted in a 170% increase in electricity production, while reducing total emissions of NOx, SO2 and PM. Commenter s said the DOE established the technical requirements for this project, an d supplied $72M toward construction, and the EPA has now drafted a rule that will prevent JEA from operating these units and receiving the value of the money that our customers (and Federal taxpayers) invested in good faith.

St. Johns River Power Park, Jac ksonville, FL upgrades . Commenter s said furthermore, to comply with the Clean Air Interstate Rule (CAIR) regulations JEA and FPL invested $278 million to install Selective Catalytic Reduction (SCR) systems at St. Johns River Power Park (SJRPP), the largest local coal units (these SCR systems became operational in 2010). Commenter s said CAIR and the Clean Air Mercury Rule (CAMR) were later replaced with CSAPR and MATS, and it was ultimately determined that with these upgrades the units were expected to be ca pable of CSAPR and MATS compliance. Commenter s said the EPA has now drafted a rule that will197 prevent JEA from operating these units and receiving the value of the money that our customers invested in good faith to meet other environmental rules.

Schere 4, Juliette, GA upgrades

. Commenter s said for the same reasons as above, between 2007 and 2012, JEA participated in comprehensive environmental control upgrades to the Scherer 4 coal

- fired generating unit, co

- owned by JEA (23.64%) and FPL (76.36%). Commente r s said the unit is located within Georgia Power service territory, and operated by Georgia Power. Commenter s said the scope of these upgrades, at a total cost of over $597 million, included installation of a wet scrubber, an SCR system, a fabric filter, and PAC injection for mercury control. Commenter s said the EPA has now drafted a rule that will prevent JEA from operating these units and receiving the value of the money that our customers invested in good faith.

Commenter s said in all three cases abov e, JEA has proceeded in good faith to implement costly upgrades to its fleet, including Northside 2 repowering, partially funded by the DOE, in order to comply with new EPA regulations. Commenter s said now, in a case of extreme over

- reach, EPA is proposin g regulations that will void these capital investments that recent EPA regulations required, and render five fully modern clean coal

- fired generating units totaling 2,700 MW 4 capacity to be stranded assets. Commenter s said that in 2020 JEA and its custome rs will have $795 million in debt outstanding on these three projects, and that debt will have to be repaid without the benefit of use of the underlying assets due to BB 2 and the interim goal date. Commenter s said the CPP unnecessarily makes JEA customers ' investments in costly environmental rules obsolete, exceeds EPA's authority, and requires JEA's customers to bear a disproportionate burden of the cost of compliance.

Missouri . Commenter s stated that own portions of three coal fired power plants, all of which were built in the last three years at a cost of approximately $1.5 billion, and which comprise well over 50% of its generation capability. The commenter s said the process to build these plants was begun in 2004, well before the current regulations we re first proposed; further the bonds sold to finance the construction will not be paid off until well after 2040. The commenter s said these electric plants are among some the low emitting power plants in the entire U.S. fleet; prohibiting the use of these plants as contemplated in this rule, will force Missouri's municipal electric utility customers into the financially untenable position of having to pay for unusable plants for over 30 years while having to compete in the open marketplace for increasingly unavailable electric power. The commenter s said essentially EPA's proposed guidelines force this class of customer to pay for electricity twice during a period when the agency predicts that rates will increase anyway. The commenter s said the ultimate impac t is a death spiral for small

- town middle America as small manufacturers are forced to flee escalating electric power bills, and as residential customers have fewer and fewer dollars to spend at local stores to keep them solvent. The commenter s suggested t o allow existing plants with bonded indebtedness to continue to operate for the life of the plant or 40 years whichever comes first.

Florida

- Gulf Power Crist. Commenter s stated in 2009, a $600 million scrubber system began operation at Gulf Power Plant Cr ist in Pensacola, Florida. The commenter s said EPA's modeling shows Crist units 4 and 5 retiring in the base case, and Crist units 6 and 7 retiring in the main compliance case. The commenter s said the unrecovered cost of Plant Crist's scrubber system are
t hus stranded, negatively impacting Gulf Power's customers. The commenter s said EPA must198 reassess its stringent proposal to specifically avoid stranded investments and existing generation
assets.
Georgia. Commenter s stated the proposal assumes that existing generation units will be retired. The commenter s said Georgia has already certified the retirement of over 3,000 megawatts of coal resources, largely in response to environmental requirements. The commenter s said the proposal assumes that Georgia will ret ire another 3,900 megawatts by 2025. The commenter s said retiring these additional megawatts will strand the significant investment Georgia has already made in the existing coal fleet, billions of dollars to reduce environment footprint.

Commenter s stated over the past two decades, Georgia Power and Southern Company have gone to extreme measures to upgrade and implement environmentally friendly components to their existing facilities; these are goals that are important to them and ensure a fair, better qual ity of life for all here in the South.

Mississippi. Commenter s stated this rule is very flawed when it looks at states like Mississippi and doesn't take into account the investments that people have already made and the life expectancy of plants that have already been environmentally controlled because the rules continue to shift. The commenter s said for one set of rules $600 million were spent to comply with it and now the rules change.

Comment 14: Nebraska is only state in US with wholly publicly owned utility power sector, this means the CPP presents unique challenges to their power sector, and makes Nebraska public power districts more susceptible to hardships associated with stranded assets

Response 14: See response to comments 1 and 2 in this sectio n (4.7.2)

. To elaborate further, the flexibilities that the emission guidelines provide for all states to choose different plan designs help address the unique attributes of the Nebraska power system. Nebraska public power representatives were among the st akeholders and state representatives who expressed interest in the possibility of power companies engaging in interstate trading

-- without Nebraska joining with other states in a multi

- state plan. The final emission guidelines provide for mass

- based and

r ate

- based interstate trading for states that would prefer to develop individual state plans.

, See also section VIII.H and section I.A, II.F

- G, V.A

- C, VIII.G, X.C, XI.C

- E, and XII.E of the final rule preamble of the CPP for the EPA’s response to this commen t

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

Commenter s stated that Nebraska is the only state in the U.S. with a wholly publicly owned utility power sector. Commenter s said while this allows Nebraska to deliver effi cient, low

- cost, reliable electricity to over 1.8 million people, it also means that the Clean Power Plan presents unique challenges to Nebraska ’ s power sector. Commenter s said Nebraska ’ s non

- profit public power utilities are statutorily

- created entities with limited control and authority, and are required by law to provide least

- cost electricity generation. Commenter s said as a result, Nebraska public power utilities have less financial flexibility than private entities, relying solely on bonds and ratep ayer fees to finance investments in new facilities, retrofits to existing facilities, operating and maintenance costs, and other expenses. Commenter s said this makes Nebraska public power districts more susceptible to the hardships associated with stranded assets.199 Commenter s said Nebraska public power districts have already invested millions of dollars in upgrades and retrofits to bring existing units into compliance with other air quality regulations such as the Mercury and Air Toxics Rule, Regional Haze, Cross State Air Pollution Rule, and the sulfur dioxide (SO2) National Ambient Air Quality Standard regulations. Commenter s said the Clean Power Plan puts these investments made for compliance in other air regulations at risk, forcing utilities to choose between investing in additional capital improvements and shutting down existing units prematurely, resulting in stranded assets. Commenter s said due to the public power structure of Nebraska ’ s utilities, the only way to address the escalation in costs is t o raise electricity rates on customers

– the 1.8 million citizens of Nebraska

– and these increases may be significant for those public power utilities with smaller service areas.

Comment 15: Significant investments have been made to upgrade coal

- fired EGU s to comply with federal and state regulations, and these assets would be lost if units are forced to retire or operate less. Proposed regulation could force facility currently undergoing $384 million upgrade to retire. Rule does not consider time and mone y required for infrastructure upgrades. Extensive plant retirements as result of MATS and CPP are expected to exacerbate resource adequacy concerns unless additional replacement capacity can be built in timely fashion; G&T impacts will disproportionately i mpact rural cooperative customers

. Response 15: See section s VIII. G.1, VIII. H
, I.A, II.F

- G, V.A

- C, VIII.G, X.C, XI.C

- E, and XII.E of the final rule preamble of the CPP for the EPA’s response to this comment

. See the “Stranded Assets Analysis” MEMO in the docket from July 2015.

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

Several commenters indicated that the proposed rule will cause significant stranded costs from previous investments made to upgrade coal

- fired EGUs for environmental compliance.

Georgia . Commenter s said that Georgia Power has invested $4.3 billion through 2013 to install environmental controls mandated by prior EPA rules in order to limit other pollutants w ith $1.1 billion still slated for future improvements including $543 million in 2014 alone. Commenter s said that approximately $2.5 billion has already been invested in environmental control equipment at one of Georgia ’ s coal facilities, Plant Scherer, in addition to several other coal plants.

Big Stone Plant . Commenter s said they have made significant investments in environmental control upgrades and efficiency improvements at their various plants, and are approximately 80% through a $384 million air quality control system (AQCS) upgrade at Big Stone plant to reduce emissions to comply with the Regional Haze Rule and Mercury and Air Toxics Standards. Commenter s said before the AQCS project began, the EPA reviewed it through the
promu lgation of the State of South Dakota ’ s Regional Haze State Implementation Plant, and it was reviewed and unanimously approved by public utility commissioners in Minnesota and North Dakota, the states in which most of their customers are located. Commenter s said the project represents the largest single investment their company has ever made. Commenter s said that if the proposed rule is finalized as written, it would likely force retirement of Big Stone Plant shortly after the installation of the $384 mill ion air quality control system that will make it one of less than 10% of coal

- fired units nationwide to use similar state

- of

- the

- art technology to control200 SO2, NOx, and particulate matter emissions. Commenter s said that if the plant is forced to retire

ea rly, rates for Otter Tail ’ s rural, low

- income and elderly customers would increase by as much as 20%.

Virginia . Commenter s said that the proposed rule unfairly strands and penalizes those states and coal

- fired power plants that invested in costly environ mental upgrades. Commenter s said for example, the Virginia State Corporation Commission ( “ VSCC ” ) recently commented that Virginia may need to retire coal plants prematurely in order to reach its emissions target, which would result in the loss of many rec ent coal

- related investments, including: the Virginia City Hybrid Energy Center, opened in 2012 at a cost of $1.8 billion; the Chesterfield Power Station scrubbers, installed in 2011 at a cost of $275 million; and the Clover Power Station, opened in 1996 a t a cost of $1.2 billion, and with a planned service life of over 50 years.93 The VSCC also noted that “ Virginia and West Virginia ratepayers have only recently begun paying for more than $2 billion in environmental controls necessary for Appalachian Power Company to comply with a 2007 EPA Consent Decree. ”

Florida

– Seminole . Commenter s described past and on

- going upgrades that have been made to the Seminole Generating Station (SGS). Commenter s discussed various environmental control upgrades that have bee n added to the facility at a cost of more than $530 million. Commenter s indicated that additional environmental control projects are planned in 2015. Commenter s indicated that Seminole Electric Cooperative is a not

- for

- profit cooperative, and its costs a re directly reflected in its rates. Commenter s said if SGS were to be decommissioned prior to the end of its useful life, the net book value will have to be retired, written off, and collected from our Members, along with the interest expense on debt that was borrowed to match the expected useful life.

Wisconsin . Commenter s said they estimate a cost of compliance for the proposed regulation to be $3.3 to $13.4 billion for Wisconsin alone. Commenter s said that this cost estimate does not include any costs related to additional infrastructure needs associated with the rule, such as natural gas infrastructure necessitated by increased gas use contemplated under the proposal, or the need for new transmission lines. Commenter s said Wisconsin currently does not have the infrastructure in place for this conversion, and it would take years to build. Commenter s said furthermore, the EPA ’ s plan does not consider “ stranded costs, ” , which are those investments that have been made in coal

- fired power plants that may n eed to be retire earlier than anticipated due to rule requirements.

HRI investments would be stranded

. Commente r s indicated that any investments made to improve heat rate (BB1) would be stranded to the degree that the coal sector capacity factor is diminis hed due to the forced increase of NGCC sector capacity factor (BB2). Commenter s stated that an unintended consequence would be that the lowest cost tons of CO2 reduction will have been displaced by the highest (among the building blocks), thus highly comp romising the BSER cost effectiveness criterion.

Kentucky Cooperative . Commenter s indicated that they rely on rate revenue from the high capacity factor operation of its 1,400 megawatt Spurlock Generating Station to service its substantial RUS debt, maintai n infrastructure, pay for increasing maintenance expenses, expand its natural gas generation while struggling to maintain low rates. Commenter s indicated they201 have invested well over a billion dollars to install state of the art emissions controls to compl y with numerous other regulations issued by EPA under the CAA: its New Source Review (NSR) Consent Decree, Title IV, NAAQS, CAIR, CSAPR, NSR, MATS, the Clean Water Act, and various solid waste regulations. Commenter s said their coal

- fired units are among t he lowest emitting units in the country. Commenter s said now the EPA is proposing to restrict the ability of these well

- controlled units from operating and will leave these investments as stranded assets and result in dramatic, unprecedented and dangerous increases in electricity rates. Commenter s said one of their EGU ’ s (Spurlock) potential stranded cost is nearly $1.4 Billion. Commenter s indicated this amount will potentially be even higher as they continue to invest in projects to meet additional non

- CPP environmental regulations and other operating enhancements.

G&T Cooperatives. Commenter s stated that the CPP imposes extraordinary costs on the operation of Generation & Transmission Cooperatives (G& Ts) which will disproportionately impact rural cooperative customers. Commenter s said most G&Ts rely on high capacity factor operation of coal generation, and reducing this energy source will result in some G&Ts potentially having difficulty remaining fin ancially viable and servicing debt, which will also adversely impact reliability. Commenter s indicated that G&Ts have invested billions of dollars to install state of the art emissions controls to comply with numerous other regulations issued by EPA under the CAA: Title IV, NAAQS, CAIR, CSAPR, NSR, Regional Haze Rules and MATS. Commenter s said now the EPA is proposing to restrict or eliminate the ability of these well

controlled units from operating which will leave these investments as stranded assets and result in dramatic, unprecedented and dangerous increases in electricity rates.

General . Commenter s said that across the country MATS is forcing the retirement of approximately 47

- 75 GWs of coal units, and the CPP is estimated to force the retirement of an additional approximately 40

- 48 GWs of coal capacity. Commenter s said these extensive retirements are expected to exacerbate resource adequacy concerns unless additional replacement capacity can be built in a timely fashion

.
Commenter s said that the EPA do es not include provisions to avoid stranded costs and it is not clear that the EPA considered stranded costs when determining the cost and impact of the rule. Commenter s said that prior to finalization, the EPA should analyze this issue, estimate the pote ntial costs, and provide provisions for states to avoid stranded assets when complying with this rule. Commenter s said that some sort of cost recovery mechanism should be provided to ensure electricity customers or utility investors are not left servicing the cost of investments stranded by the EPA and state regulatory measures. Commenter s said the EPA should give consideration in its CPP target setting for states to delay CPP requirement implementation until after the costs for these EPA

- mandated investm ents have been recovered.

Commenter s indicated the stranded asset costs would most likely be imposed on consumers in addition to the higher cost of natural gas generation. Commenter s said that for merchant generating companies, the forced retirement of co al

- fired generation likely would mean bankruptcy and dissolution, since the coal

- fired asset would have no salvage value. Commenter s said that the EPA must consider these costs before finalizing the Proposed Rule. Commenter s said utilities are currently investing significant amounts of money in coal

- fired EGUs to comply with EPA regulations, and if these investments are prematurely lost due to forced retirement or reduced operation, there will be a public outcry.202 Comment 16: Investment made by utilities to comply with other EPA regulati ons; result in stranded assets

Response 16: See response to comments 1 and 2 in this section (4.7.2), including especially the reference to the July 2015 docket memo titled “Stranded Assets Analysis.” See also section VII I.H and sections I.A, II.F

- G, V.A

- C, VIII.G, X.C, XI.C

- E, and XII.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 CPP did not consider the investment made by utilities to comply with other EPA regulations including the Mercury and Air Toxics Standard (MATS), National Ambient Air Quality Standards (NAAQS), Cross State Air Pollution Rule (CSAPR) and that imp act on the remaining useful life of a plant.

Several commenters stated approximately $2.5 billion of state

- of

- the

- art environmental control equipment has been installed at Plant Scherer to control emissions of NOx, SO2 and mercury in response to various EP A and State of Georgia regulations. The commenters said this extensive, ten year effort was only just completed in 2013; however, based on EPA's own State Option 1 IPM modeling, which shows Scherer Units 1 and 2 shutting down before 2020, this significant investment in clean energy in fact becomes a stranded investment.

Several commenters stated in addition to the closing of Plant Scherer, EPA's IPM modeling also projects that Plant Wansley

- located in Heard County, Georgia

- will operate at a capacity fa ctor significantly reduced from historical levels. The commenters said similar to Plant Scherer, significant capital has been invested in control equipment at Plant Wansley

- selective catalytic reduction, flue gas desulfurization and activated carbon inje ction

- for a total cost of about $800 million. The commenters said given other EPA rulemakings under way

- like the Steam Effluent Limitations Guidelines and the Coal Combustion Residuals Proposal, significant additional expenses for continued operation o f coal

- fired power plants may be incurred, potentially increasing the amount of stranded investment due to curtailed or halted operations.

Commenter s stated EPA noted that prior to release of its proposal, stakeholders expressed concerns that the proposed GHG existing source guidelines could potentially result in stranded investments in existing generation assets to comply with other EPA rules. The commenter s said EPA states that the proposal includes features that are intended to avoid the creation of str anded assets. The commenter s said based on its own modeling, EPA's attempt to avoid creating such stranded assets is insufficient. The commenter s said for example, in 2009, a $600 million scrubber system began operation at Gulf Power's Plant Crist in Pensa cola, Florida; EPA's modeling shows Crist Units 4 and 5 retiring in the base case scenario and Crist Units 6 and 7 retiring in the Option 1

- State compliance scenario. The commenter s said Gulf's investment in the scrubber is therefore clearly stranded in EPA's modeling. The commenter s said since 2000, Gulf Power has invested over $1 billion in environmental controls; these environmental controls would be retired under the EPA's Option 1

- State compliance scenario. The commenter s were very concerned about these stranded investments and the associated negative customer impacts.20 3 Commenter s stated a concern is the potential stranding of costs (those which the company is unable to recoup because of changes in regulations) incurred to satisfy other environmental regulatory requirements.

Commenter s stated these rules, as proposed, have a detrimental effect to Mississippians as they stand today; based on several investments that Mississippi has made to try to, one, comply with existing rules of the Environmental Pr otection Agency and also to bring about diversity to Mississippi's electric mix and electric generation mix. The commenter s said as of today, the State of Mississippi has invested in just two projects alone, well over $850 million in increased projects and generation; one is to comply with EPA regulations at Plant Daniel for Mississippi Power. The commenter s said the Public Service Commission approved $600 million in cost to clean up the environmental controls on Plant Daniel that serve the Gulf Coast regio n of Mississippi, which caused a rate increase for those customers , and based on the rules as they are presented today, that $600 million isn't worth a penny; that $600 million is lost. The commenter s said that doesn't count into the fact that that Plant D aniel and the upgrades that were done there have a 25 year life expectancy that can provide good electricity to the people of South Mississippi who have been faced not only with Hurricane Katrina but with the BP oil spill and with an economy that is strugg ling to get up and running in Mississippi. The commenter s said that $600 million, it's lost because these rules use a 2012 benchmark, so that is the first problem and error that just jumps out with this.

Commenter s stated with $2.7 billion already spent ov er the last decade by the largest utility company in Alabama and another billion dollars in projects already underway to comply with current federal mandates, the commenter s were opposed any new mandates coming out of Washington.

Commenter s stated a prima ry concern relates to the potential for stranded costs from early investments made to comply with EPA's Clean Air Interstate Rule and Clean Air Mercury Rule. The commenter s said the ESPS's proposed depends primarily on load shifting from coal to natural ga s generation for compliance. The commenter s said the shift in natural gas would likely result in premature closing of the ESPS's coal unit. The commenter s said while EPA recognizes the increased cost to consumers with load shifting to natural gas, it does not consider the stranded cost for those units that still carry considerable debt.

Commenter s stated EPA's rule for existing power plants assumes that the coal

- fired Plant Morrow, located in Purvis, Mississippi would no longer dispatch due to economics. Th e commenter s said since 2010 alone, $65 million has been spent in pollution control equipment at Plant Morrow to address previous EPA regulations, and additional pollution control equipment tests are currently in process to comply with the MATS rule. The c ommenter s said if coal is eliminated from the resource mix, as proposed by the Clean Power Plan, these investments will become stranded costs, borne by Mississippi residents without any corresponding benefit.

Commenter s stated Kansas is in the midst of a p eriod of great transition for its large coal

- fired electrical generating units; the six largest coal fired units in Kansas have made and continue to make significant investments in criteria pollutant emission reduction equipment in the last three to four y ears to comply with the regional haze program. The commenter s said in addition, the Cross State Air Pollution Rule, Kansas City ozone maintenance plan rules, and the Mercury and204 Air Toxics rule have also contributed to massive investments in pollution cont rol equipment at Kansas' largest coal plants in recent years. The commenter s said more than three billion dollars is earmarked for these projects that have either just been completed or are still under construction. The commenter s said paying off the bonds and other credit instruments used to fund controls installed in 2015 cannot be expected to be completed by the early compliance period starting in 2020. The commenter s said investments of such magnitude are typically financed for much longer periods of ti me; the result is a large potential for stranded investments in the State of Kansas as a result of re

- dispatch to non

- coal generating units. The commenter s said although not new facilities, the investments made in pollution control equipment are significan t and should be allowed to be amortized over a greater time period than allowed under the proposal.

Commenter s stated this is a fundamental issue that EPA must address at the front end of the 111 (d) process by incorporating adjustments for plants with re cently installed or to be installed controls into the state goal calculations or in the compliance periods. The commenter s said the solution should take into consideration the amount of funds spent on controls as a proportion of the value of the generating unit and the generally accepted time frame used by utilities to retire the financial instruments used to fund the control devices installed. The commenter s said facilities that have recently installed or are installing new scrubbers comprise 84% of Kansas' 2012 generation; this is a far greater impact than the flexibility contained in the Ill (d) process can reasonably be ex pected to account for in the short time between the plan submittal deadline and the first year of the compliance period.

Commenter s stated that little thought was given to how the Proposed Guidelines interact with other CAA rules. The commenter s stated that, for example, Arizona will have to close all coal units to achieve its interim and final targets under the Proposed Guidelines, but utilities in the state recently invested $500 million to comply with the Regional Haze Program. The
commenter s stated that the Proposed Guidelines will require the ramping up of units located in nonattainment areas, which would violate NAAQS requirements. The commenter s stated that section 111(d) explicitly requires that consideration of the remaining useful life o f sources be considered when designing performance standards for existing sources and that contrary to that requirement, the Proposed Guidelines will lead to the stranding of assets if finalized, especially given its interaction with other CAA rules.

Comm enter s stated that the pollution control upgrades required by MATS and other rules are in many cases substantially lowering the operating efficiencies of existing units that are covered by the Proposal. The commenter s stated that in some cases, significant investments that have been recently made due to MATS and other rules will become stranded by the Proposed Guidelines if they are finalized. The commenter s stated that under EPA's analysis, the Proposed Guidelines will result in the closure of all coal

- fir ed power plants in Mississippi. According to the
commenter s , TVA has the right to purchase all of the output of the 440 MW lignite

- fired Red Hills Power Plant in Choctaw County, Mississippi, through a power purchase agreement and has historically purchased most of the facility's output. The commenter s stated that the plant began operating in 2002, is currently installing dry

- sorbent injection in order to comply with MATS and, if Red Hills is required to be shut down due to the Proposed Guidelines, the cost of this injection system would be stranded.205 Commenter s stated that EPA has not adequately considered how implementation of the Proposed Rule will impact sources that are already complying with other federal requirements, including EPA rules. The commenter s stated that, for instance, EPA projects that that the Proposed Rule will require Arizona to shut down all coal

- fired generation by 2020 to achieve the state's interim target and the final target in 2030 even though EPA's regional haze rule is resulting i n three utilities investing hundreds of millions of dollars to install controls that limit emissions of NOx at units that would have to cease operation less than three years after those projects must be completed.

The commenter s stated that, in addition, the Proposed Rule will require ramping up generation from facilities that are located in current nonattainment areas, which would violate NAAQS requirements and as EPA revises the NAAQS, the number of nonattainment areas will grow, causing even greater pro blems.

Commenter s stated that investments well in excess of $100 billion dollars have already been made to comply with previous requirements to reduce sulfur dioxide, nitrogen oxides, and particulate matter, and that these primary emissions have been reduc ed by approximately 90 percent since 1970; furthermore, tens of billions of dollars of additional investments are being made to comply with EPA's MATS and other regulations. The commenter s stated that these new air quality investments may, in fact, become stranded investments if EPA's proposed new rule is implemented and coal units are shut down prematurely.

Commenter s stated some sort of cost recovery mechanism should be provided to help assure that Minnesota electricity customers or utility investors are not left servicing the cost of investments stranded by EPA and state regulatory measures. The commenter s stated that EPA should give consideration in its CPP target setting for states to delay CPP requirement implementation until after the costs for these EPA

- mandated investments have been recovered.

Comment 17: RTOs take market

- based approach to direct construction of new capacity, and when existing efficient units with remaining book life are available doesn't support building NGCCs. Deregulated states l ike IL have no authority to require such construction. EPA should allow continued base

- load operation of EGUs with supercritical technology

- such units should be exempt from re

- dispatch

Response 17: The EPA maintains that the final emission guidelines pr ovide ample flexibilities to
states to design plans that fit special state circumstances and achieve the subcategory

- specific emission performance rates or state goals. See sections V and VIII of the final CPP preamble for more information. EPA does not require or assume re

- dispatch from any particular unit, and believes the final CPP rule provides significant flexibility for any source to comply with BSER without curtailing operation. See GHG Mitigatin Measures TSD.

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

Commenter s discussed the market

- based approach that regional transmission organizations (RTOs) take in terms of incenting the construction of new capacity. Commenter s said for the sake of clarity, l et us say here that the one

- year forward voluntary capacity market in MISO and the three

- year forward mandatory capacity market in PJM do not provide sufficient economic206 incentive to construct dispatchable resources in the state. Commenter s said and, as a deregulated state, Illinois itself has no authority to intercede and require sufficient levels of generation to meet native load.

As a real world example of the issues facing the use of Block 2 as a compliance tool and the interaction of Block 2 and the la ck of generation incentives in the RTOs markets, c ommenter s described their attempts to build a natural gas

- fired generator as a part of its dedicated resource mix. Commenter s said they conducted an exhaustive and expensive study with the goal of building a new natural gas

- fired power plant inside the PJM RTO. Commenter s said the first two steps of the three

- step generation interconnection study itself, which is a requirement of PJM, took over 4.5 years; adding an additional 3 years to finance and construct would bring the effective start date well beyond 2020. Commenter s said the interconnection study process, consisting of a feasibility study, system impact study and facilities study, is intended to show what improvements may be needed to the transmission system to accommodate the proposed generation project, and how those improvements will be funded. Commenter s said that parallel with, and in support of this study effort, IMEA spent approximately $1 million to develop preliminary plant design, secure a pur chase option on the site and conduct an extensive feasibility assessment that included consideration of the adequacy and access to natural gas and groundwater supply, environmental impacts on air and water quality, and sound attenuation and other local gov ernment zoning requirements.

Commenter s said that in the end, the three

- year forward capacity market in PJM did not provide sufficient revenue for IMEA to build and operate this facility and the interconnection study process itself was burdensome and slow. Commenter s said in light of this real

- world experience, the EPA should seriously consider how it expects Illinois, which has no mechanism in place to order or incent new generation, to meet the aggressive schedule of its Block 2 goals as provided in the p roposed rule, given the failure of PJM to provide by itself sufficient incentives for such development and provide timely response to interconnection study requests for new gas

- fired generation.

Commenter s said given these realities, the EPA should provide for the continued base

- load operation of units with supercritical technology (or which operate at an equivalent emission rate) and exempt such units from re

- dispatch under Block 2. Commenter s said this will maximize the value of these units under Block 1 and avoid issues related to stranding these units' outstanding economic investments. These new supercritical units already have the most strict environmental compliance permit obligations and can and will provide significant environmental benefits for the long term vs. other resources.

Comment 18: Premature retirement of Healy units would result in rate increases equal to roughly six times greater than the rest of the nation

. Response 18: The EPA is not including emission performance goals for Alaska in th is final rule. See section VII of the preamble for discussion of this issue.

The following are summaries of the specific public comments under this comment:207 Commenter s said that in any scenario requiring Golden Valley Electric Association (GVEA) to generat e or purchase power from a source other than the Healy Power Plant would increase the cost of electricity. Commenter s said first, retiring the Healy units prematurely would involve nearly $450 million in stranded capital costs and remaining loan principal payments. Commenter s said second, because coal is GVEA's least expensive power, replacing Healy coal

fueled generation would also result in significant additional annual variable costs between $47.4 and $60.7 million per year. Commenter s said upgrading the Alaska lntertie to transport more natural gas generation north would also result in approximately $30.2

- $41.4 million of additional annual costs to consumers.

Commenter s said that GVEA residential ratepayers rates are already much hig her than anywhere else in the nation, except other parts of Alaska and Hawaii. Commenter s said just the annual cost increases of $90.9 million related to shutting down the Healy units identified above would result in rate increases for GVEA consumers of be tween $0.05 and $0.07/kWh. Commenter s said the EPA indicates that implementation of the Proposed Rule will result in rate increases of approximately $0.01/kWh nationwide. Commenter s said that there is no justification for making Fairbanks consumers bear a burden roughly six times greater than the rest of the nation, particularly when the carbon emissions at issue are minimal.

Comment 19: Because the decision to construct nuclear electric generating stations in SC and GA were made prior to the proposal, th e EPA is viewing the incremental cost associated with the emissions reduction available from completion of these units as zero, even though construction is

on

- going

Response 19: See section XI. D of the final rule preamble of the CPP for the EPA’s response to this comment. EPA is not including the nuclear generation from these units in its final quantification of BSER.

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

Commenter s said the EPA's proposed rule and computation of the state goal does not recognize the significant investment which is continuing to be made by the rate payers and utilities in South Carolina and our neighboring state of Georgia, in zero carbon nuclear electric generation. Commenter s said the estimated cost for completion of the 2 units at the V.C. Summer Station is $ 11 billion and the estimated cost for the 2 units in Georgia is $ 14 billion. Commenter s said in South Carolina, the Base Load Review Act allows South Carolina Electric & Gas Company (SCE&G) to recover the financing costs for the V.C. Summer Station units through filing with the South Carolina Public Service Commission (PSC), and as recently as May 30, 2014, SCE&G filed a request of $70 million for this reason.

Commenter s said the EPA states in the preamble, "The EPA believes that since the decisions to construct these units were made prior to this proposal, it is reasonable to view the incremental cost associated with the CO2 emissions reduction available from completion of these units as

zero.. ." Commenter s said to date, less than one half of the cost of the UCN units in South208 Carolina has been incurred, so a significant cost remains to support the completion of these units. Commenter s added further, only the financing costs are currently being paid and the principal will be paid over the estimated 60 year lifetime of the new nuclear units

- there is clearly an incremental cost that continues to be incurred for this construction.

Comment 20: R ule will result in stranded assets; change in operati on (not just retirement) causes stranded assets; debt service on loans will continue after facilities are retired early, and many loans contain significant prepayment interest penalties; advanced retirements and curtailed operations should be avoided, EPA failed to consider competitive impacts of CPP

Response 20: See response to comments 1 and 2 in this section (4.7.2), including the reference to the July 2015 docket memo titled “Stranded a ssets a nalysis.” See also section I.A, II.F

- G, V.A

- C, VIII.G

- H, X.C, XI.C

- E, and XII.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:

Several commenters said there is potential for stranded assets under this plan and the EPA did not consider these costs. Commenter s said the EPA failed to take the remaining useful life of existing facilities into reasonable account. Commenter s said that the EPA has improperly conflated the legislative history related to technology forcing under section 111(b) of the CAA with the facility preserving useful life requirements of 111(d).

Commenter s noted that forcing changes in the operation of coal plants will create stranded costs. Commen ter s said for example, at Laramie River Station (LRS) in Wyoming, because there is no practical way to reduce the heat rate under building block 1, the only option remaining at the source is a drastic one: the owners are faced with the requirement to run t he plant less or shut down one or more units. Commenter s stated that the first option, running the plant less, will reduce the efficiency of the plant (and the heat rate, contrary to EPA's objective) and cause an increase in the operating costs

- wholesale cost increases that will have to be passed on to their
customer

- owners. Commenter s added that it is unlikely, however, that simply running the plant less will be sufficient to meet the CO2 emission reduction required of LRS, whether under the
rate

- based o r mass

- based approach. Commenter s indicated that if, instead, the owners are forced to shut down a unit prematurely, it will cause significant stranded costs and will run afoul of the directive of 111(d) to take into account remaining useful life. Commente r s said that in EPA's NODA, it asks if it should consider such issues in adjusting timeline and compliance requirements. Commenter s state d that at a minimum, the EPA should allow all stranded costs to be considered in adjusting timelines and targets accord ingly to allow recovery of costs.

Commenter s stressed that the guidelines should support cost

- effective, achievable reductions that do not advance retirements, strand assets, or curtail operations of the current fleet.

Commenter s said Seminole, as a rural generation and transmission cooperative, has primarily relied on capital borrowed from the Federal Financing Bank and loan guarantees from the Rural Utilities Service ("RUS") for the construction of its generation fleet and capital improvements to its faci lities, primarily involving environmental controls. Commenter s said currently, loans209 related to SGS account for more than 75 percent of Seminole's total outstanding debt, and these loans are secured by Seminole's Trust Indenture. Commenter s said if SGS were to be retired prior to the end of its useful life in order to comply with EPA's Existing

- Source Proposal, the debt service related to these loans would continue to impact the electricity rates paid by our Members. Commenters stated m ost o f Seminole's loans also contain significant prepayment interest penalties, so a strategy to prepay the debt would only further increase the cost paid by our Members.

Commenter s said the EPA also fails to consider the competitive impacts of its proposed rul e. Commenter s said in Florida, some utilities have a far greater dependence on coal

- fired plants than natural gas plants. Commenter s said that those utilities that would be required to prematurely shut down viable coal plants with years of remaining operat ing life, and given the limited time period for re

- dispatch, would be forced to purchase energy from other utilities. Commenter s said their consumers would lose the investment in the capital intensive coal plants and at the same time be forced to pay for n ew transmission lines and pipelines to other utilities to buy electricity from gas generation plants they do not own while their own generating units sit idle.

Comment 21: S tranded Cost & Replacement Cost

Response 21: See section I.A, II.F

- G, V.A

- C, VIII. G

- H , X.C, XI.C

- E, and XII.E of the final rule preamble of the CPP for the EPA’s response to this comment. See the “Stranded Assets Analysis” MEMO in the docket from July 2015.

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

Commenter s stated the Proposed Rule and the application of additional requirements on existing generation resources will result in a number of serious cost and compliance issues, particularly as it relates to stranded assets and obtaining financing for rep lacement power. The commenter s said the cost impacts resulting from the Proposed Rule will ultimately be borne by the cooperatives' end use retail members; unlike investor

- owned utilities, due to the not

- for

- profit nature of cooperatives, cooperatives cann ot shift costs to shareholders or reduce profit margins as a means to mitigate the final rate impacts of the rule.

Commenter s stated cooperatives, their member cooperatives, and ultimately the retail consumers will be hit particularly hard by stranded cos ts. The commenter s said the EPA's model anticipates shutting down baseload generation; there is uncertainty about biomass and whether it will be viewed as carbon neutral; if it is not viewed as carbon neutral, it will likely be retired resulting in strande d costs. The commenter s said cooperatives will then have to expend additional money to replace the plants that will be shut down.

Commenter s stated the rule will result in the closure of some of the cleanest base load generation facilities in operation today; for example the Plum Point Energy Station located in Mississippi County, Arkansas ("Plum Point"). The commenter s said this project becam e commercially operational in August, 2010; as one of the newest coal generation facilities in the country, it was constructed using state

- of the

- art emissions control technology

- a fact the EPA either did not210 consider important or ignored. The commenter s s aid although the Plum Point facility is one of the cleanest coal plants generating power today, it would be shut down if the Proposed Rule is implemented in accordance with EPA's IPM model. The commenter s said the proposed standards would require Plum Poin t to reduce its output to a level such that the operation of the facility is no longer economically viable. The commenter s said the Plum Point facility was financed in 2011 with two thirty

- year

- term loans, both having substantial prepayment penalties in th e event prepayment is required as a result of the closure. The commenter s said the closure of generation facilities such as Plum Point will cost the cooperatives and their members millions of dollars in prepayment penalties in addition to the cost of accel erating payment of remaining principal. The
commenter s said rural Americans will see substantial increases in their energy costs as the cooperatives must recover funds to pay the costs associated with these stranded assets. The
commenter s said cooperatives will encounter decommissioning costs associated with projected coal retirements. The commenter s said on top of the stranded cost issue, cooperatives will need to acquire replacement power for the lost generation.

Commenter s added the combination of stran ded costs coupled with further expenditures necessary to replace the lost generation could have devastating consequences on the ability of cooperatives, to meet certain financial covenants contained in their existing loan documents

- the failure of which w ould trigger defaults under those documents. The commenter s said this could potentially result in the acceleration of outstanding loan facilities which would only serve to compound the financial crisis and, in a worse case scenario, could lead to the ultim ate bankruptcy of the cooperative. In the least populated and poorest service territories, no other electric utility would be expected to step

- in and provide electric service.

Comment 22: Use of glide path and/or phasing in of BB1 and BB2 does not preve nt stranded
assets
Response 22: The EPA is revised the timing of building block 2 to be gradually phased in over the interim period

. See section V.D. of the final rule preamble of the CPP for more information about Building Block 2. See the “Stranded Asse ts Analysis” MEMO in the docket from July 2015.

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

Commenter s stated that the glide path discussions in the NODA do not prevent the potential for stranded assets. Commenter s said that even phasing in of Building Blocks 1 and 2 during the interim period of 2020

- 2029 is not adequate to prevent stranded assets.

Commenter s indicated that the use of "book life" of 40 years discussed in the NODA does not reflect reality of the actual lif e of coal

- fired power plants, and that 65 years is a much more realistic time frame. Commenter s also noted that the assumed "book life" of retrofits of 15 years is also not reflective of the reality of the estimated life of these capital intensive projects

. Commenter s indicated that a more realistic assumption for retrofit book life is on the order of 30 years. Commenter s said therefore, application of book life is inadequate for consideration in determining the impact on stranded assets.211 Commenter s indicat ed that utilities have made investments in power plants to meet other EPA regulations, and these investments will cost ratepayers billions of dollars. Commenter s warned that stranding these assets will lead to higher electricity rates as new generation res ources are built to replace those prematurely retired power plants.

Comment 23: Interim goals and 10 year gli de path creates stranded assets

Response 23: In the final guidelines, t he EPA has postponed the start of the interim goal period from 2020 to 2022, and has revised its goal

- setting methodology and goals. The CO2 emission performance rates and state goals in the final emission guidelines, including the emission performance levels for the interim period, are achievable considering cost. The EPA is allo wing states to define their own emission improvement trajectory, or glide path, to meet the interim goal for 2022

- 2029 and the final goal starting in 2030. The EPA also is defining illustrative emission performance levels for three interim step periods

-- 2022

- 2024, 2025

- 2027, and 2028

- 2029

– and a state may choose to use these levels in its plan.

Additional response to this comment is provided in comments 1 and 2 in this section (4.7.2), including especially the reference to the July 2015 docket memo title d “Stranded assets analysis.”

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

Commenter s stated the proposed compliance period beginning in 2020 will burden rate payers with unnecessary costs. The commenter s said the inter im requirement as proposed requires too high of a compliance burden by 2020. The commenter s said EPA should remove the interim requirements and the 10 year glide path; at a minimum, the states should be free to develop a compliance path that is the most ef ficient and cost effective for their state. The commenter s said the potential 2020 "cliff" could require the commenter s to retire one or both of its coal fired units which would result in the stranded costs for these units to be paid by the ratepayers. The
commenters ’ analysis shows that ESGS Unit 2 existing coal fired unit is the most economical option for our ratepayers for the next 20 years. The commenter s said ESGS Unit 1 remains the most cost effective option for at least another ten (10) years. The co mmenter s said this proposed rule could force premature retirement of these units while they have significant remaining useful life. The commenters stated their customers bear the economic costs of ownership, but also realize the economic benefits; as long as the going

- forward variable costs of producing electricity with the coal plant are less than the all

- in costs (fixed and variable) of viable replacements (market purchases, or resource acquisitions), the plant will yield economic benefits for customers. The commenter s said if the plant ceases operation during its economically useful life, customers will suffer an economic loss from electric rates that will higher than they would have been had the plant continued to operate.

Commenter s stated compliance w ith interim goals by 2020 is not technically feasible for the
commenter s ; it may well require the retirement of the ESGS units and the purchase of power from the open market; however, market participants are not willing to provide firm pricing of electric energy and capacity in 2020 and beyond due to regulatory uncertainty. It is imprudent to the commenter s to rely on the markets and thus self

- build or contract with asset backed energy and capacity. The commenter s said such "clean" capacity and energy does not exist in Kentucky212 and must be constructed. Commenters sais that t o the extent that the commenter s must build replacement generation capacity for the ESGS units prior to maturation of the current long

- term bond debt and the incremental capital required to maintain the units in a reliable manner, ratepayers will be burdened with payment of debt and interest expense associated with new generation as well as stranded debt on ESGS. The commenter s said a longer compliance period would allow the commenter s to plan routine and capital maintenance in a manner to minimize the amount of stranded investment to be required from ratepayers, thus lowering the economic cost of compliance with the proposed rule.

Comment 24: By forcing significant reductions in operatio n and retirements, the CPP is a regulatory taking of these units requiring government compensation

. Response 24: See section V I II

. G . of the final rule preamble of the CPP for the EPA’s response to this comment. See the “Stranded Assets Analysis” MEMO in the docket from July 2015.

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

Commenter s said without relief for remaining useful life, many older EGU's will be forced to significantly reduce operations or retire. Commenter s sa id by forcing significant reductions in operation and retirements, the CPP is a clear regulatory taking of these units requiring government compensation. Commenter s stated that the test for a regulatory taking is easily met

- when determining if a regulato ry taking has occurred, courts consider (1) the economic impact of the regulation on the property owner, (2) the extent to which the regulation interferes with distinct investment

- backed expectations, and (3) the character of the government's invasion of
t he property interest. Commenter s stated the proposed rule violates the Fifth Amendment because uncompensated takings of property will result.

Commenter s said that the CPP would require that customers pay both for the stranded cost of retired coal

- fired pow er plants as well as their replacements, including new capital investment and/or increased market power costs. Commenter s said this is harsh, avoidable and unnecessary in light of other available options, including structural flexibility and timing option s, both of which could service to mitigate the adverse impacts associated with the rule and avert what is potentially a regulatory taking.

Commenter s stated that Rule 111(d) mandates the move from least

- cost generation dispatch to carbon dioxide

- based disp atch, drastically diminishing the value of many coal plants and rendering many of them uneconomic to run during all but the peak summer months. Commenter s indicated that because coal plant owners built their plants under one regulatory construct, only to h ave those plants rendered uneconomic by the federal imposition of a different construct (command and control resulting from Rule 111(d)), they may credibly argue for compensation for the value of their lost investment or stranded cost. Commenter s said it is therefore possible that both state and federal takings laws may be implicated by Rule 111(d), and the EPA has failed to address this potential cost of implementing Rule 111(d).

Commenter s stated that as part of the legislation creating the comp etitive retail electric market in ERCOT, the Texas Legislature allowed investor

- owned electric utilities (IOUs) to recover "all of213 [their] net, verifiable, non

- mitigable stranded costs incurred in purchasing power and providing electric generation service. " Commenter s stated that stranded cost claims from coal plant owners resulting from Rule 111(d) are not addressed in the proposed rule. Commenter s indicated that if Rule 111(d) is adopted as proposed, the Texas Legislature would need to determine whether t o change Texas law to allow recovery of stranded costs resulting from the rule, and if recovery of such costs were allowed by the Texas Legislature, these costs would ultimately be borne by all Texas electricity customers.

Commenter s said that if as EPA's IPM compliance model predicted, the EPA's proposal forces SGS to completely shut down before its useful life has run, Seminole's enormous, undepreciated investment in SGS will be rendered worthless. Commenter s said that result will leave Seminole and its M embers with a "stranded asset", with significant remaining economic value and debt, and Seminole and its Members arguably will be legally entitled to recover the costs incurred under this proposed government regulation. Commenter s said if EPA finalizes the existing proposal as currently written, it effectively amounts to a regulatory taking, entitling Seminole to recover the hundreds of millions of dollars of remaining value of SGS from the total loss of the remaining economic value of these units. Commente r s said yet, the EPA's economic impact analysis fails to consider the real costs associated with the forced closure of existing, useful power plants resulting directly from its proposal and how these costs must be recovered following the adoption of any fi nal rule. Commenter s said pursuant to the regulatory takings provision in Article V of the United States Constitution, Seminole arguably will be entitled to recover the value of its investment

- backed expectations. Commenter s said the EPA should carefully c onsider this issue as it finalizes the proposal and its effects on the future cost and reliability to generate and transmit electricity.

Commenters stated because the proposal as it stands would likely result in the premature closure of existing power plan ts, the proposal's requirements amount to a regulatory taking requiring compensation because of the premature closures and uneconomic curtailment it will require.

Commenter s stated as issued, the Proposal may be subjecting companies to one or more regulato ry takings, in the form of forced retirements or diminished operating capacities of state

of

- the

- art units. The commenter s said courts consider three factors in determining whether the effects of a government regulation constitute a regulatory taking in vi olation of the Takings Clause: (1) the character of the government's invasion of the property owner's property interest; (2) the economic impact of the regulation on the particular property and property owner; and (3) the extent to which the regulation int erferes with the property owner's distinct investment

- backed expectations with respect to the property. See Penn. Central Transp. Co. v. New York City, 438 U.S. 104 (1978); see also Tahoe

- Sierra Pres. Council v. Tahoe Reg'l Planning Agency, 535 U.S. 302 (2 002); Palazzolo v. Rhode Island, 533 U.S. 606 (2001). The commenter s said courts have applied these factors in relation to the nature and extent of a regulation's interference with an owner's rights in a whole property, rather than a specific part of the p roperty. The commenter s said based on these standards, the effects of EPA's proposed rule would meet the definition of a regulatory taking in regard to Plant Scherer and possibly Plant Wansley.214 Comment 25: States should have the flexibility to allow mult i

- state electrical systems to demonstrate compliance. Restricting compliance to a state

- by

- state basis significant increases compliance costs and results in additional stranded assets

. Response 25: The final rule provides ample flexibilities to states to design their plans, which in turn allows states to establish flexible requirements for affected EGUs

. Although the emission guidelines call for state plans and include state goals, they do not “restrict compliance to a state by state basis.” The guideline s take into account interstate effects as explained in final CPP preamble section VIII.L. The guidelines also provide for multi

- state plans, and for individual state plans that allow rate

- based and mass

- based emission trading across state lines. Regarding the means of reducing emissions, s tates are allowed to use the BSER measures, or other measures in their state plans to comply with the goals ; t here are flexibilities within the BSER measures and how they are executed ; and s tates also have non

- BSER measure s at their disposal. Regarding the form of regulation, states have a broad range of options under different plan designs. See, for example, sections V

., VIII.A. and VIII.C. of the final rule preamble of the CPP for more information.

For additional response on the flexibility provided on state plan design by the guidelines and stranded assets concerns, see the response to comments 1 and 2 in this section (4.7.2), including the reference to the July 2015 docket memo titled “Stranded ass ets analysis.”

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

Commenter s support the EPA's intention to grant states flexibility on methods to allow multi

state electrical systems to demonstrate compliance. Commenter s i ndicated this should include a broad suite of options including bi

- lateral agreements, trading of clean energy, renewable energy and avoided CO2 tons from EE.

Commenter s said TVA plans and dispatches its generating assets on a system basis across seven
sta tes to minimize cost and maintain reliability. Commenter s said restricting compliance to a state by state basis significantly increases compliance costs and results in additional stranded assets. Commenter s indicated that under EPA's analysis, the proposed guidelines will result in the closure of all coal

- fired power plants in Mississippi. Commenter s said that the TVA has the right to purchase all of the output of the 440 MW lignite

- fired Red Hills Power Plant in Choctaw County, Mississippi through a power purchase agreement, and has historically purchased most of the facility's output. Commenter s said the plant began operation in 2002 and is currently installing dry

- sorbent injection in order to comply with MATS. Commenter s indicated that if Red Hills is re quired to be shut down as a result of this rulemaking, the cost of this injection system would be stranded. Commenter s said that to avoid situations like Red Hills, TVA supports EPA's intention to grant states flexibility on methods to allow multi

- state el ectrical systems to demonstrate compliance.

Comment 26: Binding plant closures could allow emission reductions to be counted immediately, while delaying the actual closure until the end of the remaining useful life215 Response 26: The commenter s ’ suggestion is creative but it would have the effect of increasing emissions. The final CPP, which allows facilities to purchase and sell emissions allowances or ERCS, can achieve the stated objective of the commenter s without have the effect of increasing CO2 emissi ons. See response s 1 and 2 in this RTC Chapter (4.7.2) for more explanation of the agency’s view that the final emission guidelines enable states to take into account stranded asset concerns and the remaining useful life of particular affected EGUs in de signing their state plans.

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

Commenter s suggested the use of binding plant closure orders would alleviate the impact of early closure on ratepayers and would facilitate planning for the grid and state agencies.

Commenter s indicated the October 27 NODA requested comment on how book value may be used to address stranded investment concerns. Commenter s suggested that a binding plant closure order be deemed to count immediately towar d a state target, but closure would be deferred until the end of a remaining useful life established by the closure order. Commenter s explained that if a binding closure order were issued for Dave Johnston in 2019, the compliance calculation for 2020 would eliminate that plant's emissions and megawatts, but the plant could continue to operate until the plant was fully depreciated in 2027 as provided in the closure order. Commenter s said such a process incents a state to seek closure orders earlier rather th an later, alleviates the devastating impact of premature closure on ratepayers, eliminates near term investment uncertainty, and facilitates planning for the benefit of the grid. Commenter s said that the EPA's proposed rule does none of those important thi ngs.

Comment 27: Need adequate time for transition to avoid stranded assets. Should subcategorize and develop separate standards for facilities that have made significant investments in pollution control equipment since 2010, and should reaffirm State's established variance authority and expressly identify variance mechanisms states can use. Recommended variance

- based options are presented

Response 27: In the final guidelines, the EPA has postponed the start of the interim goal period from 2020 to 2022, and has revised its goal

- setting methodology and goals. The subcategory

specific emission performance rates and state goals in the final emission guidelines, including the emission performance levels for the interim period, are achievable considering cost. The EPA is allowing states to define their own emission improvement trajectory, or glide path, to meet the interim goal for 2022

- 2029 and the final goal starting in 2030. The EPA also is providing illustrative emission performance levels for three interim step periods

-- 2022

- 2024, 2025

- 2027, and 2028

- 2029

– and a state may choose to use these levels in its plan. See section VII of the preamble for further information.

The CO2 performance rates and state goals in the final guidelines are achiev able considering
cost , and give states the flexibility in practice to consider facility

- specific factors such as216 remaining useful life and stranded assets in designing their plans. As a result

, the national emission guidelines do not need to include special provisions for facilities that have recently invested in pollution control projects, variances, or alternative compliance schedules. Among the state plan options that are permiss ible under the guidelines are mass

- based federally enforceable standards on EGUs, which could encompass the commenter s ’ suggestion for facility

- specific emissions caps, if properly designed. The EPA believes that the agency’s approach to

s ubcategorization

, -- distinguishing between

-- fossil steam generation and gas

- fired combustion turbines

– is appropriate for these final guidelines

. Additional response to this comment is provided in comments 1 and 2 in this section (4.7.2), including especially the refer ence to the July 2015 docket memo titled “Stranded assets analysis.”

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

Relief needed for facilities that have recently invested in pollution control projects . Commenter s said t hat an essential element for a reasonable and cost

- effective climate program is an adequate time period for the transition to a lower carbon economy, and the EPA must make every reasonable effort to avoid stranding assets. Commenter s said they believe tha t provision must be made in the final rule to address the issue of stranded assets, particularly with respect to coal

fired units that have recently installed expensive pollution control equipment to meet other environmental requirements such as the Mercur y MATS and CSAPR. Commenter s believe d that Section 111(d) of the Clean Air Act requires the EPA to provide relief for such facilities either directly in its guidelines or indirectly by authorize states to do so in state implementation plans. Commenter s sa id allowing such relief will also help lessen the costs of this program on consumers of electric power in regions served by such facilities.

Alternatives to avoid stranded assets . Commenter s said that in the NODA the EPA discusses and requests comment on potential alternative options to enable coal

- fired facilities to recoup their pollution control investments. Commenter s said GE echoes comments of its Homer City subsidiary and strongly urge the EPA to consider subcategorizing and creating separate standards for sources that have made recent capital investments to comply with MATS and CSAPR, and reaffirm states' established variance authority and expressly identify variance mechanisms by whic h facilities that have made substantial investments to comply with the EPA's recently promulgated MATS or CSAPR requirements may obtain the relief they need.

Commenter s said : 1) the EPA could use its authority under CAA section 11 to "distinguish among clas ses, types, and sizes" and to consider costs when establishing standards of performance, to develop separate 111(d) standards for existing facilities that since 2010 have made substantial investments in pollution control technologies to comply with CSAPR a nd MATS. Commenter s indicated standards for this subcategory of sources could take several different forms. Commenter s said the EPA could adopt an emission rate standard that it determined sources within the subcategory could reasonably achieve, or, consis tent with one of the variance options discussed below (cap

- based variance), the agency could establish an annual CO2 emissions cap for such facilities, or criteria for states to use to develop such a cap, that reflects a reduction (e.g., 20%) from 2005 lev els. Commenter s said this type of an approach217 would balance the EPA's dual goals of reducing CO2 emissions and not prematurely stranding assets, particularly those just recently installed to comply with other EPA programs.

Variances

- General . Commenter s s trongly recommend ed that the EPA acknowledge and/or endorse variances, and emphasized that at the same time, states must be given the ability to adjust its emission target to account for any variances issued. Commenter s said that Homer City strongly recomm ends that the EPA acknowledge and, in certain scenarios endorse, states' authority to issue variances from the EPA emission guidelines and to adopt alternative compliance standards and deadlines for facilities meeting certain conditions. Commenter s said CA A section 111(d ) ( 1) provides that EPA "shall permit the State in applying a standard

- to take into consideration, among other factors, the remaining useful life of the existing source." Commenter s said similarly, 40 C.F.R. Section 60.24(f) provides that states may apply less stringent standards and longer compliance schedules to individual facilities or "class of facilities" if the state demonstrates:

• Unreasonable cost of control,

• Physical impossibility, or

• " Other factors specific to the facility (or cla ss of facilities) that make application of a less stringent standard or final compliance time significantly more reasonable."

Commenter s said it is worth noting that the variance authorized by 40 C.F.R. Section 60.24(f ) ( 3) is distinct from and broader th an the other two categories, including the concept of a facility's remaining useful life. Commenter s said they believe that the EPA and Pennsylvania should readily rely on this specific regulatory variance authority to allow facilities that have recently

m ade substantial capital investments time to recoup their investments before being subject to the entirety of a state 111(d) plan.

Commenter s said the EPA should embrace this authority, not shunt it aside. Commenter s said in the preamble to the proposal, EP A takes the position that "no relief for individual facilities would be needed" because EPA's proposed emission guidelines happen to take the form of "state emission performance goals for the collective group of affected EGUs in a state," rather than a "pr esumptive standard of performance that must be fully and directly implemented by each individual existing source within a specified source category." Commenter s disagreed with the EPA's conclusion.

Commenter s said however, the form of the emission goal has nothing to do with the ability of a state, under CAA section 111(d)(1) to grant variances which "take into consideration, among other factors, the remaining useful life of the existing source to which such standard applies." Commenter s said the EPA cannot circumvent this statutory provision merely by changing how it may choose to prescribe state guidelines. Commenter s said moreover, we cannot accept the premise that the claimed flexibilities in EPA's portfolio approach obviate a state's need to adjust its emission target in account for any source

- specific variances granted. Commenter s said unless states have the ability to adjust their emission targets, variances would be of little utility, since any relief granted to one source would have to be made up by another. Commenter s said to provide meaningful relief and to help address the stranded asset issue, states must have the218 ability to grant variances and to adjust state emission targets commensurately. Commenter s said for its part, the EPA could codify crit eria for when it would be appropriate for state targets to be adjusted to reflect a variance. Commenter s said for example, the EPA could make clear that it supports the issuance of variances to avoid stranding assets and the adjustment of state emission
ta rgets to such variances. Commenter s said states could grant general variances to other sources, but they would not be able to adjust their emission limits in response to variances that do not satisfy the EPA's criteria (e.g., when a source has not made a c apital expenditure since 2010).

Specific Variance

- based Options . Commenter s set forth two specific variance

- based options that the EPA should authorize and endorse:

Option 1: Alternative Compliance Schedule

Commenter s said the EPA should specify in the final rule that states should grant variances pursuant to 40 C.F.R. Section 60.24(f) to coal

- fired facilities that made substantial investments in pollution control technology since 2010 to comply with CSAPR or MATS. Com menter s said a variance under this option would exempt the facility from a state's base 111(d) program for 20 years from the start of the program. Commenter s indicated that during the variance period, the EPA could adjust their applicable emissions target to exclude emissions from those sources operating under the variance, then at the conclusion of the variance period, the state would have to readjust its emission target to account for the source and the facility would be required to meet all applicable st ate plan requirements.

Commenter s said that such an alternative compliance schedule is consistent with discussion of potential ways to consider of the "book life" of major upgrades to a facility in EPA's recent NODA. Commenter s said the assumed book life f or large environmental retrofits, such as the dry scrubbers being installed at Homer City, has traditionally been 30 years. Commenter s said regulatory analysis underlying both CAIR and CSAPR used a 30 year life for FGDs, as did the MATS Rule. Commenter s sa id while the EPA has more recently used 15 years for evaluating book life under CAA section 111(d), the EPA can certainly consider the "book life" of major pollution control equipment to be 30 years given the large capital outlays required and substantial operation and maintenance costs.

Commenter s said the EPA's endorsement of a 20

- year alternative compliance schedule for qualifying sources like Homer City is plainly consistent with the statute and EPA regulations. Commenter s said as discussed above, state s may implement alternative compliance schedules pursuant to their Section 60.24(f) variance authority, as supplemented by EPA guidance setting forth specific eligibility criteria. Commenter s added that moreover, allowing variances for those facilities tha t meet reasonable eligibility criteria is consistent with the EPA's own authority to "distinguish among classes, types, and sizes within categories of new sources for the purposes of establishing such standards." Commenter s said although there is not an ex plicit corollary to this language in CAA section 111(d), such may be fairly implied in light of the EPA's express power to make such distinctions in establishing standards of performance under section 111(b). Commenter s said accordingly, the EPA should con sider such an alternative compliance option and expressly allow states to (1) grant eligible facilities 20

- year variances, and (2) implement corresponding adjustments in their state emission targets over the variance period.219 Option 2: Emission Caps

Comment er s said a second option would be for the EPA to authorize and endorse states to use their variance authority to subject sources to site

- specific, annual CO2 caps in lieu of the base 111(d) program. Commenter s said under this option, facilities would be su bject to a CO2 emissions cap that reflects a 20% reduction off of the source's 2005 emissions. Commenter s said qualifying facilities would again be those facilities that have made substantial capital investments since 2010 and need time to recoup those inv estments. Commenter s said since many coal plants have and will retire after 2005, the emission reductions from those plants is 100 percent. Commenter s said therefore, coal plants as a group will contribute significant CO2 reductions to achieving supportabl e reduction targets. Commenter s said the capped facility could operate pursuant to whatever schedule it chooses, provided it stays below the cap. Commenter s added the facility would also be able to run under a cap in any year and utilize the "headroom" und er the emission cap in subsequent years. Commenter s said the obvious benefit to the source is that it would have the flexibility to comply with state plan requirements through a permit and operate at full load (when the plant has the lowest heat rate) duri ng select periods of time, as opposed to being subject to a rate. Commenter s said the benefit to the state is that it would obtain a guaranteed mass reduction of CO2 and would maintain the viability of EGUs within the state.

Commenter s said they believe th at this approach would be permissible under the CPP as proposed, as well as under the variance authority of 40 C.F.R. Section 60.24(f). Commenter s said however, we believe it important for the EPA to eliminate any confusion by specifically recognizing this in the final rule or accompanying materials as a viable option to avoid stranding assets. Commenter s said states are likely to have more comfort adopting such a measure if the EPA speaks to it directly in the final rule.

Commenter s stated that to provide relief and to avoid stranding assets prior to the end of their normal useful life, EPA has two options: (1) EPA could use its CAA authority to create a separate subcategory consisting of existing coal

- fired facilities that have recently made sizable capit al expenditures, and then develop standards for those sources that balance CO2 reductions and the ability recoup recent investments; (2) EPA and states could exercise variance authority provided by the CAA and EPA's 111(d) implementing regulations to estab lish alternative compliance standards and deadlines for qualifying facilities. The commenter s provided details on each of the options and described two specific variance

- based options (alternative compliance schedule and emission caps) that EPA should adop t.

Comment 28: The Proposed Regulation fails to recognize significant and recent investments that have substantially reduced carbon dioxide and other emissions; which if stranded, will contribute to higher rates and higher bills for customers.

Response 2 8: See response 1 of this section (4.7.2), including the reference to the July 2015 docket memo titled “Stranded assets analysis”. See also section VIII.H and section I.A, II.F

- G,220 V.A

- C, VIII.G, X.C, XI.C

- E, and XII.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 EPA appears to recognize that the Proposed Regulation is likely to result in "stranded costs," but fails to offer an y quantification of such costs. The commenter s said the Proposed Regulation does not provide states with "the flexibility to make exactly the kind of judgments necessary to avoid requirements that would result in stranded assets."

Commenter s stated in regulated States like Virginia, costs of such stranded investments or "stranded assets," as EPA characterizes them, are often ultimately borne by customers. The
commenter s said the Proposed Regulation fails to recognize this basic concept by ine xplicably asserting that impacts on electricity prices "would likely be less" if a State were to implement new resources "on a more aggressive time

- frame." The commenter s said a more aggressive displacement of existing resources will increase stranded cost s, which is almost certain to contribute to increased, not decreased, electricity prices in regulated States.

Commenter s stated a compliance strategy of replacing all coal

- fired generation facilities in Virginia with comparable amounts of state

- of

- the

- art natural gas combined cycle facilities would not satisfy EPA's Mandatory Goals for Virginia, many recent investments in power plants, including significant expenditures for environmental controls, are at risk of being stranded. Investments in the coal

- fired fleet located in Virginia, which is used to provide Virginians with reliable service at just and reasonable rates, include:

• Virginia City Hybrid Energy Center ("VCHEC"), placed in

- service in 2012, at an initial capital cost of $1.8 billion;

• Chesterfield Power Station scrubbers placed in

- service in 2011 and 2008, at an initial capital cost of $275 million; and

• The Clover Power Station constructed and placed in

- service in 1995 and1996, at an initial capital cost of $1.2 billion, and with a planned service life of over 50 years.

The commenter s also recognize d that the Virginia ratepayers served by Appalachian Power Company, whose generation facilities are located primarily in West Virginia, face stranded costs associated with the carbon emission rates that the EPA proposes for West Virginia. The
commenter s said Virginia and West Virginia ratepayers have only recently begun paying for more than $2 billion in environmental controls necessary for Appalachian Power Company to comply with a 2007 EPA Consent Decr ee; these recent environmental compliance projects include flue gas desulfurization ("FGD") systems, for all four units at the Amos and Mountaineer Power Stations, which were placed into service between 2007 and 2011. The commenter s said other recent envir onmental investments for West Virginia facilities funded by Virginia ratepayers include scrubbers and FGD systems at Dominion's Mount Storm generating facility.

Commenter s stated Virginia is unable to take advantage of the 10

- year averaging allowed by the Proposed Regulation to meet the Interim Mandatory Goal, which may provide some flexibility221 for States with coal

- fired fleets expected to retire "after 2020 but before 2029." The commenter s said only the VCHEC, Chesterfield, Clover, Amos, or Mountaineer

- has an estimated retirement date before 2030, and none before 2020; thus, a Mandatory Interim Goal of 884 pounds/MWh beginning in 2020, and a Mandatory Final Goal of 810 pounds/MWh beginning in 2030, means that billions of dollars of useful plant in Virgin ia (and West Virginia) are likely to be stranded, with a cost to Virginia residents and businesses that is not accounted for by the Proposed Regulation. For this reason, the commenter s urge d the EPA to reconsider its proposal "that the remaining useful lif e of affected EGUs, and the other facility

- specific factors identified in the existing implementing regulations, should not be considered as a basis for adjusting a state emission performance goal...."

Commenter s stated in Arizona the closure of coal plan ts means the state utilities will be closing plants before the end of their usable life; however they must continue to pay the remaining debt all the while investing in new generation. The commenter s said according to Ruben McBride, a member of the Graham County Electric Cooperative Board of Directors, the Proposed Rule will mandate they serve the same number of customers with twice if not three times the amount of debt. ("EPA Carbon Plan Detrimental to Arizona,")

Commenter s stated this ruling is a little t oo aggressive and that it's going to drive up costs in South Carolina disproportionately for Berkeley Electric Cooperative members. The commenter s said by restricting the use of coal, this rule will change the power supply infrastructure that members have already paid for, for the coal plants that are there for the past decades.

Comment 29: Closures on units that have debt obligations; loan obligations; allow unit to
ope rate for remaining useful life.

Response 29: See response 1 of this section (4.7.2). See also section IX

. D . of the CPP final preamble for the EPA’s response to this comment. See also the responses to comments 1 and 2 in this RTC chapter (4.7.2), including the reference to the July 2015 docket memo titled “Stranded
assets a nalysis

. ”

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

Commenter s stated many electric cooperatives finance fossil generation projects using capital from the U.S. Department of Agriculture

- Rural Utility Service (RUS). The commenter s said the CPP in the proposed plan will force the closure or de

- rating of coal units that currently have debt obligations. The commenter s said to assist electric cooperatives to meet these loan obligations we propose allowing units with RUS financing to continu e to operate for the remaining useful life to ensure the fulfillment of the RUS debt obligation.

Commenter s stated recently, Dairyland made substantial investments to the existing coal fleet to reduce air emissions; these investments were also in accordanc e with government regulatory policies, but now are potentially significant stranded costs going forward with the CPP. The
commenter s said the CPP will mean a major and expensive transition to other generation resources, while simultaneously paying the debt associated with recently installed pollution control equipment. The commenter s support ed a diverse mix of generation fuel sources and222 technologies which will reduce emissions and believes it is wise to avoid any policy or regulatory mandate which could re sult in an overdependence on any single fuel source for power generation.

Commenter s stated because of the rural nature of the service territory, Dairyland qualifies for construction loans from the U.S. Department of Agriculture's Rural Utilities Service (RUS). The
commenter s said RUS is a credit agency that finances and administers loan and grant programs which assist rural electric utilities to improve the quality of life and promote economic development in rural America, made under authority granted by the Rural Electrification Act. The commenter s said Dairyland has relied on these low

- interest, long

- term loans to construct the generation and transmission facilities necessary to provide affordable and reliable power to rural consumers. The commenter s sai d at present, nearly all loans for Dairyland are made through the Federal Financing Bank and are guaranteed by RUS; they carry a loan term of up to 35 years, depending on the projects, and the remaining useful life of the facility involved. The commenter s said the loans are made for specific projects; when a loan is approved for a generation project, the term of the loan generally reflects the remaining useful life of the facility. The commenter s said if the generating facility is prematurely retired, as co uld potentially happen due to the CPP, the debt on those facilities still remains and still requires payment over the remaining life of the loan. The commenter s said the shuttered plant will no longer generate revenue that would be used to pay that plant's debt.

Comment 30: The EPA should provide guidance for managing stranded asset debt in the proposed rule

Response 30: The EPA is not including emission performance goals for Alaska in this final rule. See section VII of the preamble for discussion of this issue.

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

Commenter s stated the proposed rule includes no provisions that address stranded assets. The
commenter s stated they are currently investing $187,000,000 in Healy Un it 1 and Healy Unit 2 based on successfully executing the Consent Decree with EPA; given this investment and the lack of affordable generating alternatives, the commenter s intend ed to operate Healy Unit 2 beyond 2030. The commenter s said depending on futur e energy availability, the commenter s may need to operate Unit 1 beyond 2030 as well. The commenter s said as a practical matter, any plan to meet the proposed Alaska CO2 Performance Goals will likely include the shutdown of Healy Unit 1 and Healy Unit 2 be cause these two EGUs are the only Subpart UUUU

- affected coal

- fired EGUs in Alaska; if so, then the investment in these two units will become stranded assets that would be an unreasonable liability for the commenters to absorb. The commenter s said customers simply could not afford to pay for this liability while, at the same time, pay for the cost of whatever generation could replace Healy Unit 1 and Healy Unit 2, if available. The
commenter s said to avoid this situation, EPA should provide guidance for mana ging stranded asset debt in the proposed rule, including a provision for full compensation for utilities that would face absorbing the sunk costs for bringing Healy Unit 2 out of warm layup in reliance on the Consent Decree, the costs of retiring the base

- load coal plants, and the costs of acquiring223 reliable replacement power. The commenters said if not already done, EPA should also include stranded asset debt in the economic impact analysis for this proposed rule.

Comment 31: Coal

- fired EGUs are at a disa dvantage; have made investments; but re

- dispatch will leave stranded

Response 31: See response 1 of this RTC chapter (4.7.2) regarding stranded assets concerns. In addition, s ee section I.A, II.F

- G, V.A

- C, VIII.G

- H, X.C, XI.C

- E, and XII.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 EPA's proposed " building blocks" put coal

- fired EGUs at a distinct economic disadvantage, asking for heat rate efficiency improvements while at the same time driving dispatch away from coal and towards NGCC and renewable energy generation. The
commenter s ha ve made signifi cant environmental investments in its FPP coal fired EGUs, adding scrubbers at the cost of approximately $400 million and adding mercury emissions control technology in order to meet the MATS rule. The commenter s said EPA does not consider the economic har m caused to FPP by the potential re

- dispatch, which, would strand these significant investments at the expense of the owner and its wholesale power customers.

Comment 32: To avoid increased stranded assets, the EPA should not allow any upgrades to coal

- po wered EGUs. Because utilities should have known climate change regulation was coming they should not be able to recover full cost of their investment in new coal powered power plants

. Response 32: See response 1 of this RTC chapter (4.7.2) and section I.A, II.F

- G, V.A

- C, VIII.G

H, X.C, XI.C

- E, and XII.E of the final rule preamble of the CPP for the EPA’s response to this
comment.
In addition, the agency observes that the emission guidelines give states flexibility regarding the mix of emission reduction methods to require or incentivize through their state plans . States may choose a different mix of emission reduction methods than the EPA assumed in calculating CO2 performance rates and state goals, and may achieve reductions through non

- BSER s trategies. Thus, states can take into account concerns about locking in investments in fossil generation as they design their plans, and design their plans with incentives that they think appropriate.

The EPA is determining in this rulemaking that heat rat e upgrades at coal

- fired affected EGUs are part of the BSER. The commenter does not provide a legal rationale for barring efficiency upgrades that reduce the emission rate at an affected source.

The agency and others have observed that a growing number of electric utilities include projections of the expected costs associated with greenhouse gas emissions in their resource224 planning. The likelihood of future carbon regulation has been publicly rec ognized by many in the U.S. power sector for many years.

This rule does not make decisions about cost recovery by utilities for particular investments; these typically are matters considered by public utility commissions.

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

Commenter s submitted the report "Pathways to Deep Decarbonization in the United States" as a different way to think about how to reach carbon emission reductions. Commenter s said the report talks about stock lifetimes and replacement opportunities of various technologies.

Fuel switching locks in emissions for many years

. Commenter s said the graph illustrates a very important point

- that in order to cut carbon emissions now and put the US onto a decreasing

c urve of carbon emissions, we must be very careful about making the right investments now. Commenter s said if we prioritize natural gas now then we decrease emissions when the technology is installed but then we are locked in to that level of carbon emissio ns. Commenter s said switching fuels, i.e., coal to natural gas, locks in natural gas emissions for the next 40

- 50
years. Commenter s said the report states, "For some kind of long

- lived infrastructure

- for instance, power plants

- there is likely to be on ly one opportunity for replacement in the time period. Commenter s said adding new high carbon generation creates infrastructure inertia .

. . that puts investments at risk

- otherwise known as stranded costs/assets.

Stranded costs . Commenter s said in Louis iana, stranded costs have been a significant part of the conversation. Commenter s said they define stranded costs in this context as utility costs that are currently part of the Utility's revenue requirement and are authorized to recover through their
rat es, but whose recovery may be impeded or prevented by the new EPA regulations. Commenter s said as an example, take a 20 year

- old coal plant with a 30

- year depreciation schedule. Commenter s said assuming the plant will not be able to meet emission reduction targets and is decommissioned, the Utility would have 10 years of stranded costs. Commenter s said in this example, it seems prudent to allow a rider to the utility to recover those costs that were authorized but will no longer be able to collect. Comment er s indicated coal plant capital upgrades would also fall under this definition.

Commenter s said that utilities may try to claim book value or fair market value of the coal plants in their portfolio but this should be discouraged if the power plants have been fully depreciated.

EPA should not allow coal plant upgrades and new coal plants should not be allowed to recover full cost of investment

. Commenter s said because of the stranded cost issue, the Alliance strongly advises that the EPA not allow for co al plant upgrades. Commenter s said admittedly, this will not lower emissions in the short term but will guarantee emission reductions over the long term and decrease the start

- up cost of implementing the Plan.

Commenter s said for new coal plants, they do not believe that u tilities should be allowed to recover the full cost of the investment because of a lack of prudency. Commenter s said that U

. S

. u tilities have had the same access to climate science information and carbon emission data as the rest of the c ountry and should have better predicted the need to safeguard the climate system.225 Commenter s said it begs the question that any new coal or natural gas plant is actually prudent. Commenter s said experts from Clemson University stressed that "Scientific eco nomic analysis cannot be used to make the call on whether [stranded costs] should or should not be recovered because if they are not recovered, there will be no economic efficiency effect. However, if the process decides that stranded cost recovery is to b e the rule of the day, then these costs should be recovered efficiently via a two

- part, access

- charge tariff or a general tax levy and subsidy that does not disturb the relation between the price of electricity and its marginal cost of production."

Commen t 33: The EPA's Specific Authorization of State Options to Conditionally Exempt, Subcategorize by Utility Type, or Allow Al ternative Compliance Mechanisms

Response 33: The EPA recognizes that each state has differing policy considerations

– including varying emission reduction opportunities and existing state programs and measures

– and that the characteristics of the electricity system in each state (e.g., utility regulatory structure, generation mix and electricity demand) also differ. The final rule gives states the flexibility to implement a broad range of approaches that recognize that the power sector is made up of a diverse range of companies that own and operate fossil fuel

- fired EGUs, including vertically integrated companies in regulated mark ets, independent power producers, rural cooperatives and municipally

- owned utilities, all of which are likely to have different ranges of opportunities to reduce GHG emissions while facing different challenges in meeting these reductions. By expressing the application of the final BSER as a source

- specific performance standard, and by providing a translation of that to statewide rate

- and mass

- based CO 2 goals based on each state’s particular mix of sources, the rule allows states the flexibility to determin e how to achieve the CO 2 reductions (i.e., greater reductions from one building block and less from another, as well as the adoption of other measures that lower carbon intensity), and to adjust the timing in which reductions are achieved, in order to addr ess key issues such as cost to consumers, electricity system reliability and the remaining useful life of existing generation assets.

Regarding stranded assets, see the response to comments 1 and 2 in this RTC chapter (4.7.2) including its reference to the July 2015 docket memo titled “Stranded a ssets a nalysis

. ” For additional information s ee section I.A, II.F

- G, V.A

- C, VIII.G

- H, X.C, XI.C

- E, and XII.E of the final rule preamble of the CPP

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

Commenter s stated CWLP is the only municipal utility with generation in Illinois and is vital to the City's economic health, employing over 600 employees, many of whose jobs may be at stake with the GHG Rule. The commenter s said due to the ec onomic downtown, CWLP has over 130 fewer employees today than in 2010; further, with such small stand

- alone units, generation flexibility is limited, while the early investment by citizens in APCs has been substantial, undertaken to meet or exceed the envi ronmental regulations in place at that time, well before a GHG Rule was contemplated; the debt service on these investments will continue into the future.226 Commenter s stated CWLP faces obligations to pay debt service on investments made to improve efficien cy at existing plants, to implement pollution control projects to meet EPA standards and to add additional generation necessary to assure sufficient capacity through 2037. The
commenter s said based on analysis of the current proposal, the commenters fear t he citizen's sunk costs will become stranded investments, with little or no opportunity to generate revenue to pay back the debt, unless appropriate adjustments are made to the rule. The commenter s said given that CWLP's four (4) coal

- fired units burn less than 3% of the coal burned in Illinois for fuel, that CWLP meets existing emission limits for traditional pollutants (including Illinois' mercury emission standard, a more stringent mercury emission limit than the USEPA's Mercury Air Toxics Standard, or M ATS), that the four (4) "affected units" emit less than 2.6% of the total carbon emitted by Illinois' fossil

- fuel EGU's, that have (and have had) and expect to continue to have aggressive renewable energy and energy efficiency programs, and so as to avoid stranded investments by the citizens of the City of Springfield, Illinois, the commenter s request ed the USEPA adjust its GHG Rule to provide guidance to states for the provision for small not

- for

profit municipal utilities like CWLP, which meet the unique factors that distinguish them from other affected entities subject to the plan.

Commenter s stated the Missouri River Energy Services (MRES), a regional utility, is unique in many ways. The commenters said MRES relies on a single, base load coal plant loca ted in Wheatland, Wyoming called the Laramie River Station (LRS). The commenter s said the three units of LRS began commercial operations in 1980, 1981 and 1982, and produce 1,710 megawatts (MW). The commenters said MRES, through its financing affiliate Western Minnesota Municipal Power Agency (Western Minnesota), owns 16.5% of LRS, and is entitled to approximately 282 MW. The commenter s said LRS has six owners, all of which are

consumer

- owned entities located throughout the region. The commenters said LR S is the only MRES resource that qualifies as an "affected unit" under this rule that emits CO2; however, MRES has no sales in Wyoming. Commenter s stated LRS provides 70% of the energy that MRES supplies to its members; most members of MRES have allocation s of federal hydropower that supply a portion of their needs, and MRES serves the balance of their community's need over and above the allocation; as a result, on average, MRES member communities rely on LRS for 40% of their power. Commenter s stated LRS is presently subject to an order of EPA regarding Regional Haze which requires the installation of Selective Catalytic Reduction (SCR) technology on all three units of LRS by 2019; the remaining life of LRS is about 20

- 30 years; the cost to install the three SCRs at LRS is approximately $750 million in total, $125 million for MRES and Western Minnesota alone. The commenter s said when EPA's Regional Haze order is considered in light of EPA's Clean Power Plan under 111(d), this newest proposal will cause strand ed costs and force 61 member municipal utilities and their consumer

- owners to pay for air quality control measures for which there is no value. The commenter s said the 111(d) proposal is premised on an assumption that all utilities own multiple and diverse plants and can shift generation within their portfolios to lower emitting generation; however, that option is not available to most small utilities, like MRES, that rely on a single base load coal plant to meet their needs.

Comment 34: Clean Power Plan threatens to strand interests in renewable and nuclear resources227 Response 34: EPA’s approach to determining the subcategory

- specific emission performance rates and state goals that are achievable considering cost is a forward

- looking approach that starts from the state of the electricity system in 2012. Under the final emission guidelines, zero

emitting generation that existed in 2012 is not included either in the BSER or as an eligible measure for credit in rate

- based state plans. However, new capacity a nd incremental generation after 2012 can contribute toward meeting the CO2 emission rates and state goals. With respect to recent and future investments, we expect that the treatment of interstate effects in the BSER and state plan accounting in the final guidelines will help to address the types of concerns raised by the commenter.
For purposes of state plan accounting, in the final rule, to the extent qualifying RE generation measures and nuclear, are tied to a state plan, the MWh impacts of the measures may be used by an affected EGU or state to adjust a CO2 emission rate, regardless of whether the RE generation occurs inside or outside the state or territory. For more information about specific methods to adjust the CO2 emission rate of an affected EGU to reflect RE and the eligibility requirements renewable resources must meet, see section VIII.K.1 of the final rule preamble.
Under the final guidelines, additions in nuclear capacity are treated in similar fashion to the addition of new RE. As described in Section VIII.K of the preamble to the final rule, new nuclear power generating capacity installed after 2012 and incremental generation resulting from nuclear uprates after 2012 also are measures eligible for adjusting a CO2 emission rate. However, existing nuclear units (i.e., those that originally commenced operation in 2012 or earlier years) that receive operating license e xtensions are not eligible for use in adjusting a CO2 emission rate, except where such units receive a capacity uprate as a result of the relicensing process. Only the incremental capacity from the uprate is eligible for use to adjust a CO2 emission rate. The final rule allows for multi

- state coordination among states retaining individual state goals under rate

based and mass

- based emission trading programs. Details can be found under section VIII.C of the final rule preamble.
See also the response to comm ents 1 and 2 in this RTC chapter (4.7.2) including its reference to the July 2015 docket memo titled “Stranded assets analysis.” Additional information relevant to these concerns is in section I.A, II.F

- G, V.A

- C, VIII.G

- H, VIII.L, X.C, XI.C

- E, and XII.E o f the final rule preamble of the CPP.

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

Commenter s stated the Clean Power Plan threatens to strand MRES contractual interests in renewable and nuclear resources. The commenter s said MRES has contracts for the output of over 117 MW of clean, non

- emitting resources located in Iowa, Minnesota, North Dakota and Wisconsin. The commenter s said MREW is also in the process of constructing a 36 MW hydroelectric power plant at the Red Roc k Dam in central Iowa. The commenter s said together, this totals more than 153 MW of clean power that should be available to MRES for use in offsetting emissions from its only coal plant in Wyoming; however, the way the Clean Power Plan is detailed in the preamble and the technical support documents, there is no assurance that these assets will not become stranded investments.228 Commenter s said the proposal does not clearly acknowledge the fact that non

- emitting resources are the property of the utility that owns it or has the rights to the output and environmental attributes. The commenter s said under building block 3, the Clean Power Plan provides that states are free to develop state plans that give to the states themselves

- not the utility owners

- the r ight to count RE located within the state's borders or even located in another state if the RE can be said to have been built to comply with the RE policy of the first state. The commenter s added such plans are not required to honor the non

- emitting energy or credits generated in another state. The commenter s said this approach threatens to strand MRES non

- emitting generation and related credits; these investments have an established value under each of the respective contracts, and that value is likely to increase substantially under a regulatory regime where those resources can be used to offset CO2 generation. The commenter s said a regulatory scheme which restricts the interstate use of this energy and credits will prevent MRES from effectively managing i ts resources to reduce its carbon footprint, and will strand those assets. The
commenter s said the stranding of both coal and clean energy resources creates a direct cost impact on MRES and its member municipal utilities.

Comment 35: CPP results in opting for energy sources outside of economic disp atch and increase energy prices

Response 35: The EPA acknowledges the comments regarding Georgia’s nuclear and renewable resources. The agency has determined that the BSER for the final rule will not inclu de the provisions we had proposed for under

- construction units in the setting of state goals, and will allow incremental generation from new nuclear units to be applied towards compliance. Please see section V.A of the preamble for further discussion of t he treatment of new nuclear plants, and section VIII.K and VIII.L of the preamble for further discussion of provisions in state plans of allowable actions that result in an adjusted CO2 emission rate of an affected EGU, the accounting approach for incremen tal generation, and how states can address interstate effects in their plans. We appreciate commenters’ concern regarding crediting issues. We believe that changes made in the final rule resolve these issues.

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

Commenter s stated historically, Georgia has had lower than average electricity prices, because GA relied on a diverse generation mix to provide fuel flexibility and reliability to achieve consistent low prices. The comme nter s said simply by responding to market conditions and Public Service Commission

- directed adjustments, Georgia has reduced its carbon dioxide emissions by more than 33 percent in the last decade. The commenter s said Georgia has been proactive in adopting nuclear and other renewable energy sources, including one of the first nuclear plant expansions in the nation since the 80s. The commenter s said GA has invested tens of billions of dollars to expand Plant Vogtle nuclear plan, to produce new carbon

- free en ergy; however, the timeline chosen in the proposed rules does not appropriately credit Georgia for these proactive actions; rather, EPA's guidelines would force Georgia to make further229 investments. The commenter s said it will make Georgia opt for energy so urces that are outside of the economic dispatch and again increase energy prices in the state.

Comment 36: Early reduction s; stranded assets

Response 36: The EPA appreciates the importance of early actions by states and utilities to reduce fossil electric ity use and CO2 emissions. EPA’s approach to determining the CO2 emission performance rates and state goals that are achievable considering cost is a forward

looking approach that starts from the state of the electricity system in 2012. In part to maintai n incentives for near

- term actions that will continue to reduce emissions in 2022 and beyond, the agency has significantly revised the proposal with respect to the eligibility date for emission reduction measures

-- such as incremental renewable energy gen eration and demand

- side energy efficiency measures

-- that can be used to adjust the CO2 emission rate under a rate

- based state plan. S tates adopting rate

- based plans may award ERCs to qualified providers that implement any eligible projects from 2013 onward for the quantified and verified MWh of generation or savings those projects provide in 2022 and subsequent years. See section VIII.K for an explanation of the final rule provisions and rationale. In addition, the removal of building block 4 from the BSER calculation helps to concerns that commenters raised about treatment of states that had been leaders on state energy efficiency requirements.

