1 TABLE OF CONTENTS

3.3 Cleaner Generation Sources (Building Block 3)

................................ ................................ .. 2 3.3.1 Renewable generating capacity

................................ ................................ .......................... 2 3.3.2 Current level of performance

................................ ................................ ......................... 129 3.3.3 Target level of performance

................................ ................................ ............................ 139 3.3.4 Start year for state efforts

................................ ................................ ............................... 242 3.3.5 Pace at which states improve from start year to target level

................................ ....... 248 3.3.6 RE targets for interim and final state goals

................................ ................................ ... 271 3.3.7 Cost effectiveness of RE

................................ ................................ ................................ ... 334 3.3.8 Nuclear energy

................................ ................................ ................................ ................. 373 3.3.9 CHP/cogeneration

................................ ................................ ................................ ............ 632 3.3.10 Hydropower

................................ ................................ ................................ .................... 635 3.3.11 Other

................................ ................................ ................................ ............................... 6812 3.3 CLEANER GENERATI ON SOURCES (BUILDING BLOCK 3)

This section addresses comments on Cleaner Generation Sources (Building Block 3). We have organized the comments in this section under 11 subsections, 3.3.1 to 3.3.11. Responses to the comment topics of these subsections are discussed below along with summ aries of the specific public comments.

3.3.1 Renewable generating capacity

This section discusses specifics regarding renewable generating capacity as it applies to building block 3 goal s. The EPA considers construction and operation of expanded RE generat ing capacity to be proven, well

- established practices within the industry consistent with recent industry trends. The comments in this section address the EPA’s methodology for determining states’ potential renewable generating capacity.

Commenters have r aised a number of issues related to this subsection which are organized by topics (comments) below. Responses are provided for these topics.

Comment 1: Commenters asserted that the EPA o verestimates the i mpact of r enewables

. Response 1: Cost

- effective RE under building block 3 is assumed to replace both coal

- and natural gas

- fired generation from affected sources. This replacement, as described in preamble section s V of the final rule preamble of the CPP , is assumed to occur at the interconnect

- level, be i n proportion to the historical affected source generation mix, and result from both system

- (e.g., grid operator) and source

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

C ommenters stated that renewable gen eration displaces both coal and natural gas generation; thus, the CPP overestimates the impact of renewables.

C ommenters stated that, because the EPA's modeling assumed that renewable energy generation would offset CO2 emissions from coal generation, the CPP over predicted the impact of renewables to reduce CO2 emissions and artificially lowered the interim and final state CO2 rates in the proposed rule. C ommenters stated renewable generation displaces both coal and natural gas generation. C ommenters state d this assumption also over predicts the impact new renewables will have to meet targets in state plans.

C ommenters stated the EPA has over predicted the CO2 reductions from wind generation and should evaluate and model each state's wind generation portfol io to determine the amount of coal generation and natural gas generation displaced by renewable sources. C ommenters stated that, as more renewable energy is added to the system to meet interim and final goals, the percentage of natural gas generation displ aced by the renewables will be increased. C ommenters stated that, in 2012 wind generation on the Associated system reduced CO2 emissions by 870,261 tons of which 748,308 tons (86%) was displaced from coal generation and 121,954 (14%) from natural3 gas gener ation. C ommenters stated that, as Associated installed additional wind generation the percentage of CO2 displaced from coal decreased each year: in 2013 wind generation displaced CO2 from coal generation by 994,340 tons (69%) and from natural gas 461,537 t ons (31%) and in 2014 that trend continued and as of June 1, 2014 the 838,513 CO2 tons displaced by wind generation 67% is from coal generation and 33% from natural gas. C ommenters stated that, based on this data the CPP has over predicted the CO2 reductio ns from wind generation by at least 15%.

Comment 2: Some c ommenters did n ot s upport the EPA's RE m ethodology

. Response 2: The rationale, assumptions and methodology used to incorporate incremental RE into the BSER are well supported by historical data and the most recent information on the cost and performance of RE technologies. The adjustments made to the final building bl ock methodology are the result of elements of the proposed approach, commenter feedback, and additional EPA analysis. Additionally, the methodology, based on historical RE capacity deployment and validated by detailed power sector modeling that demonstrat es both the technical feasibility and cost

- effectiveness of the building block 3 generation levels, is consistent with the application of the other building blocks, in which historical data serves as the basis for a level of performance that is validated b y EPA analysis. State RPS requirements are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rule. The methodology that produces the building block 3 generation levels is described in detail in section V.E o f the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP

. For a detailed explanation for the inclusion of incremental RE in the BSER, refer to section V of the preamble. For legal issues related to building block 3, refer to Chapter 1 of the Response to Comment document.

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

C ommenters stated the EPA's assumptions regarding increased renewable energy generation are arbitrary and capricious. C ommenters listed the following issues:

• EPA does not justify its assumptions regarding the feasibility of increased renewable energy generation in t he administrative record.

• EPA's assumptions regarding increased renewable energy generation are arbitrary, capricious, and unreasonable.

• The limited implementation under Section 110 SIPs does not mean RE is demonstrated under the restrictive federal requi rements to be quantifiable, non

duplicative, permanent, verif.iable, and enforceable

• EPA's regional approach fails to adequately address differences in renewable energy potential between similarly located States.4 • EPA's reliance on existing state RPS goals fails to address the fact that many States permit out

- of

- state generation to meet RPS obligations. In other words, state RPS goals are not a good proxy for each state's renewable energy generation potential.

• EPA's reliance on existing state RPS goals fai ls to account for the fact that many States have built in mechanisms to suspend or scale back RPS goals if certain price caps are exceeded. In other words, the RPS goals do not necessarily reflect a state's belief that the RPS goals can actually be achieve d.

• EPA fails to address the fact that state RPS programs may exclude municipal power suppliers from RPS obligations. As a result, state RPS goals may exceed the actual percentage of a state's total electricity generation that will be met by renewable sour ces.

• EPA fails to fully appreciate the costs and implementation challenges faced by large

- scale renewable energy projects. For example, the CREZ project in Texas, which was designed to transmit 18 MW of wind generation to population centers, took eight ye ars to construct. Even if started today, such a project could not be completed until mid

- way through the interim compliance period.

• EPA fails to distinguish between renewable supply and renewable generation in assessing state RPS programs. For example, EP A includes Washington D.C.'s RPS program, even though Washington D.C. has no electricity generation at all and depends entirely on renewable generation from neighboring States.

• Rather than treating each state equally, EPA should consider an electricity

ge neration weighted approach so that small States with lower generation levels can't cause such dramatic shifts in a region's renew able energy goal under block 3.

Comment 3: Commenters asserted that the EPA should use a levelized generation approach to RE.
Response 3: The EPA believes the flexibility for affected sources to demonstrate compliance on a multi

- year compliance period provides sufficient predictability to affected sources pursuing a compliance strategies that involves the procurement of RE. Refer to s ection VIII.B of the final rule preamble of the CPP for further detail on state plan performance periods.
The following are summaries of the specific public comments under this comment:

C ommenters stated the CPP should allow states and utilities to claim a levelized generation number from RE to make measuring compliance with the rule more predictable and practicable. C ommenters noted that generation from RE will vary from year to year and make comp liance with the CPP difficult as a result of different weather. C ommenters stated the levelized generation approach will also encourage investment in RE. C ommenters proposed an alternative concept of using a rolling 3 year historical average. C ommenters stated this would protect the5 utility against compliance failures from bad weather in a particular year, while muting criticism that a levelized number may be gamed.

Commenters stated the D.C. Circuit has explained that "it is the system which must be ade quately demonstrated and the standard which must be achievable." (45 45 National Asphalt Pavement Association v. Train, 539 F.2d 775, 785 (D.C. Cir. 1976) (quoting Essex Chem. Corp. v. Ruckelshaus, 486 F.2d 427, 433 (D.C. Cir. 1973)).) Commenters said an " adequately demonstrated system is one which has been shown to be reasonably reliable, reasonably efficient, and which can reasonably be expected to serve the interests of pollution control without becoming exorbitantly costly in an economic or environmenta l way." (46 46 Essex Chem. Corp., 486 F.2d at 433

- 34.) Commenters asserted that EPA's proposed treatment of states with nuclear units under construction, in short, exceeds the agency's authority under section 111(d).

Commenters stated Section 111 mandates that cost be considered as part of BSER, yet, EPA completely ignores this factor in its incorporation of under

- construction nuclear into BSER. Commenters said EPA simply asserts in the proposed guidelines that "since the decisions to construct these units were made prior to this proposal, it is reasonable to view the incremental cost associated with the CO2 emission reductions available from completion of these units as zero for purposes of setting states' CO2 reduction goals..." 79 Fed. Reg. 34,870.

Comm enters stated in building block 3, EPA's proposed guidelines include under construction nuclear sources in determining what constitutes BSER for Tennessee and two other states. Commenters said EPA's rationale for including these under construction nuclear sources is that they represent zero incremental costs for purposes of setting the proposed standards because the decision to construct the units was made before the proposal. Commenters said EPA fails to look at any other under construction low or zero ca rbon sources in other states and included them in setting a state's goal. Commenters said TDEC is aware of low carbon sources that were under construction either in 2012 or at time of EPA's proposal that were not built into determining BSER and the standar d of performance for those other states. Commenters said EPA offers no explanation or other rationale on why Tennessee (as well as South Carolina and Georgia) have under construction nuclear sources included in building block 3 while no other under
constru ction low carbon units are included in calculating the respective state goal. Commenters said Tennessee is unfairly treated in that its under construction nuclear is used to define the state goal while for others states, other under construction low or zer o carbon sources are not factored in and simply create compliance margin. Commenters said EPA's legal rationale fails to address the inherent inconsistency in its approach to Tennessee's nuclear units versus other types of low or zero carbon sources. Comme nters said EPA's approach is therefore, arbitrary and capricious. Commenters said notwithstanding or waiving the issues of legal uncertainty described in this section, the remaining sections of the comments focus on TDEC's concerns around EPA's methodologi es, approach, application and technical support. Commenters said it is necessary to provide EPA with substantive comments on the proposed guidelines, while, at the same time, recognizing overarching legal issues that would cause the entire approach under S ection Ill (d) to fail legal challenge.6 Commenters stated as noted previously, EPA simply asserted in the proposed rule that "since the decisions to construct these units were made prior to this proposal, it is reasonable to view the incremental cost asso ciated with the CO2 emission reductions available from completion of these units as zero for purposes of setting states' CO2 reduction goals." Commenters stated that this assertion by EPA is unprecedented in the 111(d) context. Commenters said it is also u nsupported in the record. Commenters said, for example, EPA's 376

- page Regulatory Impact Analysis (RIA) accompanying the proposed rule barely mentions EPA's treatment of "under construction" nuclear and lacks any additional supporting analysis or explanati on. Commenters noted, where the RIA does reference "under construction" nuclear, EPA simply adds a footnote (p. 3

- 10, at n. 38) referencing the 224

- page Greenhouse Gas Abatement Measures Technical Support Document (GGAMTSD), (53 RIA, at 3

- 10.) which in tur n contains just one paragraph purportedly discussing EPA's approach to "under construction" nuclear

- a paragraph merely reciting EPA's assertion in the proposed rule about the "incremental cost" of completing these projects. Commenters stated that this is circular reasoning and is not a legitimate explanation for why EPA believes, as a legal and technical matter, completion of nuclear units under construction constitutes BSER. Commenters noted, in the GGAMTSD, like the RIA, EPA provides no additional analy sis or supporting information for its treatment of states where nuclear units are currently under construction. (54 EPA's explanation and analysis for its approach to "under construction" nuclear falls woefully short of the applicable requirements for RIAs . See Office of Management & Budget, Regulatory Impact Analysis: A Primer, available at http://www.whitehouse.gov/sites/default/files/omb/inforeg/regpol/circular

- a

- 4_regulatory

impact

- analysis

- a

- primer.pdf. ) Commenters said equally unsatisfactory is EPA's legal memorandum accompanying the proposed rule, which simply asserts that Watts Bar 2, Vogtle 3

- 4, and Summer 2

- 3 have "long been known to grid operators for planning purposes." (55 EPA Legal Memorandum for Proposed Carbon Pollution Emission Guidelines f or Existing Electric Utility Generating Units, at p. 69, available at http://www2.epa.gov/sites/production/files/2014

- 06/documents/20140602

- legal

- memorandum.pdf.) Commenters noted that this lone reference does not justify EPA's legal assertion that complet ion of nuclear units under construction constitutes BSER. Moreover, commenters noted that EPA has not explained its determination that, for purposes of the section 111(d) analysis, these units are adequately demonstrated. (56 As EPA notes in the proposed r ule, section 402(i) of the EPAct of 2005 states: "No technology, or level of emission reduction, solely by reason of the use of the technology, or the achievement of the emission reduction, by 1 or more facilities receiving assistance under this Act, shall be considered to be (1) adequately demonstrated for purposes of Section 111 of the Clean Air Act " 42 U.S.C. 15962(i). Importantly, Congress crafted this limitation broadly; namely, with respect to "facilities receiving assistance under this Act [i.e., th e EPAct]." The EPAct provided various forms of assistance for new nuclear reactors, including tax credits and loan guarantees. The operators of Vogtle 3

- 4 and Summer 2

- 3 have received, or will receive, assistance provided through that legislation, and as s uch, these units should not, as a legal matter in this context, be deemed "adequately demonstrated." See Congressional Research Service Report, Nuclear Energy Policy, at p. i (Sept. 19, 2013) ("Significant incentives for new commercial reactors were includ ed in the Energy Policy Act of 2005 (EPACT05, P.L. 109

- 58), such as tax credits and loan guarantees.").)7 Comment 4: Commenters urged the EPA to consider more energy sources in compliance determination.
Response 4: The EPA addresses the role of BSER RE te chnologies in section V of the final rule preamble of the CPP and non

- BSER measures to achieve standar ds of performance in section VIII

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

C ommenters encouraged the EPA to allow states to consider forms of energy production, other than wind and solar, that emit CO2 but are beneficial to the environment at a rate that would be beneficial to compliance. C ommenters supported a flexible process that will allow existing, new and/or as yet unproven energy technologies to be included in Kentucky's qualified technologies under the CPP in future. C ommenters encouraged the EPA to allow states to employ technologies that provide environmental benefits beyond the CPP to be included in CPP
comp liance measures. C ommenters stated a broad collection of technologies under Building Block 3 should be allowed, such as: landfill gas to energy facilities; alternative energy resources for co

- firing with coal or stand

- alone power production; waste coal (go b); tire

- derived

- fuel; municipal solid waste; shingles; biomass; waste wood; rail road ties; forest slash; energy crops; methane recovery from anaerobic digestion of animal wastes; and hydro.

Comment 5: Commenters asserted the EPA shoul d model the expansi on of RE, including upper limits on deployment

. Response 5: The EPA does model the final building block 3 generation levels to assess their technical feasibility and cost

- effectiveness. That modeling includes upper limits on the penetration of variable, non

- dispatchable RE for each of the model’s 64 U.S. sub

- region s. The limits are 20% of net energy for load by technology type and 30% of net energy for load for all variable, non

- dispatchable RE technologies. These levels are well supported by existing deployment levels as well as a host of studies and analysis that are detailed in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP. The methodology that produces target generation levels under building block 3 is described in detail in section V.E of the final rule preamble of the CPP

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

C ommenters said there is enough scientific evidence to quantify an upper limit on renewable energy penetration. The issue with increasing penetrations is the intermittency of renewable
energ y and the cost of significant amounts of low carbon capacity (or resource adequacy) is not yet known as this has always been a service provided by dispatchable, fossil fuel generators, the

c ommenters added. The EPA assumed technical limits based on averagi ng the existing RPS's of EPA determined regions, the c ommenters said. Commenters stated this method appears arbitrary as the existence of policies with alternative compliant mechanisms that have yet to come to fruition do not prove feasibility, particularl y for neighboring states that have different markets, transmission constraints, and natural resources. At the least, the c ommenters argued that the EPA should model the expansion of renewable energy and include cost estimates for variability,8 transmission, curtailment, and capacity costs that would result, just as the c ommenters ha ve done when estimating the costs of policies.

Comment 6: Commenters asserted all states should equally bear RE investment costs.
Response 6: In the final rule, the EPA has redu ced state

- level disparities in RE by quantifying building block 3 target generation as incremental RE and applying that generation at the interconnect

- level. For more detail on the building block 3 target generation methodology, refer to section V.E of the final rule preamble of the CPP and chapter 4 of the GHG Abatement Measures TSD supporting the final CPP

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

C ommenters stated that creating a plan where all states share equally the cost of investing in appropriate RE, from both a technical and economic perspective is crucial. C ommenters stated the EPA's approach for BSER for Washington's fossil fuel plants requires that Washington generate an additional 9.8 million MWh from RE, more than their 2012 fossil fuel generation. C ommenters stated this BSER approach is clearly not fair considering that the seven states with the least 2012 investment in RE generation (MD, TN, CT, KY, DE, RI, AK ) have a 2029 combined RE target that is less than Washington's target in 2029 of 17 million MWh.

Comment 7: Commenters expressed concerns regarding the variability of RPS standards.

Response 7: State RPS requirements are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detail in section V.E of the fi nal rule preamble and in chapter 4 pf the GHG Mitigation Measures TSD supporting the final CPP

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

C ommenters expressed concern that RPS standards vary greatly and can include: h ydroelectric generation, municipal solid waste, combined heat and power, clean coal, carbon capture and sequestration, and energy efficiency measures. Commenters stated t he EPA would not define any of these technologies as RE and using its historical contr ibutions to develop RE targets will inflate the goals. Furthermore, the commenters observed, the CPP does not respect the rate increase caps included in some of the state RPS or the fact some of the RPS are purely voluntary goals. In addition, the commente rs concluded, RE requires significant transmission investment and only a small percentage of the nameplate capacity of wind RE generation can contribute toward meeting utility Planning Reserve Margin requirements.

C ommenters stated the EPA's assumptions i gnore states' economically reasonable resource limitations and the cost effectiveness of each type of renewable source.9 Commenters stated that EPA's assumptions for achievable levels of renewable energy in each state are based on a regional analysis of ex isting state laws

- Renewable Portfolio Standards (RPS)

- that requires a certain percentage of all generation be "renewable" in nature and is inappropriate. The commenters stated EPA's proposal fails to recognize that each state RPS is far more complex t han merely a single percentage value; whereas, EPA assumes that all RPS are created equal, and simplistically require a set percentage of generation to come from renewable resources, each RPS is unique. The commenters gave the examples of "safety valves" t o ensure the requirement for a certain percentage of renewable energy does not result in exorbitant energy costs and each RPS contains its own applicability rules, defining what is and what is not "renewable," some of which may conflict from state to state . The commenters stated the EPA has failed to provide a clear definition of "renewable" energy in its own proposal, given that EPA largely ignores hydropower in its analysis and admits that its effort to address biomass remains incomplete (even though most state RPS laws would count both resources as "renewable"). The commenter stated EPA's building block 3 assumptions actually increase the stringency of the state RPS laws upon which it is built by eliminating any "safety valves" and state

- specific applicab ility rules that would otherwise apply and used New Mexico's "Renewable Energy Act"

- to illustrate.

Commenters also stated the EPA proposal overrides the policy choices made by the New Mexico legislature in favor of policy choices made by other state legis latures that EPA prefers, and the commenters questioned whether the Clean Air Act provides EPA that level of legal authority. The commenters stated the imposition of one state's policy choices on another also fails to take into account the significant intr a

- region differences that exist.

Comment 8 : Commenters expressed concern that the EPA's reliance on existing state RPS goals fails to account for the fact that many s tates have built in mechanisms to suspend or scale back RPS goals if certain price caps are exceeded.

Response 8 : State RPS requirements are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detai l in section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP

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

C ommenters stated the EPA's reliance on exi sting state RPS goals fails to account for the fact that many States have built in mechanisms to suspend or scale back RPS goals if certain price caps are exceeded; as a result, the RPS goals do not necessarily reflect a state's belief that the RPS goals c an actually be achieved.

