## Maryland Department of the Environment: Public Hearing - July 19, 2013 Serious Nonattainment Ozone State Implementation Plan Donna McDowell 24308 Hipsley Mill Road Laytonsville, Maryland 20882 doona.mcdowe l l @ yma jl. com Good afternoon. My 

### name is Donna McDowell. I am a Sierra Club volunteer, and grandmother to two boys, 7 and 9
. I am here for them. I reside in a rural corner of Montgomery County, a stone ' s throw from Howard County
. A i r knows no boundaries, and we are subject to bad air flowing our way from both Baltimore and the District of Columbia ; as you probably know, 

## both Howard and Montgomery Counties received a grade ofF for "'zone Days " from the American Lung Association. Only Garrett County received a C. The Baltimore Metropolitan area has suffered some of the worst air on the East Coast with 22 orange or red ozone alerts occurring during 2012
. We are in day three of a Code Orange for air quality this week! In the Amer i can Lung Association report , State of the Air, the Washington-Baltimore area ranks 9th in the top twenty five most ozone polluted cities, and if 

### you remove areas in California and Texas from the list, we are number one! As you know, ground level ozone pollution occurs when nitrogen ox i des (NOx) and Volatile Organ i c Compounds (VOCs) react in the presence of sunlight and heat. Ozone, causes a multitude of health problems
. According to the Physicians for Social Responsibility, "low leve l s of ozone can cause coughing, wheezing, shortness of breath and chest pain. At higher concentrations, breathing ozone can lead to more ser i ous effects , including lung tissue damage , reduced lung capacity , asthma exacerbation, as well as increased risk of hospitalization for asthma, bronchitis, and other chronic resp i ratory diseases. Recent studies demonstrate that ozone exposure also may lead to premature death" (Coal-fired Power Plants, Physicians for Social Responsibility
. ) Ozone pollution disproportionately affects the poor, the young and the elderly , groups that make up large proportions of the population in Baltimore. The American Lung Association estimates that close to twenty five percent of the Baltimore City residents live in poverty, more than twenty percent are children, and close to 73,000 are over the age of 65. Children are prone to more risks from ozone pollution: their lungs are growing, they are outside and active during peak ozone periods in the summer , and they are more suscepti b l e to respiratory infections
. 

## My grandsons, avid baseball players, play games several times a week and are exposed to more ozone than the average adult. Although most of us shield our children from smoking, we alone cannot shield them from ozone. And that is why we are here before MOE.

### What will help reduce the emission of dangerous nitrogen oxides (NOx) which mix with volatile organic compounds to produce ozone? One of the best ways is to regulate coal-fired power plants in the area especially those which do not have state-of-the-art controls for NOx
. According to Physicians for Social Responsibility, "coal plants emit approximately 87 percent of utility-related nitrogen oxide (NOx) pollution
.. . the second largest source of NOx pollution after automobiles" (Coal-fired Power Plants, 

### Physicians for Social Responsibility.) Coal-fired power plants also produce high levels of sulfur dioxide and mercury not to mention particulate matter pollution
. (And as an aside , Baltimore City received a grade of F for particulates from the American Lung Association.) The Greeks believed that there were four elements on our planet: earth, air, fire, and water. Although we know now that this is not true, the Greeks were right in recognizing their importance to life on the planet. When we foul one of these "elements," we foul the others. Not only do nitrogen oxides pollute the air, they also foul the water, in this area, the Chesapeake Bay. Too much nitrogen deposition in the Bay leads to eutrophication, a process that causes an accelerated growth of algae, leading to oxygen depletion. Garrett Hardin ident ified the problem with pollution control in the ''Tragedy of the Commons " : He said:"
... In a reverse way, the tragedy of the commons reappears in problems of pollution. Here it i s not a question of taking something out of the commons, but of putting something in--sewage, or chemical, radioactive, and heat wastes into water ; noxious and dangerous fumes into the air
. . . . The rational man finds that his share of the cost of the wastes he discharges into the commons is less than the cost of pur ifying his wastes before releasing them
. Since this is true for everyone, we are locked into a system of "fouling our own nest,, so long as we behave only as independent, rational, free-enterprisers , " (Tragedy of the Commons, Garrett Hardin). That is why we must look to the State to act in ways that protect all of us - we all live in the "commons
. " Please recognize the unacceptable costs in 

## ill health and habitat destruction that occur from ozone; please use your authority to require significant reductions In NOx from coal-fired power plants
.

## july 19, 2013 Mary Jane Rutkowski Maryland Department of the Environment Air and Radiation Management Administration 1800 Washington Boulevard, Suite 730 Baltimore, MD, 21230 

## RE: Comments of the Sierra Club Regarding Baltimore Serious Nonattainment Area 0.08 ppm 8-Hour Ozone State Implementation Plan My name is Diane Brown and I am an intern at the Maryland Chapter of the Sierra Club. I'm a second year college student at the University of Vermont. This interests me because this impacts my daily life as well as the life of my friends and family. just this week there have been a few Code Orange days including today. People in sensitive groups, like myseiL are advised to stay inside. But people still need to function. I still need to walk my dog, walk to my car to drive to my internship, and other .simple daily things that require me to go outside. When people who are not part of the at risk group go outside, they might complain about how hot it is and say that its humid. But as an asthmatic, I have a little more to think about. When I go outside even just to walk my dog or go out to the car, there is this element of fear in my mind. Fear that each breath is getting shorter and shorter. Fear that I can suddenly go into an asthma attack. Fear that walking too fast or heing outside for just a minute too long, will he my ticket to the hospital. According to the American Lung Association, I am one of the 175,015 adult asthmatics here in Baltimore that fear every day during the summer months. This fear and this danger are only there when the air quality is so poor like it has been in the summers in Maryland lately. And can only remain and increase unless we regulate all the sources polluting ozone . I'm not ok with the fact that I can't be a part of the summer activities that made up my summer. I can't go to the pool, I can ' t go to the park, I can't go kayaking, I can't ride my bike I can't take a trip down to the Raltimore harbor. It's risky for me and for the young ... the elderly. It's not healthy for anyone really. Reing an asthmatic and just a breathing organism I care about the air. The MDE should he doing everything in their power to reduce these dangerous days of code oranges and worse . I urge

## you today to not just rehash the existing regulations, which is continuing to fail achievable safe ozone levels. Set new standards to address the major in-state sources of ozone-forming pollutants. Why is it that Baltimore area coal plants are still lacking state-of-the-art conti'Ols for NOx? I urge you, MD 

## F. to protect the health of residents of the Baltimore area by imposing health protective emission limits on NOx from the Baltimore area coal plants.

# INTERFAITH 

# of ower 

# (X.Light

Good morning, I'm Chiquita Youn ger from Interfaith Power & 

## Light I live in Cockeysville and attend Unity Fellowship Church of Baltimore. Through Interfaith Power & 

## Lig ht, Baltimore churches and synagogues and other religious communities across the Baltimore area are coming together to save energy, support clean energy and take action on climate change. Homewood Friends Meeting has even installed solar panels! Why are good folks in Baltimore's religious communities concerned about the pollution that the Crane and Wagner coal-fired power plants are putting into the air? We're concerned because all 

## of our religious traditions teach us to care for our neighbors. It's not ri ght to allow air pollution to make people in our communities sick, or to keep people inside for days a t a time every summer. And our religious traditions to teach us to care for " the least of these"

- that we must pay attention to the needs of the most vulnerable members of our community. It is children and th e elderly that suffer most from our failure to put modern pollution controls on the Crane and Wagner coal plants. When 1was youn ger, in the summer time I loved**~** 

## playing outside. 1don't think it's fair that my son cannot enjoy a summer day, because the air is unhealthy to breath. And for decades, we have unfa i rly imposed the health burdens of coal-fired power plants on poor communities and communities of color. Sometimes we are told that gett in g our electricity from coal-fired power plants like Crane and Wa gner is "cheap"; but dirty energy isn't cheap. It Is Intolerably ex pensive. We pa y those costs with our health; we pay with damage to our climate; we pay by experiencin g more storms like Sandy and extreme heat. Please commit today to addressing the a ir pollution from the Crane and Wagner plan ts. Please issue a stronger plan to protect all of us from dangerous air pollution. Chiquita Younger Progra mAssociate @gwipl.or g

### July 19, 2013 Ruth White 8945 Footed Ridge, Columbia Md 21045 Comments for MDE hearing- Baltimore Serious Nonattainment Ozone State Implementation Plan
I understand that coal plants are a major source of the ozone-forming pollutant, NOx. Several plants in the Baltimore area still lack state-of-the-art controls for Nox
. These plants need to be heavily regulated and preferably shut down
. I am concerned for all the children and elderly people and others affected by the ozone and other poor air quality that results from burning coal. Asthma runs in my family. My grandfather's cousin had severe asthma, as did my father
. I had childhood asthma and some residual impact that still affects me as an adult. My daughter had severe childhood asthma and has it some still. She has infant son and we are hope and pray he doesn't develop asthma. My husband and 1 are over 65 and he has a heart condition so we are both an at risk population for the impacts of air pollution
. Families should not have to worry about the health of their children or their older members, or those with lung or heart disease. We need strict coal plan emission limits on Nox to protect everyone's health! In addition, to affecting the health of many in our communities, pollution from burning is a heavy contributor to climate change
. We need to be moving to solar and wind power for our electri c ity .