The EPA has also developed the Clean Energy Incentive Program, an optional program designed to reward invest ment in certain RE and demand

- side EE projects that commence construction after the effective date of this rule and that generate MWh or reduce end

- use energy demand during 2020 and 2021. For more details on this program, see section VIII.B of the preamble to the final rule.
With respect to stranded assets, see the response to comment 1 in this RTC chapter (4.7.2). See also section I.A, II.F

- G, V.A

- C, VI, VIII.B., C, G

- H, X.C , XI.C

- E , and XII.E of the final rule preamble of the CPP

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

Commenter s stated TECO and their customers have made a substantial investments to make early reductions; EPA's proposal for existing sources neglects to account for this bold and early action. T he commenter s said “ if Florida limits outlined in this proposal are finalized in their current form, our customers will be paying twice for the same reductions many other companies deferred until now. Projects that are part of the billion

- dollar reductions we recently completed are amortized over the remaining life of the coal plant beyond 2030 ” . The commenter s said to minimize the impact of the customers' bills in this proposal would create stranded assets; the benefits of these reductions, 5 million tons of CO2 per year, have been realized for each of the last 10 years.

Commenters stated EPA's proposal also directly penalizes Tampa Electric Company customers; in addition to paying for substantial emission reductions, they've been participating in energy ef

ficiency programs that TECO has incentivized since 1979. The commenters said indeed,230 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 commen ters said the EPA proposal penalizes these proactive and forward

- thinking customers who are now benefiting from a lower bill, because these customers would undoubtedly see a substantially higher bill due to the additional costs this proposal would bring. T he commenters said EPA should recognize that the decades of early action, as well as new appliance and building codes, are already reducing load demand, and EPA should work with states to adjust the goal if the remaining reductions are found to be too expe nsive or simply not practical.

Comment 37: The EPA should take remaining useful life into consideration of this flexibility

. Response 37: See the response to comments 1 and 2 in this RTC chapter (4.7.2) for the response to this comment. States have the f lexibility under the emission guidelines to consider remaining useful life of individual affected EGUs, for example, through emissions trading systems that enable a facility to comply through purchasing credits or allowances, or through differentiat ing
req uirements for individual EGUs or classes of EGUs. For reasons explained in VIII.G.1.d, the required CO2 emission rates or equivalent state goal would not be changed based on remaining useful life or other facility

- specific considerations.

With respect to c oncerns about stranded assets, see the response to comment 1 in this RTC chapter (4.7.2), including the reference to the July 2015 docket memo titled “Stranded assets analysis.”

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

Commenters stated that EPA should take remaining useful life into consideration of this flexibility . The commenters noted that they have had two studies performed by highly respected engineering firms to assess remaining useful life at their plant , and both studies indicated the plant should be able to operate reliably through 2037. The commenters noted that EPA's IPM indicates the plant will be retired prior to 2020, which is well before the end of its useful life. The commenters stated that if th e Clean Power Plan becomes finalized and the EPA IPM is correct, their plant will be prematurely retired, and these costly investments will become stranded assets and leave over 350 power plant and coal miners without jobs. The commenters stated that consi derations such as remaining useful life and stranded assets with units are precisely the types of factors that Congress expected States to be able to consider in determining what standard of performance to apply to each specific facility within their indiv idual borders, yet the Proposed Rule deprives States of that ability.

The commenters requested flexibility for small business entities and cooperatives

- which may be in the form of allowing the State flexibility in smaller emission reductions to small business without punishing the larger entities by increasing their reductions. The comm enters noted that this would lead to a minor slippage in the State's goal and could take the form of a set percentage decrease in CO2 emissions from the generating station

- an example would be, a 10% reduction in CO2 mass emissions based on the average ov er the high five year emissions during the period between 2005 and 2012. The commenters stated that this reduction could be made by either231 reducing the megawatt output and/or improvements in efficiency and could be incorporated with a specific time frame b ased on the useful life of the generating station. The commenters noted that this would allow the small entity to continue to operate and pay off its debt over the remaining life of the unit

- not become a stranded asset, resulting in a significant cost in crease to its members.

Comment 38: The EPA asked for comment about whether generating units that have been retrofit with emission controls should be allowed time for cost recovery of those controls before the EPA CPP provisions are assigned against the uni t.

Response 38: The agency appreciates the input of commenters on this issue. T he guidelines do not dictate that states use a particular definition of “remaining useful life.” The EPA interprets the provision as primarily concerned with facilities that h ave short remaining useful lives, and with retrofit costs. States also are free to consider stranded assets concerns in designing their plans. The EPA will consider the reasonableness of the way in which a state considers remaining useful life and other f actors in applying a standard of performance to a particular EGU in the context of evaluating state plans to determine whether they are satisfactory, i.e., whether they meet the requirements of the guidelines.

With respect to concerns about stranded assets , see the response to comment 1 in this RTC chapter (4.7.2), including the reference to the July 2015 docket memo titled “Stranded assets analysis.” See also section s I.A, II.F

- G, V.A

- C, VIII.G

- H, X.C, XI.C

- E, and XII.E of the final preamble of the CPP.

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

Commenters agree d with EPA's notion that EPA CPP targets should not be rendering as stranded investment the recently deployed environmental control retrofits that EPA has stipu lated as being both suitable and required for compliance with EPA regulations. The commenters said it is noteworthy that EPA's own cost and feasibility analysis when establishing stringency of these environmental regulations now in force gave consideration to factors such as the technology performance achieved by EPA examination of the best performing units and other measures as appropriate for the regulation.

Commenters note d that cost recovery measures for Minnesota electric utilities are regulated by th e Minnesota Public Utilities Commission, who gives consideration to how the environmental measure is satisfying applicable regulatory requirements and gives consideration to tax and accounting regulations and standard practices. The commenters also acknowl edge d that the CPP targets being considered by EPA can have the function of negating state regulatory authority decisions for cost recovery of measures that EPA compelled for deployment to comply with new EPA regulations such as the CSAPR and MATS that hav e pending compliance dates between 2015 and 2017. The commenters said new CPP target requirements imposed by 2020 or even 2030 (just five to fifteen years from EPA's CPP proposed rule comment input timing) might compel a unit with recently deployed signifi cant and expensive environmental controls to curtail232 or cease operations. T he commenters said in addition to Federal regulations, Minnesota has also provided for control retrofit and cost recovery for compliance with the Minnesota Mercury Emission Reductio n Agreement (MERA), the Arrowhead Regional Emissions Abatement Program (AREA), the Metropolitan Emission Reduction Program and measures like the Minnesota Renewable Portfolio Standard, the stringency of which was set with consideration to how existing gene ration resources can serve to provide for system reliability as intermittent renewable energy and energy efficiency improvements are deployed. The commenters said ideally, some sort of cost recovery mechanism would be provided to help assure that Minnesota electricity customers or utility investors are not left servicing the cost of investments stranded by EPA and state regulatory measures. The commenters said EPA should give consideration in its CPP target setting for states to delay CPP requirement implem entation until after the costs for these EPA

- mandated investments have been recovered.

Comment 39: T&T

- Besides the costs directly related to the existing coal

- fired EGUs that will be retired (as a consequence of complying with other regulations), Navaj o Nation also made investment in purchasing Navajo Mine, and there have been significant job losses and decreased

revenue.
Response 39: The EPA acknowledges the economic concerns of the Navajo Nation. In designing the final emission guidelines the agency h as revised its approach to establishing CO2 performance rates and state goals, and has provided broad flexibility for states and eligible tribes

, if the y choose, to design plans that address their unique circumstances. See sections I.A, II.F

- G, V.A

- C, VIII .G

- H, X.C, XI.C

- E, and XII.E of the final rule preamble of the CPP for the EPA’s response to this comment. See comments 1 and 2 in this RTC section (4.7.2), including reference to July 2015 docket memo titled “Stranded assets analysis.”

In addition, we would like to call the commenters’ attention to the POWER Initiative. The initiative is a coordinated federal multi

- agency effort to assist communities negatively impacted by changes in the coal industry and power sector.

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

Commenters said that in the Proposed Supplemental Rule the EPA sated that it does not expect any additional emission reductions from areas of Indian country with affected EGUs because the EGUs in the Navajo Nation's area of Indian country are already expected to meet the proposed goals through compliance with other regulations (BART). Commenters said that the EPA correctly recognized that the participants in NGS and FCPP have made significant investments to achieve emission reductions under other EPA rules.

Commenters said the Navajo Nation has also made investments to assure future operation of the plants, including purchasing the Navajo Mine to ensure a continued supply of coal to FCPP. Commenters said addi tionally, these other EPA rules have negatively affected the Navajo Nation in terms of job losses and decreased revenue to the Navajo Nation government. Commenters said annual losses to the Navajo Nation due to the three

- unit shutdown at FCPP will be $86233 m illion. Commenters said NGS and its associated mine (Kayenta Mine) were estimated to contribute $13 billion to the Navajo Nation economy between 2020 and 2044. Commenters said however, that contribution will be significantly diminished as a result of EPA' s Regional Haze Rule for NGS.

Comment 40 : Concerns describing stranded assets and costs and early retirements

Response 40 : With respect to concerns about stranded assets, see the response to comment 1 in this RTC chapter (4.7.2), including the reference t o the July 2015 docket memo titled “Stranded assets analysis.” See also sections I.A, II.F

- G, V.A

- C, VIII.G

- H, X.C, XI.C

- E, and XII.E of the final rule preamble of the CPP for the EPA’s response to this comment. In response to the comment that retirements should count toward the state goal, the baseline inventory relies on historical data and does not incorporate anticipated future retirements. Therefore, planned retirements have the potential to assist the state in meeting its state goal. See VIII.C for discussion of planned retirements under rate

- based or mass

- based plans

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

Commenters cited that "concurrent increases in the operating costs of coal plants are often related to the required installation of environmental control technologies. The c ommenters stated that before these capital investments are made, plant owners must consider the future life of the unit(s), current and future f uel costs and revenues compared to other fuel types, and the impacts of additional environmental regulations. Accordingly, 20.2 GW of mostly smaller coal

- fired units were retired between 2011 and 2013, while an additional 20.8 GW are projected to retire by 2024."

The c ommenters cited that "according to the 2014 LTRA reference case, an additional 44.2 GW of fossil

- fired and nuclear capacity is projected to retire between 2014 and 2024 ...... The

c ommenters stated that these projections are based on the assu mption that current environmental regulations will remain unchanged; it does not include potential impacts of EPA's recently proposed Clean Power Plan (section 111(d) of the Clean Air Act)." The c ommenters stated that in the currently proposed CPP, the gl ide path required to meet the interim goal will drive large CO2 reductions by many western states by 2020. The c ommenters stated that this is premised on EPA's assumptions that there will be numerous coal plant retirements in addition to the large

- scale re tirements identified in NERC's assessments cited above. The c ommenters stated that the changes to the generation mix expected to occur by 2020 are illustrated by Figure 6. Commenters provided a Figure 6 showing Cumulative Fossil Fuel and Nuclear Retirement s between 2011 and 2024 Total 83 GW 17. The c ommenters stated that in fact, the generation mix will have to change substantially between the date of the final CPP rule and the start of program compliance in January 2020. The c ommenters stated that the CPP does not give adequate consideration of the CO2 emission reductions expected to be achieved during this time period. The c ommenters stated that the proposed CPP also does not adequately consider the increased complexity of making further shifts in the gene ration mix beyond those already "sunk" by start of the plan compliance in 2020.234 Commenters asked EPA to recognize that while consideration of RUL of newer or upgraded assets is critical to some western states, to other western states it is just as critica l that EPA provide the flexibility to fully recognize coal plant retirements in state plans, consistent with EPA's approach to compliance in other CAA programs. The c ommenters stated that CAA programs with a federal

- state policymaking process similar to wh at is required under section 111(d) include the regional haze program and related BART emission standards.

Commenters stated that the Western U.S. fleet has numerous affected power plants that have multiple, joint owners. The c ommenters stated that decisi ons regarding pollution control investments, operational changes or retirements of jointly owned plants are complicated and time

- consuming efforts. The c ommenters stated that the Western U.S. fleet has many units that were built after CAA Best Available Co ntrol Technology (BACT) requirements were in place and have newer and more pollution controls than coal

- based generation built before BACT and the Fuel Use Act. The c ommenters stated that in addition, numerous units in the Western U.S. have recently comple ted, or committed to, significant new pollution controls or fuel conversions in response to other EPA regulations.

Commenters stated that a key aspect of EPA's Clean Power Plan proposal is that it will exert regulatory pressure in the same direction toward which the utility sector is already swiftly moving. The c ommenters stated that indeed, it is difficult to overstate the trans formation that U.S. energy markets have undergone in recent years. The c ommenters stated that most significantly, the U.S. is decisively shifting away from coal as the primary generation source of base

- load electricity, a trend that is evident in the most recent data. The c ommenters stated that the U.S. has seen older and less

- efficient existing coal

- fired power plants continuing to retire since 2012 due to increased competition with other generating resources and impending environmental regulations. The c o mmenters stated that between 2008 and 2013, U.S. utilities retired approximately 20 GW of coal

- fired capacity, with approximately 11.3 GW retired in 2012 alone. The c ommenters stated that as of November, 2014, utilities had announced firm plans to retire s ome 75 GW of coal

- fired generating capacity (or to convert it to natural gas) by 2021. The

c ommenters stated that according to a recent market study, a further 17 GW is "at risk" of retirement due to competition with low

- cost natural gas. The c ommenters st ated that as coal

- fired capacity has declined, so has generation from the coal

- fired fleet: in 2013, coal

- fired EGUs accounted for 39.1 percent of U.S. generating output

- slightly higher than the low of 37.4 percent reached in 2012, but still representing a 20 percent decline in market share since 2006.

Commenters stated that looking ahead, forecasts indicate that the shift from coal to cleaner sources of energy will continue. The c ommenters stated that for example, EIA predicts in its Annual Energy Outloo k 2014 Early Release Overview that total domestic coal

- fired capacity will decrease by over 15 percent from 2012 to 2040. The c ommenters stated that EIA attributes this trend to slower growth in electricity demand, competition from zero

- and low

- carbon res ources, and economic changes resulting from more stringent environmental regulations. Similarly, commenters stated NERC anticipates that 31.5 GW of net coal

- fired capacity will retire by 2023.

Commenters stated that it is well documented that the U.S. coa l

- fired EGU fleet is aging and faces continued economic competition from renewable sources and gas

- fired generation, as well as increasing public opposition to the use of high

- emitting fossil fuels for energy. The235 c ommenters stated that there is little dou bt that the sector will continue to experience a large number of retirements and declining capacity factors for those units that remain in the near future. The c ommenters stated that due to a number of factors, including the changing economics of the energ y sector, a large wave of coal retirements will occur in the coming years. The

c ommenters stated that the Energy Information Agency ("EIA") projects 60GW of retirements in the next few years. The c ommenters provided Figure 15 , titled: “ Age of U.S. Coal

- fir ed EGUs as of 2015 ” . The c ommenters stated that as illustrated, the median age of a coal

- fired unit in 2025 (assuming no retirements) will be 52 years, whereas the average design life assumed at the time of these units' construction was 30 to 40 years. The c ommenters stated that a review of approximately 300 coal units that retired between 1993 and 2012 indicates that the average age at the time of its retirement is 53 years. The c ommenters stated that this figure is comparable to the coal fleet that the Si erra Club's Beyond Coal Campaign has actively tracked since 2010. The

c ommenters stated that the average age of retirement for units tracked by the Sierra Club that have already retired is 54 years.

The c ommenters stated that this estimate of average retirement age is consistent with the prevailing engineering analysis. The c ommenters stated that the highly respected engineering text Steam, I ts Generation and Use by Babcock &Wilcox notes that unit availability shar ply declines after 25 years and assigns a typical life of 25 years for the superheater, 30 years for the reheater, 35 years for the economizer, and 40 years for the lower furnace. The c ommenters stated that "Life extension" of a unit by replacing these maj or components is sometimes feasible, but is not "routine maintenance" and normally will (and should) trigger the application of more rigorous environmental requirements. The c ommenters stated that U.S. coal

- fired generation is expected to decline even more dramatically in the following decade, since there will be relatively few coal

- fired units under 40 years old by 2025. The c ommenters provided a Figure 16 , titled:

“ Age of U.S. Coal

- Fired EGUs as of 2025 vs. Generation in 2012 ” and a Table 3 , titled: “ Age of U.S. Coal

- Fired EGUs as of 2025 vs. Generation in 2012 ” . The c ommenters stated that Fig. 16 and Table 3 show that by 2025, the units responsible for 758 GWh in 2012 (47 percent of the coal

- fired generation that year) will have retired or will be over 50 years old and nearing retirement. The c ommenters stated that this assessment is consistent with several analyses by the Brattle Group154 and others.

Commenters stated that CWLP currently operates four (4) coal

- combustion units; 3 of the units were placed into service in 1968, 1972 and 1978 for a total nameplate capacity under the U.S. EPA's Clean Air Markets of 388 megawatts (MW), which is comparatively small, and a fourth, virtually brand new unit. While many smaller units in the country have been target ed for closure, CWLP has maintained a continuous commitment to plant maintenance and an aggressive program of plant investment to assure the most efficient combustion of fuel economically justified while maintaining and exceeding current emissions control requirements. The

c ommenters stated that as a result, these plants are cost effective and clean units that have substantial remaining economic value. The c ommenters stated that this commitment to environmental end efficiency excellence required the communi ty to make significant capital commitments that are at unnecessarily and inappropriately at risk under the CPP as proposed.

The c ommenters stated that CWLP's commitment to environmental excellence is demonstrated by its history. The c ommenters stated that as early as 1980, CWLP installed one of the first wet flue

- gas desulfurization (WFGD) systems in the country to reduce SO2 emissions by more than236 90%. CWLP recently completed an upgrade of the original 1980's WFGD at the cost of nearly $30 million and now all 3 WFGDs remove 98% or better of SO2. The c ommenters stated that Selective Catalytic Reduction systems for NOx removal were installed in 2003. The c ommenters stated that in 2009, the SCR's began year

- round operation to assist in control of other emissi ons. The c ommenters stated that the WFGD and SCR projects were funded through bonds, with a payback period through 2037 for our citizens. The c ommenters stated that additionally, these units utilize electrostatic precipitators, which capture approximately 99% of particulates. The

c ommenters stated that these investments in air pollution controls (APCs) demonstrate CWLP's commitment to meeting strict emission limits at the source, rather than paying to pollute through the purchase of emission allowances; the se investments now may become stranded costs, depending upon the final GHG Rule. The c ommenters stated that even our two smallest units, 31 and 32, have APCs beyond most of our larger neighboring investor

- owned EGUs, but are still "affected units" under th e GHG Rule as proposed. The c ommenters stated that these two units provide critical support during peak loads. The c ommenters stated that CWLP also operates a small natural gas turbine and two smaller black start capable diesel

- fired turbines, used primari ly for peak demand

The c ommenters stated that in 2009, CWLP began commercial operation of a new coal

- fired unit, Dallman Unit 4, with a nameplate capacity of 230.1 MW, replacing our Lakeside units, which lacked modern pollution controls and were retired i n 2009. The c ommenters stated that Dallman Unit 4 won accolades from engineering and environmental groups alike. The

c ommenters stated that it was constructed with a dry ash handling system, and has some of the most advanced APCs of any power plant in the country, exceeding the controls of much larger neighboring investor

- owned utilities. The c ommenters stated that as one of the cleanest burning units in the country, Dallman Unit 4 is of the type new, efficient solid fuel plant USEPA should want dispatched before others.

Commenters stated that while CWLP's units 31 and 32 may be smaller than the average unit, these units have APCs beyond most units their size and larger, for which the citizens of Springfield are still paying the debt service for these upgr ades. The c ommenters stated that therefore, while many units under 100MW capacity will likely retire due to other air pollution regulations being implemented, CWLP has no plans to retire units 31 and 32 at this time since CWLP has already invested to compl y. The c ommenters stated that these units provide critical support for the intermittency of our wind farms, operating during peak loads when our wind farm outputs are near or at zero.

The c ommenters referred to a graph that indicated that CWLP's substanti al investment in renewable energy and energy efficiency (EE) cannot be counted on during periods of peak demand for the utility. The c ommenters stated that CWLP faces summer and winter peak periods. The c ommenters pointed to a graph that overlays annual electric load against the availability of our renewable resources and as the graph demonstrates, during the summer, when our average load peaks, wind resources average very low capacity factors. The c ommenters state d that as result, CWLP has continued to rely on our smaller coal units to fill the gap in the summer months when wind generation is not available.

The c ommenters stated that while renewables are an important component of the GHG rule to reduce carbon emis sions, coal

- fired units such as units 31 and 32 are necessary for reliability,237 especially in high load periods (summer and recent winter load), as our data demonstrates. The

c ommenters stated that the benefit of these units to the community is outsized and their impact on GHG emissions is negligible. Commenters provided a Figure showing CWLP On

- Peak Avg Hourly Load vs Hancock Wind Farm Hourly Capacity Factors.

The c ommenters stated that as a vertically integrated municipal utility, providing not only
gene ration, but also transmission and distribution to its customers, CWLP owns and operates 64 miles of 138kV and 66 miles of 69 kV transmission lines for the 80 square miles of its service territory. The c ommenters stated that CWLP's original system and subst ations were all built on the 69kV transmission line, from which the majority of the CWLP load is served. The

c ommenters stated that as part of the engineering and economic assessment of options to make APC and EE upgrades, CWLP concluded the cost to retire these units was disproportionate to any gain. The c ommenters stated that one notable concern is the impact early retirement will have on the CWLP transmission system. The c ommenters stated that analysis of removal of 31 and 32 generation concludes reliabi lity consequences of sufficient magnitude to require significant transmission upgrades. The c ommenters stated that to mitigate these reliability issues, CWLP would be required to install multiple new connections between the 69 kV to 138 kV system. The c omm enters stated that two engineering alternatives are available but costly. The

c ommenters stated that the least expensive option that is deemed necessary but adequate is estimated to cost approximately $8,900,000 for upgrades that include new transformers a nd a new 138 kV line. The c ommenters stated that the other option, which provides greater benefits, is estimated to cost more ($12,216,800 in 2012 dollars). The c ommenters stated that additional facility study would be necessary to determine a more accurat e cost estimate, which would include a short

- circuit analysis and stability analysis, and would also require a very coordinated outage schedule to complete any upgrades. The c ommenters stated that additionally, these investments would have to be proposed a nalyzed and approved by the MISO, a time consuming and expensive process.

The c ommenters stated that other logistical and financial issues arise with the concept of closing units 31 and 32. The c ommenters stated that in addition to the transmission voltag e step down costs, the building that serves units 31 and 32 also houses unit 33. The c ommenters stated that during a unit 33 outage, heat that is currently provided by units 31 and 32 boilers to the building and would no longer be available. The c ommenters stated that while this may seem inconsequential, the estimate to install building heat is $1.5 million. The c ommenters stated that closing the plant is estimated to cost an additional $1M, to address closure issues such as hydrogen and oil removal and oth er closure expenses. The c ommenters stated that sales associated with units 31 and 32 provide significant income to the City's general fund by contributing 30% of revenue of sales from these units. The c ommenters stated that revenue from sales associated w ith units 31 and 32 are also directed to fund CWLP's energy efficiency programs. The c ommenters stated that therefore, early retirement of units 31 and 32 would require the City to determine not only how to pay for the transmission voltage step down, heati ng and closure costs, but also how to raise funds for the City services and CWLP energy efficiency
programs.

Commenters stated that taking a relatively lower cost means of production, i.e., existing coal resources, out of utility's resource mix and still having to pay for stranded costs due to the unrecovered assets only exacerbates the problem of trying to recruit industry to one of the238 poorest states in the union and that happens to rank last or close to last in almost every category of well

- being.

4.7.3 Other

Section 4.7.3 covers all other public comments related to state flexibilities associated with the proposed goal s.

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: Flexibility is very important and must be maintained by the rule. The EPA must add ress disparities in final rule

Response 1: The EPA agrees with the commenters that flexibility is important and must be maintained by the rule.

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

Several commenters stressed th e need for flexibility on the part of the states to develop plans appropriate to their regional situations. Several commenters emphasized the need to be able to incorporate and build on existing programs, and several emphasized the need for flexibility to develop individual state or regional plans (such as RGGI). Commenters strongly supported the flexibility to use any number of building blocks, as well as other measures such as renewable energy credits or emission credit trading with other states, system operator, or regions as necessary and appropriate to achieve compliance. Commenters indicated the rule should allow states the flexibility to integrate a variety of tools and compliance methods at their disposal and the flexibility to promote creative an d effective methods of emission reductions, and develop new means of achieving the EPA requirements. Commenters emphasized that the rule show allow both the necessary flexibility and time so that all states can craft effective implementation plans. Additional concerns were also expressed, as described below.

Commenters stated that states should be allowed to meet the target goals using the same flexible strategies they have historically used to control criteria pollutants under section 110 of the CAA, and stressed that states should be able to design compliance plans that minimize disruption to existing successful states programs (including, in California, the state's Cap

- and

- Trade Program, renewable portfolio standard, and energy efficiency programs). Commenters said that state planners must be given the discretion to capture cost effective reductions across the gr id and continue to efficiently implement existing programs that can deliver reductions into the future. Commenters strongly encouraged the EPA to allow states to choose among several compliance options, including a rigorous alternative version of the state commitment approach on which it requests comment.239 Commenters stated that EPA must develop CAA 111(d) guidelines that foster both regional coordination and the option for states to submit individual plans. Commenters said that the EPA also must provide sta tes multiple options for capturing the benefits of state energy efficiency and renewable energy programs. Commenters stated that the EPA must provide a workable mechanism for states to adopt either a rate

- based or mass

- based approach to achieving state
goa ls, as well as to modify their plans

- such as to continue achieving reductions cost

- effectively by incorporating new technologies that become available. Commenters emphasized that the rule and the EPA's manner of implementation and approval must recognize that regional plans could appropriately take many different forms. Commenters said that the EPA must allow states flexibility to allocate credit for zero

- carbon resources and to reach agreements allocating carbon liabilities.

Commenters emphasized that th e EPA also should support the dialogue and standardization needed to promote state flexibility. Commenters said, for example, the EPA should work with states to ensure states receive proper credit for energy efficiency programs. Commenters said that the gu idelines must account for the need for both accountability and flexibility in developing Estimation, Measurement and Verification protocols that work across states and will meet federal standards.

Commenters stated that the Clean Power Rule guidelines must recognize the primacy of States and rely on both State utility and environmental regulators to lead the creation of emission performance system that reflect the policies, energy needs, resource mix, and economic conditions of each State and region. Comme nters stressed that the guidelines must also be flexible enough to allow states individually or regionally to take into account the different makeup of existing power generation in each state and region. Commenters said further, the guidelines must allow States to avoid GHG emissions reductions that are not feasible, and must provide sufficiently flexible compliance pathways or mechanisms that recognize State and regional variations to achieve the most cost

- effective emissions reduction in each State.

Comm enters said it is essential that states have the flexibility to employ emissions rate goals in lieu of mass based goals and that East Kentucky Power Cooperative must be permitted to substitute new NGCC units in place of retired coal units in its emission r ate calculations. Commenters said the CPP will only have the potential of being achievable if states are provided with this flexibility in developing their plans.

Commenters said each state should have the opportunity to determine for itself which carbon reduction mechanisms make the most sense for its citizens, its workers and its economy, or for states to band together to submit regional implementation plans. Commenters said as a result, the final rule must permit each state to focus on ensuring power re liability, fostering community stability, and encouraging economic growth

- all while reducing carbon dioxide pollution.

Several commenters said the EPA should preserve as many options for state compliance as possible, and address any inconsistencies leading to disparity. Several commenters said that flexibility is the strongest aspect of the proposed rule, even though it creates many complications. Several commenters said that the EPA's efforts at consistency, while laudable, are not complete, leading to un intended disparities, and these disparities must be addresses appropriately in the final rule.240 Commenters argued that states should have flexibility and discretion with regard to state plan development and source compliance. In comments submitted prior to the proposal in April 2014, and resubmitted following proposal, the commenters offered the following as part of their response to the question , "What requirements should state plans meet, and what flexibility should be provided to states in developing thei r plans," in EPA's " Considerations in the Design of a Program to Reduce Carbon Pollution from Existing Power Plants. " The commenters explained that states should be afforded maximum flexibility and discretion in developing their plans and determining how e ach EGU within the state may comply, taking into account remaining useful life. The commenters explained that each state is different with all EGUs is not feasible, but state plans could justify source

- specific standards and a best management practice appr oach, including heat rate improvements through operations optimization and best available technology economically achievable.

The commenters stated that it is important to highlight that 40 CFR 60.24(f) authorizes states, under certain circumstances and on a case

- by

- case basis, to allow individual sources longer compliance schedules and to apply less stringent emissions standards than otherwise required by EPA's emissions guidelines . The commenters suggested that once the state has set achievable standards for each existing EGU, the state should maintain discretion to enable source compliance through a variety of flexible mechanisms that may vary from state

- to

- state.

Commenters stated that as noted by U.S. EPA, Section 111(d) gives states "the primary responsibility for designing their own state plans." Commenters said it appears U.S. EPA is taking every opportunity to limit this role. Commenters said Ohio EPA reiterates that states should have the flexibility to determine the best approach given their specific abilities. Commenters said U.S. EPA should not be limiting options under this proposal. Commenters said RE and EE should not be components of BSER; however, Ohio EPA continues to believe state s should have the flexibility to choose what measures apply to an affected EGU.

Comment 2: Rule is intrinsically inflexible

Response 2: The EPA maintains that the final rule provides ample flexibilities to states. States are allowed to use the BSER measur es, or other measures in their state plans to comply with the goals ; t here are flexibilities within the BSER measures and how they are executed ; and s tates also have non

- BSER measures at their disposal. See sections V.A.2., V.A.5., V.A.6. and VIII.A. of th e final rule preamble of the CPP for more information.

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

Several commenters state d that the proposed rule is intrinsically inflexible.

Several commenters indicated that the EP A has stated repeatedly that there is flexibility in the proposed Clean Power Rule in that it allows states to develop their own compliance plans, and that those compliance plans may, but are not required to, utilize any combination of the four "building b locks" identified in the proposed rule. Several commenters indicated, however, that the EPA established state CO2 emission goals based on aggressive assumptions about what each of the four building blocks can achieve. Several commenters said that although the EPA claims241 that states retain the flexibility not to implement each of the building blocks in the manner EPA assumed when developing state goals, in reality it would be difficult for a state to achieve the emission targets set by EPA without implement ing all of the building blocks. Several commenters indicated that accordingly, states do not have the option of not implementing a building block or substantially deviating from EPA's assumptions. Commenters added that even if states could manage to get mo re emission reductions from one building block to offset fewer reductions from another that would be considerably less flexibility than states must be afforded under Section 111(d).

Commenters said that despite the claim that the proposal offers "maximum flexibility" to ensure the "best set of cost

- effective reductions", the proposed rule contains elements that do not provide the flexibility needed to ensure cost

- effective emission reductions that represent a state's preferred approach to meeting its 2030 target. Commenters said these elements of the proposed rule include, but are not necessarily limited to, the timing for submittal of state implementation plans (SIPs), the estimation and enforceability of the interim target (i.e., the so

- called "glide
pa th"), the lack of appropriate credit for early action, and the possibility of employing a mass

based limit over a rate

- based limit for the 2030 target.

Several commenters stated that the proposed Clean Power Plan provides no actual flexibility for Arkansas

. Commenters said that Arkansas Electric Energy Consumers (AEEC), and Arkansas as a whole, will more than likely be unable to achieve compliance with any of the four building blocks in their own rights. Commenters said that as a result, there is no real possibility that shortfalls in one building block can be satisfied or negated by overachieving in other building blocks, and therefore no real flexibility is provided for Arkansas or AECC. Several commenters said that for states with a high amount of coal generation, the proposed emission reductions must be accomplished primarily be reducing coal

- fired energy generation if such states can hope to meet the stringent requirements, and thus, in actuality, the CPP's "flexibility" is non

- existent when it comes t o states that rely heavily on coal generation.

Commenters said that the EPA has indicated that even if a state can demonstrate that a particular building block is not feasible, the EPA will not adjust a state's emissions goal unless the state can demonstra te that additional controls on the other building blocks are not feasible. Commenters said this is a flawed interpretation of CAA Section 111(d) regarding what constitutes BSER and should be rejected.

Commenters indicate d that the Proposed Rule states that its interim and final goals provide states with flexibility to design plans over the long term. Commenter s indicate d , however, that because the interim goals are so stringent, many states will have to take significant a ctions by 2020 in order to comply, limiting flexibility. Commenters stated that due to the inflexibility of the proposed regulation, it would shut down the Arizona Electric Power Cooperative Apache Generating Station and potentially other small cooperative power plants. Commenters indicated that in the case of Arizona, the "flexibility" provided by the proposed regulation is illusory. Commenters said Arizona's target assumes that all coal

- fired EGUs are shut down; therefore, there is no gain that can occur from Building Block #1. Commenters said that if Arizona increases the allocation to Building Blocks #3 and #4, Arizona cannot comply with the interim goal. Commenters said that similarly, Arizona cannot increase Building Block #2 because there is no "OG G en" capacity left that has not already been redispatched to NGCC.242 Accordingly, it appears that under the Clean Power Plan as proposed, effective January 1, 2020, AEPCO must shut down all of its affected EGUs.

Commenters felt the proposed rule is unlawful b ecause the EPA proposes to establish emission goals that it says states have no authority to modify. Commenters said that because the EPA has simply assumed each Building Block can be implemented fully without ascertaining whether that is in fact the case , the touted flexibility of the rule is illusory. Commenters indicated that in many cases, states cannot realistically implement one or more Building Blocks and do not have the flexibility to increase the stringency of other Building Blocks or measures to achieve their mandated goals. Commenter s indicate d that the EPA analysis has already demonstrated that Pennsylvania will need to use all four building blocks to achieve the required emissions reductions, and states that these goals cannot be achieved sol ely by inside the fence line improvements at existing fossil fuel fired EGUs, which is the only legal method to achieve these CO2 emission reductions.

Commenters indicated that the rule provides limited flexibility because the proposal states that "once th e final goals have been promulgated, a state would no longer have an opportunity to request that the EPA adjust its CO2 goal." Commenters indicated the final state goals "would reflect any adjustments as appropriate based on comments provided to the EPA to address any data errors in the analysis for the proposed goals", and said that these statements contradict the assertion that the EPA has granted the states flexibility within the Clean Power Plan. Commenters stated that the state goals have been set with out input from the individual states on the front end of determining state specific BSER potential, although the role of the states according to Section 111(d) of the Clean Air Act (CAA) is to establish and apply standards of performance. Commenters said t hat the proposal also claims that states are given the "flexibility" to choose between rate

- based and mass

- based performance levels for each performance. Commenters stated that there essentially is no "flexibility because the EPA sets the target goals have already been set

- rate

- based state goals in this original proposal and in its November 6, 2014 supplement to the rule EPA has set the mass

- based state goals as well.

Commenters stated that rule does not give flexibility suggested by EPA.

Commenters stat ed that they are very cognizant of the fact that the flexibility U.S. EPA advocates is limited to choosing the methods of emission reduction and timeframe of plan development and implementation. Commenters said no flexibility is given in determining the
to tal emission reduction figure.

Comment 3: Rule is not flexible due to the stringency of the building block targets

Response 3: The EPA maintains that the final rule provides ample flexibilities to states. States are allowed to use the BSER measures, or ot her measures in their state plans to comply with the goals ; t here are flexibilities within the BSER measures and how they are executed ; and s tates also have non

- BSER measures at their disposal. See sections V.A and VIII.A. of the final rule preamble of the CPP for more information.

The following are summaries of the specific public comments under this comment:243 Several commenters said that the proposed rule does not offer states flexibility due to the stringency of the targets.

Commenters said the flexibili ties that the EPA insists the states have under the proposed rule are illusory given the stringency of the standards, practical impediments, and the EPA's decision to disallow exceptions or a modification to the standards. Commenters stated that the "guidelines" proposed by the EPA are mandatory, extraordinarily stringent and, once established in the final rule, will not be subject to modification. Commenters said that the proposed "anti

- backsliding provision" specifically prevents m odifications to a state goal after finalization of the rule that increases emissions under any circumstance. Commenters stated that such a provision, if retained, serves as a constraint to addressing unanticipated developments and increases the potential for negative economic impacts from the rule.

Commenters indicated that although the EPA has repeatedly emphasized the flexibility provided in the proposed Clean Power Plan, the "portfolio of options" (aka "building blocks") that comprise the foundation of the proposal are clearly designed to increase the stringency of the rule, rather than assist states and affected sources' compliance efforts. Commenters indicated that by incorporating reduction measures beyond affected sources, the EPA was able to tighte n individual state targets substantially. Commenters said that while the EPA's "mix and match" messaging implies otherwise, if the emissions reductions called for from one individual building block are not met, they must be made up for through even greater reductions in another building block (or by alternative measures that EPA does not specify). Commenter s state d that because individual building block targets were set at aggressive levels, there is little to no "wiggle room" between options and as a resul t, unless EPA incorporates true flexibility into the rule, they expect states will face major compliance challenges.

Several commenters said that the stringency of the targets remove any flexibility that may have been intended. Several commenters said, fo r example, the EPA's assumptions for replacement of coal generation with natural gas generation under building block 2 constrain the state's ability to rely on building block 1 (heat rate efficiency in coal plants) for any movement towards the state's inte rim or final goals. Several commenters said additionally, Arizona's goals represent an emissions rate for existing natural gas that is much lower than what the Agency says is achievable for brand new natural gas units. Several commenters said consequently, Arizona is forced to construct new renewable generation sources on unrealistic timelines and accelerate energy efficiency without the time to rationally consider what programs are most cost

- effective and achievable within the state.

Commenters said the EP A must provide true flexibility to the states by allowing them to consider unit specific realities, including the remaining useful life of the source, when assessing the reasonableness of the standard and the compliance schedule as applied to any single fa cility.

Commenters said although EPA claims that state have flexibility to determine how to meet EPA's goals, the magnitude of the emission reductions in the proposal leaves most states little alternative but to follow EPA's mandates laid out through build ing blocks 1 through 4. The
commenters said EPA has proposed to substitute its judgment for that of public utility commissions, utility companies, grid operators, and consumers across the nation by presuming244 the appropriate amounts of electricity from coa l, natural gas, nuclear, and renewables, as well as presuming how much electricity consumers should use in each state.

Commenters said the EPA attempts to address the 2020 interim limit by requesting comment in the NODA on two proposals designed to provide sufficient flexibility, but the EPA's proposed fixes won't solve the problem. Commenters said the EPA provides the option of meeting the deadline by 2020 while receiving credit for "certain pre

- 2020 reductions" (without further elaboration on what those m ight be), or implementing the goal earlier than 2020 by taking into consideration reductions currently under development. (79 Fed. Reg. at 64,545

- 46). Commenters said neither of these options change the unrealistic nature of the 2020 goals, nor do they pro vide states with true flexibility in determining how to structure the reductions needed by 2030. Commenters said the EPA should (1) eliminate the mandatory nature of the interim emission limit, and (2) allow states to assess a reasonable performance standa rd for individual units, or at a minimum allow states to determine how to structure their own glide path to meet the 2030 goal.

Comment 4: Rule is not as flexible as EPA claims because all of the individual building blocks reflect relatively stringent assu mptions. EPA should re

- evaluate its assumptions to ensure each one of its building blocks is achievable, rather than relying on assumption that any flaws in one BB can be offset by the flexibility associated with another BB. BB2 may not be achievable in Ne w England due to early action

Response 4: The EPA maintains that the final rule provides ample flexibilities to states. States are allowed to use the BSER measures, or other measures in their state plans to comply with the goals ; t here are flexibilities wi thin the BSER measures and how they are executed ; and s tates also have non

- BSER measures at their disposal. See sections V.A and VIII.A. of the final rule preamble of the CPP for more information.

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

Commenters said EPA claims that any errors in the calculation for only one building block will not warrant a change in the goals because of the additional flexibility provided by other building blocks. Commenters said for examp le, EPA claims that "a state's inability to meet the level of emission reductions anticipated through use of one building block may free up resources that the state could then devote to more stringent implementation of another building block." 79 Fed. Reg. at 34,893. Commenters said as such, EPA asks states that have concerns about one or more building blocks to "explain why the application of the other building blocks would not result in greater emission reductions than are reflected in the EPA's quantific ation for that state."

Commenters said however, since all of the building blocks are based on relatively stringent assumptions, the flexibility EPA may intend to provide is simply not available. Commenters said the inability to achieve one building block will not necessarily "free up" resources because the state will likely have already expended those resources even if, in the end, the desired level of improvement cannot be fully achieved. Commenters said the EPA also incorrectly assumes that the building blocks are fungible because each compliance option will result in different costs in different states

- even if a trade

- off is possible, it could also be far more expensive than EPA245 assumes. Commenters said in addition, the generation resources covered by the building blocks are not fungible in a practical sense because different resources provide different services to the electric power grid that must be considered in determining the potential impact o f a trade

- off between energy resources, such as frequency and transmission support. Commenters said however, EPA's analysis does not appear to take those ancillary grid services into account in assuming that efforts under one building block can substitute for another. Commenters said the timing of the building block assumptions also renders the proposal inflexible, since EPA assumes some building blocks will be achieved by 2020 while others can only be achieved over the entire compliance period ending in 20 30. Commenters said as a result, states may be forced to employ more expensive options if the cheaper options are simply impossible to achieve at the levels EPA assumes in its nationwide analysis by the deadline required.

Commenters said that the proposed regulation does not actually provide flexibility because the states are provided with a narrow range of costly policy choices, which most of the state did not choose for themselves. The commenters said this does not provide any actual flexibility and stil l produces the same outcome, higher electricity prices and decreased generation.

Commenters asked EPA to re

- evaluate its assumptions to ensure each one of its building blocks is achievable, rather than relying on the unsupported assumption that any flaws i n one building block can be offset by the flexibility associated with another building block.

Commenters also said the EPA's claim that a state has the ability to increase remaining building blocks to make up for a state's inability to implement a particul ar building block is misleading. Commenters said for example, if a state cannot meet its goal for re

- dispatch to new renewable generation (presumed zero

- carbon) under Building Block 3, an increase in re

- dispatch to NGCC under Building Block 2 would not off set the state's shortage under Building Block 3. Commenters said since the building blocks are fundamentally different, states have very little room to deviate from the exact combination and level of intensity prescribed by the EPA in the goal

- setting form ula to achieve compliance.

Commenters said by design, the magnitude of the carbon intensity reductions varies significantly across the building blocks. Commenters said while it may be theoretically feasible for New Hampshire to increase implementation slig htly across other building blocks to account for an inability to meet demand

- side energy efficiency goals, the same cannot be said if New Hampshire is incapable of meeting re

- dispatch goals since they account for the bulk of the carbon intensity reductions required in the state. Commenters said for example, New England as a whole

- and specifically New Hampshire, has already implemented Building Block 2 to the maximum extent possible prior to the 2012 reference year given the natural gas availability
constr aints of the region. Commenters said this is evidenced by the shift of coal

- and oil

- fired EGUs to targeted operation primarily during times of elevated demand. Commenters stressed that for this reason, additional re

- dispatch under Building Block 2 is not feasible for New Hampshire

- which renders the state goal entirely unattainable due to the unrealistic magnitude of carbon intensity reduction that would be required of the remaining building blocks that are unequipped to handle such increases.

Commenters stated, EPA established state emission rate goals in the Proposal by considering CO2 emissions reductions available through four building blocks that EPA found make up the246 best "system" of emissions reductions or BSER. Commenters said, EPA claims that, by not mandating that states adopt any of the measures considered in the building blocks, EPA is providing states with "flexibility" in how they achieve their goals. Commenters said, however, the unrealistic assumptions that EPA used in each building block ar e unreasonable and not achievable for many states. Commenters said, as a result, the state goals are so stringent that states will have little to no flexibility in the programs and limits they must adopt to meet both the interim and final emission rate goa ls. Commenters said, many states will be able to do so only through the precise adoption of the measures that the IPM assumed would result in compliance. Commenters said, other states will not even be able to meet the state goals using the IPM modeling res ults due to the limits of the modeling and the failure of the model to take into account reliability constraints, permit limits, transmission constraints, infrastructure needs and other factors that will restrict a state's ability to comply with its goals; particularly the interim goals that will apply beginning in just five years. Commenters said, EPA's use of unreasonable assumptions, its failure to consider numerous constraints that impact EPA's conclusions in each building block, and its reliance on mea sures that EPA does not have the authority to mandate render the BSER determination arbitrary and capricious. Commenters said, EPA must eliminate consideration of Building Blocks Two, Three and Four in determining BSER and must revise its analysis of Build ing Block One.

Comment 5: In reality, the proposed regulation does not provide states with the flexibility to maintain additional coal

- fired generating capacity because of the unrealistic levels of RE and EE that would be required to offset the emissions

. Response 5: The EPA maintains that the final rule provides ample flexibilities to states. States are allowed to use the BSER measures, or other measures in their state plans to comply with the goals ; t here are flexibilities within the BSER measures and ho w they are executed ; and s tates also have non

- BSER measures at their disposal. See sections V.A and VIII.A. of the final rule preamble of the CPP for more information.

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

Comment ers state d that the EPA must provide states with the flexibility to address reliability, cost, and remaining useful life. But commenters said that in reality states cannot preserve sources that Building Block 2 otherwise would retire through greater implem entation of other building blocks or other measures. Commenters said, however, that under the Clean Power Plan, states cannot preserve power plants for reliability purposes, cost, or remaining useful life because the EE or RE required to offset the emissi ons of a single preserved power plant are wholly unrealistic. Commenters said that for many Southeastern states, it will be impossible to meet even the projected level of RE under the Proposed Rule, let alone tripling or quadrupling that would be required to avoid massive coal unit retirements.

Commenters provided a scenario i n Arkansas to demonstrate the unrealistic growth in RE and/or EE that would be required to maintain coal

- fired generating capacity. Commenters indicated that the EPA IPM modeling projects that four of Arkansas' seven coal

- fired EGUs would retire or

cease operating by 2020. According to c ommenters , retaining either the White Bluff or247 Independence generating stations would require a 322 percent increase in EE from the amount assumed in BB4 and the IPM analysis, or a 335 percent increase from BB3

- assumed RE levels (i.e., an additional 5,000 NW wind or 9,000 MW solar). Commenters noted that the IPM did not project compliance through wind or solar generation in Arkansas because of the complete lack of RE potential in the state.

Commenters also provided an ex ample using Arizona's goals. Commenters said that in Arizona, the EPA's Goal Computation TSD and the IPM predict that meeting the state's interim emissions goal will require the retirement of all Arizona coal

- fired capacity by 2020. Commenters stated tha t if Arizona does not, or is unable to, retire even 1,000 MW of coal generation (approximately the size of the Cholla power plant), meeting Arizona's CO2 emission rate goal would be impossible. Commenters indicated that under EPA's theory Arizona could ma ke up for retaining the coal

- fired capacity by expanding RE and EE. Commenters indicated that this would require a 489 percent increase in RE from IPM projected levels or a 140 percent increase in EE from the level assumed in building block 4 and the IPM analysis. Commenters indicated that this equates to an additional 4,000 MW of wind or 7,000 MW of solar. Commenters added that utilizing existing NGCC generation at higher levels also would not help with compliance because Arizona's 735 lb/MWh interim go al is more stringent than the state's average NGCC emissions
rate.

Comment 6: Interim goal makes rule inflexible. The EPA should eliminate, or adopt a different approach to, the interim goal

Response 6: The EPA has modified the interim goals in response to comments and our further consideration. The interim period covers the years 2022

- 2029 and includes illustrative interim emission values for the periods of 2022

- 2024, 2025

- 2027, and 2028

- 2029. States have the flexibility to use different steps than those included in the final rule if the state demonstrates in its state plan that the values chosen for the 3, 3, and 2 year increments are equivalent to the interim goal included in the final rule for the 2022

- 2029 period. See section VII of the final rule
pre amble for discussion of the statewide goals.

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

Commenters said that throughout the Notice of Proposed Rulemaking and technical support documents and in discussions with stakehold ers, if any potential impediment to implementation of the proposal is raised, the EPA's answer is, almost inevitably, flexibility. Several commenters said however, the interim goal limits the flexibility available to states. Commenters said incorporation of the assumed 2020 implementation date for BB2 into the interim goal calculation will have the opposite effect and will interfere with a state's ability to shift from BB2 to measures, such as BB3 and BB4, whose effectiveness tends to grow over time. Com menters said because the interim goal reflects an average of annual values from 2020 to 2029, states cannot shift reductions in generation on an MWh

- for

- MWh basis from BB2 to BB3 or BB4 without violating the interim goal.248 Commenters attached the spreadshee t that the Arizona Department of Environmental Quality mentioned on the August 14, 2014 conference call between Region 9 states and EPA. Commenters said the spreadsheet illustrates the fundamental inconsistency between the proposed interim goal and the EPA 's stated objective of allowing states flexibility in choosing how to comply with the guidelines. Commenters said the following table provides a summary of the results of our calculations

.
Commenters stated that as the table shows, the more Arizona relies on Building Blocks 3 and 4 to achieve compliance with the final goal, the farther it gets from compliance with the interim goal (scenarios 2

- 4). Commenters added conversely, if Arizona designs its pr ogram 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 (scenario 5).

Commenters sa id that in fact, Arizona has no flexibility to shift from one Building Block to another to meet its rate

- based goal under the program as proposed. Commenters indicated that the state cannot increase reliance on Building Block 1, because the rate

- based goal assumes zero coal generation, and the interim goal, as explained above, prevents Arizona from increasing reliance on Building Block 3 or 4 to preserve coal generation. Commenters said that if no coal generation remains in 2020, increasing the efficiency o f coal units will obviously have no effect on Arizona's rate. Commenters added that Arizona cannot increase reliance on Building Block 2, because the interim goal effectively requires the maximum re

- dispatch possible.

Commenters said that Arizona is not th e only state in this predicament. Commenters said that the EPA's goal calculation spreadsheet makes it clear that a number of other states have goals that
presume re

- dispatch of all or a substantial portion of coal and OG generation to NGCC by 2020. Commen ters added that moreover, for some states, the presumption of 2020 implementation of Building Block 1 may present a similar impediment to flexibility.

Commenters said therefore the EPA should eliminate, or adopt a different approach to, the interim goal. C ommenters said that if an interim goal is included in the final rule, it should provide a reasonable phase

- in period for all Building Blocks

- otherwise the EPA will deny Arizona and many other states the flexibility it intended to include in the program.

Commenters noted that the scenarios presented in the spreadsheet are offered solely to illustrate the problems with the EPA's proposed interim goal, and that ADEQ has not evaluated the technical or economic feasibility of any of the RE or EE alternatives i ncluded.

Comment 7: The interim goal stringency and timing deprives Oklahoma of any flexibility to implement alternative compliance measures, and effectively mandates the closure of coal

- fired power plants

. Response 7: The EPA has modified the interim goals in response to comments and our further consideration. The interim period covers the years 2022

- 2029 and includes illustrative interim emission values for the periods of 2022

- 2024, 2025

- 2027, and 2028

- 2029. States hav e the flexibility to use different steps than those included in the final rule if the state demonstrates in249 its state plan that the values chosen for the 3, 3, and 2 year increments are equivalent to the interim goal included in the final rule for the 2022

- 2029 period. See section VII of the final rule preamble for discussion of the statewide goals.

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

Commenters said the interim goals require such significant emission decreases in such a short amount of time that they effectively mandate the closure of coal

- fired power plants. Commenters said in additional to overestimating the emission reductions achievable through re

- dispatch, EPA also assumed that all "available" emission rate reductions from re

dispatch could be achieved at the start of the ten

- year interim goal compliance period. Commenters said as a result, the interim goals in states with electric generating companies that have invested in low

- emitting NGCC, like Western Far mers, are so stringent that almost all of the emission rate reductions required by the Proposed Rule must be achieved in the first year in the ten

- year compliance period. Commenters said the EPA assumes that by 2020, Oklahoma can achieve 80 percent of the total emission rate reductions required in 2030.

Commenters said Oklahoma cannot comply with the proposed interim emission rate goal without making drastic changes to generation very early in the compliance period. Commenters graphed the proposed emission rate reduction trajectory for Oklahoma and said it resembles a cliff: emissions decrease sharply early in the compliance period and then remain largely unchanged through 2030. Commenters said as a result, Oklahoma will have no choice but to prematurely clo se existing coal

- fired generating units early in the compliance period. Commenters said the stringency and timing of the proposed interim goals deprives Oklahoma of any flexibility to implement alternative compliance measures and effectively mandates the c losure of coal

- fired power plants.

Comment 8: The EPA's claims of state flexibility and control are a false promise; states should be given flexibility to develop the elements of a plan that works best for the state, should be allowed extensions, shou ld be allowed to change plans based on changed circumstances, and should be allowed to adopt a "rate of progress" approach

. Response 8: The EPA maintains that the final rule provides ample flexibilities to states. States are allowed to use the BSER measures, or other measures in their state plans to comply with the goals ; t here are flexibilities within the BSER measures and how they are executed ; and s tates also have non

- BSER measures at their disposal. See sections V.A and VIII.A. of the final rule preamble of the CPP for more information.

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

States have broad authority . Commenter s said that the state goal is the standard of performance and the means to achieve that end sho uld be left to the states. Commenters said states have broad authority to develop a state plan for existing sources, and EPA only has authority to deem that a plan is satisfactory or not. Commenters said as long as the state plan is "satisfactory" and dem onstrates that the state will attain, maintain, and enforce the emission guideline (42 U.S.C. section 7410(a ) ( 1)), EPA should not be allowed to second

- guess the state's means of achieving250 the objective. Commenters said in the proposed regulation, the EPA has taken away much of the flexibility by establishing its rigid Interim Goal.

EPA should allow states flexibility including extended target date as appropriate. Commenters said that in developing a plan, a state may choose the measures it will include to achieve its goal, and the EPA should allow states the flexibility to choose elements that work best for the state. Commenters emphasized that only the final state goal needs to be federally enforceable, and said that planning and reporting already required by the CPP allow for correction and "penalty" if a state fails to be on course. Commenters said in addition, EPA should allow states to extend the 2030 target date upon a showing of a plan, like the Ameren Missouri IRP, that will cost effectively achieve comparable reductions within a reasonable time frame.

Several commenters said despite all the preamble discussion of flexibility for states, in reality states have no discretion. These commenters said the proposal sets emission rate goals that cannot be a djusted by states, and all of the requirements imposed on state plans allow states no discretion. These commenters said the EPA must revise the proposal to allow states to submit plans to establish the performance standards consistent with CAA Section 111

. Selling EE credits

. Commenters said states should not be forced to implement a portfolio approach that would place a compliance obligation on transmission and distribution utilities like Ameren Illinois. Commenters said such utilities should be able to s ell energy efficiency "credits" to EGUs to assist with low cost compliance.

Change plans based on changed circumstances

. Commenters said states should be given the flexibility to change their plans based on changed circumstances. Commenters said for exampl e, a breakthrough technology (like hydrofracturing) may change the whole energy system.

Adjust goals based on state

- specific circumstances

. Commenters said the EPA should give the states the flexibility to propose adjustments to state emission goals based on what is achievable in each state.

Rate of progress approach

. Commenters said the EPA should allow states to adopt a "rate of progress" approach in their state plans. Commenters said elements needed to implement a "rate of progress" approach are well

- kno wn to EPA and states alike. Commenters said because the CPP proposes "beyond the fence line" measures, the state plans will require a unique level of cooperation among state legislators, administrators and regulators, and the EPA must provide sufficient ti me for the planning processes to be authorized by state legislators. Commenters said states must then be allowed the time to communicate and explore existing state policies and programs to determine what GHG

- reducing mechanisms are already authorized and h ow those reductions can be converted to verifiable reductions attributable to the "affected EGUs."

Commenters said options to be considered include:

• Building codes,

• Energy efficiency changes,251 • Appliance standards and rebates and policies to encourage such changes;

• Offset programs;

• Policies to encourage energy technology innovation for an "all of the above" strategy that includes nuclear, clean coal, renewables, and natural gas;

• Policies to encourage u pgrades to transmission systems, including low loss transmission lines and smart grid;

• Tax policies to encourage efficiencies and new technology development

Commenters said while the innovation possibilities are endless, the CPP must allow states the time to develop a state plan, and one year to do so is simply insufficient. Commenters suggested that upon conclusion of the planning processes, a complete plan with timelines for achieving reductions can be presented to EPA for approval.

Comment 9: Proposed rule does not provide flexibility; BB2, BB3, and BB4 are outside the EPA's authority and cannot be remedied by the approaches suggested by the EPA

. Response 9: The EPA maintains that the final rule provides ample flexibilities to states. States are allowed to use the BSER measures, or other measures in their state plans to comply with the goals ; t here are flexibilities within the BSER measures and how they are executed ; and s tates also have non

- BSER measures at their disposal. See sections V.A and VIII.A. o f the final rule preamble of the CPP for more information.

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

Stringency of goals limits flexibility

. Commenters said that the four building blocks in the proposed regulation take away state flexibility rather than provide flexibility. Commenters said the Proposed Guidelines lack flexibility because the state goals that are its centerpiece are set assuming signific ant emission reductions resulting from the application of all four Building Blocks. Commenters said the EPA claims that its "reasonable rather than maximum" approach to implementing the Building Blocks means that there is room for states to trade emission reductions among Building Block policies (and policies that were not included in the Building Blocks) to achieve each state's goal. Commenters said that the EPA's Building Block assumptions used to set state goals are so stringent that there is no true f lexibility in the proposed emission guideline.

Rule would encroach on areas that fall under exclusive jurisdiction of states

. Commenters said another reason the proposed emission guideline would limit rather than enhance flexibility for states is that it would encroach on areas that fall under the exclusive jurisdiction of the
states. Commenters said most

- if not all

- of the programs in Building Blocks 2, 3, and 4 are the quintessential purview of state electricity regulators

- not state environmental agencies. Commenters said these programs have been developed pursuant to well

- established state252 sovereign powers over matters relating to electricity regulation, including determining the appropriate mix of generating resources within a state. Commenters said the EPA is barred by the Constitution and U.S. Supreme Court precedent from infringing upon a traditional state sovereign function un less Congress has adopted clear statutory language expressly authorizing the Agency to do so, and nothing in the CAA expressly authorizes the EPA to regulate the generation of electricity or other such energy regulatory matters traditionally reserved to
st ates. Commenters said further, the EPA's attempt to regulate electricity generation will adversely and inequitably harm the owners, investors and rate

- paying customers of individual electric generating facilities by setting mandatory emissions guidelines which the EPA acknowledges are based primarily on regulating the production of electricity, not based on the technological ability to control CO2 emissions from the affected source category. Commenters said the rule creates winners and losers within a sta te as well as among states, and the disparities are unrelated to the relative ability of a regulated facility to control its emissions. Commenters said such a program is clearly an expansion of the EPA's authority, in addition to the inequity, since nothin g in the CAA or the Subpart B rules contemplates such an expansive program of regulating the generation of electricity within a state's borders or beyond. Commenters said the Proposed Guideline acknowledges that interference with the sphere of exclusive s tate jurisdiction is a considerable concern.

EPA proposal

- not include RE and EE in state plans

. Commenters said the EPA seeks comment on a proposal to remedy this situation by essentially creating a technical loophole. Commenters said the EPA suggests t hat it can avoid entanglement in areas over which the states are sovereign simply by not including things such as RE and EE in state plans, preventing such requirements from becoming federally enforceable, while states impose the requirements directly to a llow compliance with what would be otherwise unachievable emission limits contained in state plans. Commenters said this proposal mistakes formal federal enforceability with the problem of federal interference in areas that are exclusively the states' doma in. Commenters said the EPA's proposed solution, however, does not mitigate that problem. Commenters said the same problem exists even if the EPA were to adopt only Building Blocks 1 and 2, because the rule sets emissions guidelines that can only be met b y regulating how electricity production is managed within the state (or within a multi

- state region if the state enters into such an agreement). Commenters said building block 2 is not based on achieving CO2 emissions reduction, but on requiring changes i n how electricity is produced.

EPA proposal

- state commitment approach

. Commenters said the EPA also proposes what it calls the "state commitment approach." Commenters said this approach would not make requirements for non

- EGUs part of a federally enforce able state plan: "Instead, the state plan would include an enforceable commitment by the state itself to implement state

- enforceable (but not federally enforceable) measures that would achieve a specified portion of the required emission performance level on behalf of affected EGUs." Commenters said this approach clearly does not avoid the EPA's interference in areas that are traditionally regulated only by the states

- it merely seeks to avoid the appearance of such interference. Commenters said in attem pting to do so, it also creates state plans that otherwise would not meet the requirement of federal enforceability.

Commenters said therefore, Duke Energy's response to the EPA's request for comment is that Building Blocks 2, 3 and 4 are all outside the a uthority of what the EPA can do within section253 111(d) and Subpart B, and those serious flaws cannot be remedied by the approaches the EPA has suggested to sidestep the legal requirements of the CAA.

Comment 10: States have little to no flexibility in thei r ability to meet the proposed state goals; the proposed guidelines are unlawful because the EPA doesn't have authority to establish emission standards for states

. Response 10: See section IV 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:

One

- size fits all approach taken to establish goals

. Commenter s said in calculating the state goals, the EPA applied all four Building Blocks to each state's 2012 electric generation to determine the extent to which the state could reduce its CO2 emissions rate by 2030. Commenters said the EPA says that it will consid er adjusting state goals if a state comments that one of the Building Blocks is technically infeasible or its costs "were significantly higher than that projected by EPA". Commenters indicated that this implicitly acknowledges that the Agency adopted a one

- size

- fits

- all approach to establishing state

- specific goals without adequately considering individual state characteristics. Commenters said however, the EPA also states that because it believes it is imposing "reasonable" levels of each Building Block (" rather than the maximum") a state should be able to increase its use of another Building Block to compensate for a limited (or lack of) use of another Building Block.

EPA doesn't have authority to establish emission standards for the states. Commenters s aid Section 111(d) provides that states are to develop performance standards for individual sources as part of state plans, after considering state and local factors unique to individual emitting units, including the remaining useful life of individual uni ts. Commenters said the Proposed Guidelines are unlawful because the EPA is establishing the emission goals rather than allowing the states to do so, noting in the process that states have no authority to modify.

Stringency of goals limits states' flexibi lity

. Commenters said even if the EPA had authority to establish emission standards for the states, because the EPA has simply assumed each Building Block can be implemented fully without ascertaining whether that is in fact the case, the flexibility the E PA claims to be providing is, in fact, illusory. Commenters said in many cases, states cannot realistically implement one or more Building Blocks at the level the EPA has assumed and they do not have the flexibility to increase the stringency of other Buil ding Blocks or measures to achieve their mandated goals because contrary to the EPA claims, the level of stringency assumed by the EPA for each Building Block is, in many cases, unrealistic and unachievable. Commenters said this leaves the retirement of co al

- fired EGUs as one of the only options available to achieve the goals the EPA has proposed, and a standard that forces this outcome cannot be described as flexible.

Multiple SIP submittals should be allowed

. Commenters said that states must have more tha n one chance to develop and acceptable SIP. Commenters said considering the complexity of this rule, the large number of uncertainties, and the potential impact on electric utilities and254 consumers within each state, the EPA must provide a vehicle that all ows for states to have more than one chance at getting the SIP correct.

Comment 11: Flexibility is overstated. As proposal is written, application of the practical effects test proves that BB3 and BB4 are mandatory, the use of BB3 and BB4 is a rule withi n the meaning of the APA, and reliance on those building blocks is improper

. Response 11: The EPA maintains that the final rule provides ample flexibilities to states. States are allowed to use the BSER measures, or other measures in their state plans to c omply with the goals ; t here are flexibilities within the BSER measures and how they are executed ; and s tates also have non

- BSER measures at their disposal. See sections V.A and VIII.A. of the final rule preamble of the CPP for more information.

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

Commenters said the flexibility of the rule is overstated because the use of building blocks 3 and 4 are essentially mandatory and therefore the use of BB3 and BB4 is a rule within the m eaning of the Administrative Procedures Act (APA), and reliance on those building blocks is improper.

Commenters said that the proposal sets state goals that EPA claims are based on achievable emissions reductions by applying all four building blocks. Com menters said the EPA also proposed alternative, less stringent state goals based on applying only Building Blocks 1 and 2: "We are also soliciting comment on application of only the first two building blocks as the basis for the BSER, while noting that app lication of only the first two building blocks achieves fewer CO2 reductions at a higher cost." (79 Fed. Reg. at 34,836). Commenters said because the state goals are premised on a BSER that reduces emissions from all four building blocks and actions at the affected EGUs would, alone, never achieve the state goal, reliance on Building Blocks 3 and 4 is essentially binding.

Commenters s aid Federal case law interpreting the Administrative Procedure Act ("APA"), 5 U.S.C. Section 551 et seq., demonstrates how courts determine whether policies contained in EPA documents such as policy memoranda are considered binding rules. Commenters discus sed one case, Appalachian Power Co. v. EPA, in which the court did not rely solely on the Agency's characterization of the documents, but looked to the language of the document and how it was practically applied in holding that:

[I]f an agency acts as if a document issued at headquarters is controlling in the field, if it treats the document in the same manner as it treats a legislative [formal] rule, if it bases enforcement actions on the policies or interpretations formulated in the document, if it leads private parties or State permitting authorities to believe that it will declare permits invalid unless they comply with the terms of the document, then the agency's document is for all practical purposes 'binding.' ( 208 F.3d at 1021)

Commenters said rely ing on Building Blocks 3 and 4 is really an obligation for states, not a flexible option. Commenters said the proposal as written leads stakeholders to believe that state255 plans will not be approved unless they rely on emissions reductions achieved by relyi ng on all four building blocks. Commenters referred EPA to See National Mining Ass'n v. Jackson, 856 F.Supp.2d 150, 156 (D.D.C. 2012) (rejecting the agencies' stated position that guidance was not binding and imposed no obligations, the court found that th e guidance had "caused EPA field offices and the state permitting authorities to believe that permits should and will be denied if its 'suggestions' and 'recommendations' are not satisfied."). Commenters said moreover, if states cannot meet their goals, le gal consequences will flow.

Commenters said if allowed to go final as written, application of the practical effects test proves that Building Blocks 3 and 4 are, contrary to EPA's characterization, mandatory. Commenters said the use of Building Blocks 3 a nd 4 is a rule within the meaning of the APA, and reliance on those building blocks is improper.

Comment 12: The EPA has overstated the degree of implementation flexibility available to
states
Response 12: The EPA maintains that the final rule provides am ple flexibilities to states. States are allowed to use the BSER measures, or other measures in their state plans to comply with the goals ; t here are flexibilities within the BSER measures and how they are executed ; and s tates also have non

- BSER measures at their disposal. See sections V.A and VIII.A. of the final rule preamble of the CPP for more information.

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

Several commenters indicated that the flexibility the EPA claims is o verstated.

Several commenters said that the EPA set each state's goal assuming that each state completely adopts all four building blocks. Several commenters said that for Florida each building block is unachievable and there is no margin to make

- up under one buildi ng block the amount to which the state falls short on another. Several commenters said that absent this ability, Florida cannot meet the proposed goal. Several commenters also indicated that the EPA's proposed state goals would be unachievable under a fe deral plan, since the EPA lacks the legal authority to implement at least Building Blocks 2 through 4.

Commenters said that the EPA has overstated the degree of implementation "flexibility" available to states. Commenters said that in reality, the purport ed flexibility is insufficient for developing any workable compliance solution and indicated additional guidance on how alternative measures will be 'credited" if they are relied on is needed.

Commenters said that significant flaws have been identified in EPA's assumptions and goal calculations for both blocks 1 and 2. Commenters said that correcting these assumptions should reduce the stringency of the state goals, as there are significantly fewer opportunities for heat rate improvements available, and s ignificantly less NGCC capacity is available for re

- dispatch. Commenters stated that similarly, the EPA's evaluation of the opportunities for increasing RE and EE are seriously flawed, and as a result, states ultimately have very little flexibility in deve loping plans, and no guidance on how alternative measures will be "credited" if they are256 relied on. Commenters said that these omissions must be addressed if states are to be equipped to investigate and adopt alternative measures as part of their state pla ns.

Commenters also said that the flexibility relied on by EPA is illusory. Commenters said the EPA speaks of flexibility as if having eliminated one building block as unworkable, a state could simply increase its use of another block

- this kind of flexib ility could only be realized if each building block of the proposal had unrealized and unlimited potential (which they do not). Commenters said that because there are serious overestimates of what can be achieved in each of the four building blocks, meeting the goal in Texas would force significantly more coal retirements than the EPA suggests. Commenters said shutting down coal

- fuel powere d plants is not BSER, and fundamentally, the EPA's interpretation of 111(d) is untenable.

Commenters expressed concern regarding the EPA's overall restriction of state flexibility. Commenters said despite EPA's claim that it provides state's "broad discre tion," states must factor several overbearing considerations into the development of their state plans (four state plan "approvability criteria" and twelve "components"). Commenters said just as for the approval of SIPs under Section 110, the EPA must def er to a states' plan under Section 111(d) so long as the state develops a satisfactory plan in light of its unique attributes. Commenters stressed it is important that EPA not limit the states' authority, flexibility, or discretion in their development of state plans.

Commenters also said the flexibility in the proposed regulation is illusory. Commenters said given the building block approach employed by EPA, this imaginary flexibility is akin to telling a person to drive a car from point A to point B, usi ng whatever route the person so chooses, as long as the person only uses the amount of gasoline required for a single, pre

- prescribed route.

Comment 13: Proposed rule offers limited flexibility because no other emission guideline promulgated pursuant to S ection 111(d) has included such prescriptive plan elements and rate of progress determinations

. Response 13: The EPA maintains that the final rule provides ample flexibilities to states. States are allowed to use the BSER measures, or other measures in the ir state plans to comply with the goals ; t here are flexibilities within the BSER measures and how they are executed ; and s tates also have non

- BSER measures at their disposal. See sections V.A and VIII.A. of the final rule preamble of the CPP for more infor mation.

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

Commenters said that the proposed emission guideline is so prescriptive that it offers states little flexibility and does not fulfill the legal requirements of the CAA

.
Commenters said while EPA has stressed that states may choose their own program elements, the goals are so restrictive that most states will need a combination of direct emission controls, generator fuel favoritism, and end user incentives to reach both the interim goals and the final goal. Commenters said while EPA admits that this is the desired outcome, such policy goals do not fulfill the legal requirements of the CAA. Commenters said states have discretion to choose257 the measures to come into compli ance with Section 110 to attain NAAQS and the same discretion applies in the Section 111(d) context. (Train v. Natural Res. Def. Council, 421 U.S. 60 (1975)).

Commenters said moreover, the previously enacted emission guidelines make the standard of perfor mance very clear while allowing states discretion to implement the standard in various
ways. Commenters said the EPA should do no more than to allow states to set forth the compliance plan that makes sense for the state's unique circumstances.

Commenters s aid that despite EPA's claim that its proposal provides states with broad discretion, EPA in fact severely limits state flexibility by constructing several factors and criteria that states must satisfy in developing their state plans. Commenters listed EP A's four proposed approvability criteria (79 Fed. Reg. at 34,852), and indicated that EPA has no basis to impose such criteria. Commenters said the CAA explicitly provides states with the ability to consider, among other factors, the remaining useful life of the existing source to which such standard applies. (42 U.S.C. Section 7411(D ) ( 1)). Commenters also indicated the proposed rule trespasses on the states' ability to consider the necessary factors and to provide for the application of less stringent em issions standards or longer compliance schedules than those otherwise required...provided that the state demonstrate the necessity.

Comment 14: The EPA's assertion of flexibility is based on the false premise that each BB is attainable up to and above the amount established in setting the goal

- analysis suggests that is
not true. The EPA has failed to take into account state specifics by modeling th e costs on a national basis and for RE, on a regional basis

. Response 14: The EPA maintains that the final rule provides ample flexibilities to states. States are allowed to use the BSER measures, or other measures in their state plans to comply with the
g oals ; t here are flexibilities within the BSER measures and how they are executed ; and s tates also have non

- BSER measures at their disposal. See sections V.A and VIII.A. of the final rule preamble of the CPP for more information.

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

Several commenters said that the EPA's assertion of flexibility is based on the false premise that each BB is attainable up to and above the amount established in setting the goal, but analysis suggests that reality is far different than expected by EPA.

Several commenters said that each of EPA's BBs contains a significant limitation that has both general and very specific applicability. Several commenters said for states with newer coal fleets BB#1 can not be attained as those fleets generally already are more efficient than the national average. Several commenters said many states are identifying serious constraints to increased dispatch of natural gas, such as limited pipeline capacity or the need for new transmission lines, that calls into question the ability to meet the BB#2 earliest goals set by EPA. Several commenters said for states with limited renewable resource capabilities BB#3 cannot be adequately met, and for states that have already undert aken aggressive EE programs, BB#4 presents a problem.258 Several commenters said for each state that encounters a problem with any one of the BBs, EPA expects that the state must make up for that shortfall by increasing the usage of another BB. These commente rs said while each state will have unique problems, the most significant problems are likely to occur in those states that are expected to make the majority of reductions through BB#2. These commenters said if BB#2 compliance options are limited, states w ill have to find reductions through demand

- side energy efficiency, heat rate improvements at existing plants or increased renewable energy generation. These commente r s said given that the interim goal occurs as soon as 18 months after the state plan is fi led, even these options would seem unavailable as they could never be implemented in time to meet the interim goal.

Several commenters said it is critical that the proposed rule take into consideration each state's unique energy and economic situation as w ell as the technological feasibility and most importantly, the cost of EPA's compliance BBs for each state. These commenters contend ed that the EPA has failed to do this by modeling the costs on a national basis and, for renewable energy, on a regional bas is. These commenters added that each state should have a far greater role in the design of the standards than has been afforded by EPA, particularly since EPA has designed standards for many states that are simply unachievable in the allotted timeframe. Th ese commenters said further, EPA needs to allow states to exempt certain facilities on a case by case basis as provided by the statute.

Comment 15: The proposal conflicts with applicable regulations, and EPA is proposing to impose an emission standard rather than a guideline, and has eliminated the states' ability to minimize the effects on its fleet of EGUs

Response 15: The EPA maintains that the final rule provides ample flexibilities to states. States are allowed to use the BSER measures, or other me asures in their state plans to comply with the goals ; t here are flexibilities within the BSER measures and how they are executed ; and s tates also have non

- BSER measures at their disposal. See sections V.A and VIII.A. of the final rule preamble of the CPP f or more information. See section III of the final rule preamble of the CPP for more information regarding the legality of the final rule.

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

Commenters said that the EPA's proposal conflicts with applicable regulations, and indicated that EPA is proposing to impose an emission standard rather than a guideline, and has eliminated the states' ability to minimize the effects on its fleet of EGUs.

Beyond the plant considerations

. Commenters said the EPA states in the 1975 preamble to its rule implementing CAA Section 111(d) that guideline documents must include "information pertinent to control of the same pollutant from designated (i.e., existing) facilitie s..." [ 40 Fed. Reg. 53340 (Nov. 17, 1975) ]

. Commenters said no discussion of reaching beyond the plant to take into consideration other factors and then impose reductions on the designated facilities based on those factors is mentioned in the rule or in t he preamble.

Minimizing effect of regulation

. Commenters said the EPA's 1975 preamble also acknowledges that "States may apply less stringent standards to sources (or classes of sources) when economic259 factors or physical limitations specific to particular sources (or classes of sources) make such application significantly more reasonable " (40 Fed. Reg. at 53341; see 40 C.F.R. Section 60.24(f)) Commenters said although EPA's new proposed regulatory language does not preclude use of 40 C.F.R. Section 60.24 (f), it is clear EPA intends the 30% emission reduction to be binding on all EGUs and "no relief" will be afforded under 40 C.F.R. Section 60.24(f). 79 Fed. Reg. at 34925. Commenters said the Proposed Rule therefore effectively prohibits a state from min imizing the effect of the emission rate set by EPA on its fleet of EGUs.

Subcategorization

. Commenters said the EPA's proposal does not acknowledge, despite its protestations to the contrary, the differing impact of its proposal on states and facilities. Commenters said the 1975 preamble provides that the Administrator will specify different emission guidelines for different sizes, types, and classes of designated facilities when costs of control, physical limitations, geographical location, and similar fa ctors make subcategorization appropriate. Commenters said thus, while there may be only one standard of performance for new sources of designated pollutants, there may be several emission guidelines specified for designated facilities based on plant confi guration, size, and other factors peculiar to existing facilities.(40 Fed. Reg. at 53341). Commenters said the EPA should take this approach, rather than combining all EGUs and applying an overall emission rate for CO2.

Emission Standard versus Emission Gu ideline

. Commenter s said the EPA stated in the 1975 preamble that it did not intend to impose a "legally enforceable national emission standard." (40 Fed. Reg. at 53341). Commenter s said instead, EPA explained that it would only issue "guidelines" for exi sting sources, so that its direction would not be binding on the states. Commenter s said "Emission guideline" is defined by EPA as a guideline that "reflects the degree of emission reduction achievable through the application of the best system of emission reduction which (taking into account the cost of such reduction) the Administrator has determined has been adequately demonstrated for designated facilities." (40 C.F.R. Section 60.21(e)). Commenter s said "Emission standard," on the other hand, is defined as a "legally enforceable regulation setting forth an allowable rate of emissions into the atmosphere, establishing an allowance system, or prescribing equipment specifications for control of air pollution emissions." (40 C.F.R. Section 60.21(f)).

Commen ter s said in the proposed regulation, EPA is proposing to impose an emission standard rather than a guideline, by mandating a 30% reduction in emissions from all fossil fuel existing sources by 2030 by setting state emission rate requirements that cannot be changed, and by prohibiting states from using 40 C.F.R. Section 60.24(f) when necessary. Commenter s said the EPA expressly emphasizes that the state emission limit is not a goal but a minimum mandate that cannot be changed once the rule is finalized. ( See e.g. 79 Fed. Reg. at 34898). Commenter s said rather than provide a "guideline," as required by the rule, therefore, EPA is proposing to establish a legally enforceable emission standard and has eliminated the states' ability to minimize the effects on its fleet of EGUs.

Commenter s said the EPA's calculation of the state goals impermissibly limits the states' discretion and is error

- ridden.260 Comment 16: Flexibility is critical. Rule is not as flexible as the EPA implies (building block by building block discussion )

Response 16: The EPA maintains that the final rule provides ample flexibilities to states. States are allowed to use the BSER measures, or other measures in their state plans to comply with the goals ; t here are flexibilities within the BSER measures and how they are executed ; and s tates also have non

- BSER measures at their disposal. See sections V.A and VIII.A. of the final rule preamble of the CPP for more information.

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

Commenter s stressed the importance of state flexibility in the rule, and indicated that based on an examination of each of the building blocks as they relate to Colorado, the rule does not offer the degree of flexibility EPA implies. Commenter s sa id that increasing performance in one building block may have the unintended consequence of decreasing performance in another block.

Commenters said that it is critical that a final rule maintain and not further dilute state flexibility. Commenters said th at among other considerations, uncertainties associated with the calculations utilized to derive the proposed goals, and ambiguity surrounding the distinctions between these plans and traditional State Implementation Plans (SIPs), support affording states maximum flexibility in plan development and implementation.

Commenters said that in establishing the four building blocks, the EPA recognized the operational differences between EGUs and explained that while states may not be able to achieve projected redu ctions in any given building block, states may be able to make up that difference by securing more reductions in another building block. Commenters said that Colorado closely evaluated the state goal calculation methodology and the reductions that would be needed for Colorado to meet its proposed 2030 goal. Commenters said that as a result of that analysis, Colorado is concerned that there may be less flexibility for Colorado than the EPA believes. Commenters noted that for example, increasing performance i n one building block may have the unintended consequence of decreasing performance in another building block.

Building Block 1

- due to past efforts difficult to attain, re

- dispatch makes investment risky, parasitic load decreasing efficiency

. Commenters said that under Building Block 1

- Coal

- Fired Steam EGUs' Heat Rate Improvement (HRI), the EPA sets a national average of 6% efficiency improvements, and cites technologies and work practices that can be used to realize this goal. Commenters said that on t he whole, Colorado coal

- fired EGUs have already implemented a number of these technologies and work practices to realize energy efficiency. Commenters said that while there may be additional projects to pursue, these would likely occur at some of our smal ler units. Commenters said that the implication is that the larger units cannot secure 6% reductions on top of those already implemented prior to 2012, and any projects at smaller units would not be enough to achieve an overall average of 6%. Commenters no ted that considering the drive to re

- dispatch to lower carbon intensity generation by 2020 (or even 2030), coal

- fired EGUs may not realize a reasonable return on such investments

- this would make it difficult to financially justify additional HRI investme nts. Commenters noted that further, several coal EGUs will be installing additional pollution controls associated with the CACJA and Regional261 Haze requirements, and this will increase the parasitic load that reduces net generation at the EGU, which will wo rk against HRI efforts.

Most decisions regarding additional resource through interim goal have already been made

. Commenters indicated that the Public Utility Commission (PUC) in Colorado has exclusive statutory authority to evaluate and approve additional generation and decommissioning of existing power plants through the resource planning process for Colorado's two investor

- owned utilities, or about 60% of our state's electricity load. Commenters said that the PUC also has authority over demand side manag ement (DSM), renewable energy standard (RES), transmission, and distribution. Commenters noted that decisions regarding additional resources through the interim goal of 2020 have already been made. Commenters said that in the recently completed Electric Re source Plan (ERP), the PUC approved an additional 450 megawatts of wind and 170 megawatts of utility scale solar to the existing generation of the state's largest investor owned utility, and established DSM goals through 2020. Therefore, c ommenters said, d ecisions about acquisition of zero

- carbon sources, decommissioning of coal units, use of natural gas units, and energy efficiency for as the majority of resources have been made through 2020. Commenters said however, Blocks 2, 3, and 4 could interfere with PUC authority, and interrupt the carefully constructed CO 2 reduction trajectory of Colorado's IOUs.

Building Block 2. Commenters said that under Building Block 2

- Re

- Dispatch to Lower Carbon Intensity Generation, the EPA applies a national average capac ity factor of 70%, to realize a shift from more carbon intensive coal

- fired generation to less carbon intensive natural gas

- generation. Commenters said Colorado has concerns relating to both the nameplate capacities used to determine the actual generation capacity, and the 70% capacity factor itself.

Shouldn't use nameplate capacity

. Commenters said that first, the capacity factors reported via the Energy Information Agency's Form 860 with respect to natural gas combined cycle turbines may not be representative of their actual operating capacity. Commenters said that the instructions for this form apparently require the reporting of the highest name plate capacity, and not the maximum operating capacity given operational limiting factors, such as the maximum output of equipment feeding steam turbines. Commenters noted that it also appears that EGU's may have inconsistently reported these numbers to th e EIA. Commenters said that this leads to an overestimation of the potential generating capacity from the start. Commenters said that to address this issue and ensure that more realistic and accurate information is used, Colorado suggests that the EPA use the average of the reported summer and winter generation reported on the same Form 860 to determine actual generating capacity.

70% re

- dispatch is unrealistic

. Commenters said that second, 70% re

- dispatch may be overly ambitious and not be technically fea sible. Commenters said that the growth of natural gas capacity has been necessitated in part by the growth of renewable energy. Commenters stated that many existing turbines operate in standby mode to backup intermittent renewable energy sources when the w ind dies down, or the sun is obscured. Commenters stressed that these turbines are critical to electric reliability. Commenters noted that many existing turbines were never designed to operate continuously under load, as proposed in the EPA's rule, and thi s directly affects the remaining useful life of those existing turbines. Commenters said that in Colorado, many of these turbines were generally installed in proximity to current transmission lines. Commenters said, however, there are transmission line cap acity limitations that may not262 support the power generated simultaneously from efforts to re

- dispatch to natural gas turbines and increase renewable energy generation. Commenters stated that this may be an issue in supporting re

- dispatch from existing unit s as well as transmission needs for new units post 2020. Commenters noted that installing additional transmission lines is a resource intensive process that involves getting approval from multiple authorities and can take years, and noted that recent effor ts to expand transmission in the West have been limited by Endangered Species Act requirements. Commenters stated that without the proper transmission lines, increased operation of turbines could cause reliability issues.

Non

- attainment area operational li mits

. Commenters indicated that many of Colorado's existing turbines are located in an 8

- hour Ozone Nonattainment Area, and as such have accepted operational limits far below the maximum generating capacity. Commenters noted that renegotiating those permi t limits or installing new turbines to increase operating limits may not be feasible. Commenters added that these challenges will only increase if, as expected, EPA lowers the ozone standard. Commenters said that in those cases where the operator was able to renegotiate the permit limits, the modified permit would likely have to demonstrate compliance with the recent 1

- hour NOx standard, which could involve complex and stringent modeling.

Commenters indicated that for all of these reasons, it appears that it is not technically feasible for all existing turbines to be ramped up to 70% capacity factor, or to be significantly ramped up by 2020. Commenters said that to help address these concerns, Colorado supports the glide path approach discussed in EPA's NOD A to phase in dispatch changes over time, including those that occur prior to 2020. Commenters said that Colorado could also support a reasonable, "minimum floor" for natural gas dispatch as proposed in the NODA, in order to address equity issues amongst t he states.