C ommenters stated the EPA misrepresents the standards that states have adopted because most state standards contain "off

- ramps," where the state could acquire a lower amount of renewable resources than the numerical levels set for th in the standards depending on impacts on cost or grid reliability.1 0 C ommenters stated these "off

- ramps" also represent legislative choices that the EPA ignores given its view that it should be the arbiter of "best practices" for renewable resource development. C ommenters provided the following examples:

• 7 states have annual cost cap s on utilities' annual revenue requirement for renewable resource development;

• 4 states have a retail rate impact limitation;

• 3 states cap the monthly surcharge on a customer's bill at a set amount;

• 13 states provide for payment into a fund as an altern ative compliance mechanism;

• 3 states subject renewable resources to review under a just

- and

- reasonable standard;

• Virtually every state with a portfolio standard has some other form of off

- ramp, such as a waiver or a freeze, depending on compliance impacts

.

• EPA fails to account for the fact that municipal and cooperative utilities typically

are exempt from portfolio standards.

Comment 9 : For some states, RE targets under the proposed approach are less th an the states reported RE generation amounts for 20 1 2.
Response 9 : In the final rule, the EPA applies building block 3 generation at the interconnect

level. For more detail on the building block 3 target generation methodology, refer to section V.E of the final rule preamble of the CPP and chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP

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

C ommenters stated that for some states the renewable energy generation targets developed using this proposed approach are less than those states' reported renewable energy generation amounts for 2012. C ommenters stated that, to address this issue, NextEra Energy rec ommends that the approach for quantifying the renewable energy generation component of each state's goal be modified to include a floor based on reported 2012 renewable energy generation in that state

.

Comment 10 : C ommenters expressed concern regard ing th e c ost and implementation challenges of building block 3, including transmission infrastructure.11 Response 10 : The EPA addresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP

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

Commenters expressed concern regarding the cost of implementing building block 3 and transmission infrastructure related to additional renewable energy.

C ommenters stated the EPA overestimated the potential availability of renewable capacity and, because these resources will not be available to the ext ent that EPA has projected, States likely will have to implement other measures to achieve their emissions reduction targets, at greater cost and greater impact on electricity reliability (for a more detailed discussion of these points, see Industry Coalit ion Comments at Sec. VII.E.4).

C ommenters stated the EPA fails to account for the significant cost and numerous implementation challenges that would result from nationwide implementation of a large volume of renewable capacity. C ommenters stated these imp lications result primarily from the intermittent nature of many renewable energy sources, such as wind and solar, and the substantial new transmission infrastructure that would be needed to bring renewable generation from the resource location to populatio n centers and industrial areas. C ommenters stated that, particularly for States with large generating capacities, EPA's projection that annual growth factors of renewable capacity in the double digits are achievable may prove difficult to sustain in practi ce.

C ommenters requested the EPA to encourage states to work with transmission owners and providers and RTOs and ISOs, where they exist. C ommenters stated that, because transmission siting is largely subject to the jurisdiction and varying requirements of individual states, states have the ability to work with each other and with transmission planners and agencies having responsibility to protect land and other resources, to make the permitting process, including environmental reviews, less duplicative and inefficient. C ommenters stated the EPA should reject the urge to discount the importance of transmission to fulfilling its goals and the EPA should not assume that the industry will always find it easy to avoid or diminish congestion, build new infrastruc ture to compensate for a lack of market access, or address reliability challenges. C ommenters stated that, if the need for transmission is not articulated in the state plans, a coordinated approach to addressing these challenges becomes all the more diffic ult. C ommenters stated the EPA must help ensure that transmission is part of its strategic approach as it facilitates the very fundamental changes in the way electric generation is planned, fueled, and dispatched.

C ommenters stated that, as renewable ener gy technologies have become more cost competitive and efficient, the primary obstacle to its further deployment in areas having the highest quality wind and solar resources remains the lack of adequate transmission capable of moving green energy to distant markets. C ommenters stated this factor is fundamental to the feasibility of Building Block 3 of the EPA's proposed rule. C ommenters stated that, to ensure the role of transmission is considered, transmission owners and providers, as well as RTOs and ISOs,12 should be afforded the opportunity to furnish technical information in support of transmission solutions capable of increasing the efficiency of the system as a whole, while also achieving emissions reduction goals. C ommenters stated that, as FERC recognized in establishing its Order No. 1000 planning processes, transmission is a regional and even interregional phenomenon that require s a broad planning perspective and a determination to coordinate state law and regulation as never before. C ommenters stated that transmission planning and development is growing more complex and often more difficult (e.g., differing state and federal faci lities siting regimes, conflicting cost allocation theories and proposals, and multiple layers of environmental reviews under both state and federal law), as evidenced by lengthy regulatory approval processes and construction periods, even when important r eliability needs or the requirements of public policy like lower carbon generation are at stake. C ommenters stated that, if the need for transmission is not articulated in the state plans, a coordinated approach to addressing these challenges becomes all t he more difficult.

C ommenters said that natural gas use currently is largely tied to providing peaking power and providing voltage support and inertia to the system to compensate for the variability of wind and solar resources. The commenters said t he expa nsion of RE will be highly dependent not only on transmission, but also on the continued robustness of the grid (see generally NERC Report). The commenters added robustness of the grid as it relates to integrating renewable energy is currently provided by natural gas generation facilities (and, in the future possibly, pumped storage)

. Commenters stated the expansion of RE will therefore require the expansion of natural gas power to follow the load and to compensate for the variability of renewables at a hig her level. Commenters noted t his increase in natural gas will require build

- out of natural gas infrastructure and the build

- out of transmission, the construction of natural gas pipelines and transmission require lengthy permitting processes, environmental impact assessments, and additional costs to

consumers. Commenters stated t he proposed rule and related TSDs do not assess the related impacts to natural gas and transmission the c ommenters said and therefore should be revised and

re

- analyzed to reflect the actual constraints and delays this will cause in RE development and the resulting costs to ratepayers.

C ommenters encouraged the EPA to look into regional transmission planning and specifically at FERC's Order 1000 as a way to foster states' adoption of t he CPP and of renewable
energy. Commenters stated that i n 2011, FERC established a series of rulings (Order 1000) to improve the U.S. power grid and reduce its balkanization. Essentially, Order 1000 requires public transmission utilities to: (1) engage in regional and interregional transmission planning, while accounting for public policy considerations and (2) develop cost allocation methods to allocate the costs of new transmission projects among beneficiaries of the transmission line. Commenters stated O rder 1000 supports renewable energy by ensuring that state policies, such as Renewable Portfolio Standards, are taken into account by utilities, and by allowing states to share their renewable energy with other states within the same Integrated System Oper ator (ISO) network. Commenters stated i t lays the groundwork for the large

- scale development of renewable energy by facilitating a build out of electric transmission lines connecting renewable energy resources and load centers.

C ommenters said that an exam ple of such sharing, which facilitates the flow of renewable energy from where it is produced to the load centers where it is consumed, is the Competitive Renewable Energy Zones (CREZ) in western and central Texas. Commenters stated t his network13 of more th an 3,000 miles of transmission lines delivers thousands of megawatts of clean and cheap wind energy produced in the Panhandle to the population centers of Dallas/Fort Worth, Austin, and San Antonio. Commenters stated t his same template for renewable energy transmission can be achieved in other ISOs. Commenters stated that f or example, utilities and states forming part of the Midcontinent Integrated System Operator (MISO) could collaborate with each other to bring wind energy generated in North and South Dak ota to states like Wisconsin and Missouri, thereby fostering greater adoption of renewable energies and allowing these states to meet their RPS and 111(d) targets.

C ommenters said that by encouraging utilities across states to collaborate in transmission
p lanning, and by setting up new ISOs where there are none currently (in the Southeast and West), cost

- effective actions can be achieved . Commenters pointed out that there are other co

benefits of renewable energy projects are job creation, local economic de velopment, supply chain development, enhanced domestic manufacturing, reduced U.S. energy dependence on foreign oil, and decreased health impacts resulting from fossil fuel emissions and climate change.

C ommenters said that in both of the proposed approach es, the RE goals are based, in part, on prior RE development trends, yet the prior growth of RE resources is not necessarily an indication of future growth. Commenters added that o ften the most rapid and cost

- effective gains are achieved in the early years of development and in those areas with the greatest resource potential and the greatest potential to deliver and integrate these RE resources (i.e., available transmission). In addition, commenters stated many of the prime areas for RE development are loc ated far from load centers and will require transmission to be built to deliver the power to load
centers . Commenters said that a typical transmission line requires five years or more to site, permit and construct. Commenters stated l arge

- scale transmissio n projects, such as high

- voltage overlays and those needed for RE integration can involve even longer lead times. The commenters anticipated i ncremental RE additions to the grid (especially if geographically far from load) potentially will come at an incre asingly higher cost.

C ommenters observed that the EPA's approaches are predicated on the assumption that large quantities of new RE generation can be integrated into the grid . Commenters stated the EPA has not accounted for the technical challenges related to integrating and managing large quantities of RE into the existing transmission and distribution system. These challenges grow as the level of RE penetration increases, the c ommenters said. This effect has already been observed in Hawaii and Germany, where these technical challenges have slowed the pace of growth of RE and have limited their cost

- effectiveness as additional grid upgrades are needed to accommodate increasing amounts of RE, the c ommenters explained. In order to set realistic RE generation goals, the c ommenters asserted the EPA must take into account the challenges associated with increased penetration of RE when setting RE generation targets under section 111(d). This may entail moderating the growth of state RE goals in the later years of the interim compliance period, the c ommenters concluded.

C ommenters said that as a result of infrastructure barriers, in a state like Wyoming where the renewable generation for Basin Ele ctric does not exist and the bulk of existing wind power was constructed by other companies to meet their out

- of

- state renewable portfolio standards, the construction of new renewable wind resources would have to be supported with new simple cycle generato rs, and it might be necessary to build and maintain a new combined cycle14 generating facility to manage the variability in these new loads, the c ommenters said. None of this infrastructure exists, according to the c ommenters . The infrastructure to replace c oal

- based generation within Wyoming does not exist, has not been developed, is not planned, and cannot be constructed by 2020, the c ommenters asserted.

Commenters stated concern about the impact of additional intermittent resources on service reliability requirements. The commenters noted Florida requires a robust, diverse, and dispatchable baseload generating fleet; however, many of the low

- or zero

- carbon technologies EPA assumes in its Building Block 3 allocation to Florida are intermittent, non

- dispatc hable,

non

- baseload technologies. Commenters provided the example that in 2013 the monthly capacity factor for solar photovoltaics in the U.S. ranged from 13 to 22 percent, which showed there is no demonstrated baseload solar option. The commenters said th e low capacity factors of many low

or zero

- carbon technologies (excluding nuclear and possibly co

- firing with biomass) combined with Florida's need for dispatchable baseload generation means that Florida would likely need to build additional natural gas

- f ired facilities and related infrastructure for use as stand

- by units for reliability purposes simply because of EPA's assumed requirement. The commenters referred
to a recent report from Brattle.com entitled "Solar Energy Support in Germany

- A Closer Look" that assesses Germany's efforts to increase renewable generation resources noted an expected cost increase associated with redispatch, curtailment, and other remediation actions necessary to maintain reliability. Commenters said EPA errs in failing to acco unt for these additional expenditures or the implementation time needed to ensure electric reliability.

Commenters stated EPA should encourage more flexible market

- based approaches to supplying renewable power to reduce the emission reduction burden on fos sil fuel power plants. Commenters said the increased use of renewable energy also can play a large role in reducing electric power sector GHG emissions. Commenters said to the extent legally permissible, therefore, using renewable energy as a means of achi eving performance standards, to facilitate market

- based emission reductions, makes good sense. Commenters said at a minimum, power plant operators should have the option of being able voluntarily to take advantage of increased renewable energy use through a crediting mechanism to meet BSER obligations. Commenters said EPA should also consider additional means to promote the use of renewable electricity, including the direct purchase of renewable energy through flexible contract options, shared or community renewable tariff programs and other programs involving the physical delivery of clean electricity. Commenters said these options, which are aimed in large part at making it practical for corporations and other large electricity users to buy RE (and not jus t Renewable Energy Certificates (RECs)), could play a significant role in attracting additional RE supply in many states. Moreover, commenters added, the EPA's express support for such supply

- inducing regulatory incentives, would align the agency with the President's recent December 2013 guidance to federal agencies on best practice procurement policy for renewable generation. Commenters said a robust voluntary RE option under the Proposed Rule would leverage the augmented role of gas

- fired generation under the Rule. Commenters said flexible gas

- fired facilities play a key role in providing load

- support to variable renewable energy when the wind is not blowing and the sun is not shining.15 Comment 12 1 1 : Commenters took issue with the assumption that RPSs are a reasonable proxy for quantifying renewable generation potential.
Response 12 1 1 : State RPS requirements are not a factor in quantifying the amount of cost

effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detail in section V.E of the fi nal rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP

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

C ommenters stated that, although South Carolina does not have a renew able portfolio standard (RPS) in place, and is not currently a member of a GHG trading program, the state has taken just as many other significant steps resulting in a measurable reduction of CO2 emissions. C ommenters stated South Carolina is ranked high a mong states for clean energy use (5th) and Leadership in Energy and Environmental Design (LEED) for building space per capita (top 10). C ommenters stated the state legislature updated, by Act 143, the South Carolina Energy Standard to the 2009 Internationa l Energy Conservation Code (IECC) for all commercial and residential building with an effective date of January 1, 2013. C ommenters stated South Carolina also ranks highly among states regarding its use of nuclear power generation as a component of a diver se fuel portfolio.

C ommenters stated that calculating renewable energy targets by region is not representative of actual planned renewable energy generation levels in those regions. C ommenters expressed concern that states with no published RPS are not included in the averaging calculation, even if those states have voluntary renewable energy programs or RE generation facilities that were developed outside of a formal RPS requirement. C ommenter s stated the effect on the final regional RE targets is that they are skewed toward certain states that may represent unusual or unique technical potential for RE development.

C ommenters stated that, because not all states have or will have an RPS or othe r state renewable energy policies, they urged the EPA to carefully consider the impact of all types of renewable energy procurement on state compliance plans, and not just renewable energy generated in response to a state RPS or similar state policies. C om menters stated consumers and businesses are making significant commitments to renewable energy generation for reasons other than RPS compliance and such customer

- driven renewable energy demand may be a particularly important driver for renewable energy dev elopment in the future. C ommenters stated that the actions of

non

- utility parties are largely unaccounted for in the Clean Power Plan. C ommenters encouraged the EPA to consider the impact of allowing states to adopt policies that empower non

- utility partie s to contribute to state compliance under the Clean Power Plan. C ommenters stated they support the approaches that will drive the most low

- carbon energy onto the grid.

C ommenters stated EPA errs by establishing an overly restrictive definition of renewable technologies to be used to meet Building Block 3 goals. C ommenters stated the EPA allows technology that is fueled by sun, wind, water, organic matter, and other resources regul arly replenished by physical or biological cycles (GHG Abatement Measures TSD at 4

- 1). C ommenters stated the excessively narrow scope of EPA's definition is highlighted by reviewing the broad definition in North Carolina's REPS, which classifies renewable technologies as: Solar16 electric, solar thermal, wind, hydropower, geothermal, or ocean current or wave energy resource; a biomass resource, including agricultural waste, animal waste, wood waste, spent pulping liquors, combustible residues, combustible liq uids, combustible gases, energy crops, or landfill methane; waste heat derived from a renewable energy resource and used to produce electricity or useful, measurable thermal energy at a retail electric customer's facility; or hydrogen derived from a renewa ble energy resource.

C ommenters stated EPA should acknowledge each state's definition for renewable energy is unique to them based on the resources available to them within their borders and include these generation sources for compliance.

C ommenters stat ed the EPA assumption that existing RPS targets are feasible across all states within a defined region does not adequately consider the varying definitions of renewable across the states . Commenters also stated that renewable resources physically located i n one state are often used to satisfy RPS requirements in other states . Commenters took issue with the assumption that RPSs are a reasonable proxy for quantifying renewable generation potential, and cited literature showing that motivations for RPS impleme ntation and stringency are multi

faceted and include many state

- specific factors that cannot be generalized to other contexts or assumed to be indicative of best practices over a multi

- decadal horizon.

C ommenters suggested tribal lands should not be inclu ded in assessing a state's RE potential at all, considering that tribes are not subject to the Proposed Rule; these drawbacks must be addressed before considering any option related to technical potential.

C ommenters stated the EPA should be aware that sta tes such as New Mexico with a large rural population and many rural electric cooperatives often have secondary and even tertiary standards which are necessarily lower than those for the investor owned utilities (IOUs), due to the demographics of the rural population as well as transmission constraints of rural areas. C ommenters stated a focus only on primary standards in setting a regional "average" RPS ignores the demographics and constraints unique to rural electric cooperatives.

Comment 13 1 2 : C ommenters suggested that RPS policies need to be increased and broadened.
Response 13 1 2 : State RPS requirements are not a factor in quantifying the amount of cost

effective RE that is part of the BSER in the final rule. The methodology that produces target generati on levels under building block 3 is described in detail in section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP

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

C ommenters suggested elements from state RPS design and grid control area policy be synthesized to present best practices that facilitate renewable energy development, with a particular emphasis on leveraging private sector financing. C omment ers suggested that, for states with existing RPS policies, the states can make their RPS targets more robust by aligning with the timeline of the CPP through 2030 and raise overall annual RPS targets.17 C ommenters stated that state RPS policies have provided investors and developers with important long

- term, market demand targets and have been a successful, low

- cost tool with more than 68% of renewable energy generation in the U.S. (~51 GW) occurring in states with RPS policies at a cost of less than 2% of el ectric rates in states with RPS policies. C ommenters stated that, to achieve CPP targets through greater use of cost

- competitive renewable energy, RPS policies need to be increased and broadened, possibly to more states and to more utility segments. C ommen ters noted thirteen states presently do not have RPS policies, and in some states not all utilities are covered by existing policies. C ommenters said that all future requirements under existing RPS policies only amount in the range of 3.5 GW of new renewab le energy power each year through 2030 (ACORE

- US PREF), well below what the US renewable energy industry can deploy . Commenters stated renewable energy additions have averaged approximately 10 GW per year since 2008, including more than 16 GW in 2012 (FERC ) or 49% of all new capacity that year. C ommenters stated the ability of the industry to ramp up generation is virtually unlimited.

C ommenters indicated that a number of states on a bipartisan basis have already taken action to increase or strengthen their RPS policies. The commenters said, i n 2009, California's Governor issued an executive order increasing the state's RPS target from 20% by 2010 to 33% by 2020

. Commenters added that in Colorado, the state legislature in 2007 modified the state's RPS
progra m (from a 2004 ballot initiative) to include a higher target; the 2007 modifications also added separate renewable energy requirements for electric cooperatives, which previously had been omitted from the state's RPS mandate. The commenters said i n 2010, t he Colorado legislature again increased the state's RPS target, to its present level of 30% by 2020. Commenters added, i n 2012, the Maryland legislature enacted a bill accelerating compliance deadlines for the state's solar carve

- out (including changing th e ultimate 2% target date from 2022 to 2020). Lastly, the c ommenters indicated that in 2013, Minnesota increased its RPS to 40% and New Jersey in 2010 converted its significant RPS target to a capacity requirement (versus a percent of generation).

