Michigan Municipal Electric Association 

809 Centennial Way • Lansing, Michigan • 48917-9277 

Phone: (517) 323-8346 • Fax (517) 323-8373 • www.mmeanet.org 

MICHIGAN PUBLIC POWER NEEDS FLEXIBILITY FOR 

CRITICAL, SMALL PUBLIC SYSTEMS & SMALL UNITS 

UNDER THE PROPOSED "CLEAN POWER PLAN" 

Comments from Melanie McCoy, General Manager of Sebewaing, 

MI Light & Water, and President of the 

Michigan Municipal Electric Association (MMEA) 

Provided July 31, 2014 at EPA's Public Input Session in Pittsburgh, PA 

INTRODUCTION 

➢ Introduction: Hello, my name is Melanie McCoy, and I am the general 

manager of a municipal, public power system located in Sebewaing, Michigan, 

a rural village of almost 2,000 people in the very tip of the Michigan thumb. I 

also serve as the President of the Board of the Michigan Municipal Electric 

Association or "MMEA", which is the state association of more than 40 

municipal power systems, some of which own and operate up to 17 fossil-fired 

plants that may be impacted by this rule, with other systems supplying our 

customers through power purchased from other energy providers under 

contracts and through the energy markets. I speak on both MMEA's and 

Sebewaing's behalf today. These public power systems are also part of the 

American Public Power Association or "APPA", #representing more than 2,000 

municipal systems across the nation, and we have closely coordinated with 

APPA in the development of our comments here on the "Carbon Pollution 

Emission Guidelines for Existing Stationary Sources: Electric Utility 

Generating Units" or the "Clean Power Plan". 

➢ Importance of Public Power: Non-profit municipal utilities and their power 

plants are critical to local communities across the nation. Despite the small size 

of many of these public systems, these municipal utilities are essential to 

electric reliability and energy supply diversity, and critical to the communities 

they serve. These municipal systems are often the only source of power in a 

local community. These public power systems provide energy to important 

community facilities such as law enforcement, hospital, and educational 

buildings. These facilities increase electric reliability and help avoid wholesale 
electric market price spikes. All of the Michigan public power systems I 

represent today are "small entities" under the SBREFA statute. And most of 

our units are very small, from a handful of megawatts each up to 160 MW, with 

most of these units at less than 80MW in capacity — yet most are still subject to 

EPA's proposed emissions rule. Other public power systems, like Sebewaing, 

depend on power from other generators, purchased through contract or on the 

market, and distributed through our local transmission and distribution systems. 

➢ Public Power May Bear the Worst Brunt of the EPA Power Plan: Despite the 

critical importance of municipal utility systems and their power plants, I am 

here, because Michigan public power and other municipal systems are gravely 

concerned that we may bear the worst brunt of the EPA's proposed Clean 

Power Plan for existing Electric Generating Units or "EGUs" — in ways that 

could put some of our communities in crisis. 

PUBLIC POWER & SMALL ENTITIES WILL BEAR THE WORST BRUNT 

➢ Small Units & Small Systems Impacts: Our small systems and small power 

plants will suffer disproportionately from these' proposed Clean Power Plan 

requirements, because of the drastic diseconomies of scale involved with 

changes to small units with small customer bases. This would include 

diseconomies of scale in trying to achieve heat rate efficiency improvements at 

these small plants, as suggested as a "Building Block 1" strategy by EPA in this 

proposed rule. Further, many of our Michigan public power systems have only 

a single baseload unit, or a very small number of units, with little or no ability 

to re-dispatch to lower-emitting units or apply controls flexibly across multiple 

plants. Often these units are located in isolated "load pocket" areas in which 

there are limited available options for securing power. For the Michigan 

electric generators that I represent, the plants subject to EPA's proposed rule are 

the core of the electricity system in the region, often with no readily available 

alternatives within the service territory — and if a plant shuts down or is made 

too expensive, it could cause a community and business crisis. Localities like 

Grand Haven, Marquette, and Coldwater, MI own and operate only one 

baseload plant, which means that these municipal utilities do not have any 

flexibility to shift load among other units, as they would if they had a multi-unit 

system. 

