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December 20, 2013

VIA EMAIL to: carbonpollutioninput@epa.gov

Ms. Gina McCarthy, Administrator

U.S. Environmental Protection Agency

1201 Constitution Ave., N.W.

Washington, D.C. 20460

Re: Listening Sessions on the Design of a Program to Reduce Carbon Pollution from 

Existing Power Plants Under Sec. 111(d) of the Clean Air Act

Dear Administrator McCarthy:

In response to the various listening sessions that the U.S. EPA has conducted over the past 

several months to obtain public input on possible design considerations regarding the 

Administration’s expected regulatory program to limit emissions of greenhouse gases from 

existing power plants under Sec. 111(d) of the Clean Air Act, American Municipal Power, 

Inc. (AMP) and the Ohio Municipal Electric Association (OMEA) hereby offer the following 

initial considerations and practical implications for the agency’s review. AMP, one of the 

nation’s largest municipal power suppliers, welcomes the opportunity to meet with you 

and your staff to address in person any questions you may have and provide any additional 

information that you might need, particularly regarding the unique ramifications of 

potential options on municipal utilities and their ability to provide affordable and reliable 

energy to a broad range of consumers.
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Background on AMP

Ohio-based AMP is the non-profit wholesale power supplier and services provider for 129 

locally regulated municipal electric entities located in Delaware, Kentucky, Michigan, Ohio, 

Pennsylvania, Virginia, and West Virginia. AMP’s members collectively serve more than 

625,000 residential, commercial, and industrial customers and have a system peak of more 

than 3,000 megawatts. AMP’s core mission is to develop, manage and supply diverse, 

competitively priced, reliable wholesale energy to public power members through strategic 

partnerships, member-focused relationships and a diversified power resource mix. AMP’s 

diverse energy portfolio makes the organization a national leader in the deployment of 

renewable and advanced power assets that include a variety of base load, intermediate and 

distributed peaking generation using hydro, wind, landfill gas, solar and fossil fuels, as well 

as a robust energy efficiency program. The majority of AMP’s members are located in the 

PJM regional transmission organization footprint, with a handful of AMP members located 

in MISO. The OMEA represents the state and federal legislative interests of AMP and 81 

Ohio municipal electric communities. 

Because of AMP’s structure as a non-profit power provider, AMP / OMEA closely follow 

federal and state regulation that could impact its members’ costs and reliability. To that 

end, AMP’s / OMEA’s comments on the design elements of limits on GHG emissions from 

existing power plants reflect expected impacts of the upcoming standards on AMP and 

member units, as well as potential impacts to other existing units in the region, from which 

AMP / OMEA members expect to acquire varying proportions of their power supply 

through wholesale market purchases. The multi-state nature of AMP’s / OMEA’s 

membership and power supply portfolio, plus the various types of electricity markets 

within which we operate, all point to the need for careful consideration of all options, 

particularly those that acknowledge that “one size does not fit all” when it comes to carbon 

standards.

AMP is a progressive leader in developing alternative and renewable energy among both its 

public and private peers. AMP has actively worked over the past decade to diversify our 
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power supply portfolio, to the point that we are on track for our owned assets to be 

approximately 20% renewable by 2016. The closure of an older coal facility in 2010, 

coupled with the addition of 707 MW of new natural gas combined cycle (NGCC) generation 

at the AMP Fremont Energy Center (AFEC) in 2012 and 300 MW of new run-of-the-river 

hydroelectric generation by 2016, has both reduced our reliance on market purchases and 

lowered our overall carbon footprint considerably. AMP was an early participant in carbon 

markets through membership in the Chicago Climate Exchange (CCX) and has an active 

forestry carbon offsets development program, with over 200 acres already reforested in 

Ohio alone. In addition, AMP’s three-year-old Efficiency Smart program is delivering 

positive results and energy (and emissions) savings to participating AMP members. 