Comment 14 1 3 : Commenters asserted that the EPA should adopt the UCS Demonstrated Growth Approach.
Response 14 1 3 : The resources and data provided in this comment were valuable in finalizing the bui lding block 3 methodology. The final methodology to establish building block 3 generation levels is consistent with several of the recommendations provided in the UCS Demonstrated Growth Approach

– the final methodology relies on the capacity deployment of select RE technologies over the most recent five

- year period, takes into account current law and RPS policies, and assumes continu ed growth in RE at levels equal to the EPA IPM Base Case through 2021. The final methodology for building block 3 is described in section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CP P

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

C ommenters recommended strengthening the renewable energy building block by adopting the UCS Demonstrated Growth Approach (UCS Approach).18 C ommenters stated the UCS Approa ch is a logical outgrowth of the EPA's approaches for determining the BSER for the renewable energy building block. C ommenters recommended the EPA revise its methodology by (1) setting renewable energy growth rates that are already being achieved by many s tates; (2) incorporating full compliance with current state RES laws; (3) using actual generation data from 2013 (or the most recent year available) and including recent and planned renewable energy development between 2013 and 2017; and (4) committing to reviewing and strengthening state emissions reduction targets, as well as state renewable energy targets, by 2025, to ensure that the CPP is updated to reflect the latest opportunities for cutting CO2 emissions.

C ommenters explained the UCS Approach would (1) s et a national renewable energy growth rate benchmark based on demonstrated growth in the states from 2009 to 2013; (2) assume full compliance with current state RES policies, as set by law, that require certain percentages of electricity to come from renewable sources; and (3) account for actual and expected renewable energy growth between 2013 and 2017. C ommenters stated the UCS Approach assumes state

level renewable energy targets begin in 2017 and ramp up through 2030. To determine each state's 201 7 baseline generation levels, c ommenters recommended using EIA's actual renewable generation data from 2013 (the EPA's approach uses 2012 data) and add projected generation from wind and utility

- scale solar projects known to be under construction through 2 016. To calculate state renewable energy targets for 2030, c ommenters recommended a four

- step approach:

• First, we use EIA data to calculate each state's average renewable energy growth rate over the five

- year period from 2009 to 2013. We find that, on aver age, states increased their renewable share of electricity sales by 1 percent annually. This growth rate serves as our national benchmark. The 2009

- 2013 benchmark period accounts for the recent rapid growth in wind and solar technologies; it eases fluctuat ions in development due to uncertainty around federal tax credit expirations and extensions; and it captures much of the historic development spurred by state RES policies

- a key driver of renewables growth. Eleven of the 15 leading states that have achieve d growth rates at or above the national benchmark from 2009 to 2013 have also achieved a 1 percent or higher average annual growth rate over a 10

- year period from 2004 to 2013.

• Second, for states below the 1 percent national benchmark, we assume that they gradually ramp up to that rate from 2017 to 2020 in a similar way that the EPA assumes energy efficiency targets would ramp up in Building Block 4. This period serves as an opportunity for states that have not been as active in deploying new renewable ene rgy sources to catch up to the national benchmark. Renewable energy is assumed to grow after 2020 in these states at an annual rate of 1 percent of total sales through 2030.

• Third, for the 15 leading states among those that have been deploying renewable

e nergy at or above the national benchmark, we increase their respective renewable energy targets from 2017 to 2030 at each state's average annual growth rate during the five

- year benchmark period, up to a maximum of 1.5 percent per year. We view this as a r easonable limit that can be sustained over time in states with19 strong renewable energy potential. This is supported by the fact that seven states have achieved annual average growth rates of 1.5 percent or more over a 10

- year period from 2004 to 2013 based on EIA data. Moreover, a 1.5 percent growth rate is consistent with renewable energy targets set by leading RES states.

• Fourth, to account for full compliance with mandatory state RES laws, we assume that states achieve the greater of two measures: the g eneration projected by our growth rate approach; or the level needed to meet states' respective RES targets for each year from 2017 to 2030, as projected by the Department of Energy's Lawrence Berkeley National Laboratory. To ensure reasonably achievable

r enewable energy penetration rates during the compliance period, we also cap the total share of renewable generation for any state at 40 percent of total state electricity sales, a level that several studies by grid operators, utilities, and government agen cies have shown can be achieved at the state and regional level in this timeframe while maintaining reliability. Only seven states hit this cap prior to 2030.

C ommenters stated that key constraints included in the UCS Approach, such as the 1.5 percent

ann ual growth rate cap and the 40 percent cap on the overall target, are reflective of current conditions and thus should be flexible over time. C ommenters stated that, as the EPA undertakes regular reviews of the CPP, which should occur at least every eight years as allowed by the Clean Air Act, these constraints could be adjusted upward or eliminated to reflect improvements in renewable energy technologies , grid integration techniques, and falling costs.

C ommenters stated that, if all states met these targets, the nation's electricity coming from renewable energy in 2020 would double compared with the EPA's proposal

- from 7 percent of total U.S. electricity sales to 14 percent and, by 2030, it would result in a 23 percent share of renewable energy, as compared with 12 percent under the current the EPA proposal. C ommenters stated that achieving higher levels of renewable energy generation under the UCS Approa ch is technically feasible. C ommenters stated they used the same data from NREL that the EPA relied on for its alternative approach, and, in every CPP

- region, the UCS Approach requires only a small fraction of the vast renewable energy resources that are t echnically available. Commenters stated t he technical potential based on the EPA's methodology includes utility and distributed solar photovoltaics, onshore wind, geothermal, and bioenergy. C ommenters noted their estimates do not include the tremendous off shore wind potential in the U.S., which the EPA excluded because they claimed that the technology has not been adequately demonstrated to qualify for the BSER. C ommenters referenced a recent DOE report showing that 14 offshore wind projects totaling 4.9 GW are in advanced stages of development in nine states and the Virgin Islands and stated that, given the status of these projects, and the likelihood that states will include them in their state compliance plans, the EPA should consider including a contribu tion from offshore wind as a potential BSER option over time.

C ommenters stated that t he UCS Approach is affordable. C ommenters stated that, u sing the National Renewable Energy Laboratory's Regional Energy Deployment System (ReEDS) model, they analyzed th e impacts on CO2 emissions, electricity and natural gas prices, and the electricity generation mix of achieving the state renewable energy targets under the UCS Approach compared with business as usual. C ommenters stated their analysis is a reasonable20 appr oximation of the incremental costs and impacts of increasing renewables under the Clean Power Plan; however, they did not analyze the full impacts of implementing the entire draft rule. C ommenters stated their analysis included updates to technology cost a nd performance assumptions that reflected data from recent project installations and mid

- range projections from several recent studies as discussed in more detail below and a separate technical appendix. Under the UCS approach, c ommenters stated total CO2 reductions achieved by the Clean Power Plan could increase from 30 percent below 2005 levels to nearly 40 percent. C ommenters stated the ReEDs modeling showed that the additional renewable energy generation would displace mostly natural gas. C ommenters sta ted that diversifying the electricity mix with renewable energy would help reduce the economic risks associated with an overreliance on natural gas and reducing the demand for natural gas would also lead to lower and more stable natural gas and electricity prices. C ommenters added they analyzed sensitivities related to key parameters in the UCS Approach and found that it is robust to these changes.

C ommenters stated that, under the UCS proposed approach, national average consumer electricity prices were a m aximum of 0.3 percent higher per year than business as usual through 2030. C ommenters stated that, as a result, a typical household (using 600 kWh per month) would see a maximum increase of 18 cents on their monthly electricity bill on average at the natio nal level. C ommenters stated that, under the UCS Approach, the national average price of natural gas delivered to the electricity sector would be 9 percent lower than business as usual by 2030. C ommenters stated that, at the regional level, average consume r electricity prices would range from a 3.7 percent reduction to a 3.4 percent increase, while power sector natural gas price reductions would range from 8 percent to 17 percent by 2030. C ommenters stated that previous studies have shown that reducing natu ral gas use in the electricity sector with renewables and energy efficiency can also help reduce consumer natural gas prices and bills for heating, manufacturing, and other uses. C ommenters stated, for example, a 2007 EIA analysis found that implementing a national RES of 25 percent by 2025 would lower cumulative (from 2009 through 2030) consumer natural gas bills by $17 billion (or 1 percent), more than offsetting the cumulative $15 billion (0.4 percent) increase in consumer electricity bills. C ommenters s tated these benefits are not captured in the UCS Approach, which uses an energy model that focuses only on the power sector. C ommenters stated they found that the incremental cost of increasing renewables under the UCS proposal was at or below $30/MWh, the range that the EPA identifies as meeting the BSER cost criteria under the Clean Power Plan. C ommenters stated these results assume national trading of renewable energy credits (RECs). C ommenters stated that, if there are any limits placed on trading betwe en regions, experience with renewable energy markets suggests that REC prices would likely be higher in some regions and lower in other regions of the country.

Comment 1 5 1 4 : Commenters stated the NREL technical potential report was inaccurate in its estimates.
Response 1 5 1 4 : The final methodology for building block 3 does not rely on a benchmark development rate quantified through NREL technical potential estimates, as proposed under the Alternative RE approach. The EPA believes the RE resource estima tes and cost steps that underlie IPM projections appropriately represent relevant land use restrictions. Further, building21 block 3 target generation levels are quantified at the interconnect

- level, providing significant development flexibility. Refer to chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP for additional analysis on the assumed renewable resource potential.
The following are summaries of the specific public comments under this comment:

C ommenters referred to a NREL report estimating renewable energy potential and stated the environmental exclusions NREL relied upon underestimate restrictions on renewable energy deployment and, as a result, significantly overestimate Oklahoma's renewable energy potential.

C ommenters stated renewable energy potential was analyzed by NREL based both on the potential for development of a particular renewable energy type in a particular location and on whether a given location could permit development of that renewable energy resource. Commente rs added t he reports excluded areas that NREL determined would not permit the development of a certain renewable energy type, because of either topographic or environmental land restrictions. C ommenters stated that having failed to account for the ESA and recent land use restrictions, NREL suggests that 58 percent of Oklahoma's land area is available for wind generation and 56 percent is available for rural solar photovoltaic ("PV") generation. C ommenters stated that, when the habitats of the ESA

- listed les ser prairie chicken are removed from consideration, the technical potential of available wind and solar development is reduced significantly. C ommenters stated Oklahoma's hydropower potential must also be significantly reduced, as NREL failed to consider e xclusions for the habitats of six listed aquatic species which reside in Oklahoma, rivers that NREL determined have hydropower potential.

C ommenters said that the NREL report admittedly overestimated renewable energy by permitting double counting . Comment ers said that, specifically, the report notes that "the same land area may be the basis for estimates of multiple technologies." C ommenters stated this approach double counts renewable energy potential in Oklahoma by assuming that mutually exclusive renewa ble energy development could occur in the same location when in reality it could not. C ommenters stated that, for example, Oklahoma's wind and rural solar PV potential likely overlap given Oklahoma's topography and population density. C ommenters stated tha t, by assuming these technologies can be built on top of each other, the alternative approach significantly overstates Oklahoma's potential for both technologies.

C ommenters stated that the NREL report does not provide an accurate representation of hydropo wer potential in Oklahoma . Commenters said that NREL estimate d hydropower potential based on a decade

- old study that in turn relies on even older median data. The commenters said that a ccording to the EPA and numerous hydrologists, climate change is and wi ll continue to significantly affect streamflow dynamics. In light of these dynamics, commenters stated that the EPA should utilize a more recent, and thus more accurate, hydrologic dataset. Commenters stated that i n the alternative, the EPA should justify its reliance on this older data.

Comment 16 1 5 : Commenters recommend ed using NREL estimates of technical potential for specific RE generation technologies.22 Response 16 1 5 : NREL technical potential data is used in the EPA’s power sector modeling analysis to support the building block 3 generation levels. For additional information, refer to the Chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.
The following are summaries of the specific public comments under this comment:

Commenters reco mmended that EPA should utilize a determination of technically potential renewables in a similar manner to the National Renewable Energy Laboratory (NREL) estimates of the technical potential of specific renewable electricity generation technologies.

Comm ent 1 7 1 6 : Commenters stated EPA overestimated the amount of additional renewable energy potential.
Response 1 7 1 6 : The EPA addresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both section V.E of the final rule preamble of the CPP and chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP

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

C ommenters stated that, while the EPA's compli ance building block number three assumes that about 10 percent of Florida's generation could come from renewable energy by 2030, additional renewable energy is not a viable option for us since GRU already has roughly 34 percent of its energy coming from re newable energy.

C ommenters stated that a recent MISO study suggests that the EPA's assumptions regarding increase in renewable energy are unrealistic, and threaten both grid reliability and an affordable energy supply for this country. C ommenters stated t he MISO study of the impact of the GHG Rule found through modeling that renewable energy could not be expected to replace the fossil

fuel retirements already planned due to MATS, nor those expected to retire due to the GHG Rule.

Comment 1 8 1 7 : Commenters noted factors limiting the inclusion of new RE in Alaska.
Response 1 8 1 7 : No building block 3 requirement has been expressed for Alaska in the final methodology.
The following are summaries of the specific public comments under this comment:

Commenters stated there are significant limits to including new renewable energy resources in the generation mix in Alaska. C ommenters stated geographic and economic constraints limit the availability of utility grade renewable energy resources. C ommenters stated utility grade wind and geothermal generation resources are generally located in southwest and western Alaska, hundreds of miles away from transmission facilities connected to affected EGUs. C ommenters stated that, given the current state of technol ogy and the low angle of sunlight during much of the23 year, our solar resources are not utility grade. C ommenters stated Alaska is actively investigating biomass, hydrokinetic, and hydroelectric resources, and developing those that appear viable; however, m any of these resources are also not located within economic reach of load served by an affected EGU.

C ommenters stated that transmission and economic constraints dictate that only smaller renewable energy projects can be integrated. C ommenters stated the relevant transmission lines are already operated substantially at capacity to transfer hydroelectric and natural gas generation to load. C ommenters stated the cost of making substantial upgrades to the existing transmission infrastructure would make most renewable energy projects uneconomic; therefore, most new renewable energy projects will have to be sized to interconnect with their local distribution system. C ommenters stated that only projects producing 2 MW or less can be interconnected wit h local distribution systems and this lack of scale substantially affects project economics. C ommenters stated that, without economies of scale, Alaska does not have the same opportunities to develop projects as the interconnected continental states.

C omme nters stated the affected utilities in Alaska have limited capacity to accommodate additional non

- firm energy, particularly intermittent generation sources such as wind and solar. C ommenters stated that, to ensure reliability of the system, firm generation resources must be available to follow intermittent generation resources. C ommenters stated firm generation resource capacity that is sufficiently nimble to continuously follow load in addition to intermittent generation resources such as wind and solar mu st be continuously online. C ommenters stated the availability of this type of firm generation capacity is limited in Alaska. C ommenters stated that increased cycling of fossil units occasioned by following intermittent generation will decreases the unit's efficiency, leading to an increase in CO2 emissions. C ommenters stated that measures to regulate wind and solar generated energy could include installation of large batteries and flywheels at cost of about $2,000 per kW. C ommenters stated the integration o f significant amounts of non

- firm power may also significantly de

- optimize dispatch and result in higher fuel and generation operation and maintenance costs.

C ommenters stated that their ability to incorporate new renewable energy, particularly on the tim eline required by this rule, is infused with substantial uncertainty. C ommenters stated that, in many cases, federal environmental studies and permitting requirements and policy create significant barriers to developing even reliable firm renewable energy resources that could be safely absorbed into Alaska's electric utility systems, such as storage or lake tap hydroelectric generation. C ommenters stated that declining prices for Alaska oil is reducing the State's ability to provide financing for new renewa ble energy projects. C ommenters stated that, while their utilities are actively examining options for new renewable energy resources, many renewable energy projects are simply uneconomic. C ommenters stated at least one utility notes that the projects typic ally cost two to three times the avoided cost of gas

- fired generation.

Comment 1 9 1 8 : C ommenters stated that additional increases in renewable capacity in Montana are limited.24 Response 1 9 1 8 : The final methodology for building block 3 has been modified to quantify and apply target generation levels at the interconnect

- level, with a two

- year phase

- in period that provides additional time to accommodate additional investments or planning that may be necessary in deploying and/or procuring incremental RE. For more detail on the building block 3 target generation methodology, refer to section V.E of the final rule preamble of the CPP and chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.
The following are summaries of the specific public comments under this comment:

C ommenters indicated that the MDEQ "White Paper" suggested Montana could significantly increase its renewable electricity generation capacity as part of its strategy to comply with the proposed Federal rule . Commenters said Montana generated 1661 GWh of renewable electricity in 2013 . Commenters said MDEQ's analysis suggested the state may need to increase renewable capacity by 342 MW to 2,859 GWh by 2030 to help reach Montana's CO2 reduction target

. Commenters added that Montana has significantly increased its renewable capacity in recent years as evidenced by construction of a number of wind farms. C ommenters stated that additional increases in renewable capacity in M ontana are limited by several factors:

• Montana's high voltage transmission lines are already at or near full capacity and additional renewable generation would require new transmission lines or upgrades at existing facilities.

• Securing rights

- of

- way for co nstruction of renewable facilities and their required transmission capacity is no easy task in Montana

- as evidenced by the difficulties faced by NorthWestern Energy's attempts to construct the Mountain States Transmission Intertie line from Montana Idaho t hat was planned to increase renewable capacity. The proposed line ran into significant opposition related to eminent domain issues, landowner concerns about visual and environmental impacts, and market considerations.

• Without the necessary increases in tra nsmission capacity to handle increases renewable generation, increased renewable generation would require a decrease in coal

- fired generation. Decreased coal

- fired utilization would likely lead to decreased efficiency at these units and thereby substantial ly offset any benefit realized from additional renewable generation. Coal plants are not designed cycle to integrate renewables, but are designed to be baseload generating units

achieving their efficiency by running at constant levels over long periods of time, the c ommenters noted.

• The high voltage transmission line that runs from Colstrip west depends on the inertia provided by the steady generation of the Colstrip coal

- fired power plant. Reduced capacity at the plant will compromise reliability of the tr ansmissions system, the c ommenters asserted

.

Comment 20 19 : In comments on the tribal and territories SNPR, c ommenters stated that the Proposed Rule's approach to Block 3 yields no new RE in these jurisdictions.25 Response 20 19 : In the final rule, the EPA applies building block 3 generation at the interconnect

- level. This methodology does not dist inguish between affected EGUs within an interconnection. However, there are no requirements related to building block 3 for Alaska, Hawaii, and the U.S. territorie s. For more detail on the building block 3 target generation

m ethodology and where it is applied, refer to section V of the final rule preamble of the CPP and chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP

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

C ommenters stated this result is based on the EPA's assessment that there is currently no utility

scale, grid

- connected, non

- hydropower renewable electricity being generated on these tribal lands or in Guam or Puerto Rico

- an assessment that overlooks a number of recent and ongoing RE projects in those areas. C ommenters stated that, since each jurisdiction has a 2012 baseline of 0 MWh from RE, any percentage increase will similarly yield 0 additional MW h. C ommenters stated that, for the territories, the EPA co

- proposes an alternative approach that would establish an expected RE percentage of 0.37 percent of total generation starting in 2017 and would apply a 9 percent annual growth factor over the course of the compliance period. C ommenters stated that, by 2029, this co

- proposal would result in an RE penetration of 1 percent in the territories. C ommenters stated the Agency did not propose a similar alternative for the tribal nations, reasoning that the co

- proposal is based not on domestic electricity consumption but on total generation within that jurisdiction. C ommenters stated that, since domestic consumption of electricity on the tribal lands is only a small fraction of the total generation produced, th is co

proposal would expect the tribes to develop renewable resource capacities that greatly exceed their demand for electricity.