### 7/19/13 MDE Nonattainrnent Ozone State Implementation Plan 

# Vi -te
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# t'D " ' e

v-..- 11 Cl11b Name: Doug Aus; Home: Towson, MD 

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### As one of more than 175,000 adult asthmatics living in the Baltimore area, I am here today to voice my support to strengthen the Maryland Department of the Environment's Non atta i nment Ozone State Implementation Plan. I specifically want to see nitrogen oxide emissions li mits on Baltimore area coal plants, specifically the Crane and Wagner power plants. When nitrogen oxide reacts with sunl ig ht, 

### it forms excessive ground-level ozone and spreads over the Baltimore area, which aggravates my asthma. I have brought my inhaler with me today. I most often use it when I**a~ the**  

### City
. 

# .. , This ozone pollution does not only harm our air. The Chesapeake Bay also suffers from n i trogen oxide pollutants that form ozone . It accelerates the growth of algae in the Bay, hindering the growth of aquatic vegetation in it and depleting it of oxygen. Most cities in the Eastern part of the U.S. have already complied with standards established by the Environmental Protection Agency in 1997. When compared to neighboring cities, Balt i more has some of the worst air quality on the East Coast. last year, the Baltimore metropolitan area had 22 code orange or red alerts. It is inadequate to simply continue existing standards, which do nothing to address pollution from the Crane and Wagner power plants. I urge the Maryland Department of the Environment to protect the health of Baltimore area residents by imposing em i ssions limits that force Baltimore area coal plants to install state-of-the-art controls for nitrogen oxide.

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## was born and raised in Harford County Maryland and am currently a rising junior majoring in Biophysics at Johns Hopkins University. I've lived my entire life in Maryland and I've grown to love the city of Baltimore over the past few years I've attended school. So much so, that 

## I want nothing more than to stay in the city once 

## I graduate and soon after find a job here. While it was never a problem for me in Harford County, I've found that my minor asthma has gotten more serious over the past couple months of staying in the city and that I 

## am getting shortness of breath much more frequently, even though much of my work is physical labor and I've biked to work almost every day. I'm only turning 20, so my age has nothing to do with It and I 

## have started to think that it is the air in the city that is getting to me. Consequently, I 

## honestly am worried that I 

## can't stay in Baltimore after I 

## graduate and live the healthy life I 

## imagined for myself. I 

## don't really have a strong relationship to anywhere in Maryland, so if the air in the city stays the way it is, I 

## may not have a future in the state anymore. While 

## I may be sounding like a hypochondriac, with a water treatment system inspired by a man who is named after a building many of my classmates have lived in (Abel Wolman) and urban green space sprouting up every week, 

## I know that our city is a leader in water and a leader on the land. I 

## am not afraid to get my hands in the dirt and take a drink of Baltimore City tap water afterwards, but I 

## am afraid I 

## can't keep doing that in the future if I 

## have to breathe Baltimore's current air while I'm doing it. As a result, I 

## am asking that our regulations for ozone are taken further than they have been in the past. Maryland's plan to address ozone is simply a rehash of Its existing regulations, which our inability to achieve safe ozone shows, are not sufficient. This week alone we have had three code orange days, coincidentally one of them being today. Baltimore has twice the state average mortality rate and one of the highest pediatric asthma hospitalization rate in the country. The plan contains no proposals for new standards or regulations to address the major in-state sources of ozone precursors . Since coal plants are a major source of the ozone-forming pollutant, Nitrogen oxides and several plants in the Baltimore area still lack state-of-the-art controls for nitrogen oxides, it is clear what needs to be done. The Maryland Department of the Environment should protect the health of the current and potential residents of the Baltimore area by establishing health protective emission limits on NOx from the Baltimore area coal plants. MOE has the authority it needs to require significant and needed reductions in NOx from these coal plants. Thank you for listening to me and 

## I hope for our health and our future, that you will make the r i ght decision.

## My	name	is	Tim	Whitehouse. I	am	the	Director	of	the	Chesapeake	Chapter	of	the Physicians	for	Social	Responsibility. As	has	been	noted,	o zone	is	a serious health	problem	in	the	Baltimore	area. Ground level	ozone	contributes to asthma,	emphysema, bronchi tis	and	other	diseases. Two of	my	th ree	children	suffer	from	asthma; one	has	very	serious	asthma	that	requires frequent	hospitalization. The	Crane	and	Wagner	c oal	plants	are	a	major	source	of	the ozone - forming pollutant, NO x

## , in	the	Baltimore	area	and	a serious	cause	of	respiratory	problems	in our	population. It	is	unacceptable	that	the	Crane	and	Wagner plants do	not	have state	of	the	art pollution	controls that	are increasingly common	in	other	plants around	the	country
. The	PSR	Chespeake Chapter	calls	on MDE	to protect the	public’s	health by	imposing strict health
- protective	emission	limits	on	NOx from	these	two coal	plants. We	ask MDE	to	di rectly	address	this	issue	in	the implementation	of	its	State	Implementation Plan	and	in	the	permits for	these	two	plants. Also,	because	EPA	has	reclassified	Baltimore,	MD	as	a	“serious”	nonattainment	area, we	call	on	MDE	to	enhance	its	monitoring	of	air	quality	in	the	Baltimore	area. Thank	you	for	accepting	these	comments.

## Avoiding a Train Wreck: Replacing Old Coal Plants with Energy Efficiency R. Neal Elliott, Rachel Gold, and Sara Hayes August 2011 An ACEEE White Paper

{!; ) 

### Amer•can Council for an Energy-Efficient E conomy 529 14 111 

### Street, N.W., Suite 600, Washington, D.C. 20045

(202) 507-4000 phone, (202) 429-2248 fax, a cee e . or g/\void nq a Train Wreck • L A C I I I


### Table 1. EPA Regulatory Actions Affecting Utility Coal Power Plants**Cl•~n** Atr Tr .M'I
..pon**Rule 4c;** **AT~ I**  (Succ•s.s.o "" IQ CA.IRI ._I • I • I I 1 I
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### Veatch 2010 

### Aging Fleet Most of the coal-fired U
. S. electric generation fleet was built be tween the 1950s and 1980s. These coal plants were ori ginally designed to operate for 30 years, although through-life extension measures have enabled them to operate far longer than ori ginally anticipated. The median coal generation plant was bui l t in 1966, and most of the exist i n g coal capacity is over 25 years old. w ith the last major addit i ons occurring in 1980-1984 (Source Watch 2011 ). Unt1l recently. many of these older, smaller plan t s were exempted from provisions of the Clean A i r Act. As a result. many of these plants have not been moderni z ed or updated with current em i s sions control t e chnologie s (Hsu 2006). Many of these older plants have not seen the level of modernization investment that some of the newer plants have received
. so that their cost of operation may be higher due to deferred main t enance . 