Existing AMP and member-owned facilities that are expected to be subject to EPA’s 

upcoming carbon standards include the previously mentioned NGCC generating plant, a 

number of small natural gas combustion turbines, and member-owned local coal-fired 

electric generating units. In addition, AMP owns approximately 23% of the Prairie State 

Energy Campus, a 1,600 MW mine-mouth supercritical coal plant in Illinois that began 

commercial operation in 2012. AMP’s / OMEA’s comments reflect expected impacts on 

those facilities plus impacts on regional electricity markets. 

Specific AMP/ OMEA Comments for EPA Consideration

As a leading provider of energy to municipalities and their residents and businesses, AMP 

brings a perspective to EPA rulemakings impacting the energy field that is both 

complementary and distinct from other stakeholders. Accordingly, AMP / OMEA request 

that EPA carefully consider the following specific comments prior to proposing any carbon 

standards on existing units. These are our initial high-level comments for consideration by 

EPA at this early stage of rulemaking development, and are likely to evolve with additional 

analysis and developments. AMP’s / OMEA’s comments are directed not at the legal 

underpinnings of the expected standards at this time (and thus we take no position at this 

time on EPA’s legal authority to pursue such rules), but rather on issues relative to 

feasibility, practicality, and applicability to AMP, our members, and existing units under 
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both AMP’s and our members’ control and ownership. We also are active with a variety of 

coalitions and national organizations that will be raising legal issues for EPA’s 

consideration, and look forward to working collaboratively and cooperatively with EPA in 

sharing our perspectives on the impacts of such standards on AMP, its members’ municipal 

utilities, and their customers.

Scope of Applicability: As noted above, AMP / OMEA expect that a number of small coal 

units owned by local municipal governments, plus a number of small combustion turbines 

owned by both AMP and our members, could be subject to the upcoming existing source 

rule. Under other federal air regulatory programs, units 25 MW and below have been 

exempted or subject to separate rulemaking procedures due to lower overall emission / 

impacts, higher relative compliance costs when compared to benefits, equipment 

incompatibility, etc. Public power systems and utility units, like those of AMP’s members, 

tend to be smaller and older than investor-owned systems and units, and are therefore 

disproportionately likely to fall beneath the 25-MW threshold. AMP / OMEA request that a 

similar approach be taken to exempt fossil units 25 MW and below from the existing source 

rule.

AMP Organizational Structure / Business Model: As a joint action agency that 

cooperatively supplies energy and capacity and provides other services to our 129 member 

electric systems in seven states, AMP, like many public utilities, does not easily fit the mold 

that EPA envisions for electricity generators that it intends to regulate under the existing 

unit rule. In practice, each of the AMP’s project participants effectively owns its project 

share through contractual arrangements. 

When it comes to regulation, however, EPA appears to presume that it can impose

emissions standards on distinct EGUs that are owned and operated by a single entity, such 

as a utility. Special attention may be needed to ensure that performance standards or 

compliance options do not fail to recognize or accommodate the business model of many 

joint action agencies and public power providers, particularly their multi-state 
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characteristics. As an example, AMP is headquartered in Ohio, has members in seven 

states, and owns units or parts of units in four states. AMP owns the largest portion of an 

EGU in Illinois, but none of AMP’s members are located in that state, even though many get 

varying portions of their power supply from that unit.

In addition, state implementation plans should also recognize the multi-jurisdictional 

nature of AMP’s business model, membership, and ownership of its various generating 

units. AMP / OMEA are particularly concerned that states are able to develop reasonable, 

workable state implementation plans without fear that another state or federal process will 

supersede its efforts

Role of RTO Markets: Concomitant with AMP’s business model as an issue that warrants 

particular and distinct consideration by EPA is the increasingly important role that regional 

transmission organizations (RTOs) are playing in the operation of EGUs, and thus 

emissions. AMP / OMEA and others have repeatedly identified this issue in comments filed 

on other regulatory proceedings in the past several years; yet, EPA appears to favor 

regulatory approaches that assume that the owner / operator of a power plant is part of a 

traditional vertically integrated model. The vast majority of AMP’s members are located in 

the PJM market, with a few in MISO (Michigan members), and two members located in 

Kentucky, which are not included in any RTO.