C ommenters stated that the Proposed Rule dramatically underestimated the renewable potential of the three tribal nation lands , Guam, and Puerto Rico. C ommenters stated the region in which the tribal nation lands are situated has among the best solar and wind resources in the United States and, indeed, the world. C ommenters stated, for example, in 2012, the National Renewable Ene rgy Laboratory ('NREL') estimated that the Navajo Nation has approximately 1,200,000 MW of utility

- scale solar capability, and nearly 1,800 MW of wind resource potential, 500 MW of which is of high quality, meaning that its capacity factor would be 35 perc ent or greater. C ommenters stated Puerto Rico has excellent solar potential, similar to the U.S. Southwest's resource, and a ridgeline wind resource that is on par with that of Texas, one of the leading states for wind development. C ommenters stated Guam and the U.S. Virgin islands have similarly strong renewable potential. C ommenters stated that, to expect 0 or 1 percent renewable generation in these regions does not reflect the best system of emission reduction and would sacrifice an importa nt opportunity for reducing emissions in these areas.

C ommenters stated a large percentage of residents on tribal nation lands currently lack electricity, despite the fact that large, centralized fossil fuel plants have operated in those jurisdictions for decades. C ommenters stated that distributed renewable generation combined with energy storage and/or microgrids is an ideal option to provide electricity in these communities to residents that still lack this vital resource and would help develop green jo bs in the process. C ommenters stated many tribes have already started to develop renewable energy within their borders, recognizing the economic development and energy independence benefits of such projects.26 C ommenters described several planned wind and s olar tribal projects. C ommenters stated tribal renewable energy development has been hampered in recent years by federal restrictions on tribes' ability to enter into long

- term surface leases; thus, the relative paucity of renewable energy projects in trib al areas with excellent resources should not be taken as a sign of their infeasibility or lack of interest from the tribal nations. C ommenters stated that, in 2012, Congress enacted a law to promote greater tribal self

- determination and economic developmen t by allowing tribes to enter into long

- term leases without the historical need for prior approval from the Secretary of the Interior. C ommenters stated the 'Helping Expedite and Advance Responsible Tribal Home Ownership Act of 2012 (the 'HEARTH' Act) requ ires tribal nations to establish their own regulations governing surface leasing, and it is those regulations

- rather than the case

by

- case leasing decisions

- that must approved by Interior. C ommenters stated the EPA should consult with tribal nations an d the Department of the Interior to ensure that the nations have the guidance they need to develop these regulations, to ensure that review by Interior proceeds in a timely manner, and to ensure that tribes have the requisite authority to negotiate wind an d solar development leases to achieve compliance with EPA's rule.

C ommenters stated Puerto Rico has taken significant steps toward reducing its reliance on imported fossil fuel power, including the establishment of an RPS requiring 12 percent RE by 2015, 15 percent by 2020, and 20 percent by 2035. C ommenters stated the EPA's approach in the supplemental proposal ignores the island's RPS targets, even while the Clean Power Plan establishes Block 3 targets based on states' RPS goals. C ommenters stated that P REPA, the island's utility, has signed long

- term power purchase agreements with renewable energy developers for about 1,000 MW of renewable capacity, which would satisfy the 2015 portfolio standard. C ommenters stated an existing utility

- scale RE project

- a 24

- megawatt solar photovoltaic ('PV') plant at Guayama

- is managed by the same company that owns Puerto Rico's coal plant. C ommenters stated the territory has also become a leader in distributed solar, both solar PV and solar hot water heaters: over 11, 000 solar hot water heaters installed using weatherization assistance program funds, net metering revenue, and tax benefits for small

- scale PV electricity projects have together reduced electric load on the island by more than 40 MW. C ommenters stated that , given the high electricity prices in the Caribbean (and, for that matter, among the Pacific islands) due to the need for imported oil, renewable energy is a particular attractive option for Puerto Rico, and it is reasonable to expect more renewable devel opment there.

C ommenters stated the island of Guam has ambitious (though non

- binding) renewable energy goals. C ommenters stated utilities must supply 8 percent of net electricity sales using renewable energy by 2020 and 25 percent by 2035, with other inter im goals established. C ommenters stated that, in 2011, the Guam Power Authority ('GPA') issued its first renewables solicitation, leading to the approval of the 20 MW Quantum Guam Power solar facility, which was still under construction as of 2013 and that GPA has also been negotiating a second project: a 15

- MW combined solar PV and wind installation. C ommenters stated the Department of the Interior Office of Insular Affairs and NREL published in 2011 an Initial Technical Energy Assessment Report for Guam a s part of an ongoing collaborative project to develop a comprehensive energy strategy for the territory, to decrease the island's reliance on imported fossil fuels, and to increase the resiliency of its grid in the face of future population growth. C omment ers stated NREL's technical assistance with respect to Guam's renewable energy potential will be extremely helpful in developing those resources.27 Comment 2 1 2 0 : Commenter s suggested there will be increased interest in tribal opportunities in meeting targets.
Response 2 1 2 0 : In the final rule, the EPA applies building block 3 generation at the interconnect

- level. This methodology does not dist inguish between affected EGUs or opportunities for RE development within an interconnection. For more detail on the building block 3 target generation methodology, refer to section V.E of the final rule preamble of the CPP and chapter 4 of the GHG Mitigation Measures TSD supporting th e final CPP.

R efer to section V.E.6 of the preamble and the GHG Mitigation Measures TSD.

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

C ommenters stated that by instituting a larger role for renewable energy in the CPP tribes may benefit from the additional wrap up and renewable energy and investor owned utilities cooperative utilities, public power agencies and independent power producers would no w look at native lands serious for additional opportunities to meet these updated targets . Commenters stated that since the federal government is a part owner of Navajo Generating Station, it would be a good place to start and the federal government can se nd a message that is serious about emissions by transitioning their ownership share of NGS before 2025 to a mix of either building block 2 and 3.

C ommenters stated that the Navajo Reservation will look deeper into renewable energy and start investing in it , as now the Navajo Nation is investing more into fossil fuel energy while everyone else is looking to solar and wind and other avenues.

Comment 2 2 2 1 : Commenters suggested the EPA could achieve more reductions from renewable energy.
Response 2 2 2 1 : The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, which is described in section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.
The following are summaries of the specific public comments under this comment:

C ommenters stated the EPA's proposed targets can and should be strengthened. C ommenters suggested the goal of the plan should be to reduce emissions 35 to 40 percent below 2005 emissions by 2020. C ommenters stated the formula used by EPA to establish the emissions target in each state needs to be adjusted to reflect that additional available clean, renewable generation and energy

- efficiency resources would replace generation from the dirtiest fossil fuel sources and at a faster pace, yielding greater emissions reductions than EPA assumed. C ommenters stated the EPA has rightly recognized that energy efficiency is the most cost

- effective resource to reduce emissions and that many successful state programs demonstrate potential for efficiency across the country. C ommenters stated that more cost

- effective efficiency is available more quickly and28 a t lower cost than was assumed in the proposal as state programs have demonstrated the ability to ramp up more quickly than the proposal would require and to use a wider variety of efficiency tools than was considered. C ommenters stated that, by setting ass umptions about the availability and quantity of renewable energy opportunities far too low, they left substantial, achievable reductions off the table. C ommenters stated the EPA should analyze resource availability and costs on the state and regional basis rather than limiting the assessment of potential development to mandated renewables and state renewable portfolio standard.

C ommenters suggested using renewable wind and solar energy to cut GHG emissions by 70%, not 30% since renewable energy is now very cost effective and reliable.

C ommenters stated the rule should be strengthened to require the percentage of renewable energy to be increased to 20 percent by 2020 and 30 percent by 2030.

C ommenters stated that, with improvements Sierra Club recommends, th e Clean Power Plan could reduce power plant emissions by 35 to 40 percent from 2005 levels by 2020. C ommenters stated this is necessary to meet the President's goal of a 17 percent reduction in U.S. carbon emissions from 2005 levels by 2020 and promote ene rgy efficiency and renewable energy without incentivizing natural gas, nuclear energy, and other climate disrupting energy sources. C ommenters stated the EPA rightly includes these resources in setting the state targets, but the availability and quantity o f renewable energy opportunities assumed in the plan is too low. C ommenters stated that, with a current account of retirements of dirty power plants and a more accurate estimate of growth in the renewable energy and energy efficiency sectors the Clean Powe r Plan could produce deeper reductions in carbon pollution.

C ommenters referred to a report from the Union of Concerned Scientists and stated the EPA could nearly double the amount of cost

- effective renewable energy from 12 percent of total 2030 U.S. elect ric sales to 23 percent. C ommenters stated that most significant is the fact that shifting the emphasis to existing renewable technologies would result in greenhouse reductions from the current proposed rule benchmark of 30 percent below the 2005 levels by 2030 to a 40 percent below the 2005 level.

C ommenters stated renewable energy generation can play a much more significant role in the U.S. electrical system than previous projections would indicate. C ommenters stated the U.S. Department of Energy's Offic e of Energy Efficiency and Renewable Energy has formed a collaborative with more than 110 researchers from 35 organizations including national laboratories such as NREL, industry, universities and non

- governmental organizations under the umbrella called, R E Futures. C ommenters stated this group issues a study, titled RE Futures, which analyzed the possibility and feasibility of using several variable energy technologies at various degrees of market penetration (30%, 50%, and 80%) finding that renewable elec tricity generation from technologies that are commercially available today are more than adequate to supply 80% of total U.S. electricity generation in 2050 in every region of the country.

C ommenters stated that evidence is mounting that a much stronger f ocus on renewable energy generation is needed to make the EPA's Clean Power Plan effective. C ommenters stated that a report from the Union of Concerned Scientists says the EPA could nearly double the amount of
cost

- effective renewable energy from 12 percen t of total 2030 U.S. electric sales to 23 percent.29 C ommenters stated that shifting the emphasis to existing renewable technologies would result in greenhouse reductions from the current proposed rule benchmark of 30 percent below the 2005 levels by 2030 to a 40 percent below the 2005 level. C ommenters stated the costs of renewable energy generation continues to go down and this increase state emphasis under the rule should not in any way dramatically increase costs to energy ratepayers, under the models use d for the study the maximum increase is 18 cents on the monthly electrical bill and lower in some states. C ommenters stated the report supports research by others that increasing the renewable energy mix reduces the economic risk from volatile natural gas prices and overreliance on deploying large

- scale natural gas plants under the existing rule language. C ommenters stated the paper suggested (1) setting a national renewable energy growth rate benchmark based on demonstrated growth in the states from 2009 t o 2013; assuming full compliance with current state RES policies that require certain percentages of electricity to come from renewable sources and (2) accounting for actual and expected renewable energy growth between 2013 and 2017. C ommenters stated the study looked at existing Energy Information Agency (EIA) data on state's deployment of renewable energy and found that on average states increased their renewable share of electricity sales by 1 percent annually during the period of 2009 to 2013. C ommenter s stated that, using this growth rate as a national benchmark provides a helpful measure for public policy to help states comply with the EPA Clean Power Plan. C ommenters stated the suggestion for increased renewable energy is part of several building bloc k measures to comply with the Clean Air Act and states could, as recommended in this paper, use a policy such as performance

- based rates to comply with the achievable increases of 1% annually in renewable energy generation.

C ommenters stated that, by choo sing the regional average renewable energy standard approach, the EPA severely underestimates the potential deployment of clean energy into the grid. C ommenters stated the "best practices" approach simply averages the political environment for renewable en ergy several years ago. C ommenters stated high achieving states like Maine, Minnesota, South Dakota and Iowa were already exceeding what EPA expects the state to achieve by 2030. C ommenters stated clean energy is competing economically with fossil generation, and it is holding down overall electricity prices. C ommenters stated other states will likely increase their renewable energy standards in the next several years. C ommenters stated that , if EPA wants to use renewable energy standards as a proxy for renewable energy potential, it would be better to use the highest renewable energy standard for the region. C ommenters stated that method would give a closer approximation of the medium term p otential carbon pollution reductions through renewable energy for that region. C ommenters stated this is not a perfect method of estimating the potential, but is closer to what actually would be best practices for that region.

C ommenters stated renewable energy is a well

- established carbon pollution reduction strategy with 29 states having renewable energy standards. C ommenters stated that both the low cost and the widespread adoption of renewable energy mean the EPA was right to include renewable
energy a s part of the Best System of Emissions Reductions (BSER). C ommenters stated that, even with an unstable policy environment, installed wind energy capacity has grown by 140% in the last 5 years, and wind energy production is even higher. C ommenters stated t hat, while installations stalled in 2013, the wind industry is on a path that could lead to 20% of United States electricity coming from wind by 2030, and that figure includes the uncertainty around the future of the PTC. C ommenters stated that installed s olar capacity grew 473 percent from 2009 to 2013, and the first half of 2014 saw the installation of 2463 MW of new solar generating30 capacity. C ommenters stated that, during roughly the same time period, the price of solar dropped 65%, the expansion of sol ar is expected to continue as the price continues to drop, and the final rule should recognize the dramatic expansion of solar.

C ommenters stated the growth of wind and solar should be enough for the EPA to reevaluate how it measures clean energy potential . C ommenters stated that expanding renewable energy past the minimal amount suggested in Building Block 3 would enhance reliability. C ommenters stated that, on several occasions in recent years, wind energy has kept the lights on and electricity prices in check. C ommenters stated that, in January 2014, during a cold snap, natural gas prices skyrocketed, but wind production was high, which saved PJM upwards of $2 million/hour. C ommenters stated that, as the Department of Energy pointed out, grid operators

ar e finding ways to economically and reliably integrate wind power. C ommenters stated grid operators are able to ramp up and ramp downwind generation quickly because of improved wind forecasting and creating a 5

- minute dispatch interval allows wind plants to stay within tolerances that all power plants are subject. C ommenters stated the forecasting of wind continues to improve, and this should increase the amount of wind power that grid operators are able to integrate. C ommenters stated smart deployment of so lar and combined heat and power (CHP), hopefully biogas powered, can even be targeted down to the block to allow utilities to address congestion issues.

C ommenters stated that, based on their experience, states could get far more carbon pollution reduction s through renewable energy than the EPA suggests in Building Block 3. C ommenters stated the EPA should increase the carbon pollution reduction goal of the Clean Power Plan, which can be achieved by finalizing a rule that 1) recognizes the growth of wind an d solar energy, 2) takes full advantage of the energy efficiency resource, and 3) a planned review and update in 2025 to take advantage of advances in technology and clean energy finance to maximize cost effective carbon pollution reductions. C ommenters st ated the EPA should also encourage strong state implementation plans that include significant renewable energy and efficiency measures and include the interests of workers and under

- represented communities in the planning process.

C ommenters asserted the R PS

- based approach to calculating BSER (RPS Approach) to be an underestimation of the full potential that RE can contribute toward reducing carbon emissions for the following reasons:

• The RPS Approach estimates the contribution of renewables in a given sta te toward that state's BSER based on the existence of and historical performance toward compliance with a state RPS, which are by their nature political market drivers and therefore may not accurately reflect the potential renewable energy resource that is technically and commercially viable in a state or region,

c ommenters asserted

.

• The RPS Approach estimates the contribution of renewables in a given state based on a regional average of state RPS policies, which in some cases results in renewables targets that are below a state's current RPS requirements c ommenters said. At the very least, a state's RPS target for any given year should serve as a31 floor for the estimated contribution of renewables toward that state's BSER, in the

c ommenters ' opinion.

• The R PS Approach makes assumptions about renewable energy growth that are overly conservative, in c ommenters view. For example, it assumes that there will be no growth in renewable energy deployment between 2012 and 2017, which the

c ommenters indicated is contr ary to actual circumstances and current market projections from a multitude of credible sources.

• Additionally, the c ommenters noted that in some cases the RPS Approach incorrectly extrapolates pre

- 2030 state RPS requirements to calculate 2030 CPP targets. In other words, if a state's RPS requirements do not continue through 2030, the RPS Approach should determine a reasonable growth rate beyond the last year of the state's RPS requirement, based on historical and projected market trends, to calculate renew ables' contribution toward the state's 2030 CPP target, rather than assuming no further deployment of renewable energy between the last year of the RPS requirement and 2030, the c ommenters concluded.

C ommenters asserted the rule does not do enough to enco urage renewables . Commenters said that the EPA's plan includes only a 2 percent growth in renewable energy over the scope of the plan. Shifting more coal fired power plants to renewable energy sources, not natural gas or nuclear, is the only way to effecti vely curtail climate change, in the commenter s ' opinion

. Commenters pointed out that the proposed rule still has coal and natural gas as the leading sources of electricity production in the US by 2030. In the c ommenters ' opinion, the CPP does not adequatel y capture current and potential renewable energy generation levels; and its expectations for results from 2030 are only slightly higher than the Energy Information Administration's. In seven states, actual renewable energy generation levels already exceed the EPA's targets for 2030, according to the c ommenters

. C ommenters urged the CPP to set a national renewable energy growth rate benchmark based on demonstrated growth in the states from 2009

- 2013.

C ommenters asserted that more aggressive reductions are ne cessary to protect the climate and that more significant reductions are economically viable and advantageous . Commenters said that NREL has demonstrated that the United States could utilize 80% renewable energy by 2050 with off

- the

- shelf technology. The co mmenters pointed out t his is the level of reduction that has been deemed necessary by the Intergovernmental Panel on Climate Change to avoid the most serious consequences of rapid climate change. Commenters stated t he Proposed Rule will in essence raise pe rformance of all utilities to that of the primary utilities in each region that are already leading the clean energy effort nationally. The commenters additionally expressed, t his approach is based on what has been accomplished to date, not on what a suffi cient level of greenhouse reduction would be and can be nationally. Further, the commenters also said making the renewable energy and energy efficiency requirements more demanding can be economically advantageous . Commenters indicated that the Denver Metro Area has demonstrated that diversity in energy sources and a pursuit of energy efficiency is a positive economic engine, with the fossil fuel and clean tech sectors composing their 4th and 6th largest employment concentrations, respectively ( http://www.me trodenver.org/industries/energy/ ).32 C ommenters stated that the BSER methodology for renewable energy underestimated what is feasible, cost

- effective, and adequately demonstrated, and as a result, the state goals in the proposed rule reflect a feasible syst em of emission reduction, but not necessarily the "best" system of emission reduction. C ommenters stated that particular features of the BSER methodology have resulted in estimated contributions from various technologies, including renewable energy, that u nderestimate what is feasible, cost

- effective, and adequately demonstrated, and as a result, the state goals in the proposed rule reflect a feasible system of emission reduction, but not necessarily the "best" system of emission reduction . Commenters said the proposed RPS approach significantly underestimates the amount of electricity that can be cost

- effectively generated by renewables over the 2020

- 2030 compliance period . Commenters provided details on two power system modeling studies, by UCS and NRDC, which confirm that larger quantities of renewable energy than assumed by EPA are technically feasible, demonstrated, and cost

- effective . Commenters also provided additional information from DOE, regarding the potential for growth of wind energy, referencin g DOE's upcoming Wind Vision report which confirms that greater amounts of wind energy can be deployed at little to no cost to

consumers . Commenters said the proposal does not adequately account for recent progress in decreasing wind energy costs and impro ved technology for renewable generation.

C ommenters stated that there is a huge potential for renewables in the country, and the EPA used an overly conservative approach in determining renewable energy potential across different regions. While expressing appreciation for the EPA's framework of utilizing re newable energy as part of a state's compliance strategy, C ommenters recommended that the EPA refine its analysis to better reflect the vast potential of renewable energy across the country. C ommenters noted that the calculations assume increasing renewable s from 2017, but fail to capture any of the recent or projected growth in renewables from 2012 to 2017. C ommenters also pointed out that in 17 of the 29 states with renewable electricity standards (RES), the targets under the EPA's proposed CPP are lower t han the level of renewables that they actually would have developed under their existing laws.