### Utility Fuel Prices Compounding the challenges for electnc ut11it1es is the shift i n the relative prices of coal and natural gas . During the 1990s and early part of 2000s , ut1ht1es 1n many regions made major Investment s 1n new natural gas capac1ty (EIItott 2006). Because of restructur m g of the electric power industry
. low gas pnces a t the t1me and Improvements 1n gas power plant te chnology. some reg i ons of the counlry sa w substantial investments m natural gas f1re generatton (CR S 201 0) Ho wever , during the 2000s, natural gas pnces rose dramatically and exhtbited Significant volatility, which made it a less attractave eleclnc generation source . Dunng the latter part of the past decade , coal markets globali z ed and prices increased dramatrcally (Elliott 2006)
. During thi s same period. we saw the development of non-conventional natural gas resources in parttcular
. shale gas that has result e d in a dramatic reduct i on 1n natural gas pnces rn North Amenca (MIT 2011 )
. These lo wer and more stable pnces are proj ected to cont1nue rnto the foreseeable future (Habacivch 2011 , Petak 2011) Becau s e of 1ts low operatmg cost and low emissions relat1ve to coal. natural gas has aga i n become a more attract i ve uttlity fuel even though lhe price of natural gas on a per Btu bas1s rema1ns somewhat hrgher than coal (see Ftgure 1)
.Avoiding a I r**;~** 11 Wreck**~;-** AC I I I


### INTRODUCTION For the past century
. America has relied upon coal-fired pow er plants as the primary source of elect n c • ty generation. Updates to U
. S
. Environmental Protection Agency (EPA) regulations Wl ll requ1re that i nvestment be made in these plants to allow their cont1nued operation. These combined market cond i tions call 1nto question the economics of further investment in many of these older coal po wer plants to allo w the i r cont i nued operation
. Addit i onally
. 1n recenl years . coals cost advantage as a ut i li t y fuel has d1m1nished v v hen compared t o natural gas . So
. utililles are faced wi th the prospect of either i nvest i ng to bring many coal po wer plants mto compliance w 1th the updated environmental regulat ions . or investmg 

## m new energy resources to meet customer electnc1ty needs
. The potential costs of bnnging coal plants r nto compliance or replac1ng them w i th new . likely natural gas plants would result in sign i ficant increases in the pri ce of electnc1ty Substantial uncertamty ex1 s ts about the costs the Industry could face
. but est•mates for compliance mves tment costs range from $70
- 180 bill1on (Celebi e t al. 2 010)
. A number of ut i lit i es including Progress Energy Duke Energy
. and Amencan Electri c Pow er have already made announcements of planned retirements (Mufson 201 1 : Wald 2009 : Dayton Da i ly News 2011 )
. Regardless of w hether ut i lities opt to retrofit old power plants or bu i l d new ones . ut i l i ties and the 1 r customers are faced w 1th the pro s pect of Increasing e l ectnc rates to recover the cost of these new supply mve stments
. Energy efficiency represents an altematrve resource that can replace 

### a significant portton of the at-r isk coal capacity at a fract i on of the cost of supply-side Investments
. Maximiz i ng cost-effecti ve investments in energy efficiency can help ensure adequate supplies of electricity wh1le contain i ng the rate increases
. In addi ti on. energy efficiency investments made in the tndustrial sector can contribute to the modernization of ou r manufactunng sector
. prov i drng rmportant benefits to local economies
. 

### SITUATIONAL ASSESSMENT A number of factors figure into 

### a utility's dec i sion about w he t her to retrofit or retire and replace an exist i ng coal plant. The maj orrty of the coal plants that may be affected by these factors are th e older. more costly plants that generally are run a limited number of hours per year . 

### Impact of EPA Utility Regulations EPA is proposing updates to at least six regulations affe ct i ng coal -fire d power plants wi th compliance deadlines 1n the next seven years (see Table 

### 1 )
. The combined effects of these more strrngen t regulations. rather than the effect of any single regulatton will affect mvestment decisions by utilities as to w hat course to t ake to meet c u stomer electric i ty needs
. 1 Various analyses have projected that betw een 

### 6 000 and 

### 65
. 000 MW of capacrty could be at nsk of closure in the near future as a result of the 1mpact of th e se regulatory changes
. Posstble re tirements of older po w er plants have ra i sed concerns about the adequacy o f supply rn some reg10ns of the country
. primarily in the M i d w est Southeast
. and Mid-Atlantic reg1on s of the country (Tierney 2011 )
. More recent analys is by ICF (20 1 1) made after EPA had 1ssued more details on the proposed ru l es suggest the rmpact may no t be 

### a great as some Initially feared. w1lh ICF reducmg 

### Its estrmates for closure from 50,000 to 40.000 MW (SNL 2011 )
.

' Wo r ld Resot l rces l n st rt u l e p r owtes <1 good exp l arm t ro n of the s e r.1 le s on lhe 1r Web s t e !.!lf p W' .VI ' i**\' i~~IC!.:..:_c,•o..** **'2S)J.D.' 1.~·_;5]~Jlll~.~**  l!:'J.I!:_l!._!'lt. I**!.!,VH.!!!_l~U~~I!•** 11**lt'!Jtrld ht!b_.II!IJ•.!Y..!.U!J.!.I~.:J** /\voulml a Train Wreck**c** 1\CI 1 I


### EXECUTIVE SUMMARY Changes in fossil fuel markets and updates to environmental regulations are put11ng increased pressure on the competitiveness of extstmg coal-fired electric power plants. The s e changes put on the order of 40.000 megawatts of coal-f1red electric generation at ri s k of retirement. This capacity is primarily located in the Ohio Valley. Upper Midwest, Mid-Atlantic. and Southeast w here coal is the dominant generatton fuel. Most of these umts are older. less-used plants rather than the more modern untts that have already had thetr emtssions control systems upgraded
. Whether these coal plants are retired and replaced
. or have additional environmental measures installed to bring them into compliance with updated regulat t ons . utilit j es will need to make a Significant investment These investments will raise electncily rates for customer s In many affected markets. electnc rates are projected to increase by more than 20 percent tn the next few years An alternative to these supply-side investments would be to look at customer-s1de investments in energy efficiency to replace th s capacity. in parttcular
. combined heat and power (CHP) and waste energy recovery . Energy efficiency and CHP are typtcany less expensive energy resources than coal po wer plant retrofits or construction of new natural gas generation As a result. impacts on electricity rates would be minimized
. benefiting all utility customers. w1th many customers having the added benefit of seeing their energy bills decline as their consumpt on declines
. Moreover. thts strategy of using energy efficiency to enable retirement of older coal plants would help reduce the risk of future costs likely to be tncurred by coal-f1red electricity generation
. such as a cost for carbon emissions. A key target for these energy efftctency investments should be large energy consumers , particularly manufacturing firms
. many of whom are potsed to make major new capital capacity mvestments in thelf facilities as the economy recovers and demand for manufactured products tncrease s . These investments in manufactunng have the added benefit of modernizmg ener g y-using infrastructure in w ays that offer add1t1onal local economic benefits of job creat i on and enhanced environmental compliance of the manufactunng facilities
. Unfortunately. while customer-side investments represent a least-cost path for maintaining electricity supply requirements
. current utility regulatory and bustness models do not encourage utilities to make these investments
. To realize the full economic benefits of energy effiCiency will requ1re a change in the utility regulatory business model to encourage ut i lities t o shift a large portion of their investments from the supply- s ide to the demand-side. This shift will require changes that encourage utilities to invest ratepayer funds in the demand-side and allow them to earn a preferred return on these Investments
. If the se pohctes are put in place
. customers will benefit from lower electricity rates and a more vibrant local economy w ith more jobs. while electricity utilities w i ll be motivated to become energy efftciency suppliers
. not just electricity suppliers. It has often been observed that crisis and opportunity are inextricably linked
. as a cnsis encourages us to push the envelope of innovation and accomplish feats we didn't think we were capable of
. The so-called " coal train w reck" may afford just such an opportunity to modernize our electric utility regulations to reflect a new century of different economic and energy markets
. creating opportunities for the utility industry to define a new path to sustained profitability by selling efficiency services not just electncity, wh le ensunng reliable and affordable pow er to their customers. 