A majority of AMP’s Ohio-based EGUs are located in the PJM region. However, as noted 

above, the Prairie State Energy Campus, which serves AMP / OMEA members in Ohio and 

other states, is located in the MISO region. In today’s deregulated electricity markets, there 

are markets for both energy (actual electricity produced, as measured in kWh) and capacity 

(the capability of a power plant to produce electricity, as measured in kW). Capacity 

markets have been created to try to predict which EGUs might be available in the future to 

provide needed electricity and to try to send long-term price signals for all EGUs. In PJM, 

which operates a forward capacity market, the basic idea is that power plants receive 

compensation for capacity, or the power that they will provide at some point in the future. 
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The way these markets are run in the PJM territory, there is an auction every year that has 

a delivery date three years away (forward capacity market). This auction is called the Base 

Residual Auction. Then, there are smaller balancing auctions every year leading up to the 

delivery date where bidders can buy back commitments, sell other capacity or sell new or 

additional capacity. These are called Incremental Auctions and occur in case a power plant 

cannot meet its commitment, and needs to purchase replacement capacity from another 

power plant or to sell new or additional capacity.

EPA’s upcoming existing source rule will undoubtedly impact AMP’s and our members’ 

ability to bid EGU capacity into these forward capacity auctions, as bidding decisions are 

being made now regarding units for which some compliance is expected but for which we 

have no details as to compliance requirements. Relying on bid “correction” through future 

incremental auctions may not be a viable option going forward under changing PJM rules 

and, irrespective of the ability to correct bids in incremental auctions, the uncertainty 

created by this process adds additional risk to power supply planning.

In addition, as noted previously, AMP’s generation assets are located in multiple 

jurisdictions, and the participating members in those projects are not necessarily located in 

the same jurisdiction or even RTO. For example, many AMP / OMEA members are 

participants in the Prairie State facility located in Illinois (which is in MISO), and AMP 

members from other states are participants in the AFEC facility located in Ohio. This split 

jurisdictional issue creates the opportunity for owners of AMP generation assets to be 

subject to multiple, potentially conflicting, regulatory requirements.

AMP / OMEA do not believe that this complexity is insurmountable, but it calls for highly 

flexible, innovative, and perhaps state-driven multi-state regulatory programs that 

recognize the important role that RTOs are currently playing relative to emissions and 

energy and capacity markets. 
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State Flexibility / Multi-State Coordination: As noted above, AMP’s nature as a multi-state 

organization reinforces the need for maximum flexibility for the states, which are charged 

under Sec. 111(d) as the lead agencies for establishing performance standards and 

determining how facilities within each state can meet those standards. EPA’s role under 

Sec. 111(d), on the other hand, is to provide guideline documents for the development of 

state implementation plans, including the types of control measures that are adequately 

demonstrated and achievable for an affected source in those individual states. While EPA 

cannot directly control state actions in defining performance standards under Sec. 111(d), 

the agency can greatly encourage state flexibility by recognizing the changing nature of the 

nation’s electricity grid, markets, and players, which are rarely confined by geographic 

state boundaries. AMP / OMEA respectfully urge EPA to carefully consider the multi-state 

nature of today’s energy markets when proposing its guidelines.

AMP / OMEA also note that EPA’s tight schedule for developing and finalizing standards for 

existing units is extremely ambitious and is likely to impair the ability of states to properly 

respond with their state implementation plans by the June 2016 deadline. This time 

limitation will be magnified by the need for many states to consider possible multi-state 

coordination options in response to their individual needs and priorities.

Early Action for Compliance: As a leader in the region in the development and deployment 

of renewable energy and other cleaner generation, AMP is proud of the steps it long has 

taken to diversify our power supply portfolio. Prior federal legislative efforts to address 

CO2 / GHGs envisioned providing “credit” for certain actions that had been undertaken by 

the regulated entity to reduce emissions prior to a specified date. 

Early action “credit” should specifically include prior compliance actions, including 

retirement of coal units, system or end-user efficiency improvements, additions of 

renewable generation, development of carbon offset projects, etc., as well as any 

compliance activities that can be taken inside the unit’s boundaries. This flexibility is 

particularly important to AMP / OMEA and its members because of the diffuse ownership 
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structure of our generating units. In addition, early action efforts should be considered in 

the establishment of any baseline applicable to allowance allocations / emissions trading 

program, should that approach be included in any compliance program. 