C ommenters indicated that while it supported the rule, as stated below the c ommenters asserted the greenhouse gas reduction targets must be more ambitious

- and that the means to achieve greater GHG reductions currently exist and can be implemented without economic disruption. To do so, the c ommenters recommended the EPA more realistically examine the true reductions that can be achieved through more robust energ y efficiency and renewable energy goals (Building Blocks 3 and 4)

- both of which will help achieve greater reductions as well as reduce the overall costs of state compliance with the rule . Commenters said that this is particularly important in light of th e Natural Resources Defense Council's "Updated Costs and Performance" analysis by ICF International to run the Integrated Planning Model (IPM) with updated data that in some cases dramatically alters the data inputs and resulting conclusions of EPA

- which also uses the IPM. That analysis, the c ommenters added, with updated data not reflected in this draft rule, indicates that far greater emissions reductions are possible than envisioned in this draft rule. It also indicates a huge difference in the costs a nd savings resulting from implementation of this rule. C ommenters stated that for meaningful emission reductions to occur, the EPA's proposed "outside the fence line" approach to identifying possible reductions must remain intact. Failure to do so would re nder Building Blocks 3 and 4 meaningless, and in the commenter s ' view those Building Blocks are where true reductions will be achieved. Were the CPP to be restricted to33 activities inside the fence line at the plant level, the GHG reductions would likely be limited to 4 percent or less

- far below the goals identified in the CPP, the c ommenters asserted.

Commenters said that the EPA appropriately considered the potential to reduce emissions from coal and gas fired power plants by deploying renewable energy. But, the commenters asserted that the EPA has significantly underestimated the amount of renewable energy that can be deployed at reasonable cost. C ommenters stated that the EPA should use current cost and technical potential data when evaluating the quan tity of renewable energy that can be deployed at reasonable cost in each state. C ommenters stated the rate of renewable energy deployment assumed in the EPA's analysis should be at least as fast as the historical rates of deployment. In its proposal, the c ommenters said that the EPA included two frameworks for analyzing the potential for emission reductions via renewable energy deployment

- the use of regional averages of renewable energy policies and a technical

- economic potential analysis. Comme nters sta ted that b oth significantly underestimate the actual potential by failing to reflect the dramatic cost reductions that have occurred in recent years. The commenters argued that i n order to properly assess the potential from renewable energy, the EPA must use up

- to

- date data . Commenters stated these data should includ e : the renewables deployment rates already underway in many states the actual generation data from 2013 recent and planned renewable energy development between 2013 and 2017 . Commenters said cu rrent data show that wind and solar costs are each approximately 45 percent less costly than the EPA assumed in its analysis.

C ommenters stated that the EPA draft rule significantly underestimates the potential role of renewable energy in setting state tar gets as part of the BSER. C ommenters stated the CPP (1) does not adequately capture renewable energy deployment rates that states are already achieving; (2) fails to reflect the continued growth and falling costs of renewable energy projected by market exp erts; and (3) falls short of the national renewable energy generation levels that the U.S. Energy Information Administration (EIA) projects would occur in 2020 under a business

as

- usual approach without the CPP, and is only marginally higher than the EIA's projections by 2030. C ommenters stated t he renewable energy targets under the EPA's Proposed and Alternative Approaches significantly underestimate the potential of these resources, and result in barely any additional renewable energy beyond what would ha ve occurred under business as usual (i.e., without the proposed rule).

C ommenters stated the EPA's proposed approach for setting state renewable energy targets based on the regional average of state renewable electricity standards in 2020 does not represe nt the CAA

- required "best" system of emission reduction, but more of a "average" or even "below

average" system for many states. C ommenters stated he EPA's proposed approach results in the following anomalies:

• In seven states, actual renewable energy gene ration levels in 2013 exceed the EPA's renewable energy targets in 2030.

• Seventeen of the 29 states with RES policies have lower targets under the EPA approach than what is required under their respective state laws, which is due both to the EPA's averagi ng of state RES targets in given region and not including RES targets that continue to ramp

- up after 2020 in many states.34 • The national level of renewable energy generation included in the EPA's state targets is lower than the EIA's business

- as

- usual proje ctions in 2020, and only marginally greater in 2030 (Figure 6

- 1).

• The average annual national renewable energy growth rate under the EPA proposal is 0.65 percent of total sales between 2017 and 2030. By contrast, 15 states have already been achieving aver age annual growth rates of more than 1 percent over the last five years.

• Although the EPA's methodology aims to have states ramp up their renewable energy level toward reaching their respective regional targets, as many as 25 states do not actually reach the EPA's targets by 2030 because of the low annual growth rates assumed under the agency's proposed approach.

• The EPA does not assume any growth in renewable generation between 2012 and 2017.

C ommenters stated the EPA's alternative approach for the rene wable energy building block, which is based on technical and economic potential, also underestimates the potential for renewable energy to cut carbon emissions. C ommenters stated that, nationally, it results in virtually the same renewable energy target as the EPA's proposed approach, though the distribution of renewable energy differs at the state and regional level. C ommenters stated most states have the technological and economic potential to raise their renewable energy use to much higher levels than wh at the EPA is proposing in the Clean Power Plan. C ommenters stated that, by specifying a larger role for renewable energy in setting state targets, the EPA could ensure that the Clean Power Plan achieves greater overall carbon emissions reductions. By cont rast,

c ommenters stated, if the EPA adopted a modified Union of Concerned Scientists proposal for setting state targets

- the UCS Demonstrated Growth Approach

- grounded in states' actual experience in deploying renewable energy, the renewable energy targe ts within the plan would nearly double at the national level. C ommenters provided Figure 6

- 1 ( titled: " The EPA's

r enewable e nergy t argets u nder i ts p roposed c lean p ower p lan a re m odest "), which shows 2020 and 2030 projections of the Percent of Electricity Sales under EIA business as usual, EPA proposed approach, EPA alternative approach, and UCS "Demonstrated Growth Approach."

Commenters stated, a third component of the BSER includes a determination by the EPA that a certain amount of generation at the affe cted EGUs can be replaced by using an expanded amount of lower

- carbon generating capacity. Commenters said, the RGGI states affirm through their demonstrated experience that the cultivation of less carbon

- intensive, renewable generation can be a cost

- effec tive prong of a wide

- ranging emission reduction strategy. Commenters said, between 2005 and 2012, the RGGI states increased in

- region, non

- hydroelectric renewable generation by 47 percent. Commenters said, solar and wind generation increased by 4043
percen t. Commenters said, this impressive growth in renewable generation promises to continue in the RGGI region, due to a combination of aggressive state policies such as renewable energy portfolio standards ("RPS"), net metering tariffs, long

- term contracting, the establishment of "Green Banks," innovative green financing mechanisms, and renewable energy technology grant
programs.35 Commenters stated, EPA proposes that the best system for reducing carbon emissions from existing power plants is a system

- wide appr oach based on the application of four building blocks that include on

- site measures and measures taken to shift generation away from carbon intensive units. Commenters agreed with EPA's approach for determining the BSER. [The EPA proposes two alternatives to the four building blocks of the BSER. SEIA does not take a position on those two different approaches, but rather supports the use of measures taken at the plant as well as measures taken on the system to reduce carbon emissions from existing sources.] Commenters specifically agreed with the EPA that renewable energy measures, and solar measures especially, are necessarily part of the BSER. Commenters were concerned, however, that building block 3 (renewable energy measures) as it is currently calculated is incomplete because it does not contain current solar market data and it does not include distributed solar. Commenters said, therefore, as it is currently written, EPA's proposal does not accurately reflect the emissions reductions achievable through a pplication of the BSER.

Comment 2 3 2 2 : C ommenters stated that the EPA's CPP also underestimates the emissions reductions that can be achieved in Kentucky through distributed renewable energy.

Response 2 3 2 2 : As non

- BSER measures, the technologies described in this comment are an important flexibility for affected sources to achieve the standards of performance; however, the EPA has maintained utility

- scale RE as the basis for building block 3. For a full disc ussion of

non

- BSER RE technologies, refer to section VIII of the preamble supporting the final CPP.
The following are summaries of the specific public comments under this comment:

C ommenters pointed to a 2012 study by Downstream Strategies, a West Virginia based research organization, which found that Kentucky could generate 34% of their electrical demand from distributed renewable energy by 2025 . Commenters said that for the purpose of that report, distributed energy was defined as "the generation of electricity and heat, or the capture and reuse of waste heat, at or near the point of consumption." Commenters stated t he EPA should not limit its view of what i s possible in terms of Kentucky's renewable energy resources to merely what is possible in terms of utility

- scale developments.

Comment 2 4 2 3 : Commenters generally supported the Proposal, but said more reductions are possible in North Carolina.
Response 2 4 2 3 : State RPS requirements are not a factor in quantifying the amount of cost

effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detail in section V.E. of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.
The following are summaries of the specific public comments under this comment:36 C ommenters generally supported the Proposal, but stated the EP A's assessment of the potential for cost

- effective renewable energy opportunities is, if anything, conservative. C ommenters stated the RPS

- based approach assumes that a state with a relatively aggressive existing RPS commitment or significant existing rene wable generation will only meet the regional average commitment, and not its own higher commitment or even 2012 generation levels, in some instances. C ommenters stated that, for example, Iowa generated 25 percent of its electricity from renewable sources i n 2012, but under the renewable goal in the proposed rule, would only be required to generate 15 percent by 2030. C ommenters stated that a 2020 regional average RPS benchmark is applied to states in 2030, rather than using a 2030 regional RPS average for t hat purpose. C ommenters stated that, for example, North Carolina has committed to procuring 13 percent of its electricity from renewable sources by 2021, but is only required by the Clean Power Plan to procure 10 percent by 2030. C ommenters stated that the renewable targets assume that no increase in renewable generation will occur between 2012 to 2017; in fact renewable generation continues to grow by rule in most states with an RPS.

C ommenters stated North Carolina is already on track to meet and exceed the level of renewable energy generation assumed in the Plan. C ommenters stated that, in 2007, the North Carolina General Assembly enacted the State's Renewable Energy and Efficiency Portfolio Standard ("REPS") and, by 2021, North Carolina's REPS requires electric utilities to achieve combined renewable and energy efficiency levels of 12.5% of 2020 retail sales (municipal utilities and electric membership corporations must meet a lower target of 10%). C ommenters stated that, for the state's largest utilitie s, Duke Energy Carolinas ("DEC") and Duke Energy Progress ("DEP"), this amounts to 21,969,750 MWh, almost double the 11,668,176 MWh targeted under the Clean Power Plan. C ommenters stated that, to the extent that the utilities elect to meet part of their RE PS requirement with energy efficiency, these reductions will also count toward compliance with the Clean Power Plan target. C ommenters stated that the utilities would still need to meet at least 13,181,850 MWh of the REPS requirements with renewable energy . C ommenters stated the Clean Power Plan renewable target for North Carolina is not only achievable, it must be achieved (and greatly surpassed) under existing North Carolina law.

C ommenters stated the EPA should strengthen North Carolina's renewables building block to reflect expected and required increases in renewable energy. C ommenters stated the EPA's target significantly underestimates the potential for renewable energy in North Carolin a in four ways: (1) the EPA assumed that states will not even start increasing their use of renewable energy until 2017, an assumption at odds with the reality of rapid renewable energy ("RE") deployment in North Carolina; (2) the EPA's goal of 10% of 2012 generation does not even reflect North Carolina's REPS, which require almost twice what EPA assumes; (3) the EPA's target is highly conservative because it is based on existing state policy, not on the cost

- effective renewable potential in the state (or r egion); and (4) the EPA assumes that new renewable energy will not displace any existing generation.

C ommenters stated that, to correct its assumptions, the EPA should (1) account for actual and expected renewables growth between 2013 and 2017, rather than assuming that North Carolina will not experience any renewable growth until 2017; (2) assume full compliance with current REPS requirements that are set by state law; (3) ensure that the growth rate of renewables deployment is at least as aggressive as hi storical rates; (4) update its formula to account correctly for emission reductions from renewable energy; and (5) clarify that out of state renewable energy37 certificates ("RECs") can be used towards compliance to ensure the most cost effective use of

rene wable energy.

C ommenters said that the EPA's development of the renewable component of Block 3 significantly underestimates the potential for renewable energy in North Carolina.

Comment 2 5 2 4 : C ommenters supported renewable generation.
Response 2 5 2 4 : The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, which is described in section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final C PP

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

C ommenters stated there are several studies that have shown that states can handle up to 35 percent of annual power from renewable sources with minimal cost. C ommenters s tated, for example, PJM (a regional transmission organization covering the Mid

- Atlantic, Virginia, and parts of the Midwest), the National Renewable Energy Laboratory for the Western United States, and the state of Michigan have all found that 30

- 35 percen t of electricity could be generated using variable renewable resources with minimal integration cost. C ommenters stated a recent study found that Minnesota's grid could handle up to 40 percent generation from wind and solar sources. C ommenters stated elect ricity generation from renewable resources grew by almost 6 percent per year on average over the past five years (2009

- 13) and new wind energy is cheaper than new coal generation in most markets.

C ommenters provided the following renewable energy cost info rmation:

• A recent state survey of renewable and fossil contracts submitted to the Michigan Public Service Commission found that the most recent new utility

- scale wind power contracts cost about half the price of new coal generation. The same study found th at a combination of renewable energy and energy efficiency is cheaper than any other new fossil fuel generator, including combined

- cycle natural gas units. DTE Energy in Michigan recently announced that it is lowering customers' electricity rates by 6.5 pe rcent in 2014, citing low

- cost wind energy (aided by technology improvements and tax credits) as a major factor.

• Austin Energy in Texas finalized a power purchase agreement that will bring it 150 megawatts of solar energy at less than 5 cents per kilowatt hour. By comparison, the company estimates that new natural

- gas

- fired generation would cost 7 cents per kilowatt hour, coal 10 cents and nuclear 13 cents. After subtracting federal tax incentives (according to company officials, the project is not receivin g any local incentives), the rate for solar energy compares favorably to natural gas, at just over 7 cents per kilowatt hour.

• In early 2014, the Minnesota Public Utility Commission chose a 100

- megawatt distributed solar project over natural gas projects be cause the solar project will38 deliver a number of economic and environmental benefits, including the elimination of transmission costs and a reduction in transmission line loss. Specifically, it was found that, when one accounts for avoided energy costs,

av oided capacity costs, avoided transmission costs, the impact of emissions, and the cost to Xcel Energy [the utility] from transmission line losses, the benefits of [the solar] proposal amounts to a savings of $46 million of net present value of societal co sts.

• In late 2013, Xcel Energy submitted a proposal to Colorado regulators that identifies solar and wind power as the most cost

- effective options for new generation in the state. This was the first time the utility, which serves customers in eight western and Midwestern states, opted to develop new renewable resources on a purely economic basis.

C ommenters provided the following renewable electricity cost and jobs information:

• In Iowa, MidAmerican Energy just announced it will invest $1.9 billion in new wi nd power, bringing wind capacity up to 39 percent of its generation portfolio. The company estimates that when all the turbines are completed, rates will go down by $10 million annually, while creating 460 construction jobs, 48 permanent jobs, and generati ng more than $360 million in new property tax

revenue.

• The Illinois Power Agency found that the state's renewable energy standard enabled significant job creation and economic development opportunities; moreover, in 2011, the growth of wind energy reduced electricity rates by about 4 percent per megawatt hour of electricity generation, for total statewide savings of over $175 million.

• Oregon's second largest utility, PacifiCorp, reported that the required investments in renewable energy actually helped lowe r their total costs by $6.6 million in 2011.

• Studies by the New York Independent System Operator (NY ISO), Synapse Energy Economics, and the National Renewable Energy Laboratory (NREL) suggest that increased renewable energy generation has the potential to save American ratepayers tens of billions of dollars a year over the current mix of electric power options.

C ommenters provided the following information regarding wind energy in Texas:
Texas just completed a $6.8 billion transmission project that is expe cted to lead to 7.5 gigawatts of new wind generation over the next three years, and eventually up to 16 gigawatts of new wind generation (in addition to the 12 gigawatts of wind capacity installed by the end of 2012). In total, the state's grid balancing a uthority (ERCOT) is studying 25 gigawatts of new wind projects. While many of these projects are in the planning process and may ultimately not be built, these figures are significant when one considers that Texas' record peak summer generating39 capacity wa s about 68 gigawatts in August 2011. Notably, Texas already generates more than twice as much electricity from wind as the next largest wind producing state (California), and has more installed wind capacity than all but five countries.

C ommenters provided the following information regarding renewable technology developments :

• Wind development costs have fallen in recent years because of improved turbine technology and more favorable terms for turbine technology purchasers. Many states are generating more of their electricity using wind resources, and are finding numerous economic benefits by doing so. This is partly because of the 64 percent decline in levelized power purchase agreements for wind generation between 2009 and the end of 2013, to about $24 pe r megawatt hour on average across the country (with incentives)

. New wind energy is now routinely cheaper than new coal generation, and is cheaper than new gas in many parts of the country. If gas prices continue to rise or wind prices continue to fall, wi nd will become increasingly competitive with natural

- gas

- fired generation in more regions of the country.

• Location is much less of a barrier for wind due to the continued increase in turbine height

-- from a hub height of 30 meters in 1990

- 95 to about 140 meters in 2011. Turbine technology improvements, including the ability to install larger turbines on taller towers (which can have a hub height of 140 meters and a rotor diameter of 160 meters), have expanded the areas suitable for onshore wind energy deve lopment. Nearly 1,000 gigawatts of additional wind capacity could be possible throughout the country if these new, taller turbines are installed (which is about as much as the total amount of wind capacity current installed). The majority of this new poten tial is in the eastern United States, which was previously thought to have lower onshore wind potential than other parts of the country. Capitalizing on low

- speed wind resources (6 meters per second) these
state

- of

- the

- art turbines could result in levelize d costs of $35

- $55 per megawatt hour (this includes the federal production tax credit), according to a National Renewable Energy Laboratory analysis. Without additional financial support, the price range would be $58

- $78 per megawatt hour (assuming the ful l level of the production tax credit can be realized by the developer, which is usually not the case). This price is well below the levelized cost of electricity from coal technologies ($79

- $118 per megawatt hour) and is similar to the levelized cost of

ne w natural gas generation ($63

- $78 per megawatt hour).

• Prices for solar photovoltaic modules have declined 80 percent since 2008. When combined with the federal investment tax credit, this rapid decline has helped make power purchase agreements for electric ity generated from utility

- scale projects competitive with conventional sources in some regions. Power purchase agreements for utility

- scale photovoltaic projects have reported prices below $50 per megawatt hour. However, prices for residential systems are typically higher because of their smaller size and larger non

- module (soft) costs, such as mounting hardware, labor, permitting and fees.40 • Concentrating solar power (CSP) is also on the rise in the United States. One major benefit of CSP is its ability to be deployed with thermal energy storage so it can produce electricity on demand. CSP is a relatively new technology, with only 1.4 gigawatts deployed as of early 2014. While its costs are currently high, the DOE SunShot Initiative aims to reduce the cost o f generation to $60 per megawatt hour by 2020.

C ommenters provided the following information regarding increasing demand for renewable
energy:

• Sixty percent of the Fortune 100 companies and 43 percent of the Fortune 500 companies have public climate and/or renewable energy goals. Fifty three Fortune 100 companies report total savings of $1.1 billion annually through energy efficiency and renewabl e energy, indicating a long

- term commitment to these goals, which serve in the business interest.

• To date, 19 large companies

- 3M, Adobe, Bloomberg, Cisco, eBay, EMC, Facebook, General Motors, Hewlett

- Packard, Intel, Johnson & Johnson, Mars, Novelis, Nov o Nordisk, Procter and Gamble, Recreational Equipment Inc. (REI), Sprint, Walmart, and Volvo

- have come together to publicly ask for access to more renewable energy through the Corporate Renewable Energy Buyers' Principles ( http://www.wri.org/publication/ corporate

- renewable

- energy

- buyers

principles ). These companies currently have a combined renewable energy demand of nearly 10.5 million megawatt

- hours (MWh) per year in the U.S. alone

- a figure that is expected to more than triple beyond 2020

- and the li st of signatories to the Corporate Renewable Energy Buyers' Principles continues to expand.

• Many companies are shifting from purchasing short

- term, temporary Renewable Energy Credits (RECs) to longer

- term investment strategies, such as Power Purchase Agre ements (PPAs) and on

- site generation. However, companies such Walmart, with 100 percent renewable energy goals, need access to more grid

connected, renewable energy options to meet those goals ( http://www.wri.org/sites/default/files/on_the_grid_infographic .png ).