### ACKNOWLEDGMENTS The authors express their appreciation to the numerous individuals who have shared information and insight s that have formed the tdeas expre s sed in this white paper . They also express appreciation to their ACEE E colleagues who have reviewed and edited 

### it. Please note that co-author Rachel Gold
. formerly with ACEEE
. i s no w w t th OPower
./\ v ut d n q a Tratn Wreck ·• /\( : 1 I I



### t • ,o l 

### Figure 2. "At Risk" Coal Generation 

### by Region



# ? 

# \ Source
. ICF 

### 2010 

## . ( \\



### Table 2. Forecasted Capacity at Risk 

### by Region Percentage of Total Summer Capacity at Total Summer Capacity at State Risk Capacity R is k ll hnots . l nd t ana Ohio
. M ichigan , 25GW 152 GW 16
.4%

W ISCOnSin Al a bama Kentucky 11 GW 88GW 12
. 5% MISSiSS i ppi , T e nnessee Dela w are . Flonda. Georg1a l\ 1arytand, North and South 5GW 201 GW 2
. 5 % Carolina
. Virg1nia
. West Vi r gina Io

w a . Kansas
. M nnesota
. Missoun
. SGW 77GW 6
.5 % Nebraska
. North and South

D a ko t a Penn s ylvan i a . Ne w York
. Ne w 3GW 103GW 2 9'k

J e rsey 

### Source : capac 1 ty at nsk-IC F 

### 2010 ; summer capac1ty-EIA 

### 2010 - .> •Avoiding a Iran Wreck
.**~) I** **~** 

### ROLE FOR ENERGY EFFICIENCY Energy efficiency represents a low-cost energy resource that could be called upon to meet a significant port i on . if not all
. of the electricity capacity that could be lost due to coal plant closures. Significant energy efficiency resources are available in the at-risk states These resources are less expens1ve than investments required to bnng ex1sting coal plants 1nto compl1ance or to construct new generatton capacity
. and can be deployed much more quickly As a result. including efficiency as pari of the utthly resource plans for at-risk states will mimm1ze the costs of meet1ng future electnc1ty needs 

### Deploying Efficiency Resources Costs Less than Building New Coal Plants Energy efficiency has proven to be a least-cost resource when compared w1th new generation capactty and is the cheapest option for meeting our additional capac1ty needs. ACEEE's research has found that the average cost to a ut1lity for energy efficiency measures is 2
. 5 cents per kWh, in comparison to new generation sources . which can range from 6 to 15 cents per kWh (see Figure 3) (Fnednch et. al
. 2009: Lazard 2009) 

### Figure 3. Levelized Utility Cost of New Electncily Resources 20 18 16 :;: 3': .>< 14 

# .. c.. 

# .. '! 12 

### ., ::!..**~** 10 0 u 

# ... 8 

# ..

. !::! 'ii > 6 

# .. ..,j 

# r

0 

# .. "' .$ 1i 0: 2 0**En~rgy** Wtnd Biom
.us Natur11l G.1s Pulveri l "'d Nuclear Co01IIGCC**Sol:~r** PV Elfocoency• Comboned Coal ' Cycle Nnll!s I llt !I!J Y I!IIK
·t · n t y nvt l<i ! JI'**~ltltj'ar•t** pu!llll • m tlnlnlllMil I rtt : drlt h 1'1 , , ,I ; Jl)IJ (/\CI I I ) n li o llu:r tln l a hrm I ill <ltd )00!•**II~J il**  P r d rn nq e of i1dvanr.ec1 p w v Pfl / f! c1 f0.1**l.rc1P <.** **fr ~**  t ll rh O n rapi
. I 'P <11'1 0**romprP.S~ On** **.** In particular. energy efficiency Investments in manufacturi ng. Including combtned heat and power (CHP) and recovered waste heat are among the lowest cost efficiency resources (Ch ittum, Ell i ott 

### & Kaufman 2009)
. Investment i n manufacturing has the added benefit of moderniz i ng manufacturing plants
. Improving the i r global competitiveness and reducmg their cost of complytng \v ith future industrial a i r quality regulations. U.S. manufacturing is poised to enter a period of major capital investment to modernize its capacity ( BCG 2011 ). which it will need to rem a en globally competitive
. A signi f icant share of U
. S
. manufactur i ng is located in the states that are likely to face retirement of existing coal capacity
. By directing some utilety energy efficiency investments into manufactunng modernization
. the U
. S. can maximize the economic impact of these dollars. States and localities that invest in efficiency profit from a range of secondary economic benefits as w ell
. E nergy efficiency investments directly reduce utility bins and operating costs for consumers . Th ts effectively reduces dollars spent for the purchase of fuel and the costs of operating a coal plant. and/\votd I I! J a Train Wreck " /\C I I I
redirects those dollars mto new jobs in other sectors of the local economy . Most of these sectors create more local jobs than the fossil-fueled electnc generatmg sector where significant dollars flow out of the local economy (Laitner et al. 

### 201 0) In addttion uttllzing energy efftciency resources to enable the retirement of older coal plants helps reduce nsk by stgmftcantly reductng the amount of future costs that ratepayers would face if a policy to tmpose a cost for carbon em1sstons was enacted
. 

### Efficiency Can Meet Forecasted Capacity Shortfalls Energy efficiency is a vast. untapped energy resource in the U
. S. This resource can be used to meet the forecasted generation capacity shortfall
. Many ut1ht1es are already factoring energy efficiency into their planning (Harris 

### 2011; TVA 

### 2011 ). and energy efficiency is recognized as a strategy for meeting capacity challenges in many of the analyses predicting the retirement of coal plants
. Proactive management of energy efficiency (and "smart gnd " ) resources have been advanced as solutions that can ensure that electnc reliability will not be compromised
. One such analysis estimated that by 

### 2018 new energy efficiency programs could decrease summer peak capacity demand by 

### 20,000 MW of the 

### 40
. 000 MW that may be needed (Bradley et al
. 

### 2010; NERC 

### 2009)
. An ACEEE meta-analysis of 

### 48 studies on the potential for energy efficiency in the U.S
. indicates that given the nght choices and investments. the U
. S
. could cost-effectively reduce energy consumption by 

### 20 to 

### 30% or more over the course of the next 

### 20 years (Laitner and McKinney 

### 2008)
. Energy efficiency potential studies m a number of the at-nsk states indicate a large amount of available energy efficiency. The Southeast Energy EffiCiency Alliance (SEEA) analyzed the cost-effective energy efficiency potential for many of the at-risk states includtng all of West Virginia and parts of Alabama
. Georgia
. Kentucky. Maryland, Mississippi. New York, North Carolina
. Ohio. Pennsylvania. South Carolina
. Tennessee
. and Virginia. The analysts covered four end-use sectors (residential. industrial , commercial. and transportation) and three fuel types (electricity. natural gas and fuel oil)
. SEEA projected that the measures included in its study would avoid the need for approximately 

### 60
. 000 MW of new capacity in the southern United States by 

### 2030 (Brown 

### 201 0). ACE E E has conducted state-specific studies of efficiency potential in a number of the at-risk states and found substantial opportunities to meet capacity needs wi th efficiency
. In Ohio
. cost-effective efficiency policies could reduce capacity needs by nearly 

### 1
. 500 MW by 

### 2015 and 7 

### 600 MW by 

### 2025 (ACEEE 

### 2009). In Pennsylvania , the story is even better. By 

### 2015 the state could cost-effectively reduce capacity needs by over 

### 5
. 000 MW ramping u p to approximately 

### 20.000 MW by 

### 2025 (Eidndge et al
. 

### 2009)
. The untapped potential for increased efficiency savings is massive. with the proJected range of available efficiency consistently falling within (or exceeding) the range of est i mated capacity needed to address forecasted coal retirement. Many at-risk states have only just begun to take advantage of this resource . and there are a number of cost-effec tive policies these states can adopt now that will avoid constrained capacity and high electricity pr i ces . The states and regions most at risk are already engaged in some energy efficiency programs. w ith more efforts in some states than o t hers
. Table 2 lis ts states that are mo s t " at-ri sk ' ' for coal power plant rettrement. All of the at-risk states are already meeting some capaci 1 y needs with ener g y efficiency
. However. the savings being realized represent only a fraction of the available. cost-effect ive resource (Molina et. at. 

### 2010). Of the at-risk states
. nine have an Energy Efficiency Resource Standard (E E RS) , which establishes targets for energy effic i ency savings for the utilities i n the state
. These sav i ngs are targets and requirements by state legislatures and utility commissions that wt ll requtre Investment in energy eff1c1ency programs by utilities. The savings from those programs are commitments from states and utili t ies that wtll help to meet capacity shortfalls
. ACEEE's recent report on EERS performance has found that states with an EE RS are achieving significant energy efficiency savings from utility programs . reducing strains on the utihty grid
. Overall. most st ates are meeting or are on track to meet energy sav1ng goals
. Thirteen of the twenty states w i th EERS policies in place for over two years are achieving 

### 100% or more of their goals. three states are achievi ng over 

### 90 % of their goals , and only three states are realiZing savings below 

### 80 %
fiSEE C0\

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- mon th roll in!t a\·eragc n:ulo\ '<1 1 e fti c • c:ncy fm men:my of at**lcll l**  ::>0 pt!I'Ct:lll
. (:!) Fm the I:! month -> beginnin g .lanu ;u y 1
. :!OU ;md**th.: ~t:** **aft.:r.** each a U eckd f < Kihl)**~lt<tllm.:ct** a I :! · 111n111h**rnlliu~** it\'CI'al!..: rcuam H)**dli~: ic** **nc)** !(n mel em ) nf ; tl lca,;t !)() 1**~:cut.** l3) Tit<: IIII!I ' CIII') ' lclllll\'aJ cfliciclll') t·.: q mr.:d in 

### * I>( I) a111l (.::!)**nftJu~** I'C !l: lllahUII**~11 111**  he dl!lc:nniued in m:conlanc.: \\'ith Rc g ttlat1ou .O.J of llu-. ch aptc:r. 