Likewise, for municipal systems without their own EGUs like in Sebewaing, we 

have no ability to influence the pollution control choices that will be made by 

our energy suppliers, and we will be subject to the vagaries, uncertainties, and 

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higher costs of "environmental dispatch" that may affect our power supplies 

because of the rule. 

➢ EPA Recognizes the Challenge to Small Systems and Units — But Offers No 

Help: EPA itself has recognized that municipal power and small entities may 

receive the worst brunt of the rule. But the only solace offered by EPA is that 

there is a long time to figure this out. Indeed, EPA actually says that EPA's 

proposal will have no impact on small entities, because it is really the States 

that will impose these requirements, not EPA — and maybe your state can cut 

these small entities a break. See 79 Fed. Reg. at 34,887 and 34,946-47. EPA 

notes that single-unit generators — which describes many public power systems 

— may face major challenges in meeting the requirements of the rule imposed 

through states. But again, EPA offers no relief or ideas for how to mitigate 

these single-unit challenges, other than making a vague suggestion that these 

small utilities should use "longer-term capacity planning strategies." Id. at 

34,887. EPA notes that small plants in rural areas (which describes many 

municipal systems) might have great challenges meeting these rules, but offers 

only that EPA met with the U.S. Department of Agriculture on that issue, with 

no further explanation or potential solutions. See Proposed Rule at 34,899. 

Michigan public power has serious concerns that this inadequate level of effort 

by EPA, even though it recognizes the challenges for small systems, small 

units, and public power, does not comply with SBREFA requirements. 

➢ Other Concerns about the Proposed Rule Will Worsen These Impacts: 

Michigan public power has several other concerns about how the rule may 

exacerbate these threats to the viability of these critical municipal systems and 

units, which I will summarize briefly: 

o No room for economic growth: The State emissions goals and standards 

proposed by the rule do not provide an adequate factor for economic and 

load growth over the compliance periods leading up to 2020 and 2030. The 

rule essentially assumes that our communities and economies won't grow, 

and the rule hurts our energy systems if we do grow our manufacturing, our 

jobs, and our local and state economies. 

o Disconnected from other Clean Air Act rules: The proposed carbon 

emissions rule may have the impact of closing down a lot of plants, 

including in small public power communities that depend on these critical 

units. At many of our plants, we have already spent millions of dollars on 

plant improvements to address EPA's Clean Air Act rules for NOx, SO2, 

mercury, and other pollutants like the CAIR, CSAPR, and MATS rules. Yet 

this investment may be stranded and abandoned by municipal power entities 

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that have no other choice than to shut, after our good faith efforts to comply 

with those other EPA Clean Air Act rules. Although EPA's proposal 

recognizes the appropriateness of recognizing the "remaining useful life" of 

units when applying requirements, EPA does nothing to address that issue, 

instead merely mentioning that States can consider those remaining useful 

life issues. 79 Fed. Reg. at 34,925. 

o No credit for clean energy actions: The EPA's proposed rule also 

provides no credit for plant improvements, energy efficiency programs, and 

renewable energy projects undertaken by utilities between the proposed rule 

baseline of 2005 and the proposed start-date for compliance of 2012. Public 

power is in the lead in the utility industry for clean and green power efforts, 

and we are committed to genuine action on climate change, if it is balanced 

with economic, cost, and community issues. I spent years as the general 

manager of Wyandotte Municipal Utilities, just south of Detroit, where we 

undertook one of the most ambitious efforts in the nation to transform our 

fossil-fired community to a green energy community. Using resources from 

the Obama Administration's EPA and Department of Energy's green energy 

programs, together with state, local and private resources, we launched 

major energy efficiency programs for our residents, we installed the largest 

solar photovoltaic project in the State of Michigan on a public building, and 

we launched a major, downtown geothermal project. All between 2009 and 

2012. Under EPA's proposed rule, none of that counts for Wyandotte —

punishing a progressive, clean energy community. These types of clean 

energy actions have been taken by many Michigan public power systems, 

but they will not get any credit under EPA's approach. 

One specific area of local clean energy action that should be credited under 

the Clean Power Plan is to account for existing hydroelectric energy 

generation, for hydro plants of less than fr 1 OMW in capacity, in the 

calculations used to set State goals and standards for emissions reductions. 