Commenters said that if Colorado cannot meet the proposed national average of 6% heat rate improvement and 70% re

- dispatch to natural gas turbines, it becomes more difficult to make up those differences by means of Building Block 3

- Re

- Dispatch to Renewable Sources, and Building Block 4

- DSM/Energy Efficiency.

Use of regional average of RE effectively requires states that have invested heavily in RE to invest more

. Commenters said Building Block 3

- Colorado implemented a RES beginning in 2005 , which increased Colorado's annual generation from non

- hydropower renewable sources from 811,000 MWh to 6,192,082 MWh in 2012. Commenters stated that renewable energy has grown in Colorado at a faster rate than many other states in the region. Commenters added that in terms of capacity, Colorado increased utility

- scale renewable generation from 250 MW to 2,415 MW during that period. Commenters said, however, Colorado is precluded from taking full credit for these reductions under the proposal. Commenters s aid that the EPA has stated that those reductions that have already or will occur prior to 2020 have been factored into the state goal computation. Commenters said however, the EPA uses a regional average of renewable generation in the West (a region alrea dy high in renewable generation) to arrive at an elevated renewable generation goal for western states. Commenters stated that again, this approach effectively requires states that have already made significant investments in renewable generation to invest more. Commenters noted that moreover, the significant CO 2 emission reductions Colorado has realized through renewable sources may not be enough to offset the very real limitations of meeting other building blocks.263 Don't get credit for early demand

- side management projects ; rate of return on newer projects is lower

. Commenters said that under Building Block 4

- Colorado's EGUs have been and will continue implementing energy efficiency and DSM projects that reduce electric demand. Commenters said that inve stor

- owned utilities (IOUs) in Colorado have a statutory mandate through 2018 to conduct DSM with PUC oversight which has resulted in 1.7 million MWh of savings annually. Commenters said however, the EPA's calculations do not provide credit for DSM program s until 2014, even though IOUs began ramping up DSM programs as early as 2007. Commenters added that moreover, early efforts securing demand reductions may establish a de facto standard by 2020. Commenters said that Colorado's IOUs have noted that energy

e fficiency programs implemented since 2007 are maturing such that the avoided energy per dollar appears to be declining. Commenters said that in response, the Colorado PUC recently flattened the energy efficiency targets for the state's largest IOU, establi shing a 400 GWh per year goal for 2015 through 2018. Commenters said that in addition, Colorado's IOUs are projecting lower retail sales growth than is assumed by EPA's model, and by 2020, this may make it more difficult to achieve the projected 1.5% .annu al reduction.

The EPA should provide flexibility to states to be able to take credit for voluntary EE programs and other measures outside traditional utility DSM projects

. Commenters stated m any of Colorado's municipal and electric coops have DSM programs that are not mandated by state
statute. Commenters stated t hese programs, as well as other statewide offerings, provide significant reductions in energy usage while outside of the traditional regulatory structure. For example, commenters added , Tri

- State G eneration and Transmission saved an estimated 580,174 MWh of energy in Colorado implementing DSM between 2005 and 2013. Commenters stated,
t he Colorado Energy Office also offers statewide energy efficiency programs, including managing a portfolio of energy performance contracts that produce energy savings of 141,779 MWh/yr. Commenters stated Colorado encourages EPA to provide necessary flexibility to account for these and other voluntary DSM projects, including a broad range of efficiency measures outside o f traditional utility DSM projects, such as locally adopted building codes, federal appliance standards, demand response, and distribution system improvements.

Commenters said that collectively, the foregoing issues call into question whether or not the st ate goals may be overly ambitious. Commenters added that regardless, there are undeniable constraints on the flexibility afforded Colorado in meeting the state goal. Commenters said that therefore, it is imperative that a final rule increase the flexibilit y afforded states in EPA's proposal.

Comment 17: The EPA should not include additional building blocks as BSER

- this would make the goals more stringent and reduce state compliance flexibility

. Response 17: The EPA maintains that the final rule provides ample flexibilities to states. States are allowed to use the BSER measures, or other measures in their state plans to comply with the goals ; t here are flexibilities within the BSER measures and how they are executed ; and s tates also have non

- BSER measures at their disposal. See sections V.A and VIII.A. of the final rule preamble of the CPP for more information.264 The following are summaries of the specific public comments under this comment:

Commenters said while not every element of the proposed BSER is reasonable for a given state, the amount of flexibility offered in compliance plans may allow states to meet the overall goals by either over

- achieving on other Building Blocks or adding new elements no t considered as BSER. Commenters said if EPA considers additional elements in defining the BSER, significant new analysis would be required regarding costs and benefits. Commenters said while it may be appropriate for a state to substitute one of the sugge sted additional components for one of the original Building Blocks, it would not be appropriate for EPA to do so if the result is a more stringent goal than states had the opportunity to comment upon. Commenters said the EPA correctly noted that carbon cap ture and storage is too costly to consider on a retrofit basis and should not be considered as BSER for existing facilities, as control cost must be considered when determining BSER, in accordance with CAA section 111(a).

Comment 18: State regulatory refor m will require plan flexibility

Response 18: The EPA maintains that the final rule provides ample flexibilities to states. States are allowed to use the BSER measures, or other measures in their state plans to comply with the goals ; t here are flexibilities within the BSER measures and how they are executed ; and s tates also have non

- BSER measures at their disposal. See sections V.A and VIII.A. of the final rule preamble of the CPP for more information.

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

Commenters indicated that the EPA should learn from some states that are already reinventing their utility sector. Commenters said that at the forefront is the New York state effort called Reforming the Energy Vision (REV) creating regulatory changes that promote more efficient use of energy, increase renewable energy generation from wind and solar, wider deployment of DERs such as microgrids, on

- site power sources and storage. Commenters said that following close behind New York ar e other Northeastern states redoing their regulatory framework for electric utilities. Commenters indicated these state reforms may require greater flexibility and ability to quickly modify utility operations while the EPA rules might be less nimble and re ady for change. Commenters suggested that the federal government could learn a lesson from these eastern states that have been clear that the new energy system must unlock markets, spur innovation, modernize the grid, empower customers, and have forward lo oking and outcome based regulation and rate structures. Commenters said the critical bottom line is that the federal rules not be an impediment to electrical utility energy sector reform.

Commenters said the proposed rule must allow broad flexibility in co mpliance measures allowed to achieve goals as well as enable states and utilities to develop plans that best complement established regional energy market systems. Commenters said another flexibility that EPA should provide to affected sources is the abili ty to update state plans with changes with respect to the mix and amount of various compliance measures applied. Commenters said this will encourage technological innovation and creativity in pursuing solutions that likely would result in more cost effect ive and/or efficient carbon reductions.265 Comment 19: North Carolina illustrates how states could benefit from the flexibility proposed in the CPP

Response 19: The EPA agrees with the comments that the final rule provides flexibilities to states. States are allowed to use the BSER measures, or other measures in their state plans to comply with the goals ; t here are flexibilities within the BSER measures and how they are executed ; and s tates also have non

- BSER measures at their disposal. See sections V.A and V III.A. of the final rule preamble of the CPP for more information.

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

Commenters said North Carolina, home to the country's largest electric utility, illustrates how states could benefit from the flexibility proposed in the Clean Power Plan. The commenters said the plan would allow North Carolina to get credit for steps it already has taken to grow clean energy and invest in energy efficiency.

Commenters said North Carolina has an energy efficiency policy that allows utilities to earn a fair return when they make energy efficiency investments, rather than build new traditional power plants. The commenters said North Carolina also has a renewables portfoli o standard that requires investor

- owned utilities to increase their mix of clean energy and energy efficiency resources to 12.5 percent by 2021.

Commenters said the proposed rule will give states the flexibility to design a plan that takes into account i ts unique strengths and challenges, and describes the options available to North Carolina to illustrate. Commenters said for the state of North Carolina, the Congressional Research Service has calculated that an increased use of existing natural gas units, energy efficiency improvements and increases in renewable energy generation, respectively, will result in the greatest emission rate reductions. Commenters said while some commenters may argue that difficulties in achieving emissions reductions particular to one specific building block will render the proposed rule flawed, the ability for states to design plans based on any measure or combination of measures provides the flexibility for states and utilities to meet emission reduction goals in the most effi cient and cost

- effective manner.

Commenters said for example, any difficulty in achieving reductions through efficiency improvements at fossil fuel

- fired power plants can be mitigated by planning for and achieving greater reductions in the other building b locks or alternative programs. Commenters said efficiency improvements at fossil fuel

- fired units in North Carolina are estimated to result in a five percent emission rate reduction

- less than each of the remaining three building blocks. Commenters said u nder the proposed rule, North Carolina would have the flexibility to consider this and other information and shift the focus of its implementation plan to the three remaining building blocks. Commenters said North Carolina has great potential for gains in renewable energy generation and energy efficiency, and allowing the state to incorporate that potential into its implementation plan will provide the flexibility needed to readily achieve, and likely exceed, the state

- specific goal established in the propo sed rule.266 Comment 20: The EPA must clarify in the final rule that states can satisfy their respective carbon emission reduction or target standards by securing methane emission reductions from natural gas distribution facilities

Response 20: The EPA maint ains that the final rule provides ample flexibilities to states. States are allowed to use the BSER measures, or other measures in their state plans to comply with the goals ; t here are flexibilities within the BSER measures and how they are executed ; and s tates also have non

- BSER measures at their disposal. See sections V.A and VIII.A. of the final rule preamble of the CPP for more information.

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

Compliance measures can be outside BSER

. Commenters said the EPA has repeatedly stated in the context of the development and publication of the proposed CPP that states are not required to implement the four building blocks to satisfy the GHG performance goals. (See, e.g., 79 Fed. Reg. at 34835 (states may "choose to include measures (in their state plans) that were not part of the EPA's BSER determination, as long as the state achieves the CO2 reductions at affected EGUs necessary to meet the goal that EPA has defined as representing the B SER." (emphasis added))) Commenters said these statements properly distinguish between the factors considered by EPA in determining BSER for the source category and the alternative compliance methodologies available to the states in ensuring the applicatio n of BSER

- equivalent performance by the regulated sources.

Natural gas distribution system methane reductions to satisfy goals

. Commenters said Section 111(d) allows the flexibility afforded to states in developing compliance plans to include measures tha t satisfy the performance standards reflective of EPA's BSER determination, and this includes reducing methane emissions from natural gas distribution systems. Commenters said to the extent that a state can ensure that reductions in GHG emissions (in this case, methane) accomplished through an aggressive program to limit leaks from natural gas distribution for on

site energy generation can meet all regulatory standards for creditable emission reductions, state plans must include provisions which authorize a ffected EGU sources to secure GHG reductions through such efforts. Commenters said in such case, the affected EGUs would be obligated to ensure that methane emission reductions achieved in this manner, including by third party entities not subject to the E mission Guidelines, satisfy criteria for permanent, enforceable, surplus and quantifiable emission reductions.

Commenters said additionally, natural gas distribution facilities have a significant nexus to the regulated source category under this rulemaking

- EGUs

- as utilities in many states own or operate local distribution companies ("LDCs") and are, therefore, in a position to implement GHG emission reduction measures from such sources.

Emissions and emissions reductions from natural gas distribution sy stems

. Commenters said controlling methane emissions from the natural gas distribution sector could result in significant reductions in GHG emissions. Commenters said methane emissions associated with natural gas transportation and storage accounted for ab out 130 million metric tons of U.S. GHG emissions in 2012, or roughly 2% of all U.S. GHG emissions. (See EPA, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990

- 2012). Commenters said natural gas distribution systems alone were267 responsible for near ly 26 million metric tons of GHG emissions. (Id). Commenters said the number of customers using natural gas has grown steadily since 1990, with 600,000 miles of additional piping added since that time to accommodate increased demand. Commenters said methane emissions from natural gas distribution systems are likely to increase, as consumer demand for natural gas is expected to continue to rise as North American natural gas reserves are further developed. Commenters said further, the CPP itself w ill likely lead to greater demand for natural gas, thereby adding to the length of piping comprising the natural gas distribution system, and increasing the potential for methane emissions. Commenters said given the significant global warming properties of methane, the reduction in emissions from natural gas distribution systems may materially contribute to the reduction in GHG emissions sought through this rulemaking.

Commenters said PSEG's experience in reducing methane emissions from its LDC demonstrates the potential positive climate impacts of reducing GHG emissions from natural gas distribution systems. Commenters said PSEG has reduced its LDC methane emissions by 31% since 2000. Commenters said in 2013 alone, PSEG's efforts resulted in a reduction of roughly 14,294 tons of CO2e from the PSEG

- owned gas distribution pipeline network. Commenters said additional methane reduction opportunities exist within PSEG's distribution system, as methane emissions accounted for roughly five percent of PSEG's calcula ted 2013 GHG emissions.

EPA action required

. Commenters said for the foregoing reasons, EPA should clarify in the final rule that states may include in their compliance plans opportunities for affected EGUs to satisfy their respective carbon emission redu ction or target standards by securing methane emission reductions from natural gas distribution facilities, where such emission reductions can be demonstrated to be permanent, surplus, quantifiable and enforceable

Comment 21: The EPA must provide more gui dance to States on specific emission reduction options and various issues and flexibility

Response 21: The EPA maintains that the final rule provides ample flexibilities to states. States are allowed to use the BSER measures, or other measures in their sta te plans to comply with the goals ; t here are flexibilities within the BSER measures and how they are executed ; and s tates also have non

- BSER measures at their disposal. See sections V.A and VIII.A. of the final rule preamble of the CPP for more information

. The EPA will work with the States and provide as much guidance in the state plan development as necessary.

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

Several commenters requested additional guidance from the EPA rega rding specific emission reduction options and issues as well as flexibility.

Commenters indicated that some state policies to encourage advanced energy, such as RPS and energy efficiency resource standards, are familiar to many states, and the Proposed R ule provides a clear signal that they will be approved if incorporated into state compliance plans. Commenters said, however, that without additional guidance from EPA, states may be reluctant to adopt other creative, cost effective emission reduction poli cies that take full advantage of advanced energy technologies. Commenter s were concerned that without specific guidance as to how to268 incorporate these technologies, states may not do so. Commenter s also stressed it is important that the EPA provide guidance to ensure that regulatory uncertainty does not inhibit incorporation of combined heat and power into State plans.

Therefore, c ommenters indicated that to balance the need for flexibility with the benefits of certainty, EPA should provide as much specific guidance as possible on approvable measures and policies, while reiterating and making clear that additional measures and policies can be approved even if not specifically named in the Clean Power Plan. Commenters stated t his guidance should contain as many default approvable policies as possible and criteria on which additional state policies will be evaluated. In addition, c ommenters request ed additional EPA guidance on how states may account fo r the emission reduction benefits of advanced technologies.

Commenters also stated that the EPA should give some indication as to what would qualify as allowable compliance methods in addition to BB1 through BB4. Commenters suggested that as an example, transmission and distribution projects that reduce system losses should be allowed as an option for compliance, and the EPA should include this flexibility as part of the final rule.

Commenters stated that there are many read ily

- available clean energy technologies, resources, and practices that can be used by states to reduce GHG emissions. Commenters stated that the EPA should affirmatively indicate that technologies, resources, and practices that are not included in the Buil ding Blocks can be eligible as compliance options for states. Commenters said that this is essential to ensure that all viable clean energy technology options are considered.

Commenters supported the flexibility that would allow states to "include measures in their plans beyond those that the EPA included in its determination of the BSER", and indicated the final rule should retain this flexibility for states. Commenters indicated that many states are experiencing increased implementation of Distributed Ge neration ("DG") resources, particularly adoption of roof top solar installations in residential markets. Commenters stated that the EPA should explicitly recognize DG and other emerging technologies as eligible resources for demonstrating compliance with state plans and targets.

Commenters indicated that the EPA should clarify that states may choose to include new NGCC units in their 111(d) compliance plans. Commenters supported the EPA's indications that new NGCC units, constructed in compliance with Se ction 111(b), may also be included in states' Section 111(d) compliance plans. Commenters said that the EPA should confirm in the final rule that states have the flexibility to include new NGCC units in their compliance plans. Commenters said the EPA shoul d also clarify when, if ever, NGCC units built after the effective date of the 111(d) rule, but not immediately included in 111(d) compliance plans may be subject to that rule rather than 111(b) and how the emissions from those units will be treated within the state goals. Commenters said these clarifications are necessary in order for states to adequately develop Section 111(d) compliance plans.

Commenter s support ed the proposed rule's flexibility, but indicated that the extraordinary amount of deference p rovided to states under the proposed rule is likely to create uncertainty with state regulators. Commenters said that waste

- to

- energy (WTE) is a valuable renewable energy resource that may be used as a compliance tool, and that to provide clear guidance, the269 EPA should clarify that every megawatt hour generated by WTE facilities can be used toward reducing emissions from affected electric generating units in a state plan. Commenters said that by taking this step, the EPA will provide clarity that the treat ment of WTE in state plans can continue to reflect federal and state renewable programs and policies, while providing states with greater compliance flexibility and ensuring a robust mix of renewable energy technologies. Commenters added that because WTE p revents the generation of methane from waste otherwise destined for landfills, the co

- benefit of reducing methane is also captured. Commenters indicated that the EPA has previously concluded that every ton of waste managed at a WTE facility actually reduce s overall GHG emissions by one ton of carbon dioxide equivalents.

Commenters said the flexibility afforded to states must be better defin ed. Commenters said in order for the proposed rule to be fully evaluated, even the framework of flexibility afforded to the states must be defined. Commenters said leaving the SIP requirements open does help with flexibility, but also carries with it uncertainty. Commenters said that specificity in defining SIP "bookends" will not lessen flexibility, but will give more meaning to it, with a clearer understanding of expectations for SIP approval.

Comment 22: The EPA should specify minimum criteria or requirements for each policy approach (rate based vs. mass based, source

- based vs. state commitment approach, etc.) in o rder to ensure consistent enforceability. The EPA should provide one or even several model plans, or components of model plans that states could adopt

. Response 22: The final rule provides flexibilities to states to comply with the mass

- based or
rate

- based goals. The EPA will work with the states to provide any guidance necessary during the state plan development. The EPA has converted the rate

- based goals to mass

- based goals

. See section VII of the final rule p reamble of the CPP and the CO 2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule supporting the final CPP for the final mass

based goals

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

Flexibility can c ause difficulties with verifiability and enforceability

. Commenters applauded the flexibility that the proposed regulation gives states, and in particular expressed support for EPA's decision to allow states to convert from rate

- based targets to mass

- based targets. Commenters said however, the flexibility given to each state in developing its own plan does create some potential difficulties with respect to the verifiability and enforceability. Commenters said it will be difficult to ensure that conversions are done in a way that is accurate and is consistent from state to state, so the EPA's final rule must provide a clear discussion of how it will ensure consistency and enforceability in the instance of rate to mass conversions.

Rate

- based approach

. Commen ters said in states that choose to adopt a rate

- based approach, enforcement and verification can be done by ensuring that each power plant keeps its emissions below the target rate, or purchases the necessary credits, or holds sufficient emission allowance s if the state adopts a mass

- based system. Commenters said the final rule should include a robust discussion of how the states could implement these types of systems and ensure that, along with270 each source meeting its emissions targets, the state achieves the overall reductions required on the specified time

- frame.

Mass

- based approach

. Commenters said alternatively, states that take a mass

- based approach must incorporate into their plans an enforceable mechanism that applies to the regulated sources and ens ures that any shortfall in emissions reductions will ultimately be remedied, again within the specified time

- frame. Commenters said in both cases (rate

- based approach or mass

- based approach) the EPA should define minimum requirements that will ensure verif iable and enforceable emission reductions.

Model plans and minimum criteria or requirements

. Commenters urged the EPA to provide one or even several model plans, or components of model plans that states could adopt. Commenters said further, the EPA should specify minimum criteria or requirements for each policy approach (rate based vs. mass based, source

- based vs. state commitment approach, etc.) in order to ensure consistent enforceability. Commenters encouraged the EPA to emphasize model plans or model

co mponents of plans that most facilitate the use of renewable energy and energy efficiency measures to achieve reduction targets. Commenters said finally, the EPA should also provide a model plan or model plan components for states that wish to cooperate wit h other states or enter into multistate agreements in order to meet their targets.

Comment 23: The EPA should not write guidance which restricts flexibility, and should broaden its scope of sequestering carbon dioxi de

Response 23: The EPA maintains that t he final rule provides ample flexibilities to states. States are allowed to use the BSER measures, or other measures in their state plans to comply with the goals ; t here are flexibilities within the BSER measures and how they are executed ; and s tates also have non

- BSER measures at their disposal. See sections V.A and VIII.A. of the final rule preamble of the CPP for more information. See sections VIII for more information about the application of carbon capture and sequestration.

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

EPA should not write guidance which restricts flexibility

. Commenters said the EPA repeatedly states in the preamble that EPA will allow states to use different tools to demonstrate compliance

. Commenters said in some cases, EPA solicits comments on whether it should restrict that flexibility and write guidance that limits states. Commenters said for example, on page 34921, EPA solicits comments on whether EPA should allow a broad range of rene wable energy and demand

- side energy efficiency measures and programs in demonstrating compliance or write guidance to limit it to certain well

- established programs. Commenters said because South Dakota is already on a path of increasing renewable energy wi thout EPA mandates, we strongly suggest that EPA give states flexibility and not write guidance which restricts flexibility.

EPA should broaden scope of sequestering CO2

. Commenters said on page 34897 of the preamble, EPA requests comments on whether carbo n dioxide emission reductions associated with other measures not currently included in any of the four proposed building blocks be included in the state goals. Commenters said South Dakota recommends EPA broaden its scope271 of sequestering carbon dioxide. Co mmenters said for example, EPA should allow states to use distributed generation, which is power generated at the point of consumption and reduces power demand from electric utilities and cooperatives, and certain farming practices along with wetland, gras sland, and forest preservation practices in meeting the state's goal. Commenters said although the farming practices are not directly related to the production of electricity, these practices reduce carbon dioxide, which is the goal of EPA's proposal

Comm ent 24: Each state's goal reflects its unique conditions

Response 24: The EPA agrees with the comment that each state’s goal reflects its unique conditions and that the final rule provides flexibility to the states to comply with th e rule

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

Commenters said the proposed rule provides flexibility and the goals reflect the unique conditions of each state. Commenters said the proposed rule provides states the flexibility to conside r a broad range of compliance options that recognize that the power sector is made up of a diverse range of companies that own and operate fossil fuel

- fired EGUs, including vertically integrated companies in regulated markets, independent power producers, rural cooperatives and municipally

- owned utilities, all of which are likely to have different ranges of opportunities to reduce GHG emissions while facing different challenges in meeting these reductions. Commenters said in addition, in calculating each st ate's CO2 goal, EPA took into consideration the state's fuel mix, its electricity market and numerous other factors, and thus, each state's goal reflects its unique conditions. Commenters said each state will have the flexibility to design a program to mee t its emissions goal in a manner that reflects its particular circumstances and energy and environmental policy objectives. Commenters said States will be able to address the economic interests of their utilities and ratepayers by using the flexibilities i n this proposed rule to reduce costs to consumers, minimize stranded assets, and spur private investments in renewable energy and energy efficiency technologies and businesses.

Comment 25: Need guidance regarding how to deal with deregulated electric sect ors using a

mass

- based plan

Response 25: See s ection VIII of the final rule preamble of the CPP for a discussion of a state’s flexibility in submitting state plans and assigning emision rates or mass limits to sources.

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

Commenters said that the USEPA should be aware that in some states, like Michigan, there are elements of the electric industry that are unregulated and therefore a number of load

- serving entities (LSEs) or independent power producers (IPPs) do not fall under the jur isdiction of the Commission. Commenters said that the Commission cannot use its regulatory authority to bring the operations and cost recovery of these entities into alignment with a state plan that uses a

mass

- based approach. Commenters said that in fact, it is unclear how such entities could be272 included in a mass

- based state plan. Commenters indicated that the MDEQ can put some CO2 emissions stipulations into permits that would influence the LSEs' plant operations in a rate

based plan. Commenters said tha t the USEPA should provide guidance for states that have partially or fully deregulated electric sectors on how such states could comply with their Section 111(d) emission reduction obligations in a mass

- based plan. Commenters added that a similar situatio n occurs with municipal utilities, which run primarily coal

- fired plants. Commenters noted that the Commission has no regulatory authority over their operations or cost recovery; therefore, it is difficult to envision how such utilities could be included i n a mass

- based state plan.

Comment 26: Deregulated market concerns

- the EPA should work with states to encourage market reform as part of compliance with the CPP

Response 26: T his final rule is consistent with both regulated and de

- regulated markets. Ma rket structure is a choice for individual states made well outside the confines of this final rule.

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

Commenters said the proposed CPP would potentially reach the entire spectrum of energy policy. Commenters said before proceeding with a proposal that seeks to transform the electric generation system, EPA must more carefully and thoroughly evaluate its proposed CPP in light of the numerous, complex electricity market design consi derations that are implicated by the proposal.

Commenters said Dynegy, as an independent power producer, operates solely in the deregulated markets, with no captive customers or rate base from which to recover the costs of compliance with environmental or other requirements. Commenters said therefore, the markets in which Dynegy operates must be appropriately designed to provide a level playing field and prevent interference that undermines the markets.

Commenters said for example, Illinois is one of the few multi

- independent system operator ("ISO") states in the country (i.e., Illinois is served by both MISO and PJM), and no other state is split so dramatically on a geographic or generation basis. Commenters said without significant capacity market design changes in the MISO market regions (southern and central Illinois), it is unlikely that sufficient revenue will be generated for power plants to make the necessary investments in equipment upgrades that would help the state achieve its CO2 targets. Commen ters said the market disconnect between MISO and PJM in how the two RTOs compensate generators for capacity is substantial

- in the last PJM capacity auction, a 500 MW power plant in PJM would have received $22 million in capacity payments. Commenters said in contrast, under the last MISO capacity auction, a similarly

- situated plant in the MISO region of Illinois would have received only $3 million in capacity payments, or approximately 14% of what the similarly

- situated plant located in PJM received. Comme nters said this disconnect means that investment required for heat rate improvements and other carbon

- reduction approaches will not be economically justifiable in southern/central Illinois and, as a result, the only compliance option will be plant retireme nts. Commenters said therefore, EPA should work273 with the states, including Illinois, to encourage market reform as part of compliance with the CPP.

Commenters stated that to ensure fairness and accuracy, EPA should reconstruct BSER calculations based on t he differing market dynamics in each state. Commenters said setting an accurate state specific rate requires such attention to detail.

Commenters stated as a general comment, that FE believes that the rule is faulty in that while EPA relied on the fact the electric system is an inter

- connected system and thus requires an interdependent approach laid out in the proposal, EPA then developed specific BSER building blocks as independent silos without calculating their interconnectivity.

Comment 27: Rule should not limit diversity of technologies; misc.

Response 27: This final rule does not limit diversity of generation technologies. The final rule RIA suggest s the technology diversity in the generation portfolio will become more diverse in response to the policy. Moreover, states/sources have the flexibility to discuss a variety of abatement technologies to achieve emission reductions and demonstrate complianc e with the 111(d) requirements as discussed in section VIII of the final rule preamble of the CPP

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

Maintain diversity

. Commenters stated that the final rule should not place a limit on the diversity of technologies, as future advancements cannot be predicted, and should be applied to all sources of emissions in order to ensure that climate change goals are achieved in the most cost effective, timely and efficient manner for each state.

Commenters said the final rule should be constructed to give states sufficient flexibility to foster a diverse power supply, including continued use of coal

- fired power plants. The commenters said a diverse power supply can shield electricity consu mers from fuel disruptions and price spikes. Commenters said this can be achieved by permitting states to develop provisions that recognize the inherent differences between different kinds of electric generating units, including the difference between coal

- fired power plants and natural gas

- fired power plants.

Commenter s support ed the broad flexibility that EPA proposes to grant states to develop emission performance standards on either a rate basis or to convert that rate

- based goal to a

mass

- based equival ent.

Comment 28: Proposed regulation provides flexibility to the states

. Response 28: The EPA agrees with the commenters that the final rule provides flexibilit y to states. See sections V.A and VIII.A. of the final rule preamble of the CPP for more inform ation.

The following are summaries of the specific public comments under this comment:274 Several commenters stated that under the proposed rule states have substantial flexibility in developing their compliance plans.

Commenters state d that the EPA has taken a technology neutral stance to compliance, and that the flexibility of the rule allows states to choose among the full range of advanced energy technologies in order to meet their targets. Commenters commend ed the EPA for providing states broad flexibility in crafting compliance plans that work for their particular circumstances. Commenters said with a wide range of advanced energy technologies and services at their disposal, states can develop plans to meet EPA's carbon emission st andards that will be vehicles for creating a higher performing electric power system for all customers. Commenters said deploying advanced energy technologies and services will create jobs and stimulate economic growth from investments in modernizing the e lectric power system. Commenters said new consumer value will be created in a long

- stagnant electricity sector by introducing competition, choice, and innovation for new products and services, both known today and not yet imagined. Commenters said and beca use advanced energy technological development continues at a rapid pace, flexibility will allow states to utilize new technologies and mechanisms as they are developed over the course of the next 16 years. Commenters also commend ed EPA for allowing
a range of readily available market

- tested "beyond the fence line" measures for compliance.

Commenter s also support ed the flexibility the EPA proposes to provide states in crafting plans to achieve compliance with the targets, which they indicate is consistent wi th key principles of cooperative federalism and the successful history of the CAA. Commenters said the EPA correctly proposed state

- specific emission targets under CAA Section 111(d), while, at the same time, recognizing that states and regions with the ex perience and authority to regulate energy markets and implement clean energy and energy efficiency programs are in the best position to determine the most cost

- effective way to achieve the required emission reductions. Commenters said moreover, states and regions have the ability to coordinate across state agencies, work with independent system operators/regional transmission organizations (ISOs/RTOs), and solicit input from stakeholders.

Several commenters said the proposed regulation provides substantial flexibility to states to determine the most cost

- effective means to meet the applicable target based on the specific resources and opportunities in a state. Commenters said as long as a state can demonstrate that its compliance choices can achieve its app licable emission reduction level, the EPA appropriately proposes to recognize those measures as compliance options. Commenters urged the EPA to encourage market

- based programs such as the Regional Greenhouse Gas Initiative or the California Global Warming Solutions Act program. Commenters said the electric power sector is the most capital

- intensive industry in the U.S., and experience has shown that flexible, market

- based solutions have been highly effective and cost

- effective in transitioning to cleaner energy technologies.

Commenters said that in the proposed regulation the EPA appropriately defers to the states to design plans that meet the Agency's goals, and emphasized that only states truly understand their own energy systems, and said the EPA has ap propriately given states broad latitude to use all the tools available to them to reduce emissions.275 Commenters said the proposal gives states wide latitude to identify their overall compliance strategies in response to their local circumstances, and incent ivizes state participation in multi

state approaches by offering an additional year for compliance to states that elect to adopt a multi

- state approach. Commenters added affected power plants also have a decade to comply with the new standard.

Commenters s aid the rule permits each state to craft a compliance plan that is tailored to the specifics of its local and regional economy that will protect existing jobs while reducing emissions, and that can create opportunities to grow new jobs, encourage investmen t, and jump start new technologies. The commenters also said the proposed rule allows a state with multiple coal plants to encourage improvements in both supply and demand. The commenters said technological changes can increase the supply of power produce d by each ton of coal, and boosting end use energy efficient tools will reduce demand for electricity during peak hours.

Commenters said the CPP offer a common sense, flexible, and achievable way to protect the health of our communities and address the imp act of climate on our world. The commenters also said there is evidence showing that it's a good investment, and the CPP allows state to design plans that best fit our regional economies, and mixes of energy sources.

Commenters discussed the flexibility the proposed regulation offers states regarding Building Block 1. Commenters indicated that the proposal doesn't mandate that every state or every coal

fired EGU engage the 6 percent HRI as a compliance strategy and rather allow s the states to forgo this building block altogether. Commenters indicate d that because the Clean Power Plan allows a state to demonstrate compliance through any number of pathways, which may not even include and HRI investment strategy, the 6 percent HRI assumption should be retained in the final Clean Power Plan.

Comment 29: Flexibility of regulation allows states to choose most economical approach, and such flexibility encourages innovation and makes industry more competitive

. Response 29: The EPA appr eciates the supportive comments and agrees that the final rule provides flexibility to states and affected EGUs

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

Commenters said the Clean Power Plan is flexible, giving states many opportunities to meet their goals. The commenters said each state gets a target based on its existing resources and progress to date, but can comply by selecting from many of various different opt ions. The commenters said this flexibility lets each state choose the most economical approach for its electricity customers considering available resources, economic potential, and more human impacts such as jobs, environmental justice, and the enormous public health benefits of reducing carbon and other air pollutants.

Commenters said although they trust in the power of technology, they have learned that it is actually policy and regulations that drive innovation. The commenters said studies have found that flexible standards like the Clean Power Plan will drive busines ses to be more competitive276 globally and at home. The commenters said the Industry Studies Association found that strict car pollution standards for carbon monoxide and hydrocarbons in the 70s incentivized US auto makers to innovate, making them more competitive than many overseas manufacturers.

Commenters said giving states flexibility allows them to determine how best to reduce emissions in ways that are tailored to the interests of the l ocal regional economies to protect existing jobs while reducing emissions to create opportunities to grow good new jobs, to encourage investment, and to catalyze innovation.

Commenters urged EPA to maintain the flexibility for states to achieve the require d emission reductions in the most economic means possible. Commenters said this flexibility will unleash innovation through technological advancement and smart policies.

Comment 30: Plan does provide flexibility, but flexibility can be abused and can be a disincentive for real action

Response 30: The EPA believes that providing flexibility to states/source provides significant benefit in terms of least cost reductions. Section VIII of the final rule preamble of the CPP outlines a robust set of standards for state plans and how they must demonstrate compliance with the rule’s BSER while utilizing alternative compliance measures and the flexibility afforded them.

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

Commenters stre ssed that although some degree of flexibility in the rule is good, flexibility should not override strong incentives for states to step up their game. Commenter s worried that the CPP may give states too much flexibility.

Commenter s expressed concern that the flexibility built into the rule may create problems. The
commenters said if the individual jurisdictions are going to have the authority and the responsibility for achieving the goals there's going to have to be an enforcement mechanism with teeth be cause we can expect some of the jurisdictions to be less than enthusiastic about pursuing this goal.

Commenters said the CPP gives states the flexibility to craft the best solution for their particular situation, which is often better than a one

- size

- fits

- all federal directive, but cautioned that with flexibility comes the need for fair standards and careful oversight. The commenters said that it is an unfortunate reality that the weaker the oversight, the more politicized the decision

- making is likely to be. The commenters said since no state wants to be subject to a federal implementation plan, the fact that the EPA is committed to implementing such a plan if states are unable to is one of the best ways to ensure meaningful state action.

Commenters said state flexibility is good, but cautioned that the EPA oversight is needed to keep
states on tract. The commenters said OH recently scaled back its alternative energy standards and strengthened wind power siting requirements, and as a result two larg e wind energy277 producers scaled back plans for development in Ohio. The commenters said they fear if the states are left without standards or oversight, clean energy production is doomed.

Commenters supported the proposed regulation but expressed concern t hat the states are being given way too much flexibility, and cannot be trusted to enforce the regulation, and offered Pennsylvania as a case in point. Commenters said Pennsylvania Department of Environmental Resources has given the state over to the natur al gas industry for the development of fracking, and is not protecting their environment. Commenters said Pennsylvania has seen reductions in carbon emissions over the past several years as a result of significant development of the state's shale gas resou rces. Commenters said recent experience indicates that Pennsylvania will need close oversight to ensure a good job is done developing and enforcing a compliance plan.

Commenters said Kentucky's Assistant Secretary for Climate Policy, John Lyons, recently s tated that the average carbon emissions of Kentucky's fleet of coal fired power plants should meet the new standard by 2020

- because 11 coal boilers are already scheduled to be shut down because of EPA's air quality regulations. Commenters said so, in oth er words, Kentucky can meet the Clean Power Plan standards simply by continuing their present course, with little incentives for additional innovation.

Commenters said while the EPA standards call for 30 percent reduction in the nation's carbon emissions, Kentucky's specific goal is only 18.3 percent. Commenters said they are already at the bottom, and our regulators don't want to do more

- the flexibility is a disincentive for real action.

Commenters said Kentucky's progress to date allows it to remain a t the very bottom of every indicator, from efficiency to clean power to protection of human health. Commenters said the Clean Power Plan continues the subsidization of obsolete coal fired and nuclear power, making it more difficult to move our state forwar d and to cleaner resources.

Commenters said that the state

- specific plans may be too flexible. Commenters said BSER is an ambiguous term with no precedent on how to interpret this provision. Commenters said the ultimate interpretation is problematic bec ause it is sufficiently broad to include actions and restrictions that go beyond the fence line of existing power plants. Commenters said as such, states can include provisions in their plans to reduce carbon dioxide emissions from existing power plants, e nergy consumers, and other potential sources of carbon dioxide emissions such as combustion units at metalcasting facilities.

Comment 31: The EPA should establish an emissions trading bank

Response 31: S tates have the flexibility to coordinate establish interstate systems if they so choose as discussed in section VIII of the final rule preamble of the CPP.

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

Several commenters support ed the use of emissions trading to reach targ ets.278 Commenters said that Massachusetts intends to rely primarily on the most well

- tested and economically efficient strategy for reducing power plant emissions

- the RGGI allowance trading
program. Commenters highly recommended a similar approach in other states. Commenters said that in fact, they recommend that EPA explore the possibility of hosting or funding a third

- party emissions trading bank that can allow interested states to "plug

- and

- play" in to a wider, more
cost

- effective market. Commenters said however, we also applaud EPA's recognition of other strategies that more directly target energy efficiency and clean energy, and urge EPA to ensure that the final CPP allow states to take full advantage of these strategies. Commenters said that while accommodating a variety of flexible approaches, we urge EPA to ensure consistency between target setting and compliance formulas and measures throughout the rule to maintain the stringency of the rule as a whole.

Commenters encouraged the EPA to establish a bank for RE to recognize early action and to ease planning in later years. Commenters said that leading RE states have received more stringent, more expensive state emissions mandates under the Proposed Rule, and that the proposed structure tends to pu nish states that have passed renewable standards, built RE, and used NGCC plants to integrate RE. To fix this problem, c ommenters proposed that the EPA incorporate a banking concept to credit early and ongoing RE development.

Commenters stated that the design set forth in these comments is only one among several possible designs for RE banking. Commenters indicated that under their concept, the EPA would first set a floor for banking eligibility of 1.5 times the national average renewabl e generation in 2012. Commenters said that the national average in 2012 was 5.6%, so this floor would be 8.4%, and that only states that had renewable generation above that level would qualify for banking. Commenters said these states would be allowed to b ank all renewable generation that is above the 2012 leadership floor percentage for the years of 2017

- 2019.

Commenters said that States would be able to realize the value of the bank in later years of the
program. Commenters proposed that, working in conju nction with the state

- determined interim target period concept discussed elsewhere in their comments, states would have the option to "spend" their bank in the form of adding the banked renewable MWh into the denominator of their final targets from 2030

- 20 34. Commenters said that after the bank is depleted, or by 2035, states would then be required to achieve the final target established in the Clean Power Plan. Commenters said that banking rewards renewable leadership by deferring investments in the last i ncrement of emissions reductions necessary to meet the final goal, but states would ultimately still be required to meet the same final goal. ( Commenters said, however, if the EPA does not allow states to propose their own glide path to the 2030 target, ba nking becomes still more important as a means to alleviate some of the cost and other impacts of the interim targets.)

Commenters said the renewable banking concept offers many benefits. Commenters said first, it would restore the message to states that ea rly action on renewables will not be ignored

- in fact, it would do so in a way that explicitly recognizes that the early reductions made by RE long before 2020 have real value under the program. Commenters said that second, it would more fairly treat the utility customers who have funded proactive RE development. Commenters said third, the banking concept would create a new incentive for implementation of new renewables prior to 2020, which may be critical for ongoing renewable development, especially if t he current set of federal tax subsidies for solar and wind is not renewed. Commenters said that banking279 accomplishes these objectives while maintaining the same total carbon loading to the atmosphere as required under the proposed rule; it provides relief only to the extent that equivalent reductions occurred prior to the commencement of the program. Commenters said that it recognizes early reduction actions taken long before the proposed rule would become binding. Commenters stated that the general concept of early reduction banking, and renewable banking in particular, enjoys the support of a broad set of stakeholders across the utility industry, environmental advocates, and renewable trade groups, and is raised by the EPA as an alternative in the proposed rule (79 Fed. Reg. at 34918

- 19).

Comment 32: Crediting early action

Response 32: 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:
Credit if go beyond target

. Commenters indicated that under the Clean Power Plan, states and companies that have already transitioned towards lower carbon and zero carbon energy and energy efficiency are closer to the full deployment of the BSER than others

- and 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. Commenters noted that in addition, the standard only applies to fossil generators, so those states with less fossil generation in their system mix will bear less cost.

Emission reductions in 2012

- 2020 timeframe . Several commenters said that the years between 2012 an d 2020 present a distinct challenge. These commenters said that the EPA uses 2012 data on power sector infrastructure in assessing the potential for emission reductions to be secured under the best system of emission reduction during the 2020

- 2029 complia nce period. These commenters suggested that crediting emission reductions secured between 2012 and 2020 would encourage states and companies to act earlier, moving emission reductions forward in time. These commenters noted that the potential to reduce c arbon pollution during 2012 to 2020 was not taken into account in setting the state targets. These commenters said that as such, giving compliance credit to those actions taken during this time that would have happened regardless of the Clean Power Plan

- take, for example, renewable energy deployed by a renewable energy standard in a state strongly committed to clean energy

- creates a bank of compliance credits that will be used by that state during the compliance period in the place of other, beyond busi ness

- as

usual emission reducing actions, and the overall emission reductions achieved by the Clean Power Plan will be reduced by the same amount.

Several commenters suggested that states and companies can take advantage of the 5 years between the finalizat ion of the standards and the beginning of the compliance period to gradually build out renewable generation and build up energy efficiency programs so that these resources are ready to deliver carbon reductions.

Crediting. Commenters said that i f the EPA d oes decide to provide early action credit, we urge the Agency to ensure that such crediting does not erode the environmental integrity of the Clean280 Power Plan by crediting business

- as

- usual actions. Commenters further said , crediting for early action shoul d take place in the context of strengthened state targets that better reflect the full potential for emission reductions under the best system of emission reduction, as discussed above with respect to each of the building blocks and the formula change.

Com menters said that it is naturally difficult to determine what electricity generation is avoided as a result of early actions that commence before the start of the interim compliance period. Therefore, Commenters recommended that the EPA credit such actions in a manner that does not

over

- reward such actions and undermine the benefits of the Clean Power Plan. Commenters suggested that one possible approach that the EPA may wish to consider is comparing early action in states employing rate or mass based progr ams against the emissions standard for new natural gas plants under section 111(b), or the state's GHG emissions rate for the interim control period, whichever is lower. Commenters said that another possible approach that could be used in conjunction with or in place of the first approach would be to credit states adopting mass

based programs based on how much they reduce emissions below their approved cap for the interim compliance period.

Comment 33: Flexibility to use measures not defined within the BS ER building blocks is critical; use of existing programs and measures should be available to count towards compliance; rule should explicitly acknowledge application of reductions from existing state plans beginning in 2013 to ensure early action is not pe nalized

. Response 33: See sections VI and VIII.B of the final rule preamble of the CPP for the EPA’s response to this comment.

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

Commenters said as proposed, the regulation allow s states to include measures in the State Plans beyond those the EPA included in its determination of the BSER, and maintains that this flexibility is critical. Commenters said in the proposed rule, states may identify technologies or strategies that are not explicitly mentioned in any of the four building blocks and may use those technologies or strategies as part of their overall plans (e.g., market

- based trading programs or construction of new natural combined cycle units or nuclear plants)." (79 Fed. R eg. at 34,837) Commenters said this acknowledgement of measures not defined within the BSER building blocks is critical to maximizing the flexibility of states to achieve their reduction targets. C ommenters also agreed that use of existing programs and mea sures should be available to reduce CO2 emissions from EGUs and help states meet their state targets. Commenters said the Proposed Rule should explicitly acknowledge the application of reductions from existing state plans beginning in 2013, because this wo uld ensure that states already employing GHG reduction strategies are not penalized by their early actions.

Commenters said the EPA proposes that states may submit compliance plans that include measures not specifically identified in EPA's BSER determinati on, and maintained that the use of non

- BSER compliance options is an important flexibility mechanism that allows states to design compliance plans that reflect the reduction opportunities available in a state.281 Commenters said the CPP should allow states to comply with the proposed Section 111(d) guidelines by continuing to participate in RGGI.

Commenters said while in the proposed Guidelines EPA explicitly listed CHP and cogeneration approaches as examples of non

- BSER measures that could be included as compliance alternatives in a state plan, states should not be limited to those non

- BSER measures explici tly spelled out in EPA's proposal. Commenters said other GHG reduction strategies could include

• Methane leak reduction programs currently being undertaken by local distribution companies,

• Programs incentivizing the direct use of natural gas in home heati ng;

• Programs incentivizing the capture of fugitive methane from municipal waste landfills and in bio

- gas digesters at agricultural facilities;

• Improved utility infrastructure (reduces line losses and thus improves efficiency of the utility transmission and distribution systems);

• Commenters said Indiana is a heavy manufacturing state, and such states should be allowed to:

• Count savings from EE and DSM programs at manufacturing facilities,

• Count savings from the conversion of coal

- fired industrial boilers to combined heat and power (CHP) systems at industrial facilities

• Count the energy efficiency savings of the large customers that may have already opted out of EE programs per the SEA 340 opt

- o ut provision.

Commenters stated the final guidelines should allow states to include non

- BSER measures

- both those identified by EPA in the proposal and those not specifically included

- in state compliance plans submitted under the final guidelines for ap proval.

Comment 34: States need maximum flexibility to use existing state

- initiated programs to meet goals, and states need broad compliance flexibility in part because significant changes to other sectors of the economy could affect the emission rate of the electric sector

. Response 34: As discussed in sections VI, VII, and VIII, of the final rule preamble of the CPP the EPA is finalizing a rule that continues the state flexibility from proposal and builds onto that by more clearly establishing alternativ e compliance metrics.

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

Use existing programs for compliance with CPP

. Commenters strongly supported the EPA's proposal to provide states with substantial flexibility in how they achieve the Clean Power Plan's282 emission targets because states are in the best position to balance the numerous competing legal, environmental, economic, geographic, and equity issues that will arise as they attempt to reduce CO 2 emissions from their exis ting fossil fuel

- fired generation fleet. Commenters said further, many states have already begun to implement multi

- year programs to reduce CO2 emissions from existing power plants and other sources. California's Cap

- and

- Trade, Emission Performance Standar d (EPS), Energy Efficiency Resource Standard (EERS)

, and Renewable Portfolio Standard (RPS) programs are just four examples of the kinds of multiyear policies that California is implementing to reduce its GHG emissions. Commenters agreed with the EPA that the Proposed Rule should provide California and other states with maximum flexibility to use such existing state

- initiated programs to meet the federal guidelines and support federal goals.

Changes to economy affect electric sector emissions

. Commenters said another reason for providing states with broad compliance flexibility is that many states could experience significant changes to other sectors of their economies that could affect the emission rate of their electric sector. Commenters said for examp le, California already provides numerous incentives to encourage deployment of electric vehicles and public transportation. Commenters said in addition, the Port of Los Angeles has been pursuing a number of strategies to reduce GHG emissions from port tra ffic and operations. Commenters said one of these strategies involves installing "alternative maritime power" (AMP) facilities to allow docked vessels to reduce their emissions by relying on the electric grid for power while in port. Commenters said as wit h vehicle electrification initiatives, the Port's AMP initiative could increase demand and emissions from the electric power sector even as it greatly reduces overall GHG emissions from the Port. Commenters said both state and local governmental entities a re currently contemplating additional initiatives to increase the electrification of the transportation and other sectors as a means of reducing emissions of both conventional and GHG pollutants.

Commenters said these changes, many of which are already in progress, could potentially increase demand for electricity from fossil

- fueled power plants even as they reduce the overall level of emissions across all sectors in the state. Commenters said implementation of these initiatives will also require careful co ordination between the state and local entities to ensure continued emission reductions while maintaining a reliable, cost

- effective supply of electricity. Commenters said consequently, substantial flexibility is essential for allowing states to achieve th eir federal emission targets in the most cost

- effective and efficient manner possible, in light of both existing state programs and future state goals.

Other points

. Commenters expressed support for several additional policies including:

In general, the EP A should allow states to meet their emission targets in any way they choose, so long as the states can demonstrate that their policies and programs can meet the targets.

SCPPA strongly supports the EPA's proposal to allow states to demonstrate compliance by meeting a mass

- based target in lieu of a rate

- based target (although they have concerns with the EPA's proposed approach to quantifying the mass

- based goal).283 SCPPA also supports the EPA's proposal that states could adopt a "portfolio" or "state commitm ent" approach that would assign responsibility for attaining emission reductions to entities other than affected EGUs.

Comment 35: Rule must give states the flexibility to design their state programs in a manner that best allows the states to address the s ocioeconomic and other impacts that the rule will have on some sectors of state economies, especially those in coal producing states

. Response 35: The EPA maintains that the final rule provides ample flexibilities to states. States are allowed to use the B SER measures, or other measures in their state plans to comply with the goals ; t here are flexibilities within the BSER measures and how they are executed ; and s tates also have non

- BSER measures at their disposal. See sections V.A and VIII.A. of the final r ule preamble of the CPP for more information.

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

Commenters said although the Clean Power Plan is an essential step forward for the U.S. in the fight against climate change, the proposed rule has the potential to have significant and disproportionate negative impacts on some parts of the country

- particularly coal producing states, such as West Virginia. Commenters said therefore, it is essential that EPA's final rule provide sta tes the flexibility to design their state programs in a manner that best allows the states to address the socioeconomic and other impacts that the rule will have on some sectors of state economies.

Commenters said as EPA moves toward finalizing the Clean Power Plan rule, EPA should consider the broader socio

- economic challenges that West Virginia and other coal producing states face with respect to compliance with this rule, in addition to the economic development challenges associated with declining deman d for coal. Commenters said while EPA is limited in its ability to address many of these issues directly, it should retain those provisions of the proposed rule that allow flexibility for states to achieve emission reductions across the electric power syst em

- both inside and outside the fence

- line measures

- through the use of market based mechanisms and multi

- state and regional compliance pathways.

Commenters said such flexibility will give states the best opportunity to reduce compliance costs and enhanc e their ability to support the sectors of their economies that are positively affected by the rule, and mitigate impacts in those sectors that are negatively affected.

Comment 36: Rule should allow alternative compliance payment if state is unable to meet interim and/or final goal

Response 36: The EPA believes that states have a variety of flexibilities, including the trading/purchasing of credits that will enable them to comply with the BSER requirements.

The following are summaries of the specific public comments under this comment:284 Commenters suggested that the USEPA should consider allowing an "alternative compliance payment" if a state will be unable to meet its interim and final goals. Commenters said that this payment could be made if a state adequat ely demonstrates that meeting the final goal is technically infeasible, given the circumstances and characteristics of the state's electric industry. Commenters said the USEPA could use these payments to fund clean energy projects throughout the country to offset the retained emissions in the states making the alternative compliance payments.

Comment 37: On a case

- by

- case basis, the rule should allow states to apply less stringent emissions standards or longer compliance schedules than those otherwise requ ired

Response 37: While this rule does provide flexibility on demonstrating compliance over a period of time, meaning annual rates and emission levels may vary, compliance levels still must be demonstrated over the course of the period. States have the flexibility to assig n rates and reduction incentives to affected sources, but at the aggregate level would still need to demonstrate compliance with BSER.

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

Several commenters said that EPA shoul d provide an exemption or allow for a deviation from the goals in select instances.

Commenters stated that a Force Majeure

- type provision that allows states to deviate from the goals in unforeseen circumstances is necessary. Commenters said there are numer ous circumstances over which states have no control that must be factored into the ability to meet the proposed goals of the Clean Power Plan. Commenters said that for example, the Western States are experiencing severe drought conditions, and dropping wa ter levels may result in a significant decrease of available hydropower, and states like Nevada would have to make up the difference by relying on existing fossil

- fuel fired facilities. Commenters said that other examples of force majeure events include, b ut are not limited to conflicting orders from the United States Department of Energy or the FERC requiring continued EGU operations to ensure reliability, and overarching requirements of U.S. military bases within state boundaries as to the parameters of n earby RE projects. Commenters said that these issues may interfere with Nevada's ability to timely meet the goals, and said that the EPA should include an exemption or allow for a deviation from the goals to mitigate states' risk for failure to comply in s uch circumstances.

Several commenters said the EPA must also maintain a state's authority to "on a case

- by

- case basis for particular designated facilities or classes of facilities . . . provide for the application of less stringent emissions standards or l onger compliance schedules than those otherwise required . . . provided that the State demonstrates with respect to each such facility (or class of facilities):

• Unreasonable cost of control resulting from plant age, location, or basic process design;

• Physi cal impossibility of installing necessary control equipment; or285 • 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."

Comment 38: The EPA must allow revisions to emission target after rule is finalized. Existence of flexibility depends on specific circumstances; Alaska's circumstances restrict compliance options. Alternative mass

- based em ission target should be allowed

Response 38: The EPA is not including emission performance goals for Alaska in this final rule. See section VII of the preamble for discussion of this issue.

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

Proposed rule prohibits changes after finalization

. Commenters said that it is essential that the final rule allow flexibility in the assigned target emission rate. Commenters said currently, EPA proposes that "once the final goals have been promulgated, a state would no longer have an opportu nity to request that the EPA adjust its CO 2 goal." Commenters said the EPA also proposes to remove flexibility that is generally permitted in implementing EPA regulations to deviate from a standard of performance based on facility specific considerations. Commenters said this proposal takes the rule in the wrong direction. Commenters said in Alaska, there are a limited number of affected EGUs, a limited transmission system, and a small ratepayer base. Commenters indicated said we have serious reservations a bout our ability to implement this rule in the first instance. Commenters said further, EPA has not evaluated the feasibility of impact of the rule here and the data provided by EPA contained errors and imprecise data. Commenters stressed that if Alaska is not exempted, there must be a mechanism to re

- evaluate the target rate after the rule is finalized.

Flexibility depends on specific circumstances

. Commenters said the existence of flexibility depends on specific circumstances; Alaska's circumstances restr ict compliance options. Commenters said the flexibility available to Alaska is limited by:

• The number of EGUs at issue,

• The role of those EGUs in the generation mix,

• The number of ratepayers to bear compliance costs,

• Transmission constraints,

• Climate and geography, as well as

• Other factors.

Commenters said their review of available data during the comment period suggests that achieving the mandated emission rate will require retiring one of the Healy coal units

- in fact, EPA's goal calculation presumed that neither of the Healy units would operate. Commenters sa id286 given the importance of maintaining reliability of electric service for the Fairbanks load center, EPA should not promulgate a rule that would require such a result.

Mass

- based emission target

. Commenters supported EPA's proposal to allow an alternative

mass

- based emission target. Commenters said this provision introduces a degree of flexibility that may avoid penalizing states for reducing total CO 2 emissions from affected EGUs when the same event increases the per megawatt hour emission rate because of a shift in the proportion of fuel sources.

Comment 39: Regulation should allow for phased implementation

Response 39: The EPA describes the flexibilities available to states in Section VIII of the final rule preamble of the CPP.

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

Commenters said that the EPA needs to provide policy flexibility to state regulators as they develop their state plans under 111(d), and in particular, the EPA should allow and encourage state p lans to provide for phased implementation, with a Phase I policy, Phase II policy, etc. as needed.

Commenters indicated that a true emission reduction glide path would allow state regulators to adopt a relatively simple and bulk electric system (BES )

- co mpatible set of policies to achieve the relatively minor emission reductions and "low hanging fruit" in the early years of the next decade, and to subsequently develop a more comprehensive and integrated set of polices to achieve the deeper emission reduct ions in the latter part of the decade. Commenters said that this more comprehensive, subsequent set of policies can better be identified and realized in the early part of the next decade than it can today, because there will be far more insight into the

co mmercial viability, cost and system implications of emerging clean energy technologies, and more ability to integrate the state policy with the more complex system of federal, regional and other stakeholder policies and practices described above.

Commente rs said that for example, Phase I could consist of what the EPA terms a "portfolio approach" to incent the deployment and integration of clean energy resources in both the grid and the distributed energy markets, coupled perhaps with a moderate mass

- based budget and a generation

- and consumer

- friendly allowance allocation framework to minimize stranded costs. Commenters said this would allow states to achieve the moderate emission reductions under the front end of their glide paths, with lower impact to th e BSE, while also supporting the initial integration of cleaner resources.

Commenters said that Phase II could consist of a more stringent budget, rate and "portfolio" objectives designed to propel the evolving system to achieve the 2030 goals and continu e to achieve greater emission reductions after 2030. Commenters argued that Phase II, however, would be best designed after 2020, based on the greater information about the economics of remaining coal plants, the cost, performance and availability of low c arbon solutions, and their integration with the BES.287 Commenters stated that this approach would also have great practical value in a number of states, which would require legislative approval or modification of existing statutes even to implement the BSER elements EPA bases its emission targets on. Commenters said that it would be far easier to achieve such approval for a simple Phase I plan to meet modest emission reductions in 2020 through 2025, than for the potentially drastic plans needed to achieve th e EPA's current 2020 emission reduction requirements

- much less to deal with the need to protect reliability, prevent market distortions, and keep prices reasonable for consumers during such a dramatic sudden reduction in emissions.

Comment 40: The EPA m ust allow states to consider the remaining useful life of existing affected EGU when developing 111(d) plans

. Response 40: See section V I II 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 said that states must be able to consider the remaining useful life of an affected existing EGU when developing 111(d) plans. Commenters said on page 34926 of the preamble, EPA solicits comments on i ts position that states may not include the remaining useful life of affected electric generating units, and other facility

- specific factors identified in the existing implementing regulations, as a basis for adjusting a state emission performance goal or for relieving a state of its obligation to develop and submit an approvable plan that achieves the goal on time. Commenters said Section 111(d ) ( 1 ) ( B) of the Clean Air Act explicitly states, "Regulations of the Administrator under this paragraph shall per mit 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 .” Com menters said therefore, EPA has no choice but to give the states flexibility in considering the remaining useful life of the existing affected electric generating unit when developing 111(d) plans.

Comment 41: The EPA must recognize the substantial variab ility in hydro generation when assessing compliance to avoid penalizing states for spikes in fossil

- fuel generation caused by unfavorable hydro conditions, either through compliance exemption for use of normalization or some other adjustment method during demonstrated periods of low hydro generation

. Response 41: See section V I II 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 said the EP A must recognize the substantial variability in hydro generation when assessing compliance to avoid penalizing states for spikes in fossil

- fuel generation caused by unfavorable hydro conditions. Commenters said the EPA's proposed use of a rolling three

- yea r288 average to measure compliance with performance goals is not adequate to account for the effects of variability in hydro generation.

Commenters provided a figure (Figure 1), which depicts Idaho Power's total system hydro generation from 1975 through 201 3. Commenters said the rolling averages plotted in Figure 1 further show that using a five

- year, or even a ten

- year, rolling average is not sufficient to even out the effects of the historic hydro variability. Commenters said use of at least a fifteen

- year rolling average would be necessary to even out the effects of hydro variability in measuring compliance with performance goals.

Commenters said the EPA must allow states flexibility to account for this inevitable hydro generation variability in demonstrating compliance with interim and final performance goals, either through a compliance exception or use of normalization or some other adjustment method during demonstrated periods of unfavorable water conditions and low hydro generation. Commenters said in the absence of meaningful adjustments, hydro

- dependent states, and particularly Idaho given its extremely low state performance goal, simply will not be able to demonstrate compliance during such periods.

Comment 42: T he EPA has no authority to dictate arbitrary "interim" goals. Plans should avoid forced early retirement

. Response 42: The EPA has modified the interim goals in response to comments and our further consideration. The interim period covers the years 2022

- 2 029 and includes illustrative interim emission values for the periods of 2022

- 2024, 2025

- 2027, and 2028

- 2029. States have the flexibility to use different steps than those included in the final rule if the state demonstrates in its state plan that the valu es chosen for the 3, 3, and 2 year increments are equivalent to the interim goal included in the final rule for the 2022

- 2029 period. See section VII of the final rule preamble for discussion of the statewide goals. Please see section IV of the final rule preamble for discussion of the EPA’s authority.

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

Commenters stated that the EPA has no authority to dictate arbitrary "interim goals. Commenters suggested that because future emission reductions will occur through the natural aging of the existing fleet, plans could be established based on the remaining useful life of existing units consistent with the express language of section 111(d). Commenters indicated that the EPA should allow states to examine the emission reductions that will occur within the existing fleet as units near and reach the ends of their useful lives, and establish a glide path to lower total mass emissions from the existing fossil fleet. Commenters said the EPA should allow states to calculate the "degree of emission reduction" achieved through such a procedure, and to develop the path for reductions that is consistent with the energy and economic needs of the
states.

Commenters stressed the need for reasona ble decommission schedules to avoid excessive rate increases. Commenters said that to reach its emission goals the Clean Power Plan must be viewed as cost effective by the public, and the best way to accomplish this is to establish realistic289 goals and allo w the states to craft credible and cost

- effective plans, which include reasonable decommission schedules for existing units in a manner that avoids rate shock. Commenters said that the final rule should provide states the flexibility contemplated by the la nguage and legislative intent of Section 111(d).

Comment 43: The proposed regulation would result in nonsensical consequences, such as a newer, cleaner coal

- fired plant being forced to retire in one state, while an older, dirtier coal

- fired plant in a neighboring state remains operating

. Response 43: The EPA maintains that the final rule provides ample flexibilities to states. States are allowed to use the BSER measures, or other measures in their state plans to comply with the goals ; t here are flexibil ities within the BSER measures and how they are executed ; and s tates also have non

- BSER measures at their disposal. See sections V.A and VIII.A. of the final rule preamble of the CPP for more information.

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

Commenters said as the Supreme Court recently reminded EPA, nothing in the CAA authorizes the Agency to regulate GHGs "in any way that would be 'extreme,' 'counterintuitive,' or contrary to 'common sense.'" Commenters said yet even a cursory examination of the Proposal reveals that it is rife with extreme, counterintuitive, and nonsensical consequences.

Commenters said perhaps the most bizarre consequence is the arbitrary way that statewide re

dispatch under Building Block 2 af fects different EGUs based on the state in which they are located. Commenters said as an example, imagine that two states

- State A and State B

- have equal amounts of generation from existing coal

- fired EGUs, but State A's coal

- fired units are
newer, more efficient, and operate state

- of

- art environmental controls, while State B's coal

- fired units are older, degraded, and operate older environmental controls. Commenters said if State A happens to contain more unused NGCC generating capacity than State B, th en under Building Block 2, State A will be forced to curtail its coal

- fired generation more severely than State B

- even though its EGUs are newer and emit air pollutants at a lower rate. Commenters said indeed, if the unused NGCC capacity in State A is gr eat enough, Building Block 2 may eliminate its coal

- fired generation entirely, while the older coal

- fired EGUs in State B continue to operate.

Commenters said this is precisely the scenario that would take place in Arizona under EPA's Proposal with respect to the Springerville Generating Station, which is owned in part by Tri

State. Commenters said the 418 MW Unit 3 at Springerville, which achieved commercial operation in the summer of 2006, is Tri

- State's newest and most efficient coal

- fired unit and has

s tate

- of

- the

- art controls, and represents a significant investment by Tri

- State, both in the generating facility itself and in the long

- term transmission, water, and land rights necessary to operate the facility.

Commenters said yet under the Proposal, EPA' s "best system of emission reduction" for EGUs located in Arizona involves eliminating all generation from coal

- fired EGUs

- including all 4 units of the Springerville facility. Although EPA claims that the proposed emission guidelines provide states with "flexibility" to adopt plans that do not strictly follow the Building Blocks, the290 State of Arizona has performed its own analysis and determined that the proposed state goal for Arizona is so stringent that it actually provides no implementation flexibilit y as a practical
matter. Commenters said thus, the Proposal would effectively force the premature retirement of the Springerville facility.

Commenters said Tri

- State owns several other, older coal

- fired EGUs in different states where the proposed state goa ls do not require eliminating all coal

- fired generation. Commenters said accordingly, the Proposal would have the bizarre consequence of forcing Tri

- State to retire its newest, most efficient, best

- controlled coal

- fired EGU, which has already been the subj ect of significant capital investments. Commenters noted that if the Springerville facility had been located just 10 miles to the east in New Mexico, it would be saved from forced retirement.

Commenters said shutting down Springerville Unit 3 would strand a significant investment made by Tri

- State less than 10 years ago. Commenters added that the decommissioning and write

- off costs for Unit 3, in conjunction with any measures needed to replace that power supply, would harm Tri

- State, its 44 member cooperati ves, and the retail consumers of those cooperatives through higher rates to compensate for the loss of this valuable asset in Tri

- State's generation portfolio. Commenters said equally important, eliminating Springerville Unit 3 would shut down a baseload f acility that Tri

- States uses to serve firm load, leading to potential disruption in load

serving reliability. Commenters said baseload capacity is a key component of a reliable generating system and provides value particularly during the peak hours of a ut ility's peak

season. Commenters said if Unit 3 is shut down, Tri

- State will not have sufficient capacity to serve firm load, and will be required to construct new generation to replace that capacity, further increasing costs to its member systems.

Comment 44: The EPA should take steps to foster consumer and labor oversight and participation

Response 44: See the EPA ’s Regulatory Impact Analysis for the Clean Power Plan Final Rule, EPA

- 452/R

- 15

- 003 ( RIA ) for the final CPP for a discussion of consumer impacts

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

Commenters said the EPA should take steps to foster consumer oversight by making key information readily accessible on its website and should require states to provide consume r voice and oversight in the development and execution of implementation plans. Commenters said consumers will benefit from sound policies and bear the brunt of poor policies, and as a matter of fairness, they deserve a strong role in the formulation and e xecution of state plans. Commenters said consumer participation and oversight is valuable for another reason as well

- there is substantial overlap between the policies that are best for reducing emissions and those that are best for consumers. Commenters said consumer participation will substantially increase the likelihood that states will adopt sound, least

- cost plans that are likely to yield their projected carbon

- reduction goals.

Commenters said that when customers are involved in their energy solution s, such as with community solar, they are much more tied to the decisions they are making. The commenters291 said in such situations consumers recognize the impacts they have, and how much it really affects their bottom line.

Commenters said that states must be encouraged to include labor voices in the development of their compliance plans.

Comment 45: The EPA should provide a comparative analysis of the costs of action versus the costs of inaction

Response 45: The EPA ’s Regulatory Impact Analysis for the Cl ean Power Plan Final Rule, EPA

- 452/R

- 15

- 003 ( RIA ) analysis discusses the cost and benefits of this final CPP rule.

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

Commenters said in the analysis for the proposed rule, the EP A has yet to compare the costs of business as usual. Commenters said it would be very helpful if the EPA would provide a comparative analysis of the costs of action versus the costs of inaction.

Comment 46: Commenters said EPA should encourage the states to implement least cost approaches by indicating that the selection of resources that deviate significantly from this principle will be subject to close scrutiny.

Response 46: The EPA uses least

- cost modeling tool whe n assessing compliance scenarios. A State may use this to inform their thinking about least cost approaches.

Comment 47: Diverse fleet of generating resources is optimal but renewable energy resources and energy efficiency can be dispatched and thus cann ot be considered replacements for existing fossil fuel

- fire generation, but rather additive in nature

Response 47: The EPA discusses abatement potential through renewable energy in s ection V. A of the final rule preamble of the CPP . Holding load assumption s constant for a given future year, as renewable generation increases it will likely replace fossil sources. The collective regional fossil generation of the fleet with more RE generating resources is expected to be less than one with fewer RE resources.

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

Commenters said the EPA should encourage the maintenance of fuel diversity with each states' generation portfolio, rather than choosing winners and losers to the effect of decreased system reliability. Commenters said that maintaining a diverse fleet of generating r esources is optimal because it gives utilities the ability to capitalize on the lowest cost fuel options over the long term and ensure low cost electricity to customers. Commenters said that a fleet that is overly292 reliant on one particular generating resou rce would cause customers to bear significant risk with respect to the cost of that particular generating source. Commenters indicated that as part of Georgia Power's maintenance of a diverse fuel mix, the Georgia PSC has approved additional renewable gene rating resources, including solar generating capacity. Commenters stressed that to meet their purpose of maintaining fuel flexibility and diversity, however, these generating resources cannot be considered as replacements for existing fossil fuel

- fired gen eration, but rather are additive in nature.

Commenters indicated that it is important to note that neither renewable energy resources nor demand

- side energy efficiency (DSEE) can be dispatched, i.e., they cannot be called upon to serve electricity load at any time. Commenters noted that most renewable energy resources are dependent on weather conditions and DSEE is dependent on customer behavior; neither is guaranteed. Commenters concluded that as a result, they serve a different purpose than existing fossi l fuel

- fired generation, which is capable of being called upon to meet customer demand. Commenters said that the EPA's proposal to lower states' goals by assuming the replacement of existing dispatch

- able generation with intermittent renewable resources an d DSEE that relies on customer behavior similarly would significantly impact the reliability and cost

- effectiveness of the electric grid and is directly inconsistent with the purpose of these resources and the decisions of state PSCs to approve the additio n of these resources to utilities' generation (or avoided generation) mixes to ensure fuel diversity and cost

- effective electricity.

Comment 48: The EPA should treat renewable energy from Canadian sources in the same manner as renewable energy from domestic sources. Explicitly including Canadian hydropower as a resource that can be used to comply with the CPP obligations would give states the flexibility they need to meet goals

. Response 48: See section VIII.K. 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 fully supported the EPA's position that states should be given maximum flexibility in determining how best to meet the targ ets set forth in the Clean Power Plan, and said inclusion of Canadian hydropower in the Clean Power Plan would be consistent with state RPS requirements and would also allow states the flexibility they will require to meet SIP goals in the future.

Comment ers said even prior to the release of the proposed Clean Power Plan, many states had already begun requiring utilities to increase their reliance on renewable generation through renewable portfolio standards (RPS). The commenters said this has included re cognizing Canadian hydropower as a resource that can help states meet their renewable energy and climate change goals. Commenters said as the EPA notes in the Clean Power Plan's supporting technical documents, "most states allow use of eligible renewable r esources located in other states to satisfy the state RPS requirements," and this "may also include Canadian hydroelectric and wind energy resources."293 Commenters said in recent years, California, Connecticut, Minnesota, Rhode Island, Vermont, and Wisconsin have all adopted legislation or regulations that allow local utilities to use Canadian hydropower in meeting their respective RPS targets. Commenters said New England States are also exploring ways to increase hydropower imports in the region to help meet their GHG reduction goals. Commenters said in the MISO region, which includes Manitoba, Wisconsin adopted legislation in July 2011 that grants renewable credit to imports from new hydropower facilities under development in Manitoba. Commenters added simi larly, in March 2011, Minnesota's Public Utilities Commission ruled that Minnesota Power could apply a portion of hydroelectricity purchases from Manitoba Hydro to meet its state renewable energy standard requirements.

Commenters said as the examples noted above demonstrate, states and utilities have been proactive in seeking out renewable energy sources to supply the current and future needs of their residents and businesses. Commenters said explicitly including Canadian hydropower as a resource that can b e used to comply with Clean Power Plan obligations would give many states the flexibility they will need to meet their SIP goals and emission reduction targets in the future.

Comment 49: States can most cost

- effectively achieve Clean Power Plan 2030 carbo n emission reductions through deployment of greater levels of renewable power generation and EE. Flexibility and effective state policies are essential

. Response 49: The EPA agrees with the comments that flexibility for state plans is essential. The EPA maintains that the final rule provides ample flexibilities to states. States are allowed to use the BSER measures, or other measures in their state plans to comply with the goals ; t here are flexibilities within the BSER measures and how they are executed ; and s tates also have non

BSER measures at their disposal. See sections V.A and VIII.A. of the final rule preamble of the CPP for more information.

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

Commenters said states can most cost

- effectively achieve Clean Power Plan 2030 carbon emission reductions through deployment of greater levels of renewable power generation. Commenters said renewable energy is virtually emissions

- free, the least expensive option

res ource in many markets today and, as with most maturing but technologically enabled industries, and costs continue their downward trend. Commenters said states can achieve their Clean Power Plan targets while also realizing a host of additional benefits, in cluding a 21st Century modern grid, a more modern diverse power supply, greater energy independence, more secure energy supply, new private sector investment, economic growth, and a growing mix of quality jobs. Commenters said effective state policies are essential to deploy greater levels of renewable energy and leverage the capital and ingenuity of the renewable energy industry.

Commenters said RE and EE are the key to reducing carbon pollution, and also drive job growth and reduce energy bills. The comm enters stated they think these resources can contribute even more to the CPP.294 Commenters said it is appropriate that the CPP places emphasis on expanding renewable energy and energy efficiency efforts. Commenters said over the next 40 years Pennsylvania ca n transition to 100% renewable power generation, and the CPP will also inspire investment in infrastructure to protect communities from climate change impacts they are already experiencing, spur the kind of innovation that will power American with clean en ergy in the 21st century, and improve resiliency and give states flexibility to implement plans that increase efficiency.

Commenters said the EPA should provide additional guidance to state about how to integrate high levels of RE.

Commenters encourage d EP A to clearly signal to that that the flexibility built into the CPP should be met through increased capacity for renewable energy projects.

Commenters supported the CPP's inclusion of demand side energy efficiency as one of the four major pollution reducin g tools available to states.

Comment 50: The U.S. needs an "all

- of

- the

- above" energy strategy that encourages development of all energy source options, without favoring one specific source over another

. Response 50: The flexibility afforded to states as d escribed in Sections V and VIII of the final rule preamble of the CPP maximizes the breadth of compliance options and allows states/source to keep any of the “all

- of

- the

- above” generation technologies that it chooses.

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

Commenters said the U.S. truly needs an "all

- of

- the

- above" energy strategy to ensure we are responsibly developing energy sources while meeting consumer demands, protecting the environment and modernizing extract ion and refining processes through market

- led efficiencies. Commenters said this means adopting policies that encourage development of all energy source options, without favoring one specific source over another. Commenters said by allowing businesses and consumers to self

- select, we encourage energy

- efficiency by allowing consumers, not the EPA or the federal government, to choose preferred sources. Commenters said allowing consumer choice prevents the inefficiencies that inevitably come with government

- le d, command and control regulation.

Commenters said all consumers of energy, whether they are large manufacturers or individual households, benefit most from an all

- of

- the

- above energy strategy. Commenters said diversity of energy supply is not only critica l in keeping energy costs reasonable, it is essential in ensuring steady and reliable streams of energy to power our factories and heat our homes. Commenters said for many Georgia businesses and industries that compete in a global economy, energy represents a major input cost that can ultimately determine viability. Right now, energy is an advantage for many Georgia industries in large part because of the abundant and diverse supplies of affordable energy resources that are collectively keeping ene rgy costs reasonable and supply reliable. Commenters said with the current diversity of generating resources, Georgia continued its trend of maintaining below

- national average electricity prices, which is crucial to the continued growth and success of Geor gia's economy. Commenters said however, if regulations295 such as the EPA's CPP force energy options off the table, energy prices will be more volatile, costs will increase, reliability will be threatened and ultimately Georgia's businesses and other U.S. fir ms will be less competitive in the global economy.

Commenters said the stringency of the building blocks makes compliance costly, risky for system reliability, and implausible if not impossible. The commenters said the real flexibility states need is the flexibility to maintain a diverse, low

- cost, and reliable generation mix for their citizens, economic, and energy security. The commenters said that the value of generation diversity to stability in power supplies and prices is missing in this proposal.

Comment 51: The EPA should encourage states to use carbon capture mechanisms as a compliance tool

. Response 51: The final rule provides ample flexibilities to the states to use the BSER measures, or other non

- BSER measures to comply with the goals

. See sections V.A and VIII.A. of the final rule preamble of the CPP for more information.

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

Commenters said the proposal offers maximum flexibility for compliance, and said a state ca n authorize carbon capture and storage mechanisms to reduce emissions from existing coal plants. The commenters said this technology recently announced the Department of Energy is actually helping to fund construction of the largest post combustion carbon capture project in the world, the Petra Nova Project in Texas, which was just announced a few weeks ago. The commenters said this is projected to capture 90 percent of the carbon dioxide emissions from one of the plant's generators. The commenters urged th e EPA to include in the final rule language, encouraging states to use carbon capture mechanisms as a compliance tool.

Comment 52: States should be allowed to decide how the distribution of responsibility to meet goals is allocated, whether a rate

- based o r mass

- based approach is used, and should be able to
est ablish the compliance timeline.

Response 52: The final rule provides ample flexibilities to the states to use the BSER measures, or other non

- BSER measures to comply with the goals

. See sections V.A and VIII.A. of the final rule preamble of the CPP for more information. The states also have the flexibility to choose whether a rate

- based or mass

- based approach is used, however the EPA h as converted the rate

based goals to mass

- based goals . See section 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 the final rate

- based and mass

- based goals

. The timing for compliance remains as 2030 for the final goa ls. The EPA has modified the interim goals in response to comments and our further consideration. The interim period covers the years 2022

- 2029 and includes illustrative interim emission values for the periods of 2022

- 2024, 2025

- 2027, and 2028

- 2029.

The fo llowing are summaries of the specific public comments under this comment:296 In response to the EPA's request for comments, c ommenters supported permitting states to decide how the distribution of responsibility to meet goals is allocated as well as the compl iance timeline. Commenters said in part, this is a practical solution as the affected EGUs will require some time to implement in

- boundary changes while the state can implement programs under Building Block 3 and Building Block 4 that could possibly affect immediate reduction in #CO2/kWh. Commenters suggested the implemented programs could, in fact, be implemented by the private capital market and private businesses, thus creating both system cash flow and increased employment. Commenters said in turn this will reduce the total generation requirements, and reduction in generation requirements results in less of a capital burden on the EGUs and ultimately less of a burden on the utilities rate

- payer. Commenters said in addition, the Rural Electric Providers w ho are least able to afford modifications to EGUs will have time to secure capital. Commenters said that two heating and cooling technologies, Ground Source Heat Pumps (GSHP) and Waste Energy Recovery (WER) systems, are excellent examples of technologies t hat compliment this approach.

Several other commenters also said that the EPA should allow states the flexibility to allocate responsibility for meeting a state's emission reduction goal among that state's affected entities as it sees fit. Several comment ers said as described in the State Plan Considerations TSD, EPA proposes to "give states broad discretion to develop state plans that best suit their circumstances and policy objectives." Several commenters said this should include the recognition that aff ected entities within a state will not begin at the same starting point regarding carbon

- reducing actions that are already in effect. Several commenters said individual utilities

- and their customers

- may have implemented a number of measures which have already reduced carbon emissions, and under the Clean Power Plan, states are able to incorporate these actions into their compliance plans so long as emissions reductions achieved post

- 2020 can be attributed to these measures. Several commenters said in th e final rule, EPA should specifically allow states to determine how their compliance obligations will be allocated among all affected entities, thus allowing states to conclude that entities which implemented early actions that will achieve ongoing and lon g

- term emission reductions will not be required to contribute further towards a state's emissions reduction goal.

Several commenters said the EPA should continue to allow states the flexibility to select a rate

based approach or a mass

- based approach to e missions reductions for inclusion in state compliance plans. Several commenters said they have reviewed EPA's Notice of Additional Information Regarding the Translation of Emission Rate

- Based CO2 Goals to Mass

- Based Equivalents issued November 6, 2014, but cannot yet determine if this approach provides significant benefits over the previously proposed rate

- based mechanism. Several commenters said in fact, it appears that the two standards do not correlate well. Several commenters said as a general observati on, MidAmerican notes that implementation of the guidance on rate to mass conversion results in a greater reduction in emissions. Several commenters said where the rate

based reduction from 2012 levels would be 24%, a mass

- based conversion would result in a reduction of 31% from 2012 levels by 2030. Several commenters requested that EPA's final rule retain the flexibility for states to select which emissions standard best suits their circumstances.

Comment 53: Rule implementation at the state level is sub ject to political influence297 Response 53: As demonstrated in the GHG Mitigation Measures TSD and discussed in Section V of the final rule preamble of the CPP , the quantification of building blocks and BSER is a bottom

- up technology cost and performance assessment.
The following are summaries of the specific public comments under this comment:

Commenters said the flexibility provided to the states, and much lauded cooperative federalism approach, is in some ways a double

- edged sword because it creates the potential to affect how the rule is implemented based on political ("policy") preferences. Commenters said for instance, the rule could end up being implemented through a mass

- based limit whereby allowances are distributed resulting in a situation where F lorida utilities are competing amongst themselves for their fair

- share of a limited pool of allowances. Commenters said ultimately, those smaller utilities with little or no political influence may be penalized despite their good intentions, early investme nts, and realized reductions. Commenters said for example, EPA should ensure that any approved state plan does not unfairly penalize those early adopters such as the City of Tallahassee.

Comment 54: States should be allowed to use non

- affected EGUs to ach ieve compliance with 111(d) targets, and should have ultimate flexibility in building their state programs and determining what activities can be included for compliance (partial list of activities provided )

Response 54: See sections V and VIII of the fina l rule preamble for discussion of the flexibilities available to states and affected EGUs

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

Commenters said the EPA must provide the maximum flexibility for states to use non

- af fected EGUs to achieve compliance with 111(d) targets. Commenters said states should be permitted to determine what the least cost methods are for achieving the emission rate reduction targets set by the EPA.

Commenters said CAA section 111(d) require sta tes, not EPA, to set standards of performance for sources and not only do states have the authority to set the standards, but they also have the authority to determine how the sources within each state will meet those standards. Commenters said therefore, states should have ultimate flexibility in building their state programs and determining what activities can be included for compliance. Commenters said these activities include, but are not limited to, the following areas:

1. A state should have authorizatio n to deem that a current state program qualifies as BSER for that state

2. The states should have sole discretion on how to reach the 2030 compliance target including timing, glide path, interim targets, etc..., without any requirements from EPA during that i nterim period

3. Enforcement of a state plan should be the sole responsibility of the state298 4. States should have the discretion to include new Section 111(b) affected NGCC units in their compliance plans

5. States should have the ability to control what activitie s count towards compliance and when these activities can count towards compliance including, but is not limited to, plant retirements, treatment of nuclear and hydro, energy efficiency measures, renewable energy, and new 111(b) NGCC units

6. States should hav e the ability to count any emission reductions that occur after the baseline year including retirement of fossil

- fired generation

7. States should have sole authority over whether or not the state uses a mass

- based or rate based approach towards compliance an d how that translation is calculated

8. States should have definitive oversight and control over any multi

- state approach or plan

Comment 55: States must be given sufficient flexibility in determining how to incorporate biomass energy into their implementation plans, and biomass feedstocks should be evaluated at a national level, not using a state or regional

- level approach that incorporates chain

- of

- custody accounting for biomass feedstocks which would add complexity and cost to the program witho ut added benefit.

Response 55: 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.

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

Commenters emphasized that it is essential that states be given sufficient flexibility in determining how to incorporate biomass energy into their implementation plans. Commenters said given the number of existing state programs addressing biomass and biomass energy, it is imperative that States be able to design Section 111(d) implementation plans that are consistent with those programs and avoid subjecting forest owners and bioma ss energy facilities to duplicative or inconsistent regulatory programs. Commenters said further, giving States broad latitude to incorporate biomass energy into their implementation plans is consistent with the cooperative federalism principles that are e mbodied in Section 111(d) and give States primary authority to establish standards of performance and implementation plans to achieve those standards.

Commenters said that it is critical from a policy perspective that the EPA and States adopt GHG regulati ons that avoid unnecessary complexity and are capable of implementation. Commenters said evaluating changes in forest carbon stocks at an appropriate scale, such as at the national level, captures essential information about the sustainability of forestry practices from a carbon perspective consistent with established international norms and supporting science. Commenters said in contrast, a narrowly focused stand, state or regional

- based approach that incorporates299 chain

- of

- custody accounting for biomass fe edstocks would add significant complexity and cost to the regulatory program at the risk of making biomass utilization uneconomic without providing additional useful information with respect to sustainability from a carbon perspective.

Comment 56: Small g enerators have special concerns

Response 56: As discussed in s ection V of the final rule preamble of the CPP

, the EPA believes the BSER approach provides compliance options (including ERC credits) that are available to every affected source. Moreover, sta tes have the flexibility to assign emission rate or emission limits as it best sees fit, and therefore can accommodate concerns of a particular units. The final CPP BSER does not prescribe any specific utilization for individual units.

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

Commenters indicated that municipal generators face additional challenges. Commenters indicated that three of Nebraska's six utilities affected by the Clean Power Plan are municipal generators, and these utilities each serve communities of approximately 50,000 or fewer using only one or two power plants with units of 100 megawatt capacity or less. Commenters said that in addition to facing the challenges to public power utilities, the small scale of these municipal generators further restricts their ability to find flexibility under each of the building blocks of the EPA's proposed Clean Power Plan.

Commenters indicated that smaller generating facilities mean smaller efficiency gains per dollar
sp ent on heat rate improvements described under Building Block 1 or demand

- side energy efficiency measures described under Building Block 4. Commenters said that in addition, limited natural gas electric generation and a lack of access to robust natural gas supplies and infrastructure effectively rule out re

- dispatch to natural gas facilities described under Building Block 2.