### E
. sy ..t.:m- wide Cumplimii:C Dt:h!lllllllilllUII'>
.

\.0 1 OHICL\L II XI RJ·\ ' ISION 

# :: :wSl.l C0\·1:\R ::!(• II. :?

- at h !tp '" " d
... d , t·do.: u u l. u , L<>l ll ; n -.ub lst h: o.:h .•**t..: -.<~(** **(' hap** **l·d tllll**  ..., u h 1 1 ll d I lm OH ICI. \I. COPY NO I O il 1('1. \I. I E X 

## r t I) Cumpliauc.: with th.:**.:111i~~iun** lituitatiuu ' in***~ B**  mad C nl**thi~** 1\: ; m l a tiun**Ill <'** **~** hc achi..:\ ·c d by d..:ulmhtwtill !-! that th..: hlt;1IJ11HIIh..:rul tum. Cllllll..:d hum

. 111 d..:d n c**~cu..: tu1** **~** IIIIII!. 111 a**~)'!.h:lll** do.:s nut cxc.:..:d th..: !>11\llul th..:**lmtii<~ !-!** **C** liuulahuu-, lur all dcctric**~..:ncratilll! 111111** **~** 1 11 that -,y,.h:m {::!} , \ l> ysh.:lll · \\ td..: cmuph a uc.: d.:t.:nu i u H iiuu**~ho~ll** hc**h.1:-~:tl uul** **~** upuu**cmi.,~iuu** ... lnuu nuit:- 111 \ • lat) l
. uuliiMI**ar~:** suhj.:d tu th.: c tJu ..; ..;iou huntalluu..; 111**B** a mi C olthi.; ll! f!. IIIHIIUII
. { i) ( f rl 1111it th .t t 1-. pari uf a**!.~ -;tclll**  IS II it**II ~**  ).:rrcd In a diJ1..:J ' CIIt JICI ' llll th a t dues UUt ll\\ II
. upcr.ttc. l..:<t"!· m cuulrul ;111 all\!ctcd 111111**bjcd** lu**tin~ ~:haplcl**  lh.:**t1a1hl~ncd** nuit sh.tlllll..:ct th..: liuutahuu:- 111**(': Band**  C u f tln-; 1 ..: 11 11latiuu applic<ibl..: In that ..:h.:ctnc**.:u..:ratl\1~** 111111. 

## .04 Detea·mining the l\lercury Remo\'al :Efficiency for Affected 

## F acUities . .-\. T he**procedme~ of** **~§** B -F of thb rel!uliu ion**hall** he ll'>e d to demo nc;tm te com J )Iiance with t he I :-month**rollm ~**  ;wet"<t g e r emo\ a l e f ficienc y required for merctll') b) Re g: nlaHon
.030 o f rhi<; chnpter
. Tite owner lll' operntor of nn**ff ~cte** **d** fn c i lity**~hnllnotify** the Department of the comp linnc e d emonf>tm h o n me1hod tl ha" elected from 

### §* 0 -F of**tlu ~** **re nlahon**  on ot· before .I annal} ' I. :!0 I 0. for the compli nnce period that**commence ~**  on that dnt e nnd on or before Jnnii:U} ' 1. :0 1 3
. f or the co m pliance period thnt**conunence ~**  on that dale
. T he owner or operntor of ;m electric g eneratin g umt th a i dec t<. to demon <. lrale compliance\\ tth the requi r ed merctll')' remm ·a l efficiency 

### hy meetin g the ma !." ellli "'-J Oil" limit:uion 111**~F** ofth i"> re g ulatwn !> ha ll ut ili ze that '>ame method tor a ll other ele.:tric g enerntlll g ll ll t h m the**~y;, tem.**  O n .:e elected t o r ench nf fecled fa cthty or s y;, tem. m . :tpplicable. th e option may not be chang ed during: the de"tf!nated compliance periocl. hut may he changed for the next comphance per iod
. B. Dete n ninlll l'- :\·Ierctuy Content 111 Coni nnd :\Iercury Fhte Ga;,**mi '>~** **ion** Rate!> for Ench**.-\ft~ctecl** EleciJ ic Generat ing t:nit. ( 1) The 0\\ ner or operalot of an decII ic**eneratm ~**  1111it '>llbjectto thi;, regulation , hall. a t lea<, I once each qum1er dmmf! a**con ecllll\**  e I S ·month peraocl**be umin** **~** not htter th:m Jnly I.**~oo .**  (a) Determme t h e meJ'C\11 ) content 

### of the coal u h l ized 

### by ench affected mut u,;mp. nte s tmethod npprm ·ecl h) th e Depm1ment
. anrl (h) Conduct n comhmlion**"** te<.t to clelenu me the merc ury emi,-,,;ion r:1k mlhe llue f!a;. ttp!-IJ' ea m of i'lll) pollution controlmea , ure.**mcludm ~**  fuelm..:rcmy h e ue fi cialion
. (:) Comh t h tiou Jl. :l!.**te ~**  and collection of co:tl <,;nnple-. to dete rmi ne the mercmy content in co<1l ,; hall he performed on the "- 1 1lh! clay or cli'l )' \
. 

### 0) The mercm') ' emi '- "ton rrtte in the flue !!a :-**hi!** 

### II he l'epoated a '> ounces of mercury pet tnllion Btu heill mput. ( -t) Combt t-t ton**p. ~** **le lln** **~ ~h** **:~ ll**  he pe t foamed**tt.~in !l**  a te '- 1 protocol**i'l ppron~d** **h~** the Depattmenl
. The te-.t protocol -.hall he ""bmmed lo the Depm1ment at**le r~<.** **t -t** **~** cL1 )' ' 

### p1 ior to commencement of**Je ~t1112..**  t "') The 0\\ ner or operatm o f an at feet eel electnc**eneratin;** unit 1-hall ,;uhnut to the

Depmtment : (a) T he re,;ult!>**ofte h**  to cletennme the mercm: content o f**co<~l** :mel merctU) emb <;io nmle in the flue
.!!a;, upon r eceJpl ancl



### :-..0'1 OH ICJ..\1. I I X ' l Rl· \ IS ION**·" ()** Sl · l C0\1 , \R**~(,** 11
. :-; a t btlp 11 " \I 1 i" l
... t
. • k. liHln ,**~~"' "i** **'Hbr .:** **hapl..: '**  

## :: r. _ C l•;op k •.... bll u::Suh l •tk I I lmOI·FICI:\1. 

# nwr- NOI Oil ICI.\1. ITXT t h) :\ tl.:rumblralluu thai I h.: curuhnst iuu ,l!·l"**~..:** ... 

### c.. wct'o.: p..:rlnmJc.:d lllllillll !'! a**~."oal** \\ irh a mc.:rcm ) couh!ul \\ ith111 I he: ,., ; mr..: or luwc.:1**ran~c il~**  I he: mc.:n:lll) ' cuut..:uluf I he: ..:u a l ntrht ..: d hy th..: c.:lc.:dn..: ,l!C.:IIL!I tthu;.: unit dunn ;: the: p1..:\ tuns I() y.:;u-. . C.**Dd..:mumu~** rite: Lncouhol!..:tl \l c.:n:m)' Hue Cias Bttsdiue lor ;ur AfJ;.:..:h!d hu: tlil)
. 