EPA has indicated some interest in looking to actions taken outside the traditional 

boundaries of affected units for possible compliance options, including energy efficiency, 

renewables, etc. AMP / OMEA concur with this flexibility but need to reinforce our position 

that the “outside the fenceline” approach is only appropriate for compliance options, as is 

the case for other flexibility or market mechanisms. Specifics as to standard setting must 

be source-specific, not applicable to electric systems as a whole. 

Credit for Unit Retirements: An element of “early action” that may also extend into the 

compliance period would include providing credit against future compliance obligations 

for early retirement of higher emitting older fossil generating units. These could include 

units retired due to a variety of reasons (economic, regulatory, etc.) – but the end result 

would be reduced emissions. Owners taking such actions should be able to count such 

reductions toward compliance with any future standards. As with early action compliance 

credits, the establishment of a reasonable baseline for unit retirement credits is essential 

and should accommodate, at a minimum, owners’ decisions made relative to EPA’s prior 

GHG regulatory actions.

Protection Against NSR Triggers: EPA’s upcoming standards for existing units could also 

encompass units that undergo modifications, including the addition of pollution control 

equipment, efficiency upgrades, etc. It is essential that owners that undertake responsible 

actions to reduce emissions at the unit itself will not face New Source Review (NSR) 

violations. AMP / OMEA urge EPA to carefully consider this matter prior to issuing its 

guidelines to states and avoid the risk of creating significant regulatory and permitting 

pitfalls for facilities that engage in energy efficiency projects that reduce greenhouse gas 

emissions.
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Preserving Useful Life of Fossil Units: As a part owner of one of the nation’s newest and 

cleanest coal units, AMP encourages EPA to allow states to consider the economic life of 

power plants in order to avoid billions of dollars of stranded investment, which will only 

result in higher prices for customers and no comparable emission reductions. It is 

important to note that efforts to preserve a unit’s useful life in the past have been 

interpreted by EPA as triggering NSR, which in some cases has led to delaying maintenance 

projects, thus reducing unit efficiency, or to the early retirement of such units. Such 

unfortunate results should be avoided in the future.

Costs of Compliance / Cost Effectiveness: While it is impossible to estimate possible 

compliance costs for AMP / OMEA and our members in advance of EPA issuing proposed 

standards for existing units, decisions made by EPA and by the states on all of the prior 

issues will ultimately impact compliance costs and the overall cost-effectiveness of any 

standards for existing units. AMP / OMEA are concerned that EPA’s assumption that there 

are no costs to its new unit NSPS proposal could be carried forward into the agency’s 

upcoming existing source rule. In addition, the agency’s assumptions in the new unit rule 

about the availability of carbon capture and sequestration (CCS) are unreasonable and 

unproven. If these positions are repeated or incorporated into the existing source rule, 

impacted units will likely not be able to comply with any existing source rule in a costeffective way. CCS is at best an unproven and expensive experimental technology that 

should not be used as the basis for emissions standards in the existing source rule. AMP / 

OMEA urge EPA to decline to adopt these assumptions in the existing unit rule in light of 

the agency’s assertion that it is seeking cost-effective and flexible solutions.

AMP also notes that the unique nature of our business model – as very different from that 

of a traditional vertically integrated utility – effectively precludes our ability to spread 

compliance costs across a large number and variety of units – both impacted and not 

impacted, or to recover costs directly from customers. Again, state flexibility is needed if 

these circumstances are to be accommodated in state implementation plans.
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Conclusion

While by no means exhaustive, these broad topics encompass the initial key issues of 

importance to AMP / OMEA regarding the upcoming existing unit rule. AMP / OMEA will 

work with our states on these and other issues as they arise, and we thank EPA for this 

opportunity to provide input to the agency at this critical time in an effort to influence the 

outcome of this action. Please let us know if you need additional information; we are 

standing by to be of assistance at any point in this process.

AMP Contact: Jolene M. Thompson, Senior Vice President

jthompson@amppartners.org

614.540.1111