Commenters also expressed concern about the proposal's treatment of smaller electric cooperatives. Commenters said that in the propos al the EPA notes that "the power sector is made up of a diverse range of companies that own and operate fossil fuel

- fired EGUs, including vertically integrated companies in regulated markets, independent power producers, rural electric cooperatives and mun icipally

- owned utilities, all of which are likely to have different ranges of opportunities to reduce [greenhouse gas (GHG)] emissions while facing different challenges in meeting these reductions." Commenters said that indeed, it is difficult for an elect ric cooperative such as Tri

- State to comply with the Proposal because it is not vertically integrated. Commenters said that the EPA acknowledges that cooperatives with smaller fleets may have a more difficult time because they do not have as much of an abi lity to re

- dispatch among their own units. Commenters said that the EPA asserts, however, that the Proposal provides enough flexibility that this should not be much of an issue

- the EPA is incorrect. Commenters said that in reality, the state targets are so stringent that all flexibility is removed and that the EPA assumptions in applying the four Building Blocks are so unreasonable that there is no way for a state to meet its goal without adopting all four Building Blocks and implementing them largely in line with the EPA's assumptions.300 Comment 57 : Small utili ties that are minority co

- owners of EGUs have no ability to make decisions about or exercise control over new projects, and should therefore be given some accommodation in meeting the standard set forth in the proposed rule

. Response 57 : As described in s ectio n V of the final rule preamble of the CPP

, the EPA believes its BSER provides for compliance options that are available to all units.

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

Commenters said small utilities that are m inority co

- owners of EGUs have no ability to make decisions about or exercise control over new projects, and should therefore, be given some accommodation in meeting the standard set forth in the Proposed Rule. Commenters said states should be permitted a nd encouraged to use their discretion to address special considerations towards small utilities in order to equalize the playing field against their large utility counterparts.

Commenter s are a minority owner, non

- operating joint participant in at least on e affected EGU

- the Hunter 2 Unit operated by PacifiCorp. Commenters said small utilities that are minority co

owners of EGUs are strictly bound by contract as to what rights, if any, they may exercise in major decisions affecting those units. Commenters said in these circumstances, minority owners have no ability to initiate measures that would be required to implement actions necessary to complying with the requirements set forth in the Proposed Rule. Commenters said voting rights in such relationships t ypically vest in the majority owner(s) the ability to initiate

- or not initiate

- large

- scale capital projects.

Commenters said HRI projects certainly fall into this category. Commenters said when small utilities have no ability to force HRI projects, t hey risk not being able to meet compliance deadlines, which ultimately brings into questions those small utilities' ability to maintain compliance with applicable rules. Commenters said small utilities' inability to institute HRI projects also highlights t he potential for varying motivations between large, majority owners and their small, co

- owner counterparts.

Commenters said small utilities will have far fewer resources to satisfy regulatory obligations. Commenters said in addition, large operating utili ties may not share in the same motivation that small utilities have to achieve the relevant emission reduction levels, which will require significant capital expenditures. Commenters said larger utilities managing their fleet of EGUs will be competing for capital dollars with other EGUs.

Commenters said moreover, larger utilities, or interest

- controlling co

- owners typically have at their disposal other options to meeting the requirements that are not available to small utilities. Commenters said for exampl e, large utilities may have interstate carbon trading programs in which to satisfy emissions reductions requirements contemplated in the Proposed Rule. Commenters said larger utilities that are also operators have the ability to operate EGUs in such ways t o meet compliance requirements, such as by using different dispatching techniques, where small utilities have no such ability.301 Commenters emphasized that states should be permitted and encouraged to exercise their discretion to address special considerat ions towards small utilities in order to equalize the playing field against their large utility counterparts.

Comment 5 8 : Flexibility must be combined with accountability. The EPA should be careful not to create the expectation that the CPP's targets ar e all that can be asked of the electric utilities. Additional reductions should be required

. Response 5 8 : The EPA is establishing a Best System of Emission Reductions consistent with the 111(d) requirements and considerations.

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

Commenters said the CPP provides flexibility, and allowing flexibility in achieving the goals can have significant benefits to stakeholders. The commenters said however, the final plan must be crafted in a way that ensures environmental results, marrying flexibility with accountability. The
commenters said because an effective response to climate change may require additional emissions reductions from the power sector, the EPA should be careful not to crea te the expectation that the Clean Power Plan's targets are all that can be asked of the electricity utilities.

Commenters said the rule could be a little more aggressive and include additional elements that will serve both to the goals of reducing greenho use gases while giving state more flexibility. Commenters expressed support for the CPP, but said they don't go far enough.

Comment 59 : Greater flexibility is need for Interstate Cooperative efforts, including flexible frameworks within plans will be appr oved and market

- based options that do not require an interstate agreement. In addition to flexible options, the states need adequate time to meet, discuss, and create multi

- state plans

. Response 59 : See section V I II of the final rule preamble of the CPP f or the EPA’s response to this comment.

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

Multi

- state plans

. Commenters said there is a compelling rationale for states to enter into multi

state plans, including increased flexibility and cost

- savings opportunities. Commenters said that while there are advantages to this type of arrangement, the Proposed Rule fails to take into consideration the arrangement from a regulatory standpoint and the time involved in reaching an enforceable interstate agreement. Commenters said to be binding or obligatory upon any state, Congress must approve any agreements or compacts regarding th e control of air pollution. Commenters said additionally, not all states will be able to enter into joint plans covering every aspect of their EPA

- mandated plan.302 Commenters indicated that the rule must contain maximum flexibility and more time to design in terstate plans and interstate carbon trading programs.

Market

- based emissions trading

. Commenters said the EPA needs to provide additional flexibility regarding emissions trading mechanisms that are market

- based and do not require an interstate agreement. Commenters said the EPA should clarify that states can cooperate regionally without blending state goals, whether rate

- based or mass

- based, into a regional goal for which all cooperating states are jointly liable. Commenters emphasized that this should in clude ensuring that only the state that fails to meet its obligation is penalized under a multi

state approach and not the other states participating in the program.

Carbon credit and liabilities

. Commenters said the EPA should support approaches that all ow states to allocate credit for zero

- carbon resources, along with approaches that allow states to reach agreements on the allocation of carbon liabilities. Commenters said this includes ensuring that existing tracking mechanisms for renewable energy, such as the Western Renewable Energy Generation Information System (WREGIS), are compatible with the final rule.

Extensions

. Commenters said the final rule should make it clear that a state qualifies for the available extension as long as it is committed to c oordinating action with other states. Commenters said this should include allowing states to pursue a dual

- track approach

- continuing to evaluate both multi

- state options and single

- state options.

Additional guidance

. Commenters said the EPA should also p rovide greater clarity on the documentation requirements and compliance options for multi

- state and regional plans, including the option for states to participate in more than one multi

- state program.

Commenters said for a multi

- state plan to be a feasibl e option under the Proposed Rules, the EPA needs to provide flexible frameworks within which plans will be approved and market

based options that do not require an interstate agreement. Commenters said in addition to flexible options, the states need adequ ate time to meet, discuss, and create multi

- state plans.

Comment 6 0 : T&T Supplemental

- The building blocks were created to give the states flexibility in meeting emission reduction goals. Similar flexibility was not given to the Navajo Nation.

Response 6 0 : See sections V, VI, VII, and VIII of the final rule preamble for the EPA’s response to this comment

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

Commenters said the Building Blocks were created to give the states flexibility in meeting emission reduction goals. Similar flexibility was not given to the Navajo Nation. A Navajo Nation plant adopted under the proposed supplemental rule will not contribute to a "vibrant and growing economy"303 Comment 6 1 : Flexibilities to States

Response 6 1 : We disagree with these comments. We describe in the preamble the flexibilities available to the states, including the additional flexibilities afforded by the final rule, comp ared to the proposal. See sections V and VIII of the final rule preamble for more discussion of state flexibilities.

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

The commenter s stated that, in prior rule makings, EPA has provided a target(s) for compliance and the goal for reduction, and each state was responsible for determining the best method of implementation. However, the commenter s stated that in this rule making, EPA mandates a target for 2030 (the overall goal) and then interim targets for 2020 and every two years thereafter, thus usurping the state's autonomy to determine what is necessary to insure safe, reliable, cost effective electricity for their citizens. The commenter s stated that in 44 years of the CAA, the EPA did not micromanage the states, effectively eradicating their autonomy. The
commenter s encourage d the EPA to establish the goal and allow the states to determine the glide path and technical solutions necessary to achieve the goal thus insuring safe, reliable, environmentally sound, low cost electricity.

The commenters stated that the stringency of the proposed rule usurps states authority because states cannot exercise the flexibility in establishing the performance standard allowed by section 111(d)

. Commenter s stated that the proposed rule dictates all key policy choices that should have been left to the states

. The commenters stated that EPA has claimed a high degree of flexibility afforded to states under the proposed rule, but the rule is not flexible. Commenter s stated Section 111(d) is intended to provide a framework for States to establish regulations on aff ected sources; states are afforded a number of mechanisms to make such standards feasible and effective. Commenter s stated that this is clearly not the case and the EPA is proposing binding emission reduction targets that each State would be legally obliga ted to meet. See 79 Fed. Reg. at 34,892; see also proposed 40 C.F.R. 60, Subpart UUUU; Section 60.5740(a3ii).

Commenter s said that the only flexibility allowed under the standard is to determine where to require even more stringent standards within certain building blocks should one block not be achievable, and that the mere shifting of targets within building blocks does not really provide flexibility to states.

Comment 6 2 : Proposed Rule does not provide states' flexibility to establish the performance
st andard

– states cannot take into account "remaining useful life" and other factors

Response 6 2 : The EPA maintains that the final rule provides ample flexibilities to states. States are allowed to use the BSER measures, or other measures in their state plan s to comply with the goals ; t here are flexibilities within the BSER measures and how they are executed ; and s tates also have non

- BSER measures at their disposal. See sections V.A and VIII.A. of the final rule preamble of the CPP for more information.

The following are summaries of the specific public comments under this comment:304 Commenter s argued by proposing binding, inflexible State emission reductions targets without the site

- by

- site analysis provided for in the CAA and regulations, the EPA is violating Congress' intent to allow States to adjust standards and emissions controls to fit the fleet of existing

sources. C ommenter s also argued that the EPA did not consider the investments made by consumers to maximize benefits throughout a generating facility's useful life.

C ommenter s noted that state flexibility is specifically addressed in section 111(d)(1), EPA must permit a stat e to consider, "among other factors, the remaining useful life" of existing sources when applying performance standards. Commenters provided examples of factors that can be considered, including costs, non

- air quality health and environmental impacts, ener gy requirements

, physical impossibility, technical feasibility

, the costs and feasibility of installing controls considering the plant age, location, and process design

. Commenters said that the proposed rule does not adhere to the statute's requirement th at states be given maximum flexibility in applying BSER in setting standards of performance for existing sources based on the unique circumstances of their states. C ommenter s stated that the statute gives states the flexibility to establish the stringency of performance standards, the form that standards must take, the types of compliance measures EGUs may use to meet state performance standards, and the schedule under which EGUs must comply. For example, the commenter s noted that states should be free to d evelop their own "glide paths" to achieving the emission reduction goals for the first compliance period.

Commenters believed the EPA structured the Proposed Rule in a way that would prevent individual states from considering "the remaining useful life of the existing source" and other factors in applying a state

- established performance standard. The commenters argued the proposed rule infringed upon states' rights and ability to consider remaining useful life and other factors . Commenter s felt the "Agency' s overreach" would result in the stranding of assets, which would impact rural electric cooperatives due to their relative small size, limited portfolio of resources, and recent significant capital investments.

Commenter s pointed to the 1977 Amendments and stated that the Amendments expressly provided that states determine the standard for existing sources, and that states have the authority when regulating existing sources to take into consideration the costs of compliance and other nonair quality impacts and energy requirements. (Pub. L. No. 95

- 95, 91 Stat. 700 (1977)). The
commenter s stated that the House Report of the Legislative History confirms congressional intent to continue state primacy and protect the investment backed expectations represented by existing sources, and noted the language that, "the State would be responsible for determining the applicability of such guidelines to any particular source or sources" and "Unless the State decides to adopt and enforce more stringent standards, the State plan would be expected to take into account the remaining useful life of the source (or sources)."

C ommenter s argued that the duty Congress imposed on EPA to allow states to consider the remaining useful life of the individual sources is further expanded in EPA's 1975 regulation at 40 C.F.R. 60.24(f) . That regulation provides:

"States may provide for the application of less stringent emissions standards or longer compliance schedules than those otherwise required by paragraph (c) of this section, provided that the State demonstrates with respect to each such facility (or class of facilities): (1)305 Unreasonable cost of control resulting from plant age, location, or basic process design; (2) Physical impossibility of installing necessary control equipment; or (3) Other factors specific to the facility (or class of facilities) that make application of a less stringent standard or final compliance time significantly more reasonable."

Commenters said EPA rejected the case

- by

- case exceptions described in the federa l implementing guidelines (40 C.F.R. 60.24(f)) in its proposed rule.

C ommenter s noted that in the implementing regulations for Section 111(d) (Subpart B) , EPA expressly acknowledged states' authority to establish performance standards

. Commenter s quoted S ubpart B " States will have primary responsibility for developing and enforcing control plans under Section 111 (d) " and " will also have authority to grant variances in cases of economic hardship .... " and c ommenters cited Subpart B : "Given the variety of c ircumstances that may be encountered in controlling existing as opposed to new sources, it makes sense to have the States develop plans based on technical information provided by EPA and make judgments, subject to EPA review, concerning the extent to which less stringent requirements are appropriate."

C ommenters stated that the EPA guidelines do not allow the state to set less stringent goals or longer compliance schedules or consider the remaining useful life or other factors and thus the proposal is contrary to the CAA. Commenter s asserted that s t ates have unique site

- specific knowledge that allows them to design more effective emission standards.

Comment 6 3 : State Flexibilities

Response 6 3 : The EPA maintains that the final ru le provides ample flexibilities to states. States are allowed to use the BSER measures, or other measures in their state plans to comply with the goals ; t here are flexibilities within the BSER measures and how they are executed ; and s tates also have non

- BS ER measures at their disposal. See sections V.A and VIII.A. of the final rule preamble of the CPP for more information.

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

The commenters said the binding emission goals proposed for each state are sufficiently stringent that states will be unable to meet them unless they: go beyond the traditional inside

the

- fenceline first block and significantly altering their energy and resource policies ; or retire units or drastically curtail production from existing coal

- fired power plants. C ommenter s stated that this comes at a heavy price

- for individual sources that may be required to shut down before the end of their useful lives, with the potential for huge stranded investments, or at t he massive cost of adding otherwise unnecessary renewable energy.

Comment 6 4 : State Goals

Response 6 4 : The EPA has converted the rate

- based goals to mass

- based goals . See section 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 the final mass

- based goals

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

Commenters stated that while states might techn ically be free to vary from the BSER level of control of each building block, the practical effect is that because of the magnitude of the proposed BSER emission reductions, EPA has established the level of control that each state must meet and states do n ot have the ability to set their own standards of performance

. Commenters stated that the State may convert the EPA

- set state goal into a rate

- or mass

- based goal but cannot change the number, and the State has leeway to "assign the emission performance ob ligations to its affected EGUs, "but only"

, as long as, the required emission performance level is met.

Commenter s stated even if a State were to determine that the emissions reduction targets set by the EPA was inappropriate and could not reasonably be ac hieved, then states have no power under the proposed rule to change the emission reduction goal EPA has set for it based on that inability and would still be required to submit a plan that satisfies the EPA's binding targets, or risk the imposition of a fe deral implementation plan administered by the EPA.

The commenter s concluded that EPA must modify its proposed rule to allow states to adjust their goals as necessary to preserve state authority "to adopt whatever mix of emission limitations it deems best suited to its particular situation." Train v. NRDC, 421 U.S. at 79 (1975), s ee also Union Elec. Co. v. EPA , 427 U.S. 246, 267 (1976) (noting that "the State has virtually absolute power in allocating emission limitations so long as national standards are met . . .").

Comment 6 5 : State Flexibilities

Response 6 5 : The EPA maintains that the final rule provides ample flexibilities to states. States are allowed to use the BSER measures, or other measures in their state plans to comply with the goals ; t here ar e flexibilities within the BSER measures and how they are executed ; and s tates also have non

- BSER measures at their disposal. See sections V.A and VIII.A. of the final rule preamble of the CPP for more information.

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

C ommenter argued that the EPA has not done a source

- by

- source analysis of each source in the state that would be subject to the proposed guidelines, and noted that is the job of the states in setting the standar ds and developing its plan. The commenter s argued that the express language in Section 111(d) for consideration of remaining useful life and other factors suggests that the guidelines BSER proposed by EPA needs to be presumptive so state specific analyses can consider remaining useful life and/or stranded assets in developing state plans.

Commenter s said that this rule has less compliance flexibility than what is typically allotted to states under section 111 (d). Commenter s said, section 111 (d) grants st ates the authority, in applying a standard of performance to particular sources, to take into account the source's remaining useful life or other factors. Commenter s said, EPA suggest that, given the degree of flexibility in the BSER approach, the statutor y allowance for source specific considerations will not be allowed. Commenter s said, the statutory directive to allow states to take those factors into307 consideration should not be ignored in any context, but especially here where our options are so limited already.

Comment 6 6 : Commenter s stated that there is no specific language in section 111(d) or elsewhere in the act that prohibits states from including measures other than performance standards, implementation, and enforcement measures, provided that the y reduc e emissions from affected EGUs.

Response 6 6 : We agree that there is no such explicit prohibition. In particular, as stated in the proposal, the terms of CAA section 111(d ) ( 1) do not explicitly address whether, in addition to emission limits on affe cted EGUs, state plans may include other measures for achieving the emission performance level. 79 FR at 34902. The proposed portfolio approach would have allowed states to include such other measures, such as demand

- side efficiency mechanisms, in their st ate plans. See 79 FR at 34902

– 03. But as explained in section VIII, after considering comments on the proposed portfolio approach, EPA is not finalizing that approach. Instead, EPA is finalizing an option to submit a “state measures” plan type, under which a mass CO2 emission goal may be partially or entirely achieved through state measures that impose requirements on entities other than affected EGUs and that are not included in the federally enforceable 111(d) state plan, provided the state submits standa rds of performance for CO2 emissions from affected EGUs in the form of a federally enforceable “backstop” that would be triggered if the state measures fail to achieve the required CO2 emission performance level. See section VIII. Thus, the state measures approach provides the flexibility that the commenter s favored while ensuring that federally enforceable standards will be in place if needed.

Comment 6 7 : Comments in support of the level of flexibility provided in the rule

Response 6 7 : We appreciate the support and we note that the final rule differs from the proposed rule that the commenters commented on in certain respects. However, the final rule still provides the type of flexibilities suggested by the commenters.

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

• Commenters commended EPA for the level of flexibility provided in the rule, specifically:

• The commenters supported d ifferent goals for each state to reflect existing policies and resource availability.

• The comment ers supported o ption for states to select a mass

- based standard.

• The commenters supported a llowing states to decide how to achieve the emissions target.

• The commenters supported s tates ’ ability to deploy the system or systems of emission reduction most app ropriate for the emission sources in their state (23140).

Commenter s stated that this flexibility will assist Arizona in achieving its emissions reduction target through greater reliance on renewable energy and energy efficiency measures than in EPA's goal assumptions.308 Commenter s stated that the procedures "similar to that provided by Section 110" allow states sufficient flexibility in meeting the state goal set thereunder to include in their compliance plans other measures (i.e., measures that are neither performance standards nor measures that enforce or implement performance standards).

Comment 6 8 : Goal Design

Response 6 8 : P lease see section VII of the final rule preamble of the CPP for more information regarding state goals . The EPA has also converted the rate

- based goals to mass

- based goals . See section 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 the final mass

- based goals

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

Commenters stated, U.S. EPA's general section 111 (d) implementing regulations reinforce the range of approvable plan designs that U.S. EPA and the states may jointly develop. Commenters said, the general regulations track the statute's language, directing that state plans are to

" establish emission standards for designated pollutants from designated facilities and provide for the implementation and enforcement of such emission standards." 40 C. F.R. section 60.21 (c) (emphasis added). Commenters said, although the standards "shall apply to all designated facilities within the State," the precise way in which the standards are applied is to be defined in the state plans themselves. See id. At sect ion 60.24(b ) ( 3). Commenters said, though careful monitoring and reporting are required to ensure that facility emissions decline as required, see id.at section 60.25, states may chart a range of paths towards the BSER emission levels. Commenters said, U.S . EPA maintains authority over the timing of this process via a requirement that plans include compliance schedules with "legally enforceable increments of progress" for "each designated facility or category of facilities." Id. at section 60.24(e ) ( 1). Com menters said, thus , the regulations, appropriately, allow for state creativity while maintaining close U.S. EPA oversight to ensure that states stay on track.

Commenters stated, accordingly, the general regulations provide only limited constraints on just how emission standards themselves are to be designed. Commenters said, they do set broad terms, providing that "[e]mission standards shall either be based on an allowance system or prescribe allowance rates of emissions except when it is clearly impractic able"

- if so, other methods are presumably allowed. See id. At section 60.24(b ) ( 1). Commenters s aid, mass

- based trading programs qualify as allowance systems, and these are plainly allowed (and if they were not now permitted, U.S. EPA would still be free to specifically allow them, or other mass

- based programs, in this instance, via notice

- and

- comment rulemaking, as it proposes to do). Commenters said, in sum, just as the statute does, the regulations leave a wide array of emission

standards designs open t o the states.

4.8 OTHER GOAL

- SETTING APPROACHES309 Section 4. 8 covers public comments related to other goal

- stetting approaches to the final and interim goals.

Commenters have raised a number of issues related to this subsection which are organized by top ics (comments) below. Responses are provided for these topics.

Comment 1: Commenters offered an alternate plan from New York State

. Response 1: See section V of the final rule preamble of the CPP for the EPA’s response to this
comment.
The following are summaries of the specific public comments under this comment:

Commenters noted that an "alternate plan has been outlined in detail for New York State.

Commenters noted that "Even though New York is distant from the U.S. sites that are the most advantageou s for harnessing wind and solar energy, a peer

- reviewed report by scientists from leading universities have described and justified a plan that fulfills the State's energy needs, virtually without exception, by 2020 (the exception being air transport)."

A ccording to commenters, “ The plan relies on solar energy, wind energy, and energy derived from a small number of water turbines" and accomplishes the following:

• " Reduces demand by about 37% through various efficiencies"

• " Creates more jobs than jobs lost ( aided by the fact that most energy will be produced in

state)"

• " Improves price stability since energy costs from wind and the sun will be virtually zero"

• " Decreases the number of deaths per year due to air pollution by 4,000."

Comment 2: The Dynamic Dis tribution System

Response 2: See section VIII of the final rule preamble of the CPP for the EPA’s response to this comment.

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

Commenters recommended "The Dynamic Distribution Sys tem: Encouraging competitive markets forces to complement compliance goals will move the U.S. toward steady and sustained greenhouse gas reduction goals ; r edesigning the energy distribution market throughout the U.S. to allow for new energy generation mark et entrants and even individual businesses and home

-310 owners to sell excess self

- generation energy in a fair, open, and transparent dynamic distribution system marketplace is the recommended path."

Comment 3: The EPA should not compel the creation of multi

- state collaborations, but should support multi

- state collaboration when states request it

Response 3: 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 co mments under this comment:

Commenters said each state has its own unique energy supply, distribution and customer end use infrastructure that they weigh when determining the cost of compliance and level of hardship to electricity consumers in the state und er the EPA's CPP targets. Commenters said the EPA should not compel the creation of multi

- state collaborations, but should allow states to voluntarily provide for cooperative agreements for CPP compliance if they determine it is mutually agreeable and EPA determines that equivalent environmental performance is delivered. Commenters said that the EPA should not establish CPP targets that are not economic or feasible within each state or based on an assumption of state collaborations.

Comment 4: Regional ver sus state specific goals

Response 4: 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:

Several commenters said the EPA's proposal s uggests that states that coordinate implementation of their compliance plans would need to combine all of their state goals in a multi

- state group and implement the same multi

- state goal. Several commenters said that the combining of state goals to create a multistate goal represents only one possible approach to multistate coordination and the EPA should enable multistate approaches under which individual states keep their state goals and nevertheless allow for cooperative activities between states.

The c ommenters said enabling regional approached to compliance may have implications for how the EPA determines the extent of available renewable energy in constructing each state's goals. The commenters said the regional approach to state goal

- setting describ ed in the EPA's NODA is one such way that the state goal methodology can be better aligned with the principle of interstate trading of renewable power and associated attributes.

Comment 5: The best approach to achieve the goals set forth by the CPP is a regional approach,

an d not a state

- by

- state approach311 Response 5: 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:

Several commente rs said they believe that the best approach to achieve the goals set forth by the Clean Power Plan is a regional approach

- and not a state

- by

- state approach. Commenters said if the approach to Clean Power Plan was a regional approach, then many of the co mpliance hurdles and constraints would be alleviated. Commenters said this is particularly true given the vast majority of electricity is bought and sold within an RTO region, all of which (save Texas) have a multi

- state footprint. Commenters said in addit ion, studies by RTOs indicate costs are minimized using a regional approach, and in fact, MISO has demonstrated through detailed analysis that regional approaches are more economic. Commenters said the electricity industry already operates on a regional b asis, and electrons flow without regard to geographic conventions: What matters in the electric transmission business are the boundaries between transmission operators.

Commenters w ere very supportive of allowing for mass

- based, regional plans amongst sta te to achieve compliance and create region

- wide solutions like the successful Regional Greenhouse Gas Initiative.

Commenters stated EPA should select Regional Approach as its primary model for the BSER. The commenters acknowledge d that there is a great deal of flexibility for states or regional groupings of states to develop compliance options for the proposed rule, even outside the direct framework of the BSER. The commenters said this flexibility no doubt will help mitigate some of the severe job impacts that could be a consequence of the proposed rule. The commenters said even so, these impacts are expected to be substantial; the 46

- 50 gigawatts of capacity EPA expects to be taken out of service under the more stringent proposed Option 1 represents (by
commenters estimate) at least 7,200 direct jobs at power plants with a substantial number of indirect jobs, perhaps as many as 60,000, from companies that supply the power plants and from businesses that cater to the operations' emp loyees. The commenters said Option 2 would reduce the amount of capacity expected to be taken out of service by about one

- third, and would substantially mitigate the harsh impact to workers and communities, with only very moderate impacts on the carbon dio xide emissions reduction expected. The commenters said in context, EPA states clearly that the expected carbon reduction from the proposed rule is less than that for either of the two light duty vehicle rules it has promulgated. The commenters said EPA sho uld encourage states to combine their compliance efforts via regional approaches; substantial efficiencies and potential cost

- savings are likely if states are allowed to work together, with little or no impact on the effectiveness of the rule, and those ef ficiencies could further ensure grid reliability and preserve jobs and communities.

Comment 6: Regional approaches are most cost effective mechanisms for compliance

- role of RTOs

Response 6: See section VIII of the final rule preamble of the CPP for the EPA’s response to this comment.312 The following are summaries of the specific public comments under this comment:

Commenters said regional approaches to compliance provide the easiest mechanism for handling the interstate effects of state plans and recent a nalyses, including one from MISO and one from the Brattle Group, show that regional approaches are the most cost effective mechanisms for compliance. Commenters said although EPA has not defined an exact approach to creating a regional plan, EPA notes that Regional Transmission Operators, such as PJM Interconnection, could have a role in implementing, or at least logistically facilitating, multi

- state efforts.

Commenters stated that a regional approach would help Ohio overcome technical challenges such as cross

- state power flow and crediting and, more importantly, would lower implementation
costs. Commenters added that at the same time, it would facilitate the work of the region's business community responsible for carrying out emission reductions by reduci ng the number of markets and variability between them.

Commenters said in addition to the role that PJM could play in meeting a regional compliance target that included Ohio, Ohio AEE believes that PJM could help Ohio realize renewable and energy efficienc y resource gains. Commenters said PJM already has a system in place to utilize demand response resources, and according to PJM, these demand response resources are competitive with wholesale electricity generation in some load areas. Commenters said as Ohi o increases its energy efficiency resources, PJM could integrate these into its existing system.

Comment 7: "Regionalizing" the RE goal computation is technically unsupportable. The EPA must revisit any computation method for RE and apply it based on st ate

- specific factors and abilities

Response 7: See section 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:

Commenters said regionalizing the RE goal computation is technically unsupportable. Commenters said they understand that Ohio was grouped with other states based in part on "regional similarities" that can be inferred from the state

- level technical potential reported in an NREL GIS

- based analysis. Although c ommenters didn't dispute the quality of the NREL study cited, they noted that there is significant variation in the various renewable technology potentials amongst the states grouped with Ohio. Commenters said although it is unclear from the available information, it appears that the East

- Centra l region was grouped based on the technical potential of rooftop solar

- however, in no IPM modeling study did solar generation demonstrate significant growth in Ohio.

Commenters urged EPA to clarify the methodology of grouping states together, with emphas is on those renewable potentials that are demonstrated to be similar amongst the various regions. Commenters said it is clear that if EPA is to pursue setting of renewable goals based on regional potential, more reasonable groupings must be used. Commenter s said in setting BSER, U.S. EPA must examine what is demonstrably achievable, supported by technically sound projections, and313 cost effective. Commenters said the rational for grouping states based on a wide range of technical potentials is unclear, and sa id if U.S. EPA insists on continuing with this approach U.S. EPA must consider what renewables are currently in use and being developed in each state. Commenters said undoubtedly, renewable potential can be very different from state

- to

- state, even those wi thin certain presumed regions. Commenters said the EPA has derived unrealistic RE goals, and has ignored the fact that many state RE portfolios have a cost safety valve to protect rate

- payers from exorbitantly high RE costs. Commenters said however, U.S. E PA assumes when setting BSER that a state can achieve its entire RPS goal thereby artificially inflating RE potential and ultimately assumed reductions. Commenters said the EPA must analyze each states RPS programs in more specificity to truly inform a cos t

- effective and technically feasible BSER for RE.

Commenters offered several instances which clearly demonstrate that the EPA's "regional" approach to determining a state's RE goal is not appropriate and the EPA should be determining this ability on a stat e

- by

- state basis.

Commenters stated t he EPA notes that for some states interim and final targets never reach the level they actually achieved in 2012. Commenters said clearly in these cases the "best practices" is not computed accurately if a state does n ot even have to achieve in 2030 what they were capable of achieving in 2012.

Commenters stated t he EPA notes Alaska and Hawaii are not grouped with other states given their unique locations, and the EPA developed RE generation targets for each of those st ates based on the lowest values for the six regions evaluated. Commenters said the EPA is giving consideration to unique location but ignores with all other states uniqueness actually related to RE potential.

The EPA acknowledges the approach to quantific ation of a state's RE generation target does not explicitly account for the amount of fossil fuel

- fired generation in that state and therefore, the application of their approach could yield, for a given state, an increase in RE generation that exceeds the state's reported 2012 fossil fuel

- fired generation. [79 FR 34868] Commenters wondered, what would that additional RE displace

.
Commenters said fundamentally, this approach, in some instances will either drive a state's final goals up or down, inequitably compared to other states, and this cannot possibly be considered a best practices scenario. Commenters said the EPA must revisit any computation method for RE and apply it based on state

- specific factors and abilities.

Comment 8: States need more time to develop multi

- state plans

- the two years for coordinating with other governments may not be sufficient. The EPA should do more to facilitate development and implementation of regional plans or arrangements, and one way is for the rule to recognize "modu lar" plans like those discussed by CARB

. Response 8: See section I.A., III.A. and VIII of the final rule preamble of the CPP for the EPA’s response to this comment.314 The following are summaries of the specific public comments under this comment:

Need more time for plan development

. Commenters said while EPA affords states more time to develop multi

- state plans (two years, rather than the one year allotted for an individual state plan), two years to coordinate with other governments may not be sufficient. C ommenters said the additional time allowed for multi

- state coordination is further muted by interim filings and target deadlines that must include specific implementation details. Commenters said as proposed, the timeline for submitting plans and for imple mentation of those plans does not contemplate the time need for inter

- state coordination (even in the absence of a multi

- state plan), nor for development of necessary infrastructure improvements needed to execute the mandated reductions.

Enforcement waivers and extended deadlines . Commenter s said furthermore, EPA should do more to recognize the interrelated nature of the electricity grid in various regions and provide more robust measures and provisions that facilitate the development and implementati on of regional plans or arrangements, including recognition of measures that address enforcement waivers or extended deadlines if warranted. Commenters said indeed, as EPA itself noted, "system operators have offered suggestions in using regional approache s to implement CAA section 111(d) while maintaining reliable, affordable electricity." (79 Fed. Reg. at 34,846) Commenters indicated such regional approaches cannot be successfully implemented within the time

- lines set forth in the Proposed Rule.

Modular P lans

. Commenters said one way to facilitate multi

- state agreements is for EPA's rule to recognize "modular" plans, like those that have been discussed by the California Air Resources Board. Commenters said these individualized plans would allow states that are in accord on specific matters to enter into compliance agreements where a comprehensive multi

- state plan (where all of the parties agree to all of the necessary terms and conditions that would be required for a comprehensive multi

- state plan) may be i nfeasible. Commenters said not all states are similarly situated with regard to meeting their state targets, or the measures that would most likely be employed to get there. Commenters said issue

- specific agreements with another state or groups of states c ould be utilized to advance a single objective and facilitate attaining the states' targets. Commenters stated these types of arrangements would also allow better alignment of individual issues, such as the treatment of energy efficiency and renewable ener gy, and would facilitate regional coordination regarding critical electric

- grid related considerations.

Comment 9: Additional clarity is needed regarding some issues related to multi

- state/regional compliance, and EPA must provide additional assistance an d infrastructure related to multi

state/regional compliance

Response 9: See sections 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:

Commente rs stated that t o support multi

- state approaches to 111(d) implementation, the EPA should:315 “ Provide greater clarity on requirements for states to qualify for the 2

- year extension to submit state plans when coordinating action with other states

. Clarify th at states can cooperate without blending state goals into a multi

- state goal (which is in accordance with best emissions tracking and accounting practices to ensure appropriate crediting and to avoid double counting). Indeed, multi

- state cooperation is mo st likely to arise among states that have individual state plans that recognize reductions or credits from other states

- this approach should qualify as a multi

- state approach eligible for an additional year extension.

Provide the necessary assistance an d infrastructure for states to accomplish multistate approaches. For example, EPA should provide or approve the use of credit tracking systems for states that wish to implement trading programs and accept reductions or credits from other states as valid co mpliance currency.

For rate

- based trading between states, EPA would need to assist states on Evaluation, Measurement and Verification (EM&V), tracking and minimum requirements for crediting to enable a tradable credit system, and clarify how states could take advantage of emissions reductions driven by shifts in utilization that occur across state lines. EPA should also assist states with a tracking system or enable states and regions to build existing renewable energy tracking systems for this purpose.

C larify several steps involved in developing a regional plan including (a) conversion to a mass

based goal in a manner that does not disadvantage states that choose this option, and (b) the development of state 111(d) plans in states that are "split," with part of their generation in one regional transmission organization ("RTO") and the remainder in a different or no RTO. ”

Commenters stated EPA should provide states with detailed directions, equations, and examples explaining how a rate

- based multi

- state goal can be calculated by states that agree to participate together in a multi

- state plan. The commenters said this guidance should also include directions on how to convert a multi

- state rate

- based goal to a multi

- state mass

- based goal.

Comment 10: For states choosing multi

- state compliance option, the EPA should retain the approach of developing state

- specific goals, rather than req uiring multi

- state or regional goals, the EPA or a third party should provide credit tracking system, and the EPA should allow for extension of plan submittals

Response 10: See section VIII of the final rule preamble of the CPP for the EPA’s response to th is comment.

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

Several commenters said that the EPA should retain its approach of developing state

- specific goals and should not require multi

- state or regional goals for states c hoosing multi

- state compliance options. Commenters said the EPA's proposal suggests the development of joint performance standards for states wishing to coordinate their compliance plans. Commenters noted that this would likely involve the development of a single emissions rate target for multiple316 states. Several commenters said there is little reason to expect that states with goals less stringent than an average single goal would be willing to accept a more stringent regional average goal.

Commenters sa id given the timeframe available for such multi

- state plan development, including the likely inability of states to agree on a single emissions rate target and develop a program to implement such a mechanism in a timely fashion, it will be extremely diffic ult to achieve. Commenters said that given the complexity of the rule, states will likely need several years to fully examine their options for regional cooperation and to compare these approaches with state

specific compliance options, and at the end of t his time consuming process, states may still decide to comply via strategies they can apply within their state boundaries. Commenters said however, states that have seriously examined regional compliance options should still qualify for the extension for completion of their state plans so long as they demonstrate that they are actively engaged in a process with other jurisdictions to consider multi

- state coordination and that they are developing multi

- state or individual state plans that contemplate such

c oordination. Commenters said that multi

- state plans should provide for trading between states of credits representing tons of emissions or megawatt

- hours of generation, and the EPA or another third part entity should provide a credit tracking system to be used by states wishing to participate.

Commenters said that the EPA points to RGGI as an example of a regional program with a single emission target, but said it is important to note that RGGI is made up of a group of similarly situated, like

- minded state s, all of whom had the same overall emission reduction goal

- a 10 percent reduction in carbon dioxide emissions

- and required each state to agree to and pass model legislation. Commenters said on the other hand, the Western United States is an area that is very diverse in its generation resource mix and access to fuel supplies, whether they are mine

mouth coal supplies, wind resources, or rivers that supply an abundance of hydroelectric

resources. Commenters said the application of BSER results in dramati cally different emission rates to be achieved in the Western United States, which includes one of the highest emission rate goals (1,771 lb CO2/MWh in Montana) and the lowest emission rate goal (215 lb CO2/MWh in Washington). Commenters said this diversity creates potentially insurmountable hurdles for Western states to agree on a single emission rate target, and such a single target may not be appealing even to likeminded states given the complexities, including how states may be penalized for noncomplianc e, of enforcing a multi

- state program with a single emission rate target on a state by state basis. Commenters therefore recommended that EPA retain its approach for developing state

- specific emission rate targets, but allow states to develop creative and innovative multi

- state compliance solutions.

Comment 11: The choice of which option to use for calculating a weighted average, rate

- based CO2 emission performance goal for multiple states should be left to the states forming the multi

state group. States should have the option of either relying on its modeling capabilities, or if state defers to its ISO, the ISOs modeling capabilities when establishing the state's goals

. Response 11: See section VIII of the final rule preamble of the CPP for the EPA’s response to this comment.317 The following are summaries of the specific public comments under this comment:

Several commenters provided input regarding which of the two proposed approaches for joint demonstration of emission performance in multi

- state plans should be used. Several commenters said the EPA proposed two alternative methods to calculate the weighted average emission rate goal for a group of participating states, and indicated that states should have the discretion to decide which approach makes the most sense for their multi

- state jurisdiction. Commenters said that if only one option can be used, the second option (using projected quantity of electrical generation by affected EGUs each year in each of the states) is preferred because it acknowl edges that different states within a multi

- state grouping will grow at different
rates. Commenters said if however, the first option is required (uses electricity generation by affected EGUs in each of the states during the 2012 base year), a multi

- year b aseline should be used instead of the unrepresentative (due to abnormally low natural gas prices) 2012.

Commenters said to assure that state goals are set which ensure reliability, manage cost and recognize the need to balance the interactions between the four building blocks on an hourly basis taking into account the regional market impacts, the state should be able to either rely on its modeling capabilities, or if the state defers to its ISO, the ISO's modeling capabilities when establishing the state's goals. Commenters said regional models will incorporate greater consideration of regional impacts on a state's goals by accounting for impacts and interactions between the region's electric resources.

Comment 12: Multi

- state approaches

Response 12: See s ection 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:

Several commenters argued that EPA lacks the expertise to properly assess costs savings associated with multi

- state approaches. Commenters indicated it should be left to the participating states to make the economic determination that such an agreement is in the interest of the ratepayers. Commenters said that while the CAA does leave discretion to the Administrator, such economic consequences are so state

- specific that it is beyond the EPA's ability to make those decisions, and therefore, the requirement s should be limited to meeting the required emission reduction goals. Commenters said that even if EPA did have the expertise to properly assess costs savings associated with multistate approaches, it would be inappropriate to penalize states that are wil ling to and can reduce program costs by utilizing multi

- state options or to gauge the reasonableness of the costs of state

- specific goals by surmising potential economic benefits associated with theoretical multi

- state approaches.

Commenters posed several questions regarding modeling for potential multi

- state targets. Commenters asked :
If modeling is required for potential multi

- state targets, should states model the individual state rate targets or a regional target

.318 Should the regional target be weighted by state fossil generation or some other metric

Should it be based on 2012 generation or projected generation

Comment 13: The EPA should impose a minimum gas generation share target by state. This could increase true flexibility, enhance opportunities for coordinated state action, and decrease overall economic burden of the CPP

Response 13: The EPA has revised its building block two assessment and determination of sub category

- specific rates. The regionalized building blocks help share some of the natur al gas abatement potential across every state relative to proposal that limited building block two reduction potential within state. See section V.D for discussion of building block two.

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

Commenters said that Building Block 2's re

- dispatch step effectively displaces all coal generation in Mississippi, making the rule very inflexible. Commenters said that states and their utilities must plan based on the state

- specific goals the EPA has derived. Commenters said that even if multi

- state compliance and/or trading mechanisms could enhance flexibility in theory, the proposed goals and compliance schedule will in practice force states and utilities into actions that will increase cost s and risk reliability impacts. Commenters said that several of these issues could 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.

Comme nters 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 irreversible actions to ensure compliance on a single

- state basis. Commenters indicated they have not evaluated what minimum share level could be appropriate, but believes such modification could increase true flexibility, enhance opportunities for coordinated state action, and decrease the overall economic burden of the Clean Power Plan, while maintaining overall emissions reduction goals.

Comment 14: The EPA should evaluate the merits of a uniform rate

- based national performance goal. It would be simpler, could achieve the same 30% national reduction, would address early action, increase reliability, and provide flexibility

. Respo nse 14: See sections 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:319 Commenters said the EPA should evaluate the merits of a straightforward, un iform, rate

- based, national performance goal that considers all applicable electric generating units (EGU), as opposed to EPA setting individual, state

- specific goals. Commenters said a single national goal could achieve the same 30% national emission redu ction and be based on a national performance limit in the range of the proposed Section 111(b) standards applied to the collective power sector for each state. Commenters said that additional time and alternative voluntary strategies for compliance could b e provided to states that require the greatest emission reductions.

Commenters said a national performance goal would equitably address past emissions reductions (early action) and could be designed to provide flexibility for achieving compliance. Commente rs performed a variety of calculations and concluded that a national performance standard of 1,030 lb/MWh would achieve similar emission reductions sought by the EPA under its proposed rule and would appropriately credit past actions and broaden compliance options. Commenters said that the 1,030 lb/MWh goal is within the range of the EPA's proposed Section 111(b) new source performance standards for coal boilers and NGCC units, which is appropriate over the long term, as existing units are replaced with ne w units.

Commenters said as an alternative to a suggested 1,030 lb/MWh standard, the EPA could apply the proposed Section 111(b) standards to each affected existing unit under Section 111(d), and compute a weighted average based upon a formula to be determ ined. Commenters said under this scenario the national performance goal would be set within the range of 1,000 lb/MWh and 1,100 lb/MWh, using Section 111(b) standards for new coal boilers and natural gas combined cycle power plants (NGCC). Commenters added that while New Jersey has not developed a methodology for this approach, the EPA could perform a weighted average approach by either using historic unit generation or projected unit generation.

Commenters added that a uniform national goal would improve the reliability of the electric grid by enabling states like New Jersey to maintain some fuel diversity, which is important for addressing price volatility and weather events.

Comment 15: The proposed CPP RE targets are too low; UCS's "demonstrated growth" approach should be used to set more aggressive targets for RE

Response 15: See section V.E. of the final rule preamble of the CPP for the EPA’s response to this comment.

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

The commenters said to drive the kind of renewable energy gains necessary to have meaningful impact on U.S. carbon emissions, the EPA should adopt the Union of Concerned Scientists' ("UCS") recommendations for strengthening the CPP. The commenters 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."

The commenters said the U CS analysis showed that the levels of renewables reached through compliance with the CPP are lower in 2020 than what the EIA predicts would occur under a320 business

- as

- usual approach, and the CPP's 2030 results are only marginally higher than the EIA's proje ctions.

The commenters said the UCS Demonstrated Growth approach uses baseline renewable energy generation for each state and adds a reasonable incremental level of growth. The commenters said in Texas, for example, the UCS Demonstrated Growth approach ass umes that Texas will maintain the 1.1% annual growth rate in renewable energy deployment that the state achieved during the baseline period

- 2009 through 2013. The commenters indicated that UCS estimates that a demonstrated growth approach would result in 40% renewable generation in Texas by 2030, compared to just 20% under EPA's proposal, with improvements in every region of the country.

Comment 16: Regulation must account for remaining useful life of EGUs; states should have lead role in developing targets; targets for existing sources cannot be more stringent than corresponding standards for new sources under Section 111(b)

Response 16: See sections V and VIII of the final rule preamble of the CPP for the EPA’s response to this comment.

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

Background

. Commenters explained that UNS subsidiaries TEP and UNSE are members of the Arizona Utility Group (AUG), which also is filing comments on the Proposal. Commenters said the AUG c omments present details of a joint proposal (AUG Proposal) that would achieve a substantial CO2 emission rate reduction while mitigating other adverse impacts that would result from the EPA's Proposal.

Commenters said the fundamental tenet behind the AUG Proposal is that the EPA is compelled both statutorily, and by common

- sense public policy to recognize and account for the "remaining useful life" of coal

- fired power plants that are serving Arizona residents at a cost already incorporated in customers' ap proved rates. Commenter said in addition, the AUG Proposal emphasizes the lead role that states are afforded in establishing "standards of performance" under Sec. 111(d), and clarifies that "standards of performance" for existing sources under Sec. 111(d) cannot be more stringent than corresponding standards for new sources under Sec. 111(b).

Suggested specific changes to methodology

. Commenters offered specific language incorporating these concepts as presented below :

1. For purposes of goal setting under BB2:

a. Redispatch from coal

- fired EGUs to natural gas combined cycle (NGCC) EGUs should occur upon the later of any of the following:

i. January 1, 2020;321 ii. 40 years after initial commencement of operation; or

iii

. 20 years after commencement of operat ion of major pollution control retrofit, 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 after commencement of operation of selecti ve 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 shutdown 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 commitment 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

- fired EGUs for purposes of calculating the I nterim and Final Goals.

2. For purposes of goal setting, when re

- dispatching to NGCC, a rate of 1,000 lbs CO2/MWh should be used, consistent with the most stringent standard in the EPA's proposed New Source Performance Standard for EGUs.

3. The State should esta blish the Interim Goal in its State Plan based upon EPA's building block approach as modified by paragraphs 1 and 2 above.

Effect of suggested changes

. Commenters said incorporating these changes, Arizona's interim goal emission rate is determined through the state planning process, and the final 2030 goal emission rate becomes 963 lbs CO2/MWh

.
Commenter s said Salt River Project Agricultural Improvement and Power District (Salt River Project or SRP) conducted an analysis of the impact the AUG Proposal wou ld have on each state using a database developed and maintained by The Brattle Group. Commenters said SRP's analysis concluded that, although these changes would result in later re

- dispatch of coal

- fired units in a limited number of additional states, the overall impact across the entire universe of affected units is small.

Commenters said UNS believes that the AUG Proposal satisfies the intent of Clean Air Act Section 111(d) while avoiding the EPA Proposal's significant threats to reliability, affordabilit y and Arizona's economy. Commenters strongly encouraged the EPA to incorporate these changes in the final rule.

Comment 17: Proposed methodology using existing RPS requirements as a foundation significantly underestimates renewable energy potential in man y states322 Response 17: See section s V 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 indicate d that the methodology EPA proposes to estimate renewable energy potential available to states significantly underestimates the potential. Commenters asserted that an approach that incorporates all renewable energy resources and takes into account established trends in market growth would pr ovide a better basis for determining feasible renewable generation growth in each state as part of building block 3.

Commenters said to estimate the carbon emission reductions from affected EGUs achievable based on increases in renewable generation, EPA has developed a "best practices" scenario for renewable energy generation based upon RPS requirements already established by a ma jority of
states. Commenters stated that this methodology, however, represents a significant understatement of the renewable energy potential available to states for the reduction of greenhouse gas emissions.

For instance, according to c ommenters , seven states had more renewables in 2013 than EPA's 2030 targets for those very states, and 17 states would develop less renewable generation under EPA's target than under their existing mandatory RPSs. Commenters said under EPA's proposed method, 25 states also would not reach the proposed regional target by 2030. Commenters said EPA's approach effectively assumes that renewable generation grows at 0.65 percent of total electric sector market share per year, well below the recent market share growth rate of 1 percent
per year. Commenters said as such, the proposed approach's renewables targets fail to meet the CAA standard for "best" system of emissions reductions.

Comment 18: The proposed RPS approach is flawed b ecause state RPSs are not necessarily based on the amount of cost

- effective, achievable RE within a given state's or region's borders

. Response 18: See sections V and VI of the final rule preamble of the CPP for the EPA’s response to this comment

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

Commenters stated that although the TSD and NODA approaches are indeed an improvement over the RPS

- based approach, they still significantly underestimate the actual RE potential for
sta tes today. The proposed RPS approach is flawed, according to c ommenters , because state RPSs, which are policy commitments, are not necessarily based on the amount of cost

- effective, achievable renewable energy within a given state's or region's borders.

C ommenters said the Clean Power Plan assumes that state RPS programs are set based on an assessment of the costs and feasibility of target percentages of renewable energy. Commenters said however, the establishment of the BSER, including evaluations of cost and feasibility, is the responsibility of the EPA and not the states. Commenters said by resting the justification for the level of achievable renewable energy generation on the fact that "states have already had the323 opportunity to assess those requiremen ts against a range of policy objectives including both feasibility and costs", EPA's Proposed RPS Approach does not directly demonstrate that the Administrator has determined that building block 3 meets the standard for BSER, as Section 111(d) requires.

Co mmenters agreed that the recognition of regions to cost

- effectively support renewable generation is an important insight that should be used in establishing the BSER. However, Commenters argued, this conclusion does not mean that the responsibility to dete rmine BSER for each region should be left to the political decisions reflected in some state policies, which may have been developed for purposes other than reducing carbon emissions at affected EGUs. Commenters said it is unlikely that state RPS were set based on the same criteria that the EPA is required to use when determining BSER.

Commenters said in addition, RPS requirements developed by the states do not necessarily reflect consideration of regional achievability. Commenters said for instance, many o f the existing state RPSs do not take into consideration renewable energy trading markets, achievability of regional emission reduction goals, and the full extent to which renewable generation may be implemented within a particular region. Commenters said further, by only examining the impact of one policy framework, the analysis is inherently conservative, as many other policy options are available in addition to RPS frameworks for EPA to establish best practices for renewable generation expansion.

Commen t 19: Regional growth factor should not be applied to each state; instead the EPA should assume that each state can meet the average of existing RPSs in the region

Response 19: See section 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:

Commenters disagreed with the proposed RFS approach which only expects a state to meet a regional average rate of renewable energy generation, even if the state's renewable generation already is above that average. Commenters recommended that EPA not apply the regional growth factor to each state and instead assume that each state can meet the average of the existing RPSs in the region.

The commenters said under the EPA's proposal, states with renewable generation below the regional targets make pre

- determined incremental annual progress; however, once a state reaches that goal, renewable generation remains flat through 2030. Commenters said this resul ts in markedly slower growth in renewable generation than is achievable to best reduce carbon emissions and is not consistent with statutory mandate to create "best practices". Commenters said in addition, using the proposed regional approach to establish generation targets, the EPA would effectively be giving some states renewable generation targets lower than the state's actual reported generation amounts for 2012.324 Commenters said under the EPA's Proposed RPS Approach, if a state's renewable generation i n 2012 has already exceeded the regional renewable target, its annual renewable generation levels are held to the regional target for the entirety of the compliance duration, 2017 to 2029. Commenters said this would result in an unintended outcome whereby a number of states would not need to reduce carbon emissions below their 2012 levels under building block three, and the same regional renewable generation target in percentage (share of total generation) terms is imposed on all states in a given region.

Commenters said in addition, because of the application of the regional growth factor to the 2012 renewable generation in a state, the absolute megawatt

- hour target would be smaller for states starting with a lower amount of renewable generation, and large r for a state starting with a higher absolute amount of renewable generation. Commenters said as such, some states would effectively be rewarded for not pursuing cleaner energy portfolios before 2012. EPA's final rule should reflect a more equitable soluti on.

Comment 20: The EPA should not assign RE goals based on regional averages and 2012 generation, but instead should conduct rigorous state

- specific RE integration analyses

. Response 20: See section 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:

Commenters said assigning renewable goals informed by regional averages and 2012 generation does not ensure realistic goals based on transmission co nstraints and grid reliability. Commenters said EPA should conduct rigorous state

- specific renewable energy integration analyses, factoring in:

• Existing transmission capacity and reliability issues,

• Environmental siting requirements,

• Land use requirements and restrictions,

• Endangered and species of special concern habitat, and

• Other factors

To inform the renewable goals set for states

, c ommenters said EPA should also consider the impact of neighboring states and regions attempting to significantly increase renewables integration within the same timeframe, which will also compound reliability and constructability related challenges325 Comment 21: Sta tes, not the EPA, should determine key, state

- specific elements of BSER, such as renewable energy potential, as part of their state plans

. Response 21: See section VIII o f the final rule preamble of the CPP for the EPA’s response to this comment

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

Commenters suggested EPA consider allowing states to determine key, state

- specific elements of the BSER, such as renewable energy potential, as part of their state plans in the phased ap proach recommended above under "policy flexibility". Commenters said this is especially important for states with extensive renewable programs already underway, as well as in other states where breakthroughs in renewable energy technologies and business mo dels have the potential to unlock much more competitively priced renewable energy in the future than is apparent today.

Comment 22: The EPA should consider an incremental approach to BB1 so that there would be no reductions associated with coal plant hea t rate improvements for states that generated less than roughly 10 percent of their total annual energy from coal as of the end of 2012

Response 22: See sections VI and VIII of the final rule preamble of the CPP for the EPA’s response to this comment regarding credit for early actions. The EPA is not implementing an incremental approach to Building Block 1 in the final rule

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

Commenters said that the adjusted emission rate for New York is overly stringent and penalized New York for its early actions. Commenters suggested an incremental approach to BB1 which includes no reductions associated with coal plant heat rate improvements for states that generated < 10% of their tota l annual energy from coal as of the end of 2012.

Commenters said New York has invested in a wide

- variety of energy reduction programs that (when coupled with the energy efficiency inherent in urban systems) have led to relatively low carbon dioxide emissio ns when compared with other states. Commenters said New York's low carbon dioxide density is also a reflection of the fuel mix of the power sector. Commenters said New York has historically invested in the use of hydroelectricity from in

- state hydroelectri c plants and high

- voltage transmission links to hydroelectric facilities in Canada. Commenters said when combined with nuclear capacity, more than 53 percent of the electricity used in New York is generated by zero

- emissions resources, with less than 3 per cent generated by coal in 2013.

Commenters said in states that have taken early action to reduce their dependence on coal, increase the amount of natural gas capacity, and integrate zero

- emissions resources, EPA's four Building Blocks combine to create str ingent targets and challenging conditions on the power system.

Commenters said in establishing its targets for coal generation heat rate improvements, EPA repeatedly highlights the range of practices, technologies, and measures adopted by the various326 EGU's that make up the nation's coal generation fleet. Commenters said the EPA's finding of technical feasibility relies on fleet

- wide averages, recognizing that "some EGU's may have already implemented some upgrades," and best practices associated with heat ra te improvements. Commenters said in so doing, EPA declines to set plant

- specific targets.

Commenters said in New York, attainment of EPA's targets is based on the existing technology and practices at a small cohort of plants. Commenters said only seven co al

- fired plants operated in New York in 2012, for a total nameplate capacity of roughly 1,350 MW. Commenters said since that time, one plant has retired, a second co

- fires natural gas, and a third is being closed and re

- powered to burn natural gas, and two of the remaining plants are required to operate under reliability

- must

- run orders. Commenters said this calls into question the technical feasibility of using a "fleet

- wide average" to implement EPA's targets.

Commenters said to resolve this technical fea sibility concern resulting from "fleet

- wide" assumptions being applied to a small cohort of units, the Alliance recommends EPA consider an incremental approach to Building Block #1 so that there would be no reductions associated with coal plant heat rate i mprovements for states that generated less than roughly 10 percent of their total annual energy from coal as of the end of 2012. Commenters said such an incremental approach could be applied fairly across all states and would support EPA's intention to avo id setting emission standards on a plant

- by

- plant basis.

Comment 23: Each state's RPS goals should be used as a floor for achievable RE generation in that state, not for establishing a ceiling

. Response 23: See section V.E. of the final rule preamble of t he CPP for the EPA’s response to this comment

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

Commenter s argue d that the proposed RPS approach should use each state's RPS goals as a floor for achievable renewable generation in that state, not for establishing a ceiling. The commenters said under the proposed RPS approach, if a state's own RPS is more ambitious than its regional average, the regional average is nevertheless used. The commenters said by failing to incorporate a state's own RPS commitments in its BSER determination, the EPA undermines its own justification for the proposed RPS approach.

According to commenters , this analytical error is particularly acute for the five states that a lready generate as much or more renewable electricity than their regionally calculated average for 2030. The commenters said oddly, such a state could increase affected EGU use as a proportion of generation and still meet its BSER targets for renewable ene rgy.

Commenters said the EPA is taking comment on whether the level of 2012 renewable energy generation in each state should serve as a floor for the amount of renewable energy generation expected for that state under building block 3. Commenters strongly supported such a floor; however, to more accurately reflect the level of renewable generation a state has actually achieved, they recommend that the floor be set at a state's renewable energy generation when the327 Clean Power Plan is finalized in 2015. Comme nters said further, the Clean Power Plan should determine that for states with an RPS policy more ambitious than the regional average, the BSER should require that renewable energy targets are at least as high as the state RPS requirement. Commenters said this approach is consistent with the EPA's general "no backsliding" policy approach.

Comment 24: The EPA approach should not assume no renewable energy growth during the period 2012

- 2017, and rather than using 2012 renewable energy as a starting point, the EPA should use renewable energy at the t ime the regulation is finalized

Response 24: See section 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:

Commenters disagreed with EPA's assumption that there will be no renewable energy growth between 2012 and 2017. The commenter s also asserted that the proposed RPS approach should use a state's renewable energy generation rate at the time the Clea n Power Plan is finalized as the starting point from which its renewable generation is expected to grow, rather than 2012.

Commenters stated u nder the Proposed RPS Approach, state level renewable energy targets begin in 2017 and continue to ramp up through 2030, even though compliance would not be required until 2020. However, commenters stated , the methodology assumes the increase starts to occur only after 2017. Commenters stated t o determine a state's 2017 baseline generation levels, EPA takes 2012 renew able generation and assumes that as the starting point in 2017. Commenters felt that this approach inadequately assesses renewable potential as it assumes no growth in renewable generation from 2012 through 2017, even though significant renewable capacity that was not generating in 2012 (including a large amount of renewable capacity added during 2012 that contributed less than a full year's output to 2012 generation) has been installed, is currently under construction, or is under advanced stages of develo pment and will be online by 2017.

Commenters stated t he Clean Power Plan should assume each state's renewable energy generation is able to grow beginning in 2012 until it meets the regional target, rather than expecting zero growth from 2012 to 2017. The c ommenters said in particular, if EPA adopts the Proposed RPS approach, the growth factor assumption should be adjusted to reflect growth throughout those years. The commenters said if this modification is not made, the best practices scenario for renewable energy expansion will be based on an underestimation of the growth factor used for each state in that region. The commenters said there should be an established trend from 2012

- 2029 using data that yields an annual growth factor unique to each region and based upon each region's current and target renewable generation levels.

Comment 25: In the final rule, the EPA should clarify that credit for off

- the

- grid renewable generation will be allowed in plan compliance

.328 Response 25: See section s V.E. and VIII of the final rule preamble of the CPP for the EPA’s response to this comment.

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

Commenters stated that the EPA should clarify in the final rule that credit for off

- the

- grid

renew able generation will be allowed in plan compliance. Commenters said that some states, such as New Mexico, have many rural areas where costs for connection to the grid make distributed generation with storage capacity (off

- the

- grid) the most economic optio n for both residential and some commercial facilities. Commenters said these resources, while small, still reduce the usage of fossil generation that otherwise would have been necessary without the installations, and with proper evaluation, monitoring and verification, these should be valid resources for crediting in a state plan.

Comment 26: The EPA should add a national benchmark to better reflect demonstrated growth of renewable energy

Response 26: See section V of the final rule preamble of the CPP for a discussion of changes made to building block three in this final rule, and supporting analysis in the GHG Mitigation Measures TSD.

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

Commenters recommend ed that the EPA revise the proposed RPS approach to ensure that state emissions rate reduction targets and, in particular, renewable growth rates, better reflect deployment rates already being achieved by many states (what has been adequately demonstrated) and reasonable projec tions of deployment (what is achievable). The commenters said to that end, the EPA should revise its preferred alternative to ensure that a "demonstrated growth approach" for setting renewable energy targets is used.

Commenter s state d that to calculate sta te renewable energy targets, the EPA should use EIA data to calculate each state's renewable energy growth rate over the five

- year period from 2009 to 2013. The commenters said that EIA data show that states, on average, have increased the share of their total generation coming from renewable energy by 1 percentage point annually over this time period .The commenters said this demonstrated growth rate should be used to set the future renewable generation targets. Commenters stated that this is a reasonable target to use as a national benchmark, since 11 of the 15 leading states that have achieved annual growth rates at or above one percentage point annual growth have maintai ned this over the past ten years. The
commenters said establishing a national benchmark accounts for recent rapid growth in wind and solar generation and captures much of the historic development spurred by state RPSs.

Commenters suggested that for states below the one percentage point national benchmark growth rate, 2017 to 2020 would function as a period for states to ramp up deployment, allowing states that have not been active in renewable development to catch up to the national benchmark. The
commenter s said after 2020, it would be assumed that renewable energy within these states would grow at the one percentage point national benchmark growth rate through 2030. For the329 15 leading states that have deployed renewable energy at or above the national benc hmark, Commenters suggested that the EPA increase their respective renewable energy targets from 2017 to 2030 at each state's average annual percentage point growth rate during the 2009

- 2013 benchmark period, up to 1.5 percentage points annually. Commenter s stated that this is a reasonable upper limit that is capable of being sustained over time, and a 1.5 percentage point growth rate is consistent with renewable energy targets set by many leading state RPSs.

Commenters indicated that to account for full co mpliance with mandatory state RPS laws, states should be required to achieve the greater of two measures: either the generation projected by this growth rate approach, or the level needed to meet states' respective RPS targets for each year from 2017 to 20 30, as projected by the Department of Energy's Lawrence Berkeley National Laboratory (LBNL 2013). The commenters said to ensure reasonably achievable renewable energy penetration rates during the compliance period, the EPA could cap the total share of

rene wable generation for any state at not less than 40 percent of total state electricity sales, a level that several studies by grid operators, utilities, and government agencies have shown can be achieved at the state and regional level in this timeframe whi le maintaining reliability.

Commenters acknowledged that this approach places constraints upon renewable developments, such as a 1.5 percentage point annual growth cap and a 40 percent overall target cap, but observed that these restrictions are reflective of current conditions and should remain flexible. The commenters said as the EPA undertakes regular reviews of the Clean Power Plan, these constraints could be adjusted upward or eliminated entirely to account for new renewable technologies, grid integrat ion techniques, other changes in the generation mix, and falling costs over the compliance period.

Comment 27: The EPA should remove the provision requiring that states that are net importers of power discount any reductions that may be achieved by end

- us e energy efficiency programs. If discount requirement is not eliminated, it should be based on the percentage of imported generation for the compliance year itself, not a factor calculated based on 2012 baseline data

. Response 27: As described in section V .A of the final rule preamble

, the EPA is no longer including demand

- side energy efficiency in its BSER quantification. However, states/sources still have the ability to use demand

- side energy efficiency measures as part of their compliance strategy. The EPA discusses the EM&V procedures for demand

- side energy efficiency approaches in s ection VIII of the final rule preamble of the CPP

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

Commenters said in states that import elec tricity, the EPA notes that states must discount the CO2 emission reductions associated with EE to reflect the level of electricity imports. Commenters said the EPA is proposing this be done through modeling or use of a proxy net import factor. Commenters said if states are responsible for all the emissions generated by in

state resources, regardless of where the power is actually consumed, then states should not have to discount end

- use energy efficiency reductions to account for power imports. Commenters said in addition, it is logical that a state be given full credit for avoided emissions from state

-330 implemented EE programs since the rate payers within the state are paying the program costs. Commenters said that for these reasons, we request that the EPA remove the provision requiring that states that are net importers of power discount any reductions that may be achieved by end

use energy efficiency programs.

Realizing that the EPA may not eliminate t he discount requirement, c ommenters said to the extent that a proxy net importer factor is used, we request it be based on the percentage of imported generation for the compliance year itself, not a factor calculated based on 2012 baseline data. Commenters said that as encouraged by Virginia law, Dominion has begun a program of building in

- state generation to reduce the amount of imported power. Commenters explained therefore, a requirement to use the 2012 import data as the basis for an EE credit adjustmen t factor would disadvantage Virginia and discredit meaningful EE measures implemented in the
state.

Comment 28: The EPA should assume that incremental renewable and energy efficiency resources have the effect of displacing fossil generation. Using that a ssumption, analysis by Commenter s indicate d Alabama can reach the remaining 55% of its target through renewable energy and energy efficiency, with only minimal gas re

- dispatch

Response 28: In both proposal and final the EPA assumed that incremental RE generation had the ability to replace existing fossil generation. In this final rule, per this comment and others, the EPA captures that replacement by reducing the baseline level of generation from fossil sources in amount s equal to the incremental RE generation

. See sections V and VI of the final rule preamble for further discussion.

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

Commenters indicated their analysis shows that Alabama can a chieve its remaining reductions through a combination of renewable resource additions and increased energy efficiency investments, along with minimal natural gas re

- dispatch. Commenters said for the purposes of this analysis, we ignored the potential reduc tions from the heat rate improvements of Building Block 1, which some utilities have cited as unfeasible or impractical.

Commenters said in our analysis, we make an assumption that the EPA did not make: that incremental renewable and energy efficiency res ources have the effect of displacing fossil generation. Commenters said as the EPA appears to recognize in its recent Notice of Data Availability [See 79 Fed. Reg. at 64,543.], to assume otherwise is inconsistent with EPA's application of BSER for Building Block 2 and nonsensical as a practical matter: utilities will dispatch resources having no fuel costs in lieu of those that do.

Commenters said they show that if renewable energy and efficiency measures are assumed to displace fossil generation, Alabama n eed not pursue natural gas re

- dispatch all the way to 70 percent. Commenters said instead, Alabama could achieve its target by increasing to a capacity factor of 64 percent, just 5 percentage points higher than current utilization. Commenters said

moreover , Alabama can achieve its target without pursuing renewable and energy efficiency resource additions to the extent EPA assumed in its target

- setting. Commenters said instead,331 Alabama could reach its target with just 80 percent of the levels of each measure that EPA assumed in its calculations.

Comment 29 : The EPA solicited comments regarding whether it should change its formula regarding building blocks 3 and 4 not only add to resources, but also to remove 2012 fossil fuel generation. Commenter s warn ed analyzing effect of adding one type of resource on other resources is difficult and complex

Response 29: The EPA does assess the effect of its BSER quantification in a power sector modeling tool that informs of the collective impacts of the building bloc ks and BSER quantification.

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

Commenters said the EPA solicited comments regarding whether it should change its formula regarding building blocks 3 and 4 to not only add resource s, but also to remove 2012 fossil generation. Commenters cautioned that when adding one type of resource, the effects on other resources is a difficult and complicated determination. Commenters said that if the EPA wishes to subtract existing generation in its goal setting, then it should carefully model any changes to make it more likely that these generation changes will actually occur in the way suggested in the formula.

Comment 30: The EPA's proposed approach is overly restrictive in that it has potent ial to render a portion of energy efficiency measures stranded. To remedy this, the EPA should allow states to take credit for energy efficiency measures

. Response 30: See section V.A for a discussion of demand

- side energy efficiency. The EPA is not inclu ding demand

- side energy efficiency in the final BSER. See section V.A for a discussion of demand

- side energy efficiency. Also see section VIII for discussion of how demand

- side energy efficiency can be used for compliance in state plans.

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

Commenters said in developing the energy efficiency target, EPA did not incorporate assumptions regarding emissions reductions associated with energy efficiency or demand side

measures. Commen ters said however, in the preamble EPA states that it is "proposing that, for demand

- side EE measures, consistent with the approach that the EPA used in determining the BSER, a state could take into account in its plan only those CO2 emission reductions oc curring (or projected to occur) in the state that result from demand

- side EE measures implemented in the state." Commenters said in addition, in the State Plan Considerations TSD, EPA presents a number of options for calculating emissions reductions associ ated with energy efficiency

measures

- which may only be applied to affected resources in the state where the energy efficiency measures were implemented. Commenters noted that due to the interstate nature of the interconnected electric system, the emissio ns reductions associated with energy efficiency may often occur in a different state from where the energy efficiency measures were implemented, and therefore the EPA's proposed approach is overly restrictive in that it has the potential to332 render a portio n of energy efficiency measures stranded. Commenters said to remedy this, EPA should allow states to take credit for energy efficiency measures. Commenters said the EPA should allow states the flexibility to allocate energy efficiency across their system( s) via resource planning and compliance reporting mechanisms to be developed under state plans.

Comment 31: 2030 Regional targets should be based on 2030 RPS targets, not 2020 targets

Response 31: See section 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:

Commenters suggested that using 2020 RPS goals to set 2030 targets for a region is inappropriate. Commenters stated that i nstead, 2030 regi onal targets should be based on 2030 RPS targets.

Commenters said while it is true many RPSs have deadlines in 2015 or 2020

- well before the 2030 compliance deadlines set forth within the Section 111(d) proposed guidelines

- the Clean Power Plan includes no j ustification as to why states should only be expected to meet 2020 targets by 2030, rather than 2020. The commenters said this approach is not consistent with EPA's justification for using state RPS policies in the first place. The commenters said the Prop osed RPS Approach should, at a minimum, use the target in the final year of a state RPS requirement to set 2030 targets, rather than using 2020 RPS requirements to set 2030 targets. The
commenters said in that way, the calculation of achievable renewable g eneration as part of building block 3 would not ignore the commitment by policymakers in some states to add renewable generation after 2020. For states with requirements that do not continue to increase through 2030, c ommenters suggested that the Proposed RPS Approach should determine a reasonable growth rate based on historical market trends or the historical rate at which that state RPS increased to estimate an achievable level of renewable energy growth between the last year in which a state has an incre asing requirement and 2030.

Comment 32: Proposed alternate set of state goals reflect an overly conservative approach

Response 32: The EPA is not finalizing the alternative approach that had final goals in 2025. See section V of the final rule preamble fo r information regarding our final BSER determination. Also see sections VI and VII of the final preamble for subcategory

- specific emission performance rates and state goals, respectively.

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

Commenters stated that the EPA's proposed set of alternate goals, which call for a different level of emissions reductions to be achieved by 2025 instead of 2030, reflect a less stringent application of the building blocks and a shorter impleme ntation period, ultimately reflecting an overly conservative approach. The commenters said in particular, the alternate goals underestimate the extent to which the key elements of the four building blocks

- including penetration of renewable resources

- ca n be achieved rapidly while preserving reliability and333 remaining reasonable in cost. The commenters said in addition, the alternate approach proposal for a less stringent program with a 2025 goal year is overly conservative with respect to achievability by that time.

Comment 33: Final rule requiring 50% carbon emissions reduction from today's levels appears achievable, so final rule should have more aggressive emission reduction target by 2030, and should signal an intent to require further reductions

.
Res ponse 33: See the Regulatory Impact Analysis for final CPP Rule , EPA

- 452/R

- 15

- 003

. The EPA has quantified BSER in this final rule, and expects slightly more reduction than expected at proposal. The EPA ’s statutory obligation is to determine a best system of emission reductions as described in s ection V of the final rule preamble of the CPP

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

Commenters suggested that in addition to setti ng a more aggressive emission reduction target by 2030, the EPA should also set a target emission reduction level envisioned for 2050, to indicate that further reductions are expected beyond 2030.

Commenters said the final rule will likely result in significant investment in new power generation and transmission assets through 2030, and these assets have useful lives that can extend over 50 years from initial construction. Commenters said selection of generat ion technologies in which to invest will depend on a view of emissions targets not only prior to 2030 but through the useful life of the generating plant. Commenters said that signaling the trajectory of emissions reduction targets expected post 2030 will limit investment in projects that would become stranded as emission reductions are strengthened.

Comment 34: State

- specific emission goals should not be adjusted after the final rule is issued, absent extraordinary circumstances

Response 34: The EPA will allow states, via State Plan submittal or revision, to adjust their state wide rate or mass goals per unit inventory changes. If applicability review or formal applicability determinations change the status of units in regards to their inclusion or exclusi on in the state’s affected population, the state may adjust the goal. See section VII.E. of the final rule preamble of the CPP for more information.

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

Commenters agreed that onc e the final goals have been promulgated, a state should no longer have an opportunity to request that the EPA adjust its carbon target to reflect a change in any one building block analysis (unless the state also demonstrates that it could not get addition al reductions from application of any other of the blocks, or comparable measures). The
commenters said to make such a demonstration, states should be required to show that they availed themselves of all reasonable and flexible compliance options, includin g from out

- of

- state

sources.334 Comment 35: BSER should be based on more than what is merely "reasonably achievable "

Response 35: See 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 that in the draft proposal, in developing state emissions reduction goals, only estimates of what is reasonably achievable were calculated and considered for each building block. Instead, c ommenters indicated that the EPA should base BSER on more than what is merely reasonably achievable.

Commenters indicated that courts have recognized that identification of BSER is an expansive, flexible endeavor. The commenters said in the service of sec uring the maximum emissions reductions, the D.C. Circuit Court has held that EPA may weigh "cost, energy, and environmental impacts in the broadest sense at the national and regional levels." The
commenters said while the costs of implementing the BSER may not be unduly burdensome or exorbitant, this certainly does not mean the standard must only achieve the minimally reasonable reduction goals. The commenters said rather, EPA should assess the technically feasible amount of emissions reductions possible wi thin a region when considering emissions reductions goals.

Comment 36: GHG emissions are emitted from various sectors of the economy; reductions from other sectors of the economy besides EGUs should be considered

Response 36: See 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 indicated that because GHG emissions occur from various sectors of the economy, emissions reduction s from all sectors should be considered/required, not just from the EGU
sector. Commenters expressed concern that the proposed rule would establish a mitigation approach that does not adequately recognize alternative methods of reducing emissions in an ef ficient and cost

- effective manner across the U.S. economy.

Commenters note d that in the proposed rule, the EPA cites the 2009 Endangerment Finding, the recent Intergovernmental Panel on Climate Change report, and the recently released National Climate Ass essment to establish impacts from GHGs and the reason for regulatory action on CO2. The commenters said according to the EPA, all GHGs "cause and contribute" to the EPA identified impacts

-- not only CO2. The commenters said further, CO2 is emitted from va rious sectors of the economy, not only from the electric sector. The commenters said in terms of U.S. GHG emissions, the electric sector comprises 32% of total anthropogenic emissions (excluding land use); the transport sector about 28%; and the combinatio n of the commercial, industrial, and residential sectors comprises about 30%.335 Comment 37: Achieving meaningful, cost

- effective emission reductions across the power grid requires taking a grid

- level perspective, as states' experience demonstrates

Response 37: See 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 emphasized that the EPA should draw on the experience of states i n identifying BSER and setting the emission goals by using a system

- wide approach. The c ommenters indicated that meaningful, cost

- effective emission reductions are best achieved through a system

wide approach that draws from three primary strategies

Comm enters indicated that states are achieving very significant carbon pollution reductions through a variety of state programs, including emission budget and trading programs, renewable portfolio standards, energy efficiency programs, state statutes that require or promote planned electricity resource changes, and others.

Commenters emphasized that as EPA designs its Section 111(d) carbon pollution emission guideline for states on the basis of the "best system of emission reduction," it should take into account all of these types of demonstrated successes and the carbon pollution reductions achievable by them. The commenters said that only by considering reductions from all of these types of approaches will EPA be able to establish a standard that achieves the most m eaningful,
cost

- effective reductions.

Commenters indicated the state programs can be grouped into three categories of approaches (as identified by EPA in its questions), each of which can secure a distinct pool of emission reductions:

• changes at individua l covered sources to reduce carbon emission intensity (market

- based programs can help drive these types of improvements; programs and incentive for combined heat and power generation can increase overall efficiency, carbon capture and sequestration can red uce emissions, other potential on

- site improvements to reduce emissions include using RE to provide supplemental steam heating, using waste heat to remove moisture, implementing advanced systems for combustion and dispatch optimization, or oxy

- combustion s ystems)

• shifts in generation from higher carbon emitting sources to lower emitting sources (market

- based state programs demonstrating effectiveness of these types of shifts,
state new source performance standards have also driven such improvements), and

• Reduction of emissions through displacement by zero carbon generation or reduction in electricity demand (adding wind and solar energy resources as well as nuclear power 46

, market

- based programs, renewable energy standards, and state demand

- side energy eff iciency standards and programs)336 Commenters indicate d meaningful, cost

- effective emission reductions are best achieved through a system

- wide approach that draws from all three of these strategies. The commenters said that in particular, state experience has demonstrated that the most cost

- effective strategies resulting in meaningful reductions are those that promote shifts away from high

- emission fossil sources, displace emissions with zero

- carbon generation, or reduce electricity use through demand

- side eff iciency programs.

Commenters stated that in contrast, more limited emission reductions are available from plant

level efficiency improvements, as demonstrated by the extensive technical analysis in EPA's proposed new source standards for the sector. The c ommenters indicated that meaningful reductions could be achieved at a reasonable cost if the full range of available on

- site systems, including efficiency upgrades and other improvements, were applied to each source, except those nearing the end of their r emaining useful life. However, the commenters stated that such an approach is less cost

- effective, and less effective in promoting long

- term improvements in the electricity system, than a system

- wide approach as described above and as demonstrated in our

s tates.

Commenters stated that the best emission reduction systems focus on shifting the grid as a whole away from high carbon sources because individual generating units do not operate independently. The commenters said instead, they are part of a system o f highly interdependent sources whose aggregate emissions are dependent on system management. The commenters said that as state experience has shown, reducing demand for fossil generation or providing alternative, cleaner, sources of supply achieves emissi ons reductions far beyond the level that can be achieved by improving the operations of individual fossil plants.

Commenters indicate d such grid

- level programs have major economic benefits along with environmental improvements, and stated that state effort s to add renewable power have improved the fuel diversity and system performance of the grid, while supporting a national boom in clean energy jobs. The commenters noted that the EPA's Acid Rain Program achieved significant pollution reductions through a grid

- level approach, rather than focusing narrowly on individual sources. The commenters noted that the EPA's recently developed "roadmap" also outlines system

- level approaches to reducing fossil fleet emissions to maintain compliance with standards for po llutants like ozone and soot.

Comment 38: The EPA should put all states on a trajectory to meet goals, while allowing varying compliance times

Response 38: The EPA uses reasonable deployment schedules for its building block assumptions when quantifying BS ER. This results in a glide path of increasing compliance responsibility moving from earlier years to later years. See sections VI, VII, and VIII of the final preamble for information related to the interim subcategory

- specific emission performance rates, interim state goals, and state plans.

The following are summaries of the specific public comments under this comment:337 Commenters stressed that the emission guideline should equitably recognize states' different starting points and circumstances (because they begin with widely differing power fleets and existing regulatory initiatives). The commenters indicated that EPA should account for these differences by placing all states on a trajectory to achieve a uniformly rigorous target, while allowing varying compliance times (recognizing that this period of time may extend beyond an initial phase covered by the rulemaking).

Commenters suggested one approach that EPA should consider is setting a single emission intensity target that would apply to each state, individually or as part of a region, representing net improvements to the carbon intensity of a sta te's electricity system that could be achieved through the system

- wide approaches described above. The commenters suggested that this target could be expressed as an aggregate emission rate of pounds per megawatt

- hour or potentially as a rate of emissions per gross domestic product.

Commenters said that states that would have further to go to meet the target could have longer compliance times to meet the common goal. The commenters said this approach would require all states to reduce emissions while being equitable to states that have already made progress toward meeting the emission intensity target. The commenters said the same goal would be achieved by establishing a mass

- based emission budget for each state that reflects a level of aggregate emissions f rom covered sources commensurate with full use of the best system of emission reductions.

Commenters said that approaches like these would automatically recognize the substantial emission reductions achieve by first

- mover states while providing other state s the time they need to pursue these opportunities. The commenters said that the EPA would ensure that each state has designed its program to put regulated sources on an achievable glide path to reach its target as soon as practicable, thereby maintaining a clear regulatory incentive to reduce carbon dioxide emissions over the compliance period. To support their argument, the commenters said that the EPA has taken these approaches in the past: other Clean Air Act programs allow states time to comply, with the time period depending on the degree of pollution reduction required and a showing of "reasonable progress" towards final standards. The commenters stated that the EPA's Section 111(d) general regulations likewise support this approach, as they anticip ate that state plans will set compliance schedules that include regular progress reports.

Commenters stated that this approach, which focuses on moving states toward a shared endpoint, is substantially better than one based on requiring percentage reductio ns (either in tons or rates) from a particular baseline year. The commenters said that setting an equitable baseline across the states, which have varying economic and emissions histories, would be difficult and time

consuming. The commenters added that be cause states have very different emissions levels now, requiring all states to reduce emissions by the same percentage across the board, regardless of starting circumstances, would not treat the states equitably, or be the most cost

- effective way of achiev ing reductions.

Commenters indicated they recognize that other equity issues will arise as the EPA considers how to move the states towards a common target

- including the fact that states may be net importers or exporters of power, and so their emissions may be affected by actions in other states that they cannot directly control. The commenters added that on a related point, some states may338 have relatively smaller in

- state power systems, and so may have limited opportunity for system

wide improvements wit hin the state.

Comment 39: The EPA could recognize a minimum target level that was considered sufficiently low enough for any such state that additional reductions would not be required

Response 39: See section V.A. of the final rule preamble of the CPP fo r the EPA’s response to this comment.

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

Basic Concept . The commenters said separate from the performance goals set for states on an individual basis, the EPA could recognize a mi nimum target level that was considered sufficiently low enough for any such state that additional reductions would not be required. The
commenters said states that achieve a minimum target would not be required to comply with the full state performance pla n requirements contemplated in the rule, but rather, they only would need to submit a limited state plan that provides for continued compliance with the minimum threshold. The commenters said establishing an appropriate minimum CO2 target would achieve the EPA's desired result without requiring significant federal oversight or time and expense of detailing compliance. The commenters said additionally, it would incentivize states to meet the minimum CO 2 target by allowing them to avoid the larger administrat ive costs of complying with a full plan.

EPA Precedent

. The commenters said a minimum CO 2 target approach is consistent with the EPA's other regulatory schemes and the sub

- categorization principles applicable to implementation of Section 111(d). The commenters said using its discretion to create subcategories on a state

- wide basis, the EPA could create another subcategory that covers all generation sources in states like Idaho that have no coal generation, low emissions, or similar characteristics tha t provide assurance that carbon emissions will remain low. The commenters said for those states, the EPA then could determine a separate BSER and related emission guideline based on a minimum CO 2 emission threshold or target that could not be exceeded,
rat her than state

- specific emissions goals based upon application of the four building blocks.

Proposed Minimum Level . The commenters proposed a minimum target of 550 pounds of CO2/MWh for Idaho. The commenters said other states could potentially hit this th reshold target by 2020, or later in the compliance period, and could modify their state planning requirements then, which would incentivize those states to accelerate emissions reductions.

The commenters said if the EPA does not withdraw its proposed emis sions goal for Idaho (which is Idaho's preferred outcome), then the EPA should adopt the "limited plan" system described above. The commenters said this system is consistent with the EPA's overall goals and creates a more equitable and efficient result for states like Idaho that already have very low emissions and no in

- state coal generation.

Comment 40: Guidelines should allow states to use effective current programs as the basis of compliance339 Response 40: See section s I.A.

, V, and 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:

Commenters state d that the EPA should incorporate into the BSER determination all of the approaches that states are already demonstrating achieve cost

- effective emissions reductions, including reductions from onsite improvements, shifts in generation among covered sources, and displacement from zero

- carbon generation increases or demand

- side efficiency. The
commenter s state d that even if the EPA doesn't explicitly base BSER on state programs, it should allow states with any effective existing programs the option of using t hese programs as the basis of compliance, as long as states can demonstrate through a rigorous, consistent methodology (to be identified by the EPA) that those programs will achieve the required reductions.

Commenter s suggest ed using the programs because s tates managing greenhouse gas reduction, energy efficiency, and renewable energy programs have built these programs through their own democratic and stakeholder processes, and with a deep understanding of conditions within their power grids. The commenter s stated that to the extent that those programs are delivering a substantial portion of the reductions needed to comply with Section 111(d) guidelines, the EPA should ensure that its federal framework provides states with the option of incorporating their

c urrent programs with minimal change or burden as long as they achieve equivalent reductions. The commenters said that as its governing regulations require, the EPA has regularly invited the states to propose a range of approaches to meet federal standards, in whole or in part, and they expect it to follow the same course here.