Comment 2 6 2 5 : Commenters expressed general support for renewable energy.
Response 2 6 2 5 : The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, which is described in section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP

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

C ommenters expressed support for renewable energy. C ommenters stated the District's Renewable Portfolio Standard requires electric suppliers to obtain 20% of their power from renewable sources by 2020, and the District Government is aggressively pursuing renewable41 energy to power its own operations. C ommenters state d they will soon sign power purchase agreements for dedicated supplies of more than 40 megawatts (MW) of new wind power generation and more than 10 MW of solar on public building rooftops. C ommenters stated these projects will cut more than 135,000 tons of CO 2 each year 2 or more than half of the emissions from District Government buildings, while reducing energy costs in the long

- run. C ommenters stated the District Government is not alone in pursuing renewable energy. C ommenters stated DC Water, the metrop olitan region's water and wastewater utility, is seeking to install more than 10 MW of solar at its wastewater treatment facility. C ommenters stated American University, George Washington University, and George Washington University Hospital recently partn ered to sign the nation's largest non

- utility solar purchase agreement for 52 MW.

C ommenters stated that wind can grow to provide perhaps 20 percent of electric power before issues arising from land use are likely to restrict further wind plants. C ommente rs stated solar may grow greatly from its present 0.2 percent, one

- five hundredth of all electric power, to perhaps five percent. C ommenters stated that, while it is simply not in the cards to generate enough power without using America's abundant coal and gas resources, the issue with coal and natural gas is this: long before we run out of fossil fuels, we'll run out of atmosphere in which to dump their combustion products like carbon dioxide.

C ommenters stated that renewable energy actions in Texas and C alifornia provide proof that clean energy can make the emission cuts we need. C ommenters stated California already gets 20 percent of their electricity from wind, solar, and geothermal power sources. C ommenters supported the EPA Clean Power Plan because al l 50 states need to take a minimum action to cut carbon pollution and to fight climate change. CO2 pollution doesn't stop at the state border, but it crosses all borders.

C ommenters stated that northwestern PA has regional assets that could be leveraged a s part of this effort. C ommenters stated there is sufficient hardwood forest acreage within 75 miles of Erie to support at least a million tons of pelletized wood annually for biomass energy, sustainably managed from waste cuttings and pulpwood. C ommenters stated the southern shores of Lake Erie have a commercially viable wind resource, estimated offshore at 18 miles per hour at 90 meters and onshore at 15 miles per hour at 80 meters high, but developers await signals that state policy will support wind pow er demand and a workable regulatory framework.

C ommenters stated the renewable energy labs conducted a technical feasibility study of solar potential and found that Pennsylvania has the technical capability to produce more than 600,000 gigawatt hours of el ectricity through solar every year, which is almost four

- and

- a

- half times their current retail sales of electricity in their state.

C ommenters supported expanding cleaner resources by building additional renewable power to meet customer demand.

C ommenters supported renewable energy programs and stated that added incentives that can be made available for the water and wastewater industries' continued adoption of renewable energy will go a long way in meeting the EPA's goals given the size and scale of opera tions in these industries. C ommenters stated that, with regard to harnessing renewable energy sources, there are many emerging examples of how these efforts might operate in practice. C ommenters stated42 they maintain a portfolio of alternative energy suppli es that includes solar, wind, and biomass facilities and this portfolio saves an estimated 2,500 metric tons of CO2 annually. C ommenters stated the company has installed over 3.1 MW of solar generating capacity at 11 facilities across three states (New Jer sey, Illinois, and Missouri), with plans for additional facilities. C ommenters stated they are particularly interested in alternative, renewable energy generation due to its clean energy benefits, as well as its enabling of electric power diversification t hat affords greater resiliency during regional emergencies. C ommenters stated that reducing energy usage by 585,000 kilowatt

- hours a year prevents 1,577 pounds of nitrogen oxide, 4,875 pounds of sulfur dioxide and 699,856 pounds of carbon dioxide from bein g emitted into the air.

C ommenters supported the EPA's inclusion of renewable energy, based on an average of regional renewable portfolio standards, in its BSER determination. C ommenters stated their experience as a leader in renewable energy development demonstrates that renewable energy may be a cost

- effective and meaningful way to help achieve compliance with state 111(d) targets.

C ommenters expressed support for renewable energy. C ommenters stated the United States has some of the richest solar resour ces in the world; nationally, the U.S. solar industry grew by 76% from 2011 to 2012. C ommenters stated that, in Colorado, beneficial solar policies have led to dramatic growth: in 2008, solar installations in the state jumped from 11.6 MW to 22.3 MW; three years later, Coloradoans installed more than four times as much solar, ultimately reaching

nea rly 250 MW of cumulative installed solar photovoltaic (PV) capacity by the first quarter of 2013; and by late 2014, installed capacity is estimated at 380 MW.

C ommenters stated renewable electricity generating technologies are a well

- established part of
t he U.S. power sector. C ommenters stated more than half the states have established renewable portfolio standards (RPS) that require minimum proportions of electricity sales to be supplied with generation from renewable generating resources. C ommenters stat ed production of renewable generation replaces predominantly fossil fuel

- fired generation and thereby avoids the CO2 emissions from that replaced generation. C ommenters stated renewable electricity generation is a proven way to assure reductions of CO2 emi ssions from the electric sector with the potential to do so at a reasonable cost and/ or electric rate impact.

C ommenters supported the expanded use of renewable electricity (RE) generating capacity as a means of reducing the carbon intensity of the natio n's electricity system. C ommenters stated increased reliance on RE generation is a proven way to achieve reductions of CO2 emissions at affected EGU at reasonable costs. C ommenters stated RE generating technologies are well

established elements of the powe r system. C ommenters stated that, according to EIA, approximately 75 GW of non

- hydropower RE generating capacity were installed in the United States as of the end of 2013; according to the US Department of Energy (DOE), wind power represents 33% of all new generating capacity installed since 2007; and, according to Solar Energy Industry Association (SEIA), solar PV installations were 4.8 GW in 2013 and are expected to exceed 6.5 GW in 2014.

C ommenters stated the EPA underestimates the potential deployment of clean energy into the grid and the final Clean Power Plan should drive clean energy innovation and adoption of wind43 and solar. C ommenters stated wind, solar, and other renewable energy are already helping the United States reduce its carbon pollution, a nd clean energy is helping create American jobs.

C ommenters agreed with the approach of allowing states to meet the proposed required reductions through the use of system

- wide programs and policies that will allow states to build on existing programs, inc luding renewable energy measures, to serve as compliance tools in state plans. C ommenters stated that adoption of renewable energy is already well advanced in many states, which could, if incorporated into state plans, provide an advantage as strategies ar e developed to comply with Section 111(d) targets. C ommenters stated that increasing the amount of renewable energy resources like wind and solar power is an effective, affordable, scalable, reliable, and readily available way to reduce carbon emissions. C ommenters stated that, as many states try to balance compliance with the Clean Power Plan with other energy objectives, we expect renewables to be among the most important tools available.

C ommenters supported the approach put forth by the EPA regarding cr editing states under building block 3. Commenters stated that i n order to aid state compliance with 111(d) obligations, it would be most efficient and equitable for the EPA to model its approach after the best practices of existing state RPSs. The commente rs asserted r elying upon existing best practices and infrastructure will aid states in efficiently meeting their obligations, while making double

- counting structurally impossible, thereby maintaining the integrity of the emissions reductions which will be achieved.

C ommenters indicated that the National Climatic Data Center reports that in 2013 the United States experienced seven climate disasters that each caused more than $1 billion dollars of damage, including the devastating Colorado floods that so heav ily impacted Boulder County.

, The commenters said t hese are precisely the types of impacts projected to affect American communities with increasing frequency and severity as climate

- destabilizing emissions continue to accumulate in the atmosphere . Comment ers urged action now to reduce carbon pollution and mitigate these impacts. The commenters added f ossil fuel

- fired power plants are the largest source of greenhouse gases in our nation, and the solutions are at hand to reduce carbon pollution from the powe r sector. According to the commenters, s tates and companies have long been relying on the interconnected nature of the electric grid to reduce harmful pollution from power plants, and noted that adding renewable energy generation backs down the use of foss il fuel

- fired plants

- and reduces emissions accordingly.

C ommenters indicated that it produces significant quantities of clean, renewable energy, and recently completed the process to qualify its company for GHG credits under the Voluntary Carbon Standard , similar to other WTE facilities in the U.S . Commenters supported the provisions of the proposed regulations that allow states to incorporate into their CAA section 111(d) compliance plans the GHG reduction benefits of generating renewable energy from fac ilities such as the commenter s '.

C ommenters strongly oppose d the option of setting the BSER as only the first two building blocks (79 FR 34836), because it would exclude the potential for renewables and efficiency to deliver significantly greater emission s reductions at reasonable cost.44 C ommenters supported the EPA's decision to include renewable energy as an eligible compliance option for states to reduce power plant carbon emissions and stated it meets the criteria for the BSER. C ommenters stated techno logies such as wind and solar already deliver safe, reliable, and affordable power to millions of U.S. consumers, emit no carbon in their operation, and are an economically viable alternative to fossil fuels. C ommenters stated all states have significant a nd diverse renewable energy resources that can be developed and, as a result of falling costs, advances in technology, and strong state policies, renewable energy technologies are in an excellent position to compete with the other emissions

- reduction strat egies allowed under the Clean Power Plan. C ommenters stated the U.S. power sector has experienced a tremendous growth in renewable energy, driven largely by advances in technology, decreases in costs, and state and federal policies and provided the following additional information:

• Wind capacity increased by 75 percent and solar capacity by 473 percent from 2009 to 2013.

• The national average cost of wind power has dropped more than 60 percent since 2009, making it competitive with new fossil fuel plants in many regions.

• Solar photo voltaic systems costs fell by about 40 percent from 2008 to 2012, and by another 15 percent in 2013.

• Several studies project these two trends of improved technologies and reduced costs to continue.

• Growth in renewable energy has helped most utilities com ply with their state RES requirements at little or no cost to consumers, and in some cases even providing them with net savings.

• Between 2010 and 2012 the cost of complying with RESs in 25 states ranged from a net savings of 0.2 percent of retail rates to a net cost of 3.8 percent, with a weighted average cost of 0.9 percent.

• The EPA also includes several other credible studies in the TSD that demonstrate the cost

- effectiveness of increasing renewable energy at the state and regional level and highlight t he recent cost reductions for wind and solar.

Comment 2 7 2 6 : C ommenters identified some renewable projects that help make the state target achievable.
Response 2 7 2 6 : The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, which is described in section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final C PP.

. The following are summaries of the specific public comments under this comment:45 C ommenters stated the addition of renewable energy can have a significant impact on Utah's emission rate. C ommenters stated that Energy Strategies has identified approxi mately 811 MW (21 projects) of renewable energy projects with signed PPAs in Utah. C ommenters stated that, based on their assessment, for every 100 MW of new renewable energy generating capacity Utah's emission rate decreases by approximately 10 lbs/MWH.

C ommenters stated Alabama's target is both modest and achievable. C ommenters identified some recent and planned renewable projects associated with Alabama Power and with Redstone Arsenal in Alabama: “ Alabama Power has entered two agreements to import cost

- effective wind generation, along with associated renewable energy credits (RECs), from Oklahoma and Kansas. The projects total 404 MW. The utility received approval for the first project, known as Chisholm View, from the Alabama Public Service Commission ( "PSC") in September 2011. Under terms of the agreement, Alabama Power receives 202 MW of generation from a wind farm in north

- central Oklahoma, as well as the associated RECs, over a twenty

- year term. The project came online in December 2012. Alabama Power received approval for the second project, known as Buffalo Dunes, from the PSC in September 2012. The project is functionally similar to Chisholm View: Alabama Power will receive 202 MW of generation from a wind farm in southwestern Kansas, as well as the associated RECs, over a twenty

- year term. The project came online in December 2013. Although the precise capacity factors associated with these projects are not publicly available, reasonable approximations can be inferred from the utility's statements. A labama Power has stated that the projects amount to 3 percent of the electricity consumed by its customers. In 2012, Alabama Power had retail sales totaling 53,946,766 MWh. Three percent of that figure is 1,618,403 MWh. Dividing that figure by 8,784 hours and by 404 MW produces a capacity factor of 45.6 percent. Similarly, Alabama Power has stated that the two projects are sufficient to power the equivalent of 115,000 homes. The average Alabama home consumes 14,241 kWh per year. The amount of electricity co nsumed by 115,000 such homes equates to 1,637,715 MWh. Dividing that figure by 8,874 hours and by 404 MW yields a capacity factor of 46.1 percent. Assuming a 46 percent capacity factor, these deals will result in 1,632,419 MWh of carbon

- free generation tha t goes into the denominator of EPA's emission rate equation. This in turn lowers Alabama's 2012 emission rate by 22 lbs/MWh or more than 4 percent of the target reduction. Another recently announced renewable project is the planned Redstone Arsenal solar a rray. Redstone Arsenal is a U.S. Army post and garrison located near Huntsville, Alabama within TVA territory. It will soon be home to the largest solar power array in Alabama. As part of its goal to have 25 percent of its energy produced from renewable so urces by 2025, the Army has solicited proposals for an array that will provide up to 18,000 MWh of solar

- generated electricity for the arsenal. The project is estimated to be 10 to 14 megawatts in size, with as many as 50,000 solar panels. The Army has cit ed the energy security benefit the array will provide and noted that sharp declines in the installed price of solar power have made the project financially attractive. ”

C ommenters stated that, through its Advanced Solar Initiative and related programs, Ge orgia Power is on pace to add more than 900 MW of utility scale and distributed generation solar to its supply portfolio by 2016. C ommenters stated that, earlier this year, Georgia Power entered its first

- ever wind deals, under which it will import 250 MW of cost

- effective wind generation, along with associated renewable energy credits (RECs), from facilities in Oklahoma for a 20

- year term, commencing in 2016. C ommenters stated the PSC has or is in the process of approving these programs as in the best inte rests of Georgia Power customers because they will46 provide benefits in the form of cost savings and fuel diversity. C ommenters stated that, although the precise capacity factors associated with these projects are not publicly available, it is reasonable to assume a 20 percent capacity factor for the solar installations and a capacity factor of 30 percent for wind. C ommenters stated that, if applied to the existing level of renewable generation in Georgia's 2012 baseline, the result is a reduction of 68 lbs/ MWh, or almost 9 percent of the target reduction.

Commenters stated that advanced energy technologies make achieving compliance with EPA's guidelines easy, and the EPA is giving Ohio sufficient flexibility to utilize this aspect of the BSER to achieve com pliance by offsetting the emission reductions in other buckets which may be more difficult to achieve. The commenters believed Ohio could actually go beyond the renewable generation and energy efficiency gains required to meet its emission reduction target s the way they are laid out in the BSER.

Commenters stated RPS and EERS have been implemented in most U.S. states and have been successful in encouraging the deployment of renewable and energy efficiency resources, and they offer a framework for enforcing, monitoring and verifying renewable and energy efficiency gains. The commenters said they are the most cost

- effective ways to achieve and demonstrate compliance with this part of the BSER, and other policy tools may be more expensive, less effective, and m ore difficult to verify than an RPS or EERS.

Commenters listed 17 policies and with descriptions that have been demonstrated to promote renewable and energy efficiency resources, most of which are also used in conjunction with an RPS and/or an EERS. A few examples from the commenters’ list include but are not limited to: IRPs, Net Entergy Metering, Value of Solar Tariff, On

- bill Financing, and Decoupling.

Comment 2 8 2 7 : Commenters stated that renewable energy and energy efficiency provide states with reasonable options for reaching its target.
Response 2 8 2 7 : The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, which is described in section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.
The following are summaries of the specific public comments under this comment:

C ommenters stated that, while West Virginia generated approximately 4% of total electricity produced in the state from wind and hydropower in 2012, the state has significant potential for new wind, solar, biomass and hydropower development. C ommenters stated that developing West Virginia's RE resources will contribute to the state's ability to comply with the CPP, diversify the state's energy portfolio, grow the state economy, and create new jobs.

C ommenters stated Georgia can achieve the remaining 40 percent of its target mainly, if not exclusively, through sensible, cost

- effective investments in renewable generation and energy efficiency. C ommenters stated that, whether Georgia need increase its reliance on natural gas generation is purely a function of the levels of renewable ge neration and energy efficiency it elects to pursue. C ommenters stated Georgia's potential in both areas is far greater than EPA47 assumes. C ommenters stated Georgia's pursuit of renewable and energy efficiency resource additions will result in substantial ca rbon reductions, especially if those measures are allowed to displace fossil generation on a pro

- rata basis.

C ommenters provided an analysis in the two spreadsheets included as Attachments 1 and 2 to their comments. C ommenters stated that, in both spreadsh eets, they make an assumption that EPD did not make

-- that incremental (i.e., new) renewable and energy efficiency resources have the effect of displacing fossil generation. C ommenters stated that, as EPA appears to recognize in its recent Notice of Data Av ailability, to assume otherwise is inconsistent with EPA's application of BSER for Building Block 2 and nonsensical as a practical matter: utilities will dispatch resources having no fuel costs in lieu of those that do. C ommenters stated that, for the purp oses of this analysis, they ignored the potential reductions from the heat rate improvements of Building Block 1, which some utilities have cited as unfeasible or impractical. C ommenters stated that, because of the displacing effects of renewables and ener gy efficiency on fossil units, exact reliance on the four building blocks as used by EPA in the target setting would result in

over

- compliance; i.e., Georgia would achieve a target rate lower than its 2030 goal. C ommenters stated this is an important reaso n to view application of the building blocks for target setting as distinct from their use for compliance.

C ommenters stated they analyzed two scenarios: the EPA case and what they termed the "Enhanced Renewable Generation" case. C ommenters stated the EPA's assumptions regarding those resources are reasonable; if anything, they are overly conservative. C ommenters stated that, unlike the EPA, they allow those resource additions to displace fossil generation on a pro rata basis. C ommenters sta ted that by allowing for such displacement, Georgia can meet its target with natural gas re

- dispatch of up to just 57 percent, an increase of just 6 percentage points from the current level of 51 percent, rather than all the way to 70 percent. C ommenters s tated that, in their second spreadsheet, included as Attachment 2, is the Enhanced Renewable Generation case, which includes a more robust assessment of Georgia's renewables potential, as developed by the Union of Concerned Scientists (UCS) in a recent rep ort. C ommenters stated this assessment is more in line with Georgia's recent experience with renewable generation and better reflects its potential going forward. C ommenters stated that, as Attachment 2 shows, if Georgia were to achieve by 2030 the levels of renewables penetration that UCS shows is achievable (approximately 22.7 million MWh), and those incremental resource additions serve to displace fossil generation on a pro rata basis, Georgia can meet its target without any natural gas re

dispatch.

Co mment 2 9 2 8 : Commenters expressed support for including Building Block 3, including that renewable energy is feasible, cost

- effective, and has been demonstrated to achieve significant carbon pollution reductions.
Response 2 9 2 8 : The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, which is described in section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final C PP.
The following are summaries of the specific public comments under this comment:48 C ommenters agreed renewable energy should be considered a part of BSER. C ommenters noted North Carolina's RPS, which has been in effect since 2007, requires all investor

- owned utilities in the state to supply 12.5% of 2020 retail electricity sales from eligible energy resources by 2021. C ommenters stated North Carolina's RPS has led to no appreciable rate impact on North Carolina ratepayers, rather, the North Carolina RPS contributed $1.4 billion in investment in clean energy projects between 2007 and 2012 (a 13

- fold increase) while creating or saving more than 20,000 jobs and holding el ectricity rates steady for North Carolina's electric customers.