Public power has invested substantial resources into these environmentallypreferable, renewable energy sources, and small, existing hydro should be 

part of the mix under the Clean Power Plan rule. 

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EPA SHOULD TAKE ACTION TO REDUCE THE IMPACTS OF THE RULE ON SMALL 

MUNICIPAL SYSTEMS & UNITS 

Given the critical importance of public power systems and EGUs, and in light of 

EPA's specific request for comments on how to address the potential challenges to 

small municipal utilities, Michigan public power urges EPA to take real, 

meaningful, specific action in the final Clean Power Plan rule to support 

compliance flexibility and options for small public power. This should include: 

1.) Set the Affected EGU Threshold at >73 MWs: Section 60.5795(b)(1) of the 

proposed Clean Power Rule states that the rule applies to EGUs with a baseload 

rating of 73 megawatts, but states in a parenthetical that this capacity is 

equivalent to a 250 MMBtu/h heat input rate. However, it is definitely not 

necessarily the case that a 73MW plant equals that 250 million heat input. 

Indeed, most of the Michigan public power units I represent today are less than 

73MW in capacity, but many would nevertheless be affected by the 250 million 

Btu/h heat input factor listed by EPA. The best way for EPA to avoid causing 

disproportionate and potentially devastating impacts to small municipal power 

is to clarify the applicability threshold to apply this rule and EPA's emissions 

and allocation assumptions only to units greater than 73MW in net rated 

capacity. 

2.) Include Small, Existing Hydro Resources in the Baseline State Goal 

Calculations: Existing hydroelectric plants of 10MW or less in capacity should 

be calculated into State goals/standard baselines for purposes of emissions 

reduction allocations. 

3.) Make Clear that States Can — and Ought — to Subcategorize Affected EGU 

Sources to Address Small Municipal System and Unit Concerns: EPA's legal 

analysis of the proposed Clean Power Plan rule suggests that States 

implementing this rule may have the authority to subcategorize sources to take 

into account costs, impacts and other factors. If I have made anything clear in 

my comments today, it is that small public power systems and units, 

particularly systems with only one unit or a few units, are in a class of their own 

when it comes to challenges under this proposed rule. EPA should thus make 

explicit and clear in its final rule that States should take this into account, and 

that States have authority to exclude small public Power from the rules, allocate 

hardship credits to these units in the form of less stringent or more flexible 

standards, or otherwise provide flexibility and support to these units. 

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4.) Make Sure the Rule has Maximum Flexibility to Enable States to Address 

Municipal Power Concerns: Finally, Michigan public power urges EPA to do 

all that it can to listen to the concerns of states, and to provide the maximum 

flexibility possible, in ways that will enable states to address these municipal 

utility challenges and concerns. This flexibility should be provided by EPA in 

terms of the timing for state plan development, the flexibility provided states to 

adopt compliance approaches, the inclusion of load growth factors in state 

emissions goals/standards, and the support provided to States to develop intrastate or inter-state carbon emissions trading programs. 

In Michigan, for example, we have been very pleased that the Michigan 

Department of Environmental Quality has adopted a "hardship credits" 

approach to implementation of nearly all of the NOx, S02, and mercury 

programs implemented under EPA's Clean Air Act rules, SIP calls, and other 

EPA requirements. These hardship emission trading credits have taken into 

account the drastic, disproportionate impacts and diseconomies of scale in 

pollution controls that would have impacted public power, if the State had not 

provided extra allocations of trading allowances to public power systems that 

demonstrated a true need for this support. However, we fear that the immense 

size and complexity, and short timelines, of EPA's Clean Power Plan rule may 

make it difficult or impossible for states like Michigan to develop flexible, 

creative approaches including carbon trading approaches, thus making State 

support for municipal power hard or impossible to provide. 

In closing, public power like Michigan's municipal utilities have grave concerns 

that our small systems and small units may suffer the greatest brunt of the 

proposed EPA rule. We urge EPA to adopt the right applicability threshold, and 

the maximum flexibility for states to address these issues, in order to avoid drastic 

and disproportionate impacts to our communities. Thank you very much for this 

hearing, and for your attention to our concerns. I wish to submit my comments 

into the official record today. 

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