Comment 41: The EPA has not been sufficiently clear about its intention to allow states to rely on compliance options that were not included in the "building blocks" the EPA used to calculate state emission reduction goals. This must be clarified in final rule

. Response 41: See 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 said that the EPA has not been sufficiently clear about its intention to allow states to rely on compliance options that were not included in the "building blocks" the EPA used to calculate state emission reduction goals. Commenter s said it is obvious that the EPA has failed to communicate this principle clearly, because there is still confusion in public statements by states and others on this point. Commenters said there are only two statements in the preamble to the Clean Power P roposal that we could find, and both are buried deep within the text of the preamble, and the proposed regulatory text is silent on this point. Commenters said under the caption, "VII. State Goals

- D. State Flexibilities" the preamble says:

" States can a lso cho ose to include in their plans other measures that reduce CO2 emissions at affected EGUs but that are not included in the building blocks ."340 Commenters said under Section "F. State Plan Considerations

- 8. Potential Emission Reduction Measures Not Use d To Set Proposed Goals," the preamble explains that:

" States may include measures in their plans beyond those that the EPA included in its determination of the BSER. In general, any measures that meet the proposed criteria for approvable state plans could be employed in a state plan. Beyond that, under a mass

- based approach, any measure that reduces affected EGU emissions

- even if not included in the state plan

- will, if implemented during a plan performance period, help to achieve actual emissions perfo rmance that meets the required level... Although the emission reduction methods discussed in this section are not proposed to be part of the BSER, the agency anticipates that some states may be interested in using these approaches in their state plans."

Co mmenters said it is understandable that the EPA believed this would be sufficient, but there is still considerable confusion and debate among stakeholders. Commenters said accordingly, to ensure that states are able to benefit from the flexibility that the EPA intended to include in the Clean Power Proposal, AGA urges EPA to make it clear and obvious

-- in the preamble, final rule regulatory text and any fact sheet or other outreach materials

-- that states are allowed and encouraged to include compliance m ethods in addition to those that EPA used in its determination of BSER.

Commenters stated as states work to develop their utility

- driven portfolio plans, EPA should direct them to make available the building blocks, and any additional state measures, as o ptional tools available to the utility to select from in finding the most effective way to achieve its final CO2 reduction goal. The commenters said states should be made to understand that the building blocks are not required to be imposed as mandates on any entity, and a mandate is not required, for example, in order for renewable energy to be available under block 3. The commenters said instead, because only utilities with affected EGUs in the state are regulated, mandates are unnecessary to achieve comp liance. The commenters said the obligation of the utility to achieve its mandatory CO2 reduction creates the only incentive necessary to ensure the further development of non

- emitting resources and energy efficiency. The commenters said as long as the stat e plan allows utilities to use these building blocks for compliance, and the credits are freely transferable in interstate commerce, their inherent value to the utility is assured, and no mandate is required. The commenters said this eliminates much of the uncertainty surrounding the ability to obtain legislative approval and to do so in a limited time frame.

Comment 42: The EPA should include clear language in the final rules allowing the use of out

of

- sector offsets by states (such as no

- till, converting marginal croplands to grasslands, tree planting, fly ash recycling) to meet emission targets

Response 42: See section s V 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:341 Commenters encouraged the EPA to include clear language in the rules allowing the use of out

of

- sector offsets by states to meet their emission performance targets, and to ensure that carbon offsets are included as reduc tion mechanisms. Commenters said over the years, traditional tillage has released much of the stored carbon from fields, which is why there is so much potential now for carbon storage from practices such as no

- till and converting marginal croplands to gras slands. Commenters said these practices leave the soil undisturbed and the plant residue in the field, which allows the carbon to be stored instead of released.

Commenters said Dynegy strongly supports the use of out

- of

- sector offsets and has been a leade r in pursuing GHG emissions reductions through offsets. Commenters said specifically, Dynegy has planted over 8 million trees in 73 locations across 8 states in the Mississippi River Valley. Commenters said Dynegy also recycles fly ash from coal combustion for beneficial re

use, including as a substitute for Portland cement in concrete. Commenters said in addition to safely re

- using coal fly ash in lieu of landfilling, the re

- use of fly ash reduces the amount of Portland cement produced, and the reduction o f cement production directly offsets the amount of CO2 generated by the cement manufacturing process.

Commenters said Dynegy has taken on these projects voluntarily and has invested significant capital in these projects, but investing in such programs fac es an uncertain future if they will not be provided any credit for compliance with the CPP. Commenters said by discounting unique and impactful programs like the ones Dynegy has taken on, EPA stifles innovative GHG reduction projects., which is bad public policy, bad business and, ultimately, bad for the environment.

Comment 43: The EPA should set regional RE targets, grouping states by NERC region

. Response 43: See Section V.A of the final rule preamble of the CPP for the EPA’s response to this comment.

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

Commenters responded to specific questions the EPA raises in the recently published Notice of Data Availability ("NODA") that accompanies the Clean Power Plan proposal issued Ju ne 2, 2014. The commenters reiterated support for setting regional RE targets, and suggested that the EPA should group states by NERC [North American Electric Reliability Corporation] region because these regions most realistically encompass what RE poten tial is available to serve load for a particular group of states. The commenters said these regions also largely conform to existing RE credit trading system boundaries. The commenters stated that while certain trading systems will overlap multiple NERC re gions and some state boundaries may not seamlessly conform, this basic structure could be used with modifications to deal with anomalies. The
commenters said that for example, confusion may arise where a state's boundaries straddle more than one NERC regio n. The commenters said that in such an instance, to alleviate such confusion, EPA could associate the entire physical area of the state with the NERC region where the majority of the state's load is served for purposes of estimating renewable generation
po tential. The commenters indicated that this modification would ensure that the NERC region342 that has access to that RE generation potential is also assigned those potential emission reductions for goal setting.

Comment 44: Regional RE market concept has several flaws

Response 44: See section 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:

Commenters said that the EPA's use of regional RE markets has several flaws. Commenters indicated the most glaring mistake is to assume that one regional state's portfolio requirements reflect energy development opportunities in neighboring states

- that defies logic

. Commenters said that such a portfolio recognizes unique state resources and the economics needed to competitively bring those resources to market, and to imply that all regional states have homogeneity in their RE resources and market potential is false.

Commenters also said the EPA's regional approach is flawed because it imposes the same target percentage to all states in a given region, regardless of their actual RE technical capabilities. Commenters said the regional definition for the EPA's South Ce ntral region is dominated by states that have considerable opportunities for onshore wind development and are already some of the larger wind developers in the country. Commenters said that although Louisiana is in the South Central region is does not hav e any wind generation and doesn't have the technical capabilities for any meaningful grid

- scale wind generation, so grouping it with high wind

- generation states is unreasonable.

Comment 45: The EPA should allow states to demonstrate compliance on a multi

- year basis and allow carry

- over of early redu ctions

Response 45: See section VIII of the final rule preamble of the CPP for the EPA’s response to this comment.

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

Commenters stat ed that the EPA should permit states to demonstrate compliance on a multi

- year basis and allows states to carry over early reductions.

Commenters said that emissions across an electricity system can vary from year to year depending on factors such as wea ther, economic conditions, and unexpected shutdowns, which are all outside the ability of plant operators to influence. The commenters stated that the EPA can require a more substantial level of cost

- effective reductions if it allows states to average emi ssions over a multi

- year period and enables states to bank, or carry

- over, early reductions. The commenters stated that unlike other pollutants that may have short

- term impacts, the environmental harm caused by CO2 and other GHG pollutants have much longer periods of343 impact. Therefore, the commenters said, allowing compliance on a multi

- year basis would not reduce the environmental benefits of the program.

Commenters said that the RGGI [Regional Greenhouse Gas Initiative] program uses a three

- year complian ce approach. According to the commenter, the RGGI states' experience is that this approach has the benefit of allowing sources to take advantage of multi

- year compliance strategies. The commenters indicated that by allowing sources three years, the regulat ed units have flexibility to address variations in emissions, unexpected shutdowns, or uneconomic dispatch orders, without impacting the enforceability or environmental effectiveness of the program's requirements.

Comment 46: The EPA should recognize stat e discretion to adopt different approaches to goal conversion provided states provide a reasonable explanation

Response 46: See section VIII of the final rule preamble of the CPP for the EPA’s response to this comment.

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

Commenters stated that the methodologies for rate

- to

- mass goal conversions contained in the proposed guidelines and the Translation TSD cannot be reconciled, yet the EPA appears to believe that either approach c ould lead to accurate and satisfactory mass

- based goals. The
commenters indicated that the EPA should therefore adopt the approach to mass

- based goal conversion suggested by the language in the preamble to the Proposed Guidelines: EPA should recognize sta te discretion to adopt different approaches to goal conversion provided states provide a reasonable explanation for the choices they have made.

Commenters state d that under the proposed guidelines states decide the "emission performance level" to include i n their plans, but under the proposed guidelines states are empowered only
to select a rate

- based or mass

- based goal. The commenters indicated that although this choice is presented as providing flexibility to the states, in reality it does not. The comm enters said that EPA is merely affording states a choice between accepting an EPA

- prescribed and inflexible
rate

- based state goal, or translating that rate

- based goal into an equivalent mass

- based goal.

Commenters stated that under the Proposed Guidelines, states are invited to attempt to calculate

a mass

- based rate. (Id. at 34,897). The commenters stated that the preamble to the Proposed Guidelines states that: "[i]f the plan adopts a mass

- based goal, the plan must include a description of the analytic pro cess, tools, methods, and assumptions used to translate from the
rate

- based goal to the mass

- based goal." (Id. at 34,911). The commenters indicated that similarly, section III of EPA's "Projecting EGU CO2 Emission Performance in State Plans" TSD (June 201 4), Docket ID No. EPA

- HQ

- OAR

- 2013

- 0602

- 0462 ("Projections TSD"), which was released with the Proposed Guidelines, purports to provide guidance to states on how to make such a goal translation. According to the commenter s , that guidance, however, does littl e more than direct states to project the CO2 emissions that would result from application of EPA's rate

based limit. The commenters said that these statements suggest that states have broad leeway to calculate mass

- based goals

.344 According to c ommenters , Pr oposed 40 C.F.R. Sec. 60.5770 includes an additional requirement, however:

" The conversion must represent the tons of CO2 emissions that are projected to be emitted by affected EGUs, in the absence of emission standards contained in the plan, if the affec ted EGUs were to perform at an average lb CO2/MWh rate equal to the rate

- based goal for the state identified in Table 1 of [the Proposed Guidelines]." (79 Fed. Reg. at 34,953, Proposed 40 C.F.R. Sec. 60.5770). The
commenters indicated that although this ro ughly sketched methodology might produce rate

- to

- mass goal conversions that are equivalent, other approaches might prove better fits for some states, and EPA should provide states with flexibility to demonstrate that differing methods are appropriate, as t he Agency suggests in the preamble language

. "

Commenters suggest ed that other state approaches might be valid is seemingly confirmed by EPA's November 2014 TSD, entitled "Translation of the Clean Power Plan Emission Rate

- Based CO2 Goals to Mass

- Based Equiv alents, Docket ID No. EPA

- HQ

- OAR

- 2013

- 0602

- 22187 ("Translation TSD"). The commenters said that unlike the Proposed Guidelines, which require a protection of emissions "in the absence of emission standards contained in the plan," 79 Fed. Reg. at 34,953, Pro posed 40 C.F.R. Sec. 60.5770, i.e., in the absence of application of the Building Block, the Translation TSD directs states to adjust their 2012 emissions to "reflect the deployment of incremental building block three and four resources." (Translation TSD at 5).

Comment 47: The proposed rule does not appear to give full opportunity to Canadian electric utilities to provide electricity to the U.S.

Response 47: See section VIII. K . 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 emphasized that the final EPA rule should respect the importance of U.S

. - Canadian electricity generation resources for both countries. The commenters said the ru le should address importing electricity from Canada, and should address whether Canadian exports of hydro or nuclear energy can be used to meet state goals.

Commenters said that electricity plays an integral role in the strong U.S.

- Canada energy relationsh ip

- there are more than 35 electric transmission interconnections between the U.S. and Canada, which together make a very integrated North American grid.

Commenters said that the Proposed Rule does not appear to give full opportunity to Canadian electric utilities to provide electricity across the border to U.S. states for these purposes. Commenters said that the EPA should address this issue in its rulemaking and provide full opportunity for Canada to continue to be eligible to sell its electricity across the border. Commenters said that there is also a question as to whether Canadian exports of hydro or nuclear electricity to U.S. states can be used to meet state goals. Commenters stated that between five and ten percent of Canada's total electric generat ion is exported to the U.S. and most of it is either hydro

- or nuclear

- based. Commenters said that the states of California, Minnesota,345 Vermont and Wisconsin have accepted imported electricity from Canada to meet their various "renewable" energy definition s. Commenters recommended that imports of all non

- CO2 emitting sources imported from Canada be eligible for compliance in a state plan under the Proposal.

Commenters stated that further, the Canadian government has its own version of NSPS for new and exis ting coal

- fired power plants. Commenters stated that any final rule from the EPA should address this issue in a manner that recognizes the interconnected nature of the North American grid and that is consistent with the U.S.

- Canadian trade policies set by both the General Agreement on Tariffs and Trade (GATT) and the North American Free Trade Agreement (NAFTA). Commenters provided t he Canadian Electricity Association's "Reducing GHG Emissions Under EPA's Section 111(d) Guidelines" (January 2014) paper to ex plain the complexity of this trade issue.

Comment 48: Counting out

- of

- state resources towards compliance goals. The EPA should provide clearer guidance on the crediting of emission reductions from out

- of

- state generation to ensure that the customers that are paying for a carbon

- reducing investment receive the benefit of the investment, even if it's located in another state. Utilities should be able to move MW

- h and associated emission rates generated by their facilities between states.

Response 48: See section VIII. L . 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 said the EPA should ensure that customers will receive the benefit of t he utility's carbon

- reducing investments that they paid for, even if investment is located in another state. Commenters said energy markets now cover multi

- state regions, and to provide our customers with clean and affordable power, electric utilities make investment decisions to meet energy and environmental objectives, and site facilities in the most

- optimal locations. Commenters said in the case of renewable resources, such as wind generation, this may mean investing across state lines. Commenters said in order to provide citizens with clean and affordable power and to not restrain this efficient energy market, the final rule should recognize that credit for carbon

reducing investments stays with the utility whose customers are paying for the inves tment and not be stranded inside a state's geographic boundaries.

Commenters said they agreed with the EPA's proposal that a state should be able take into account all of the carbon emission reductions from renewable energy measures implemented by the stat e, whether they occur in the state or in other states. Commenters said however, we encourage the EPA to provide further guidance in the final rule on the crediting of the interstate effects of emission reductions. Commenters said in particular, clarificati on should be provided on how states should avoid double counting in instances in which one state claims credit for renewable generation and another state that holds the environmental attributes of the same energy also claims credit. Commenters said to that end, they recommend that the Clean Power Plan encourage states to develop or participate in an environmental crediting accounting system for renewable energy. Commenters said if a state chooses not to do so, the EPA should only346 allow a state to include re newable energy MWhs in its compliance plan if it can demonstrate entities in the state have submitted environmental attributes (i.e., credits) for those MWhs.

The commenters said the EPA should approve the development of plans that allow utilities to

move megawatt

- hours and associated emission rates generated by their facilities between states.

Comment 49: Multi

- State plans

- General

Response 49: See section VIII of the final rule preamble of the CPP for the EPA’s response to this comment.

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

Against

The commenters said application of the proposed rule to individual states, constructed to try to meet the intent of 111(d), does not consider interstate Electric Generating Unit (EGU) ownership or purchase power agreements (PPA). The commenters said the option of multi

- state plans is not a viable solution to dealing with interstate ownership or contracts.

For

Commenters stated the EPA should recognize that for some states, a regional b udgeting approach will make more sense than using RECs for compliance; therefore, states should also be allowed to enter into multi

- state agreements that allow for emissions budgeting so long as the emission reductions are real, verifiable, and are not bei ng claimed by another entity or state.

Commenter s support ed flexibility in implementation strategies through multi

- state partnerships; there is an opportunity for states to collaborate across state

- lines to create cost

- effective solutions.

Comment 50: Fo r multi

- state plans using a rate

- based approach, the final rule should include an option for the multi

- state rate

- based goal to change each year based on the amount of generation in each respective state

Response 50: See section VIII of the final rule prea mble of the CPP for the EPA’s response to this comment.

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

Commenters developed a "Rate

- based Multi

- State Trading Program" Commenters suggested that for multi

- state plans using a rate

- based approach, the final rule should include an option for the multi

- state rate

- based goal to change each year based on the amount of generation in each respective state. Commenters said this approach wou ld not alter the amount of credit states347 receive per MW

- h generated, but it would allow for trading credits/allowances across state lines while ensuring that each state would either meet its rate

- based goal or that excess emissions in one state would be of fset by a partnering state that over

- complied with their rate

- based goal.

Comment 51: The EPA should allow utilities (particularly multi

- state utilities like Otter Tail) to apply the BSER on a unit

- by

- unit basis to determine a Section 111(d) target that i s specific to the capabilities and limitations of their existing generation portfolios

. Response 51: See section 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 und er this comment:

Commenters said EPA should allow utilities (particularly multi

- state utilities like Otter Tail) to apply the BSER on a unit

- by

- unit basis to determine a Section 111(d) target that is specific to the capabilities and limitations of their ex isting generation portfolios. Commenters said this would enable utilities to meet a BSER target by managing the generation resources and energy

efficiency programs they control, instead of penalizing them based on the misfortune of operating in the same St ate as a different generating resource owned by an unrelated company.

Commenters said as EPA is no doubt aware, South Dakota is a national leader in the production of zero

- carbon energy generation. Commenters said wind energy accounted for more than 24% of South Dakota's total energy production, and hydropower nearly 50%. Commenters said yet, the proposed rule's inconsistent treatment of South Dakota's energy resources penalizes the state for its proactive and successful use of its abundant clean power reso urces.

Commenters said the proposed rule would require Otter Tail to reduce operation of Big Stone Plant to a level that condemns this significant asset to premature retirement and replacement simply because it is located in the same state as Basin Electri c's Deer Creek Station. Commenters said the rule should instead allow Otter Tail to determine an appropriate, utility

- specific BSER based on a determination of the extent to which each of the four Building Blocks can feasibly and reasonably be applied to i ts specific portfolio of owned generation and its retail load. Commenters said although such an approach would still place a substantial burden on Otter Tail, it would allow Otter Tail and other companies to use the "tools in their toolbox" to achieve
requ ired emissions reductions rather than forcing premature retirements or inequitably transferring emission reduction burdens to neighboring utilities and their customers.

Comment 52: States should be allowed to consider utility

- specific regional plans

Respo nse 52: 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:348 Commenters said in order to give maximum flexibility to utility companies that operate in more than one state, rate or mass based regional plans that are specific to one company should be allowed if the state has the legal authority for the regional plan. Commenters said the regional goal for a utility could be a goal based on the goal for each state covered by the regional plan and the company's fossil fuel generation during the baseline in each state. Commenters said the utility would be allowed to determine compli ance with the regional goal considering all generation and emissions reductions in the region, and compliance with the regional goal would be considered compliance with each state's goal.

Commenters stated that under such a plan, if a utility "over compli es" with the regional goal, each state would be allowed to use that over compliance in their state average. Commenters said other forms of utility specific regional plans may provide viable options, after development by a state and consultation with the EP A before any final plan is submitted.

Commenters said in addition, the Department believes the EPA must accept state plans that include standards that are based on either rate or mass within the same plan; doing so enables compliance flexibility and cost minimization.

Comment 53: Company

- based Multi

- State plans could be considered an additional "best system of emission reductions". Under such a plan, companies that generate and distribute power over multiple states would be able to apply their zero and certain low CO2 emission electricity generation to meet Section 111(d) emission rate limits anywhere within their electric generation system, and there would be several advantages to this approach

. Response 53: See section VIII of the final rule preamble o f the CPP for the EPA’s response to this comment.

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

Commenters said that the EPA should revise the proposed rule to better mesh with the manner in which the power industry is alr eady organized: across state lines with dispatch by Regional Transmission Organizations (RTOs) seeking to assure system reliability. Commenters said they believe that this can best be done by expressly providing that company

- based multi

- state plans

are an additional "best system of emission reductions" under CAA section 111(d). Commenters said that under such a plan, companies that generate and distribute power over multiple states would be able to apply their zero and certain low CO2 emission electricity g eneration to meet CAA section 111(d) emission rate limits anywhere within their electric generation system, rather than being restricted to using those strategies in the state where the generation occurs.

Commenters indicated there are several advantages to this approach.

1. Time to action and generators determine how to reduce emissions

. First, it is impossible under EPA's proposal for companies to anticipate how states will respond within their boundaries and how system dispatch will be reorganized. As a r esult, no action can be taken by affected companies until multiple plans are proposed, approved, litigated, etc., making it impossible to meet EPA's interim goals. Allowing companies to immediately349 begin addressing their own energy portfolios to demonstrat e compliance with EPA's emission targets and individual state emission limits helps mitigate this problem and allows the parties that actually generate the emissions determine how to best reduce them.

2. Additional Flexibility. Second, approving company portf olio management programs to qualify as BSER across state lines will provide states with additional flexibility in developing and adopting plans to meet their emission rate requirements under the final rule.

3. Maximize Efficiency and minimize waste. Third, al lowing companies to manage their portfolios across state lines allows resources to be built where most efficient and without undue waste. Companies can manage their portfolios without regard to state boundaries or constraints in the transmission infrastruc ture. This would allow companies to reduce their reliance on high carbon emitting sources by supplanting those sources with low carbon emitting sources where they make the most economic and technical sense, not constrained by state boundaries.

Commenters s aid they can address the EPA's goals under a company

- based multi

- state plan approach and can do so without exceeding the individual state emission limits. Commenters said that implementing such an approach would eliminate many of the structural limitations associated with a strict state

- by

- state system, avoid disruption of the existing RTO structure, and limit conflicts with FERC and state regulatory bodies. Commenters said forcing the regulation of electric generation and dispatch into a state boundary mod el provides no environmental benefit and creates unnecessary problems, complexities, and inefficiencies that will increase the cost of compliance and undermine grid reliability

Comment 54: Multi

- state generation and transmission companies should not be ar tificially constrained by state boundaries in developing and implementing the most cost

- effective, technically sound CO2 emission reduction strategies. Absent this flexibility assets will be stranded and unnecessary renewable and gas generation will be co nstructed. Therefore, Basin Electric requests that the EPA clarify that this company

- based multi

- state approach can be utilized as BSER to demonstrate compliance under the final rule.

Response 54: See section VIII of the final rule preamble of the CPP for the EPA’s response to this comment.

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

Commenters said the EPA premises its CAA section 111(d) proposal on the idea that the interconnected nature of the electric grid provides a dditional opportunities to reduce overall CO2 emissions from the power generation sector in the most cost

- effective manner. Commenters said to fully harness these opportunities, however, multi

- state generation and transmission companies should not be artif icially constrained by state boundaries in developing and implementing the
most cost

- effective, technically sound CO2 emission reduction strategies. Commenters said instead, these companies should be allowed to apply zero and low carbon resources where the y make the most economic and technical sense, and then use the emission reduction benefits350 achieved from the use of these resources in meeting their obligations in any of the states where they operate. Commenters said if the EPA amends its Proposed Rule to expressly permit companies to pursue this methodology, and if states are allowed to treat these plans as BSER, much of the disruption to existing systems potentially caused by EPA's proposal may be avoided.

Commenters said that absent this flexibility, co mpanies will be forced to rely on less cost

effective and less technically sound reduction strategies in order to meet individual state requirements. Commenters said in many cases this will result in the stranding of existing assets in states where utiliza tion of such assets is not necessary to demonstrate compliance and the construction of new renewable and gas resources that are completely unnecessary from an electricity production standpoint but are required to demonstrate compliance within the confines of a particular state. Commenters said in different circumstances companies may even forego
cost

- effective CO2 emission reduction opportunities altogether because the opportunities exist in states where there is no need to achieve further reductions under the Proposed Rule.

Commenters said these can be avoided if the final rule allows companies to allocate zero and low CO2 emitting resources to any state where they operate. Commenters said this simple clarification will allow companies to develop and use ze ro and low carbon generation based on technical and economic considerations and eliminate the need to build redundant and unnecessary generation in a particular state for the sole purpose of demonstrating compliance with the rule. Commenters said that addi tionally, providing flexibility to allow out of state allocation of zero and low CO2 emitting resources is a prerequisite to the establishment of any robust market for CO2 credits outside the narrow context of a full

- blown, state

- based multi

- state plan.

Co mmenters said allowing companies to allocate zero and certain low emitting resources across the states where they operate is fully consistent with the provisions of the Proposed Rule. Commenters said moreover, providing companies flexibility will neither i mpair states' ability to comply with emission limits established in the final rule nor restrict their flexibility in crafting state plans. Commenters said this is because companies that utilize a multi

- state allocation approach will still be required to me et all of their obligations in each state where they operate, just like they would in the absence of a company

- based multi

- state plan. Commenters said accordingly, Basin Electric requests that the EPA clarify that this company

- based multi

- state approach ca n be utilized as BSER to demonstrate compliance under the final rule.

Comment 55: Overview of how a company

- based multi

- state plan would work, and some guidance regarding allocation

Response 55: See section VIII 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:

Basic Concept

. Commenters said the basic concept underlying a company

- based multi

- state plan is very simple. Commenters said under such a pl an, companies that generate and distribute power over multiple states would be able to apply their zero and certain low CO2 emission electricity351 generation to meet CAA section 111(d) emission rate limits anywhere within their electric generation system, ra ther than being restricted to using those strategies in the state where the generation occurs. Commenters said for example, if Basin Electric generated 1,000,000 MWh net of wind energy in South Dakota in 2030, it would be able to allocate that wind energy to meet its CAA section 111(d) obligations in another state, such as Wyoming, or in multiple other states, such as South Dakota, Wyoming and North Dakota. Commenters said this flexibility would allow multi

- state companies the ability to reduce CO2 emission s and demonstrate compliance with the requirements of the final rule in much the same manner that they currently generate electricity, namely through the operation of their integrated multi

- state generation systems.
Limitations Regarding Allocations

. Comme nters said that while Basin Electric believes that providing flexibility to multi

- state operators to allocate reduction strategies across their generation system is crucial to the development of the most cost

- effective strategies to reduce CO2 emissions un der an emission rate

- based approach, it acknowledges that certain limitations on what can be allocated may be appropriate. Commenters said specifically, allocations should not interfere with the integrity of the proposed state

- by

- state approach, or where a greed upon, multi

- state approach, by altering states' responsibilities under the rule. Commenters said additionally, allocations should not be allowed that have the practical effect of reducing the stringency of established state emission limits. Commenters said for example, companies should not be allowed to allocate existing coal generation from a state with a lower emission limit to a state with a higher limit. Commenters said such an allocation would undermine the established
state

- by

- state com pliance scheme by shifting responsibility for that affected EGU from one state to another. Commenters said in addition, and perhaps more importantly, such an allocation would result in less stringent compliance requirements for that facility, and for the c ompany as a whole.

Generating Resources to be Allocated Freely

. Commenters said to avoid these problems, Basin Electric proposes that there should be two categories of generating resources that a multi

- state company could allocate freely across its generation network: 1) new and existing non

- CO2 emitting resources; and 2) new na tural gas resources that commence construction after January 8, 2014. Commenters said neither of these resources fit within the definition of affected EGU under the Proposed Rule. 79 Fed. Reg. at 34956. Commenters said accordingly, the Proposed Rule does n ot require that these resources be accounted for in any state plan, and therefore allocation of these resources within a multi

- state area will not alter states' responsibilities under the final rule. Commenters said additionally, because these resources ar e not required to be addressed under the rule, allocating them to another state will not lessen the stringency of the established state emission limits.

Fundamental Requirements

. Commenters said under the rule as proposed, there is a multitude of ways tha t states could structure their CAA section 111(d) plans in the context of meeting a rate

based requirement, and in light of this the exact methodology for allocating zero and low carbon generation across a multi

- state system will vary. Commenters said howe ver, regardless of the allocation methodology, Basin Electric, or any other company using a multi

- state plan, would need to comply with two fundamental requirements.352 Low or zero CO2 emitting electricity could only be used once to demonstrate compliance wi thin the multi

- state system. Therefore, the total amount allocated within the multi

- state system could not exceed the total amount that the company produced or had rights to distribute. To ensure that there is no double counting, the multi

- state plan would need to include a mechanism to accurately track both the amount of zero and low CO2 electricity generated and where that generation is allocated within the overall multi

- state area.
While companies would be able to freely allocate zero and certain low ca rbon resources across the multi

- state area, they would need to demonstrate compliance with each individual state plan
on a state

- by

- state basis. Accordingly, a company could not establish its own multi

- state emission rate or average emissions across multip le states to show compliance. In other words, companies using a multi

- state plan approach would be required to meet their obligations to each state where they operate just like they would in the absence of a multi

- state plan. The only substantive differenc e would be that a company would have the additional flexibility to use zero and certain low carbon generation from anywhere within its generating system to demonstrate compliance with the various applicable state requirements.

Commenters said this approac h retains both the integrity of the state

- by

- state limits and the flexibility afforded individual states in adopting plans to meet these limits, while providing companies operating across multiple states flexibility in complying with these state plans.

Co mment 56: Consumption

- based Targets and All

- generation Certificate Tracking present advantages

. Response 56: See 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 c omments under this comment:

Commenters said the EPA recognizes many of the advantages of using regional evaluations and approaches to setting emissions goals, has considered these approaches, and calls for comment on "on whether, and if so how, the EPA sho uld incorporate greater consideration of multi

- state approaches into the goal

- setting process" (Proposed Rule, Sec. VII.E, pg. 34899). Commenters said from our perspective, the advantages of consumption

- based targets and compliance for states include the f ollowing.

1. Consumption

- based compliance includes imports and exports and accommodates interstate trading of electricity.

Commenters said electricity trading, purchasing, and use across state borders is a reality of the U.S. market. Commenters said consum ption

- based compliance will reflect states' imports and exports of electricity and demand for emissions from affected EGUs. Commenters said the integrated grid should be reflected in state goals and compliance to achieve efficient emissions reductions acco rding to BSER and to avoid inconsistent compliance that could result in double counting and underreporting. Commenters noted that the EPA acknowledges throughout the Proposed Rule that it, "believes that the BSER for CO2 emissions from existing EGUs should353 reflect this integrated character" (Proposed Rule, Sec. VI.E.3, pg. 34881), but it argues that, "this
state

- wide approach [...] harnesses the efficiencies of emission reduction opportunities in the interconnected electricity system" (Proposed Rule, Sec. I V.B, pg. 34853 and Sec. VI.E.9, pg. 34891). Commenters said they disagree that the state

- wide approach harnesses the full effectiveness of demand

- side measures and efficiencies of emissions reduction opportunities in the interconnected electricity system p recisely where the electricity system and market is interstate or regional. Commenters said it limits efficiencies unless state goals are based on consumed electricity.

2. Harmony with BSER and increased options for reductions for states.

Commenters said building blocks 2

- 4

- re

- dispatching, RE generation and demand

- side EE

measures

- affect regional reductions, reductions from both in

- state and out

- of

- state generation. Commenters said the EPA recognizes that, "the electricity system is physically in terconnected or networked and operated on an integrated basis across large regions. System operators routinely increase or decrease the electricity output of individual EGUs to respond to changes in electricity demand" (Proposed Rule, Sec. VI.B.3, pg. 3485 7), and that "instituting measures in building blocks 2, 3, and 4, due to the interconnected and integrated nature of the grid, would elicit the response of reducing generation at some or all affected EGUs" (Proposed Rule, Sec. VI.E.3, pg. 3488. As such, affecting generation without changing consumption will be difficult for states, while changing consumption leads to changes in generation; emissions from consumed generation are emissions that states can control and influence: "dispatch decisions are based on electricity demand at a given point in time" (Proposed Rule, Sec. VI.C.2.a, pg. 34862) and "reduced utilization of the higher

- emitting affected EGUs" is a "component" of BSER (Proposed Rule, Sec. VI.B.1, pg. 34856). Commenters said in other words, stat es can affect construction and use of electric generation, but use is what causes emissions, and emissions reductions in the case of RE, and use also affects construction.

Commenters said under the Proposed Rule, demand

- side reduction efforts associated wi th building blocks 2

- 4 (e.g. efforts to use more natural gas

- derived electricity, more RE, or undertake more demand

- side EE) will do less to achieve compliance in states where there is significant importing and exporting of electricity: "For states that ar e net importers of electricity, the estimated reduction in the generation by the state's affected EGUs was scaled down to reflect an expectation that a portion of the generation avoided by the demand

- side energy efficiency would occur at EGUs in other stat es" (Proposed Rule, Sec. VII.C, pg. 34896). Commenters said the EPA has created a difference between state goals and the pool of regulated emissions (in

state only), on the one hand, and BSER and the pool of emission reductions (could be either or both in state and out

- of

- state), on the other. Commenters said this difference limits the ability of states to comply and reveals that state goals are not aligned with the intent of regulation, which is to reduce emissions from power plants in accordance with BSER , as easily and cheaply as possible.

3. More accurate and complete state goal calculations.

Commenters said with respect to building block 4, demand side EE, the EPA has invited comment on an alternative to, "(scale) up the estimated reduction in the gener ation by affected EGUs in net electricity

- exporting states to reflect an expectation that a portion of the generation354 avoided in conjunction with the demand

- side energy efficiency efforts of other, net electricity

importing states would occur at those EGUs , analogous to the proposed adjustment for net electricity

- importing states described in Step 5. We also request comment on the alternative of making no adjustment in Step 5 for either net electricity

- importing or net electricity

- exporting states" (Propose d Rule, Sec. VII.C, pg. 34897). Commenters said this again recognizes the interstate nature of reductions achieve through demand

- side measures. Commenters said but under the Proposed Rule, there is no reason to expect states to help other states meet targe ts, so we do not recommend that the EPA adjust exporting and importing states' goals anticipating this. Commenters said rather, the EPA can make each state responsible for its own consumption with consumption

- based targets.

Commenters said the EPA also inv ites comment, "on whether the regional or state scenarios should be given greater weight in establishing the appropriate degree of re

- dispatch to incorporate into the state goals for CO2 emission reductions, and in assessing costs" (Proposed Rule, Sec. VI. C.2.c, pg. 34865). Commenters said again, regional scenarios are likely more accurate in terms of actual effects of re

- dispatching, but since state targets under the Proposed Rule are for in

- state generation only, the EPA should not anticipate in state goa l calculations that states will pursue policies that achieve regional reductions without significant in

- state reductions. Commenters said state goals and compliance are ideally consumption

- based, which accommodates regional reduction scenarios and which be tter reflects the effect that states may have using building blocks 2

- 4.

4. Market efficiencies for RE.

Commenters said to the extent that generation

- based compliance incentivizes more development of RE in state and less development of RE out of state, whi ch could potentially be claimed for 111(d) compliance in that other state, this could result in an inefficient distribution of resources to serve regional electricity markets as renewable energy is no longer being built where it makes the most sense. Comme nters said as a result, RE development and 111(d) compliance is likely more expensive under the current proposed rule than it would be with consumption

- based targets, which more strongly incentivize regional approaches.

5. Fairness.

Commenters said all imp orts displace in

- state generation or allow for in

- state generation not to be built, and if the in

- state generation is or would have been emitting, then imports displace in

state emissions as well. Commenters said states should be responsible for what they pay for and consume, regardless of whether that is in or out of state. Commenters said states should be held accountable for what they do. Commenters said a consumption

- based compliance system will allocate responsibly for emissions by what states do about what resources they use and not only what resources they have. Commenters said in so doing, consumption

- based targets would also give states more control over their own compliance.

Commenters said for example, "The EPA has not developed goals for Vermont and the District of Columbia because current information indicates those jurisdictions have no affected EGUs" (Proposed Rule, Sec. VII.C, pg. 34895). Commenters said consumption

- based goals and compliance would solve this problem. Commenters said Vermont a nd Washington DC consume355 electricity and are therefore responsible for emissions from power plants and can affect reductions from power plants through demand

- side measures. Commenters said yet neither state must take any action under the Proposed Rule.

Co mment 57: There is a potential for double counting if a mix of generation

- and consumption

based compliance is used

Response 57: See section s VII and VIII of the final rule preamble of the CPP for the EPA’s response to this comment.

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

Commenters said states must not have flexibility to choose which generation to include, or to select either a generation

- based or a consumption

- based target. Commenters said all states must use eithe r generation

- or consumption

- based goals and compliance, otherwise tracking of emissions with generation will be necessary for all states to avoid double counting.

Comment 58: Discusses all

- generation certificate tracking systems to be used for compliance with consumption

- based targets, and provides Wyoming as an example

Response 58: See section VIII of the final rule preamble of the CPP for the EPA’s response to this comment.

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

Commenters said consumption

- based compliance would require tracking MWh from affected EGUs and emissions with those MWh to the point of consumption in order to avoid double counting and underreporting. Commenters said regional all

- generation cert ificate tracking systems

- which issue a certificate for each MWh of generation in a region from all sources (as opposed to only RE sources)

- can satisfy this need where states and compliance entities are required to report emissions based on the certific ates that they had acquired and retired. Commenters said such systems are already being used in the Northeast for fuel source disclosure requirements: PJM

- GATS and NEPOOL GIS are both all

- generation tracking systems. Commenters said as explained by the Env ironmental Tracking Network of North America (ETNNA) in a 2010 white paper:

"Utilities purchase these certificates to substantiate use of electricity from the facility specified on the certificate. At the end of each reporting period the certificates in a utility's account are tallied to determine the mix of resources that utility used for the year. Any electricity used by a utility in the region in excess of the number of certificates held by all utilities is assigned an average emissions figure, which is based on the total number and type of certificates that are left un

purchased by load serving entities ["residual mix"]. Regional system mix calculations can then be applied to any MWh purchased by a utility that do not356 have the attributes of generation [c ertificate] associated with them, allowing the utility to factor the regional system mix into their particular overall system mix along with MWh from identifiable [specified] facilities."

Commenters said this would allow states and the EPA in this case to calculate emissions based on the direct emissions of each certificate and the residual mix of unused certificates.

Commenters said existing RE

- only tracking systems covering the rest of the country could be modified to be all

- generation tracking systems, o r at least systems that track both RE and MWh from affected EGUs for this purpose. Commenters said if consumption

- based targets were adopted, the EPA should ensure that this technology is available to all states. Commenters said tracking systems could incl ude a flag for 111(d) to identify which subset of instruments and generators could be used for compliance (e.g. existing rather than new generators, to reflect vintage requirements, etc.). Commenters said there should also be coordination between tracking systems around imports and exports.

Commenters used Wyoming as an example to demonstrate how an all

- generation certificate tracking system could work. Commenters said according to the Energy Information Administration (EIA), " Wyoming sends nearly two

- thi rds of the electricity it produces to nearby states. High

- voltage transmission lines carrying electricity from Wyoming are often operating at maximum capacity, and the state government is encouraging transmission expansion. Six major interstate projects

ar e under way to transmit more power out of Wyoming to western population
centers ." Commenters said in addition, "Coal

- fired power plants dominate Wyoming electricity generation, producing about 8 of every 9 kilowatt

- hours of net generation. Wind energy's sh are has increased rapidly, to nearly one

- tenth of net electricity generation."

Commenters said consumption

- based targets and compliance for Wyoming and its neighboring states that import its coal

- fired electricity would look very different than the propose d state goals, but would more accurately reflect each state's responsibility for emissions from existing power plants. Commenters said it would also afford Wyoming more control over its compliance (as it would only be responsible for emissions from the sub set of in

- state generators that serve load in the state) and its neighboring states would have more options and a greater ability to reduce emissions through demand

- side measures.

Commenters said in Wyoming's case, the WREGIS tracking system could be modi fied to track MWh from affected EGUs. Commenters said the EPA would calculate Wyoming's emissions performance based on the direct emissions of each certificate acquired and retired by compliance entities in the state and the residual mix of unclaimed certi ficates for any electricity used in excess of the number of certificates held.

Comment 59: Economic modeling can show that a carbon excise tax is at least as stringent as the EPA's emissions guideline. With the EPA's help, states can develop carbon tax programs and show the programs are likely to achieve the emission targets

.357 Response 59: Thank you for the comment, state flexibility in state plan is discussed in section VIII of the final rule preamble of the CPP

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

Commenters described how a state carbon tax approach can be used to meet the proposed emissions guidelines. Commenters said a state can demonstrate through economic modeling that its carbon tax program is likely to a chieve the emissions standard set by EPA. Commenters said to demonstrate equivalence, states can employ the EPA's regional air pollution methodology, which the Supreme Court recently upheld in EPA v. EME Homer City Generation, L.P. with a 6

- 2 majority. Com menters said States' authority to use economic modeling is even stronger in the section 111(d) context than it is under section 110, as Section 111(d) explicitly gives states the authority to consider economic conditions. Commenters said moreover, in the s ection 111(d) context, the EPA has endorsed "open market concepts," like carbon taxes, when they are designed to "achieve environmental limits," "minimize costs," and facilitate monitoring.

Commenters said in EME Homer, the Supreme Court upheld an EPA pro gram that set emissions limits based on the power sector's simulated response to cost thresholds, hailing the approach as
a cost

- effective way to solve a complex problem. Commenters said the EPA's economic model assumed that regulated entities would reduce emissions in response to emissions pricing. The
commenters said to set the emissions price level, EPA modeled emissions reductions at different emissions pricing thresholds and then identified the price points at which emissions fell significantly. Commen ters said as the Court explained, these price points reflected the threshold at which "a certain type of emissions control strategy bec[ame] cost

- effective." Commenters said accordingly, the EPA used these cost thresholds to allocate emissions budgets to s tates; evidence showed that the emissions pricing

- based budgets would compel regulated entities to reduce emissions. Commenters said each budget represented the "quantity of pollution" a state would produce in a year "if its in

- state sources implemented al l pollution controls available at the chosen cost thresholds."

Commenters said the EPA process for designing a cap

- and

- trade program reviewed in EME Homer shows that states can demonstrate that carbon taxes, which are in essence cost thresholds, will achi eve the EPA's emissions guideline. Commenters said to do so, they need only develop a model similar to that used by the EPA in EME Homer and in the EPA proposal. Commenters said states can do this regardless of the formula for emissions guideline, includin g rate

- based and

mass

- based standards. Commenters said states can work with the EPA to vet economic modeling approaches and tax options. Commenters said finally, just as for any other state implementation strategy, if a carbon tax for some reason failed to produce the forecast emission reductions, a state must increase the stringency of its policies, for example by increasing the tax trajectory. Commenters said in any case, there exists longstanding EPA precedent for the idea that a tax or other cost

- based threshold can be used to show that power sector emissions will fall to a predetermined level.

Comment 60: Final regulation should allow a cap and trade program based on mass emissions with compliance based either on a lb/MW rate basis, a mass basis, or a combination o f both, at election of utility.358 Response 60: The final CPP rule establishe s both rate and mass options. These are discussed in

s ection VI and VII of the final rule preamble of the CPP . Section s V and VIII of the final rule preamble of the CPP describe state flexibilit ies

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

The commenters requested that the EPA allow states to have the option for a cap and trade program based on m ass emissions with compliance based either a pound per MW rate basis, a mass basis, or a combination of both, at the election of the utility. The commenters said that with further analysis, it may be appropriate to include other industry sectors and perhap s mobile sources as part of a cap and trade program.

Comment 61: RGGI is an adequate compliance mechanism. Commenter's analysis indicated RGGI

- driven CO emissions reductions were greater than emission reductions that would result from the Existing Source Performance Standard, supporting the contention that RGGI can be an adequate compliance mechanism

. Response 61: States have the flexibility to use existing programs to demonstrate compliance. See section VIII of the final rule preamble of the CPP

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

Commenters expressed their general support for the EPA's efforts to curb greenhouse gas emissions, and support the nation's first cap

- and

- trade program for CO, emissions, the Regiona l Greenhouse Gas Initiative (RGGI) and stated that the RGGI is an adequate compliance mechanism for the Existing EGU standard.

Commenters said the attached technical support document compares the RGGI

- driven CO, emission reductions to the emission reducti ons that would result from the Existing Source Performance Standard. Commenters said the calculations show that the RGGI reductions are the greater of the two supporting the contention that RGGI can be an adequate compliance mechanism.

Commenters said to construct the table, the methodology used in the EPA June 2014 Goal Computation Technical Support Document and the EPA "tsd

- state

- goalcomputation" spreadsheet was adapted to calculate a nationwide difference between the initial unadjusted 2012 state fossil emission rate for covered sources and a final emission rate to determine a percentage reduction. Commenters said the nationwide Existing Source Performance Standard reduction of 42.9 percent was calculated by summing all the state values and using the sum s in the goal calculation methodology. Commenters said RGGI uses a pre

- compliance period of the average of 2006

- 2008 for its analyses of RGGI effectiveness and reductions. Commenters said the RGGI states lowered the overall allowable CO, emission level sta rting in 2014 and as the EPA notes the revised program reduced emissions by 45 percent. Commenters said subsequent to 2020 the RGGI cap will be 78,000,000 tons and that represents a 45.2 percent reduction from the 2006

- 2008 baseline. Commenters said becaus e that reduction is greater than the nation

- wide reduction, RGGI is an appropriate compliance mechanism.359 Comment 62: Although the EPA identifies them as "state

- specific goals", they do not in reality take into account specifics of the states as they are based on regional or national averages

Response 62: See section VIII of the final rule preamble of the CPP for the EPA’s response to this comment.

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

Commenters said that although EPA states that they have developed "state

- specific goals" using data specific to each states' EGUs and other attributes of its electricity system, in reality BSER for each of the building blocks has been based on some method of averagi ng whether at a regional or national level, and therefore the EPA is forcing a regional approach.

Commenters said in no way is EPA proposing a goal or standard that is state

- specific or allows for the states to apply the standard in a state plan based on what has been and can be achieved in the state itself. Commenters said justifying this averaging for all affected EGUs rather than a national uniform rate is in consideration of Section 111(d)'s requirement for standards of performance to be on a state ra ther than national basis is actually counterintuitive to what actually is intended. Commenters said states are charged with developing a standard of performance, taking into account remaining useful life, for their individual units based on U.S. EPA's dete rmination of a cost

- effective and technically feasible BSER for those unit types. Commenters said states have the ability to a make adjustments based on remaining useful life and apply a standard of performance to each unit rather than an average across un its, yet EPA has failed to give consideration to this very specific element of the CAA.

Comment 63: The EPA has proposed that if any section of proposed rule is deemed beyond authority of CAA, that the rule would stay in effect and be based on the provis ions of the rule that remain

- this is not an appropriate or realistic scenario

Response 63: Severability is discussed in section V.A of the final rule preamble of the CPP.

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

Com menters said the EPA has proposed that if any section of this Proposed Rule is deemed beyond the authority of the CAA by the courts, that the rule would stay in effect and be based on the provisions of the Rule that remain. Commenters said this cannot be a n appropriate method for dealing with the highly legally speculative nature of this rule, and indicated from a practical standpoint the inter

- connected nature of the plans means it is probably not workable.

Commenters said the EPA has proposed state specif ic goals that are based on a systemic approach that takes into account the totality of the energy delivery system. Commenters said states, as they develop state plans, are anticipated to incorporate into their plans compliance mechanisms that will necessar ily be integrated, and affected entity compliance strategies may be completely upset should a BB be determined illegal. Commenters said the elimination of one component can reasonably be anticipated to directly impact another to a degree that will360 necessit ate EPA's reconsideration of, at minimum, state goals and affected entity compliance obligations.

Commenters urged the EPA to consider a scenario where a state chooses to meet the obligation of all four BBs by transitioning from existing coal to new NGCC generation. Commenters said should BB2 be determined to be illegal but the other BBs are maintained, then the state's compliance with the existing goals is highly unlikely

- the EPA must be prepared to address this.

Commenters said along these lines, EPA contemplates a regulatory structure where compliance obligations can only be applied 'inside the fence.' Comme nters said the EPA proposes that in such a scenario, it would be appropriate for EPA to utilize 'beyond the fence line' measures to develop a calculation of BSER that would apply to affected units on the grounds that reduced generation remains BSER, but su ch an approach cannot withstand scrutiny. Commenters said activities that lie outside the control of the affected unit cannot possibly be proven "technically feasible." Commenters said additionally, because EPA is relying on BB measures (such as RES or EE mandates) that have not been adopted in many states, it is arguable whether these measures are "adequately demonstrated."

Comment 64: The EPA should consider excluding under construction NGCC units for purposes of goal computation

. Response 64: The EPA ha s included under construction units in its quantification of BSER as described in s ection s V and VI of the final rule preamble of the CPP . These units are both likely affected sources and have the cost

- effective potential to reduce CO 2 emissions.

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

Commenters said that the EPA should consider excluding under construction NGCC units for the purposes of goal calculation, to result in calculations that better reflect reality. Comm enters said the decision to build a new NGCC plant does not happen in isolation and is generally motivated by another change within the system (such as an increase in electric demand, the retirement of another resource, or the addition of variable resource s). Commenters argued that the EPA's failure to account for future unit closures, while simultaneously including under construction units, potentially overestimates the size of the NGCC fleet, as new NGCCs could be replacing older units scheduled to retire

. Commenters said the fact that EPA was forced to make production assumptions about new NGCCs further illustrates the unnecessary difficulty of including plants not fully in operation, as well as the inevitability of erroneous analytical
outcomes. Commente rs said removing units that were not operational by January 1, 2012, will result in calculations that better reflect reality.

Comment 65: Commenter s are a generation and transmission cooperative and states that a small
or not

- for

- profit utility exemption o r a provision for less stringent standards or longer compliance schedules should be available for small public and cooperative EGUs

Response 65: States have the flexibility to accommodate unit

- specific concerns by assigning separate emission rate or reduction requirements for units. As described in s ection V of the final361 rule preamble of the CPP

, the EPA believes its BSER provides compliance optio ns that are available to every source.

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

Commenters said on September 29, 2014, Arizona Electric Power Cooperative, Inc. (AEPCO) filed comments on the CPP requesting that the EPA consider creating a separate category for "small public and cooperative electric generating units" within the framework of the larger rule. Commenters said that Dairyland Power Cooperative agrees with AEPCO that a small or not

- for

profit utility exemption or a provision for less stringent standards or longer compliance schedules should be available to address the unique difficulties such utilities will have complying with the proposed rule. Commenters said as noted in the NRECA comments on this proposed ru le, Section 111(d) of the CAA instructs EPA to allow states to "take into consideration, among other factors, the remaining useful life of the existing source to which the standard applies." (42 U.S.C. Section 7411(d ) ( 1)). Commenters said furthermore, NRE CA noted that EPA regulations (40 C.F.R. 60.24(f)) state that:

" States may provide for the application of less stringent emissions standards or longer compliance schedules than those otherwise required [under the paragraph setting emissions standards for designated pollutants the Administrator determines may cause or contribute to endangerment of public health], provided that the State demonstrates with respect to such facility (or class of facilities): (1) Unreasonable cost of control resulting from plant age, location, or basic process design, (2) Physical impossibility of installing necessary control equipment, or (3) Other factors specific to the facility (or class of facilities) that make application of a less stringent standard or final compliance tim e significantly more reasonable ."

Commenters said electric cooperative consumers, such as the rural electric members served by the member cooperatives of Dairyland, cannot afford the high cost of electricity and capital required if Dairyland must replace its existing coal

- fired generation before its remaining useful life and build new transmission and gas pipeline infrastructure to support that new generation. Commenters said our unique non

- stock, not

- for

- profit structure does not lend itself to the sort o f flexibility the CPP requires.

Commenters said small, not

- for

- profit utilities, in practice, have fewer resources and therefore fewer options to comply with the CPP. Commenters said a large utility with many power plants will likely have numerous avenues to adapt to and address the CPP rules resulting in a smaller impact on affordability and reliability for their customers. Commenters said they own two coal plants and a portion of a third plant; they have two natural gas combustion simple

- cycle turbines, with operating time restrictions. Commenters said therefore, their options for response to the rule are extremely limited.

Commenters said that due to the unique challenges faced by them, the EPA should exempt small and/or not

- for

- profit utilities from th e CPP or offer modified compliance pathways taking special regard for the unique challenges of such utilities.362 Comment 66: Proposal does not provide credit for emissions reductions achieved prior to the 2012 baseline or for any reductions that could be achieved between the 2012 baseline and initial compliance (2020) timeline

Response 66: See section s V, VI
, and VIII of the final rule preamble of the CPP for the EPA’s response to this comment.

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

Commenters said that the proposal does not provide credit for emission reductions achieved prior to the 2012 baseline or for any reductions that could be achieved between the 2012 baseline and initial compliance (2020) timeline.

a. Pre

- 2012 Reductions

Commenters said the EPA should recognize and allow states to provide credit for unit efficiency improvements (uprates), including nuclear uprates, made prior to 2012. Commenters said in the period leading up to EPA's 2012 baseline year, com panies have undertaken a variety of initiatives that directly or indirectly reduce the carbon intensity of the electric generating system. Commenters said these actions include: upgrades at existing fossil

- fired power plants, uprates at nuclear power plan ts, new plant construction, including NGCC facilities and renewable energy projects, and energy efficiency investments. Commenters said these "early actions" should not be penalized in the goal computation, nor should they be penalized in the state complia nce plans. Commenters requested that the EPA develop a process where a state can evaluate these efficiency improvements and include these avoided emissions in a state compliance plan.

b. 2012

- 2019 Reductions

Commenters said as proposed, EPA's Clean Power Plan would not allow any CO2 emission reductions occurring between now and the end of 2019 to be eligible for compliance with the state emission performance standards. Commenters said the EPA should encourage entities to make investments in reductions pri or to 2020 by providing an opportunity to use these emission reductions and avoided emissions in state compliance plans, which will spur early investments. Commenters requested that the EPA allow for "early action" credit for emission reductions achieved t hrough any additional unit efficiency improvements and new energy efficiency programs as well as unit retirements prior to 2020.

Commenters said creditable early reductions should include any activities within the four BSER building blocks or any other mea sures identified in the state plans, such as deployment of electric vehicles or distribution efficiency from deployment of smart grid technology for example. Commenters said furthermore, if states are allowed to demonstrate compliance with a final target ( whether 2030 or the alternative 2025 emission rate goal), without reference to the interim average goal, they can include the reduction benefits of activities that occur after 2012. Commenters said this provides incentives for states to implement pre

- 2020 reduction measures, particularly new renewable, end

- use and supply

- side efficiency programs, which would provide additional environmental benefits more quickly.363 Commenters recommended that EPA should allow states to tailor their compliance timelines to the ir unique circumstances, and should be able to apply early emissions reductions resulting from existing laws and regulations towards compliance. Commenters said Nevada Senate Bill 123 (SB123) will result in the early retirement of a coal

- fueled EGU (start ing in 2014 and final unit retirement in 2017), and SB123 has also resulted in the addition of incremental gas and renewable resources being added to the utility portfolio. Commenters said thus, SB123 will allow Nevada to realize emission reductions apart from BB 1 and BB2 prior to the beginning of the interim compliance period, and states like Nevada should be allowed the flexibility to implement existing laws and regulations aimed at reducing emissions on the state

- specified schedule, thereby demonstrati ng progress toward the final goal in an alternative manner.

Comment 67: As an incentive to engage in carbon reduction measures prior to the beginning of the plan performance period (2020) and get a jump on achieving final goals, the EPA should allow credi t for new carbon reduction actions and provide limited banking for carbon reduction actions taken in 2017

- 2020 timeframe

. Response 67: See section VIII of the final rule preamble of the CPP for the EPA’s response to this comment.

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

Commenters said in order for states to fully leverage renewable energy as a compliance tool, the EPA should provide limited banking for carbon reduction actions taken after January 1, 2017, and before the plan performance period begins.

Commenters said the EPA should allow credit for new carbon reduction actions (i.e., increasing existing policies, enacting new programs and/or adding new qualifying facilities) taken after January 1, 2017, and bef ore the beginning of the plan performance period (2020), to count toward achievement of the state's emissions goals. Commenters said this would help ensure that states have an incentive to engage in carbon reduction measures prior to that period and get a jump on being better positioned to achieve their final compliance goals.

Comment 68: Proposed rule should be based on an "all

- of

- the

- above" energy supply based on maintenance of a diverse energy supply

Response 68: The EPA RIA analysis suggest the generat ion diversity will increase in response to the CPP.

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

Several commenters said that energy consumers benefit most from an "all

- of

- the

- above" energy strategy, and that diversity of energy supply is not only critical in keeping energy costs reasonable, it is essential in ensuring steady and reliable streams of energy and is vital to the country's economic survival.364 Comment 69: The EPA should utilize marginal analyses in constructing its targets, both for the nation and for the individual states, to ensure that the people of the United States receive emissions reductions benefits commensurate with the costs to achieve them

. Response 69: The EPA’s BSER quantification relies on the aver age emission profile for a generating technology that is replacing and/or being replaced. It does not attempt to conduct a replacement calculation based on identifying the marginal source. However, the EPA compliance modeling does operate on a least

- cost linear programing framework that takes these considerations into account, and states have the ability to take this into account when determining a compliance pathway.

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

Commente rs said that the proposed rule does not adequately address policy alternatives such as a 70% reduction, or a 48% reduction, and said that the question of CO2 emissions is sufficiently complex that the marginal cost and marginal benefit curves may not be en ough to characterize an optimum.

Commenters said since emissions abatement carries costs to the consumer, it is important
to ensure that those costs are commensurate with the benefits that consumers are receiving from this abatement policy. Commenters sa id by not considering the relationship between the marginal costs and marginal benefits of abatement for each state, the EPA's methodology cannot be considered sufficient for determining the optimal level of CO2 reduction for society. Commenters encouraged the EPA to utilize marginal analyses in constructing its targets, both for the nation and for the individual states, to ensure that the people of the United States receive emissions reductions benefits commensurate with the costs to achieve them.

Comment 70: To encourage nuclear generation to operate at peak performance, the EPA should allow the energy from any nuclear power plant in excess of the 81.6 % average lifetime capacity factor for all current nuclear plants to be used for compliance with the states' carbon emission rate goals, and because this is meant to be an incentive for peak performance of the nuclear fleet, none of the nuclear generation should be used to calculate the states' goals

. Response 70: The EPA has revised the goal calculat ion to exclude nuclear generation, however,

some nuclear generation can be included in the state plan for compliance with the final goals. See section VIII of the final rule preamble of the CPP for more information about nuclear generation in the state pla n.

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

Commenters said in the proposal, EPA stated "Increasing the nuclear capability relative to the amount that would otherwise be available to operate is therefore a technically viable approach to365 support reducing CO2 emissions from affected fossil fuel

- fired EGUs." Co mmenters said while EPA states in the proposal that it estimated a 90 percent average utilization rate for U.S. nuclear units, APS, which operates the Palo Verde station, has different information. Commenters said based on industry data, the average lifeti me capacity factor of the 100 nuclear plants currently operating is 81.6 percent. Commenters said of these, based on the three year average between 2011 to 2013, the plants in the fourth quartile only operated at an average capacity factor of 70.8 percent.

Commenters said therefore, to encourage nuclear generation to operate a peak performance, EPA should allow the energy from any nuclear power plant in excess of the 81.6 percent average lifetime capacity factor for all current nuclear plants to be used fo r compliance with the states' carbon emission rate goals. Commenters said because this is meant to be an incentive for peak performance of the U.S. nuclear fleet, none of the nuclear generation should be used to calculate the states' goals. Commenters said this nuclear generation, like renewables, is a zero carbon

emitting generation resource, and added this approach adds flexibility to the program and assists the states that have nuclear capability in achieving their final carbon emission rate goals.

Co mment 71: Proposed rule includes performance standards that are completely inconsistent with the Standards of Performance proposed for new sources, and instead adopts an approach that relies primarily on other, unrelated sources within each state

. Response 71: See section VIII of the final rule preamble of the CPP for the EPA’s response to this comment.

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

Commenters said that the proposed rule includes performance standards that a re completely inconsistent with the Standards of Performance proposed for new sources, and should be modified to be consistent. Commenters said the proposed rule ignores the EPA's past approach to Section 111(d), which mandated that the BSER analysis cond ucted for new sources under Section 111(b) be followed for sources to be regulated under Section 111(d). (40 Fed. Reg. at 53, 342). Commenters said instead, the BSER analysis in the Proposed Rule impermissibly relies on reductions outside the fence line, effectively making entire states into emissions "sources" through regulation of the entire energy sector.

Comment 72: The EPA should create a dynamic distribution system that includes a Distribution System Operator as the local balancing authority

. Response 72: See section VIII of the final rule preamble for discussion of state plans.

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

Commenters stated that more electrical power is being generated in homes, businesses, an d commercial buildings and used locally, and this jump in power production at the distribution366 level presents a challenge to the traditional electrical transmission and distribution system based on centralized power generation and control. Commenters said the centralized system operated by utilities was not designed for the flexible load tracking required by renewables or the control of large numbers of distributed electrical energy resources. Commenters suggested an alternative approach that holds promise is a dynamic distribution system that includes a Distribution System Operator as the local balancing authority.

Commenters said as conceived, the dynamic distribution system uses local sources to track loads, stabilize voltage and frequency, and smooth int ermittent renewable energy generation providing a predictable, constant load profile to the utility. Commenters said this new dynamic distribution system connects central and local electricity generation, storage, microgrids, and loads with a marketplace t hat enables energy transactions, such as payments passing between buyers and sellers of energy at the local distribution level. Commenters said this new system provides a promising framework for distributed energy resources to deliver the same services at a better price, with decreased power losses, decreased emissions, and better reliability.

Commenters said a dynamic distribution system, based on a new balance in structure and function between centralized and decentralized architecture, requires a new ma rket model which combines a regional and locally tailored market model.

Comment 73: Create a "better than BSER" option with a longer compliance period

Response 73: The EPA is retaining the 2030 final goal compliance date, however the EPA has modified the interim goals in response to comments and our further consideration. The interim period covers the years 2022

- 2029 and includes illustrative interim emission values for the periods of 2022

- 2024, 2025

- 2027, and 2028

- 2029. States have the flexibility to use different steps than those included in the final rule if the state demonstrates in its state plan that the values chosen for the 3, 3, and 2 year increments are equivalent to the interim goal included in the final rule for the 2022

- 2029 period. See sectio ns V and VII of the final rule preamble for discussion of the BSER and statewide goals.

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

Commenters stated in practice, the "better than BSER" approach would provide a State wit h the flexibility to work with utilities to develop long range resource planning that would allow a true glide path for affected EGUs in exchange for less carbon intensive resources replacing those higher intensity resources at times that could account for particular situations in a State. The
commenters said for example, a State would be allowed to work with a utility for a guaranteed shutdown of a coal plant that would occur in 2032 and up until 2032 the State would not be in compliance with its State goa l; but, after shutting down the coal plant, the State would be well beneath its compliance goal and its cumulative CO2 emissions over the 20 year compliance period (2020

- 2040) would be significantly lower than what would occur if the coal plant continued t o run thru 2040 with reduced output to comply with the State's proposed goal. The
commenters said there is precedent for EPA accepting a cumulative approach to a reduction in pollution emissions over a period of time; EPA relied on such a cumulative approa ch to367 accounting for emission reductions that would be achieved by the Navajo Generating Station (NGS) when approving the shutdown of the three units at NGS and deferring the installation of pollution controls by recognizing the cumulative pollutant reduct ions would be greater if the pollution controls were required in the near term on all three units without a guaranteed shutdown for the units. The commenter s encourage d EPA to permit more creative approaches for States to employ, such as UAMPS' "better tha n BSER" approach in order for States to work with affected EGUs to afford these sources with true compliance glide paths.

Comment 74: The EPA Should Expressly Allow States To Use A Hybrid Approach that can include both mass

- based and rate

- based standards

Response 74: The EPA is giving states the flexibility to choose to comply with rate

- based goals

or mass

- based goals. See section VIII of the final rule preamble for more information regarding state plans.

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

Commenters stated EPA should clearly and expressly allow states to use a hybrid approach that can include both mass

- based and rate

- based standards, in addition to allowing states to use new natural gas capacity in compliance d emonstrations; an example of this approach could be as follows:

• In Step One, a mass

- based cap

- and

- trade program could be developed for existing fossil

fueled plants. The commenters said the cap for this program could be based on annual average emissions f rom existing fossil

- fueled plants from 2007 through 2012 reduced by an amount that reflects BSER for those plants, taking into account any heat rate improvements available to them (considering the cost of making such improvements, the remaining life of the plant, etc.). The commenters said the cap

- and

- trade approach would allow those plant owners/operators to decide whether to make the heat rate improvements or simply run less (or shut down) if doing so would make an equivalent level of reduction at a lower rate.

• In Step 2, the state would calculate an emission rate (in pounds per megawatt

- hour) that the state would commit to achieve starting in 2030. The commenters said the rate would be established by calculating the numerator to be the annual CO2 cap dis cussed above plus the projected annual emissions from new natural gas plants starting in 2030 and the denominator would be the projected annual megawatt

- hours of generation in the state from all of these plants. The commenters said when making its complian ce demonstration, the state would also be allowed to include all forms of carbon

- free generation (i.e. wind, solar, hydropower, and nuclear) in the denominator as an incentive to encourage investments. The commenters said such an approach would provide sta tes with an incentive to move to cleaner generation without either EPA or the state running afoul of the jurisdictional limitations.368 Comment 75: Include all GHGs, including all reductions since 2005

Response 75: The final rule goals are based on emission reductions of only CO 2 . The EPA is not using 2005 as the baseline year, s ee section V I of the final rule preamble of the CPP for more information about the baseline year.

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

Comm enters stated in judging whether a state has achieved the GHG reductions, the EPA should be required to take into consideration all reductions in greenhouse gases in each state, including those from power plant retirements that have occurred since 2005. Th e commenters said President Obama has publicly called for the reduction of greenhouse gases by 17% from the 2005 level by 2020. The commenters said in calculating whether states have met their requirements to help achieve that federal objective, all reduct ions in GHG since 2005 should be included.

Comment 76: T&T supplementary rule

- EPA takes comment on the issue of RE across international borders, and specifically in Canada, in the supplemental proposal. The commenter s

are affected by this issue since they have current and possible future power purchase agreements with hydroelectric facilities in Canada

- Incremental or new hydro capacity installed any time after the base year, not just after the proposal date, should be el igible for compliance

. Response 76 : See section VIII of the final rule preamble of the CPP for the EPA’s response to this comment more information about RE measures that occur outside the U.S.

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

Commenters said incremental or new hydro capacity installed any time after the base year of 2012 (or other base year/range of years used in the final rule)

- not only after the date of proposal

- should be eligible for compliance. Commente rs said the emissions benefits of such investments should be counted not only beginning in 2020, but beginning in the year that hydro capacity goes into service and therefore begins displacing emissions from 111(d)

- affected EGUs. Commenters said for facili ties that go into service before 2020, EPA should allow banking of these MWh for use after compliance begins, as EPA suggested in the October 30,2014 Notice of Data Availability (79 Fed. Reg. at 64,545

- 64546).

4.9 CHOICE OF BASELI NE OTHER THAN 2012

Sec tion 4. 9 covers public comments related to the choice of baseline other than 2012

.369 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: 2012 does not represent typical year; multi

- year approach should be used for baseline; 3 or 5 year period suggested as baseline; the EPA has used multi

- year averages in other
programs; s upport for NODA 3

- year average.
Response 1: See section VI of the fina l rule preamble of the CPP for the EPA’s response to this
comment. EPA had made adjustments to fossil generation in the NorthWest to reflect a more representative generation profile.

The following are summaries of the specific public comments under this c omment:
2012 Not A Representative Year

. Several commenters stated that 2012 should not be used as baseline year because it was not a typical, representative year for the industry. Commenters stated that 2012 does not accurately represent GHG emissions bec ause in 2012 GHG emissions rates from coal

- fired generation were atypically low due to: above average hydropower electricity generation, mild weather, historically low natural gas prices, and a changing portfolio (additions and retirements) of available un its for dispatch. Commenters stated that single

- unit issues present in 2012 also significantly affected state baseline emissions, including extended outage periods for major sources of CO2 and partial year operation of new NGCCs, and the EPA did not adjus t for any of these events. Supporting their argument that 2012 was not a representative year for gas prices, Commenters indicated that natural gas prices are historically very volatile and are expected to rise faster than coal prices relative to 2012. Com menters said that 2012 is not representative for the Northeastern states because due to Super Storm Sandy, energy consumption was atypical.

Commenters stated the selection of 2012 as the base year is also non

- representative of the current energy markets in that natural gas prices were unsustainably low due to the mild weather and the significant growth in the new gas drilling regions.

Commenters stated EPA chose a baseline year of 2012; in that year, the price of natural gas hovered at historically low rate s. The commenters said the price differential between coal and gas was very nearly zero; and some coal units with dual fuel capability actually elected to burn gas for much of the summer generating season. The commenters said other coal units were laid up as NGCC units dominated the market; yet even under these most favorable market conditions, EPA data indicate that NGCC units in the Midwest operated only at about 30% capacity factor (28% in Missouri). The commenters sai d there may be some price signal that would further augment NGCC gains and produce the desired 70% capacity factor, but EPA hasn't demonstrated that it exists, nor given any indication of what it might be; and added, this is an important factor because a l arge portion of the imputed benefits of the proposal flow from this market displacement.

Several commenters supported using a multi

- year average rather than any single year, but indicated that if the EPA does choose to use a single year they must, at a mi nimum, correct for the types of anomalies discussed above. Commenters indicated that for example, to adjust for370 variable hydropower production, the EPA could employ a common regulatory practice among investor

- owned electric utilities in the Pacific Northw est region that involves "normalizing," or "averaging", hydroelectricity generation across periods and scenarios. Commenters said that ratemaking processes assume average hydroelectricity generation, irrespective of actual hydrological conditions. Commente rs said that if the baseline had been established on the basis of a "normalized" year, instead of raw emissions data from 2012, Washington's baseline would have been 5.7 million tons higher, or approximately 36.2 million tons. Commenters said that the EPA should defer to states that have a long history of normalizing for hydrogenation, since the EPA has no experience or authority with respect to normalizing for hydroelectricity generation in different markets across the country.

Commenters stated EGU's oper ations will vary greatly over the course of any given year and EPA must correct for those anomalies.

Single Year Not Representative

. Commenters stated using a single year as the basis for the calculations is inconsistent with the way the industry operates. The commenters said electric generating units require regular maintenance and must be taken out of service for extended periods of time to complete maintenance and upgrades. The commenters said for example, Laramie River Station, which is comprised of thr ee generating units, is on a three

- year maintenance schedule, with each unit being shut down for maintenance on a rotating basis. The
commenters said many utilities in the industry adhere to a three

- year maintenance schedule and, regardless of the specific schedule, selecting any single year is likely to fail to reflect the actual capability of the generating fleet. The commenters added variations in weather have a significant impact on not only the demand for electricity, but also the type of electricity g enerated in a given year. The commenters said for example, the amount of fossil generation in the Upper Great Plains region is significantly affected by the amount of hydropower generation: In high water years there is more hydro and less fossil generation , and likewise in low water years, there is less hydro and more fossil generation. The commenters said averaging the baseline will tend to reduce the impact of weather anomalies as well as unit outages.

Commenters stated EPA should start with a baseline pe riod that is reasonably representative of actual generation and carbon emission levels. The commenters said specific to the Pacific Northwest, a single year is unlikely to be representative of a fair "starting point" because of when some plants began opera tion and hydroelectric variability. The commenters d id not believe that the baseline should be the same for all states; rather the states should have, within their authority, the ability to determine the appropriate baseline period.

Multi

- year Baseline

. S everal commenters indicated that using a single year as the baseline is inappropriate, and that instead a multi

- year approach should be used. Several commenters stated that using a single year will produce anomalies, many of which could be ameliorated by the use of a multi

- year baseline.

Several commenters indicated using a single year for baseline is inappropriate because variations in weather have a significant impact on not only the demand for electricity, but also the type of electricity generated in a given year. Commenters said that for example, the amount of fossil generation in the Upper Great Plains and the Pacific Northwest regions is significantly affected by the amount of hydropower generation: during high water years, there is more hydro a nd less371 fossil generation, and likewise in low water years, there is less hydro and more fossil generation. Several commenters indicated that because of historically high hydropower availability in 2012, Oregon's only coal

- fired power plant ran at an unusu ally low capacity factor of approximately 50 percent. Several commenters indicated that across the region, hydropower generation was 110 percent of average in 2012. Several commenters stated that in Washington specifically, hydropower production ran at 127 .7 percent in 2012, as compared to long

- term average hydropower generation rates.

Commenters stated that the EPA noted in the proposal that using a four

- year average instead of a single year average would not alter the national baseline operating and emission rates significantly. Commenters countered that at the national level relying on a singl e year may not strongly influence the baseline, but for individual states a single year may deviate substantially from normal or average conditions.

Commenters stated that EGUs require regular maintenance and must be taken out of service for extended perio ds of time to complete maintenance and upgrades, potentially making a one year
average non

- representative. Commenters also indicated that a single year would not be representative because in a particular year units may be running for only part of the year due to unplanned outages such as those resulting from storms or floods.

Suggested Multi

- year Periods

. Several commenters offered suggestions regarding how many years should be used to establish baseline. Commenters suggested 3

- year, 3 to 5 year, or 5

- yea r multi

- year baselines.

3

- year baseline

. Commenters suggested the EPA should allow a state to choose any three years within the most recent ten

- year period for which emissions data is available and then average those three years to establish a baseline fo r its emission reductions and compliance plan.

Commenters stated the EPA should allow states to use as their baseline the average of any three consecutive years from 2008 through 2013.

Commenters recommended that EPA use at least the average of the last t hree available years as a baseline period, rather than using the baseline year of 2012. Several c ommenters agreed that a 3

- year average would be reasonable, but cautioned that states should not be allowed to pick which three year period is used, and sugges ted the most up

- to

- date data available should be used. Commenters further indicated that using the average of the three most recent years would also align the baseline with the rolling three year average EPA is proposing for compliance.

Several commenter s suggested that the EPA use a 3

- year average when using historical data to determine a baseline. Commenters specifically suggested using an average of total generation from 2003

- 2005 to calculate individual state emission budgets. Commenters said that U. S. policy statements for domestic and international carbon reduction goals are all measured from a 2005 baseline. Commenters suggested that the EPA should also use 2005 as a baseline in this rulemaking and allow reductions that have been made since 2005 to be excluded from goal

setting but available for use in demonstrating compliance.

Commenters recommended using a 3

- year average of data between 2005 and 2012 to calculate baseline emissions.372 Commenters suggested a baseline average of years 2002

- 2005 should be utilized to best capture early reduction efforts.

Commenters suggested a baseline average of years 2010 through 2012 should be used.

3

- 5 year and 5

- year baseline

. Commenters stated that a multi

- year average of three to five years should be used to establish baseline. Commenters indicated that three

- year averages are better baseline proxies than the single year of 2012, but still may not represent a "typical" year. A five

ye ar average provides a better representation of a typical year, and therefore, c ommenters recommended establishing a baseline period for all states of between three to five years (using the most recent period for which complete data can be acquired).

Severa l commenters felt EPA should expand the baseline period from one year to five years in order to minimize the impact of anomalies that inevitably arise during a one

- year period. Commenters suggested a 5

- year baseline period of 2008

- 2012, and indicated that reaching back to 2008 would reduce somewhat the penalty imposed on early acting states that implemented aggressive RE policies.

EPA's Use of Multi

- year Averages

. Several commenters stated that in other programs, EPA uses multiple years of data to establish baseline and demonstrate compliance. Commenters indicated that EPA uses multiple years for baselines in other programs and for compliance purposes because of the variability issues associated with the use of a single year.

Commenters stated that modeling for regional haze program analyses typically use three or more years of meteorological data, as does stationary source modeling done by Washington. Several commenters noted that in the Notice of Data Availability (NODA) published October 30, 2014, EPA pr ovides data for calendar years 2010 and 2011, suggesting the use of a three

- year average of 2010

- 2012. Commenters recommended that EPA review the discussion in 40 CFR Part 51, Subpart W [Determining Conformity of General Federal Actions to State or Federal Implementation Plans] when evaluating the appropriate number of years to include in establishing the baseline for this rule proposal.

Several commenters stated that the EPA has noted in previous rulemakings that an EGU's operations (and consequently, its GHG emissions) will vary greatly over the course of any given
year. Several commenters indicated that as a result, under the New Source Review program, the EPA applies a presumption that any 24

- month period in the five years preceding a project is
represe ntative of normal operations. Several commenters stated that a multi

- year baseline period also would be consistent with how the EPA expects states to demonstrate compliance under the Proposed Rule. Several commenters noted that the EPA is proposing that du ring the final performance period, 2030 and thereafter, states must meet the final emission performance level on a three

- calendar year rolling average starting January 1, 2030. (Proposed 40 CFR 60.5775(d)). Several commenters stated that a three

- year rolli ng average accounts for the natural variation that occurs within a single

- year period, and further noted that a multi

- year baseline period is consistent other existing EPA programs and guidance. Several commenters indicated as an example, the Cross

- State A ir Pollution Rule ("CSAPR") used an eight

- year (2003

- 2010) historic emissions baseline period established for SO2, NOx, and ozone

- season NOx.373 2012 was an atypical year

- multi

- year baseline preferred

. Commenters stated EPA has proposed that state plan red uctions be based on a single year, 2012, of reported emissions and electric generation data from affected EGUs. The commenter s asserted states should be given the flexibility to consider other baseline years that more accurately reflect each state's specif ic circumstances or averaging over several years to address the concern that 2012 was an unusual year for electric generation for a number of reasons.

Commenters stated in 2012 dispatch of the electric generation fleet was atypical. The
commenters said wh ile electric demand remained low after suffering a significant decline in 2008 as a result of the economic recession, natural gas prices dipped to a historic low (April 2012: $1.95) close to 70% below the December 2014 ($6) average price and 50% lower than the 2014 low price (July: $4.05). The commenters said the 2012 annual average price of natural gas of $2.75 was nearly $6 less than the 2005 average of $8.69. The commenters said each of these disparate data points identifies a weakness in picking one sin gle year (2012) for analysis: it builds into the model an emissions bias resulting from low gas prices in 2012. The commenter s asserted the decision to choose a single year imbeds into the program an operational bias which can create a programmatic dispari ty in impact among affected entities. The commenters said by selecting a single base year, EPA creates winners and losers based on individual operating characteristics from that one year. The commenters said utilities with major base load coal units off li ne for retrofit or repair would see a disproportionately negative impact on base case emissions compared with utilities that were operating plants at maximum capacity for 2012. The
commenters said EPA should allow states and utilities to offer alternative baseline years that includes averaging of multiple years or identifying years where operation accurately reflects maximum fleet capacity for the purposes of setting a baseline.

Three

- year baseline

. Commenters support ed the suggestion raised in EPA's ESPS NODA 27 that the Agency use three years of data for averaging a baseline (2010

- 2012) or allow the states to develop an average baseline that works best for the state for any three years from 2005 to 2013.

2012 was atypical year

- multi

- year baseline prefe rred

. Commenters stated EPA's proposal establishes a single year

- 2012

- as the baseline for calculating a state's CO2 performance goals. The commenters stated Dynegy has made significant investments and undertaken a series of steps prior to the baseline year that must be considered; for example, Dynegy has upgraded turbines on numerous units, at a significant capital cost, resulting in efficiency improvements

- all prior to 2012. The commenters added Dynegy previously retired 10 EGUs in Illinois during th e period October 2011 to January 2013. The commenters said the CPP should recognize these previous reductions, which have helped the state reduce its carbon emissions.

Commenter s asserted the baseline should be at least a two

- or three

- year period to ensu re that the baseline is representative and does not arbitrarily penalize a state and generators due to inherent variabilities that impact electric generation emissions in any single year (e.g., weather, equipment outages, fuel prices, the overall economy). The commenters said a multi

- year emissions baseline period would be consistent with other EPA air regulatory programs that recognize the inherent variability in EGU emissions from year to year, including NSR (40 C.F.R. Section 52.21(r)(21) defines "actual emissions" in terms of emissions during any consecutive 24

- month period), CSAPR (allowance allocations methodology for existing units utilizes baseline periods ranging from three years to eight years to reduce the likelihood that any single year's3 74 operati ons determine allocations), and the Acid Rain Program (allowance allocations based on a unit's average fossil fuel consumed from 1985 through 1987).

Commenters stated a single year 2012 emissions baseline is not representative of coal

- fired EGU CO2 emissi ons; among other reasons, year 2012 is not representative given historically low gas prices, which reduced capacity factors of coal

- fired plants. The commenters added using only 2012 fails to recognize significant coal plant shutdowns that occurred in the immediately preceding years. The commenters said by limiting the emissions baseline to the single year 2012, EPA skews the state targets and increases both the unrealistic nature of those targets and the burden on states and emitters to comply. The comment ers said a multi

- year emission baseline period would help to smooth out the inherent variabilities in any one year and help ensure that reduction targets are more realistic. The commenters said a multi

- year emissions baseline period would be consistent wit h EPA's proposed requirements for a state's demonstration of compliance with the proposed emission targets, which would be based on a three

- calendar year average. Proposed Section 60.5775(d).

3

- year baseline

. Commenters stated with this proposal, EPA has determined that if the reductions are made using 2012 data as a baseline, the mass emissions of GHG from EGUs will be approximately 30% less than emissions in 2005. The commenters said this estimation takes into
account the measured effects of all actions that have reduced CO2 emissions from EGUs between 2005 through 2012; however, the use of a single year in establishing the baseline does not account for unusual operational situations and conditions driven by the economy . The
commenters said a single year baseline might occur in a year where there were unusually high or low amounts of rainfall impacting hydroelectric production; likewise, abnormally low or high natural gas prices can skew the normal dispatch order of EGUs . The commenters said in 2012, due to low natural gas prices for the LG&E and KU fleet, simple cycle combustion turbines were called into service at almost twice the average run time as the previous 10

- year average rate. The
commenters said EPA should allo w states to use a three

- year average period to set the baseline rate for calculating the goal (e.g. a consecutive 3

- year period between 2005 and 2012 or perhaps the period from 2010

- 2012) to help alleviate any anomalies that may result from specifying a single year baseline period. The commenters said EPA should permit the state plans to begin counting reductions immediately following the end of the baseline period; also, EPA should allow states to count reductions from any actions that occur after the ba seline period which support meeting the final 2030 goal.

Commenters stated it is surprising that U.S. EPA chose to use just one calendar year of data as the baseline, effectively ignoring variables such as weather, unplanned and planned outages, fuel price variability and other factors that result in shifts among generation sources. The commenters said in 2012 natural gas prices were at historical lows and NG

- fired EGUs ran at higher capacity factors than would otherwise have been the case. The commenters s aid using a year that is not representative of generation patterns results in compliance with emissions targets appear more achievable. The commenters said because no single year can be representative of electricity generating patterns, the commenters reco mmend ed that U.S. EPA use at least the average of the last three years as the baseline period. The commenters said this approach would allow use of the most current data while at the same time developing a baseline that recognizes annual variations in gene ration source and emissions, as well as aligning with the proposed rolling three year average compliance period in the proposal. The commenters appreciate d the fact that U.S. EPA,375 while originally taking the position that any potential changes to state goa ls using a multi

- year base year would be minimal, has noted the concerns of states and regulated entities and has requested comment on a multi

- year approach in the recent NODA. The commenter s recognize d that each baseline approach presents its own advantag es and disadvantages, but final state baselines should be representative and not penalize states or entities and its members who have taken responsible early actions. The commenters said if U.S. EPA maintains its approach of using 2012 as the baseline, the rule should be drafted such that the baseline can be adjusted for individual states where it can be demonstrated that certain anomalies may have had an undue influence on the baseline.

Commenters stated EPA should set emission rate goals based on a multi

- year baseline period, rather than historic generation in a single year. The commenters said as EPA has noted in previous rulemakings, electric demand and resultant utility operations fluctuate greatly within a single year. The commenters said in 2012, Lewi s & Clark Station had a major outage year resulting in much lower generation from the unit than routinely occurs. The commenters said using this lower generation value arbitrarily and capriciously lowers the State of Montana emission rate goal. The comment ers said utilizing a multi

- year baseline would correct for scheduled maintenance outages and similar anomalies. The commenter s recommend ed that EPA use an average of emissions between 2003 and 2006, as this time period also would provide consideration to u tilities that have invested in renewable energy.

Commenters stated 2012 was an anomal year for generation and EPA should average three (3) years of data to establish a base.

Commenters stated it is inappropriate to use any single year as a baseline to repr esent the electric power sector; sources and amounts of electricity generation can and do vary from year to year. The commenters said the variability is due to many factors that include economic conditions, weather variability, year

- to

- year fluctuations in fuel prices, and significant unplanned and planned unit outages. The commenters said with regard to fuel prices, natural gas prices in 2012 were at their lowest level since before 2000 (the 2012 annual average Henry Hub price was $2.75 per mmBtu), lower t han today's price, and lower than any natural gas price the EIA projects into the future; this one fact alone disqualifies 2012 as a single baseline year to represent the electric power sector. The commenters said the EPA clearly recognizes that there is y ear

- to

year variability in the electric power sector, and has taken steps in previous power sector rulemakings to address it. The commenter s asserted the failure of EPA to address power sector variability in its selection of a baseline period is a gross o versight that must be corrected.

Commenters stated the use of 2012 as the single

- year baseline also limits the ability of states to receive credit for early actions that reduce CO2 emissions, such as the retirement of coal

- fired EGUs. The commenters said coal

- fired EGUs that retired during the period 2009

- 2011, for example, would not be recognized under the EPA's proposed 2012 baseline; a multi

- year baseline would allow states to capture and get credit for more early actions in their implementation plans than using 2012 as a single year. The commenters said the EPA made 2010 and 2011 eGRID data available as part of its October 30, 2014 Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Generating Units Notice of Data Availabili ty. The commenters used that data to calculate CO2 emission rates for each year for the states in which it operates, using the same methodology the EPA used to calculate 2012 CO2376 emission rates for each state. The commenters found that the use of either 20 10 or 2011 would in fact produce significant changes to state baselines that would be carried through to significant changes in some state goals. The commenters recommend ed that the EPA use a multi

- year baseline consisting of 2009 through 2012. The comment ers said specifically, the EPA should calculate state's baselines for each of these years and select for each state's baseline the average of their highest three of four years. The commenters said this will produce a far more representative baseline for th e utility sector than any single year. The commenters said all the EPA has offered with respect to a multi

- year baseline is that it "also considered the possibility of using average fossil generation and emission rate values over a baseline period (e.g., 2 009

- 2012), but determined that there would be little variation in results compared to a 2012 base year data set due to the rate

- based nature of the goal." The commenters said this one statement, unsupported by any data or analysis, is hardly justificatio n for the EPA to not use a multiple year baseline period and it makes the EPA's selection of 2012 as the baseline arbitrary and capricious.