C ommenters stated that our state programs and experiences support and affirm the Administrator's determination that such system and its constituent elements have been adequately demonstrated, are technologically feasible, and work in practice to cost

- effectively reduce carbon pollution from power plants while maintaining the reliability of the electric system. C ommenters stated that in most of our states, emissions from fossil fuel

- fired EGUs h ave decreased while renewable energy generation has increased, in large part due to our states' renewable energy policies. Commenters stated the experience of our states, confirmed by independent analyses, indicates that sufficiently ambitious renewable en ergy policies can achieve significant carbon pollution reductions or avoid pollution increases by replacing generation from fossil fuel

- fired sources or avoiding increased generation. In addition, c ommenters stated, these policies can spur renewable energy innovation and deployment and promote long

- term change toward a cleaner electricity system. Commenters provided detailed information on the California RPS, including targets, progress, and economic benefits. C ommenters also provided information on the suc cess of the New York, Minnesota and California RPS programs.

C ommenters stated zero

- emission, renewable energy technologies are currently reducing overall emissions from a state's generation fleet, and expanding renewable energy should be included in the Best System of Emissions Reduction . Commenters stated electricity generation from renewable resources

- such as wind, solar, or geothermal

- has been demonstrated to be a cost

effective means of displacing emissions from fossil fuel generation . Commenters stated, given the nature of the electricity grid, the addition of renewable energy will directly result in reduction in other generation, and there is ample evidence that it is fossil

- fuel fired generation that is reduced as additional renewables are broug ht on

- line . Commenters stated that for instance, the New York State Department of Public Service conducted extensive modeling of the economic and environmental effects of that state's renewable portfolio standard and concluded that increased renewable ener gy generation would displace generation from higher

- emitting sources, primarily natural gas

- , coal

- , and oil

- fired units . Commenters stated, likewise, a recent white paper concluded that in the RGGI region the addition of renewable energy sources have almo st entirely displaced coal

- fired generation.

C ommenters stated renewable energy also meets EPA's cost criteria . Commenters referenced a recent analysis by Lazard that suggests that the costs of carbon abatement from building a new wind or solar project, r elative to building a new coal or gas plant, are within EPA's range of $10

- $40/ton and, particularly in areas with strong wind resources, can result in net savings to electricity customers . Commenters also stated a recent LBNL survey of state renewable
gen eration cost assessments found that most states that assessed benefits of RPS policies determined that the policy resulted in net benefits due to, among other things, pollution reductions, economic development, and natural gas price suppression49 C ommenters stated EPA should include renewable energy (building block three) . Commenters stated twenty

- nine states have renewable portfolio standards (RPS), and nine others have RE goals . Commenters stated many states have already made great strides towards their RE standards and goals; for example, Texas exceeded its RPS requirements well ahead of schedule

. Commenters stated that in 2005, the State established a RPS requirement of 10,000 MW of RE capacity by 2025 . Commenters stated in part due to the increasingly fav orable economics of renewable energy technologies, Texas reached this requirement 15 years ahead of schedule, developing 10,000 MW of renewable generation capacity by 2010 . Commenters stated since then, Texas has continued deploying renewables, with over 1 2,750 MW of wind capacity to date, and last year, wind power provided nearly 10 percent of generation in ERCOT, the electricity system that serves most of Texas . Commenters also stated Massachusetts has used financial incentives, such as renewable energy c redits, net metering, and long

- term contracts, to quickly ramp up RE production . Commenters stated Massachusetts solar capacity has grown from 1.64 MW in 2007 to 687 MW in 2014, and installed wind capacity has grown from 1.64 MW to 107 MW in these same yea rs.

C ommenters stated that as demonstrated by the many successful RPS and other renewable energy programs established by numerous states across the country, increased zero

- emission energy development is feasible . Commenters stated that more than half of t he states have RPSs in place and have collectively deployed approximately 46,000 MW of new renewable energy capacity through year

- end 2012.

Comment 30 29 : Commenters expressed support for RPS programs.
Response 30 29 : The resources and data provided in this comment were valuable in finalizing the building block 3 methodology. State RPS requirements are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rule. The methodolog y that produces target generation levels under building block 3 is described in detail in section V.E. of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.
The following are summaries of the s pecific public comments under this comment:

C ommenters supported the EPA's proposed approach for quantifying renewable energy potential and agrees with EPA that existing state RPS requirements may serve as a reasonable foundation upon which to develop such a scenario for two principal reasons. C ommenters stated that, in establishing the requirements, states have already had the opportunity to assess those requirements against a range of policy objectives including both feasibility and cost/electric rate impacts; these prior state assessments therefore sup port the feasibility and economic aspects of the best practices scenario as well. C ommenters stated that renewable resource development potential varies by region, and the RPS requirements developed by the states necessarily reflect consideration of the st ates' own respective regional contexts.

C ommenters stated that using these RPS policies as the foundation for EPA's primary approach is logical and consistent with the deference given throughout the proposal to state

- based policy solutions.50 C ommenters st ated that, to fully recognize the end results of these complicated technical, administrative, and political processes, the fully realized RPS policies put in place and implemented by the states should be the foundation for this RPS

- based approach. By contr ast, the c ommenters stated, the "simple target" versions of these policies used by EPA ignore the complexity of the policies in terms of the real world targets put in place after the full effect of the RPS policies are included . Commenters noted that the " simple target" approach used by EPA uses only the starting "base" target as identified in law or regulation and ignores any secondary targets or other factors in the law or rule that adjust the target for specific conditions

. Commenters stated that, in sho rt, for the primary proposed approach, EPA should amplify the commitment to the RPS policy approach, rather than diminish it.

C ommenters urged the Agency to encourage the adoption of pro

- growth clean energy policies at the state level. C ommenters suggeste d that States that have not done so should join the increasing number embracing RPS which mandate an amount of electricity that must be generated from renewable sources. Furthermore, according to the c ommenters , commercial and residential adoption of distr ibuted solar can be facilitated by implementing and strengthening net metering policies, including compensating customers at retail rates and increasing the size of eligible systems.

C ommenters stated that for states that do not yet have an RPS program, EP A's proposed approach of building on existing RPS targets and looking at the feasibility of a given level of renewable energy on a regional basis is well supported . Commenters stated EPA's alternative approach to quantifying renewable generation through a state

- by

- state assessment of technical and market potential is also well supported . Commenters also stated that other methodologies for determining potential renewable generation on a state

- by

- state basis, such as that proposed by the Union of Concerned Sc ientists, have confirmed that increased renewable generation is feasible and cost effective at even higher rates of adoption than projected by EPA . Commenters stated heavily coal

- reliant utilities, such as Southern Company and its subsidiaries, have also b egun incorporating increased renewable energy into their generation mix, further demonstrating the feasibility of renewable energy and the role that power plant owners can play in reducing the carbon content of their generation.

C ommenters supported the a pproach put forth by the EPA regarding crediting states under building block 3. C ommenters stated that, in order to aid state compliance with 111(d) obligations, it would be most efficient and equitable for the EPA to model its approach after the best prac tices of existing state RPSs. C ommenters stated that relying upon existing best practices and infrastructure will aid states in efficiently meeting their obligations, while making double

counting structurally impossible, thereby maintaining the integrity o f the emissions reductions which will be achieved.

C ommenters expressed support for RPS programs. C ommenters stated that RPS programs in the U.S. have contributed to build robust markets for the supply of renewable generation technologies. C ommenters state d that States with mandatory RPS programs "have collectively deployed approximately 46,000 MW of new renewable energy capacity through year

- end 2012." C ommenters stated thirteen states installed a total of 1,087 MW of new wind energy capacity in 2013, and a total of 61,110 MW was operational at the end of that year in thirty

- nine states and Puerto Rico. C ommenters stated that, in that same year, solar PV reached 4,751 MW, nearly51 fifteen times the capacity installed in 2008. 410 MW of CSP capacity were also installed in 2013. According to SEIA, more solar capacity was installed in 2012 and 2013 than in the thirty years prior, and these trends are expected to continue. C ommenters stated Bloomberg New Energy Finance estimates that by 2030, the global power mix will evolve from today's system, in which
two

- thirds of our electricity comes from fossil fuel combustion, to one in which over half of all generation is produced by renewable resources. C ommenters stated NREL has estimated that given today's commercially available technologies, "[r]enewable energy resources . . . could adequately supply 80% of total U.S. electricity generation in 2050 while balancing supply and demand at the hourly level."

C ommenters stated that, of the three methodologies under considera tion by EPA, the regional RPS approach provides the most realistic basis for advancing further deployment of renewable resources. C ommenters stated the State RPS' were developed in large part by state legislatures and/or regulators in a manner that conside red the potential costs to customers based on the state's policy objectives. C ommenters stated that two of EPA's proposed renewable potential alternatives result in circumstances where more than 100% of some states' load is met by renewable generation. C om menters stated this suggests that either cost considerations have not been adequately weighed or that practical implementation issues including challenges associated with development on federal or tribal lands, or areas with habitat conservation corridors and threatened or endangered species, as well as the need for additional transmission infrastructure.

Comment 3 1 3 0 : C ommenters stated there must be a method in place to re

- evaluate the goals when a state's RPS policy is reduced or eliminated.
Response 3 1 3 0 : State RPS requirements are not a factor in quantifying the amount of cost

effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detail in section V.E. of t he final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.
The following are summaries of the specific public comments under this comment:

C ommenters expressed concern regarding the EPA's reliance on Ohio's RPS policy as a demonstrated technology for determining best practices and stated Ohio's RPS policy was not accurately represented in this proposal. C ommenters stated the RPS policy used in this ana lysis has been replaced and Ohio's current RPS policy includes reductions in long term targets and freezes the annual benchmarks for RE and solar energy resource development for two years. C ommenters stated the "Renewables Portfolio Standards in the United States: A Status Update, November 2013" [GHG Abatement Measures TSD, Page 4

- 3] document also acknowledges that legislation in roughly ten (of 29) states was introduced in 2011

- 2012 to repeal or roll

- back RPS policies. C ommenters questioned how the EPA can rely on such volatile programs to determine a demonstrated technology.

C ommenters stated most existing RPS have been revised several times in order revise expected targets, alter the design of the program or extend the compliance schedule based a number of factors, including more realistic expectations on the cost

- effective development of new52 resources. C ommenters stated that, in some instances such as Ohio, the state has reduced the stringency of the RPS and increased compliance flexibility. C ommenters s tated that, in 2014, Ohio did both by freezing the ramp

- up schedule of its RPS program and by expanding the program to allow of out

- of

- state resources to be used to fully meet the Ohio RPS, if necessary. C ommenters stated that, if renewable energy programs remain a part of the final guidelines, the EPA must recognize the need for flexibility as an approved part of state plans, and allow for mid

course revisions, banking of excess credits, and other mechanisms that already exist as part of many of the standa rds EPA used as the basis for its proposal. C ommenters stated that, in the absence of such mechanisms, there is no basis for EPA's assertion that these programs represent a level of performance that has been "adequately demonstrated" as required by the CAA

. C ommenters stated that 23 of the 27 programs examined by EPA have been revised, 19 of them multiple times, over the course of their implementation.

Comment 3 2 3 1 : Commenters did not support an RPS approach.
Response 3 2 3 1 : State RPS requirements are not a factor in quantifying the amount of cost

effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detail in section V.E. of the f inal rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.
The following are summaries of the specific public comments under this comment:

C ommenters stated the EPA's formula for calculating a state's RE pe rcentage of generation: (1) relies on the mistaken proposition that states near the same power grid have a similar capacity for RE; and (2) incorrectly assumes that state RPS regulations are an accurate representation of any given state's ability to expand use of RE. C ommenters stated the EPA provides no evidence that the regional groupings have anything to do with any given state's RE capacity. C ommenters suggested the EPA should look into relationships between current RE capacity and other as of yet undet ermined factors in grouping states. C ommenters stated that, while the proposed rule uses current state RPS requirements as a proxy for a given state's capacity for RE generation, the EPA does not support this proposition with causal evidence. C ommenters st ated there may be other factors such as cultural, cost, and industrial policy reasons for a state not to adapt strong RE requirements even if the state theoretically could support such requirements. C ommenters stated the effect of this measure is to penali ze states that have adopted strong RPS goals while minimizing obligations for states without such goals. C ommenters stated this could have the perverse effect of incentivizing states to go further than EPA's requirements in the future for fear that the age ncy will use such goals against them.

C ommenters stated the EPA's key assumption is that State RPS targets are an accurate reflection of the renewable energy potential for the State and, by extension, for each State in the region. C ommenters stated the EPA's assumption that a State's RPS target accurately reflect renewable energy potential within that State is misguided. C ommenters asserted State RPS targets may be aspirational and not necessarily supported by an analysis of renewable energy potential within the State. C ommenters stated that States sometimes incorporate safeguards that suspend or scale53 back the RPS programs if cost thresholds are exceeded the levels cannot be achieved and, in other cases, States create incentives for certain t ypes of renewable energy by offering additional credits for preferred energy sources, meaning that the credits produced for compliance with the RPS will exceed the actual level of generation. C ommenters stated some States also exclude certain classes of po wer generators, such as municipally

- owned power plants or cooperatives, from the RPS obligations, meaning that the States' actual percentage of renewable energy generation on a State

- wide level will be less than the amount required by the RPS target.

C omme nters stated the EPA's reliance on State RPS targets fails to address the fact that many State RPS programs allow out

- of

- State renewable energy generation to satisfy the State's RPS goal. C ommenters stated that, to the extent that a State permits such out

- of

- State compliance, its RPS standard may not be a good indicator of the State's assessment of renewable energy potential within the State. C ommenters stated that further complicating matters is the fact that neighboring States with the potential to export renewable energy under RPS programs may elect to enact more modest RPS programs, or forego them entirely, because it is more profitable for its utilities to sell renewable energy credits to other States.

C ommenters stated that Louisiana Public Service Com mission (LPSC) examined, in significant detail, the opportunities for Louisiana RE generation in 2004 and 2009 and concluded both times that a mandatory RPS is not warranted. C ommenters stated the data provided by the utilities indicated that the levelized cost of renewable technologies exceeds the costs of conventional resources. C ommenters stated, for example, the levelized cost of a combined cycle gas turbine is below the cost of any of the major renewable technologies. C ommenters stated current prices f or natural gas have put renewable technologies at a cost disadvantage and interest at the federal level for a mandatory renewable energy policy currently appears to be limited (LPSC General Order dated September 20, 2013, Docket R

- 28271 Subdocket B).

C omm enters objected to the EPA's RPS methodology. C ommenters stated that, while the EPA contends that the RPS in the states that have them are the results of expert assessments by those states, the EPA then ignores those expert assessments by simply averaging the RPS requirements to set a regional goal. C ommenters stated that, for ten states with RPS derived from expert assessments, the EPA assumes a renewable energy goal that is greater than the state RPS. C ommenters stated that, for five other states with RPS , the EPA renewable goal is less than the state RPS. C ommenters stated that, if a state has done an expert assessment, it should stand as the RE goal for the state unless the EPA can challenge it on a sound technical basis. C ommenters stated the expert ass essment done by one state (Delaware in the East Central region, for example) cannot be assumed to have any validity for another state (Ohio, also in the East Central Region) simply because they were grouped together by the EPA. C ommenters stated that, if a state has concluded that no RPS is appropriate for the circumstances existing in that state, the EPA should respect that finding and not impose RE requirements on that state.

C ommenters stated the EPA has not sufficiently assessed the technical challenges associated with increased penetration of renewables. C ommenters stated that adequately accounting for the spatial and temporal distributions of renewable resources and their associated costs is an essential consideration in regulatory design. C ommenters s tated the primary approach in the Proposal for calculating state

- specific renewable energy targets assumes state equivalency for54 regional calculations of resource potential. C ommenters stated this assumption is problematic when regions are large and encomp ass states with drastically different renewable resources. C ommenters stated that, given the sizeable areas spanned by the six EPA regions, there is evidence of differing levels of renewable energy resource adequacy and availability across these proposed r egions. C ommenters stated the EPA assumption that existing RPS targets are feasible across all states within a defined region does not adequately consider the varying definitions of 'renewable' across the states.

C ommenters stated the renewable resources physically located in one state are often used to satisfy RPS requirements in other states. C ommenters stated that, since these benefits are not allocated to the buyer's state, this raises questions regarding treatment of the environmental attributes of th e renewable resource.

C ommenters stated the primary approach in the Proposal assumes that RPSs are a reasonable proxy for quantifying renewable generation potential because: (i) states with RPSs ' ... have already had the opportunity to assess those requi rements against a range of policy objectives including both feasibility and costs;" and (ii) "RPS requirements developed by the states necessarily reflect consideration of the states' own respective regional contexts.' C ommenters stated that, as shown in r ecent literature, however, motivations for RPS implementation and stringency are multi

- faceted and include many state

- specific factors that cannot be generalized to other contexts or assumed to be indicative of best practices over a multidecadal horizon."

C ommenters stated the use of state renewable portfolio standard (RPS) targets to determine goals is inappropriate. C ommenters stated RPS are set largely based on policy goals rather than technical potential, and most states meet these goals partly through purchase of RE from other states, rather than just from in

- state generation. C ommenters asserted that states with high RPS goals are states that have chosen to invest in renewable energy (and reduce CO2 emissions) and not necessarily those states that have naturally high capacity for renewables development. C ommenters stated the EPA should not set higher goals for states that have already made a policy decision to invest in RE than for states that have not done so. C ommenters stated that most states' RPS go als assume the use of considerable existing hydroelectric generation and, thus, EPA's exclusion of this generation from compliance is inconsistent with state RPS goals and with the way EPA set the renewables part of the goal.

C ommenters stated that, as NE RC points out in its initial review of the potential reliability impacts of the Proposed Rule, the methods that the EPA uses for quantifying the level of RE development that states can achieve is flawed for a number of additional reasons including: many RP S programs provide extra credit for certain types of resources (which implies a lower expected level of RE deployment than EPA's methods assume); that several RPS programs include small hydropower, combined heat and power, clean coal, and municipal solid w aste resources as eligible resources (in contrast to the EPA's proposal that most of these resources would be ineligible for use as compliance options); and that the EPA's method of assigning states to RE deployment regions is "questionable."

C ommenters s tated that, as a result, the proposed RPS

- based approach is incurably arbitrary and capricious (especially as applied to South Carolina). C ommenters stated that, however, if EPA persists in using the RPS

- based approach in the final rule, it should, at the very least, include in55 its regional average the RPS levels of all states in the Southeast Region, including those that have set their state RE goals at 0%.

Comment 3 3 3 2 : Commenters indicated the EPA ignored the variability in states' RPS programs and therefore overestimated the national potential for RE growth in Building Block 3.

Response 3 3 3 2 : State RPS requirements are not a factor in quantifying the amount of cost

effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detail in section V.E. of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.

Biomass is not considered part of the best system of emission reduction in this rule and therefore it is not included in goal

- setting or compliance evaluations . However, similar to other technologies o utside of BSER, biomass may be considered as a part of a state’s plan to meet the emission guidelines.

A discussion regarding the use of some biomass feedstocks for compliance purposes, and associated biogenic CO 2 assessment, can be found in s ection s VIII. I and VIII.K of the final rule preamble of the CPP

. For more information regarding Building Block 3, refer to s ection V.E of the final rule preamble of the CPP

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

C ommenters sta ted the EPA's calculation of regional renewable energy goals is flawed because State RPS statutes contain a number of off

- ramps related to cost, reliability, and crediting provisions that can result in a lower standard. C ommenters stated the EPA gives no consideration to these off

- ramp provisions in estimating the effective 2020 rate.

C ommenters asserted that each state's RPS includes consideration of the individual and cumulative impact of unique, state

- specific provisions which, in effect, reduces the "effective" amount of renewable resources that the EPA can reasonably rely on as equivalent to its renewable energy goals.