### t I) The llllCIIIIIJ'Uiled m.:rcmy Cllll,,illll rate in I 

### h..:**flu.: ~**  ..... 

# ur cttch dech II: ,l! CII<.:tallll !! nnil .;nhjc..:l In Uri-. \.h ap tcr .;h;ill U..: d.:tcnll ll lt.!d a.; the**<~ lluu.:tic**  ; n · ..:ra!!c of the quarterly ..:omhu-.tiuu**"** tc-.ls rcqu i rc.:d by**~B** ol lhi
... re)!lllatiuu c.::o\pn:-.sctl it !> uuuccs 111:r trillinu Btu ho:<tl input {:!) Till: lllll:tlllhullcduh ! ICIIry ha»dlltl.!**euri~srmr** rii!l.! 1m i H I aHi:ct..:tl fac 1 lit> · ... h
. tll h..: deh:nuiucd a l-. lhc hc
. ll iupul \\ ctJ!htc.:t! a\ c1 a**~t o:**  !I f the enu..**~i uu**  rttlc!'. li11 the cual-lucd clct.:t nc l.! CIIC.:I ttl111 1! mnb ill lh..: alkd..:d lii..:ility d..:tcnumc.:d 111 a ccnnlaucl! \\ 11h * C( I) of this rc ;;: nla hnu
. l ') I he tllli:UUirnllcd mo:n:tuy ha-;chuc**cmis.;iullr lc**  

### i u l! C( I )**<~1111 (:** **)** ol tJt p ,**n: ~::** **nlahon ~hall**  he llll!a,.,ur cd**11)1~11** e am 

# ur iillpulhriJon coulmlmcao;mcs. iudutliu_!.!**rclmell:\11 ~**  hcud i d.tl\1111
. D
. I ).:muu-;tra l iu¥ ( · mupl1 ;mcc B)**~**\In II;: 1\ kr..:ury R.:lll(l\ a l I·**fli~o:icuc .**  ( ·ump lla uc..: '' 1 th I h.: II.!IJIIiJ.:tlm.: l l:\11') r..:mm ·alenicrcucy i.;**demtms r<~t.:d**  at . m alh:l:let! f <1cihl) \\hen the h..:
. ll lll ] llll \\ct j.dllcll m c:ragc: of I he! mt!rc.:ury**cmi;,~ton ~**  of all co a l-tin:d dcctr ic**gcnc: ra** **tm~** IIIIth M the at f c:ct.: tl t: 1ciltt). c.• 

### let dilled i h · • 1 :!-munth 

### mllm_!.! <1\ cr. t ): l.!. '" · (I) For the! I :!-mouth pct tod**conuucncm ~**  on Janumy I. 

## ::u Ill. not more lh.m**~0** p<!rceut ul' the m•cmttmlletluacn:ury Cllll'iSIUJI**t<~k** c"l a hJi,.hetl pup,uanllu**C** uf thi.; IC !:! IIlaholl: ;uul**(~)** f or the I ::!-moulh pc:1 iod comm<!ncin ll .lanumy I. ::!0 U , u ul th<!IC ,,ft .:a. 1101 morc I h a n I 0**p..:r~.:cllt** uf lire: 1mcnnrmllcd men:ury**cn ~-;** **nn** rate e"'tabli s hcd ptusuaul In**C** nl'**rhi ~**  rc :ml
. thou ,


### t I) ( " ump liaucc with th..: 1 equir..:•lmcr..:my rc.:mm al dficli.!IIC)' is achie\ ctl lm ill\ ttl tee ted litcilit y \\ hc n I he hcnt utpul we ig lu.:d ,n·t!r a gc of the lllt!n:ury <!lllbsion**ntte~** of all coal-fitc:d dec ln..: !!l.!llcratm g mrirs alth..:**alli:ctctll ll.:llily** **.** mca ... urcd as 11 11-nluuth wlliu_!.! a\·cr.i:,tl!
. dues uut c.:xt:cctllhc apphcab t .:**t!llli~** .. iou ral<! lll**~!.: (::!)or** **thi ~** **g.n)atioll.** (::!) I mi.;-;illll Rat..: .;.**Emr~~ on** **Li mil~**  Ounce ;. pe1 · Trillion Bin Heal Inpnl**Be~innin_!!** ..\fli:ct..:d Fa«:ility .Totll\1;11)' I. 

## :o 10 J;un m ry I. .:!0 1.' Brandon S hores**~I** 10 C'
. P.Crane ."i 

### IS C'lmlk Pomt**~0** 20 

### Dickerr.on**~s** 19 H.:\. \V afl_ner :!:'**I~ 1\lon~antown** **7 I~**  

### R
. Pant Smith**~:'** IS F.**Demon~tra!lll ~**  Compliance by :\·leering., .\·lt!I'Cl\1')'**.\ as~** **Emi~.,ionl'ap. .**  

### 7 Rl · \ IS ION <: !OSll · CO\L\R ::!(,I L:::- .d b il l'**\1\ \\.d~** **l.,tak.tml. h**  ro ut.tt ,nllltll.: .: l t .t i'ILI ::! ( • Ch ;tp h: t.; hh u · '-,1tb1ttkll lnr UH ICI. \I. C<W\ ' NO l OFFICI : \ I. 

## n : xr (I) Cumplmm.:o.: \\ t lh tho: H!t ]tllh:tl m o.:n .:tn) ' ro.:lllll\ 'ill o.:fhcto.:uc) 1., tlo.: tuuustr ;tlo.:tl at .111**an~clt.:ll** 

## r • •**ciltl~** \\ ho.:ll tho.: 111 · 1.,., C.:lll l'o'> IUII
.. . 1111! <1-. llh.:tl Il l (lllltllll!> as a I ::: - IIIUIIIh lUi hil l! JIO.:ItUd
. du 1101 O.:XI.:t.:O.:d lho.: apphcahlc o.:tllh.;JmJiimih iu**I(::::)** of l)u.., ro.: ;:. ttl a lul ll.**mi~ '>** **ton** Limi h 

### Ponud,**p~r** Y**~nr B~** **imtin g**  . \ fli.!ch:d l ' <tc thl y Jamt lll ) ' I. ::::010 Januar y l. 

## :o 13 Brandon**Shor~~ ~** **(i.** C. P
. (.**ran~** 26 

## u Chalk Poml lOS ; q**Dicker~on -~**  . ... .: H.A W:-t g. ner 68 .,


### ·" ·

' i\**lors~;mtm, n**  

### I::- ti(l R. Pmtl Smith**I~** 

### t q In the o.:\ ·cul !h a t au**dc~.:tric :.:** **cucr liu~**  ttntt at ,m ilfto.:ctcd f.1ciltl ) "uh j ccl lu tJu, dt;,plo.:r pcniiHIII.!IIIl ) cc . t'o.: ' npcratinu
. tho.: lil a '"**o.:m i~**  ... u m limilahuu iu**)** uf tin-; ro.: c ul
. shuu \\ hich h .lppl ic nblc: to tlwt aft .:ch:d t itc iht) :. h a ll bt: n ! dnc.:d**propot1iuuall~** ba ,; .:J on I h.:**r~ h\**  e c a p acity
. 111**me~a\\0111".** 

### nf a ll the t:lo.:chic**_!! ellent\111** **~** IUIIh at lito.: allo.:ckd lac !lil y which m o.: Mthj..:t.:llu till'**ro.:~nl i!wn** **.** (**)** In th.:**.:\ ~ut**  tl1o1 t < 111 .:ut ir.: aff l! ct.:u fa c1lity '' 1 thiu a**., ~**  .. t.:m**p~mt .t** **llcutly c~** **~.: .,**  np.: r, tlluu. tho.: lutalmii' ' o.:mt ...... I UII luuilal ic•ll 1 11**~I ~)**  uf I hi" l t: l! llh 11luu ,JMII ho.: 1 educe; I h) tho.:**111.1 ,.~** **.:111i~swn** linutalum appltc a hlc Inch..: llflo.:ch:tll , tcthl y. l '\) I xco.:pl dill Il l;! p..:1111d-. ul 'l < ulu p. 'huh in\\ 11
. 11M I l'nncl inu u1 lllilllllo.:t J.I IICC. the m 1 110:1 Ill upo,;r , IIUJ ufau d..:c t nc :.: cu o.: r .1 1111)! 111111 shii ll O.:lhlllO.: ti M I IIII:IC II f ) CCIII ! I'UIIIJ<: il ,llll:' .ue Clllll lll lllllhl)**cmplo~ed** un**.::~ch** 111111 aut!**prop~l'l)** mlJthkd till' optim a l**cuutrolt:~km !t**  wto COII!>Hlc!rahou til.: up.: r• um ;;: CUIU hhnll, , 