Commenters stated to set realistic and equitable state goals, EPA must start with a baseline period that is represe ntative of actual generation and CO2 emission levels. The commenters said the 2012 baseline period in the Proposed Rule is not representative, in part because EPA did not correct for anomalous events that impacted total CO2 emissions in that single year. T he
commenters said EPA should consider alternative multi

- year baseline periods to minimize the impact of anomalies in 2012; at minimum, EPA should address certain anomalies to 2012 data that unfairly penalize some states and/or companies.

Commenters state d numerous anomalous events can occur during any single year, as demonstrated by 2012; these anomalies include increased utilization of certain affected EGUs due to extreme weather events, atypically low CO2 emissions from coal

- fired generation due to hist orically low natural gas prices, a changing portfolio (additions and retirements) of available units for dispatch, abnormally high levels of hydroelectric generation, and unit outages for repair or retrofits. The commenters said for example, in Arizona, one affected EGU, Springerville Unit 3, operated at a reduced capacity factor of approximately 54% in 2012 due to unplanned outages for steam turbine work; this much lower capacity factor should not be deemed to be representa tive of typical operations for this baseload unit.

Commenters stated another example is the unusually high hydroelectric production experienced in the Pacific Northwest during 2012 resulted in unusually low fossil power generation; in that region, fossil resources dispatch only after all hydroelectric and wind resou rces have been fully allocated. The commenters said because of historically high hydroelectric availability in 2012, Oregon's only coal

- fired power plant ran at an unusually low capacity factor of approximately 50%. The commenters said across the region, h ydroelectric generation was 110% in 2012, as compared with average levels; this equates to 14.3 gigawatt

- hours of carbon

- free energy generation above an average water year, which lowered Pacific Northwest emissions by 5.7 million tons, or 22%. The commente rs said in Washington, hydroelectric production ran at 127.7% in 2012, as compared to long

- term average hydropower generation rates. The
commenters said by mandating emission reductions from the 2012 baseline, EPA has proposed goals for states in the Pacif ic Northwest that are artificially skewed relative to states that rely more on thermal generation. The commenters said around the country, there are other examples of such anomalies in 2012, as would be the case for any single

- year baseline.377 Commenters st ated as EPA has noted in previous rulemakings, an EGU's operations (and, consequently, its CO2 emissions) will vary greatly over the course of any given year. "A cold winter or hot summer will result in high levels of 'normal' operations while a relatively mild year will produce lower 'normal' operations... [E]lectricity demand and resultant utility operations fluctuate in response to various factors such as annual variability in climatic or economic conditions that affect demand, or changes at other plants in the utility system that affect the dispatch of a particular plant." The commenters said as a result, under the New Source Review program, EPA applies a presumption that any 24

- month period in the 5 years preceding a project is representative of normal operations.

Commenters stated a multi

- year baseline period would smooth out the anomalies associated with 2012 and more accurately represent the natural variations inherent in the electric industry. The
commenters said while anomalous events occur every y ear, these events do not all have the same impact on operations and emissions; as a result, any single

- year baseline period will not accurately represent normal operations of the energy industry. The commenters said a multi

- year baseline would better repre sent the natural yearly variation and, thus, better depict normal operations. The commenters said in the NODA published on October 30, EPA acknowledged stakeholder concerns about use of 2012 as the baseline year for state goal calculation and asked for com ment on whether the agency should use a different single data year or the average of a combination of years, such as 2010, 2011, and 2012. The commenter s support ed the use of an alternative multi

- year baseline for purposes of goal setting.

Commenters stat ed EPA chose 2012 as the baseline year for its emission reduction goal calculations, but that year was not representative for New Mexico, resulting in unnecessarily stringent goals that may be unachievable and result in risks to reliability. The commenters said as proposed in its recent Notice of Data Availability, EPA should allow states to choose a baseline using an average of several years to ensure the baseline for the goal calculations is representative and results in appropriately stringent emission r eduction goals.

Commenters stated variability of the generating levels for fossil generation in New Mexico is much more significant than EPA suggests

- the average variation in generation on an individual unit basis is nearly 100 percent; more importantly, however, the analysis above confirms that 2012 was not a representative year for New Mexico for several reasons. The commenters said first, 2012 was the second lowest year for total generation, which means 2012 is a poor representation of peak demand; sec ond, 2012 was the lowest year for coal generation because Escalante was operating at an unusually low capacity factor during that year (49.7 percent), even though Escalante is expected to return to capacity factors as high as 88 percent in the future. The
commenters said accordingly, EPA's goal calculation relies on an already depressed value before applying building blocks 1 and 2, which lowers New Mexico's interim and final goals unfairly.

Commenters stated unfortunately, any single year that EPA might s elect as a baseline for the entire country will likely result in an unrepresentative analysis for at least some states; relying on a single

- year baseline also fails to reflect the variability in dispatch of individual generating units from year to year wit hin the same state. The commenters said because maintaining sufficient generating resources capable of serving a wide range of possible demand levels and respond to any unexpected variations in demand is critical to grid reliability, EPA should at least ac count for historical variability in establishing its goals. The commenter s recommend ed EPA reevaluate378 whether an average of several years might help avoid unrepresentative values for individual states and better reflect the variability in individual genera ting unit operating levels from year to
year.

Commenters recognize d that a 2010

- 2012 baseline, as suggested by the NODA, may not be representative for all states. The commenter s encourage d EPA to provide as much flexibility to states as possible on select ing an appropriate and representative baseline, particularly since states are responsible for establishing the "standards of performance" for existing units under Section 111(d).

Commenter s stated EPA chose the year 2012 as the baseline year as it represe nted the most recent year for " ... which complete data were available at the time of the analysis." The
commenter s said EPA did not attempt to determine whether 2012 was representative of normal operations for power plants across the U.S. The commenter s s aid individual states and regions like Utah are more likely to have experienced anomalous years in the operations of their power system and this can impact the states' emissions rates and EPA's calculation of the goals. The
commenter s said consideration of a multi

- year base period is likely to smooth out the anomalies arising from the use of 2012 as a base year by providing a more realistic average, or normal, baseline from which to develop the proposed Utah state emission rate goals. The commenter s said to ensure a more representative baseline period and provide some partial credit for early actions, EPA should set the baseline levels for computing the state goals based on a multi

- year period prior to 2012.

Commenters stated a single

- year baseline period w ill not accurately represent normal operations of the electric generation industry; numerous operational and system anomalies can occur during
any one

- year period. The commenters said these anomalies include increased utilization of affected units due to e xtreme weather events, unexpected plant shutdowns, atypically low Greenhouse Gas (GHG) emissions rates from coal

- fired generation due to historically low natural gas prices, a changing portfolio (additions and retirements) of available units for dispatch, and abnormally high levels of hydropower generation. The commenters said in order to set realistic state goals and avoid inequities that a single year base year creates between states, EPA should expand the baseline period from one year to five years. The commenters said a multi

- year baseline period would smooth out anomalies and accurately represent the natural variations inherent in the operations of coal

- fired generation.

Commenters stated in 2012, the largest coal

- fired generation plant located in Utah , the Intermountain Power Plant, had a mechanical failure that reduced its capacity factor to 46.7%, far below its average capacity factor of 85.3% for the years 2008

- 2011; this is a clear example of how 2012 was not a typical or average energy generation year. The commenters said as EPA has noted in previous rulemakings, an electric generating unit's operation and GHG emissions will vary over the course of any given year; "A cold winter or hot summer will result in high levels of 'normal' operations while a relatively mild year will produce lower 'normal' operations ...[E]lectricity demand and resultant utility operations fluctuate in response to various factors such as annual variability in climatic or economic conditions that affect demand or changes at

o ther plants in the utility system that affect the dispatch of a particular plant." The commenters said under the New Source Review program, EPA applies a presumption that any 24

- month period in the five years preceding a project is representative of normal operations.379 Commenters stated EPA should allow Utah the flexibility to select the average of the five years from 2008

- 2012 or the three years 2010

- 2012 as its baseline. The commenters said for Utah, using a three

- year or a five

- year baseline to calculate the 2030 emissions rate goal creates a less stringent goal than using the 2012 baseline. The commenters said changing Utah's base period to a five

- year period (2008

- 2012) would change the 2030 emissions rate goal 43 lbs/MWH to 1,365 lbs/MWH and a three

- year base period would change the 2030 emission rate goal 7 lbs/MWH to 1,329 lbs/MWH. The commenters said if the EPA is going to establish an emission target, the commenter s asserted states should be given the opportunity and flexibility to set baseline ye ars that are representative of normal operations of electricity generation in the state.

Commenters stated the base year for EPA's proposal is 2012; however, the existing electric generation system in the U.S. is much too complex to be adequately represen ted by one calendar year. The commenters said variables such as fuel prices, equipment outages and de

- rates, weather, and demand changes due to industry or residential fluctuations can significantly impact generation and the dispatch of specific units with varying emission profiles. The commenters said variables impacting one region of the nation may not impact others. The commenters said the use of 2012 to establish baseline carbon dioxide (CO2) emissions is especially problematic for the State of Michigan as 2012 was both a mild year in terms of temperature and Michigan experienced the lowest natural gas pricing in the last decade. The commenters said the combination of these variables led to significant CO2 emission reductions in comparison to preceding as well as subsequent years. The commenters said using U.S. Energy Information Administration (EIA) data for Michigan's electric po wer sector generation, the 2012 Total Net Generation for Michigan was 105.8 million megawatt hours (MWhs). The commenters said the average yearly Total Net Generation data from the ten year preceding period (2002 to 2011) was 113.8 million MWhs and ranged from a high value of 121.6 million MWhs (2005, a year of economic growth that we hope to see again in the future) to a low of 101.2 million MWhs (2009, a year significantly impacted by the deep national recession). The commenters said similarly, 67,877 tho usand metric tons of CO2 were emitted in 2012, whereas the ten year average preceding 2012 was 76,000 thousand metric tons. The commenters said a high value of 80,228 thousand metric tons was experienced in 2007 (a year of significant economic growth); and a low value of 69,301 thousand metric tons occurred in 2011 (also a year impacted by the recession). The commenters said the EIA data quoted above proves that use of a single calendar year is not representative; an appropriate and fair method to develop a baseline would include multiple years to account for the numerous variables associated with different states and regions. The commenter s request ed that EPA bracket calendar year 2005 (the year quoted as the baseline in EPA's press releases) through and in cluding calendar year 2012 (the baseline year actually used by EPA), and allow each state or multi

- state compact to choose from 12 to up to 60 consecutive months (a total no greater than 5

- years) within this bracket to develop its own baseline for the stat e's compliance plan percent reduction target. The commenters said such an approach is far more equitable and truly representative of the dynamic situation encompassing CO2 emissions in the U.S.

Commenters stated numerous anomalous events can occur during a ny one

- year period as was the case in 2012. The commenters said these anomalies include increased utilization of affected units due to extreme weather events, atypically low GHG emissions rates from coal

- fired generation due to historically low natural gas prices, a changing portfolio (additions and retirements) of380 available units for dispatch, unit outages, and above normal levels of hydropower generation; following are some examples:

• The unusually high hydropower production experienced in the Pacific Nor thwest during 2012 resulted in unusually low fossil power generation; across the region, hydropower generation was 110 % of average in 2012. The commenters said by mandating emission reductions from the 2012 baseline, EPA has proposed goals for states in t he Pacific Northwest that are artificially skewed relative to states that rely more on thermal generation. The commenters said South Dakota's total energy production in 2012 was one of the highest on record; therefore, the mandate to increase renewable ene rgy generation and decrease usage through energy efficiency mechanisms (goals that are tied to the state's total generation in 2012) is more onerous than it otherwise would be had a multiyear approach been used or had another year been selected as the base line.

• South Dakota's one natural gas combined cycle plant was undergoing test firing in 2012. EPA considered it an existing unit under its proposal. Using data from an earlier year would reduce its impact on South Dakota's state goal or eliminate it from being considered as an operational unit depending on what year is selected

• Wind generation in South Dakota increased significantly between 2008 and 2012 and, by EPA using 2012 as the baseline, is receiving no credit for this increase.

• The Colstrip Plant in Montana ran 23% less than what would be expected during a representative normal year.

Commenters said in order to set realistic and equitable state goals, EPA must start with a baseline period that is statistically representative of generation and GHG emission levels. The
commenters said EPA must address certain anomalies that arose in 2012 to avoid the unfair and arbitrary impacts that penalize some states and/or companies. The commenters said EPA uses multiple years for baselines in other programs and for compliance purposes because of the variability issues associated with use of a single year. The commenters said at a minimum, EPA must address corrections related to other data anomalies, such as affected units that were off

- line for most or all of th e baseline year.

Commenters stated using 2012 or any single year as a baseline does not capture the variability of operating conditions and emission rates that are experienced as a part of operating and maintaining a reliable electric system from year to y ear. The commenters said specifically, use of 2012 as the baseline is inappropriate because during that year Gulf Power had very low CO2 emissions. The commenters said 2012 had the lowest CO2 rate (pounds per net MWh) and the lowest mass (tons) emitted by the Gulf Power Florida

- units in any year since 1990, which is the last year of readily available data. The commenters said the low 2012 CO2 emissions were due to historically low natural gas prices resulting in economic dispatch increasing natural gas
gene ration while lowering coal

- fired generation.

Commenters stated EPA's Proposed Rule uses a single calendar year

- 2012

- as the default base year for calculating a state's emission rate and the corresponding CO2 reduction goals. The
commenters said in 2012, CO2 emissions were uncharacteristically low due to three factors: (1) a381 fuel mix for electrical generation based on historically low natural gas prices, (2) low economic activity due to a slow recovery from the 2007

- 2008 financial crisis, and (3) abnormal ly moderate weather throughout that year. The commenters said those circumstances are unlikely to be repeated individually, much less in combination. The commenters said Virginia's CO2 reduction goal of 810 lbs/MWh is particularly onerous and does not appe ar to accurately reflect Virginia's normal generating conditions. The commenters recommend ed that EPA use a representative period as the basis for calculating the CO2 emission reduction goals. The commenters said one alternative would be to follow the appr oach that EPA has used in other EPA programs such as the Prevention of Significant Deterioration program where an average annual emission rate based on any consecutive 24 months in the past 5 years is used to calculate a baseline for past actual emissions from EGUs.

Commenters stated the EPA should also allow the States flexibility in developing baseline emissions to include variability of individual unit operations from year to year. The commenters recommend ed that the average of three years around 2005, o r another year demonstrated as being more representative by the entity to the State agency, be considered.

Commenters EPA should abandon its use of 2012 as the baseline year for the Clean Power Plan's emission reduction goals in favor of a five

- year averag e (2008

- 2012) to better reflect average baseline emissions; EPA should also adopt a rolling multiyear average for compliance with the final emissions targets.

Commenters stated EPA should consider using a multi

- year average baseline rather than the single year 2012 to account for the fact that some generating units may have been out of service for lengthy periods in 2012 thereby skewing the baseline data.

Commenter s asserted that consideration of a longer baseline period may have merit given the anomalies that can arise through use of a single baseline year; however, before a longer baseline period can be used to calculate emission rate requirements for the final rule, EPA must analyze the data from this longer period to determine new baseline emission rate s and apply the building block analysis to these new baseline rates to calculate new proposed emission rates for each state. The commenters said EPA must also conduct the requisite technical and economic analyses necessary to adequately demonstrate that th e new proposed rates represent BSER. The
commenters said this cannot be done in the context of a final rule, but rather EPA must delay issuance of the final rule and issue a revised proposed rule. The commenters suggest ed that as an alternative to issuing a new proposed rule, EPA could include a provision in the final rule allowing states to adjust the emission rate requirements to account for any anomalies that resulted from using non

- representative 2012 data.

Commenter s recognize d that choosing any singl e year for the baseline in the Proposed Rule is problematic; various anomalies and unanticipated events occur in any single year that render that year unrepresentative of the performance of generating units within a state, and often within a single utility . The commenters said at the extreme, there are situations where a plant was out of service for the entire year

- such as the case with Minnesota's newest and most efficient coal plant, Sherburne County Plant #3 (Sherco 3), a unit jointly owned by Xcel Ene rgy and Southern Minnesota Municipal Power Agency (SMMPA). The commenters said in other cases plants were only running for part of the year due to both planned outages, such as for maintenance, and for382 unplanned outages due to weather anomalies such as sto rms or floods, equipment failures, or other unanticipated contingencies. The commenters added changes in electricity demand, such as the loss of an industrial or large commercial customer, can result in reduced output from a generating unit, even though it is still operational.

Commenters stated the final rule should allow states to establish a baseline that the state believes correctly represents its circumstances, utility generation, and related emissions. The commenters said in the Notice of Data Availability (NODA), comments are requested on allowing states to average 2010, 2011 and 2012, to determine a baseline; but this method would still undercount the emissions from Minnesota's Sherco 3 plant, since the plant was of f

- line for all of 2012. The
commenters said the Final Rule should allow a state to choose any three years within the most
recent ten

- year period for which emissions data is available and then average those three years to establish its baseline for its comp liance plan. The commenters said an acceptable alternative would be to allow a state to choose a single year that accurately represents its circumstances, utility generation, and related emissions.

Commenters stated basing state goals on a single year can not capture all sorts of variability of outages (both planned and unplanned), fuel prices, weather, and other factors that may affect generation and emissions. The commenters said in its NODA, EPA has solicited comments on whether it should consider a mult i

- year baseline period as the starting point for goal computation. The commenter s agree d with the suggestion that the base year should be an average of three representative years, such as 2009, 2010, and 2011. The commenters said adopting this approach wou ld take into account coal generation from the Pella Municipal Power Plant, allowing that retirement to be meaningfully reflected in the calculations, would more accurately reflect the output of LRS as well as Sherco, and could correct the issue with Deer C reek, as well as account for maintenance outage schedules and weather variations that affect generation; this will result in more accurate calculation of state goals.

Commenter s asserted it would be totally arbitrary to base the entire future performance

r equirements of an entire industry on any single baseline year. The commenters said if that particular year were abnormally hot or dry (as was 2012) or dry (as was 2012) or if the relative price of fossil fuels were abnormally skewed (as they were in 2012), then any extrapolations derived from that year would result in unattainable targets in the future. The commenters said EPA should base future reductions on a baseline extending over at least a five

- year period.

Commenters stated in the proposed Clean Powe r Plan, EPA inappropriately uses a single

- year baseline of 2012. The commenters said a number of events can happen during any given one

year period that results in misrepresentation of actual generation and emissions levels. The
commenters said factors tha t should be taken into account include unit operation variances due to extreme weather or maintenance, fluctuating natural gas prices, and changes in the types of units available for dispatch. The commenters said in Kansas, several large electric generatin g units (EGUs) experienced lengthy outages in 2012 for maintenance and installation of pollution control equipment to ensure compliance with other Clean Air Act obligations. The commenters suggest ed that using a three

- year averaging methodology would smoot h out the various anomalies and would be more appropriate for setting state CO2 emissions reductions goals.383 Commenters stated a three

- year baseline period would be consistent with how EPA expects states to demonstrate compliance under the proposed Clean P ower Plan. The commenters said as currently proposed, the rule would require states to meet the final emission performance level on a three

- calendar

- year rolling average starting January 1, 2030. The commenters said EPA even states that "[t]he rolling thre e

- year performance periods for measuring actual plan performance against the final goal performance level are proposed in light of year

- to

- year variability in economic and other factors, such as weather, that influence power system operation and affect EGU CO2 emissions." The commenters said furthermore, a three

- year baseline methodology would be consistent with how EPA has developed and implemented other existing programs using multiple years (e.g., Acid Rain Program, Clean Air Interstate Rule, Cross State Air Pollution Rule, and permitting and modeling requirements).

Commenters stated selection of a representative baseline year or period is an important first step in the process to calculate state emission rate and reduction goals. The commenters said the Proposed Emission Guidelines rely on a single calendar year of 2012 as the default base year for this purpose; however, reliance on one year can overly influence the resulting calculations when the year in question is not representative of the normal gene rating conditions. The commenters said this method also does not account for the normal variation that occurs in both generation and emissions from year to year.

Commenters stated for example, 2012 was the highest year on record for electricity generation from natural gas sources in Virginia due to increased generation capacity and low natural gas prices. The commenters said in fact, the generation from natural gas units was 46% higher than the next highest year on record in Virginia. The commenter s assert ed that the selection of this year misrepresents the normal generation profile for Virginia and may result in a more stringent goal.

Commenters stated in many other EPA programs such as the Clean Air Interstate Rule and the Cross

- State Air Pollution Rule, a period of five years was considered when establishing a generation baseline; then the two or three highest generation and emissions years within the five year period are identified and averaged to determine individual unit and collective emissions targe ts. The commenter s recommend ed that EPA adopt a similar approach for setting the emissions rate goal in the final rule; in this way, the yearly variation and the impact of unusual years can be better addressed.

Commenters stated the Final Rule should allo w states to choose a baseline that accurately reflects their unique circumstances, possibly a 3

- 5 year average; this would allow for years where a plant may have been out of service, which would skew the baseline. The commenters said a plant may have been out of service for planned maintenance, or for unplanned reasons resulting from generator failures, storms, or floods; the result is that the emissions for that year would have been lower than a normal, average operating year. The commenters said using a

m ulti

- year average rather than a single year baseline provides correction for such operating anomalies.

Commenters stated the Final Rule should also provide full credit for investments already made that reduce or offset CO2 emissions. The commenters have a dded a number of renewable energy resources in recent years and has provided significant financial incentives through its Sustainable384 Energy Program to promote energy efficiency in the community; the commenters should receive full credit for these investme nts to the extent that they reduce or offset the utility's CO2 emissions.

Comment 2: Multi

- year baseline recommended; not enough time between release of NODA and close of comment period

Response 2: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year

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

Several commenters said that 2012 should not be used as the baseline year. Commenters said that choosing 2012 a s the baseline year skews the calculation of baseline emissions given the unusual deviation from the average in 2011 and 2012 due to extremely low natural gas prices and back

to

- back good water years. Commenters indicated that changes in economic condition s, weather, and relative prices of energy feedstocks can all affect the amount of electricity that is generated in a given year, as well as the allocation among different energy sources. Several commenters indicated that one year of data doesn't take into account random, unplanned EGU outages, variability in fuel pricing, anomalous weather patterns, and host of other factors that determine which generation is used at any given time or that may shift generation of electricity from one fuel source to another. Commenters said that because natural gas prices were near all

- time lows in 2012, NGCC units in Arkansas generated more than 25 percent more megawatts in 2012 than they did in 2010, 2011, or 2013. Similarly, c ommenters said because of the stark reduction in natural gas prices in 2012, there was uncharacteristically low usage of coal and uncharacteristically higher use of natural gas. Commenters indicated, however, that while 2012 represented a dip in goal generation from 2011, coal generation largely retu rned to pre

- 2012 levels in 2013 and the price of gas rose closer to recent historical levels. Several commenters said that adopting a multi

- year baseline would smooth out some of the year

- to

- year variability that occurs in the electricity sector. Several commenters indicated that the EPA should use a 3

- year average (2010

- 2012). Commenters suggested that a two or three year average (e.g., 2010, 2011, 2012) should be used for baseline, and emphasized that in any event, the baseline year should not include calendar year 2013 or later, as this would exclude credit for 2013 CO2 reduction measures that have occurred after the proposal's release in June 2013. Commenters noted that use of multiple years of data for regulatory baselines by the EPA and state agenc ies has longstanding precedent.

Several commenters said that the EPA's selection of 2012 as the base year is arbitrary, and said that given the dynamic nature of the electricity system and the national economy, no one year, or even several years combined i s representative of current conditions in an individual state for the purpose of establishing a baseline. Commenters noted that nothing in Section 111 of the CAA mandates a particular year be used for baseline. Commenters stated that Standard

- of

performa nce determinations historically have not been based on historic emissions on any particular date, but instead have been based on standards achievable considering the relevant statutory factors. Commenters stated that for this proposal the EPA has complete ly departed385 from this process and has incorporated one that is flatly illegal. Commenters indicated that states should be able to appropriately credit CO2 mitigation activities both concurrent with and backdated before the plan towards state goal accomplis hment or allow appropriately adjustment of state goals

Commenters stated that the use of 2012 data (which had higher than average natural gas usage at EGUs) for a baseline has the potential to result in lower goal projections and higher costs of compliance than would otherwise be estimated with a more representative starting year. Commenters therefore recommended a three

- year average of data between 2005 and 2012 as being more appropriate for goal computation. Commenters said that this would not only assist in eliminating fluctuations in energy demand and production but would also give credit for actions taken prior to the 2012 baseline. Commenters also indicated 2012 was an anomalous year because of the low price of natural gas, and indicated that natural gas prices have historically been highly volatile. Commenters stated it would be more appropriate to establish states' goals using a five

- year or three

- year average, rather than a single year.

Commenters said the use of a single year for baseline establis hment verses a multiyear baseline is inconsistent with current U.S. EPA practice and is inappropriate for the energy market. Commenters said some Indiana units, such as NIPSCO's R.M Schahfer Generating Facility's Units 14 and 15, were involved in major co nstruction projects to install FGD units to comply with MATS and SCAPR, and many base load coal

- fired units id not operate at their highest capacity during 2012 because of low natural gas prices. Commenters recommended that the EPA use a 3

- year average ba seline for emissions, generation, and capacity factors, as opposed to relying on only 2012 data.

Commenters said using any single base year may result in anomalies due to unplanned shutdowns, among other things, and indicated the EPA should carefully cons ider comments from states documenting any anomalies or consider replacing a single year baseline with a three year baseline.

Commenters suggested that the EPA allow states to select either a single year or average taken from a group of consecutive years be tween 2005 and 2012 for purposes of determining targets and measure compliance credit. Commenters said that allowing reference year flexibility allows states to receive credit for early actions taken. Commenters said that if EPA does not provide for refe rence year flexibility in this manner, the EPA should accept technical corrections that provide for recognition of unusual operating circumstances for affects EGUs and the recognition of early action measures for satisfying state target

- setting and complia nce. Commenters said if the EPA elects to not use a multi

- year baseline approach, they recommend that the EPA define a mechanism for obtaining credit towards meeting Building Block 1 targets for early actions. Commenters recommended using a baseline time frame of the average of calendar years 2005 through 2012, as this would take into account years with both high natural gas prices and low natural gas prices as well as other factors such as weather variability and forced unit outages.

Several commenters su pported greater flexibility in determining the emissions baselines for the proposed rule. Several commenters said the use of an average of several years to establish a baseline has been employed by the EPA in previous rulemakings (i.e. NSR and CAIR) and i s superior to a single 2012 baseline year. Commenters indicated that if a single year is used for386 baseline, 2010 or 2011 would be more appropriate than 2012. Commenters also supported a multi

- year baseline period, and indicated it would maintain consistenc y with historical practices, smooth out year

- to

- year variability, and provide a more level playing field for states and affected

sources. Commenters suggested the use of a representative three

- year average out of 10 years (2002 to 2012) would be reasonabl e. Commenters added that if a single year is used to establish baseline, 2005 should be considered since it is the baseline for the much

- publicized 30 percent emission reduction for both the Clean Power Plan and the Climate Action Plan. Commenters
sugges ted states should be able to use an average of two years out of five or ten recent years to calculate baseline.

Commenters indicated that in 2012 dispatch of the electric generation fleet was atypical because while electric demand remained low after suffe ring a significant decline in 2008 as a result of the economic recession, natural gas prices dipped to a historic low. Commenters stated that the states should be given the flexibility to consider other baseline years or even averaging over several years to address the concern that 2012 was an usual year for electric generation. Commenters indicated that a multi

- year baseline would be preferable, because by selecting any single base year, the EPA creates winners and losers based on individual operating characteristics from that one year. Commenters said that utilizes with major base load coal units off line for retrofit or repair wo uld see a disproportionately negative impact on base case emissions than utilities that were operating plants at maximum capacity for 2012. Commenters said that the EPA should allow utilities to offer alternative baseline years that includes averaging of multiple years or identifying years where operation accurately reflect maximum fleet capacity for the purposes of setting a baseline.

Several commenters also indicated the EPA should use a multi

- year average as the baseline in its goal setting methodology, and c ommenters suggested a 3

- year average be used, and Commenters suggested either a 3

- year or 5

- year multi

- year baseline period. Commenters analyzed various scenarios and found if a multi

- year baseline is used Utah's emission rate targets increased. Com menters said that the EPA should allow Wyoming to select as their baseline the average of the 5

- years for 2008

- 2012, and indicated this correction alone would result in a 5% adjustment of the EPA's proposed Wyoming compliance rate. Commenters said that gi ven that the compliance period extends to 2030, it is more prudent to use a multi

- year historical average emissions and generation timeframe to mitigate bias any one year may have in establishing baselines and state goals. Commenters emphasized that this i s especially relevant due to the effect that the recent recession had on general economic activity and subsequent emissions from the power sector. Commenters added that furthermore, it is not without precedent for EPA to consider a broader look

- back period to determine actual emissions from the electric generating sector.

Commenters also suggested that the EPA should use a 3

- year average to calculate baseline, and suggested that data for 2010

- 2012 be used for the calculation. Commenters said that using any single year can result in emissions and generation that are not typical or representative, and indicated that in other rules, such as the Clean Air Interstate Rule and the Cross

- State Air Pollution Rule, the EPA has considered a range of years and has use d an average instead of a single year.

Commenters supported the EPA's decision in the NODA to release additional data for 2010 and 2011. Commenters did indicate, however, that because of the limited time between the release of387 the NODA and the close of the comment period, they have not been able to fully evaluate the new data or make a recommendation with respect to an appropriate baseline. Commenters therefore urged the EPA to consider reopening the comment period or issuing a supplemental rulemaking as ne cessary to ensure that interested stakeholders have sufficient time to evaluate and comment on the appropriate baseline for this rulemaking.

Commenters stated EPA should not have chosen a single year to calculate state goals (2012). The commenters said EPA should recalculate state goals based on an average of several years to account for year

- to

- year variations in the economy and weather which both significantly impact electricity generation and demand.

Comment 3: Sup port for three (3) year average

Respons e 3: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year

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

Commenter s support ed using a three

- year (2010

- 2012) average of generation and emissions as the starting point for the EPA's goal calculations. The commenters said using a three year average is a more accurate reflection of operating conditions, maintenance cycles/outages,

econ omic conditions and weather.

Commenters stated despite a severe drought in the Midwest in 2012, data shows that energy use was down in 2012, in part due to a mild winter; for example, in review of all the Illinois affected Acid Rain Units' heat input from 2009

- 2011, compared to 2012 data, 2012 heat input is approximately 10% lower than the average of 2009 through 2011. The commenters said applying the same analysis for EIA Illinois generation data from coal units, 2012 generation data is approximately 11% lower than the average of 2009 through 2 011. The commenters said this is especially important as the reduction target provides the floor for each building block of each plan, especially if the state proceeds with a mass based goal (CO2 tonnage) as the GHG Rule allows a state the option to do. Th e commenters said utilizing data from a year that is already significantly lower than the norm to set a "target" from which carbon emissions are to be reliably and affordably reduced is not credible. The commenters said EGUs operate variably from year

to

- y ear due to variable factors such as weather and the economy, which influence demand, and planned maintenance outages. The commenters said a credible carbon reduction target for each state would average at least three (3) years of data, such as the USEPA di d in recent air rules for EGUs. The commenters said another credible option would be to utilize the highest three (3) years of the last five (5) years of data, as the USEPA has done before. The commenters can recall no recent USEPA air emission rule applic able to EGUs in which it utilized only one (1) year of data, nor where it utilized data from a year that was demonstrably below the norm to set an even lower emission limit.

Commenters stated a three year (2010

- 2012) average of generation and emissions sh ould be used as the starting point for the EPA's goal calculations. The commenters said a multi

- year averaging period is appropriate because of yearly variation in wind, solar, and hydrological conditions;388 maintenance cycles for affected and nuclear units; weather variations; economic conditions; and fuel prices; all of which can affect the dispatch of fossil and carbon free resources from year to
year.

Comment 4: 2012 should not be used as baseline, multi

- year baseline going back to 2005 (in some instance s to 2000) would be better and would allow credit for early action; support NODA's multiyear suggestion

Response 4: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year

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

Commenters said that rather than using a single year (2012) to establish the baseline year for emissions reductions, the EPA should instead use a multi

- year baseline that is more representative o f normal system operation, addresses the considerable year

- to

- year variability in the power sector, and is more reflective of early actions to reduce CO2 emissions. Commenters indicated that use of a multi

- year baseline would be consistent with EPA precede nt.
2012 was Unusual Year for Power Industry

. Commenter s are inappropriate because this was a highly unusual year for the power system

- because natural gas prices were at a record low in 2012, that year is not representative of past operating conditions for the power system. Commenters said that in 2012 natural gas EGUs were dispatched much more than usual in 2012, and coal units operated at lower capacity, which reduced their efficiency and increased their emissions rates. Commenters said as a result, th e average CO2 emissions rate at Wisconsin power plants was 4

- 6% lower in 2012 than it was in either 2011 or 2013. Commenters said however, emissions rates at coal units in the state were 2% higher in 2012 than they were in either 2011 or 2013 because these units ran less efficiently with decreased usage. Commenters said that if the EPA will not extend the baseline back to 2005, the EPA should at least include the most recent year of available data in their calculation of state goals, which would be a more

m oderate year than 2012.

Commenters said that 2012 was not a representative year for Wisconsin or the power industry. Commenters said that in Wisconsin during the period between 2005 and 2013, 2012 had the lowest natural gas prices and the greatest percent age of electric generation from natural gas, and the highest level of renewable generation.

Significant year

- to

- year variability in Power Industry

. Commenters said the use of a single year as a baseline is inappropriate because there is significant year

- to

- year variability in power system characteristics (EGU operation, renewable electricity generation, weather variability, etc.) that cannot be represented in a baseline based on a single year. Commenters provided Table 1 which showed changes in Wisconsin's interim and final goals using three different baselines. Commenters said that Wisconsin's final rate

- based goal would increase 5 % using a 2011 baseline, and if the goal was calculated based on a three year baseline including 2010

- 2012, our goals would be between those calculated using either 2011 or 2012, and would be more389 representative of the power sector in the state. Commenters said the use of a multiyear baseline would average out much of the inter

- annual variability in the power sector.

Using 2012 does not allow credit for early action

. Several commenters said using 2012 fails to credit states, like Wisconsin, that took action before that year to reduce their CO2 emissions via measures such as plant closures, fuel switching to natural gas, installation of renewable electricity capacity, etc. Several commenters said by using 2012 as a baseline, these early actions are included in the starting point, and f or many of the building blocks, this results in the perverse outcome that states that have already acted to reduce CO2 emissions are required to do even more going forward than are states that have not taken similar steps. Commenters said that another con sequence of the failure to give credit for early action is the creation of inequity between the states. Commenters said that the proposed rule often requires deeper cuts by states that took early action to reduce GHG emissions than states that took little or no such action, disproportionately distributing responsibility for what should be a shared goal.

Commenters said that power sector CO2 emissions peaked in 2007 nationwide and in 2005 for Wisconsin, largely because many of these emission

- reducing measur es and programs were initiated or expanded after these years. Commenters said use of a multiyear baseline that includes 2005 would therefore credit much of the early action taken by states and utilities. Commenters indicated that the EPA should allow stat es to adjust their baseline to account for specific actions back to 2000. Commenters said that to give credit for pre

- 2012 emission reduction measures, using a baseline using 2005 data would be the best approach. Commenters said, however, that they could also support the use of 2010

- 2012 as described in the NODA, although they prefer the incorporation of earlier years into the baseline.

There is precedent for the EPA using a multi

- year baseline

. Commenters said that in its rulemakings, the EPA routinely uses a range of years to determine representative operating levels for EGUs (e.g., the use of the highest three years out of five used for the Clean Air Interstate Rule, CAIR). Commenters said that the EPA specifically does this to address variability due to EGUs that are offline for maintenance or installation of operating or pollution control equipment and other variations in loads and fuel use. Commenters said accordingly, the EPA's current argument that these issues are not important and that one year i s adequate to represent EGU operation is inconsistent with the EPA's past actions. Several commenters said further, the EPA is requiring compliance demonstrations in 2030 and beyond based on a rolling 3

- year average, demonstrating further that the use of a single year baseline is not consistent with compliance for this rule.

Re

- dispatch already occurring

. Commenters stated current fuel prices are already driving the re

dispatch from coal to existing NGCC. The commenters said in North Carolina, this transiti on occurred starting in 2010 through the beginning of 2014. The commenters said North Carolina has replaced 27 coal units with large NGCC plants operating at over 60% capacity in both 2012 and 2013. The commenters said these plants are newer and were desig ned to function as base load units. The commenters said North Carolina has essentially completed most of Building Block 2 in 2014; however, EPA's selection of the 2012 base year penalizes early action states. The commenters said North Carolina is unable to take credit for pre

- 2012 reductions and are expected to do more than states that took no action. The commenters request ed that EPA modify390 its one

- year, 2012 baseline reference to a three

- year baseline in order to allow credit for the pre

2012 coal EGU ret irements.

Earlier, 3

- year baseline recommended . Commenter s stated EPA developed the proposed guidelines using 2012 emissions and generation data. The commenters said based on a review of data from the U.S. Energy Information Administration (EIA), the comme nter s do not believe 2012 is representative for establishing a baseline. The commenters said between 2005 and 2013, 2012 had the lowest natural gas prices, the greatest percentage of electric generation from natural gas, and reflects the highest level of r enewable generation and energy efficiency savings in Wisconsin. The commenters said to address some of these concerns, it would be a better approach to use a multi

- year average baseline. The commenters said an earlier alternate baseline period would allow some credit for early emission reductions. The commenter s asserted that an alternative multi

- year baseline such as 2010

- 2012, or earlier, could be developed; this would be consistent with the final goal, which is measured on a three

- year rolling average ba sis (i.e., 2030

- 32, 2031

- 33, 2032

- 34, etc.). The commenters added a three

- year baseline period reduces the impact of abnormal conditions during any one particular year, such as low natural gas prices or atypical weather. The commenters said to the extent t hat a state decides to develop its plan using the same methodology as EPA, the use of a single year could also skew the distribution of a state's goal between covered utilities, if for example, one utility had an unusually large number of outages during th e single year.

Commenters stated the emission rate goals in the proposed rule were developed using 2012 emissions and generation data as a baseline; the use of a 2012 baseline for the purpose of setting state goals fails to recognize emission

- reducing acti ons taken by states and utilities prior to 2012. The commenters said 2012 was not a representative year for Wisconsin and does not fairly reflect typical operations. The commenters said between 2005 and 2013, 2012 had the lowest natural gas prices, the gre atest percentage of electric generation from natural gas, and the highest level of renewable generation and the highest level of energy efficiency savings, as shown in the tables below. The commenters said a baseline period earlier than 2012 would allow so me credit for early emission reductions. The commenter s support ed EPA's approach proposed in the Notice of Data Availability (79 Fed. Reg. 64,543) to use a multi

- year baseline such as 2010

- 2012, or alternatively for states to be able to elect this option. The commenters said the use of a three

- year average for the baseline would be consistent with the final goal, which is measured on a three

year rolling average basis (i.e., 2030

- 32, 2031

- 33, 2032

- 34, etc.); furthermore, a three

- year baseline period reduces the impact of abnormal conditions during any one particular year.

Commenters stated the EPA's use of a 2012 baseline for the purpose of setting state goals generally fails to recognize emission

- reducing actions taken by states, utilities and energy users prior to 2012. The commenters said an earlier alternate baseline period would allow some credit for early emission reductions. At a minimum, the commenter s asserted that an alternative multi

year baseline such as 2010

- 2012, or earlier, could be developed. The commenters said this would be consistent with the final goal, which is measured on a three

- year rolling average basis (i.e., 2030

- 32, 2031

- 33, 2032

- 34, etc.). The commenters said a three

- year baseline period reduces the impact of abnormal conditions during any one year, such as low natural gas prices.

Commenter s are not aware of a legal requirement that the EPA must use 2012 as a baseline; EPA's explanation for why it chose 2012 is basically that this was the most recent year391 for which it had complete data. The commenters said as part of that explanation EPA also states: "The EPA also considered the possibility of using average fossil generation and emission rate values over a baseline period (e.g., 2009

- 2012), but determined that there would be little variation in results compared to a 2012 base year data set due to the rate

- based nature of the goal." The commenters said for at least Wisconsin, EPA's statement is incorrect, since using 2012 only versus a 2010

- 2012 baseline period for Wisconsin results in an interim goal and a final 2030 goal that are 4 percent and 3 percent more stringent, respectively.

Commenters stated 2012 is not representative for establishing a baselin e. The commenters said for example, in Wisconsin, between 2005 and 2013, 2012 had the lowest natural gas prices, the greatest percentage of electric generation from natural gas and reflects the highest level of renewable generation and energy efficiency sa vings. The commenters said to address some of these concerns, it would be potentially a better approach to use a 3

- year average baseline from 2010

- 2012.

2005 baseline year

. Commenters stated states should be given discretion in meeting the technically a nd economically achievable CO2 emissions reduction goals based upon 2005 emissions levels, in lieu of the proposed 2012 baseline year. The commenters said establishing 2012 as the baseline year fails to recognize factors that may have impacted generation a nd resulting emissions as a result of anomalous conditions. The commenters said 2012 as the baseline year would not provide a representative picture of a typical year for Black Hills operations. The commenters said state compliance plans should tie reducti ons to goals based upon 2005 as the baseline year.

Commenter s recommend ed EPA pursue evaluation of using a different data year as proposed in the notice of data availability (NODA) released on October 30, 2014; generally, EPA will likely find that less re newable energy and less NGCC resources existed in the early years, thus, increasing each state's goal and reducing overall CO2 emission reductions. The commenters said this approach will alleviate a small portion of the impacts this proposed rule may have on large, complex generation asset states, but will most likely have a profound effect on small generation asset states, like South Dakota. The commenters said EPA's close review of data year could eliminate "problematic" micro

- situation states without sig nificant impacts to the overall proposed rule. The commenter s encourage d this analysis on a national basis, but emphatically encourage EPA to allow this data year shift on a state by state basis where dramatic goal changes occur.

Multi

- year baseline (of a t least 3 years) recommended. Commenters stated in the proposed rule, EPA calculated state goals by applying all four Building Blocks to each state's 2012 electric generation to determine the extent to which the state could

- according to EPA

- reduce its carbon dioxide emissions rate by 2020. The commenters said EPA states that it chose the year 2012 because it represented the most recent year for which complete data were available at the time of its analysis. The commenters said EPA considered the possibi lity of using average fossil generation and emission rate values over a 4

- year baseline period, such as 2009

- 2012, but determined that there would be little variation in results compared to the single year (2012) approach. Commenters added EPA's proposed rule does not adequately credit states for taking early action to reduce carbon emissions. The commenters said though EPA claims that early emission reductions (e.g., reductions from 2005

- 2012) are reflected in the 2012 baseline, this notion is not reflec ted when comparing Georgia's pre

- 2012 reductions in CO2 emissions (30%)392 with the additional amount of reductions required by the Proposal (48%). The commenters said while part of this problem is the improper inclusion of under construction nuclear units in Georgia's state goals, the problem also stems from EPA's sole use of 2012 data as a baseline. The
commenter s urge d EPA to use a multi

- year baseline of at least 3 years or to otherwise make adjustments to the 2012 data, to make the data more accurately ref lect typical operating conditions in Georgia. The commenters added EPA should make clear that each state has the discretion to use those data years that best reflect historical operations and that are most appropriate

- in the state's view

- for use in the development of the section 111(d) plan. The
commenters said for other rulemakings, EPA has provided a range of years within which each state has the flexibility to pick the specific year (or years) that best represents the state and that addresses specifi c state concerns. The commenters said this Proposal would seem to be ideal for that type of approach.

2012 not representative. Baseline of 2005

- 2009 recommended

. Commenters stated the EPA's use of 2012 data to establish baselines for affected EGUs is prob lematic for a number of reasons; EGUs demonstrate considerable variability in capacity factor and emissions rate from year to year due to a variety of factors, including planned and unplanned shutdowns and maintenance. The commenters said selecting one yea r in most cases will not accurately reflect an EGU's actual average capacity factor and emissions. The commenters said 2012 happened to be an "off" year for a coal plant in UAMPS' portfolio resulting in a 69% capacity factor in the proposed rule when the p lant has run at an average capacity factor of 77% for the past decade. The commenters said another coal plant in UAMPS' portfolio experienced a forced outage due to an equipment failure, resulting in significantly fewer MWh and CO2 emissions from this reso urce in 2012. The
commenters said using 2012 as the baseline year also skews emissions rate data for this plant as artificially low, with the end result being excessively stringent guidelines for the State (Utah) in which the EGU is located.

Commenters st ated the selection of 2012 as the baseline year effectively ignores the significant emissions reductions achieved by the power sector in recent years. The commenters said between 2005 and 2012 energy

- related CO2 emissions in the U.S. were reduced by a tota l of 13.2%, declining in 5 of the past 7 years. The commenters said the EPA should recognize the efforts the electric utility industry has proactively taken to reduce carbon emissions as part of the emissions rate calculations in the proposed rule. The com menters suggest ed a more equitable approach by utilizing an average of EGU data from 2005

- 2009 to establish more accurate values for capacity factor and emissions and to recognize in part the CO2 reductions achieved during that time frame. The commenter s d id not believe using an average of 2010, 2011, and 2012 emission data is the best approach for determining baseline emission data for affected EGUs subject to the CPP.

Commenters stated in the Notice of Data Availability (NODA) released October 28, 2014, EPA acknowledges stakeholder concerns surrounding the selection of 2012 as a single baseline year and published additional emissions data for 2010 and 2011. The commenters said in reviewing emissions data for UAMPS' coal resources over the past decade (2003 through 2013) one plant's emissions ranged from a low of 2.7 million tons of CO2 to a high of nearly 4.4 million tons for a range in variation of 1.7 million tons. The c ommenters said another coal

- fired plant in UAMPS' portfolio saw a range in variation of 930,000 tons CO2 in the same time period. The commenters said this wide range in emissions illustrates the extreme variability in EGU CO2 emissions from393 year to year an d the need for a different methodology for determining reduction targets. The
commenters said adding emissions data for 2010 and 2011 for consideration, in addition to 2012 data, is still inadequate and arbitrary. The commenters said utilizing this data fa ils to credit the significant reduction in emissions the electric industry has made since 2005. The commenter's proposed approach of using an average of EGU data from 2005

- 2009 would more accurately reflect actual emissions of each EGU, partially crediting CO2 reductions achieved over this time period, and would resolve the problem of artificially low emissions targets driven by outside factors such as unplanned outages.

5

- year baseline recommended

. Commenters stated EPA should change the methodology for

c alculating carbon intensity in the proposed rule and expand the baseline period (e.g. from one year to five years) in order to minimize the impact and disparities associated with basing emissions targets on a single year. The commenters said EPA should als o start with an earlier year (e.g., 2005) to address the punitive impact of the proposed rule on states and companies that have taken early action to reduce GHG emissions and address climate change.

States should be able to select from at least 2 or 3 year s

. Commenters stated rather than using 2012 emissions data to establish the baseline as in the proposal, the commenters suggest ed that EPA allow utilities to select from at least two or three different years to establish a representative baseline for each of its units. The commenters said because an individual unit could have been down for maintenance or had a lower

- than

- normal operating rate during the 2012 baseline year selected by EPA, the baseline could be artificially low. The commenters added if a uti lity took measures to reduce its greenhouse gas emissions early, before 2012, the proposed program would not provide any credit. The commenters said Florida installed most of its renewable energy capacity before 2012, including the increased use of biomass as well as rooftop and utility scale solar; the City of Lakeland, for example, initiated a solar project in 2008. The commenters said because the goal of the proposed guidelines is to reduce greenhouse gas emissions, early action reductions and carbon

- fre e nuclear generation coming online after the 2012 baseline should all be treated the same.

Multi

- year average of years before 2012

. Commenters stated choosing a baseline emission start date of 2012 punishes early efforts of states such as Colorado. The commenters said EPA should allow states with RES mandates to choose a start date prior to the implementation of the RES mandates; alternatively, the Plan should allow for an average of years prior to 2012 to account for early emission reductions.

Multi

- yea r baseline

. Commenters stated EPA should set emission rate goals based on a multi

year baseline period, rather than historic generation in a single year. The commenters said the 2012 baseline period in the Proposed Rule is not representative of normal oper ation for the electric generating industry. The commenters said natural gas prices were at a record and unprecedented low in 2012, which resulted in greatly reduced generation from coal

- fired generating units; the commenters said the U.S. economy was still in a tough economic recovery. The commenters said as EPA has noted in previous rulemakings, electric demand and resultant utility operations fluctuate greatly within a single year; utilizing a multi

- year baseline, such as 2010, 2011 and 2012, would correc t for anomalies, and provide some credit to early actors.394 Commenters stated many utilities and states have taken steps to curb carbon emissions well before 2012. The commenters said that the EPA should give some recognition for early movers in the Plan; po ssible fixes could include allowing states to pick a year earlier than 2012 for a starting value or some averaging of prior years to calculate the starting point.

Commenters stated as the last year of available data, the year 2012 appears to be an appropri ate starting point for CO2 reductions from EGUs for most states; however one of IPP's generating units was off

- line for an extended period in 2012 resulting in the generation data used to develop Utah's state goal being non

- representative of IPP's operatio ns. The commenters suggest ed that EPA set the baseline levels for computing the state goals based on multi

- year periods. The
commenters said following the approach used in these other CAA regulatory programs, the Agency should allow affected EGUs to select as their baseline the average of any 3

- year consecutive years from 2008 through 2013; such an approach will ensure a more representative baseline period and provide some partial credit for early actions.

Comment 5: 2005 should be used as baseline, to acc ount for reductions already achieved

Response 5: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year

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

Commenters stated the rule talks about achievement of a 30% reduction from 2005 CO2 emissions nationwide; however, the state goals are calculated using the actual emissions data from 2012. The commenters said the consequence is that this methodology comple tely ignores what a state has already achieved in reducing its carbon emissions. The commenters said in South Carolina, the statewide CO2 emission reduction from EGUs has been 31% since 2005 for which the proposed rule gives no credit. The commenters said this not only creates a disincentive for the states that had a plan to implement a carbon reduction strategy but it also places a disproportionate burden on the people within that state that are already paying for the carbon reductions achieved to date and who must now pay again for the additional resources necessary to achieve the EPA prescribed carbon intensity state goal. The commenters said in South Carolina, the state goal requires another 51% reduction from the 2012 baseline which is also a decrease o f 815 pounds of CO2 per megawatt hour; the largest in the nation. Commenters stated in order to be fair, any goals that are ultimately put in place need to give credit for the CO2 emission reductions that have already been achieved by retirements, conversi ons, and other utility industry responses in anticipation of GHG regulation; to that end, the baseline average annual CO2 emissions should be tied to the annual emissions of 2005, as referenced by the President's Climate Action Plan, or an appropriate stat istical average of annual emissions during the preceding years.

Commenters stated considering certain states such as Texas have made substantial investments in renewable energy since 2005, the final emission goals for 2030 should be adjusted upward to

acc ount for these projects. The commenters said Texas Public Utility Commissioner Kenneth W. Anderson, Jr. states in his written testimony before the House Energy and Power Subcommittee395 that: "The EPA's proposed Clean Energy Plan rule ignores the significant renewable energy development that has occurred in Texas during the preceding decade. Even with the extreme variations in wind generation that can occur over the course of the year, in 2013 Texas wind generation produced 35.917 million MWh (16.24% of the na tion's non

- hydro renewable generation). However, the 2012 base year selected by the EPA for the proposed Clean Power Plan rule does not give Texas credit for the societal and financial commitments to facilitate renewable energy. From 2005 through 2011 Texa s added over 8,500 MW of wind capacity, of which 8,300 MW were built within ERCOT."

Commenters stated the manner in which EPA calculated Nevada's emission limit front

- loaded the emission reductions. The commenters said EPA uses a 2012 baseline to calculate the state emission limits, despite public statements referring to reductions from the 2005 emission baseline. The commenters said the use of a 2005 baseline would more accurately account for the substantial reductions in CO2 emissions in Nevada over the l ast 10 years. The commenters said since 2005, Nevada has experienced over a 30% decrease in energy

- related CO2 emissions

- the largest percentage decrease in the country. The commenters said this is due to the shutdown of the Mojave Plant (two 800 MW units ) in Laughlin, Nevada as well the deployment of a significant portfolio of renewable generation. The commenters said by relying on a 2012 baseline, EPA gives the State no credit for any of these reductions. The commenters said EPA should instead use a 2005 baseline to give full credit to states that have taken a proactive approach to reducing carbon emissions.

Commenters stated EPA's Section 111(d) proposal relies primarily on 2012 data to set state emission reduction targets for Pennsylvania generation inc luding coal and gas

- fired facilities and nuclear generation. The commenters said by establishing a 2012 base

- line period, EPA ignores the emission reduction benefits achieved by generation resources prior to that period; however, the EPA has indicated that , under its plan, carbon dioxide emissions will be reduced by 30% from 2005 levels. The commenters urge d the EPA to re

- examine the appropriate baseline for its proposed emissions standards for fossil fuel generation and utilize 2005 as the baseline instead of 2012. The commenters said a 2005 baseline would properly capture all of the benefits achieved by: (i) Pennsylvania fossil

- fuel generation achieving emission reductions through investments made in coal plant retrofits and environmental compliance activi ties; (ii) increased deployment of gas

- fired generation utilizing domestic natural gas resources; and (iii) uprates of nuclear facilities.

Commenters stated the EPA has selected 2012 as the baseline year for implementation of the emissions standards as opp osed to an earlier baseline year, such as 2005; PA also states that the goal of its CAA Section 111(d) proposal is to achieve a 30% reduction of CO2 below 2005 levels. The commenters said by setting 2012 as the base year for its emission reduction calculat ions, EPA fails to account for and credit PA for the emissions reductions achieved by PA generation facilities from 2005 forward during which time PA

- based generation facilities invested heavily in environmental compliance retrofits that achieved significa nt emissions reductions. The commenters said EPA should consider resetting the base year for establishing emissions standards from 2012 to 2005.

Commenters stated existing sources in the state of Georgia, including MEAG generation, have actually already ac hieved a 33% reduction in carbon dioxide emissions, in tons, in 2012396 compared with 2005. The commenters said while this emission reduction between 2005 and 2012 is significant, the proposal would require an additional 44% reduction in the carbon dioxide

em ission rate (lb/MWH) by 2030 compared with 2012

- or about a 45% reduction in tons of carbon dioxide from affected units in 2030 compared with 2005. The commenters said EPA's

mass

- based equivalent goal would require an even greater emission reduction in to ns for affected units in Georgia

- 63% below the 2005 level.

Commenters stated EPA requests comment on the option of selecting a baseline date starting from a specified date prior to the initial plan performance period. The commenters said EPA
states a nu mber of options including 2005. The commenters recognize d that EPA has stated that its proposed plan will achieve GHG emissions reductions of 30% below the 2005 level by 2030 if implemented as proposed; however, EPA utilizes the baseline date of 2012 throu ghout its BB approach. The commenters said EPA's analysis for BB1 relies on a review of 2012 data for 900 coal generation facilities. The commenters said selecting 2012 as a baseline unnecessarily penalizes states, such as PA, that have benefitted from emi ssion reductions from environmental compliance measures taken by coal plant operators since 2005. The commenters said these measures include addition of SO2 and NO2 scrubbers and other upgrades that were designed to improve heat rate and general operating efficiency. The commenter s urged the EPA to consider utilizing a 2005 baseline year for the calculation of emissions reductions to be consistent with its stated objective for 30% emissions reductions from a 2005 level by 2030 and to recognize benefits in e missions reductions already achieved by PA generators.

Commenters stated it is imperative that Minnesota receive full credit for the costs of all early action in order for the Minnesota economy to remain competitive both nationally and internationally. The commenters said it is also imperative that the EPA considers the cost of any supplementary action when setting Minnesota's CPP targets. The commenters said the Minnesota Next Generation Energy Act of 2007 ("NGEA") established a statewide renewable energy standard. The commenters said Minnesota's early action by adoption of legislation such as the NGEA led to significant repowering and emission reduction requirements which continue to successfully reduce statewide CO2 emissions. The commenters said Minnesota regulators also require all utilities in the state to file an Integrated Resource Plan ("IRP") that includes consideration of CO2 environmental exter nalities. The commenters said all Minnesota filed IRPs must demonstrate that recently deployed and proposed environmental control retrofits deliver emission reductions that comply with recent environmental regulations addressing regional haze, fine particu lates, ozone and mercury as well as including a range of CO2 emission costs. The
commenter s urge d the EPA to consider that these early action and nation leading policy decisions have a true cost to current and future Minnesota ratepayers. The commenters sa id early renewable energy deployment actions, along with demand side management conservation and efficiency programs, should allow Minnesota to be rewarded and credited for existing programs. The commenters said using the year 2005 as a baseline for the CP P assures Minnesota credit for their existing programs and avoids any punishment for the more recent Minnesota early action initiatives. The commenters said Minnesota's NGEA referenced 2005 as a baseline year for setting and tracking progress of the state' s greenhouse gas emissions extending through 2030. The commenters said the magnitude of CO2 emission reductions in the state from Minnesota's early action more than satisfies Minnesota's "fair share" contribution towards meeting overall United States clima te policy objectives for improving the electric generating sectors emissions profile through 2030.397 Commenters stated the selection of 2012 as the baseline for measuring improvements, furthermore, fails to account for substantial improvements that have alr eady been achieved and at the same time ties reduction goals to data from a period of economic recovery. The commenters said during that intervening period, industrial consumers in Indiana diligently pursued energy efficiency initiatives that, under the pr oposed regulations, would not be properly credited toward the achievement of the Indiana goals. The commenters said in many other respects, Indiana would be penalized for earlier efforts to achieve heat rate improvements in coal

- fired generation, to increa se gas

- fired and renewable energy resources and to promote efficiency. The commenters said in 2012, moreover, economic conditions in Indiana and the United States were still recovering from a serious recession, and for a manufacturing

- intensive state such as Indiana in particular, the level of energy consumption in 2012 was not representative of productivity at full strength. The commenters said locking in emission reduction goals to a baseline period in which consumption was down due to economic adversity is inconsistent with the objective of supporting a vibrant and growing economy. The commenters said an earlier baseline period such as 2005 would better reflect both measures already implemented and reasonably expected conditions moving forward.

Comment 6 : Must allow credit for early reductions for BB3 and BB4 (RE & EE)

Response 6: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year

. See sections V.A and V.E of the final rule preamble for discussions of demand

- side energy efficiency and renewable energy, respectively. See section VIII of the final rule preamble for discussion of state plans.

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

Commenters stated in its Proposed Rule, EPA proposes to use 2012 as the baseline year to develop the state

- specific carbon emission reduction goals based on the BSER. The commenters said each of the Building Blocks is a separate component to the BSER, developed using a distin ct proposed methodological approach based on a cost

- benefit analysis for each GHG abatement measure; for example, for Building Block 3, EPA applied a regional annual growth rate to each state's 2012 level of renewable energy generation to derive the future renewable energy generation in that state from 2017 to 2029; for Building Block 4, EPA used a "best practices scenario" by determining each state's incremental annual savings as a percent of retail sales for the most recent year of data (2012) and then ap plying a series of other inputs to arrive at a level of sustainable performance. The commenters said EPA's proposed baseline of 2012 for Building Blocks 3 and 4 does not provide full credit for investments already made that offset CO2 emissions, including numerous efforts over the last decade by Heartland and Heartland's customers to proactively and responsibly reduce their carbon footprint.

Commenters requested that EPA push back the 2012 baseline in the Proposed Rule to 2005 for Building Blocks 3 and 4. The commenters said using 2005 as the baseline year for Building Blocks 3 and 4 would appropriately enable entities to be credited with measures they have taken in the last decade to reduce their carbon footprint through the increased use of renewable ener gy and energy efficiency. The commenters said EPA should recognize the efforts by entities that398 were forward

- thinking on renewable energy and energy efficiency measures over the past decade, and it should not use a baseline in its Building Blocks that esse ntially penalizes states that have already invested in these areas by not counting their past measures toward their carbon emission reduction targets. The commenters said use of a 2005 baseline year for these two Building Blocks would be more consistent with the Proposed Rule's selection of 2005 as the year against which the goal of 30 percent reduction in carbon emissions from EGUs by 2030 will be compared. Commenter s respectfully request ed EPA revisit its 2012 baseline for Building Blocks 3 and 4, and instead allow states to capture the benefits of any renewable energy and energy efficiency projects and programs that have the effect of reducing carbon emissions. The
commenters said using 2005 as the baseline year would enable entities to be credited with voluntary, proactive measures they have taken in the last decade to reduce their carbon footprint.

Commenters stated the proposal fails to provide credit for early a doption and implementation of programs; as a result, programs already incorporated into the calculations of a state baseline cannot be relied on to meet a state's future emission reduction goals. The commenters said those programs may be put at a comparati ve disadvantage when competing for future funding against newer initiatives or requirements that can be relied on to meet the new emission reduction standards. The commenters said states may also choose to postpone the adoption or extension of energy savin gs initiatives. The commenters said this disincentive to maintain successful voluntary DSM programs again runs counter to the goals of the Clean Power Plan and undermines the achievements builders have made in partnership with utilities in bringing energy efficient homes to market.

Commenter s urge d EPA to redesign the BSER to eliminate the incongruent treatment of early action by states on energy efficiency. The commenters said under the current BSER, early adopters that have deployed DSM programs widely a t the state level may be closer to achieving a reduction in electricity generation equal to 1.5% of prior year retail sales; however, the inclusion of existing energy efficiency programs in the baseline not only affects the rate of emission reduction expec ted from the state, but also the ability to credit the impact of those programs on compliance with the state emissions performance standard. The commenters said if the proposal is finalized as drafted, these early adopter states will be forced to incorpora te more aggressive program measures to ensure they achieve the necessary emissions reductions during the compliance periods. The commenters said these measures will not be targeting the so called low

hanging fruit but will instead be measures that are more stringent, contain more prescriptive requirements, and represent less cost

- effective means of achieving end

- use energy efficiency.

Commenters stated EPA's assumptions about the build out of renewable generation unfairly penalize Texas for taking the lead on new zero

- carbon generation and are arbitrary and capricious. The commenters said under Block 3, the baseline again puts Texas at an unfair disadvantage. The commenters said EPA does not give Texas adequate credit for billions of dollars of renewable ge neration development, including the necessary transmission infrastructure, made since 2001, much less 2005. The commenters said by ignoring the efforts already undertaken by states to reduce CO2 EPA erred in setting BSER; the result is a higher cost of com pliance and fewer alternative choices for those states which chose to implement policies that reduced carbon emissions prior to the EPA proposal.399 Commenters stated Utah has increased its renewable energy generation, primarily wind energy, from 301,862 MWH in 2008 to 1,099,724 MWH in 2012, a 2.6 times increase in generation over five years. The commenter s asserted this commitment to renewable energy should be recognized in EPA's rule. The commenters said one way EPA could give some early action credit would be to create a five

- year average baseline from the years 2008

- 2012; this would give partial credit to the commitment Utah has already made to develop renewable energy.

Commenters stated credit for early action should be expanded for energy efficiency progr ams already implemented by states. The commenters said states that have taken early action in EE are penalized by the Proposed Rule because goals are based on a higher starting point, due to the electricity generation savings already accomplished, leading to a higher ramp

- up rate than if the state had started at zero.

Commenters suggested that the rule give credit for 2005 to 2012 renewables and energy efficiency in setting the goal or that EPA clarify that these resources can be used to demonstrate complia nce in the state plan.

Commenters stated Minnesota has undertaken early action measures for customer energy efficiency deployment that already delivered significant conservation and process efficiency improvement gains for Minnesota electricity consumers. The commenters said Minnesota Pow er's analysis of energy efficiency and conservation improvement measures through 2005, as reported to the EIA 1605(b) voluntary reporting of greenhouse gas emissions program, show cumulative efficiency improvements of over seven percent relative to MP's an nual electricity customer demand. The commenters said the "timing out" of earlier conservation and energy efficiency measures contributing to cumulative conservation estimates has been such that new measures being implemented under Minnesota's energy effic iency program are approximately sustaining this magnitude of cumulative conservation. The commenters said in the CPP proposal, EPA has now reset the basis for calculating cumulative conservation by assigning 2012 as a new reference year for conservation an d energy efficiency improvements, effectively nulling out the indicated benefits from Minnesota Power's conservation and energy efficiency actions through 2012. The commenters said additionally, Minnesota utilities are now challenged by needing to sustain energy efficiency gains by implementing new measures from a depleting list of candidate projects so that expiring earlier measures can be replaced.

Commenters stated renewable energy projects developed prior to 2012 should not be used to lower the regional average rate used by the CPP. The commenters said it is understood the CPP grouped states into regions and applied regional averages to establish renewable energy targets. The commenters said states who voluntarily or through renewable portfolio standards (RPS) constructed renewable energy prior to 2012 are penalized under the current EPA model with higher renewable energy requirements and lower state emission rates.

Commenters stated as EPA recognized in its proposed rule, Minnesota has already been a lea der among states in passing legislation that promotes clean energy development. Commenters said that Minnesota has "worked collaboratively with its investor

- owned utilities to develop multi

pollutant emission reduction plans on a utility

- wide basis. This a pproach enables utilities to determine the least cost way to meet long term and comprehensive energy and environmental goals." The commenters said Minnesota adopted a mandatory renewable energy standard400 ("RES") in 2007. The commenters said under this stand ard, utilities were required to obtain 12% of their retail sales of electricity in 2012 from renewable sources, and Xcel Energy, Minnesota's largest utility, was required to reach an 18% level. The commenters said more recently, in 2013, the Minnesota Legi slature passed legislation requiring utilities to ensure that, on top of the existing RES, at least 1.5% of their retail electricity sales in 2020 come from solar energy. Commenters stated these policies have been quite successful in moving Minnesota towar d a cleaner energy economy; for example, in 2000, 4% of the electricity generated in Minnesota came from renewable sources; by 2011, renewable electricity jumped to 16% of total generation. The commenters said this has resulted in approximately 15,300 clea n

- energy

- sector jobs in 2014 and this sector is growing at a significantly faster pace than others in the state; clean energy sector average wages are also significantly higher that state average wages.

Commenters stated when a state or federal carbon red uction plan is adopted, the EPA should credit new renewables, gas generation or energy

- efficiency reductions that have occurred since 2012:

• Texans have built 48,000 MW of new generation since 1999; about 25%, or more than 13,000 MW, has been wind energy; Texas has installed over 11,800MW since 2005.

• 12,754 MW of renewable generation is committed for the future; Texas has obtained transmission contracts and this capacity is likely to be completed before the state plan is submitted or approved.

• Texas's gen eration grid has the potential to accommodate over 18,000 MW of wind and solar energy and storage.

• 51,100 MW of active generation requests under are review, more than half of which are for gas

- fired plants that can replace retiring coal plants; this numbe r includes more than 24,200 MW of wind Electric co

- ops should be treated

Commenters stated EPA should give credit for early investments in renewable energy, zero

emitting energy including baseload nuclear and hydropower generation, and energy efficiency b y properly adjusting the baseline period. The commenters said EPA's failure to give appropriate credit for early action creates a harmful precedent. The commenters said a program that fails to recognize efforts by states and companies to show leadership in reducing emissions will have the long

- term "chilling" effect of discouraging states and companies from implementing beneficial environmental measures unless and until mandated by EPA. The commenters said equally important, consumers

- the ratepayers and c ustomers

- of those companies, along with owners, already are paying for those investments. The commenters said EPA could correct this by utilizing an earlier baseline period, or by explicitly giving states credit for early actions to reduce GHG emissions when they demonstrate compliance with their interim and final standards; further, EPA could provide credit for early investments in EE by employing the same baseline electricity savings rate for all states. The commenters said finally, EPA should allow hyd ropower generation to be credited towards compliance. The commenters said an earlier baseline period would recognize and reward state and company leadership in reducing emissions; displacement of fossil

- fuel fired generation by early investments in RE, EE, and natural gas generation would401 not be "built in" to the standard calculation, so states that made these investments will not be assigned overly restrictive reduction standards and compressed compliance periods.

Commenters stated in order to set realistic and equitable state goals, EPA must start with a baseline period for each state that is representative of actual generation and GHG emission levels in that state. The commenters said the 2012 baseline period in the Proposed Rule is not necessarily representative in each state, in part because EPA did not correct for ano malous events that impacted total GHG emissions in that single year. The commenters said a better approach would be to expand the baseline period from one year to five years in order to minimize the impact of anomalies that inevitably arise during a one

- ye ar period. The
commenters said EPA must address certain anomalies that arose in 2012 to avoid the unfair and arbitrary impacts that penalize some states and/or companies. The commenters said a multi

- year baseline period would smooth out the anomalies and a ccurately represent the natural variations inherent in the electric industry. The commenters said while anomalous events occur every year, these events do not all have the same impact on operations and emissions; as a result, any single

year baseline perio d will not accurately represent normal operations of the energy industry. The
commenters said a multi

- year baseline would better represent the natural yearly variation and, thus, better depict normal operations.

Comment 7: 2012 not representative; need a more representative year; need to credit early actions

. Response 7: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year. See section VIII of the final rule preamble for a discussion of st ate plans

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

Commenters stated the EPA's Plan proposes to use a single year, 2012, as the baseline year for measuring CO2 emission reductions. The commenters said if a single yea r is chosen, it must be more representative of annual emission levels. The commenters said for New York and other states affected by Super Storm Sandy, 2012 is decidedly not a typical year and would result in an artificially low baseline. The commenters sa id the Plan's choice of a baseline period must take into account anomalous weather events or other occurrences that would render the baseline inappropriate; if 2012 ultimately is chosen as the baseline year, adjustments must be made to account for such ano malous circumstances.

Commenter s recommend ed that emission reductions achieved from September 25, 2008 (the date of the first RGGI allowance auction) to December 31, 2019 be credited, banked and applied toward New York's compliance with the EPA's Plan dur ing the interim and final performance periods. The commenters said compliance entities under the RGGI program need continuity to retain the value of allowances sold to them in good faith. The commenters said this approach would reward early movers like New York, provide an incentive for additional early emission reductions, and allow a more gradual emission improvement trajectory during the interim performance period of 2020

- 2029.402 Commenters stated the EPA uses 2012 as a baseline year for the rule. The com menters said many state carbon reduction programs went into place prior to 2012 such as RGGI, and Delaware's RPS and efficiency programs. The commenters ask ed that the EPA consider an earlier baseline year, to the extent possible given legal and regulatory authorities, to reflect early state actions.

Comment 8: 2012 not representative year; multi

- year baseline (5 year) would be better; if 2012 is used as baseline must correct for anomalies

Response 8: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year

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

Commenters said that CO2 emissions in 2012 were not representative, in part because the EPA did not correct for anomalous events that impacted total CO2 emissions in that single year. Commenters said the EPA should expand the baseline period from one year to five years to minimize the impact of atypical events that inevitably arise during a single

- year period. C ommenters said if the EPA does not expand the baseline period to five years, EPA must, at a minimum, correct for anomalies like those discussed below. Commenters said one way that the EPA could do this, as the Agency recognizes, NODA, 79 Fed. Reg. at 64,55 3, is to use different data years for individual states, as opposed to using the same data year, or combination of years, consistently across states. Commenters said such an approach would account for atypical events that affected individual states or a su bset of states.

Commenters said that numerous uncharacteristic events can occur during any single year, and such was the case in 2012. Commenters said these anomalies include increased utilization of affected units due to extreme weather events, atypically low CO2 emissions from coal

- fired generation due to historically low natural gas prices, and a changing portfolio (additions and retirements) of available units for dispatch. Commenters said additionally, as the EPA has recognized in previous rulemakings, an EGU's operations (and, consequently, its CO2 emissions) will vary greatly over the course of any given year due to unusual weather and its impact on demand. Commenters said in addition to nationwide anomalous events that occurred during 2012, single

- un it issues also significantly affected states' 2012 emissions, including extended outage periods for major sources of CO2 emissions and partial year operation of new NGCCs, and the EPA did not adjust for any of these events.

Commenters said a multi

- year ba seline period would dilute the disparate impact that an atypical event can have on a single year and would more accurately represent the natural variations inherent in the electric industry, and would be consistent with how EPA expects states to demonstrat e compliance under the Proposed Rule. Commenters said further, a multi

- year baseline period is consistent with other existing EPA programs and guidance.403 Comment 9: 2012 not representative, multi

- year baseline should be used, use of multi

- year baseline ca n make big difference in translating rate

- based goal into a mass

- based goal, states must get credit for early reductions, the EPA needs to clarify exactly what state and federal programs were relied upon in calculating state goals so public can make inform ed comments

Response 9: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year. See sections VI and VII for discussion of calculation methodology for subcategory

- specific emission performance rates and state goals, respectively

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

Commenters stated that the EPA should adopt an averaging approach to establish the base
year. Commenters indicated that the EPA considered using average fossil fuel generation and emission rate values over a baseline period but determined that there would be little variation in the results compared to a 2012 base year data set due to the rate

- based nature of the goal. Commenters said in fact, many variables affect the amount of generation and emissions in a particular year, including the level of hydroelectric generation, natural gas prices, and weather variability. Commenters added that notwithstanding EPA' s rationale, the baseline generation assumptions do impact the ultimate emission target goal. Commenters therefore recommended the use of an averaging approach in order to account for yearly differences in generation.

Commenters said that over the last decade, the landscape of energy use in the U.S. has fluctuated significantly, and the EPA's use of the year 2012 as a baseline for the states' budgets is arbitrary and leads to anomalous results. Commenters provided a graph and sta ted it showed that on a national level, carbon emission levels and coal use were at a seven

- year low in 2012. Commenters said that due to the severe cold, CO2 emissions increased 2.5 percent from 2012 to 2013, and that despite this increase over 2012 emis sions, emissions in 2013 were still 10% below their 2005 level. Commenters said that this shows that 2012 is not a reasonable baseline for any power usage statistics

- it reflects reduced power usage due to a well

- documented downturn in the economy. Commente rs said that on a state level, some states had anomalous carbon output in 2012

- a fact that the EPA did not take into account. Commenters said for example, Minnesota's Sherburne County coal

- fired power plant went offline beginning in November 2011 due to extensive turbine damage and remained offline for all of 2012, thereby reducing Minnesota's carbon emissions significantly for that year. Commenters said similarly, while a coal

- fired power plant in West Virginia was named the most efficient plant in the U .S. in 2011, its efficiencies fell in 2012 due to "restarts" and other issues "typical of the first year of operation of any power plant ... " Commenters indicated these types of issues can likely be found in the data from any year, but said they should no t control the states' budgets or be viewed in a

vacuum. Commenters said that instead of using one year of emission statistics, the EPA should at the very least aggregate the data in order to produce averages for each state that more accurately reflect the emissions trends.

Commenters said the baseline year selection is an important issue for some states, because some states already have regulations or policies that would directly (e.g., emissions cap) or indirectly (e.g., renewable portfolio standards) redu ce CO2 emissions, and some of these state requirements were in place well before 2012. Commenters said under the EPA's proposal, states may only apply emission reductions achieved under an existing state requirement or program and404 attributable to actions t aken after the date of the proposal towards their individual state goal. Commenters said the EPA does not explain, nor is it clear from the proposal, what "actions" taken under an existing state requirement or program might include. Commenters asked that the EPA provide examples of what it considers "actions" taken under a state requirement or program to include.

Commenters asked that the EPA clearly show what state and federal programs it relied upon in calculating state goals so the public can make infor med comments. Commenters said the state goal emission rate will not be changed once the EPA issues the rule as final and it must therefore rely on accurate data and recognize early adopters of carbon reduction strategies such as heat rate improvements at c oal units or existing state energy efficiency programs. Commenters said these efforts should be recognized and rewarded in each individual state's goal.

Commenters indicated a multi

- year baseline should be used. Commenters said despite using a single year 's worth of data to represent the baseline emission rate, the proposal allows EGUs

- after 2030

- to measure actual plan performance against the final goal by using a three

- year rolling average. Commenters said the EPA reasons that a three

- year average wil l account for "year

- to

- year variability in economic and other factors, such as weather, that influence power system operation and affect EGU CO2 emissions." Commenters said for these same reasons, the EPA should rely on a multi

- year average for determining the initial performance level rather than only 2012 data.

Commenters said moreover, even if there may be little variation between a single vs. multi

- year baseline when viewing the rate

- based goal, a multi

- year baseline may make a big difference when trans lating that rate into a mass

- based goal for any given state. Commenters said the EPA should allow multi

- year baselines when a State chooses to utilize mass emissions targets rather than rate

- based targets. Commenters said the rule should account for the e conomic and other factors discussed above by using a multi

- year baseline period to calculate both rate

- based and

mass

- based goals. Commenters said as these numbers show, using a multi

- year average provides a more accurate snapshot of a state's performance level against which states can compare future carbon emission reductions.

Commenters said that states should be able to utilize at least a 3

- year average to calculate state goals. Commenters said that in addition, the EPA should consider adjusting the bas eline emission levels to reflect plant shutdowns and other early reductions, particularly if bankable emissions credit is not otherwise provided for such emissions reductions.

Comment 10: M ulti

- year baseline needed; for NC 10

- year period 2002

- 2012 is best , would be more representative and allow some credit for early reductions; other multi

- year baseline possibilities

Response 10: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year

.
The following are summaries of the specific public comments under this comment:405 Multi

- year Baseline . Commenter s disagree d with the concept of using a baseline year, but said that if a baseline year is established it should be a multi

- year average and not a sin gle baseline
year. Commenters said the selection of a single baseline year merely provides a snapshot of a state's energy and emission profile at a given time and, for North Carolina, gives an inaccurate picture of the State's overall profile. Commenters s tated that failure to utilize an average when establishing the baseline for the Proposed Rule is incongruous with the building blocks fashioned largely by "averaging" data across states.

2002

- 2012 Baseline Best for NC

. Commenters said that while there are numerous yearly combinations that would yield a more equitable result than the singular year of 2012, the most appropriate baseline for North Carolina is an average of years 2002 through 2012. Commenters said there is precedent for the EPA's usage of a te n year period. Commenters said using an average of this ten year period is both more accurate and more equitable for multiple reasons:

“ A 10

- year average balances out statistical variations that appear in the State's data for any given year arising from we ather, outages, fuel cost, demand, retirements, economic conditions and dispatching. A multi

- year baseline approach would be less sensitive to these types of variations.

Additionally, economic conditions varied significantly throughout the previous decade , with significant growth followed by the Great Recession (2007

- 2009) and slow recovery. As economic conditions are a significant driver of electricity consumption, it is important that economic trends be normalized and accurately reflected in any baseline calculation. A ten year average would level out significant economic fluctuations experienced by individual states and ensure that any established standard would not be skewed toward a good or bad economic environment.

Using an average of the years betwee n 2002 and 2012 also would give North Carolina ratepayers some credit for their significant investment in environmental measures and utility retirements that have reduced coal

- fired electric generation in North Carolina during that time period. In 2002, th e North Carolina General Assembly passed the "Clean Smokestacks Act" (S.L. 2002

- 4). Under the Clean Smokestacks Act, NOx and SO2 emissions (and carbon emissions) were reduced by retiring older coal units, retrofitting some plants at a total cost of $2.89 b illion, and building new natural gas

- fired plants. An average would ensure that the baseline reflects North Carolina's trend of reducing emissions from coal

- fired power plants and would incorporate these ongoing efforts into the standard. ”

Other Possible M ulti

- year Averaging Periods

. Commenters said that while they advocate for a baseline established using a 2002

- 2012 average, a 2005

- 2012, 2007

- 2012 or 2010

- 2012 year average would be more accurate and preferable to the singular year of 2012. Commenters sai d additionally, considering the EPA's focus on 2005 in conversations prior to issuing the Proposed Rule, a 2004

- 2006 average (or similar average) would also present a more credible alternative to 2012.

Must Protect Investments

. Commenters said that any st andard that does not recognize and protect existing investments to improve air quality is unjust and unreasonable. Commenters said the Proposed Rule should be tailored to protect ratepayers and to avoid such uneconomic406 outcomes by using a multi

- year averag e or by creating a mechanism by which states receive credit for investing in emissions control technology prior to 2012.

Comment 11: The EPA should use 5

- year average over a 7

- year period for baseline; states should be allowed to select either 2012 or any 3 consecutive years out of the last decade for baseline; baseline should be average of 2010

- 2012; baseline of 2010

- 2012 better than just 2012, but 2008

- 2010 better; provide a range of baseline options to states; baseline should be average of any 3

- year co nsecutive years from 2005

- 2013 or 2008

- 2013; baseline should be 2005 but if that is not possible then highest of 2010

- 2012; final compliance date should be extended to 2040.

Response 11: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year

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

Five

- year Average over a 7

- year Period

. Commenters suggested that to calculate baseline emissions, the EPA should look t owards an average of at least five years of data over a seven year period, and said this is not unprecedented.

Commenters said that the EPA, in order to determine a unit's baseline emissions in Cross

- State Air Pollution Rule (CSAPR), took the average of t he three highest, non

- zero annual heat input values within a 5 year baseline. Commenters suggested that the survey period and averaging time should be even greater in the Clean Air Plan because, unlike SO2 and NOx under CSAPR, CO2 has not been previously r egulated. Commenters said that even with experience in regulating SO2 and NOx, the EPA recognized that emissions vary and operators of power plants should be afforded sufficient time to account for operational and other variations. Commenters suggested tha t since CO2 has never been regulated from utilities, and since a Rule like this has never been implemented, additional time should be provided.

Commenters said that the purpose of the CSAPR average timeframe was to reduce the likelihood that any particular single year's operations determines a unit's allocation. Commenters said that by not only taking the average, but also looking towards the highest data within the five

- year range, the EPA was attempting to minimize the risk in CSAPR that outlier years wo uld skew emissions limitations in a way that disproportionately or inappropriately harmed emitting units.

2012 or any 3 Consecutive years out of last 10

. Commenters stated that the selection of a single year for baseline is unreasonable, arbitrary and cap ricious. Commenters suggested that states should be allowed to select either 2012 or any three consecutive years out of the last decade on which to base an emission inventory. Commenters said that the EPA should utilize a multi

- year average of at least t hree years or permit states to select and justify the use of the most representative years from the last ten. Commenters said using a multi

- year average or other flexible year selection process will better account for normal year operations and allow for some recognition of early reductions over years directly prior to 2012.

3

- year average. Commenters said that many variables affect the amount of generation and emissions in a particular year, including the level of hydroelectric generation, unit outages

,407 natural gas prices and weather variability, and notwithstanding the EPA's conclusions, the baseline generation assumptions do impact the ultimate emission target goals. Commenters recommended the use of 2010

- 2012 for baseline, which represent the most r ecent available data. Commenters supported use of multi

- year baseline such as 2010

- 2012, or alternatively for states to be able to elect this option. Commenters did not suggest which years should be used for baseline, but indicated that a 3

- year baseline w ould be more representative than using a single year, and said that 2012 was especially unrepresentative for New Mexico as 2012 coal

- fired emission levels were the lowest for any one year between 2001 and 2012.

2010

- 2012 Better than just 2012; 2008

- 2010 Be tter

. Commenters said the use of any single year, and 2012 in particular, is not appropriate for baseline. The commenters note d 2012 emissions were anomalous, as the New York system was impacted by Super Storm Sandy for much of November and into December . The commenters said the use of a three

- year average baseline of the years 2010, 2011, and 2012 is an improvement but the Alliance suggests that the appropriate baseline is before RGGI was implemented, i.e., the average of 2008 to 2010.

Range of Baseline Options

. Commenters stated that for many states, including Florida, the year 2012 was not representative of normal operations and therefore should not be used as baseline. Commenters said instead, they recommend that the EPA provide a range of baseline
ye ar options that could be used by the states in developing their state specific emission limiting standards. Commenters said these should include multiyear averaging or use of any single year within 10 years of the ESPS proposal date of 2005.

Average of any 3 consecutive years from 2005

- 2013 or 2008

- 2013

. Several commenters said rather than using a single year for baseline, the EPA should follow the approach used in other CAA regulatory programs and should allow affected electric utilities to select as t heir baseline the average of any three

- year consecutive years from 2005

- 2013 (Commenter s ) or 2008 through 2013. Commenters analyzed historic generation levels for affected EGUs in New Mexico and found that during the period 2008 through 2012 the ratio of low to high net generation varies by a factor of 1.2 up to 4.5. Commenters said the arbitrary selection of 2012 as the baseline year in calculating the State of New Mexico's goal does not capture each facilities high end dispatch needs, particularly for t he states' coal

- fired facilities. Commenters said to correct this, the EPA should allow each state to determine the most representative facility dispatch in establishing a state goal

- in particular, affected electric utilities should be allowed to select as their baseline the average of any three consecutive years from 2008 through 2013. Commenters added that hydropower

- dependent states should be allowed to request a longer average baseline period to account for variations in hydroelectric power producti on.
2005 or highest of 2010

- 2012. Commenters responded to the EPA's NODA in which they discussed potentially allowing 2010 and 2011 to be considered part of the baseline. Commenters said they believe that an appropriate baseline year is 2005 and that any emissions limitation set by the states should be based on this new baseline. But, c ommenters said

, because the EPA seeks comment on whether 2010, 2011 or 2012 should serve as baseline years, EKPC recommends that the highest of these three years be used as the baseline and that the time to come into compliance be extended such that the final goal is eff ective circa 2040

.408 Highest of 2010

- 2012 as baseline

. Commenters support ed consideration of 2010 and 2011 as baselines in the emissions rate goal calculations; the commenters recommend ed that the highest of 2010, 2011 and 2012 be used as the baseline and that any emissions limitation be set by the states based on this new baseline.