## .05 !\lonitoa·ing nnd Rcpm ·ting l{cquh·cmcnts. A. 

### Comphmtce \\ 11h 

### the emi, , ton**mitntion ~**  

### in thic. clt :Jpler 

### 'hall he**<l~mon<,lr:Jtecl** \ n th :1 cntllinum" ..:1111"1"11 munilnl'lll)!**"Y~Io.:111** that '" ' ' '"' " lied
. npcralo.: d. mKI ccl ·lltio.:tlm otccnnlmJce \\ 11h J() CFR Pari " "'
. B
. lk a unun ;: \\ a th c.tlcutlar ycar :!00- < nld e ach yo.:;u lh!.!reaflcr.**th~:** uwn..:r nr "Jicr'a tor ur e a ch dcclnc ;! O:IIO.:r:JIIIIJ.! tunl , nh)o.:cr lu**thi~** dtaptct !>hall ,.,tthnut ; m illlllllal rcpm1 to th..: J>..:p a rlluo.:ul
. th e Depm1ment o f :\ ;uura l Re .,ourc.:<..**:~nclthe** Puhlic S en 1ce C'onun t<.<. ion
. The report fo1**e:~ch** calencl :u year !.hall he .,nhnull..:tl nul htkl ' th:tu \ l: u·dt l olthc li11lcm 111 ;: } c ar C'. E nch**r~port** !.hall include ( 1) 1**~,l<lll!.** pcrJi,nu:mcc**n:!-1111~** n:latc,\tn ClllllJlliancc \\ tlh !he**cmi !>** **nu** rcqtm·cmcut ..**nn a** **hi~** c:hapter. (: :: ) I IJ H <;-.iom. of:\Ox :tlld**so~ .**  ancl hc :! illlllll !! \\ t th c:tlcnclm year 

## :ow . IIIO.:TCIII') • 

### .:: nunec\**clnrin ~**  the pre \'IOII!>. calendnr**y~ r**  ti · om each af fecteclun i t.

:'\0'1 

### OHI C I.\ 1. II X J' 

### 2 7

- ti Rl · \ I S ION 

### : ·:oAvoiding a lra 1 11 Wreck r0 1\CI I**~** 

### Figure 

### 1. Historic and Projected Prices of Utility Steam Coal and Natural Gas


### 10

9 -+-Natural Gas 

### 8 

### 7 ::- Steam Coal 

### 6**-. ~~** **---- ---** **-------- ~~~** **~~~~~.-** 

### 4 

### 3

------------------------------------------------- 2 1 0

Source: EIA 

### 2010 

### CAPACITY AT RISK FOR RETIREMENT Estimates of the total capacity of electric generation at risk for retirement range from 

### 6.000 to 

### 65.000 MW by 

### 2015 (most of the studies have some overlap in the range of 

### 25,000 to 

### 35.000 MW) (Tierney 

### 2011 )
. Table 

### 2 below describes one of the major study's projections of coal plant retirements by 

### 2015
. The capacity of power plants at nsk for retirement varies greatly by state. Some states in the South-Central. West. and Northeast made a major shift to natural gas during the past twenty years. In contrast. many states from the North-Central through the Mid w est and into the Southeast rema1n dependent upon coal as a base-load fuel (CRS 

### 2010). The potential impacts of complying with these new regulations fall predommantly on these coal-dominant sta tes (see Figure 2). While significant natural gas capac1ty was constructed in these regions, it was overwhelmingly peaking capacity rather than intermediate or baseload combined cycle gas turbine (CCGT) facilities. As a result. many of these states are not in a position to shift to existing natural gas capac ity, as can be done 1n other regions. Most of the at-risk plants lie in the Ohio Valley, Upper Midwest. Southeast. and Mid-Atlantic. as can be seen in Figure 2. which shows one of the medium-range es ti mates for capac1ty retirements
. This pattern of possible closures is preserved across all the major stud 1 es reviewed in our research. Table 2 compares the forecasted capacity at risk with actual summer capacity (EIA 

### 2010). suggesting that the Midwest and central Southeast are the most at risk of capa d ty shortages.



### :s1\voulnq a Train Wreck**~.** 1\CI I I


### Table 1. EPA Regulatory Actions Affecting Utility Coal Power Plants

C l •,: m A tt**Tr..1n,~ort** R "lo (CATRJ**tSucc•~'lOF'** ta C:AIR)**A•o~onoaf H~••** **Ptogr~m** e.,t AW"
.. ,tl.)bf• R•traftt**T~..chnology** (I!JART _t
_**N.;~ •u** **on~l** 

### Amb••,.., Atr Ou;,tity**St3nd~fd'\** 414AA051

W.:n•ra
. nel 

### w.,.,,.,....st•r



### Aging Fleet I 't I

• J

I ' • ' I

"I

l u • 

# . , ... I ,,**~** I
. , I ' ' ' I n**~** 1 • •


## ·'.


# ... .- I .\ -**•** a • ' (j

J h •
I 4 1**~** t o I

't I
..**~** ... I

. I I '

- L • I l 

# .. , 

## -



## .. 

# . . 

# .. . 

## .
Source
. Black & 

### Veatch 2010

Most of the coal-fired U
. S
. electric generat i on fleet was built between the 1950s and 1980s
. These coal plants were originally designed to operate for 30 years, although through-life extens 1 on measures have enabled them to operate far longer than orig i nally anticipated. The median coal generation plant was built in 1966 , and most of the existing coal capacity is over 25 years old, with the last major add i tions occurring in 1980-1984 (Source Watch 2011 ). Until recently
. many of these older , smaller plants w ere exempted from provisions of the Clean Air Act. As a result. many of these plants have not been modern i z ed or updated with current emissions control technologies (Hsu 2006). Many of these older plants have not seen the level of moderni z ation investment that some of the newer plants have received. so that their cost of operation may 

### be higher due to deferred maintenance
. 

### Utility 

### Fuel Prices Compounding the challenges for eleclric utilities is the shift in the relative prices of coal and natural gas. Durmg the 1990s and early part of 2 000s, utilities in many regions made major Investments 1n new natural gas capacity ( E lliott 2006). Because of restructuring of the electric power mdustry , low gas pnces at the time and improvements in gas power plant t e chnology. some regions of the country saw substantial investments 1n natural gas fire generation (CRS 2010)
. How ever , during the 2000s. natural gas pnce s rose dramatically and exhib i ted si gnificant volatility, w hich made it a less attractive electnc generation source Durmg the latter part of the pas t decade , coal markets globali z ed and prices mcreased dramatically (Elliott 2006)
. During th i s same period , we saw the development of non-conventional na t ural gas resources 1n part1cular shale gas that has resulted in a dramatic reduc ti on 1n natural gas pnces 1n North America (MIT 2011) These lower and more stable prices are projected to contmue 1nto the foreseeable future (Habac i vch 2011
. Petak 2011 )
. Because of its low operatmg cost and low em1ssions relat1ve to coal. natural gas has aga i n become a more attract i ve utility fuel even though the pr tce of natural gas on a per Blu basis rema • ns somewhat higher than coal (see Figure 1).
')Avoiding a lliHI Wreck (•) /\CI I I
Nowak
. Seth
. Martin Kushler, Michael Sc i ortino. Dan York , and Patti Witte. 2011. Energy Efficiency Resource Standards: State and Utility Strategies for H1gher Energy Saving s. !J.!!2:1faceee.org l resea r ch-re_Rort/ u1 U
. Washington
. D
. C .: American Counctl for an Energy- E fficrent E conomy . Petak. Kevtn . 2011
. " Impact of Natural Gas Supply on CHP Deployment. " presented to the USCHPA Spring CHP Forum
. May 5, http :/J\v'\\1\v. u sc h pa.o rg l ftles t Conf e rences-P rese n t atto n s.§Rn n g"" 20 CHP'X.2 0 For u m"u2 0 2 01 1 Pe t ak Spnng CHP Forum 05 'Yr,20 0 5'Yo2 011
. Rdf
. Sciortino, Michael, Seth Now ak, Patti Witte
. Marty Kushler and Dan York. 2011. Energy Efficiency at Work: State Performance Meeting Energy Efficiency 

### Goal s .**IJ!JP. :il** **eee. org** **!J:.e_s_ arc** **-rep rt**  1J112
. Washington. D
. C
. Amencan Council for an Energy-Eff icient Economy
. (SNL] SNL Financial LC. 2011. "ICF : Gas-Fired Generation to Increase : Coal Not Dead Yet : · Release July 13 h tt p !/INvvw.snl.c o m .' lnl eracll v eX a rll cle aspx?CD ID =A - 1 3 0 246 1 9-14636& KPLT=2 Source Watch
. 2011
. "Existing Coal Plants ." Web site access on 4 1 22 1 2011
. 