Comment 12: Baseline did not credit early actions, resul ted in more stringent targets.

Response 12: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year

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

C ommenters contended that early actions were not adequately credited, but rather were used to produce more stringent state targets

.
Commenters stated EPA used 2012 state

- level emission rate data from fossil

- fuel fired generating sources as the baseline for calculating the interim and final emission rate goals. The
commenters said EPA did not adjust the 2012 baseline emission rate to account for the fossil megawatts already being displaced by renewable generation; thus, the interim and final emission rate goals assume those displaced emissions. The commenters said prohibiting states from accounting for the emission rate reductions that are essentially "baked in" to the emission rate goal calculations would be inconsistent with EPA's own methodology and arbitrarily and capriciously increase the stringency of the emission rate go als.

Commenters stated EPA should consider efforts to move to lower emitting resources in years prior to 2012 when setting goals. The commenters said by way of example, South Dakota would experience a goal change from an unrealistic 741 lbs. CO2/MWhr (2012 ) to 1,627 lbs CO2/MWhr (2005), by adjusting the baseline year. The commenters said though less dramatic, other states would realize material goal shifts should EPA consider early actions that result in reduced emissions rates.

Comment 13: The EPA offered no data or analysis to support that there would be little variation in results using 2009

- 2012 baseline period compared to a 2012 base year, and FCG

- EC analysis showed 2012 was lowest possible value and not representative. Price of natural gas in 2012 was at lowest level since before 2000, and for that reason alone 2012 disqualifies as representative. Due to year

- to

- year variability in electric power sector, a multi

- year baseline should be used.

Response 13: See section VI of the final rule preamble of th e CPP for the EPA’s response to this
comment regarding the baseline year

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

Several commenters said in the EPA's NODA dated October 30, 2014, the EPA requested comment on their a pproach to a specific baseline. Several commenters said the Florida Electric Coordinating Council Environmental Committee (FCG

- EC), of which JEA is a member,409 and Seminole Electric Cooperative, agree with the EPA that a historic baseline is preferable to a projected year or a combination of historic and projected, but it does not agree with the EPA's decision to use a single year (2012) as the starting point for calculating the state's emission rate goals. Several commenters said the EPA has offered no dat a or analysis to support its stated finding that there would be little variation in results using a 2009

- 2012 baseline period compared to a 2012 base year.

Commenters said the FCG

- EC used data from 2009

- 2012 to calculate alternative baselines for Flo rida. Commenters said using the EPA's methodology, the FCG

- EC found that EPA's 2012 baseline is the lowest possible value and does not reflect a representative year or average for Florida. Commenters said that in fact, 2012 was the lowest mass and rate y ear recorded for CO2 emissions in Florida's emissions database.

Commenters said that in addition to the fact that state baselines using years other than or in addition to 2012 do in fact vary from a 2012 baseline, there is the fact that it is inappropria te to use any single year as a baseline to represent the electric power sector. Several commenters said sources and amounts of electricity generation can and do vary from year to year; the variability is due to many factors that include economic condition s, weather variability, year

- to

- year fluctuations in fuel prices, and significant unplanned and planned unit outages. Several commenters said with regard to fuel prices, natural gas prices in 2012 were at their lowest level since before 2000 (the 2012 ann ual average Henry Hub price was $2.75 per mmBtu), which is lower than today's price and lower than any natural gas price the EIA projects into the future. Several commenters said that this fact alone disqualifies 2012 as a representative single baseline y ear applicable to the electric power sector.

Commenters said that the EPA clearly recognizes that there is year

- to

- year variability in the electric power sector, and has taken steps in previous power sector rulemakings, such as the Cross State Air Pollutio n Rule (CSAPR), to address the variability. Commenters said that in its Existing

- Unit CO2 proposal, the EPA states that there is "year

- to

- year variability in economic and other factors, such as weather, that influence power system operations and affect EGU CO2 emissions." Commenters noted that the EPA has proposed to include rolling three

- year performance periods for compliance purposes, apparently in an effort to address the variability, yet makes no mention of power sector variability with respect to its proposal to use 2012 as the single baseline year. Several commenters said the EPA must address power sector variability by using a multi

- year baseline, which will produce a more representative baseline than a single year.

Comment 14: A multi

- year baseline should be used; use of 2012 as baseline dis

- incentives action between now and 2017; should not use data from 2012 or other recession years

Response 14: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding t he baseline year

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

Use of 2012 as baseline dis

- incentives action between now and 2017

. Commenters said that the decision to use 2012 as a baseline for energy consumption is ill

- conceived, because it effectively penalizes any efficiency initiatives that Indiana undertakes between 2012 and 2017. Commenters410 said because energy efficiency programs get mor e expensive as additional savings are realized, the most cost

- effective option for states is to preserve easy improvements until they can be counted towards compliance with the proposed rule. Commenters said Indiana would be incurring unnecessary costs if the state took steps to realize net energy savings between now and 2017

- the incentive structure of the proposed rule errs strongly towards inaction, precisely the opposite of its intended effect. Commenters said the EPA has acknowledged this issue in the proposed rule, and is seeking comment on the best way to avoid a perverse incentive. Commenters suggested that one option is to give states credit for programs that are already in place that will result in emissions reductions during the compliance period

.
Commenters also indicated that the Proposed Rule, in essence, penalizes utilities that have already taken steps to reduce carbon emissions by using a 2012 baseline. Commenters said that instead of penalizing utilities that have already taken steps to r educe carbon emissions, the EPA should adjust the baseline to provide credit for early actions, or else few utilities will undertake voluntary emission reduction measures in the future. Commenters said the "penalty" will incentivize utilities to wait, ins tead, until such improvements are mandated by regulation.

Total demand in 2012 was relatively low

. Commenters indicated that 2012 was an anomalous year in natural gas markets because mild weather led to large declines in residential and commercial gas con sumption as well as electricity demand. Commenters said that according to EIA data, Indiana's total energy supply was lower in 2012 than in any year since 1996. Commenters said that due to decreased electricity demand and other reasons, natural gas prices fell below coal prices in 2012, which led to increased dispatch from NGCC plants, relative to coal

- fired plants. Commenters said that since 2012, however, coal

- fired plants have, for the most part, regained their market share in electricity markets. Com menters said this effect is particularly noticeable in Indiana

- a report by SNL Energy projects that gas generation's share of Indiana's electricity mix will decline from 13.6 percent in 2012 to 5.3 percent in 2030.

Commenters said the EPA's computations assume that the state of affairs that existed in 2012 persists today, when data and market trends suggest that is not the case. Commenters said the EPA should re

- formulate its estimates for realistic NGCC utilization on the basis of a more representative multi

- year average. Commenters said similarly, if the EPA expects Indiana to achieve net year

- over

- year energy savings relative to demand in 2012, the EPA should take into account the conditions that produced peculiar demand

- side conditions that year. C ommenters said otherwise, the EPA's estimates for future consumption will not reflect the restoration of "normalcy" to Indiana's energy markets in 2013 and 2014 and the state will be penalized for macroeconomic developments outside its control. Commenters indicated there is precedent for the use of a multi

- year average in other EPA environmental regulations.

Multi

- year baseline and adjust for economic activity

. Commenters support ed the use of a multi

year base period and suggested making some adjustments t o reflect normalized U.S. economic activity. Commenters said that the establishment of a target based solely on an unadjusted year, or even an average of unadjusted years, after 2008, is ill advised. Commenters cautioned that such a target will represent e lectric generation serving depressed economic activity, and said that cannot be in the best interest of the U.S. economy, and is particularly problematic for West Virginia.411 Commenters said that business customers, particularly larger industrial customers, evaluate many factors when deciding where to locate their plants and where to increase production levels, and availability of reliable and economical electricity is an important factor in those decisions. Commenters stated that by setting 2012 as the targe t from which emissions must be reduced, the EPA is effectively condemning West Virginia and the nation to an electricity generation starting point from which reductions must be measured that reflects power consumption during a severe economic recession and a low level of industrial activity in the State. Commenter s acknowledge d that all states may not have experienced West Virginia's slow recovery rate from the 2008 recession; however, this economic malaise continued to affect other states to varying degree s, and the EPA's choice of 2012 as a base year cements this malaise for years to come.

Comment 15: Other commenters contended that the proposal penalizes early actors by requiring early

- acting states to meet more stringent interim performance standards sooner.
Response 15: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year

.

Comment 16: Structure of proposed guidelines creates disincentives for reductions between 2012 and 2020. The EPA should allow states to bank and use for compliance all emission reductions that are achieved between 2012 and 2020, regardless of whether they result from measures that were "on the books" before proposal. The EPA can't rely on existing state programs and measures to support assertion that proposed goals are achievable, then deny states' rights to use those reductions to demonstrate compliance

Response 16: S ee 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:

Commenters stated that the structure of the proposed guidelines, particularly the approach to calculating the proposed state

- specific emission rate goals, does not recognize appropriately the efforts of states and utilities to reduce emissions before 2012. Commenters also said the structure of the proposed guidelines serves to discount and creates disincentives for reductions achieved between 2012 and 2020.

Commenters said as a policy matter, the EPA should allow states to recognize all reductions that occur after 2012, the baseline year selected by the Agency for calculating the state e mission rate goals, and the final guidelines should allow states to bank and then use for compliance emission reductions that result from state requirements, measures and programs instituted after 2012 and prior to 2020. Commenters said further, the final guidelines also should affirm that states can include in compliance plans emission reductions that occur during the compliance period without reference to whether these reductions were achieved by measures that were "on the books" at the time the guideline s were proposed412 Commenters said the EPA proposes two limits on states' ability to include reductions that occur after 2012 in state plans: first, states can only include those reductions that occur during the interim compliance period, which starts in 2020 ; second, states can only include those reductions that result from actions taken after a specified date. Commenters said according to EPA, reductions from "existing measures" that were "on the books" at the time the proposed guidelines were issued cannot be included in state compliance plans, even if they achieve reductions during the interim compliance period. (See 79 Fed. Reg. at 34,918). Commenters said however, the EPA proposes that states can include generation that occurs after 2019 from any renewabl e generating facility, regardless of the in

- service date of the facility. (See I d. at n.293.)

Commenters said preliminarily, the EPA should not limit states to those reductions that occur during the compliance period, but should allow states to bank and us e for compliance the emission reductions that are achieved between 2012 and 2020. Commenters said in advance of the proposed guidelines, many states and companies were contemplating

- or did implement

- strategies that would achieve CO2 reductions, and to the extent that states and companies are able both to adopt and implement these strategies earlier than 2020, allowing banking could provide an incentive for earlier emission reductions. Commenters added that authorizing states to include in compliance pla ns reductions from these pre

- 2020 strategies also would allow states to begin demonstrating compliance earlier and could help states more gradually phase in other emission reductions measures. Commenters said in recognition of this, the EPA should allow th e banking of reductions that occur between January 1, 2013 and December 31, 2019.

Commenters said in addition, the EPA should allow states to use reductions that occur during the compliance period, regardless of whether they result from measures that were "on the books." Commenters said the EPA states that it is necessary to discount reductions t hat result from measures that were "on the books" or that were implemented before the guidelines were proposed (except for renewable generating units) because of the "forward

- looking goal

- setting approach." (See I d. at 34,918.) Commenters said that this is inconsistent with the EPA's assertion that the proposed emission rate goals are achievable because of existing state programs. Commenters said as the EPA notes in the preamble:

EPA proposes that a 2020 start date for the interim goal plan performance peri od is achievable in light of the following additional considerations. First, existing state programs will play a role in helping to achieve the rule's proposed emission performance levels. Second, in advance of this proposal, many states already were
conte mplating design of strategies that would achieve CO2 emission reductions equivalent to those that could be required by CAA section 111(d) emission guidelines. (Id. at 34,905 (emphasis added)).

Commenters said the EPA cannot rely on existing state programs and measures to bolster the assertion that the proposed goals are achievable, but deny states the right to use the reductions that are achieved by these measures to demonstrate compliance.

Commenters said as a practical matter, measures that reduce emissi ons from existing affected units will be reflected in state average emission rates, regardless of when they occurred. Commenters said for example, if a coal

- based unit is retired in 2015 to comply with other environmental regulations

- and this retirement was "on the books" before June 2014

- this will413 be reflected when the state measures the emission performance of affected units in 2020, relative to the 2012 emission rate calculated by EPA, because that unit will no longer be operating. Commenters said th e EPA certainly could not mean to require states to add emissions from units retired before 2020 back into any compliance demonstration because the retirements were already "on the books". Commenters said yet, the discussion of "existing measures" in the preamble implies this. Commenters said the final guidelines should make clear that the "existing measures" limitation, if applicable to any measure in a state's compliance plan, is not applicable to actions that reduce affected unit emissions before 2020. Commenters said this includes not only unit closures, but also HRI projects and changes in dispatch between existing coal

- based units and natural

- gas based units.

Commenters said similarly, the EPA should affirm that it will not discount reductions from EE measures, other than to limit reductions to those that occur during the compliance period. Commenters said specifically, EE measures should be treated the same as RE measures. Commenters said for CAA purposes, it does not matter when the EE measure was pu t in place

- or whether that measure was in response to an existing state EE program or a new program

- as long as reductions are achieved during the interim compliance period.

Commenters stated as proposed, states and utilities have an incentive to delay implementing some emission reduction measures until the compliance period, which could lead to a relative increase in CO2 emissions. The commenters said to avoid creating this perverse and unintended consequence, EPA should allow states to bank credits fr om reductions that occur during the period between the baseline year and the compliance period (e.g., 2013

- 2019) due to measures installed during this time period. The commenters said these measures could include, but are not limited to, plant retirements, fuel switching, new renewable energy installations and newly installed energy efficiency measures. The commenters said states should not be required to demonstrate that these reductions were "additional" to what would have occurred anyway (i.e., without t he Clean Power Plan), as long as the measures reduce CO2 emissions. The commenters said under Wisconsin's RPS, the ability to bank credits proved essential in allowing utilities to meet their individual requirements each year as well as meet the overall st atewide goal two years ahead of schedule.

Commenters stated concern that the draft rule provides no benefit to taking action to reduce emissions between the June 2014 release of the draft rule and the end of 2019 since renewable energy deployed during this period would not be able to generate compliance credits until January 1, 2020. The commenters said EPA should provide states with flexibility to take credit for actions taken after the NOPR was issued and before the interim compliance period begins (2020) and count that credit toward achievement of the state's compliance obligation. The
commenters said this early

- action provision would help ensure that the states have an incentive to reduce GHGs prior to 2020. The commenters said it would also help prevent a dip in market activity in the renewable energy sector, as obligated parties otherwise may delay projects until after the compliance period begins. The commenters said one option for ensuring states have an opportunity to begin compliance earlier than 20 20 is to give states the option to bank credits from 2014 to 2020 for use in the 2020

- 2029 interim compliance period.414 Comment 17: Electric power system is dynamic so multi

- year baseline should be used, adjustments for power imports and exports requires sa me base year be used in every state, using 2013 data in state goal calculations resulted in different goals and different rates of progress; NODA didn't provide enough information to evaluate impact of suggested changes; using three

year average heat rate is more representative than 2012 average

Response 17: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year

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

Electric Power System is dynamic so multi

- year baseline needed

. Commenters said the methodology used by the EPA to calculate target emission rates for each state under the CPP relies on historical operating data from 2012. Commenters said these data includ e existing generating units and their output levels, as well as power demand and interstate power transfers. Commenters said however, the electric power system is dynamic, and its operation in one time period has little bearing on how it will operate in an other time period. Commenters said factors such as fuel prices for power plants, demand variability, and the construction or retirement of electric infrastructure will all affect the generation levels for individual power plants. Commenters said selecting a single year as a starting point from which to calculate target emission rates will "lock in" any transient effects particular to that year, regardless of the year chosen.

Adjustments for power imports and exports requires same base year in all states

. Co mmenters said in its October 2014 NODA, the EPA released power plant operating data for years 2010 and 2011. Commenters said although the EPA did not release sufficient data to recreate state emission rate targets using these years as the base, the data sh owed a substantial difference in power plant operations from those of 2012. Commenters said certainly, some states will find their target rates higher or lower if a year other than 2012 is used as a base year. Commenters said importantly, the EPA's methodo logy includes adjustments for power imports and exports between states; for consistency, this requires the same base year to be applied to every state, and would not permit a state to choose its own base year without leading to inconsistent target emission rates in other states. Commenters said therefore, the arbitrary and capricious nature of selecting a single year to determine emission rate targets cannot be mitigated without a fundamental change to EPA's methodology.

Influence of base year on goals

. Com menters examined the influence of the base year upon which the goals are calculated, and found changing the baseline year makes a substantial difference, but the direction and extent of that difference are influenced primarily by local weather patterns, un it availability, and other unrelated factors. Commenters compared the renewable energy that would be included in the state goal calculations using 2013 data, with the results of EPA's calculations using 2012 data. Commenters found that changing the base ye ar resulted in different goals and different rates of progress toward the regional goals. Commenters found that in certain regions, using 2013 data instead of 2012 data allowed the state to meet the regional target for 2020

- 2029. Commenters said that the E PA's NODA suggests that other years may be used in the calculation of the final goals, but did not provide the kind of quantitative data415 necessary to evaluate the impact of such a change, and did not explain why any specific year or group of years is a mor e reasonable basis upon which to make such a calculation.

Commenters said that the EPA calculations for NGCC plants in Michigan used a heat rate of 810 lbs CO2/MWh based on 2012 data, and the proposed heat rate for new NGCC plants was 1,000 lbs CO2/MWh. C ommenters said that the average heat rate for NGCC plants in Michigan based on the years 2010 through 2012 is 986 lbs CO2/MWh, which is more representative than the numbers used by the EPA.

Comment 18: The EPA should use a long

- term baseline for BB1 rate setting and compliance, and should add 4% reduction

Response 18: See sections V.C. 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 said that data from the 52

- Unit Study, which was attached to their comment, demonstrates that selecting a single year's emission data to calculate the heat rate improvement (HRI) expected under a rule can result in an unfair allocation to certai n individual units. Commenters said that for some units, 2012 represented the best performance year over the past decade, while other units had relatively high emission rates in 2012. Commenters indicated that the EPA has asked whether it should address th is problem by permitting states or sources to choose 2010 or 2011 as a baseline year instead of 2012, and commenters stated that this option is not an appropriate solution to the allocation problem. Commenters said that any state or source that is allowed to choose its preferred baseline year will inevitably select the year that minimizes its own compliance obligation, and this will invariably reduce the effectiveness of the standard and will result in a rule that does not reflect the best system of emissio n reductions.

Commenters said their approach to Building Block 1 resolves the allocation problem without degrading the efficacy of the standard. Commenters said that the EPA could calculate Building Block 1 emission reductions on the basis of the differen ce between a source's best rolling annual average rate and its long term (2001

- 2014) emission rate, and an additional four percent reduction based on available plant upgrades. Commenters stated that this approach minimizes the impact of any particular year of operation and, since it is largely based on improved operation that has already been demonstrated by the source, is feasible. Commenters said that States can thereafter allocate compliance obligations among in

- state sources to address any issues that

m ight remain.

Comment 19: States that have already enacted measures are required to do more than states that have not

- raises inequality issues

Response 19: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regar ding the baseline year.416 The following are summaries of the specific public comments under this comment:

Several commenters stated that the proposed rule results in requiring states that have realized early emission reductions to do more than states that h ave not, resulting in raising equity issues, including cost and reliability concerns. Commenters added that EPAs approach is inconsistent with the CAAs objective to achieve nationally consistent standards. Commenters contended that states that produce the most emissions should be required to make the greatest reductions. C ommenter s added that states unknowingly increased the stringency of their Clean Power Plan emission targets by passing RPS laws to address GHG emissions. The commenters also stated that wi thin and individual region, block 3 also imposes a lesser standard for states that have low levels of existing renewables. C ommenter s added that electricity generation rates currently being accomplished provide little or no credit during the compliance per iod.

Comment 20: 2012 was outlier year for NGCC EGU operations, so the EPA should use 3

- year historical average, or even exclude 2012 in calculating a 3

- year average, in determin ing any capacity factor for BB2

Response 20: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year.

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

Commenters said the capacity factors of NGCC EGUs in 20 12 should be considered the maximum achievable NGCC utilization for each state. Commenters said that in 2012, the electrical grid experienced both extreme summer peaking conditions and record low natural gas prices

- both these conditions were optimal for NGCC use and resulted in historically high use of NGCCs system

- wide.

Commenters said 2012 was followed by extreme winter weather conditions in 2013, during which natural gas prices increased and Wisconsin industrial customers were called on to curtail
natu ral gas usage. Commenters said because of this series of events, natural gas supply reserves heading into the 2014

- 15 winter are still below 2008 levels, even with increased production of natural gas. Commenters indicated this creates further challenges to increasing NGCC use as EPA has proposed. Commenters said this evidence strongly supports that EPA should use a three

- year historical average, or even exclude 2012 in calculating a three

- year average, to determine any capacity factor for building block 2.

Comment 21: Baseline period should start earlier to avoid penalizing early action. The EPA should improve the treatment of existing state programs

Response 21: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment re garding the baseline year.

The following are summaries of the specific public comments under this comment:417 Several commenters indicated that the baseline period used in calculations should start earlier than 2012 to avoid penalizing early action. Several c ommenters recommended using (or starting) the baseline period with an earlier year, e.g., 2005, to address the punitive impact of the proposed rule on states and companies that have taken early action to reduce GHG emissions. Several commenters indicated an earlier baseline period would recognize and reward state and company leadership in reducing emissions. Several commenters indicated in that way, displacement of fossil

- fuel fired generation by early investment in renewable energy, energy efficiency, and natural gas would not be "built in" to the goal calculation, so states that made these investments would not be assigned overly restrictive reduction goals and compressed compliance periods. Commenters said that the EPA should include guidance in its Pro posed Rule to instruct states how they can include credit for early reduction efforts in their compliance plans.

Commenters indicated that the baseline year should be set somewhere in the 2005 to 2007 time frame to give states credit for early action. Com menters stated that this baseline period would also be more appropriate since it predates the recession and would therefore be more reflective of normal energy demand. Commenters noted that states that expanded their NGCC capacity prior to the proposal ar e being penalized by the BSER requirements of Building Block 2. Commenters compared Georgia's NGCC capacity and 2012 NGCC utilization to that of other Region 4 states. Commenters found that 30% of Georgia's total CO2 emission reduction goal is dependent o n increased natural gas dispatch. Commenters found, however, that one Region 4 state is not required to do any natural gas dispatch

- Kentucky. Commenters indicated that Kentucky has no NGCC units, so Block 2 BSER does not apply to Kentucky. Commenters in dicated that this example illustrates the unfairness of this proposal

- states with the largest NGCC dispatch changes will incur the higher costs for their CO2 reduction.

To demonstrate how the proposed regulation penalizes states that took early action, c ommenters examined the CO2 mass emissions in the years 2005, 2012, and 2030 and associated mass emission reductions for the Region 4 states. Commenters included the year 2005 because EPA, in the rule preamble, states that the CPP will achieve a nationwide 30% reduction in CO2 emissions between 2005 and 2030. Commenters projected 2030 emissions for the southeastern states using values for the 2030 rate

- based goals and generation from the CPP's Goal Computation TSD. Commenters determined that the projection for Georgia reflects a 46percent reduction in CO2 emissions between 2005 and 2020. Commenters indicated that this is the highest percentage of CO2 reductions in the Region 4 states, and well above the 30% nationwide
average that the rule is expected to achieve. Commenters state d that in fact, Georgia already reduced CO2 mass emissions by 33% from 2005

- 2012. Commenters said that this example illustrates the unfairness of this proposal

- states that took early action to redu ce CO2 emissions are being penalized by the proposed CPP. Commenters added that the wide range in projected CO2 mass reductions within the region has the potential to provide some states with an economic advantage over states with very high CO2 emission re duction projections, like Georgia.

Commenters stated that the proposed rule must allow states to choose a baseline year between 2005 and 2012, or to use an average of any three consecutive years within that period. Commenters indicated that in that way st ates that took early action through programs such as Regional Greenhouse Gas Initiative (RGGI) can get credit for emissions reductions already achieved.418 Several commenters stated that the application of the Clean Power Plan should reward and encourage earl y acting states such as Maine and Arizona for the results achieved to date by giving equitable treatment to recent emissions reductions. Several commenters stated that by investing in renewable energy and significant energy efficiency measures over the pa st decades, they have already achieved significant reductions in fossil fired emissions and emissions
rate. Commenters indicated that in most cases, the investments needed to achieve these results exceed those of other states. Commenters stated that the emissions reductions achieved in Maine already exceed the national goals of 30 percent reduction set by the Clean Power Plan by a substantial degree when examined in the context of reductions since 2002. Commenters indicated that the investments made in M aine increased renewable generation, extensive cost

effective efficiency programs for residential, commercial and industrial sectors, and transitioning to use of less

- carbon intensive fuels for generation

- mirror the elements of the emission reduction bu ilding blocks. Commenters said that it would therefore be arbitrary to ascribe to Maine additional reductions beyond those applicable in states where no effort has been made and no expense incurred. Commenters indicated that Maine's RPS is already among th e highest in the U.S. and that as a percentage of load, Maine generates more electricity from renewable resources than any other state east of the Mississippi. Commenters added that Maine is a net exporter of electricity, renewable energy, and renewable e nergy credits to the northeast regional grid and markets. Commenters note d that as a result, Maine has already achieved many of the goals of EPA's proposed rules. Commenters indicated that because of its actions and investments, Maine as an early actor st ate has fewer untapped opportunities than late

- starting states. Commenters said that the cost of achieving additional emissions reductions in states such as Maine may be higher than achieving the same amount of initial reductions in a state that has not y et acted.

Commenters did not suggest a particular timeframe for baseline, however, they indicated the importance of crediting early action taken before 2012 and for resources that come on

- line between 2012

- 2017. Commenters emphasized AMP's hydropower inve stments, as well as those in wind, solar, and landfill gas, were made knowing the likelihood of future carbon regulations and, as such, they should not be denied credit under any state plans simply because they are pre

existing projects.

Commenters said th e EPA should improve its treatment of existing programs. Commenters said the EPA states early emission goals (those that took place before the date of the Proposal), are reflected in the baseline for each state but are not otherwise credited. Commenters sa id the EPA should improve its treatment of existing programs and early reductions by expanding the ways states can apply those goals to meeting their goals. Commenters said one way the EPA could do that is by adopting alternative approaches described in th e Proposed Rule for taking existing EE programs into account. Commenters said specifically, the EPA should change the cutoff for the date by which actions to put EE into place may be taken to at least 2005. Commenters said the EPA should also allow emissio n reductions that occur prior to the initial performance period

- at least as early as 2005

- to count toward meeting state goals.

Commenters said that 2012 should not be used as baseline for several reasons, one of them being that NGCC use was higher in 2 012 due to reduced natural gas prices. Commenters said a key benchmark location for natural gas pricing throughout the United States is at Henry Hub (HH) in Erath, Louisiana. Commenters said reviewing HH natural gas (pipeline) pricing data from 2002 to 201 2, the electric utility industry benefitted from the lowest natural gas prices in a decade

- in419 fact, in a single year, from 2011 to 2012, natural gas prices dropped 32 percent. Commenters said this anomalous low price point was predicated on the fact that demand was far behind a steadily increasing production of shale gas resulting in an abundant natural gas supply in 2012. Commenters said that because EGUs operate on an economic dispatch model, and not an environmental dispatch model, generation shifted f rom coal

- fired EGUs to natural gas

- fired EGUs during 2012. Commenters said from the EPA's formula to calculate the 2012 "unadjusted fossil emission rate (or historical fossil rate)," it is obvious to see how a significant, albeit temporary, shift in genera tion from coal

- fired to natural gas

- fired would result in a baseline carbon emission rate that is much lower than would be calculated under normal source operations.

Commenters said not only is 2012 not representative of typical operations during this peri od in history, the selection of 2012 also negates, for the purposes of calculating carbon emission reductions, the progressive moves made by the power sector through heat rate improvements, re

dispatch to NGCC units on a more widespread basis (not just via economic dispatch over a single year), and the development of robust RE and EE programs initiated by the electric utility industry and assisted by the Energy Policy Act of 2005.

Comment 22: Use of 2012 as baseline year does not give credit for early acti on
Response 22: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year.

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

C ommenter s stated that although the rule establishes 2012 as the baseline year for calculating emission reductions, many states had already taken significant steps at reducing CO2 emissions prior to 2012. The commenters listed several energy efficiency and renewable activities, which are also components of the BSER building blocks, that the state of Texas undertook and achieved prior to 2012. The commenters contended that their prior activities would make future compliance and future reductions more complicated to ob tain. The commenters stated that comparing 2012 emission to the 2030 emissions target without the benefit of reductions made prior to 2012 would result in Texas having more difficulty than any other state to comply with the requirements in the proposed rul e.

Comment 23: The EPA's choice of baseline dates punishes states that have taken aggressive measures to reduce carbon emissions and promote increased use of renewable energy generation.

Response 23: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year.

The following are summaries of the specific public comments under this comment:420 Commenters stated EPA has defined reductions on a state by state basis. The basis was the existing power ge neration technologies, and policies unique to each state; for example, some states relied more on nuclear generation, while others relied more on coal combustion for their generation. The commenters said EPA then based each state's GHG reduction requiremen t on each state's natural gas electricity generation, nuclear generation, solar generation, wind generation, policies that incentivized energy efficiency, and policies that reduce consumption of electricity through demand side management. The commenters sa id since EPA based the potential improvements on the current energy portfolio, the resultant rule requires the smallest GHG reductions from states with the highest coal usage; this outcome is a direct result of EPA's use of source categories for compliance other than that regulated by the proposed standard (i.e., coal

- fired power plants).

Commenters stated by choosing a 2012 as the baseline year, as opposed to the originally proposed 2005 baseline year, EPA is punishing states like North Carolina that have undertaken aggressive and expensive new policies to reduce carbon emissions. The commenters said aggressive emission reduction policies by the State of North Carolina have led to the retirements of coal generation units, and extensive upgrades to increase efficiency and reduce emissions at the remaining operating units. The commenters said Duke Energy has retired 26 coal

- fired units at eight (8) generation stations; seven (7) of those stations no longer generate electricity from coal; the Cliffside station is the exception, where all but units 5 and 6 at Cliffside were retired. The commenters said at the seven (7) remaining operating coal stations in North Carolina, there are 20 units, all with NOx controls and FGD scrubbers; in addition, as the only state i n the southeast to adopt a renewable energy and energy efficiency portfolio standard (REPS adopted in 2007), North Carolina added significant new renewable energy projects between 2005 and 2012, yet will receive no "credit" for undertaking such progressive policies. The commenters said the clear message to states like North Carolina is to postpone such strategies.

Commenters stated EPA set state goals based on the inclusion of not

- yet

- constructed renewable and zero

- emitting generation; however, while the Pr oposed Emission Guidelines mandate future emission targets based on the carbon reduction potential of a state's entire electric generating system, they do not consider the carbon intensity of a state's electric generating system as it exists now when setti ng a state's baseline. The commenters said EPA's approach fails to recognize the achievements made by many states, including Virginia, that have reduced CO2 emissions by making significant investments in zero and low carbon emitting generation, such as

nuc lear power, and rewards states that have not done so by giving them substantially higher CO2 emission reduction targets. The commenters said it also compares apples to oranges by discounting the carbon intensity of a state's current electric generating sys tem but setting future requirements based on projected zero

- emitting facilities. The commenters said the BSER in the Proposed Emission Guidelines effectively requires that many existing fossil fuel facilities either be shut down or drastically curtailed an d replaced with zero

- emitting generation, but gives no credit for existing zero

- emitting generation currently in a state's generating portfolio; it thus places states already having a large amount of zero

- emitting generation at a disadvantage by skewing th e analysis and requiring them to do more than states that presently have little or no

zero

- emitting generation. The commenters said the Proposed Emission Guidelines also create a perverse incentive to increase CO2 emissions because states may be encouraged to prematurely retire zero

- emitting nuclear generation and replace it with natural gas generation, which in some states may be credited to their carbon emission goal.421 Comment 24: Early emissions reductions should be counted in baseline

. Response 24: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year.

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

Commenters stated in choosing 2012 as a baseline for go al setting and applying the 4 building blocks to each state, the individual state

- specific goals established by EPA fail to credit states that have taken early action that served to lessen the carbon intensity from their power sector. The commenters said E PA's goal setting methodology actually serves to penalize states that have taken early action. By arbitrarily choosing 2012 as the baseline year for use with EPA's building blocks, the reductions from New Jersey's "All Fuel Sources" (affecting all 4 buildi ng blocks) and "Fossil Source Only" (affecting building blocks 1 and 2) are not recognized and go uncredited.

Commenters stated the proposed standards give no credit for early action to reduce or offset carbon dioxide (CO2) emissions, which, in the comment er's case, has been substantial. The
commenters said EPA should revise its baseline year or period in the Proposed Rule and/or allow the use of fleet emission averaging to provide states credit for earlier beneficial actions taken by affected entities and units.

Commenters stated EPA's goal

- setting mechanism and its use of a 2012 baseline for the purpose of setting state goals generally fail to recognize emission

- reducing actions taken by states and utilities prior to 2012. The commenters said many companie s implemented projects prior to 2012 that provided significant benefits related to greenhouse gas reduction, but these companies are now being penalized for their early action. This result is not fair. The commenters made investments prior to 2012 to incre ase the efficiency of its power plant fleet and to increase the use of renewable energy sources by: (1) adding new generation and state

- of

- the

- art emission control technology to new and existing units; (2) repowering older, less efficient coal plants to

co mbined cycle natural gas plants; (3) adding the two largest wind farms in Wisconsin and a biomass plant; (4) increasing customer energy efficiency; and (5) investing in distribution upgrades. The commenters said these projects include:

• Repowering about 32 0 MW of coal retired in 2002 and 2004 to 1,090 MW of natural gas combined cycle in 2005 and 2008 at a cost of $664 million; and

• Constructing the two largest wind projects in Wisconsin: 145 MW Blue Sky Green Field in 2008 at a cost of about $300 million and 162 MW Glacier Hills Wind Park in 2011 at a cost of about $364 million

The commenters said EPA's proposed rule does not account for any of the major initiatives undertook prior to 2012; this could result in stranded costs for customers for some of power plant investments. The commenters added compared to states that have not taken such actions, Wisconsin has more stringent interim and final emission targets under the proposed rule than states with a similar fuel mix that did not take similar actions prior to the 2012 baseline year; in order to create a more equitable baseline calculation and goal setting process, early actions prior422 to 2012 should be excluded from baseline and target calculations, and allowed for compliance
purposes.

Comment 25: Do not su pport use of 2012 as baseline; credit must be given for early reductions

. Response 25: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year.

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

Several commenters d id not support the use of 2012 as the baseline, or benchmark, year as it does not credit early reductions/actions.

Commenters stated that clearly, the Proposed GHG rule is designed to reduce the nation's CO2 emissions as a whole, and the EPA clearly contemplated that each state will be affected differently. Several commenters indicated that years ago Florida took the initiative to move to a lower carbon energy portfolio, and since then Florida's ratepayer s have funded plant upgrades that created cleaner utility plants and the construction of new plants that burn cleaner, more efficient fuels, such as natural gas and nuclear. Several commenters said that Florida's CO2 emission rate in 2012 was 30% lower tha n 2005 levels, and Florida's ratepayers funded that reduction. Several commenters said that the Proposed GHG Rule would cause Florida's ratepayers to fund another 38% reduction, essentially ignoring strides already made.

Several commenters stated that the rule should provide states with the option of utilizing an earlier baseline that would recognize the progress that has already been achieved. Several commenters said that it would also be important for the EPA to recognize the relationship between the ba seline year and current reductions already achieved for the purpose of setting the performance level. Commenters said that for example, if the EPA were to select 2005 as a baseline year, it should recognize that 2011 emissions nationwide are already 11 percent below 2005 emissions, and the average power sector emissions rate in 2011 is 11 percent below the emission rate in 2005.

Several commenters said that the EPA's approach of applying a uniform heat rate percent efficiency improvement, without considering heat rates at individual facilities, penalizes utilities that are using best practices and/or had upgraded eq uipment to increase boiler efficiency prior to 2012, while rewarding units that had done little to improve plant

- level efficiencies before 2012. Commenters said that in order for states to receive credit for early action, in establishing the final goals fo r a state, the EPA must identify which existing individual units in the state no longer have cost

- effective options available to achieve, for instance, the 6 percent HRI from BB1, and increase the state's CO2 target accordingly.

Commenters indicated that s tates should have the discretion to adjust the 2012 baseline to give credit for early action. Commenters indicated that a special consideration that states should be able to address is where certain utilities

- particularly small utilities

- have recently implemented capital projects resulting in HRI soon before the issuance of the proposed rule. Commenters contend ed that where small utilities have already spent considerable capital on increasing EGU423 efficiencies, states should be given the latitude in th e SIP process to adjust the 2012 baseline. Commenters said that States are best positioned to evaluate the Propose Rule and the objectives it sets, and look at circumstances that are unique in a particular state. Commenters stated the Proposed Rule shoul d authorize state SIPs to provide flexibility in setting the efficiency baselines up to three years for early actors. Commenters indicated that failure to grant states this flexibility would prevent applicable utilities from being credited for HRI already achieved in recent years, while at the same time precluding the utilities from achieving any additional HRI, and said this inequity would be particularly troubling where the EGU with an HRI through a turbine upgrade is the small utility's only jurisdiction al EGU.

Several commenters also indicated that as proposed, the rule does not account for carbon emissions reductions made from 2005

- 2012. Commenters indicated that any single year snapshot will have abnormalities that may not reflect the long

- term energy mix and forecast, and requested that the EPA give serious consideration to adjusting the benchmark emissions date, whether to an earlier year or a mu lti

- year average, to accurately reflect Georgia emissions accounting for emissions reduction made before 2012. Commenters said that in 2005, approximately 64 percent of Georgia's generation was from coal, and today that number is under 33 percent. Commen ters said that similarly, natural gas

- fired generation in Georgia has grown
ten

- fold since 2005, from 7 percent to 35 percent, and other portfolio changes have included securing new renewable resources such as solar, wind and biomass, and certifying the fi rst new nuclear units in 30 years. Commenters indicated that the proposed rule does not give appropriate credit for these efforts, and suggested that because of this they may have been better off if they had waited until after 2012 to make decisions regard ing utility investments in cleaner technologies.

Several commenters emphasized that states that have already taken significant steps to decrease CO2 emissions should get credit for these actions. Several commenters said their states have already taken a n umber of steps to build high efficiency coal

- fired units, increase renewable energy, and/or increase energy efficiency, and the EPA should allow such states to bank credits for what they accomplish before the first compliance date. Commenters said the EPA should establish baseline references for each state by year and allow quantities of energy efficiency achieved in excess of reference levels prior to 2020 to be carried forward for application in the compliance period. Commenters said that the draft CPP requires greater reductions from states that have already reduced emissions, and this is not consistent with the structure of the CAA. Commenters said that in a more traditional approach to Section 111 standards, the EPA would base standards on the emissi on rate achievable through the use of a particular control technology, and if a unit already had installed that control technology, it would be deemed compliant. Commenters said in the proposed Section 111(d) guidelines, however, reductions already achiev ed through state and utility investments in clean energy are not deemed compliant, but are, instead, met with standards that require further reductions in order to be achieved.

Commenters said that using 2012 data to set each state's target was troubling b ecause by that point several coal

- fired power plants had shut down or invested significant capital to improve efficiency. Commenters said that Pennsylvania's Alternative Energy Portfolio standards was passed in 2004, and suggested that the EPA should move the baseline back to 2005 to capture the significant emissions reductions made since then. Commenters also suggested that the EPA move the baseline back to 2005, rather than the 2010 mentioned in the NODA.424 Commenters said that the claim that CO 2 emission s will be reduced by 30 percent from 2005 emissions levels is misleading as 2012 is being used as the baseline year for calculations. Commenters said this stated goal is misleading, because the EPA proposed state

specific targets using 2012 as the baseline year; 2005 data was not considered when establishing the proposed emission targets. Commenters said that consequently, states that have already achieved significant CO2 reductions would need to require further CO2 emissions reductions that may not be achi evable in practice. Commenters said that CO2 emissions in Pennsylvania were reduced by approximately 15 percent between 2005 and 2012; the final goal set by the EPA for Pennsylvania requires the Commonwealth to reduce CO 2 emissions from 2012 by approximate ly 31 percent by 2030, which represents a 41 percent reduction from 2005 levels. Commenters noted that while the proposal allows EGU retirements to be credited towards meeting a state target, establishment of a more stringent target that incorporates those reductions makes the early retirements of fossil fuel

- fired EGUs not creditable from a practical standpoint. The only credits for retirements afforded in the proposed plan are those that occur after 2012. Therefore, commenters recommended that EPA conside r a five

- year averaging approach for establishing baseline for emission targets.

Commenters submitted the Proposed GHG Rule's failure to consider previous reductions makes the rule overly burdensome and arbitrary, especially compared to the minimal reducti ons in other states that have not already spent billions of dollars creating a cleaner fleet of electric utilities.

Commenters stated with respect to energy efficiency measures, since the 1990s, Southern Minnesota Municipal Power Agency (SMMPA) has develo ped an extensive energy efficiency program that has been able to achieve up to a 2.08% reduction in retail electricity sales in recent years. The commenters said the Proposed Rule's chosen baseline of 2012 simply ignores these efforts. The commenters said this punishes SMMPA for its prior, volitional efforts, as SMMPA has essentially exhausted the easy and inexpensive efficiency measures (e.g., light bulb changes) and is now left with the daunting task of having to squeeze additional efficiencies out of an already highly energy

- efficient system. The commenters said at bottom, the Proposed Rule's use of a 2012 baseline unfairly penalizes SMMPA and all other utilities that have already made significant efforts to reduce carbon emissions from their footprint. T he commenters said EPA should adjust the baseline to give utilities credit for early action.

Commenters stated Vectren has already achieved significant reductions in GHG emissions from its electric generation system. The commenters said since 2005 Vectren has reduced its GHG emissions approximately 23 percent through the retirement of a coal

- fired unit, investments in turbine efficiency, the purchase and development of renewables and the implementation of energy efficiency programs. The commenters said Vect ren has already reached the Administration's previously stated goal of reducing GHGs 17 percent from 2005 levels by 2020, yet EPA's approach to setting state

- specific emission rate goals does not recognize emission reductions achieved by individual utiliti es before 2012. The commenters said many companies such as Vectren have already completed the most cost effective of these early reductions, particularly in the areas of heat rate improvements and energy efficiency (i.e. the low

- hanging fruit), and the add itional incremental emission reductions required to meet new emissions goals based upon a 2012 baseline will be more costly to consumers and are a future disincentive to425 take early action to reduce emissions. The commenters said EPA should allow the use of an alternative baseline to recognize early actions taken by states and individual utilities.

Commenters stated EPA claims that "states with currently existing programs and policies, and states that put in place new programs and policies early, will be bet ter positioned to achieve the goals," however, EPA's building block approach, combined with its single 2012 baseline year, does not give appropriate credit for states and utilities that have acted proactively to manage CO2 emissions prior to 2012. The comm enters said since 2012 generation provides the starting point for EPA's goal calculation, only actions taken after 2012 will provide a compliance benefit to a state because pre

- 2012 actions are inherently assumed in the calculation of the goal. The
comment ers added EPA somewhat inconsistently claims in the preamble to its proposal that only actions taken after June 18, 2014 will count towards compliance. Commenters stated as an early

actor state that has endeavored to reduce its carbon footprint for many ye ars, New Mexico is penalized by EPA's failure to allow credit for actions prior to 2012 (or 2014). The commenters said New Mexico has had success in encouraging the development of renewable energy and demand

- side energy efficiency improvements in the years prior to EPA's proposal (in MWh).

Commenters stated Idaho has long been ahead of EPA's curve to utilize non

- CO2 sources of electricity production; unfortunately, much of the wind generation was put into operation prior to your proposed 2012 base year. The commenters said because 2012 is arbitrarily established, there will be no credit for the efforts that occurred prior to 2012; as such, there will be no credit allowed for the work to maximize the good efforts to utilize wind power and other renewable
gene ration installed prior to 2012. The commenters said much of Idaho's electrical power is generated using renewable hydro resources, thus reducing the need for coal

- or even gas

- fired generation. The commenters said the proposed rule does not recognize hydro generation as a renewable, non

- CO2 producing source of electricity.

Commenters stated EPA's 2012 baseline, and thus EPA's program, does not adequately credit the reductions that Iowa has already achieved at a significant investment or cost. The commenters said Iowa's cooperatives have a variety of existing policies and programs that have had the effect of reducing carbon emissions. The commenters said some of these programs have been in place for many years a nd have resulted in significant energy savings and reductions in the carbon intensity of Iowa's generation fleet. The commenters said the EPA should recognize the value of these programs and allow Iowa's cooperatives to include them as part of the best sys tem of emission reductions. The commenters said Iowa's electric cooperatives, and more generally, Iowa's utilities have had a long history of implementing energy efficiency and load management programs, with early versions starting in the 1980s. The commen ters said programs over time have required increased investments and energy savings and have become subject to more stringent review. The commenters said Iowa electric and gas utilities offer a number of energy efficiency programs, products, services, and training to residential, industrial, and commercial
customers.

Commenter s were concerned that the CPP fails to recognize that in economic fairness the ratepayers of the TVA area should receive the benefit a credit toward carbon emission reduction requireme nts for the voluntary strides TVA made with its voluntary, progressive energy efficiency programs by 2005 and thereafter rather than EPA using a 2012 baseline against which carbon emission reductions are measured.426 Commenters stated EPA's proposed rule does not allow TVA to receive any credit for early actions before 2012. The commenters said because TVA upon its own initiative reduced its carbon emissions by than thirty percent (30 percent) between 2005 and 2013, then the proposed rule consequently requires an excessive and burdensome over

- investment by TVA to reach EPA's newly proposed required goals even if reaching those goals was reasonably possible. The
commenters said that financially penalizes the ratepayers of the TVA region served by TVPPA member LP Cs.

Commenters stated EPA's cumulative percentage for PA EE reductions in 2017 is 1.02%. The
commenters said PA's estimated value for 2017 under PA Act 129 is 5.93%.The commenters said this higher value for PA Act 129 considers the reductions attributable to Phases I and II (all prior to the 2012 baseline date) and an assumed annual average incremental reduction value of 0.74% explained previously. The commenter s asserted that the EPA should allow PA to be credited with EE reduction benefits back to a 2012 baseline date. The commenters said the cumulative percentages for EPA and PA Act 129 in 2030 are 12.07% and 15.49% respectively. The commenters estimated EE reductions through 2030 amounts to 19,327 GWh when starting from baseline year of 2012 projecting f orward through 2030 using an incremental annual factor of .74%. The commenters said this compares to EPA's calculated EE reductions of 19,329 GWh through 2030 utilizing an incremental factor of 1.5%; thus, the c ommenter

- calculated target and the EPA estima tes for 2030 are nearly identical. The commenters said if EPA were not to credit PA with PA Act 129 EE reductions back to the 2012 baseline then PA's cumulative EE reductions (2017 through 2030) would be 10.3% and PA's associated cumulative GWh reductions would be approximately 14,927, a shortfall of 4,402 GWh. The commenters said on this point, the commenters recommend ed the EPA allow PA to take credit under BB4 for EE benefits achieved since the baseline year of 2012.

Commenters stated the baseline year and reduction targets for Colorado, as for other states, are arbitrary and punish Colorado for early action. The commenters said Colorado's enactment of mandates for increased use of renewable energy and conversion of power plants from coal to natural gas prior to 2012 have not improved the state's position with respect to meeting EPA deadlines for compliance. The commenters said in fact, other states which have not yet taken such drastic measures will actually be required to cut carbon emissions by much lo wer percentages; thus, Colorado is already at a competitive disadvantage to some other energy producing states. The commenters said these combined factors mean that EPA has set an artificially low baseline for further CO2 emission reductions, with no justi fication for selecting a year with higher amounts of gas generation and lower amounts of coal generation. The
commenters said this arbitrary selection puts Colorado utilities and their customers at risk.

Commenters stated as a state, Wisconsin should be w ell

- positioned to comply with a rule that limits carbon dioxide (CO2) emissions; EPA's Clean Power Plan purports to reduce overall CO2 emissions nationwide by 30 percent from 2005 levels. The commenters said since 2005, Wisconsin utilities have taken actio ns that reduced CO2 emissions by over 15 percent on a mass basis for the 2005 to 2012 period. The commenters said the EPA's goal

- setting methodology and use of a 2012 baseline for the purpose of setting state goals generally fails to recognize emission

red ucing actions taken by states prior to 2012. The commenters said by assigning state

- by

- state emission reduction requirements using a baseline year of 2012, the proposed rule often requires deeper cuts by states that have taken early action than by states t hat have not. The commenters427 said Wisconsin, for example, would be expected to reduce its CO2 emission rate by more than 34 percent by 2030; other states, including many who have done less to reduce CO2 emissions to date, are given less stringent reduction targets.

Commenters stated on or around October 30 EPA issued a Notice of data availability (NODA) related to the proposed Carbon Pollution 11 1 (d) Rule. The commenters said among other things, the agency solicited comments "on whether state

- specific circu mstances exist that could justify using different data years for individual states, as opposed to using the same data year, or combination of years, consistently across states." The commenter s asserted those circumstances do exist. The commenters said usin g 2012 as the baseline year unfairly penalizes RGGI participants, who have already shown leadership in reducing GHG emissions. The commenters said the wording in the NODA implies EPA is not amenable to allowing the group of states participating in RGGI tog ether to take any credit for the significant, early reductions the program has achieved; that would be wrong. The commenters said EPA risks reinforcing the impression that companies and states would be better off next time waiting until EPA forces action, rather than taking the initiative to address environmental concerns. The commenters said at least states should be allowed to choose a baseline period that recognizes their policies and actions taken to date to rein in GHG emissions.

Commenters stated the Proposed Rule penalizes states like Colorado that were early adopters of emission reduction and renewable energy statutes by using 2012 baseline data to establish standards of performance. The commenters said the 2012 baseline disregards the considerable i nvestment made by utilities prior to 2012 and places a higher standard of compliance on states that are industry leaders in renewable energy investment. The commenters said electric service in Colorado is provided through investor

- owned utilities (IOUs), m unicipal utilities, and cooperative electric associations. The commenters said all of these utilities serving over 40,000 customers must meet a renewable energy standard. The commenters said in 2004, Colorado citizens passed Amendment 37, which adopted a r enewable energy standard for IOUs. The
commenters said in 2007, the Colorado General Assembly passed a renewable energy standard for municipal utilities and cooperative electric associations. The commenters said in 2013, the Colorado General Assembly increased the renewable standard for both distribution and wholesale cooperative electric associations. The commenters said in 2010, the Colorado General Assembly passed the Colorado Clean Air, Clean Jobs Act (C ACJA) to reduce emissions from older coal

- fired power plants through retrofit technologies, retirement, and construction of new natural gas units.

Commenters stated Colorado utilities are industry leaders in renewable energy investment; in 2012, about 17 p ercent of Xcel Energy's companywide power supply came from wind, solar, hydro, and biomass resources, 266 MW (AC) of which was solar power, including about 129 MW (AC) of customer

- sited solar. The commenters added Xcel Energy retired the Cherokee Unit 1 10 7 MW coal unit in 2011. The commenters said by 2012, Tri

- State Generation and Transmission Association, Inc. generated or purchased 184,045 MWh of energy from renewable

sources. The commenters said by 2012, Black Hills/Colorado Electric Utility Company, LP d/b/a Black Hills Energy had invested in 158,494 MWh of energy from renewable sources. The
commenters said prior to 2012, Colorado utilities had already invested millions of dollars in reducing emissions; the Proposed Rule disregards this considerable inv estment.428 Commenters stated in using 2012 baseline data to establish standards of performance for states, the Proposed Rule penalizes states like Colorado that were early adopters of emission reduction and renewable energy statutes. The commenters said cre dit for coal plant retirements, construction of renewable and natural gas generation, heat rate improvements, and other advancements in emission reduction that occurred prior to 2012 cannot be included in Colorado's plan. The commenters said the Proposed R ule does not provide credit for customer

- sited retail distributed generation facilities, which are interconnected to the electric grid through state law provisions or the Public Utility Regulatory Policies Act of 1978 (PURPA). The commenters said these omi ssions place a greater burden on Colorado than on other states that did not take early action to address source emissions.

Commenters stated despite references to a greenhouse gas (GHG) reduction timeframe of 2005 to 2030, the rule sets goals based on 201 2 data; this eliminates acknowledgement of key GHG reduction projects occurring during the 2005

- 2012 time period. The commenters said Madison Gas and Electric Company (MGE) voluntarily converted the Blount Generating Station ("Blount") from coal to natural gas and retired 90 MW of the 190

- MW capacity prior to 2012; plans for the transition started in 2006. The commenters said natural gas became the primary fuel at Blount in March 2010, and as of December 31, 2011, the ability to burn coal was discontinued

e ntirely. The commenters said at that time, MGE anticipated possible future GHG regulation and worked with the Wisconsin Department of Natural Resources (WDNR) to specifically acknowledge this voluntary early action. The commenters said MGE requested credit to the extent possible in future regulation and formalized that as part of the Environmental Cooperative Agreement

- a contract between the WDNR and MGE to acknowledge superior environmental performance. The commenters said the period between 2005 and 2012 is also important as it was a period in which significant renewable energy projects were added to MGE's generation fleet. The commenters said MGE's renewable energy production increased from approximately 60 GWh in 2005 to over 400 GWh in 2012.

Commenters stated the proposed rule fails to provide credit for CO2 emission reduction activities undertaken by states prior to 2012; in many cases, states are penalized for taking such early action. The commenters said for example, EPA's current approach results in more stringent goals for states in which coal units have been converted to natural gas

- fired units or replaced with a natural gas combined cycle (NGCC) unit prior to 2012. The commenter s asserted that these CO2 emission reduction actions should be given cr edit and considered in EPA's baseline and goal setting computation. The commenters said EPA should finalize a rule that rewards good faith actions taken by utility companies as a preferred environmental policy approach to continue to encourage proactive ef forts in the future. The commenters recommend ed EPA provide a methodology allowing states to request adjustment to the baseline and/or obtain credit towards compliance with the EPA's goals for CO2

- reducing early actions such as retirements, fuel

switching and repowering, renewable energy, and customer energy efficiency that occurred in or after 2005 and prior to 2012.

Commenters stated the Administration has repeatedly stated that a primary environmental objective is to "by 2030, reduce nationwide carbon d ioxide (CO2) emissions, from the power sector by approximately 30 percent from 2005 levels", yet when the proposed CPP was released, each state's emission reduction level was calculated by applying the BSER to 2012 levels. The
commenters said using 2012 le vels penalizes states that took early action to reduce carbon429 emissions by not providing compliance credit for carbon reduction from 2005 to 2012, thus making their targets more severe and limiting the state's flexibility to meet their target.

Commenters s tated is concerned that Pennsylvania, and other states that have taken aggressive measures to improve air quality, will not receive credit for being early adopters of these programs. The commenters said in the Proposed Rule, the EPA states that it will rel y on 2012 carbon intensity data to set state emission reduction targets; if this is the case, emissions

reducing policies adopted prior to that point, such as Pennsylvania's:

1. Mandatory statewide utility Energy Efficiency and Conservation Program that redu ces total annual consumption of electricity; and

2. Alternative Energy Portfolio Standard, that spurred significant investment in renewable energy, will not count towards the reductions required by the Proposed Rule.

The commenters said additional emissions reductions from nuclear uprate projects, coal plant retirements, and increased gas

- fired generation from Marcellus Shale production in Pennsylvania prior to 2012 have the potential to go unnoticed if the EPA relies on 2012 carbon intensity data.

Commente rs stated the target

- setting methodology is unfair because it fails to give credit for reductions of CO2 that were implemented before 2012. The commenters said by ignoring effects from CO2 reduction by states and utilities achieved before the baseline year , EPA erred when it performed its analysis of what is reasonably achievable in establishing BSER. The commenters said ignoring these early actions creates a higher cost of compliance and fewer alternative choices for states choosing to reduce carbon emissi ons prior to the implementation of the rule.

Commenters stated EPA rolled out the Clean Power Plan by stating that the goal is to reduce carbon dioxide emissions to 30 percent below the 2005 level; there is no mention in
any information that states emissions are currently 13 percent below these levels. The

com menters said this is an important fact, that was left out, EPA should mention there has been expensive measures taken to deal with the problem.

Comment 26: Ratepayers in early action states would bear a higher cost then other states

Response 26: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year.

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

Several commenters expressed concern that ratepayers i n early action states might bear a proportionally greater burden in reducing carbon pollution than ratepayers in states that have done much less. C ommenter s contended that the rule will severely impact the states relative competitiveness; in some cases at least doubling the disadvantage the state now has regarding electric rates. C ommenter s added that it makes little sense to require a state to deeply worsen its economic position relative to its neighbors because it pollutes less, especially when other stat es are not required to reduce their carbon intensity to the same absolute level. C ommenter s stated430 that projects that are part of the billion dollar reductions they recently completed are amortized over the remaining life of the coal plant beyond 2030. The commenter s added that if the proposed limits are finalized, their customers will be paying twice for the same reductions many other companies deferred until now. Another commenter s added that because previous investments in energy efficiency and renewable s are not credited, some states will need to make further investments to meet EPA's targets, which may result in consumers paying for utility investments that will not be used. C ommenter s questioned whether EPA had considered the conditions specific to eac h state, specifically Minnesota, and the utility markets.

Comment 27: 2012 not a representative year; multi

- year average that starts earlier would be more representative and would not penalize early action

Response 27: See section VI of the final rule pr eamble of the CPP for the EPA’s response to this
comment regarding the baseline year.

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

Commenters stated that the EPA's use of 2012 as a base year for the state goals is misrepr esentative because 2012 was an abnormal year due to the unusually low prices of natural gas, and indicated this skews the EPA's assumptions about the feasibility and impacts of re

dispatching under BB2. Commenters said that furthermore, using 2012 penaliz es states that have already made significant efforts to develop RE and EE. Commenters also indicated another concern regarding the use of 2012 as a baseline year

- it is not representative of coal

- fired EGU dispatch. Commenters said that dispatch of EGUs in a competitive least

- cost electric market tends to reflect costs of fuels; natural gas prices were unusually low in 2012

- resulting in greater dispatch of natural gas

- fired units and less dispatch of coal

- fired EGUs. Commenters noted that dispatch of co al

- fired EGUs over the last two summers has increased as natural gas prices have increased since 2012, and said that historic dispatch trends bear out the relationship between fuel costs and dispatch.

Commenters also indicated that 2012 was not a represen tative year due to higher than usual gas utilization and lower than usual coal utilization, and also due to unusually mild weather. Commenters said that according to the Edison Electric Institute (EEI), mild weather in 2012 contributed to a 1.3 percent re duction in electric demand compared to 2011, while residential and commercial natural gas consumption fell by 12.3 percent and 8.5 percent, respectively. Commenters noted that EEI also points to anomalous investment patterns in 2012

- with the highest level of new capacity additions since 2004, the highest level of retirements to date, and historic highs in wind and natural gas

- fired generation announcements.

Commente rs said a multi

- year baseline should be used due to the natural yearly variations in supply, weather, interruptions, etc. Commenters said a multi

- year baseline period also would be consistent with how the EPA expects sates to demonstrate compliance under the proposed rule, and the commenters urged the expansion of the baseline period of the timeframe of 2005 through 2012.431 Commenters said the proposed regulation may have the effect of disadvantaging states (like NY) for taking early action to reduce power p lant emissions, while seemingly benefitting many other states that have delayed action. Commenters said that as currently proposed, the rule requires little of many states that have yet to take action and that typically have more "low hanging fruit"
oppor tunities to reduce emissions, and more states like New York that would have to work even harder to realize even more emission reductions from their electricity sectors. Commenters suggested that potential ways to resolve this would be for EPA to use an ea rlier baseline, such as 205, that recognized early action taken by states, or to consider a mechanism whereby appropriate credit is given to reflect emission reductions already achieved.

Several commenters said that while using a multi

- year baseline woul d partially address the concern with unusually low natural gas prices in 2012, it does not address the issue of penalizing states that have made early emissions reduction efforts. Several commenters therefore recommended a more representative and earlier b aseline year (i.e., 2005) or a multi

- year baseline average be used that takes into account the early efforts made by states. Commenters recommended that the EPA use a multi

- year baseline rather than a single

- year baseline, and indicated that a historic bas eline is preferable to a projected year or a combination of historic and projected. Commenters indicated that the EPA has proposed to include rolling three

- year performance periods for compliance purposes, apparently in an effort to address the year to ye ar variability in power system operations and associated emissions, but said that the EPA makes no mention of power sector variability with respect to its proposal to use 2012 as the single baseline
year. Commenters said that a multi

- year baseline will pr oduce a more representative baseline than a single year.

Commenters said that states that took early action should be given credit for their efforts. Commenters indicated that between 2005 and 2012 Florida utilities increased annual electrical generation while decreasing CO2 emissions (on both a lb/MWh and tons per year basis), and stated that these emissions reductions should have been taken into account in calculating Florida's interim and final goals.

Commenters also requested that the EPA utilize a mul ti

- year average to set the targets

- an approach it has used in all past regulatory actions establishing set state emission budgets, such as the NOx SIP call, the Clean Air Interstate Rule (CAIR) and the Cross

- State Air Pollution Rule (CSAPR). Commenters s aid the EPA has acknowledged concerns with the use of a single

- year baseline in the NODA and is requesting comment on using 2010 and 2011 data in addition to 2012. While Commenters indicated that this would be an improvement, they requested the best (optim al MWh) three out of five years from 2008 through 2012 be used to establish the emissions baseline. Commenters indicated consideration of a multi

- year baseline would smooth out economic, commodity, or weather anomalies arising from use of a single year by providing a more realistic average or representative baseline from which to develop state goals and emission targets.

Comment 28: 2005 or range of years between 2005

- 2012 should be used as baseline432 Response 28: See section VI of the final rule preamble o f the CPP for the EPA’s response to this
comment regarding the baseline year.

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

Several commenters stated that the President's Climate Action Plan issued in June 2013, speaks of a 17% reduction in carbon emissions from 2005 to 2020, yet in spite of these directives, the EPA has chosen to use 2012 as the baseline for emissions in the Clean Air Plan proposal. Commenters said this baseline year does not reflect any of the prior redu ctions that have been implemented to reduce carbon emissions, and said that the EPA could consider a range of years such as 2009 to 2012 or 2010 to 2012. Commenters added that a more appropriate baseline may even be 2005 since this is the beginning year me ntioned in the Climate Action Plan.

Commenters said that reductions in CO 2 emissions that occurred from 2005 to 2011 are discounted and completely ignored by selecting a 2012 baseline year. Commenters indicated that they have already reduced CO 2 emissions by 33.4% from 2005 to 2013. Commenters stated that this is a significant reduction that is not accounted for with the use of a 2012 baseline data for the Clean Power Plan. Commenters asked "If the directive for carbon emission reductions from President Oba ma began with the year 2005, why is a 2012 baseline used as the starting point", and said that it appears that the EPA was selective in choosing this particular year for the state goal calculations.

Commenters said that the EPA's Notice of Data Availability (NODA) indicates that EPA may be considering a range of dates for the baseline or another single year besides 2012. Commenters suggested using a range of years between 2005

- 2012 instead of one single year if a 2005 baseline cannot be used. Commenters said a range of years is more reflective of a facility's actual operation and would avoid the handicap of picking a year in which the facility experienced significant downtime due to an extended outage. Commente rs said 2012 was not a representative year, and said that a multi

- year baseline would be appropriate, and said at a minimum they recommend using a 3

- year period such as 2010

- 2012, or earlier, should be used. Commenters said that credit for emissions reduc tions made since 2005 should be given, and indicated using a baseline including the year 2005 would accomplish this.

Several commenters suggested the EPA should start calculating emissions targets using 2005 data, not 2012 data. Commenters said that altho ugh the goal of the Clean Power Plan is to reduce emissions 30 percent below 2005 levels, when it came time to formulate each state's emissions target, the EPA used average 2012 emissions rates from fossil

- fired electrical generating units

- this makes lit tle sense. Commenters said if 2005 emission rates constitute the benchmark against which emissions reductions will be measured, then it is logical (and fair) to calculate state emissions targets beginning in 2005, not 2012. Commenters said that by jumping ahead to 2012, the EPA does not give credit for early emissions reductions. Commenters said that total U.S. CO2 emissions fell by almost 9 percent between 2005 and 2013; the vast majority of these cuts, however, will not be counted by the EPA, and states w ill not receive any credit for them. Commenters said if the EPA begins its calculations in 2005 rather than 2012, the emissions targets for many states would be much lower and more manageable, and several coal

fired plants might be able to survive.433 Comment ers stated according to EPA's Trends in Greenhouse Emissions Table 2

- 1, emissions have been reduced by approximately 12% in fossil fuel usage and 16% in that used to generate electricity between 2005 and 2012. The commenters said at the very least, EPA sho uld recognize this effect and establish its targets on decreases since 2005.

Commenters stated in the past, performance standards have been technology

- based and tied to achieving the NAAQS for a particular pollutant; however, for CO2 there is no NAAQS or

r eadily

- available control technology on which to base emission guidelines. The commenters said EPA must distinctively define BSER for the multitude of existing EGUs. The commenters said the level of control should be considered from a 2005 base year. The co mmenters said the year 2005 is the appropriate base year for a number of reasons: it is the base year in the President's Climate Action Plan, it is representative of energy demand prior to the 2008

- 2009 recession, and 2005 has a robust emissions inventory because states were required to submit a full emissions inventory pursuant to the Air Emissions Reporting Requirements rule.

In comments submitted prior to the proposal in April 2014, and resubmitted following proposal,
commenters offered the following as part of their to the question, "How should EPA set the performance standard for state plans," in EPA's "Considerations in the Design of a Program to Reduce Carbon Pollution from Existing Power Plants." Commenters supported the use of 2005 as the base year for level of control. The commenters noted that year 2005 is a national emissions inventory (NEI) year for which states were required to submit full emissions inventories pursuant to the Air Emissions Reporting Requirements Rule. The commenters stated tha t year 2005 is also the best representation of the electric generation market, energy supply and demand, before the onset of the economic recession in 2008.

Comment 29: 2005 should be used as baseline; any reductions made after proposal date should be counted

Response 29: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year.

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

Commenters said that 2012 was rem arkable in that natural gas prices were so low that fuel switching from coal to natural gas was at its maximum in years prior and since. Commenters said that in choosing 2012 as baseline year, the EPA is therefore setting the baseline at an extremely aggr essive level. Commenters said that generators should not be penalized for having taken early action to reduce GHG emissions. Commenters stated that any such action taken after 2005 should be credited into the baseline. In addition, Commenters said that al l reductions taken and GHG emissions reductions achieved after the June 18, 2014 proposal date, including end

- use energy efficiency enhancements, generation retirements, new capital investments in existing or new generation to include nuclear, natural gas and renewable, should be counted against future GHG reduction targets.

Commenters said that the use of a single year for the baseline is inappropriate, and even if a single year were to be used, 2012 is not representative and does not provide credit for ac tion434 taken prior to any federal or state mandate. Commenters strongly suggested that the emission targets contained in the rule more closely mimic the EPA press releases which call for a 30% reduction in emissions over 2005 levels. Commenters said a 30% reduction over 2005 levels, as announced and described by EPA during the press release, is a very aggressive goal that allows utilities to get credit for early actions taken since 2005. Commenters said a 30% goal can also be implemented with le ss impact to utility customers, and without unduly compromising reliability. Commenters said that instead, the proposed rule calls for Florida to achieve a 38% reduction over 2012 levels.

Commenters said they agree with the EPA's statements that the use o f actual, historical data as a baseline is more appropriate than using a projected year data set (which would be deterministically defined based on model inputs and assumptions). Commenters said this is not appropriate for defining "adequately demonstrated ". Commenters said however, the EPA is not correct in stating that there would be "little variation in results of a multi

- year baseline period, or even another more representative year compared to 2012". Commenters examined the increased use of NGCC and de creased use of coal and oil electricity generation in Florida since 2005, and the associated decrease in emissions. Commenters said that using a baseline of 2005, Florida's state goal calculation would result in a goal no lower than 1,163 lb/MWh.

Commente rs said that if the EPA retains its beyond

- the

- unit approach to setting state goals, the EPA should use 2005 as the baseline year for computing state goals, rather than 2012, for several

reasons. Commenters said the year 2005 was a key year for U.S. and i nternational climate and energy policy because the Kyoto Protocol entered into force in that year. Commenters said the 2005 Energy Policy Act (which included major changes to federal energy policy) was also enacted into law the same year. Commenter s said 2 005 are also relevant because the EPA's own climate change goals are based on reductions from that year. Commenters said in addition, although some states were already implementing RE and climate policies prior to 2005, most leading states have made signif icant progress in reducing emissions in the nearly 10 years since 2005. Commenters said were the EPA to base state emission goals on a 2005 baseline instead of the proposed 2012 baseline, it would avoid penalizing these states for their early investments i n emission reductions, while ensuring that all states implement emission reductions from RE and EE that are roughly equivalent.

Comment 30: The EPA should retain the proposed RE goal setting approach; 2004 baseline should be used for Wyoming RE, 2012 base line should not be used for SD

Response 30: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year. See section VII of the final rule preamble for discussion of state goals.

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

Commenters said that the EPA has requested comment on whether the approach to calculating state emission limits should be modified to include a floor based on reported 2012 generation (becaus e a handful of states have calculated RE goals less than their reported RE generation in435 2012). Commenters said such a floor would punish early renewable energy adopting states by requiring them to meet more stringent goals than their similarly situated r egional neighbors. Commenters said because the generation information provided is inappropriate since these levels represent in

- state generation reported on Energy Information Administration Form 923, and may not represent creditable RE for the generating state because the Proposed Rule contemplates in certain instances that the RE will be credited outside the state of generation. Commenters said that due to these reasons, the EPA should retain the proposed renewable energy goal setting approach and not es tablish a floor based on 2012 generation.

Commenters suggested that 2004, rather than 2012, should be used for renewable energy in Wyoming. Commenters said that Wyoming is an energy exporting state and therefore it is reasonable to look at the RPS start d ates for the states in the region that depend on Wyoming's
energy. Commenters said the Wyoming Department of Environmental Quality (WDEQ) has evaluated the RPS start dates for the various states in the region and when each of the RPS programs began, as the se initiatives fueled the need for RE in that state. Commenters said the EPA incorrectly established a baseline year of 2012 for RE, which shows an inflated outlook of RE in Wyoming.

Commenters said the interest in and growth of RE in Wyoming began in 2004 as the result of RPS requirements from other states, and said the RE in Wyoming in 2012 is a result of RE development from 2004

- 2012. Commenters said as such, WDEQ determined 2004 to be the

ac curate and most appropriate baseline year of Wyoming's RE before outside influences began impacting the state's resources.

Commenters said the year 2012 is a particularly unsuitable baseline for South Dakota due to the extremely limited operations at Deer Creek Station during 2012. Commenters said using 2012 for South Dakota's baseline would distort the EPA's assumptions about the State and about the capacity of Deer Creek to ramp up generation to displace coal

- fired generation. Commenters said in its Oct ober 30, 2014 NODA, the EPA requests comment on whether a different year or the average of a combination of years should be used to calculate the state fossil fuel emission rates used in state goal computations. Commenters does not have a strong preference between using a single year versus an average of years, except that the assessment should in no way rely on data from 2012

.

Comment 31: The EPA should use projected data whenever units didn't operate normally (like PSGC), and the EPA should adjust Illino is' state goal accordingly

Response 31: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment for discussion of the subcategory

- specific emission performance rates and baseline year. See section VII of the final rule p reamble for discussion of state goals.

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

Commenters said the EPA's choice to use 2012 data from which to determine initial fleet CO2 emissions and build its BSER calculation is misguided. Commenters said that the EPA assumed that one year, 2012, is representative of CO2 emission rates for the entire industry, but too many436 variables are lost in such an assumption. Commenters said the EPA recognizes stakeholders' concerns with this approach in the recently

- issued NODA and requests comment on alternatives to the 2012 data year

- the EPA proposes using either a different single year or a combination of
years.
Commenters said that as applied to Prairie State Generating Company (PSGC), the national assumption is particularly flawed. Commenters said that PSGC had not begun normal operations in 2012 and the data reported is not representative of PSGC's normal and intended operation. Commenters said in normal steady state operations, PSGC will operate its base

- loaded units at an intended 90% capacity factor, yet the 2012 data that is currently used represents barely a 23% capacity factor. Commenters said PSGC submits that the EPA should be willing to estimate emissions and generation using projected data for a newly operating unit whose operations were not representative of steady state conditions. Commenters said the EPA does just that in the CPP when EPA accommodates "under construction" NGCC units by using estimates. Commenters said the EPA should adjust state baselines for any other EGU that came online or began normal operations after 2012, and the EPA should adjust state goals accordingly.

Commenters said projected data is easily estimated from more recent information submitted to both EPA's Acid Rain Program and the Department of Energy's Energy Information Agency. Commenters said that using data that are not representative of future actual operations of a plant that is in the initial stages of operation distorts the state goal calcula tions, particularly if a rate

based emission goal is converted to a mass

- based emission goal. Commenters said using the newly added technical support documents provided for converting a rate

- based goal to a mass

based goal, Illinois' state goal would be al most 15% less than it should be by using actual 2012 data for PSGC rather than projected data reflecting expected normal operations. Commenters said as such, PSGC believes that the EPA should use estimated data which projects CO2 emissions and electric gen erating data at the expected 90% capacity factor, and adjust Illinois' state goal accordingly.

Comment 32: States should be able to choose their baseline; 2010

- 2012 should be default baseline with option to pick different period in last 5 years if can dem onstrate not representative; a 3

- year or 5

- year average should be used as baseline; 2012 should be used as baseline, or alternate if can demonstrate not representative; 2012 should be default baseline, but states can request alternate year or years

Respons e 32: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year.

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

States Should Choose Own Baseline. Commenters said that they believe that state

- specific circumstances exist in Oregon (and other states) to justify using different data years in different states for purposes of establishing baseline fossil emissions, as the NODA contemplates. Commenters said that c hoosing any single year as a baseline unnecessarily creates437 the risk that events unique to that year and state will introduce bias, and a mult i

- year baseline would be more representative.

Commenters stated that the EPA should leave it up to states to deter mine their appropriate baseline based on the measures used to develop the goals. Commenters said that the EPA "recognizes that states that have already shifted toward lower carbon

- intensity generation or ramped up demand

- side EE programs are better positio ned to meet state

- specific goals" and that existing state measures taken after the date of proposal would be recognized in a way that "may be generally compatible with the forward

- looking methodology that the EPA used to propose state emission performance goals."

Commenters stated that these statements are a clear reflection of the flawed logic throughout the proposed rule. Commenters said firstly, those states, such as Ohio, that already have taken measures to shift to lower intensity fuels, maintain a ro bust generation mix, and improve end

- use efficiencies, received more stringent state emission goals than states that have done nothing with respect to early adoption. Commenters said secondly, they recognize that the EPA did use a "forward

- looking methodol ogy" in setting state goals, but said that unfortunately, such a methodology is contrary to the intent of Section 111, in which the BSERs is based on adequately demonstrated, commercially available technologies, not optimistic projections of what might be possible in each state.

Commenters said to avoid what is viewed by Ohio EPA as a penalization of states that have adopted beneficial measures prior to this proposal, the EPA should allow the states to determine when reductions should be credited to its emission performance goals. Commenter s urged U.S. EPA to consider, in the name of flexibility and to avoid penalizing forward

- looking state actions, the ability for states to recognize and credit prior emission reduction measures based on reasonable and defensible analyses of prior actions. C ommenters stated that the EPA's action on excluding some CO2 reductions prior to 2020 is arbitrary, and without technical foundation.

Baseline should be 2010

- 2012 as default, can request alternate

. Commenters stated that the EPA should use a 2010

- 2012 thr ee

- year average baseline as a default and allow states to select a different baseline period if the three

- year average is not representative. Commenters said that the final rule should not rely on a single data year for calculating state emission goals be cause state emission levels can fluctuate significantly from year to year due to weather, fuel prices, the economy, and outages at both fossil and non

- fossil generators. Commenters indicated that the EPA's proposed baseline year, 2012, was not representati ve of emission levels in many states, and indicated that the final rule should use data from multiple years when establishing baseline emission levels for states. Commenters said that a 2010

- 2012 three

- year average

- one of the options discussed in the Oct ober 2014 NODA

- would be an improvement over the EPA's current single

- year proposal. Commenters added that moreover, in some cases, even a three

- year average could be unrepresentative of a state's actual emission profile. Commenters said therefore, the EP A should allow states to select a different baseline year or period within the previous five years if the state can demonstrate that the 2010

- 2012 baseline is not representative of affected EGUs' typical emission performance.

3

- Year or 5

- Year baseline. Com menters said that a single year will almost never be truly representative of a state's electric generating operations, and said if the EPA is going to establish438 a representative baseline, states should be given the opportunity to choose representative base lines established from averaging various years, including three to five year averages.

2012 Baseline as default, states can request alternate

. Commenters supported the EPA's original proposal to use 2012 as the default baseline year, with the caveat that t he modifications to the quantification of the RE and EE components of the state goals are necessary to avoid penalizing early actors. Commenters added, however, that the EPA should also allow a state to select an alternative baseline year if the state can show that 2012 emissions are unrepresentative and that basing state goals on the 2012 baseline year would be unfair or inequitable.

2012 as default baseline, states can request alternate year or years

. Commenters strongly supported the EPA's proposed use of 2012 as the baseline year. Commenters said it is the most recent year of available data, and is most representative of California's existing EGUs due to the closure of SONGS in early 2012. Commenters said that the California Utilities also recognize tha t a 2012 baseline year may not be representative of other states' electricity portfolios, and therefore urged the EPA to set 2012 as the default baseline year, and provide states with the ability to either request an alternative baseline year or use a mult i

- year average (e.g., 2010

- 2012).

Commenters suggest ed allowing states to identify a "baseline" year or even average several years, rather than using one data set.

Commenters stated choosing a single year, 2012, for the compliance baseline is not
represe ntative of typical operation; for example, 2012 was an outage year for OMU, meaning that heat input and emissions were not representative of a more typical or average operating year. The commenters said the rule should allow states to establish a baseline that the state believes equitably represents its circumstances; for example, EPA could allow a state to choose any three years within the most recent ten year period for which emissions data is available and then average those three years to establish its baseline for the its' compliance plan.

Commenters stated the year EPA selected as the baseline for calculating emission reduction goals

- 2012

- was not a representative year for electric generation in Louisiana because of a mild winter and historically lo w natural gas prices that led many utilities to switch to gas and reduce solid fuel generation. The commenters said for Cleco, the petroleum coke and coal

- fired fluidized bed unit, Madison 3, experienced a very low capacity factor in 2012 because it was ju st beginning commercial operation and completing the shakedown phase of its initial startup. The
commenters said in its goal calculation for Louisiana, EPA identified solid fuel generation as having a nameplate capacity of 4,727 MW in 2012, which provided 24 million MWh to the grid, resulting in a weighted capacity factor of 58.5 percent; however, if Madison 3 had been in full operation, the capacity factor of Louisiana solid fuel generation would have been 64.4% in year 2012 using nameplate capacity, resul ting in a higher goal calculation for Louisiana. The
commenters said because a single year is often a poor representation of a state's generation mix, the commenter s support ed EPA's discussion in its Notice of Data Availability regarding the use of an average of several years as the baseline for the goal calculation. The commenter s also support ed allowing states to choose their own baselines, rather than arbitrarily requiring a ll states to follow a single baseline that will inevitably be unrepresentative for at least some states.439 Commenter s stated U.S. EPA acknowledges stakeholder concerns regarding the use of the 2012 base year or the use of a single year for goal computation; further, stakeholders identified anomalies with generation in their state or at their companies for 2012. The commenters said therefore, U.S. EPA has provided eGRID data for 2010 and 2011 and is requesting comment on whether a different single data year or average of a combination of years should be used. The
commenters said U.S. EPA is also seeking comment on whether a state

- specific year or set of years is warranted. The commenter s have several concerns regarding the 2012 base year for goal computation; t he commenter s d id not believe, given the scope of this proposal, there is a one

size

- fits

- all base year that would be appropriate for all states. The commenter s asserted U.S. EPA's simplified approach to determining an appropriate base year that applies to all building blocks raises issues. The commenters said a proposal of this magnitude warrants significant analysis by individual states to determine the appropriate base line for each individual building block given their individual state characteristics f or generation, changes in diversity of the fleet, RPS programs, EE programs, etc. The commenters said if U.S. EPA moves forward with this proposal, in the spirit of "flexibility," U.S. EPA must find a more workable method to engage states in determining ap propriate baselines to mitigate the impracticality of this proposal.

Commenters stated given the diverse operating conditions and resource portfolios of the western states, using 2012 as the baseline year for the CPP has varying impacts on EPA's goal sett ing process; in effect, the baseline date can determine "winners and losers" depending on the circumstances present in a utility's system in 2012

- some of which are entirely beyond their control.

Commenters stated a single year baseline date may or may n ot reflect "normal operating conditions" for the state and its utility systems; atypical CO2 emissions due to anomalies related to climatic or weather conditions (e.g., affecting hydro power availability that can have significant effects on regions like th e Pacific Northwest), or operational challenges unique to the state (e.g., generation is offline for anticipated or unanticipated repairs; or units were run on an alternate fuel in that year due to temporary shifts in fuel and transportation costs). The

co mmenters said sometimes these circumstances may have unique and dramatic effects on a state's CO2 emissions. The commenter s recommend ed that EPA allow states greater flexibility by:

1. Allowing state to demonstrate that an alternative baseline year is more r epresentative of its annual emissions; or

2. Allowing states to establish a baseline based on an average of years within a range of
years.

The commenters said EPA and states recognize these kinds of approaches in the context of other CAA programs in order t o address similar concerns.

Comment 33: No credit is given for early reductions; interim goal is not necessary

Response 33: See section s VI and VIII of the final rule preamble of the CPP for the EPA’s response to this comment regarding the baseline year and state plans, respectively.440 The following are summaries of the specific public comments under this comment

Commenters said that the regulation as proposed does not give credit for early reductions, and therefore, if 2012 remains the year from which calculations for CO2 reductions are made, the reduction calculation should be credited from 2005. Commenters said that if th e EPA does not use 2005 for the base year, then 2012 forward should be used rather than starting in 2020.

Commenters added that there is no language in the CAA Section 111(d) to suggest an interim goal is appropriate or required. Commenters said that in p rior Section 111(d) regulations, the EPA did not propose interim scheduled reductions. Commenters said that the calculation for reductions should be no later than 2012.

Commenters stated that the EPA penalizes the early action Tampa Electric Company (TEC) and others have already taken with respect to coal plant efficiency improvements. Commenters said that TEC and many other utilities have already completed the relevant efficiency improvement projects outlined by the EPA. Commenters indicated that since 198 0, the FPSC has incentivized heat rate improvements utilizing a program called Generation Performance Incentive Factor (GPIF) Program for investor

- owned utilities. Commenters explained that targets are set annually through a formal hearing procedure, and i nvestor

- owned utilities either gain rewards or suffer penalties based on the prior year's performance compared to the previously set annual targets.

Commenters said that the EPA's goal

- setting exercise for Florida simply assumes a reduction from efficiency improvements is plausible, without due consideration of whether or not the potential measures have already been completed. Commenters said that as proposed, the EPA would arbitrarily reward those who delayed maintenance on power plants until after 2012 an d penalize others who have already completed such projects. Commenters indicated that States should be afforded the flexibility to work with the EPA to adjust the target goal if the appropriate efficiency projects that the EPA assumes are feasible have alr eady been completed or would not achieve the reduction that EPA predicts. Commenters stated that the opportunities for efficiency improvements are limited, and the resulting very low coal

- fired unit capacity factors that would result from fuel switching re nder reductions from Building Block 1 insignificant.

Comment 34: CPP gives proper recognition to existing state policies, programs and early actions to reduce CO2 emissions. CPP rate

- based goal guidelines should be retained

Response 34: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year.

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

Commenters said that in prior comments concerning the appropriate metho d for deriving CO2 reduction goals as part of an overall CO2 reduction plan, Iowa stakeholders urged the EPA to give the state credit for its existing policies, programs, and early actions to reduce CO2 emissions, and indicated that through the proposed CP P, the EPA has given appropriate recognition to existing state policies, programs and early actions to reduce CO2 emissions.441 Commenters said Iowa DOJ finds the EPA's calculation of Iowa's goals to be fair and well

founded.

Commenters urged the EPA to retai n the CPP rate

- based goal guidelines that give Iowa appropriate credit for these early

- action initiatives that reduce CO2 emissions. Commenters said Iowa consumers have paid for these early action initiatives, often at a significant premium as compared to a business as usual or more traditional system planning approach, with the expectation that they would benefit from such investments under potential future CO2 regulations.

Comment 35: Final performance level should be 3

- year average; interim goal should be eliminated and glide path should be used

Response 35: See sections VI and VIII.B. of the final rule preamble of the CPP for the EPA’s response to this comment regarding the baseline year and state plans, respectively.

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

Commenter s agree d that a three

- year average for demonstration of achievement and maintenance is an improved amount of time. Commenter s d id not agree with an established interim goal, and instead said that ther e should be a glide path with the states reporting progress to the EPA. Commenter s stated that there is no statutory basis for requiring an interim goal.

Commenters also agreed with the proposal of a final actual plan performance check using a three

- year r olling average, the first year of such a check being 2016. Commenters said that by allowing credit for EE in 2012 and beyond, the state could make a show of progress for RE and EE with the state plan submittal.

Comment 36: Baseline based on a single year of data is especially unrepresentative for states with hydropower, the EPA should either use a 10

- year average OR other multiyear average for hydro

- dependent states or allow states to determine their own baseline

Response 36: See section VI of the final ru le preamble of the CPP for the EPA’s response to this
comment regarding the baseline year

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

Commenters said that choosing any single year as a baseline unnecessarily creates th e risk that events unique to that year and state (e.g., low or high water, extended plant outages, and atypically cold winters or hot summers) will introduce bias in a manner that makes the baseline less representative of average conditions. Commenters sai d that calendar year 2012 data implies that Oregon's electricity sector has a lower emission rate than it actually does because hydropower made up an unusually large percentage of the state's power generation that year. Commenters said that in 2012 in Oreg on, the unusually large water supply and historically low442 natural gas prices resulted in Oregon's only coal

- fired power plant operating at an unusually low capacity factor of approximately 50 percent. Commenters stated that a baseline representative of

av erage conditions would be more consistent with utility planning practices and other EPA rulemakings and ease state compliance reporting and tracking. Commenters suggested two ways to make the baseline representative of average conditions and more consiste nt with utility planning processes and other EPA rulemakings: i) use a ten

- year average to set the baseline or ii) allow states to determine their own baseline through established ratemaking or utility planning proceedings.

Use of 10

- year (or multi

- year) a verage for baseline

. Commenters said that by using a ten

- year average for baseline, the EPA would capture the variability in water years, which would mitigate the likelihood that single

- year anomalies, like high hydropower production, would lead to inaccur ate emission profiles. Commenters said that the variability in water years is significant, but a ten

- year average can produce a result that is representative of an average water year. Commenters said that using a ten

- year average would create a final goal of 415 in Oregon and an interim goal of 450, representing more than a 10% change from the proposed goals.

Commenters said that while less representative of an average water year, multi

- year averages based off fewer years will also produce a result that is closer to average. Commenters said that in an effort to more closely represent average conditions, states often use multi

- year averages in ratemaking settings to moderate single year fluctuations. Commenters said that in addition to hydro conditions, multi

- year averages can smooth out unusual impacts from extended plant outages or other short term irregular market distortions, and indicated that the EPA itself uses a multi

- year average in other EPA rulings (s uch as NSR).

Allow States to determine their own baseline

. Commenters said that another possible way to make the baseline representative of average conditions would be to allow states to determine their own baseline through established ratemaking or utilit y planning proceedings. Commenters said that under this approach, the EPA would replace the baseline with guidelines that would require states to propose a baseline representative of average conditions, which the EPA would have to approve. Commenters state d that through their extensive experience in utility planning,
rate

- making, and other regulatory proceedings, states are well

- positioned to estimate the appropriate average conditions to use in establishing a baseline. Commenters said that for example, com mon practice in the Pacific Northwest is to use an "average water year" in utility planning due to the continuous and unpredictable nature of water availability. Commenters noted that in this context, an average water year does not represent averaging foss il dispatch occurring over several years, but models fossil dispatch as if a historic (e.g., 30

- or 60

- year) average amount of hydropower is placed on the electric system.

Other

. Commenters stated using the 2012 generating year as a baseline is not represe ntative

- multi year baseline is needed: EPA established state emission rate goals by first determining each state's emission rate baseline, based on electric generation in 2012. The commenters said setting a representative baseline for the State is import ant both from the standpoint of calculating the state's emissions goal and for the calculation of compliance on an annual basis. The commenters said because 2012 was an exceptionally high water year, a higher than normal amount of electricity was generated by hydro resources. The commenters said this abnormally high hydro generation displaced some thermal generation. The commenters said to ensure a more443 representative baseline period, suggest that EPA allow each state to establish a benchmark based

on an av erage of some period of years; for a predominantly hydropower state, that period should span at least 5 years. The commenters said as an example, Tacoma Power uses a 15

- year sample of historical data to produce a baseline hydrologic generation curve; entit ies, such as the No1ihwest River Forecast Center, might serve as a good source of information in devising a representative baseline for Washington State; in addition, some mechanism should be in place to normalize the year

- to

- year variations in weather and water availability.

Commenters stated EPA's arbitrary use of a 2012 baseline to determine a goal that is supposed to be a 30% carbon reduction from 2005 to 2030 does not take into account any anomalies from intermittent renewables, market changes, energy demand, supply changes, etc.; specific to Washington State, 2012 was a very high hydropower year and natural gas prices were low; this led to a significantly lower thermal dispatch than normal

- base load coal was only dispatched at approximately 32% capaci ty factor and Washington State CCCT plant dispatch was even lower (less than 21%), resulting in an abnormally low level of carbon emissions. The commenters said in Washington State the 2012 total CO2 emissions equaled 6.9 million tons, while average emissi ons from 2008 to 2012 equaled 11.8 million tons per year, meaning 2012 represents only 58% of the preceding 5 year average.

Commenters stated in response to EPA's NODA, a three year average as proposed by EPA does not adequately address hydro variability because both 2011 and 2012 were unusually high hydro seasons. The commenters said states should be allowed to either normalize according to industry standard practices or pick a year in the recent past that had close to normal hydro, such as 2008 in the Pa cific Northwest. The commenter s request ed that EPA allow states flexibility to normalize baselines for factors such as hydro conditions, which could include using a multi

- year baseline for developing state goals or using a single year within the last few y ears that is within 2% of normal conditions. The commenters said including multiple years will better represent the variability in weather and energy markets that can affect regional generation and dispatch. The
commenters said a range from 2005 to 2012, o r at a minimum a range 2008 to 2012, would more adequately represent these fluctuations. The commenters said alternatively, 2008 exhibited hydro conditions at 99% of normal, which would be a reasoned basis for selecting thermal operations in that year as t he basis for estimating dispatch of affected generating units, rather than an arbitrary selection 2012. The commenters said the EPA should ensure states have the flexibility to make reasonable normalizing adjustments to address hydro variability.

Commente rs stated as proposed, the proposed rule selects a reference year in which states like Idaho experienced higher than

- normal stream flows. The commenters said for states like Idaho that are heavily reliant on hydropower generation, that has the inevitable result of skewing our emissions levels as the state was less dependent on its out

- of

- state thermal power production due to greater use of lower

- emissions hydropower. The commenters said the region's year

- to

- year variability in stream flows and hydropower g eneration require a more accurate baseline as the foundation for its compliance targets. The commenters said EPA should instead use an average of multiple years

- at least five

- to better account for the variability in steam flows and, as a result, clean power generation. The commenters said this would better normalize and more accurately depict electricity generation conditions and minimize climate anomalies such as temperature and precipitation that may affect a state's reduction target.444 Commenters state d the proposed rule uses a 2012 baseline. The commenters said using a single year is particularly problematic in the Pacific Northwest due to the fluctuation of electric power emissions from year to year. The commenters said water supply is variable and du e to the region's reliance on hydropower, using a single year is arbitrary and can prove problematic if the year chosen is exemplifies extreme conditions. The commenters said indeed, 2012 was one of the biggest hydropower years recently, and additionally, the Boardman Coal plant had been down for maintenance during significant portions of 2012. The commenters said using such a below average thermal generation in the baseline year effectively leads to more stringent targets in the Pacific Northwest. The comm enters recommend the rule should use a five

- year average for setting a baseline and annual targets to account for the challenges of yearly water supply and hydropower variations.

Commenters stated energy production from the hydropower system in the Pacific Northwest differs significantly from year to year, due in large part to variations in precipitation. The commenters said in 2012, the Northwest experienced a high water year and consequently, higher than average generation from the 31 dams of the Federal Columbia River Power System. The commenters said EPA proposed using 2012 as the baseline year for calculating emissions goals, but an above

- average water year is inherently flawed for purposes of determining average outputs from thermal resources in the No rthwest. The commenters said this is the case because high hydropower production is typically correlated with below average thermal production. The commenters said higher production of hydropower reduces the need to generate power from thermal resources. T he commenters said therefore, using only 2012 as a baseline for purposes of the rule at hand results in a baseline choice that is not representative of a longer term average of emissions in the Pacific Northwest.

Commenters stated the final rule should all ow for year

- to

- year hydro variation. The commenters said as a hydro

- dependent region, the Pacific Northwest would be exposed to discriminatory treatment under EPA's proposal for its use of this non

- carbon emitting resource. The commenters said the Pacific Northwest hydroelectricity varies from year to year; flow and generation over the past 23 years have varied significantly due to weather conditions. The commenters said because most Pacific Northwest states depend significantly on hydroelectric generation, and have relatively little thermal generation, they will be required to rely largely on building blocks three Renewable Energy ("RE") and four Energy Efficiency ("EE") of the proposed rule to meet their emission

- rate goals.

Commenters stated the ability of the Pacific Northwest to maintain system reliability and compliance with the requirements of EPA's proposal by depending solely on building blocks three and four is extremely problematic. The commenters said energy efficiency, especially that achieved u nder a cost

- effectiveness standard, and intermittent renewable energy generation are not sufficient to economically or operationally compensate for CO2 emission in low and even average water years. The commenters demonstrated the importance of setting the baseline year to a level representative of expected average conditions; out of 80 years, Washington State would likely never meet EPA's 2030 target, whether calculated on a mass

- basis of emission

- rate basis. The commenter s illustrate d how much year

- to

- year variability exists in the historical record; this variability will continue in the future. The commenters said total estimated CO2 emissions in a year of high hydroelectricity generation are approximately 3.5 million tons. The commenters said in a low hydroelectricity generation year, emissions rise to as high as 11 million tons. The445 commenters said understanding this natural variability is critical in setting expectations for what emissions reductions are possible.

Comment 37: A 3

- year , 5

- year, or 10

- year baseline should be used for hydro

- dependent states

Response 37: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year.

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

Commenters stated that hydropower generation in Washington and other Pacific Northwest states is highly correlated with mountain snowpack which in turn correlates with winter temperature and precipitation. Commenters said, fo r instance, Washington's hydropower generation recently ranged from a low of 54.7 million MWh in 2001 to a high of 91.8 million MWh in 2011. Commenters indicated generation in hydro

- dependent states is also highly dependent upon weather cycles, such as an El Nino, and climate change may cause further variability in hydropower generation

Commenters recommended defining hydro

- dependence as those states with hydroelectric generation consisting of more than 50 percent of total instate generation. Commenters

rec ommended that for these hydro

- dependent states, if EPA has not already decided to use a five

year baseline as the standard approach, that a five

- year baseline be used for this subset of states that are reliant on hydropower for the majority of their in

- sta te generation. Commenters noted that differentiating the baseline periods of states based on shared characteristics (such as hydropower dependency) is a concept that the EPA specifically asked for comment on in the NODA. Commenters stated that the approach proposed is consistent with that concept.

Several commenters said that for states dependent on fluctuating hydrologic cycles, the baseline period for deriving baseline data (generation, emissions, capacity factors, et al) should be 10
years. Commenters s aid at a minimum, a 5

- year average should be used. Commenters said at a minimum the EPA should consider an average of no less than three years, which better represents a "typical" profile. Commenters indicated that for Montana and other states of the Pacif ic Northwest, the amount of thermal generation online is highly dependent on the hydrologic cycle, and even a three

- year baseline would not serve to normalize the performance of the fleet in those states. Commenters recommended that hydro conditions be no rmalized through the use of a 10

- year period or through another method that identified an average water year for the region and the consequent run times of local thermal generation. Commenters also indicated that the use of any single year for baseline wi ll also lead to unrepresentative estimates of non

- hydro dependent states' emissions, levels of energy efficiency performance, renewable energy generation, etc., and suggested a multi

- year baseline would be more representative.

Comment 38: 2012 was a very good hydro year, and not typical. Good hydro years translate into de creased fossil fuel generation446 Response 38: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year

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

Commenters stated EPA is mistaken in assuming that by excluding existing hydroelectric generation from consideration in the rule that variability in annual electricity generation from existing hydr o facilities will not create problematic levels of variability in the electricity generation from fossil

- fuel fired power plants from one year to the next; this is especially the case in regions of the country where hydroelectric generation represents a si gnificant percentage of total electricity generation. The commenters said for Montana, a good hydro year can generate as much as twice the electricity from dams located in the state as during a bad hydro year. The
commenters said in good hydro years, fossi l fuel

- fired power plants, which are primarily coal plants in Montana, operate less while they operate significantly more in bad hydro years.

Commenters said key to the potential validity of EPA's proposed rule, 2012 was a good hydro year for the Pacific Northwest, which in turn significantly depressed electricity generation from affected coal and natural gas facilities across the broader region, including in Montana. The
commenters said EPA's implicit assumption in setting each state's emission rate goal is that hydro generation in future years will reflect generation in 2012. The commenters said this assumption is overly optimistic for Montana and the greater Pacific Northwest; future years' electricity generation and carbon emissions for Montana's affect ed EGUs are likely to be significantly higher than they were in 2012, in part because Montana's hydroelectric generation in 2012 was more than 1,300 GWh more than the state's 2003

- 2012 10

- year average; the 1,300 GWh of above average hydro generation in 201 2 is equal to almost 5 percent of the state's total generation in 2012.

Commenters stated the year 2012 was one of the two highest hydroelectric generation years this century for the Columbia River basin. The commenters said as noted by the U.S. Energy Information Administration (EIA) in June of this year, "Hydroelectric power plants located on the river and its tributaries account for 29 gigawatts (GW) of hydroelectric generating capacity and contributed 44% of the tota l hydroelectric generation in the nation in 2012." The
commenters said the 2012 hydroelectric generation rate in Washington State was 19% higher than the average generation rates from 2001 through 2013 based upon the EIA data; the hydroelectric generation rate in Washington State varies substantially from year to year, as does the portion of power generated by hydroelectric generation. The commenters said the EIA noted, "Hydroelectric supply can have implications for the dispatch of other generators (such a s wind turbines, thermal generators, and the Columbia nuclear station) in the Pacific Northwest, where four states (Washington, Oregon, Idaho, and Montana) host 35% of U.S. hydroelectric capacity." The commenters said the very high hydroelectric generation in 2011 and 2012 resulted in much lower generation rates from TCG during those years than are considered normal operation. The
commenters said the variability of hydroelectric generation cannot be accounted for in setting State goals for Columbia River Ba sin States utilizing data from any single year, especially 2012. The commenters said a long

- term average must be used to set the goals and to determine State performance against the goals. The commenters said an average of at least ten years is needed to

a chieve reasonably stable hydroelectric generation rates; at a minimum, a 10

- year average baseline period is needed to set goals for States in the Pacific Northwest. The commenters said447 analysis of a larger set of annual data than the 13 years available on the EIA website may lead EPA to choose an even longer baseline and compliance averaging period than ten years. The
commenter s request ed that EPA use, at minimum, a ten

- year baseline for hydroelectricity production to set goals and compliance requirements f or States in the Pacific Northwest; this change will more appropriately reflect the variability that hydroelectric power production has on a state wide emission factor.

Commenters stated hydropower generation in the Pacific Northwest varies considerably fr om year to year, which can impact the level of thermal generation, and thus emissions, in the region. The commenters said the Proposal uses 2012 as the "baseline year" to calculate state emission goals, and the EPA specifically solicits comment on the use of this single year as the baseline in its October 27, 2014 Notice of Data Availability. The commenters said there is an inherent amount of variability in FCRPS generation from year to year depending on precipitation level and timing, reservoir conditions, and other variables. The commenters said the level of hydropower generation, along with other factors, can impact the level of thermal generation in the region in any given year. The commenters said in the Pacific Northwest, 2012 was a high water year res ulting in greater than normal hydropower generation.

Commenters said states with large amounts of hydropower may experience yearly variations in thermal generation. The commenters said the Pacific Northwest has often experienced cases where a strong hydro production year contributed to conditions for a low thermal (natural gas and coal) production year; 2012 is an example of such a year. The commenters said the use of 2012 as the baseline year, where hydro production was above average and thermal productio n was below average, could lead to more ambitious emission reduction goals than the use of a different year; similarly, the use of a below average hydro production and above average thermal production year as a baseline year could lead to less ambitious ca rbon reduction goals.

Commenter s asserted that climate change may increase the variability on the FCRPS in the future; recent studies, including the latest information from the Intergovernmental Panel on Climate Change (IPCC), agree that Columbia Basin we ather will likely continue to warm. The
commenters said this warming will cause more precipitation to fall as rain in the winter rather than snow, resulting in increased river flows in winter and early spring, reduced flows in summer and new challenges for future river operations and planning.

Commenters stated the Pacific Northwest benefits from a large base of emissions

- free hydroelectricity generation. The commenters said thermal plants constitute a smaller percentage of overall output (approx.18%) rel ative to other regions of the country and certain states have very few such plants subject to regulation under the EPA proposal. The commenters said for example, Idaho has only two thermal plants that would be impacted by the EPA proposal. The
commenters s aid both plants operated at a low level in 2012, relative to the expected long term average, because the region experienced an above

- average water year. The commenters said the implications of the 2012 baseline are magnified in Avista's Idaho service terri tory because the state has only two natural gas

- fired plants falling under proposed 111(d) regulation. The
commenters said one of the two, the 318

- MW Langley Gulch plant owned by Idaho Power, came online late in calendar year 2012 and operated at a 15% ann ual average capacity factor. The
commenters said this level is well below the level operated at similar plants. The commenters said having almost identical operating characteristics and integrated similarly in the marketplace,448 the plant operated in 2012 wi th a capacity factor of one

- third that of Rathdrum Power, the only other Idaho regulated plant.

Commenters stated 2012 was an above

- average hydro year, causing baseline CO2 emissions in Washington and the Pacific Northwest to be artificially low. The com menters said 2012 carbon emissions in Washington State were 5.5 million tons lower than the 10

- year average due to above

- average hydroelectricity generation. The commenters said this figure is significant, given the 2012 actual CO2 emissions of approximate ly 7 million tons for the state, and EPA's goal to reduce those emissions to approximately 2.5 million tons by 2030.

Comment 39: Use of 2012 as base year is arbitrary

Response 39: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year

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

Commenters disagreed with the whole concept of using a baseline year for establishing BSER in the proposed rule, and sai d that any legal emission standard should be based on what is technically and economically achievable in any given state. Commenters said it is arbitrary to establish standards for states by superimposing "what other states have been able to achieve" in

e ach of the four building blocks, and it is equally arbitrary to establish standards based upon an average of "what other states have been able to achieve". Commenters contended that each state has a unique generation and dispatch profile, demand profile, weather profile, customer profile, and economic profile, as well as unique customer growth, reliability considerations, and renewable energy resources.

Commenters indicated that the EPA's choice of 2012 as the base year is arbitrary, that 2012 in particula r was highly unusual and therefore unrepresentative, stated that no single year or several years combined is representative of current conditions, and said that the EPA's selection of 2012 as the base year creates large and disparate impacts for wholly arb itrary reasons.

Commenters stated that the EPA's selection of 2012 as the base year is particularly arbitrary, because it was a highly unusual year in the energy sector. Commenters said that because natural gas prices were historically low in 2012, natura l gas generation was historically high and has since abated somewhat. Commenters said that because of the relatively large amount of natural gas generation relative to coal in 2012, electricity sector CO2 emissions in that year, as well as coal generation CO2 emissions, were also significantly lower than they had been previously, and have since increased. Commenters added that the fact that 2012 was a high water year in the Pacific Northwest also made it an atypical year. Commenters said that these facto rs combined mean that the EPA has set an artificially low baseline for further CO2 emissions reductions, and said the EPA has provided no justification for determining that the year with high amounts of gas generation, low amounts of coal generation, and t he low energy sector CO2 emissions is a representative year for projecting future performance

- there is none.449 Commenters said that given the dynamic nature of the electricity system and the national economy, no one year, or even several years combined, is representative of "current" conditions for the purpose of establishing a baseline that will then be used to measure future performance over the long

- term. Commenters said that for instance, selecting 2006 as the baseline would be arbitrary because it woul d exclude the recession, but selecting 2007 or 2008 as the baseline would be arbitrary because it would be dominated by the effects of the recession. Commenters indicated that even selecting the average of 2006

- 2012 as a baseline would be arbitrary because it cannot be said that those years are representative of the past or expected future conditions. Commenters said that the EPA's NODA recognizes that selecting the single year of 2012 as the base year is arbitrary and seeks comment on whether another year of an average of multiple years should be selected, but added that any year or combination of years that the EPA selects will be arbitrary and will produce winners and losers based on nothing more than the base year.

Commenters stated that the EPA's select ion of 2012 as the base year creates large and disparate impacts for wholly arbitrary reasons. Commenters said that for instance, the amount of natural gas combined cycle generation produced within a state in 2012 has a significant impact on the state's ul timate emission rate "goal" because the 2012 capacity factor for existing natural gas units within a state determines how far the state must go to achieve EPA's 70% capacity factor assumption. Commenters said that natural gas combined cycle units in Virgin ia, for example, operated at a 60% capacity factor in 2012, and that as a result, increasing the dispatch of those units to 70% does not displace as much coal

- fired generation as a state with lower 2012 capacity factors, such as Nebraska, where existing co mbined cycle units operated only at a 10% capacity factor in 2012. Commenters said that because of the differences in the 2012 baseline underlying the EPA's goal calculations, the EPA's calculation of Virginia's goal assumes Virginia need only increase nat ural gas generation by one

- quarter of its 2012 levels, whereas the EPA's calculation of Nebraska's goal assumes that state must increase its natural gas generation six

- fold. Commenters said that if the EPA had selected a different year in which Virginia an d Nebraska operated their combined cycle units at different levels, their goals would be different.

Commenters added that even non

- emitting generation resources and energy demand in 2012 can have a significant impact on a state's interim and final goals. Commenters said that for instance, states with relatively high renewable generation in 2012 compared to their neighbors may not have as far to go to achieve the regional targets established by the EPA, whereas states with relatively low renewable generati on in 2012 may have to ramp up generation from those resources much more quickly and extensively. Commenters said that likewise, states that achieved significant energy savings through existing demand side management programs in 2012 may be better position ed to reach the EPA's one

- size

- fits

- all energy savings rate goal in the future. Commenters said yet if EPA had selected a different baseline year in which these same states produced lower amounts of renewable electricity or energy efficiency, these states' goals would be different.

Commenters added that selecting 2012 as the base year also produces anomalies due to plant outages, etc. Commenters said that due to a fire that kept the largest coal fired unit in Minnesota (Sherburne County Unit 3) offline for the entire year, the EPA's decision to use 2012 as the single baseline year in its analysis resulted in an unrealistically low baseline of coal

- fired generation in Minnesota, which presumably will make compliance with the even lower targets450 set by the EPA that much more difficult. Commenters indicated that other anomalies likely exist in other states.

Commenter s found the use of 2012 as the sole source of baseline data problematic in the overall operation of the building blocks. The commenters said EPA's s uggestion that renewables and energy efficiency might displace fossil fuel

- fired generation is not realistic. The commenter s

were also concerned that the four building blocks proposed by EPA do not work together as a concerted system and are, in fact, some times in tension with one another.

Commenters stated selection of 2012 as the base year is arbitrary. The commenters said given the dynamism of the electricity system and the national economy, no one year, or even several years combined, is representative of "current" conditions for the purpose of establishing a baseline that will then be used to measure future performance over the long

- term.

Commenters stated for instance, selecting 2006 as the baseline would be arbitrary because it would exclude the rece ssion, but selecting 2007 or 2008 as the baseline would be arbitrary because it would be dominated by the effects of the recession. The commenters said even selecting the average of 2010, 2011, and 2012 as a baseline would be arbitrary because EPA has
not demonstrated that those years are representative of the past or expected future conditions in North Dakota.

Commenters stated to ensure a more representative baseline period and provide some partial credit for early actions, EPA should set the baseline lev els for computing the state goals based on a recent multi

- year period prior to 2012. The commenters said following the approach used in other Clean Air Act regulatory programs, EPA should allow Montana to select a more representative baseline

- and one that receives credit for all "early action efforts."

Comment 40: 2012 baseline values are not representative

Response 40: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year

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

Commenters stated to the extent that EPA determines that Idaho must meet a specific emission rate under the proposed rule, EPA must use baseline operating values and emission rates that
app ropriately characterize state generation and CO2 emissions levels in order to set rational, achievable, and non

- arbitrary state performance goals. The commenters said EPA's 2012 baseline emission rate for Idaho is not representative; specifically, EPA fail ed to appropriately characterize generation levels for Idaho Power's Langley Gulch NGCC plant. The commenters said EPA's understatement of Langley Gulch's operations and Idaho's baseline emissions results in an artificially low and arbitrary performance go al for Idaho that is not reasonably achievable.

Comment 41: 2012 Not Representative for Baseline

- state specific comments451 Response 41: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year

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

Idaho

Commenters stated in its goal

- setting analysis, EPA identifies two "existing" NGCC plants that were in operation in Idaho as of the end of 2012

- Idaho Power's Langley Gulch plant and the Rathdrum LLC plant. The commenters said EPA used the operating data from 2012 for those plants in determining baseline emissions and setting the Idaho state performance goals; however, EPA failed to take into account that Langley Gulch , a newly constructed $400 million unit, was not commissioned until June 29, 2012; thus, the 2012 operating data for Langley Gulch used by EPA in its baseline include only a partial year of operation and significantly understates the anticipated future cap acity factors. The commenters said specifically, EPA took the capacity factor of approximately 37% for the six months the plant operated in 2012 and annualized it to derive an overall 2012 capacity factor of only 15.2%. The commenters said not only does EP A's calculation fail to adjust for the six months of non

- operation prior to the plant's commissioning, but it also fails to recognize that the period after commissioning a new unit includes periods that do not represent normal operation conditions.

Commen ters stated by comparison, the plant operated in 2013 at an annual capacity factor of approximately 46% and projections for future use are much higher; EPA's reliance on the partial year data resulted in an underestimate of overall Idaho NGCC generation in the 2012 baseline and an inaccurate baseline capacity factor for both NGCC units of only 30%.

Commenters stated EPA's underestimate of NGCC generation in the 2012 baseline substantially impacts Idaho's and Idaho Power's ability to achieve future complian ce while meeting customer demand. The commenters said through EPA's goal

- setting process, the underestimated NGCC baseline component translates directly into a lower state performance goal for Idaho. The
commenters said the real

- world compliance effect is to severely constrain the future (post

- 2020) use of Idaho's existing NGCC resources, including the brand new Langley Gulch plant. The
commenters said given the disparity between the interim (244 lbs/MWh) and final (228 lbs/MWh) goals for Idaho, which are based on an inaccurate 2012 baseline rate (339 lbs/MWh), and the emission rate for Langley Gulch (approximately 850 l bs/MWh), compliance can only be achieved, if at all, when existing NGCCs are limited to very low c apacity factors associated with extreme peaking operation. The commenters said the limitations necessary to achieve compliance would thus severely impact Idaho utilities ability to meet load and maintain reserve requirements. The commenters said EPA's over ly stringent performance goals could force Idaho Power to virtually idle the brand new $400 million Langley Gulch plant while building new NGCC capacity and/or using peaking units with substantially higher costs and carbon intensity that would be outside t he scope of Section 111(d). The commenters said this outcome would have substantial impacts on customers, both in terms of the diminished utilization of Langley Gulch and the additional costs of building or obtaining comparable replacement generation. The
commenters said in addition, any new NGCC capacity built would be subject to a higher emissions limit under the proposed Section 111(b) standards and could ultimately produce452 greater total carbon emissions. The commenters said this result demonstrates the arbitrary and capricious nature of EPA's state performance goals for Idaho in the proposed rule.

Iowa, Minnesota and South Dakota

Commenters stated to calculate the state goals, EPA started with the combined 2012 CO2 emission rate for each state's covered fossil fuel

- fired power plants. The commenters said using a single year as the starting point to calculate the rate

- based goals for each compliance period fails to take into account data anomalies that can occur in any given year, and did in fact occur in 2012. For example, the commenter s have identified data anomalies in three states in which MRES serves members: Iowa, Minnesota and South Dakota, as well as an anomaly in the operation of LRS.

Commenters stated in Iowa, the City of Pella Municipal Power P lant is identified as an affected unit, but was retired in 2013 and did not emit any tons of CO2 in 2012.

Commenters stated in Minnesota, Sherburne County Generating Station (Sherco) Unit 3 was offline for all of 2012 due to an unplanned outage, making th e starting point of Minnesota's goal calculation atypical. The commenters said this should be corrected, as Minnesota will continue to rely on this generating unit (approximately 900 MW) for the duration of the planning period, and likely beyond; further, Hutchinson Plant #2 is erroneously categorized as an affected unit, even though it does not meet the criteria because its average annual operation has been below 219,000 MWh threshold. The commenters said the Hutchinson unit should be removed from the list of affected units, and the goal recalculated for Minnesota. The commenters said a significant forced outage at Laramie River Station in 2012 makes the selection of that single year unrepresentative of generation at LRS. The commenters said the operating h ours for 2012 for Unit 1 were less than 60% of normal because of a long forced outage caused by a fire; the 2012 data for LRS is not representative of normal source operations for LRS Unit 1.

Commenters stated in South Dakota, Deer Creek Station, the only NGCC plant in South Dakota, was modeled by EPA as operating at 1% 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
commenters said while firing of the unit may have begun in April, it was not commercially operated for the bulk of the year. The commenters said the 1% capacity factor is clearly unrepresentative, and South Dakota was the only state that had a less than 10% NGCC capacity factor applied in EPA's building block 2 calculation.

Comment 42: Tribal and Territorial Supplemental

- 2012 not representative; earlier baseline should be used (e.g. 2005) to allow credit for early r eductions. Emissions reductions that will occur due to compliance with other rules should be recognized by the EPA; Navajo Nation is not like a state

Response 42: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year

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

Responding to the Tribal and Territorial supplemental proposal, several commenters said they support using alternatives to the 2012 base year because 2012 was an unusually low year for coal generation. Several commenters said that according to the Proposed Rule, "Nationwide, by 2030, this rule would achieve CO 2 emission reductions from the power sector of approximately 30 percent from CO 2 emission levels in 2005." Several commenters said that in fact, throughout the Proposed Rule comparisons are made to 20 05 emissions, and therefore the EPA should look as far back as 2005 for an appropriate representative baseline year. Several commenters indicated they understand the EPA's desire to have consistency between jurisdictions in establishing base years, and sug gested using the highest base year generating level at least looking back to 2005 would be reasonable in establishing the base year for fossil generation. Commenters said that using averages for the base generation is not an appropriate approach since it d oes not account for changes that were beyond the EGU owner's control. Commenters urged the EPA to consult with the Navajo Nation prior to issuing a final rule in order to determine which year between 2005 and 2012 is the most representative of operations at NGS and FCPP.

Several commenters said that EPA should use a historic baseline rather than the year 2012. Several commenters said that high gas usage in 2012 due to the presence of unusually low gas prices, combined with continuing depressed economic co nditions, resulted in a lower dispatch rate for NGS and FCPP in 2012. Several commenters said it is therefore encouraging that EPA is open to looking to other years to serve as a baseline in calculating emissions. Commenters said that the baseline rate sh ould be set based on historic emissions that are representative of historic CO2 emissions at FCPP and NGS. Commenters recommended that the EPA allow a look

- back to 2005 in order to establish a more representative baseline
year. Commenters said the use of a baseline year back to 2005 is justified because it is the baseline year that the EPA is using for assessing the total carbon reductions, and 2005 has also been used as a baseline year with international actions. Several commenters stressed that the emiss ions rate that will be established for the Navajo Nation must be sufficiently high to be able to accommodate the options available to NOS under EPA's Best Available Retrofit Technology determination under the Regional Haze Rule. Approval of Air Quality Imp lementation Plans; Navajo Nation; Regional Haze Requirements for Navajo Generating Station, EPA

- R09

- OAR

2013

- 009. Commenters indicated these options are identified in Appendix B of the Technical Work Group (TWG) agreement as "Alternative A" and "Alternativ e B."

Commenters stated that carbon emissions will decrease at the two power plants (FCPP and NGS) as a result of previous rules promulgated by the EPA, and the effect this will have on the Navajo Nation's coal

- based economy should be recognized by the EPA

. Commenters said that the Navajo Nation's economy is severely underdeveloped, and the Navajo people are currently experiencing an unemployment rate of a staggering 52%. Commenters said that many of the Navajo people live in extreme poverty, with 32% lack ing electricity, 31 % lacking complete plumbing, 38% lacking water services, 28% lacking kitchen facilities, and 60% lacking a telephone. Commenters emphasized the Navajo people cannot absorb the detrimental economic effects that will come with unit shutdo wns and decreased coal production at the two power plants located on their lands. Commenters added that the Navajo Nation government has also seen a significant decrease in its revenue, which weakens its sovereignty and forces it to become more dependent u pon the federal government to provide essential services to the Navajo people.454 Commenters stated that the power plants and the Navajo Nation have already taken measures that have yielded substantial reductions in CO2 emissions, and said some credit should be given to the Navajo Nation for those efforts. Commenters said that the Parties have already begun discussing possible allocations of CO2 credits, and indicated there is general agreement between the Parties that the owners of NGS and FCPP need sufficien t credits to assure the ongoing operation of these power plants, along with the concept that the Navajo Nation would receive some sort of economic benefit if credits were used off tribal lands. Commenters said the Parties are also exploring opportunities f or the Navajo Nation to retain excess credits that can be used for the benefit of the Navajo Nation. Commenters said that building flexibility into the Navajo Nation's emissions rate (i.e., giving the Navajo Nation a more favorable emissions rate) gives th e Navajo Nation the opportunity to develop a carbon trading program and participate in a multi

jurisdictional program, and also gives the Navajo Nation an effective tool to assist it in determining its own economic future and lessens the need for reliance on the federal government for assistance.

Several commenters added that the EPA must also realize that the Navajo Nation is not like a
state

- among other things, states have diverse economies, while the Navajo Nation's economy is severely underdeveloped. Several commenters said that States have the ability to absorb occurrences like EGU shutdowns and job losses, but the Navajo Nation does not. Several commenters added that the Navajo people are facing economic hardships that are much more severe overall t han those in the states, with many Navajos living in extreme poverty.

Commenters stated EPA's use of 2012 emissions data in applying Building Block One to Bonanza fails to recognize that 2012 was not a typical year. The commenters said the goal calculation for the Uintah

- Ouray Reservation is based on a single data point from a single operating unit

- the 2012 emissions at Bonanza unit 1. The commenters said EPA 's Technical Support Document utilized the 2012 Bonanza emissions rate of 2145 lbs./MWh and reduc ed it by 6% and 4%, respectively to obtain the 2,016 and 2,059 lbs./MWh alternative building block one goals for the reservation. The commenters said unlike goal computation for multi

- source jurisdictions, where variation in operating levels from one unit to another tend to offset and diminish when averaged over multiple units within a jurisdiction, the selection of a single year's data for a single unit does not produce representative results for future operations.

Commenters stated using 2012 for calcula ting possible HRI for Bonanza Unit 1 is particularly inappropriate and unrepresentative because 2012 was the third best year within a ten year operating period in terms of carbon dioxide emissions/per electric output. The commenters said there is no reason to assume that the unit could meet that rate in future years, much less achieve the additional reduced emissions EPA expects from building block one. The commenters said the use of 2012 year "single point" data as a baseline for Bonanza Unit 1 carbon diox ide emission rate presents an unrepresentative characterization of the unit's normal operations. Specifically:

1 ) 2012 was a major planned outage which involved a major turbine generator overhaul. The
commenters said as part of the 2012 major outage, the generator turbine at Bonanza underwent a major overhaul for the first time in years. The commenters said as part of the 2012 overhaul, seals were replaced, reducing leakage from years of wear, and the unit experienced temporary marked improvement in carbon dioxide emission rate which, as the data indicates, did not455 continue in following years due to normal wear

- in of equipment and plant systems, as is typical following such an extensive overhaul outage

2 ) Unit heat rate, and therefore carbon dioxide emissi on rates, immediately following the 2012 major unit outage were significantly better than average unit heat rate over multiple years. The
commenters said the Bonanza Unit heat rate typically exhibits marked improvement in the months immediately following m ajor maintenance outages. The commenters said such outages do not occur each year; and the 2012 outage was especially rigorous in that it involved a protracted overhaul of the turbine generator

- an occurrence which occurs only once or twice in a decade. T he commenters said as part of such an overhaul (especially involving turbine overhaul), many plant systems are attended to, with significant replacements taking place to address wear issues over the years' interval between such outages. The commenters said naturally occurring degradation through wear of seals and other parts once again commences following such outages thus giving the year in which such an outage occurs an unusually low (better) heat rate than is representative of the unit's actual performan ce and capability when measured over multiple
years.

Comment 43: T&T Supplemental

– The EPA should use a historic baseline rather than the year 2012

Response 43: 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:

Commenters stated, the Navajo Nation should be given a more flexible emissions rate than what is currently stated in the Proposed Supplemental Rule. The commenter s asserted th at the rate should be set based on historic emissions that are representative of historic CO2 emissions at FCPP and NGS; accordingly, instead of using 2012 as the baseline year, EPA should allow a longer look look

- back period for purposes of establishing a more representative year.

Commenters stated the power plants and the Navajo Nation have already taken measures that have yielded substantial reductions in CO2 emissions. The commenters said some credit should be given to the Navajo Nation for those effor ts. The commenters said building flexibility into the Navajo Nation's emissions rate (i.e., giving the Navajo Nation a more favorable emissions rate) gives the Navajo Nation the opportunity to develop a carbon trading program and participate in a multi

- jur isdictional program; it also gives the Navajo Nation an effective tool to assist it in determining its own economic future and lessens the need for reliance on the federal government for assistance.

Comment 44: Due to variability in coal constituency and other factors, a single year baseline is inappropriate for Bonanza Unit 1 on Uintah

- Ouray Reservation. Instead a 5

- year average (2008

- 2012) should be used as baseline456 Response 44: See section VI of the final rule preamble of the CPP for the EPA’s respo nse to this
comment regarding the baseline year

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

Commenters said the Bonanza Unit 1 on the Unitah

- Ouray Reservation relied on one single source of coal for all of its primary fuel requirements in 2012 and most other years. Commenters said that source, a dedicated Mine located 35 miles away from the Unit, has no coal sorting or blending facilities, is not located within practical distance of any coal delivery or coal market faci lities, and must mine the coal ahead of its one long

- wall mining system as that coal exists. Commenters said as a result, the fuel variability at Bonanza Unit 1 differs greatly from one year to the next and for portions of the year as the Mine retreats th rough various pockets of differentiated coal reserves. Commenters said the effect on carbon emission rates can be dramatic both because of the nature and speed with which coal delivered into the Unit can change, but also because of challenges in operating the Unit systems at optimal configuration to address sudden changes and swings in coal constituency. Commenters said 2012 did not reflect representative carbon emission rates over the extended period of operations at Bonanza Unit 1

Commenters said the Supp lemental Proposal uses a historical baseline emissions rate of 2,145 lb/MWh for the Bonanza unit

- as the only generating source within the Uintah

- Ouray (UTE) Reservation. Commenters said based on the foregoing historical figures, and given the factors cited above for not relying on one single operating year data, Deseret urges that the appropriate representative baseline carbon dioxide emission rate should be adjusted for Bonanza Uni t to use the 5 year average period (2008

- 2012) which increases the baseline emission rate to 2,173 lb/MWh.

Commenters stated operations of Bonanza during 2012 do not reflect normal or representative operations of the Unit for purposes of setting standards intended to be attained over long periods. The commenters said the Interim Goal compliance period under the Supplemental Proposal encompasses the years 2020

- 2029, a multi

- year period during which operations at Bonanza are anticipated to vary depending on a number of factors. The commenters said factors that existed during 2012 which render that year unsatisfactory as a representative year to use for converting to a mass based standard include:

2012 was a year of an unusually extended outage planned for re pair, replacement and inspection of the turbine generator at Bonanza. The commenters said 2012 was a major maintenance outage year for Bonanza Unit 1. The commenters said such planned maintenance outages are not scheduled every calendar year at Bonanza Uni t 1. The commenters said the unit is designed and intended to run for many consecutive months (more than one calendar year) between major planned outages; moreover, to preserve a warranty from its equipment manufacturer, Deseret committed to a very lengthy planned maintenance outage to occur on or before the close of the year 2012 in order to facilitate an internal inspection of the generator turbine assembly

- an event that was not scheduled for some 12 years going into 2012, and would not be expected to b e repeated for another 6 to 10 years thereafter.

Deseret adjusted the dispatch order of its generating resources in 2012. The commenters said although Deseret owns and operates one generating facility, Bonanza Unit 1, it also has a457 minority interest in the Hunter 2 unit operated by PacifiCorp. The commenters said in managing its load and resources, Deseret has in limited circumstances re

- designated the order of dispatch between the Bonanza unit and its entitlement to output from Hunter 2 to reflect specific , isolated events or circumstances. The commenters said these "re

- dispatch" decisions are a

- typical, infrequent, and usually extend for a few months' time. The commenters said during 2012 Deseret

re

- ordered the dispatch of its generating resources such tha t, for the entire year 2012, Bonanza was dispatched down, therefore generating less, and the Hunter 2 unit dispatched to a higher output level than during typical operating conditions. The commenters said the re

- dispatch decision in 2012 reversed the usual order in which these two generating resources are dispatched. The commenters said the cause for the 2012 re

- dispatch decision revolved around challenges that Deseret anticipated in potential short

- term disruption in coal deliveries to Bonanza. The
comment ers said in order to preserve and stockpile fuel stock at Bonanza against the risk of short term supply disruption, Deseret took the unusual step of re

- ordering the dispatch points between its resources; this results in skewing the 2012 operating level and results.

Commenters said operating data for Bonanza Unit 1 demonstrate that the Equivalent Availability Factor for the unit was 88.18% during 2012; this compares with EAF for 2011 (the preceding year) of 93.51%, and 2013 (the subsequent year) of 94.44%; likewise, Net Capacity Factor in 2012 was only 76.91%, which is much lower than the 87.59% the following year and 82.40% the previous year ; 2012 was clearly not representative.

Commenters stated EPA has recognized and invited input from affected jurisdicti ons which would be unusually and unfairly disadvantaged by choosing 2012 as a baseline period due to unique circumstances. The commenters said the Uintah

- Ouray Reservation is just such a jurisdiction.

Commenters stated unlike standards set for multi

- sourc e jurisdictions, the Uintah

- Ouray emission source is one single unit

- Bonanza Unit 1; it is therefore not like states which aggregate and therefore "average" among several or multiple emitting units events or occurrences that are not annual or more freque nt in nature

- in most situations, the frequency and/or duration of planned outages, for one example, would tend to "average out" among multiple units, precisely because most operators avoid scheduling prolonged outages simultaneously with outages schedule d for multiple units under that operator's control. The
commenters said Deseret and the Bonanza Unit 1 has no such offsetting opportunity; it is therefore inappropriate to base the historic emission rate baseline on any single year.

Commenter s urge d a mul tiple year period as a baseline determination. The commenters said overall, operating levels at Bonanza Unit 1 were the very lowest during 2012 of any of the 10 years beginning 2004 through 2013; 2012 operating levels and emissions results do not fairly

re present a valid baseline from which to derive a baseline for computing goals under the Supplemental Proposal.

Comment 45: Territories. The EPA should allow Puerto Rico to use 2014 as the baseline period for AESPR, as the current calendar year is more rep resentative of CO2 emissions from AESPR's458 Facility. Alternatively PR should calculate baseline using any two consecutive years out of last 5
years
Response 45: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment reg arding the baseline year

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

Commenters said in its proposal, the EPA has used 2012 as the "baseline" year from which reductions in CO2 emissions would be measured in Puerto Rico , the same baseline year EPA has proposed for facilities in the rest of the United States

. Commenters again urged the EPA to reconsider its one

- size

- fits

- all approach because there are "specific circumstances" which justify using a "different data year for" Puerto Rico "as opposed to using the same data year, or combination of years," as the EPA has proposed across the 50 states. ( 79 Fed. Reg. 64,543, 64,553 (Oct. 30, 2014) (seeking comment on use of 2012 as a single baseline year in EPA's proposal for the 50 states) )

. Commenters said rather, if the EPA proceeds with this approach to determine the BSER when setting a CO2 emissions goal for Puerto Rico, the EPA should allow Puerto Rico to establish a baseline for each of its sources that is representative of expected operations for each source. Commenters said for AES Puerto Rico, that representative baseline is the current calendar year, 2014.

Commenters said in general, establishing a baseline that is representative of current facility operations simply reflects common sense. Commenters said a single historic year may be an anomaly that is not representative of current or historic operations. Commenters said there may have been an extended outage due to a major maintenance

- or an unusually high forced ou tage rate

- or simply a downturn in dispatched generation for any of a number of reasons. Commenters said is arbitrary for the agency to set a baseline

- and derive reductions from that baseline

- without first considering the specific circumstances in a s tate or territory or at a particular facility within the state or territory. Commenters said otherwise, a source could be forced to make additional reductions from an already atypical, reduced operating level.

Commenters said to provide for a representativ e baseline year is especially critical here, because using a 2012 baseline would require AESPR to dramatically reduce its operations by more than 25% below 2014 operating levels in 2020. Commenters said yet, 2012 would not be representative of either AESPR 's current or historic operations

- or the operating level expected going forward.

Commenters said on the contrary, calendar year 2014 has been the culmination of sustained efforts by AESPR management to maintain their units more effectively in order to re duce the equivalent forced outage rate (EFOR) at its facility and achieve the equivalent availability factor (EAF) of 90% expected under the PPA. The commenters said the data in this regard are very clear: In 2012 the equivalent forced outage rate (EFOR) f or the AESPR plant was 9.43%. Commenters said by contrast, the EFOR for AESPR in 2014 was 1.69%, in line with the expectation for properly maintained CFB units. Commenters said similarly, in 2012 the EAF was 82.15%

- while the EAF in 2014 to date has been 91.17%. Commenters said with the increased availability and reliability, AESPR has produced substantially more electricity for PREPA in 2014 than in 2012

- the net capacity factor (NCF) for AESPR in 2012 was only 80.94%, but has45 9 been 91.68% during 2014. Co mmenters said moreover, PREPA has forecast that it expects to continue to purchase electricity from AESPR in the range of the 2014 production levels in coming years.

Commenters said in the alternative, the EPA should allow Puerto Rico to establish a baseli ne for BSER by averaging any two consecutive years of operations in the past five years as representative of normal operations. Commenters said setting a baseline based on a two

- year average would follow the same approach the EPA itself has used when setti ng a baseline under the New Source Review requirements of the federal Clean Air Act. 57 Fed. Reg. 32,314, 32,325 (July 21, 1992) (discussing presumption that any two years in the five years preceding a physical change would be considered representative of normal operations for the source); see 40 C.F.R. section 52.21(b)(48)(i) (regulation establishing the presumption of two years as the baseline).

Comment 46: As is proposed rule won't accomplish reductions needed. For meaningful comparison the Proposed Rul e's reduction targets should be articulated and evaluated in comparison to emissions in 1990, the internationally

- accepted year, not 2005

. Response 46: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year

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

Several commenters said the emissions reductions that would be achieved by the Proposed Rule will not achieve the emissions reductions needed to avoid the worst of climate change. Several commenters said that to be able to make meaningful comparisons, the proposed goals should be compared to a baseline of 1990, the internationally

- accepted baseline year, not 2005.

Commenters said the EPA expresses the Proposed Rule's targets as a 30% decrease in existing plant emissions by 2030 as compared with baseline emission levels in 2005. Commenters said because emissions in 2005 were, however, higher than those in 2012 (the last year f or which EPA has published comprehensive inventory data), the Proposed Rule will, by 2030, result in only about a 17% reduction from 2012 power sector emission levels. Commenters said the Proposed Rule also omits any comparison with emission levels in1990, the internationally agreed

- upon emission baseline year. Commenters said given the proper 1990 baseline, this proposal amounts to a reduction of less than 4 percent.

Commenters said a group of leading climate scientists has calculated that developed countr ies like the United States must reduce their greenhouse gas emissions by 35

- 65% below 1990 levels by 2030 in order to preserve a likely chance of limiting global temperature rise to 2 degrees Celsius this century. Commenters said when measured against 199 0 emissions, the Proposed Rule reduces power sector emissions by only 7.7% by 2030. Commenters said on an economy

wide basis, moreover, current United States climate policy, including the Proposed Rule, will result in emissions 5% above 1990 levels by 2030

. Commenters said the Proposed Rule thus clearly fails to accomplish reductions urgently required from the nation's largest source of greenhouse gas emissions. Commenters said moreover, because the Proposed Rule seeks only to create a carbon intensity stan dard rather than an emissions cap, it is far from certain whether460 even the 30% target of emissions reductions from 2005 levels will in fact be reached. Commenters said in light of these grim facts, there is simply no justification for the Proposed Rule's low targets and slow implementation schedule.

Commenters stated the proposed Clean Power Plan improperly calls for reductions in CO2 from 2005 levels; the problem is that CO2 levels in 2005 were the highest ever. The commenters said in fact, current level s are 15% less than in 2005. The commenters said the proposed rule should at least use current levels, or more appropriately, 1990 levels.

Commenters stated using 2005 emission levels as a baseline is a mistake for multiple reasons; first, the 2005 baselin e will take credit for reductions that have already occurred as emissions have declined since their height in 200; second, the international community has agreed to use 1990 as the appropriate baseline and we should follow suit. The commenters said scienti sts base their required reduction amounts on 1990 levels so it only makes sense to use these levels as the baseline for reductions.

Commenter s said the base year should be changed from 2005 to 1990, because having 2005 as a baseline takes credit for reduct ions that have already occurred.

Commenter s stated progress in reducing greenhouse gases should be based on emissions in 1990, the Kyoto Protocol baseline, not emissions in 2012. The commenter s said the international community has used 1990 as a baseline e ver since the Kyoto Protocol.

Comment 47: The EPA should use 2012 as base year for all calculations

Response 47: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year

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

Commenters said that there is considerable confusion of what the goals are, and recommended that 2012 should be used as the base year for all calculations.

Commenters stated that the 30 percent r eduction goal is from a 2005 base year. Commenters said the emission rate was 2,434 million metric tons in 2005, and, in the most optimistic case, will be reduced to 1,701 million tons by 2030. Commenters added that by 2012, EGU's had already reduced emiss ions to 2,023 metric tons, or 17% by switching from coal to natural gas for lower cost, and by closing older, smaller coal fired EGU's that were not worth upgrading to meet other EPA air pollution reduction standards.

Commenters stated that the actual state specific goals are calculated from a 2012 base year compared to a base case of future emissions. Commenters said the base case assumes no carbon reduction goal is set and calculates CO2 emissions will grow to 2,256 metric tons by 2030. So, Commenters said, compared to the base case, CO2 emissions will only fall 25% (from 2,256 tons461 to 1701 tons), according to the EPA. Commenters said therefore, the EPA should drop the reference to 30% reduction by 2030 from 2005, and use a 25% reduction by 2030 from 2012 to end this confusion.

Comment 48: 2012 should be used for baseline

Response 48: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year

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

Commenters stated EPA has offered states the opportunity to request an alternative base year in calculating the goal; however, for Oklahoma, data for the years 2010 and 2011 do not appear to provide a ny significant advantage over the year 2012. Therefore, the commenter s request ed that the year 2012 be retained as the base year for the state.

Commenters support ed the EPA's proposal to use 2012 as the base year for compliance calculations. The commenters said while others have argued that use of an earlier base year is more appropriate, the commenter s asserted that they are requesting a change because of a misunderstanding of rate

- based targets. The commenters said if properly implemented, a revised base year would have no outcome on the overall plan. The commenters said under the proposed
rate

- based methodology, compliance depends on the average emission rate of the entire fossil

fuel generation sector; consequently, all historic changes that have resulte d in lower carbon intensity from that sector are already considered in the estimation of what reduction level is achievable and will contribute to meeting the goal. The commenters said while an earlier base year would not impact the fossil fuel sector, it could increase the amount of credit available from energy efficiency and renewable energy sources without increasing the associated costs. The
commenters said such a change would necessarily require EPA to revise its analysis to determine the Best System o f Emissions Reductions under 7411(a)(1); this would result in a corresponding need for a more stringent standard of performance. The commenters did not investigate the impacts of changing the base year on the conversion from rate

- based to mass

- based target s. If EPA were to alter the baseline, the commenter s expect ed the alteration would include any necessary changes to methodology to ensure mass

- based goals remain as close as possible to the final rate

- based goals.

Commenters stated according to EPA, the ap plication of EPA's building block methodology to Minnesota's existing energy mix results in a need to reduce its carbon emissions rate (CO2 lbs/MegaWatt hour ("MWh")) from a 2012 emissions rate of 1,470 lbs/MWh to a 2030 emissions rate of 873 lbs/MWh. The commenters said using EPA's figures would place Minnesota among those states with the largest emissions reduction goals. The commenters said despite a seemingly stringent target, the analysis of Minnesota's current emissions rate and its projected emission s rate under a business

- as

- usual scenario discussed below demonstrates that Minnesota is well positioned to meet the Clean Power Plan's goal. The commenters said this analysis shows that, despite what EPA will likely hear from other Minnesota stakeholders about462 "fixing" the perceived disparity between Minnesota and other states, there is no need to fix any disparity by weakening Minnesota's target.

Commenters calculated how close Minnesota would get to reaching its Clean Power Plan target by merely complyin g with existing state laws; Minnesota's robust RES and solar energy standard already require an increasing percentage of renewable energy from its utilities through 2025. The
commenters said Minnesota also has an annual energy

- savings goal equivalent to 1. 5% of the average of the three prior year's weather

- normalized gross annual retail sales. The commenters said assuming that the utilities comply with Minnesota's mandatory RES and EPA's energy efficiency savings methodology, Minnesota's 2030 emissions rate would be 940 lbs/MWh. The
commenters said this means Minnesota would only need a 7% reduction in emissions to achieve Clean Power Plan compliance after achieving the state's RES, energy efficiency goals, and solar energy standard.

Comment 49: 2012 should be used as base year; regulation should be strengthened

Response 49: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year

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

Several commenters supported the use of 2012 as the base year for the Clean Power Plan building block methodology. Commenters stated that emissions of CO2 were lower in 2012 than in any year after 2005, and indicated that use of any other calendar year or average of multiple years for the baseline would weaken the national stringency of the Clean Power Plan proposal, all else re maining equal. Commenters confirmed the EPA's conclusion that there was not a significant difference in the state emission targets with a 2012 baseline versus a baseline of 2010

- 2012, and indicated they are indifferent as to whether a 2012 single year base line or a 3

- year average 2010

- 2012 baseline is used in the determination of the state emission targets.

Commenters expressed support for the Clean Power Plan overall, but indicated that the draft proposal for a 30% reduction from 2005 power plant emissions levels is incommensurate with the pace of pollution reductions that scientists have found necessary to avoid catastrophic climate change. Commenters said that this is due partly to the choice of a 2005 baseline, representing America's peak pollution. Co mmenters said that some utilities are already moving away from coal to natural gas, and the EPA's proposed rule would curtail industry behavior only slightly from a baseline, "no

- action" scenarios assuming low natural gas prices, and is not adequate to the Clean Air Act.

Commenter s encourage d the EPA to hold to the 2012 baseline, not only because that's when data is available that EPA started gathering on emissions from power plants but because ultimately the bar is too low at that 30 percent. The commenter s said by the time we go forward, the process is proceeding and we've been a dozen years down this road of knowing we're going to have to limit emissions on coal fired power plants, and the private sector has a couple years to get used to the idea that tha t's going to happen. The commenters said they have 20 years, 2020 to 2029 to implement it. The commenters said that they can accomplish this with little effect; and by the463 time we get to 2020, by the time we get to 2029 we will know very clearly that the b ar has been set too low.

Comment 50: The EPA should reevaluate baseline to strengthen targets; early reductions result in underestimate what's achievable

Response 50: See section VI of the final rule preamble of the CPP for the EPA’s response to this

comm ent regarding the baseline year

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

Commenters stated EPA must set stronger and faster pollution reduction targets; the Clean Power Plan's goals for states underestimate our capa city to expand clean energy and energy efficiency. The commenters said these goals are, in many cases, lower than pre

- existing targets of state renewable portfolios and efficiency standards, or 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 (UCS 2014, C2ES 2014).

Commenters stated they cannot wait until 2030 to make sure states are meeting the goals in the Clean Energy Plan; the EPA mus t re

- evaluate the baseline it used to set the plan's state pollution reduction goals. The commenters said the current baseline fails to account for progress that is already occurring and therefore significantly underestimates what is readily achievable. Th e commenters said the plan gives states 15 years to achieve reductions, even in cases where states are already halfway or most of the way there; states can and are already doing better.

Commenters stated the plan needs binding milestones to keep us on tra ck for achieving the pollution reductions that are critical by 2030. The commenters said the EPA must have a stronger oversight role to ensure that every state does its fair share to reduce carbon pollution. The
commenters said past experience tells us that polluters exert outsized influence in many state capitals, and they routinely use that influence to try to evade accountability for their pollution. The commenters said they should not be allowed to push the cost of deal ing with their pollution onto the public nor operate as though they are above the law. The commenters said even the best environmental standards can become largely meaningless if the public and EPA are not able to monitor compliance and enforce those stan dards.

Commenters stated EPA should guard against the possibility that changes in baseline years or credit for early action will simply defer the burden of adjustment to no ultimate purpose. The
commenter s recommend ed that any adjustments to baseline year or credit for early action should not increase the actual national

- average carbon dioxide intensity of power generation in the later years of the period covered by the rule, beginning in 2025. The commenters said since the endangerment is ultimately a fun ction of cumulative carbon dioxide emissions rather than annual emissions, the commenters recommend ed that any adjustment to baseline years or credit for early action should be tailored such that the cumulative carbon dioxide emissions from 2016 through 20 24 are no larger than would have been allowed absent the adjustments in baseline years or consideration of credit for early action. In order to provide maximum flexibility to states while meeting this objective, the commenter s recommend ed that the enforcea ble standard for the464 period prior to 2025 be formulated as a limit for each state on the average carbon dioxide emissions intensity during the entire period from 2016 through 2024, leaving it to the state implementation plans to determine each state's spec ific glide path. The commenter s said if the reference glide path used by EPA to determine this allowance is adopted, then credit for early action will automatically accrue to states under this formulation.

Commenters stated the real concern about the Clea n Power Plan is that it doesn't do enough; rather than spurring immediate and significant action that is achievable and needed, the plan focuses too much, in our opinion, on endorsing advances that are already occurring. The
commenters said EPA must reeval uate the baseline it uses to set the state pollution reduction goals; as such, baseline fails to account for progress that is already occurring, and thereby leads to results that underestimate what is readily achievable. The commenters said for example, EP A proposal assumes nearly 49 gigawatts of coal plant retirements throughout the country by 2020, but nearly 68 gigawatts of coal plants have already retired or announced their intent to do so. The
commenters said in Pennsylvania, the 2020 coal plan emissio ns baseline EPA uses includes 11 coal plants that have already retired or announced their intent to retire in the next few years. The
commenters said if those emissions are removed from the 11 plants from the 2012 baseline, that baseline is already below t he level of carbon pollution EPA assumed Pennsylvania could achieve through the redispatching of coal plants. The commenters said EPA's carbon proposal would have little further direct impact on generation of electricity from the most carbon intensive form of power, which is coal.

Comment 51: 2012 is generally an appropriate base year, but for units whose operation in 2012 was anomalous, states should select an alternative baseline; due to unplanned outage in 2012 of largest coal

- fired plant in Minnesota ( Sherco 3), the targets developed by the EPA are fatally flawed and must be revised

Response 51: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year and treatment of the Sherco facility

.

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

2012 generally appropriate baseline but alternate should be allowed for anomalous units

. Commenter s indicate d that the NODA solicits input regarding whether a different single d ata year or average of a combination of years should be used to calculate a baseline for use in state goal calculations. Commenter s asserted that 2012 is generally an appropriate base year, and should remain the presumptive base year for most units in most states. However, c ommenter s stated that for units whose operation in 2012 was anomalous, states should select an appropriate three

- year ave rage for use in baseline calculations. Commenters said that providing the opportunity for states to select years would better ensure the use of data more reflective of the unique circumstances of these particular units. Commenters stated that requiring suc h data to be in the form of a three

- year average would lessen the likelihood that a state could simply select the highest

- emitting year for a particular unit. Commenters noted that this approach could address, for Minnesota the concern with Sherco Unit 3 i dentified in their September 16, 2014 letter, and may address concerns for other units whose 2012 operation was also anomalous.465 Commenters suggested that the EPA should issue an additional NODA or supplementary proposal providing this option, and allowing states the opportunity to submit appropriate three

year average baseline information for anomalous units. Commenters said that the final goals would incorporate data for these anomalous units.

2012 Baseline Erroneously and Significantly Underestimates Curr ent Coal

- Fired Generation and Emission levels in MN

. Commenters said the fact that the Proposed Rule's baseline assumptions do not include annual emissions from Sherco 3 highlights why reliance on a baseline year of 2012, or any single year, for that matte r, is not appropriate for determining historical emission levels. Commenters said indeed, using a single year as a baseline disregards the variability of electric power resulting from anomalous weather years, unanticipated outages, fluctuations in fuel pri ces, and other factors.

Commenters said that as an alternative to the 2012 baseline, SMMPA supports the Minnesota Pollution Control Agency's initial proposal to use an average of generation data from 2009 to 2011. Commenters said that any baseline period that includes 2012 will significantly understate coal

- fired generation and emissions in Minnesota. Commenters said they agree that using data from multiple years is a rational approach to determining historical emissions rates, as it would yield generatio n data that more accurately takes into account the many factors that cause generation dispatch to fluctuate year to year. Commenters emphasized that the EPA should recalculate the baseline using an average of generation and emissions levels during a single

, representative year or over the course of multiple years (not including 2012) so that its starting assumptions for the Proposed Rule more accurately reflect historical emissions levels. Commenters said if a single alternative baseline year is to be used, a year such as 2009 or 2010, during which Sherco 3 was online for the entire year, would be appropriate. Commenters said at the very least, the EPA must recalculate Minnesota's emission reduction targets to account for Sherco 3's generation capacity and emissions levels.

Comment 52: 2012 baseline and nuclear uprates

Response 52: The final goals do not have nuclear assumed in the rates, please see section V. A and V.E. of the final rule preamble of the CPP for more information about nuclear generation and Building Block 3 , respectively

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

Commenters asked whether the EPA has considered whether its use of nuclear uprates completed in 2012 or post

- 2012 in calculating the at

- risk nuclear generation goal is consistent with its use of a 2012 baseline. Commenters further asked would the EPA consider using a different baseline date that allows recently completed nuclear uprates to be excluded from the goal

- setting calculation but be i ncluded in the compliance calculation.

Comment 53: Compliance period must be clarified; two EE

- r elated issues must be clarified466 Response 53: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the compliance period. See section V.A of the final rule preamble for discussion of demand

- side energy efficiency. See section VIII of the final rule preamble for discussion of state plans

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

Commenters said that the EPA needs to clarify the compliance period in order to ensure there is no disincentive to make investments in clean energy and energy efficiency before the start of the interim compliance period in 2020. C ommenters said the EPA should allow credit for new carbon reduction actions (i.e., from increasing existing policies, new policies and/or adding new qualifying facilities) taken after a final state plan is submitted to EPA, and before the beginning of the plan performance period (2020), to count toward achievement of the state's emissions goals. Commenters indicated this would help ensure that states have an incentive to engage in carbon reduction measures prior to that period and get a jump on being better positioned to achieve their final compliance goals.

Commenters stated that there are two areas related to energy efficiency that also need a more clear explanation. Commenters said first, the EPA assumed in its drafting of the plan that energy efficiency measures are sustained on an average of ten years. Commenters encouraged the EPA to permit credit for the full term of the contract or for a longer period of time if so decided by a
state. Commenters said that secondly, under the proposed rule actions taken after the rule's proposal (June 2, 2014) would be creditable in 2020. Commenters indicated this could be interpreted to allow credit for buildings that have been built unde r outdated building codes and standards; to remedy this they suggest the EPA could use a baseline building code standard using such standards that are in place in 2014.

Commenters stated concurs that "EPA needs to clarify the compliance period in order to ensure there is no disincentive to make investments in clean energy and energy efficiency before the start of the interim compliance period in 2020. States should be given flexibility with respect to meeting targets over a multi

- year period, but the compli ance schedule should ensure emission reductions are secured as soon as possible and that state plans include provisions to correct shortfalls."

Comment 54: Snapshot data from 2012 does not adequately demonstrate that states can achieve increme ntal EE sav ings of 1.5 percent

. Response 54: See section V.A of the final rule preamble for discussion of demand

- side energy efficiency. See section VI of the final rule preamble of discussion of subcategory

- specific emission performance rates. See section VII of the final rule preamble for discussion of state goals. See section VIII of the final rule preamble for discussion of state plans

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

Commenters stated looking at reported 2012 incre mental EE savings snapshot data, EPA found that three states, Arizona, Maine and Vermont, had achieved an annual incremental retail sales467 savings rate of 1.5 percent. The commenters said EPA then concludes that this level of reduction is the "best practice s" level and an annual incremental savings that all states can achieve. The
commenters said EPA's reliance on this 2012 snapshot data is misplaced for two reasons: first, EPA takes the 2012 reported data out of context by not discussing how or how long it took the three "best practices" states to achieve this savings rate; second, if this data were to demonstrate anything, it is that the savings rate that arguably could be achieved by all states is closer to 0.5 percent, not 1.5 percent, as this is the medi an savings level achieved in 2012.

Comment 55: Under BB3, when setting the solar portion of RE target a baseline year of 2013 or later should be used

Response 55: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year

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

Commenter s d id not support using a baseline year below 2012, and strongly suggests the use of a baseline year of 2013 or higher in setting the so lar portion of the renewable state target under building block 3. Commenters noted that the solar industry has grown dramatically in recent years and the amount of solar capacity online in the U.S. has doubled since the end of 2012. Commenters said that th erefore, the use of a lower baseline year would not accurately represent the current or future potential contributions from solar to a low carbon energy supply.

Commenters said that if the EPA decides to use an average of multiple years of generation to s et the baseline, it will be critical for the EPA to adjust the calculation to reflect the generating fleet as it exists today (i.e. end of September 2014). Commenter s suggest ed that to do this, the EPA can look at the generation mix relative to the existin g online generation capacity of each technology in each averaged year. Commenters said that put another way, the EPA could look at the average capacity factor of each technology in each year and then apply that to generation fleet as it exists today. Comme nters said that to clarify further, the EPA could estimate baseline solar generation by either multiplying the historical average capacity factor for solar in each state by the current existing capacity in each state, or by modeling the expected performanc e of current existing capacity in each state. Commenters said that modeling for wind and solar is a sensible approach as wind and solar are at the top of merit order dispatch, and thus their modeled performance is very likely to reflect their average lifet ime performance.

Commenters stressed that correctly assessing the baseline and solar energy's contribution to the baseline for the Clean Power Plan is critical, as the generation fleet has changed in meaningful ways since 2012 and especially since 2010. Co mmenters said that using a simple average of absolute generation levels of each technology would grossly underrepresent solar generation as it exists today because there is a significantly larger amount of solar capacity online today.468 Comment 56: Not acco unting for current and projected RE market expansion between 2012 and 2017 distorts the methods proposed by the EPA, and ultimately undermines the true potential of solar and other renewable technologies

. Response 56: See section V.E. of the final rule pre amble of the CPP for the EPA’s response to this comment and more information about Building Block 3 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 publ ic comments under this comment:

Commenters said the EPA's Proposed and Alternative Approaches use 2012 as the base year for setting renewable penetration levels for when the rule goes into effect

- 2017. Commenters said the combination of continued perfor mance improvements and price declines, coupled with an expiring federal Production Tax Credit (PTC), and an approaching roll

- back sunset date for the federal Investment Tax Credit (ITC) have fueled major capacity additions, making reference to 2012 levels obsolete. Commenters said that not accounting for current and projected market expansion between 2012 and 2017 distorts the methods proposed by the EPA, and ultimately undermines the true potential of solar and other renewable technologies.

Commenters said for example, EIA projects that wind power capacity will increase by 8.8% in 2014, and 16.2% in 2015. Commenters said solar capacity at a national level increased by nearly three times between mid

- 2012 and mid

- 2014. Commenters said the southeast has co ntributed to these gains, doubling its solar capacity between 2012 and 2013.

Commenters said distributed generation (Residential and Non

- Residential) capacity is a major component of solar development, accounting for about 40% of all solar photovoltaic (P V) capacity installed (over 1,600 MW

- ac) in 2013 and nearly half the cumulative solar PV capacity installed to date in the U.S. Commenters said both the benchmark rate approach and IPM model approach fail to capture existing and potential distributed gener ation, which is a major omission from the solar technology sector. Commenters said in addition to being a power source that does not have emissions, distributed generation has other unique "value" benefits for customers and the grid that should not be over looked.

Comment 57: Renewable generation floor should not be set equal to amount of the state's actual 2012 renewable energy generation for state s that exceed regional average

Response 57: See section V.E. of the final rule preamble of the CPP for the EPA’ s response to this comment and more information about Building Block 3 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 commen t:

Commenters said the EPA seeks comment on whether the final rules should set a renewable generation floor equal to the amount of the state's actual 2012 renewable energy generation for states such as Iowa that exceed the regional average. Commenters oppo sed this alternative baseline because it would penalize and fail to give appropriate credit to Iowa utilities and469 ratepayer s for the significant costs of associated with their early actions to implement renewable
energy.

Comment 58: Summarizes comments regarding applying credits from shutting down coal/oil EGU' s and/or switching to NGCC.

Response 58: See section s VI and VII of the final rule preamble of the CPP for discussion of the subcategory

- specific emission performance rates and state goals, respec tively. See section VIII for discussion of state plans.

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

Retirements from 2012 should be credited . Several commenters contended that shutdowns or retirements of existing EGUs as of the date of state plan submission should be included in target rates for each state. C ommenter s stated that nationally, at least 330 coal

- fired EGUs have retired
or convert ed to biomass since 2010. C ommenter s added that the proposed state targets do not reflect any of the approximately 60 GW of projected coal

- fired power plant retirements projected to occur from 2012 through 2016. The commenters stated that EPA's BSER must a ccurately reflect expected control options which includes affected source retirements since 2012. C ommenter s contended that emission reductions resulting from coal plant retirements occurring after 2012, but prior to 2020 should count for purposes of calcu lating whether states have met their CO2 emission reduction goals from 2020 through 2030. The commenters stated that such coal plant retirements may occur prior to 2020 (the first year in which the EPA proposed an interim CO2 emission reduction goal) does not mean that those real CO2 emission reductions should be considered irrelevant for purposes of assessing whether a state has met its CO, emission reduction goals.

Disparity in goals depending on NGCC capacity

. C ommenters raised concerns about the dispar ity in state goals between those states with little or no NGCC generating capacity and those with significant amounts of NGCC capacity. C ommenter s contended that EPAs 70 percent natural gas re

- dispatch assumption in building block 2 disadvantages states th at have taken steps prior to 2012 to replace aging coal

- fired facilities with NGCC facilities. C ommenter s contended that EPA should exempt from the Block 2 redispatch calculation of all NGCC capacity constructed since 2005 to replace retired coal

- fired cap acity. The commenters stated this exemption should apply to both existing NGCC capacity and NGCC capacity currently under construction. Other commenters stated that because EPA does not account for coal

- fired megawatts that already have been displaced by R E and NGCC, both a lower baseline emission rate and high levels of RE in the baseline year cause a state's ultimate performance goal to be more stringent.

Re

- dispatch goals have more significant affect for States with significant RE

. C ommenter s explained that EPA created a 2012 baseline emission rate for each state that reflects the level of generation from all in

- state affected fossil

- based units. As a result, the commenters stated that the 2012 baseline emission rate for states that had retire d coal

- based units and built new NGCC units already reflects these reductions, resulting in a more stringent goal. The commenters stated that470 the goal calculation approach relies on the amount of electricity produced by renewable sources in 2012, meaning t hat the more renewable energy produced in 2012, the more stringent a state's goal emission rate. The commenters added that states that already had, as of 2012, increased use of wind, solar and other variable renewable resources often had built new NGCC uni ts to balance their systems. The commenters concluded that NGCCs in states with significant amounts of renewable generation had a lower capacity factor and, thus, the re

- dispatch goals envisioned under Building Block 2 have a more significant effect on the ir emission reduction goals.

Various methods of crediting early action

. C ommenter s added that EPA could adjust the interim and final goals upward in early acting states by exempting from Building Block 2 NGCCs that replaced coal and eliminating the NGCC c apacity factor penalty in leading RE states. The
commenters recommended that that EPA consider the impact of high levels of wind penetration and recalculate the baseline NGCC capacity factors for each state in order to eliminate the NGCC capacity factor pe nalty. The commenters stated that EPA should adjust the baseline NGCC generation to account for what NGCCs in each state would have generated were it not for high levels of RE penetration. The commenters concluded that this would provide credit to states
t hat have both been RE leaders and built high

- efficiency NGCCs. C ommenter s suggested that EPA apply a "floor" and "ceiling" to the amount of coal plant output displaced by NGCCs to help decrease the disparity of the impact Building Block 2 has on different states and it could provide states, like Oregon, that acted early to retire coal plants with some relief from the impact of Building Block 2. C ommenter s supported crediting coal

- heavy states, live West Virginia, for actual emission reductions that occurred between 2005 and 2012 as a result of displacing coal with natural gas. The commenter s claimed that these states have already seen an implementation of Building Block 2 as a result of market conditions. The commenter s added that these states would get no c redit because they did not have substantial in

- state natural gas generation, but did reduce mass emissions. The commenter s concluded that because EPA is claiming the rule will result in a 30 percent reduction in CO2 emissions since 2005, emission reduction due to displacement of coal units with natural gas units should be credited against the states goal. One
commenter s recommended providing states with credit for prior CO2 reductions as an option towards meeting reasonable national targets for reducing CO2 emissions. C ommenter s added the EPA should work with states to adjust the goals relating to building block 2 to a level that recognizes early actions, and acknowledges the importance of fuel diversity.

Forced early retirement and reliability

. C ommenter s added that the proposal threatens the nation's electricity supply by forcing coal plants to remain idle or shut down before replacement power is in place, and would not allow owners to recoup investments on pollution control technologies already outfitted on newer units and obtain the remaining useful life of the coal

fired EGU's.

Transferring credit to affected EGUs. C ommenter s supported owners or operators of non

emitting units or efficiency programs be allowed to use the credit for meeting its compliance obligations under the section 111(d) program or transfer the credit to affected EGUs for their compliance use under the prog ram. The commenter s stated that in the case of existing affected fossil

- fuel fired EGUs that retire prorate to the start of the interim goal period, a state would assume the unit's generation was replaced by existing NGCC generation located with the state. The commenter s added that the credit could be based on the reduction in emissions caused by the change in generation location.471 Credit for coal to NGCC switch in 2005. C ommenter s contended that they repowered coal units to natural gas combined cycle in 20 05 and realized substantial CO2 emission reductions. The
commente rs added that reductions resulted from an agreement with EPA's ongoing New Source Review enforcement program. The commenter s objected to EPA's proposal not giving credit for these reductions which were a result of agreement with EPA. The commenter s added that the reductions were included in a voluntary, but legally binding greenhouse gas trading program from 2003

- 2010.

Credit for retirements since 2005 and those scheduled to occur by 2015 . Com menter s said states must be allowed to take into account the substantial CO2 emissions reductions that have occurred since 2005 (i.e., the shutdown of nine (9) coal

- fired units in West Virginia), and those which are scheduled to occur by 2015 (i.e., the sh utdown of an additional nine (9) coal

- fired units in West Virginia).

Comment 59: The EPA should check eGRID data for more appropriate baseline

. Response 59: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regard ing the baseline year

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

Commenters stated the NODA also attempts to address EPA's use of a single year (2012) as the baseline from which state goals are calculated. The comment ers said EPA's use of 2012 penalizes states like Texas that are already implementing the measures in the building blocks. The commenters said extending the baseline to cover 2010 or 2011 or some other combination is not sufficient. The commenters said EPA must release and analyze eGRID data for a significantly longer period of time in order to assess what an appropriate baseline might be. The
commenters said for a state like Texas, such a baseline would likely extend further back than 2010. The commenters s aid without additional analysis of these data, and without EPA making data from prior years available, it is difficult to predict whether any of these options presents an improvement on EPA's proposal. The commenters said EPA's barebones "notice" and the l imited amount of time it has provided for comment simply do not allow for adequate analysis; if EPA wishes to alter its proposal to use a different baseline, it must issue a new proposal and allow for full public comment on that proposal.

Comment 60: Gene ral comments a bout using 2005 as the baseline

Response 60: See section VI of the final rule preamble of the CPP for the EPA’s response to this
comment regarding the baseline year

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

Commenters stated in terms of timeframe the base year of 2005 is problematic. The commenters said many utilities, since 2005, have closed coal fire power plants, largely due to the472 obsolescence and inefficiency of some of these plants, and other market changes. The
commenters said in that respect they would be receiving, under the regulations, automatic credit for those plants that have already been closed due to these market and engineering forces.

Commenters stated the proposal to cut carbon pol lution is based on 2005 levels. The commenters said 2005 was close to the peak year of U.S. carbon pollution, so EPA's baseline is already skewed toward the highest level of carbon. The EPA Fact Sheet states that the proposal will maintain an affordable, r eliable energy system, while cutting pollution and protecting our health now and for future generations, but in reality this is just not true. The commenters said a healthy, sustainable future cannot afford the amount of carbon the plan allows for; it's no t possible.

Commenter s were concerned that EPA is using a standard that's a few years old instead of using 2012 or '13 as the base; it weakens the net result of what the rule does.

Commenter s stated the EPA's targets for reducing carbon dioxide pollution b y 2030 are too low and do not do enough to reduce our risk from climate change. The commenter s said under the proposed rule, overall US greenhouse gas emissions will still be higher in 2030 than they were in 1990; that's well below the level recommended by the Intergovernmental Panel on Climate Change, which says developed nations must hit targets 20

- 40% below 1990 levels in order to avoid extreme climate scenarios.

Commenter s stated the EPA says that the rule will cause the US power sector to reduce ove rall carbon pollution in 2030 by 30% from 2005 levels. The commenter s said using that year as a baseline reflects a more lenient approach than many analysts expected. The commenter s said the US burned a lot of coal in 2005 due to disruptions to the natural gas infrastructure caused by hurricanes Katrina and Rita in the Gulf of Mexico. The commenter s said the 2005 baseline also allows the US to claim credit for pollution reductions that happened when our economy shrank during the great recession. The comment er s added, the EPA rule allows states to count carbon dioxide reductions from coal plant retirements that were already in the works before the rule was established; for example, by the time the rules take effect next year, Kentucky will have achieved 11 pe rcentage points of our 18 percent reduction target without doing anything more than business as usual.

Commenters stated the proposed rule, if fully implemented, is projected to result in a 30% reduction in carbon dioxide emissions from power plants below 2005 levels by 2030. The
commenters said according to calculations by the Center for Biological Diversity, this corresponds to only a 7.7% reduction from 1990

- the base year accepted by the United Nations Framework Convention on Climate Change. The comme nters said by using a misleading base year of 2005, the high point of economic activity pre

- recession, the rule takes dubious credit for carbon dioxide reductions that occurred largely because of economic decline. The commenters said as long as the U.S. co ntinues to rely mostly on fossil fuels, these are not reductions that can be sustained with future economic activity and population growth; furthermore, as discussed in the next section, much of that reduction is anticipated to come from greater reliance o n natural gas, resulting in a surge of methane emissions that is likely to undermine climate benefits.

Commenters stated according to EPA's description of the proposed rule, "[n]ationwide, the Clean Power Plan will help cut carbon pollution from the power sector by 30 percent from 2005473 levels." The commenters said while EPA can take some credit for some of the falling emissions in recent years, it certainly isn't due to the new carbon rule because it didn't even exist yet; it is misleading to refer to a 200 5 base year to judge what this rule will accomplish. The commenters said the most recent year included in the newest EPA greenhouse gas inventory is 2012; between 2005 and 2012, emissions in the power sector fell over 15%; emissions fell 10% economywide. T he commenters said if 2012 emissions are used as the basis, the best case scenario is this rule achieves not quite a 15.88% cut from power CO2 by 2030; at best, referring to data provided in the RIA, the proposed rule achieves less than a 5.96% decrease in economy

- wide CO2 between 2012 and 2030.

Commenters stated that they strongly urge U.S. EPA to consider how states can take credit for early adoption and shutdown measures taken after 2005, the year U.S. EPA is using as a baseline for 30% in CO2 emission reductions.

Comment 61: Should the EPA credit early action taken by states to reduc e carbon emissions; if so, how.

Response 61: See section V of the final rule preamble for discussion of the final BSER determination. See section s VI and VII of the final rule preamble of the CPP for discussion of the subcategory

- specific emission performance rates and state goals, respectively

. See section VIII of the final rule preamble for discussion of state plans.

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

Commenters said the clean energy programs developed in Minnesota, Colorado, and the other states we operate in should serve as models for carbon abatement strategies across the nation. The commenters said in fact, the se programs are exactly the kinds of initiatives that the proposed Clean Power Plan is designed to encourage. The commenters said they have already resulted in dramatic reductions in greenhouse gas emissions within our system. The commenters said Xcel Ener gy has already reduced its carbon dioxide emissions by 19 percent from 2005 levels and will achieve a reduction of at least 31 percent by 2020, 10 years earlier than the administration's 2030 target.

Commenters said although we are proud that our clean en ergy leadership has achieved so much while maintaining reasonably priced power, these initiatives have not been free

- our customers are funding billions of dollars of investments to make them a reality.

Commenters said unfortunately, the Clean Power Plan virtually ignores these investments

- it would provide very little credit to existing state clean energy programs. The commenters said the proposal would give an easier compliance path to states that resisted clean energy in the past, and even worse, the Clean Power Plan actually punishes states that are clean energy leaders.

Commenters said for example, building blocks 1 and 4 of the proposed rule discount the fact that the cheapest coal plant and customer efficie ncy projects and programs have already been completed in leading states. The commenters said Building block 2 requires greater emissions reductions in states such as Minnesota that, prior to 2012, replaced aging coal plants with natural474 gas combined cycle units. The commenters said Block 2 also punishes states that balance their intermittent renewable energy with natural gas plants. The commenters said finally, block 3 requires greater emissions reductions in states and regions that have moved forward with renewables under progressive renewable standards. The commenters said in other words, the proposed rule takes clean energy leadership for granted and would establish more aggressive targets in states that committed early to clean energy leadership.

Commen ters said over the last decade, our states committed to clean energy on the promise that leadership would give them a head start under federal climate policy. The commenters said there is still time to make this promise a reality. The commenters said we be lieve that a few simple changes to the Clean Power Plan will credit early emissions reductions without significantly altering the structure or environmental benefits of the rule. The commenters said Xcel Energy will continue to work with EPA to ensure that the nation's climate policy recognizes the value of clean energy leadership.

Commenters said state and private sector leadership in addressing pollution is something that should be recognized and supported. The commenters said of course, under the Clean Power Plan, states and companies that have already transitioned toward lower

- carbon and zero

- carbon energy and energy efficiency are closer to the full deployment of the best system of emissions reduction than others

- and EPA should consider clarifying th at 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.

Commenters said the proposed Clean Power Plan currently states: "Emission im pacts of existing programs, requirements, and measures that occur during a plan performance period may be recognized in meeting or projecting CO2 [carbon dioxide] emission performance by affected EGUs according to section 60.5740(a)(3) and (4), as long as they meet the following requirements: Actions taken pursuant to an existing state program, requirement, or measure, such as compliance with a regulatory obligation or initiation of an action related to a program or measure, must occur after June 18, 2014."

Commenters said credit for early action should be provided for in the final EPA regulation.

Commenters said the agency should also be aware that only counting emissions reductions from 2020 to 2029 creates a perverse incentive for states and utilities t o defer implementation of programs that reduce energy waste, and thus prevent pollution of many kinds, until 2017 or later. The commenters said in Michigan, for example, Public Act 295 of 2008 set requirements for increased renewable energy and for program s that incentivized energy waste reduction

- and implementation continued despite the deep economic crisis and rising energy costs in the state during the intervening years. The commenters said if the federal Clean Power Plan disallows counting of such measures toward the state's goal

- or worse, would disallow credit for pollution reductions achieved by such measures until 2017 or later

- EPA is actually creating an incentive to repeal Mic higan's (and other states') laws that currently reduce all pollutants. The commenters said moreover, it is clear that many states do not have mandatory energy efficiency requirements in place, and as drafted, the rule would further discourage their adoptio n prior to 2020. The
commenters said this will likely result in more CO2 (as well as increases in other pollutants, including mercury, acid rain precursors, and particulate matter) being emitted into the475 atmosphere than might occur under a final rule that encouraged early investment in pollution prevention.

Commenters said the EPA states that concerns over the "acceptable" lifetime of various measures led to the decision to propose not crediting earlier reductions. The commenters said although it can be ar gued that some waste reduction measures have a shelf life, these should not be difficult to establish, as "payback" figures are abundant in available information and other parts of the federal government have expertise setting depreciation schedules that a ssume reasonable lives of a variety of assets. The commenters said additionally, the "shelf life" of measures such as added insulation and replacement windows is so long that there should be no concern. The commenters said in most cases, the emissions redu ctions will not be "lost," but continue to provide quantifiable pollution reductions for years to come.