## b. !!tr i'.V'.v'.v so u rce: , a tc h org t n dex Rl:m ?tt tl e::E xistt n g U S Coal Plants. Tierney, Susan
. 2011
. Electrtc Reliability und e r New EPA Power Plant RegulatiOns : A Field Gwde
. h ttp 1 v•rww wn.o r g stones 20 11 01 electnc-reltabrhty- u nder-ne w -epa powe r-pl ant -regula t io n s-treldgwde. Wa s htngton. D
. C
. World R e sources In s titut e . (TVA] Tennessee Valley Authority
. 2011
. 2011 Integrated Resource Plan , 

## b J!P- : 'vAvw tva.E_9 v enwo n men l ; reQorls /trp
. mdex h t m. Knoxvtlle , Tenn
. Wald
. M. 2009
. "Big Util i ty to Close 11 Plants Us i ng Coal. " New 

### York Times
. December 1
.

I**1** [\'1.)1 1 10 J ON ,\tiO
. )**1\ JI** **I.L O·II~I** **ll·~ll~IIJII S::** **III'! "'='** **Id II.** **-,)~** ,l."l!lh:IJ =>-:>[111'}11" ll'l ll n.">
. ' ll Jllll ·'ll'l JI •J' \\\\\\ d 11 1j ll'**-~ [I')~**  }1\'l\0
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of their goals (Sciortmo et al 2011) These EERSs prionttze energy efficiency mvestments by ullht1es
. allo w mg efficiency resources to contnbute to capac1ty needs
. 

### Efficiency Can Be Deployed Quickly Capacity shortfalls could occur as soon as 2015. Energy efficiency investments can be procured relatively qu1ckly compared with the longer lead time requtred for the permitting of new power plants or transmission hnes
. 

### It can take more than a decade to brmg a new power plant online and any number of pitfalls can delay the project. such as the secu n ng of financing and necessary permits, market volatility, and construction delays
. In contrast energy efficiency comes tn fairly small chunks. so that investments can be spread out over time as needed. While a number of the at-nsk states have energy efficiency programs in place
. most would require a rapid ramp-up to significantly contribute to mitJgation of capacity constraints
. ACEEE s research (Nowak et al
. 2011) on states that have already deployed · rapid starr programs documents key strategtes for achieving energy savmgs . including mcreasmg energy effic i ency program budgets , creating stakeholder groups, and focusing on commercial and Industrial sectors
. Although these "rapid start" states
. like many of the affected states
. d1d not have the benefit of well-established programs. they did have a large
. low-cost reserve of energy efficiency opportunities because customers are less h kely to have done many energy efficiency improvements. 

## RECOMMENDATIONS Current**ut~ity** regulatory and business models do not encourage utilit i es to make customer-stde investments. To realize the full economic benefits of energy effic i ency will require a change in the utt h ty regulatory bus1ness model to encourage ut1ht1es to shift a large port 1 on of thetr i nvestments from the supply-side to the demand-s1de
. This shift w1ll requ1re changes that encourage ut1ht1es to 1 nvest ratepayer funds 10 the demand-s1de and allow them to earn a return on these Investments The changes in the utrlity regulatory business model Will need to take place at the state level, since our Utility regulatory system 1s sta t e-led. A key element of this change in the busmess model 1s to allow utthtres to make customer-side investments using ratepayer dollars and to allow a return on these doll a rs s1m1lar to returns they would receive when investing in supply-s1de resources Typically these returns would be 1n the form of performance incentives for meeting energy savmgs targets (Hayes et al. 2011 )
. All customers w ould benefit from these investments in the form of lower electnClty rates (1 e .. lower rate increases than under a supply-side strategy)
. and a more vibrant local economy with more JObs
. E lectnc ut1ht1es would be motivated to become energy efficiency suppliers. not JUst electnc 1 ty suppliers
. In many w ays this recommendation is a return to the foundation of ut1hty Integrated resource plann1ng (IRP) that was mtroduced as a regulatory pr i nciple over three decades ago . At that t r me ut1liltes w ere endmg a penod of raprd growth in electricity demand and major capacrty tnvestments Many stakeholder groups were expressing concerns about the cost of continuing to invest in new supply-side resources that were dnvmg up utility rates
. Regulators saw that building a portfolio of supply- and demand-side resources represented a least-cost planning solution that would insure affordable electnc1ty Wrth retirements of many of the generation assets constructed during that prev1ous Investment boom w e are aga1n faced With a need for new capacity
. A return to the principles of least cost portfolio planmng represents an 1dea whose time has come again
. Utilities need to participate and benefit 1f this solution is to become a reality In a gross s1mphflca h on . ut1httes make prof1 t s by selling electnc i ty and from making investments on the behalf of ratepayers on w hich they earn a regulated return
. 

### As a result , customer-side energy eff1c1ency negattvely impacts both these revenue streams by reducing sales and reducing the need for cap1tal mvestments 1n capac1ty (Kthm 2009) A number of regulatory remedies have been proposed as part of the resource plannmg process 1nclud1ng decoupling and incentives (Hayes et al. 2011 ).

f/\vOid·nq a Train Wreck
. , /\Ct I I


### A dialog will need to occur among ulililles. the1r regulators. and consumer groups . 1nclud1ng large customers. to find a path forward that w ill 

### benefit all customers and the utilities themselves These discussions will likely be difficult because of the mertta of entrenched interests on the part of all stakeholders
. However, the opportumttes for customers
. the local economy, the envtronmen t and the economic future of the utility Industry suggest that thrs top1c represents a discussion that needs to 

### be engaged rn w1th urgency and senousness . 

### SUMMARY AND CONCLUSIONS Changes in fossil fuel markets and implementation of updated environmental regulations put on the order of 40
. 000 MW of coal generation at risk of retirement by uttht1es
. This capacity is primarrly located in the Ohio Valley Upper Mrd w est. Southeast , and Mtd-Atlantic. where coal IS 

### the dominant generation fuel. Utilities are ant1c1pated to need to make signrf1cant mvestments to meet existing demand et ther for plant upgrades or replacement w1th natural gas capacity Recovery of these utthty investments ' -" Ill structurally raise electric rates for decades
. An alternat i ve to these investments would 

### be to tnvest in customer-side energy efficiency to replace much of thts capacity
. Energy efficrency and CHP are typically less expens1ve energy resources than are either investments in environmental compliance retrofits of older plants or construchon of new natural gas-fired electnc generation
. The lower utility tnvestment would mean smaller mcreases in future electric t ty rates benefiting all customers
. and many utihty customers would have the added benefit of seeing**the~r** 

### energy bills decline as their consumption declines
. A key target for these energy effrciency investments should be large energy consumers. particularly manufactunng firms , many of whom are poised to make major new capital capacity investments in thetr facilities as the economy recovers and demand for manufactured products increases
. These i nvestments in manufacturing have the added beneftt of modernizing energy-using infrastructure that offer s add 1 tional local economic benefits of job creation and enhanced environmental compliance of the manufacturing facthttes Current utility regulatory and business models do not encourage utilities to make customer-side investments
. A change in the utility regulatory bus i ness model to encourage utilities to shift their investments from 

### the supply-side to the demand-side is needed to realize the full economic benefits of energy eff i ciency
. This shift will require changes that encourage utilit t es to i nvest ratepayer funds in the demand-side and allow them to earn a rate of return on these Investments. If these policies are put in place
. customers wrll benefit from lower electricity rates. plus a more vibrant local economy w ith more JObs
. Electr i city utilities w1ll be motivated to become energy efficiency suppliers
. not just electrictty suppl i ers . To begin to realize this opportunity a dialog among utilities. their regulators. and their customers should be imbated
. Agreements w1U have to 

### be reached on a state-by-state basis , because of ou r state-based utihty regulatory system
. However because of the interconnected nature of our electric system. major customer-side efficiency investments in just some states wtll benefit all states in a region by taking some pressure off the need to make supply-side investment. Many challenges exist to reaching agreements but the benefits are huge and will create a more economically and environmentally sustainable electnc system
. bolstenng local economtes It has often been observed that crisis and opportunity are inextricably linked
. as a crisis encourages us to push the envelope of innovation and accomplish feats w e dtdn ' t think we were capable of
. The so-called " coal train w reck " may afford just such an opportunity to modernize our electric ut i lity regulations to reflect a new century of different economtc and energy markets
. creattng opportunities for the ut i lity industry to define a new path to suslatned profitability by selling efficrency services not just electricity. while ensuring reliable and affordable power to their customers
.



# ,,Avoiding a I ! <Ill Wreck**)** /\C I I I


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# ../\vn1d II() a Train Wreck**;** /\CI 1 I
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