C ommenters identified issues related to hydro units, biomass emissions, unique resources, credit multipliers, out

- of

- state renewable energy credits, alternative compliance payment programs, cost mitigation measures, retail sal es vs. capacity based standards, reliability mitigation measures, RPS based on state sales, state RPS implementation schedules, and revisions to State RPS programs. C ommenters stated the EPA ignored these factors in the proposed rule, but must fully consid er and correct for the impact of these nuances if building block 3 remains a component of the final guidelines. C ommenters provided a summary of each of these factors as described below.56 C ommenters asserted that state RPS targets designed to include exist ing hydro units are unfairly used to establish regional renewable energy goals in building block 3 that exclude existing hydro generation units. C ommenters stated most states' RPS include existing and/or new hydroelectric generating units as eligible resou rces for demonstrating compliance and the contribution of existing hydroelectric units is included in the "effective" 2020 RPS rates that EPA used to calculate the renewable energy goals for each region. C ommenters stated that, in using these regional targ ets to develop regional growth rates and individual state renewable goals in building block three, EPA relies on baseline renewable generation from 2012 that excludes hydroelectric generation. C ommenters stated that, for the purpose of calculating a baseli ne level of RE generation in each state, the EPA adopted a broad interpretation of RE generation to include any

non

- fossil renewable type, with the exception of generation from existing hydroelectric power facilities

. C ommenters stated some RPS apply to ren ewable resources that are unique in that state, and which may have limited or no applicability to other states in the regions defined by EPA in building block 3. C ommenters stated that including the potential contribution from these uniquely defined and li mited resources in the calculation of the renewable energy average for the regions creates an unrealistic expectation that other states without such resources can achieve a comparable level of renewable development. Commenters stated s ome of these uniquely eligible resources contained in existing RPS include:

• ocean tidal and ocean thermal resources (i.e. Delaware)

• offshore wind energy (i.e. Maryland)

• energy efficiency (i.e. North Caronia, where up to 40% of RPS can met with EE)

• energy recovery from swine and poultry waste (i.e. North Carolina, ~10% of RPS must be met from these resources)

• coal mine methane (i.e. Pennsylvania) "clean coal" (i.e. Ohio)

• municipal solid waste (i.e. Michigan) "

• advanced nuclear" (i.e. Ohio)

• "densified fuel pellets" (i.e. Wisconsin)

• pyrolysis of municipal solid waste (i.e. Colorado)

• solar light pipes (i.e. Wisconsin)

• compressed air, fly wheel, and battery storage (i.e. Montana)

• solar pool heating (i.e. Nevada)

C ommenters stated credit multipliers are designed to in centivize specific technologies or programs to be developed. C ommenters stated that, if a specific renewable resource is constructed within a state, then each MWh produced by that resource would be counted as 257 MWh. As a result of the multiplier, the actua l state RPS targets are less stringent that the absolute percentage target would indicate. A variety of such provisions were identified in the review of existing RPS programs, including renewable resources that are:

• located within state boundaries;

• using equipment manufactured within the state;

• constructed by state residents or by an "approved apprenticeship program;"

• constructed by a specific date;

• using specific technologies;

• operated during peak demand periods; or

• qualified as "community

- based" projects.

C ommenters stated most state RPS programs accept out

- of

- state renewable energy credits (RECs) as part of the compliance demonstration program. C ommenters stated, for instance, the state of North Carolina allows for up to 25% of its RPS requirem ents to be met by out

- of

- state resources, while Ohio now allows up to 100% of the renewable energy used to satisfy its requirements to come from outside the state. C ommenters stated the EPA acknowledges the dependence state RPS compliance on out

- of

- state r esources by noting that: [EPA's] approach applies the...growth factors and regional RE targets to state

- level generation, whereas the state

level RPS requirement upon which they are based are not necessarily applied in practice to generation that is produc ed within the relevant state (GHG Abatement Measures TSD at 4

- 19).

C ommenters stated many existing state RPS contain provisions that establish alternative compliance payment (ACP) programs if the regulated entity is unable to secure or develop the renewabl e resources required by the program. C ommenters stated these programs were created largely to protect consumers if renewable energy supplies become uneconomic or unavailable. C ommenters stated such ACP programs are designed so that entities pay a $/MWh amo unt for any shortfall of renewable energy obligations. C ommenters stated the use of ACP programs to demonstrate compliance is indicative of the difficulty that some states envisioned for meeting RPS even with the subsidies provided in the form of federal p roduction tax credits (PTC) and investment tax credits (ITC). C ommenters stated the EPA should adjust state targets where ACP has historically or can reasonably be predicted to reduce the amount of renewable energy that is actually deployed under the RPS i n the future.

C ommenters noted several state RPS programs contain cost mitigation measures whereby the state has established caps on the impact to retail rates associated with the cost of renewable resources. C ommenters stated that, if retail rates increas e by a certain amount (i.e. 1 or 2%), then the RPS is effectively lowered for that compliance year to avoid excessive consumer cost impacts. C ommenters stated that, absent additional governmental subsidies which expired at the end of 2013 (PTC) and will ex pire at the end of 2016 (ITC), it is more likely that these existing RPS caps will be triggered as additional resources are added to achieve future RPS requirements.58 C ommenters stated the EPA should not include renewable goals for any state that can reason ably be predicted to exceed the retain rate caps already in effect in those states.

C ommenters stated some states have included exit ramps from RPS to address potential reliability concerns regarding the impacts of increased capacity from intermittent reso urces. C ommenters stated the EPA should consider including such a provision to allow state to issue variances if reliability impacts would otherwise occur.

C ommenters stated the targets for most state RPS are based on the percentage of retail sales in the state; however, some RPS programs, such as in Kansas, are designed as a generating capacity

- based standard. C ommenters stated the EPA failed to account for these differences in the design of state standards in terms of the percentage reduction targets for individual states. C ommenters stated that, although EPA recognized these differences, it incorrectly noted that it "did not include targets that were capacity

- based" in the building block 3 calculation of regional goals. C ommenters stated the Kansas RPS wa s the sole basis for developing the goal for the South Central region.

C ommenters stated that nearly all the state RPS programs are designed around targets related to a percentage of state retail sales. C ommenters stated the EPA calculated regional renewab le energy goals based on these retail sales

- based RPS, but then applied that calculated rate to 2012 total generation, not retail sales, for that state. C ommenters stated this creates an "apples and oranges" comparison that may translate into unrealistic e xpectations for what a specific region or state may or may not be able to achieve. C ommenters stated that, in particular for energy

- exporting states, retail sales may be a better estimation of in

- state usage, while wholesale sales often represent energy ex ports. C ommenters asserted the state is unable to influence customer behavior, or require addition of renewable resources to meet customer demand for the portion of generation that is exported to other states. C ommenters stated the EPA should examine this "disconnect" between the state

- established RPS standards and its proposed imposition of a goal based on a wholly different base. C ommenters stated this kind of adjustment would also allow EPA to take into account in setting goals the ownership of generatin g facilities by multi

- state utilities, or by multiple partners, some of whom may be located in adjacent states.

C ommenters stated the implementation schedule for state RPS programs is generally less aggressive than the proposed schedule for implementing the Clean Power Plan. C ommenters asserted States structured their programs in this fashion in part to allow for a more gradu al, cost

effective, and practically achievable ramp rate for increasing renewable resources. C ommenters stated that, based on the review of the RPS considered by EPA, the implementation period was commonly 15 to 18 years for most states, but up to 20 years in Montana, versus the 10

- 12 year period envisioned by EPA, depending on the approval date for state plans. C ommenters stated the EPA has assumed that states would ramp up renewable generation in advance of final state plans being approved, but has not cl arified if and how such activities would receive credit under the final guidelines. C ommenters stated that, while the EPA has requested comment on how early actions could be taken into account in determining compliance, its proposal appears to give credit only for renewable generation that is provided to the grid in a specific year, and does not allow for flexible systems like banking renewable credits for use in future years.59 C ommenters stated most existing RPS have been revised several times in order revi se expected targets, alter the design of the program or extend the compliance schedule based a number of factors, including more realistic expectations on the cost

- effective development of new resources. C ommenters stated that, in some instances such as Oh io, the state has reduced the stringency of the RPS and increased compliance flexibility. C ommenters stated that, in 2014, Ohio did both by freezing the ramp

- up schedule of its RPS program and by expanding the program to allow of out

- of

- state resources to be used to fully meet the Ohio RPS, if necessary. C ommenters stated that, if renewable energy programs remain a part of the final guidelines, the EPA must recognize the need for flexibility as an approved part of state plans, and allow for mid

course revis ions, banking of excess credits, and other mechanisms that already exist as part of many of the standards EPA used as the basis for its proposal. C ommenters stated that, in the absence of such mechanisms, there is no basis for EPA's assertion that these pr ograms represent a level of performance that has been "adequately demonstrated" as required by the CAA. C ommenters stated that 23 of the 27 programs examined by EPA have been revised, 19 of them multiple times, over the course of their implementation.

C om menters stated the EPA ignored the variability in state RPS and therefore overestimated the national potential for RE growth in Building Block 3. C ommenters asserted State legislatures have allowed different types of generation to contribute to meeting sta te RPS. C ommenters stated, for example, hydroelectricity contributes more than 18 percent of New York's 29 percent RPS. C ommenters stated that many states preferentially allow for certain types of in

- state RE to receive credit for more than the amount of e lectricity actually generated, up to 3.5 times. 175 C ommenters stated that, in some states, like North Carolina, EE programs are allowed to count toward the state RPS. C ommenters stated many states also allow out

- of

- state RE to be counted toward RPS complia nce. C ommenters stated that all of these factors would limit the actual amount of RE in an individual state, which is what EPA attempts to measure in Building Block 3. C ommenters stated that by failing to appropriately adjust its regional targets downward for these different elements of state RPS, the EPA overestimates the potential for increases in RE to contribute to CO2 emissions rate targets.

Comment 3 4 3 3 : Commenters addressed concerns regarding the process to estimate renewable energy baseline and goals and if and how renewable energy sources not recognized by the proposed rule are accounted for.

Response 3 4 3 3 : The final methodology for quantifying target generation levels under building block 3 doe s not rely on the establishment of baseline generation. Instead, the final methodology establishes a level of RE incremental from 2012 that is both feasible and cost

- effective. There are no RE resources used in setting the target generation that are not fu lly creditable under compliance.

Biomass is not considered part of the best system of emission reduction in this rule and therefore it is not included in goal

- setting or compliance evaluations . However, similar to other technologies outside of BSER, biomas s may be considered as a part of a state’s plan to meet the emission guidelines.60 For more information regarding Building Block 3, refer to s ection V.E of the of the final rule preamble of the CPP

. A discussion regarding the use of some biomass feedstocks for compliance purposes can be found in s ection s VIII.I and VIII.K.1 of the final rule preamble of the CPP

. State RPS requirements are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detail in section V.E. of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.

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

Commenters said that the EPA misinterprets 2012 RE data for Mississippi as well as for the entire Southeast region. Commenters said that all of Mississippi's RE came from biomass in 2012, but the EPA does not prese ntly allow biomass to be a part of the state compliance plan for RE. Commenters said that the majority of the RE for the southeastern states came from hydro and biomass; yet the EPA does not factor existing hydro power when calculating state CO2 goals and has still yet to render a decision on biomass. According to commenters, both factors have resulted in the EPA using inflated RE percentages for 2012 which in turn serve as the basis of setting the EPA's future target for Mississippi.

Commenters said that the EPA's process for setting the future RE target for Mississippi is flawed because it does not reflect the realities of state meteorology. Commenters stated that solar and wind have not been proven as viable options in the southeast for significant RE so urces because of weather patterns for the southeast. Commenters pointed to two maps from the National Renewable Energy Laboratory that provide information on solar and wind speeds for the United States. Commenters said that the Concentrating Solar Resourc e map shows that almost all of Mississippi has insolation values less than 4 kWh/m2/day, but Concentrating Solar Power technologies require a minimum insolation value of 7 kWh/m2/day. Commenters said
p hotovoltaic technologies continue to advance and the associated capital cost continue to improve and small scale solar projects may have a place in the state's future generation resource mix, but certainly not to the scale contemplated by the EPA's RE tar get. Finally, commenters said, the United States Average Wind Speed Map demonstrates that all of Mississippi is located in a Class 1 wind region, which is not currently viewed as a feasible area to develop wind farms as an RE generation resource. Commente rs concluded that wind is not option in Mississippi for meeting the EPA RE target.

Because Mississippi is nearly solely dependent on biomass or obtaining RE from across numerous state lines, commenters asked the EPA to identify whether biomass will be all owed to be a part of state compliance plans for RE and evaluate whether states which are dependent on biomass for meeting compliance have the wood/woodwaste resources to support the extremely high RE generation targets set by the EPA. Commenters also asked that the EPA evaluate the economic impact that competition for wood/woodwaste resources would have on other industries in states that are dependent on these wood/woodwaste resources. In summary, commenters said, the EPA should consider removing RE from th e CO2 goal calculation but allow RE to count towards compliance with the overall goal. Commenters noted that in the GHG Abatement61 Measures TSD, the EPA states that Florida's renewable energy generation for 2012 was 4,523,798 MWh [ GHG Abatement Measures TSD , pp. 4

- 6 ]

. C ommenters stated that after reviewing the U.S. EIA Detailed 1990

- 2012 Annual Generation State Historical Tables, which are included as appendices to the proposal, it appears that the EPA arrived at Florida's 2012 renewable energy generation to tal by adding the megawatt hours produced by "Other Biomass," "Solar Thermal and Photovoltaic," and "Wood and Wood Derived Fuels" [ U.S. EIA Detailed 1990

- 2012 Annual Generation State Historical Tables (specifying that in 2012, Florida generated 2,272,621 M Wh from "Other Biomass," 193,616 MWh from "Solar Thermal and Photovoltaic," and 2,057,561 MWh from "Wood and Wood Derived Fuels") ]

. Commenters noted that the EPA has stated that it will formalize the CO2 accounting framework for biogenic CO2 emissions at a later date. Commenters asked if the EPA has considered the effects of the accounting framework on the calculation of state goals and compliance demonstrations. Commenters asked if the EPA will revisit the calculation of state goals if it determines that b iomass cannot be treated as a zero carbon source.

Commenters said that the EPA's assumed growth projections under Building Block #3 for the increase in renewable energy generation within Florida may not be technically feasible and noted that renewable ene rgy accounts for only 2% of the state's total generation mix. While the EPA appropriately excluded hydroelectric generation from the BSER, commenters stated that the EPA has relied heavily in building block 3 on large expansion of biomass power. C ommenters stated that in 2012, 96% of Florida's renewable generation was from biomass (the other 4% was from solar). Although biomass continues to be an important component of a diversified energy portfolio, commenters requested that the EPA remove biomass from the BSER calculation, similar to hydroelectric, because biomass has already peaked. Commenters noted that a review of the EIA data the EPA relied upon in building block 3 demonstrates that biomass consumption for electricity generation has been relatively fla t for the last 22 years and that it peaked in the late 1990's and has since declined. While this leveling off may be due to biomass cost rather than feedstock availability, commenters said that this does not support a year

- over

- year growth of 13%, as the p roposed rule requires.

Commenters added that biomass is not limited to its usefulness as a fuel and that many of the opportunities to use biomass as a fuel depend on the region. For example, commenters stated, in North Florida, softwoods and hardwoods are prevalent, as well as other energy crops. In assessing the contribution of biomass to the BSER in building block 3, commenters said that the EPA should provide a more detailed analysis of the types of sustainable biomass available by region and the compet ition for use of this natural resource by other industries. For example, commenters noted, the entire wood products industry relies upon biomass as a raw material. Should EPA write a rule that forces electric generation of the limited biomass resources,

co mmenters said that power generators will compete for fuel resources from the manufacturing industries this country relies upon for a wide variety of products. Commenters said that this industry is already highly competitive in securing raw materials in the limited "wood basket" of each location. According to commenters, the firm fuel commitments was one large component of several previous biomass

- to

- energy projects never getting off the ground, e.g., in Florida alone, approximately a dozen bioenergy permits were sought, with only a couple moving forward with construction. Commenters said that the EPA should fully consider the harm to manufacturing by issuing a rule that relies on biomass consumption instead by power generation.62 Commenters noted that biomass energy is the only renewable fuel source in Florida that is not intermittent and is dispatchable, but a determination on whether biomass can be considered carbon

- neutral renewable energy remains pending. At this time, commenters stated that renewable ener gy is therefore prohibitively expensive to be deployed in Florida. Commenters added that only biomass that is carefully chosen, grown responsibly, and efficiently converted into energy can reduce carbon pollution and minimize harmful impacts to our land, w ater and soil. In other words, commenters said, biomass energy should do the job better than the fossil fuels it replaces.

Without clearly defining what types of biomass are/are not considered carbon neutral, commenters said that new biomass generation wi ll likely not be built in time for this rule. As well, without this clear roadmap, commenters said that it is not possible to fully review and comment on an unfinished building block and assessing whether a building block 3 that relies on biomass

- to

- energy is adequately demonstrated and represents an achievable BSER depends on the type and criteria of biomass that is included. Commenters also described Florida's proposed goals and stated that it is imperative that the final rule incorporate and account for the biogenic nature of biomass fuels. If the commenters ' cogeneration boilers are brought under the proposed emission guidelines, the CO2 emissions from them will be well above the Florida goals. For example, commenters explained, in 2012 and 2013, NHPC's total CO2 emissions were approximately 2,570 lb/MWh (net), but the non

- biogenic CO2 emissions from NHPC's boilers were only about 160 lb/MWh (net).

Commenters said that the EPA's treatment of biogenic CO2 emissions from biomass

- firing units will have a la rge impact on states that are trying to achieve the EPA's CO2 reduction goals. Commenters encouraged the EPA to promote the use of renewable energy (such as biomass, wind and solar) in lieu of any type of fossil fuel. Although natural gas has lower CO2 emi ssions compared to coal or oil, commenters said that the use of natural gas still results in a net increase in CO2 emissions and impacts upon the environment. To this end, commenters added, the EPA should provide and promote incentives for the use of renew able energy, including but not limited to tax credits, subsidies, and higher electric rates. Commenters noted that future RE projections for the states where electric generation from biomass is included show that projected RE targets will not be attainable within the specified time frames if electric generation from biomass is not included as RE. Commenters stated the EPA includes existing or historical biomass electric generation to determine state RE targets, and simultaneously questions the continued
cat egorization of biomass or certain type of biomass as RE. Commenters urged the EPA to provide states with guidance concerning electricity generated from biomass in an expeditious manner and adjust state goal calculations as warranted.

Commenters raised sim ilar concerns for Louisiana's probable need to increase biomass use to meet RE targets, but noted that while burning biomass may be technically renewable, it is not necessarily clean. Commenters said that the EPA's data shows that solid biomass fuels such as wood waste and agricultural byproducts can emit as much, if not more CO2 than coal, and significantly higher quantities of NOx. And, commenters added that in July 2013, the U.S. Court of Appeals vacated the EPA's "biogenic carbon deferral" in which the EPA had exempted CO2 emissions from biomass plants for purposes of CAA permitting for a period of 3 years pending further study. Commenters concluded that it is unclear how increased biomass generation will be63 subjected to, or impacted by other EPA rules s uch as the Cross State Air Pollution Rule (CSAPR).

Commenters described Georgia's limited RE capacity (CHP) and stated that for Georgia to achieve its state RE target, other RE sources must increase by more than 44% per year, which is unreasonable and imp ossible. Commenters asserted that the EPA's logic for not including existing hydro in calculating state goals, but allowing states to include new hydro in their compliance calculations also applies to industrial CHP. Commenters stated the EPA does not incl ude existing hydro because it believes that would distort the goal calculation due to the low expected growth rate for large hydro projects in the future. Commenters stated that the same situation exists for industrial CHP sources burning wood or wood deri ved projects, i.e., very low future growth potential, so that these sources should not be included in a state's goal calculation. Commenters added that, as is the EPA's approach for new hydro, states should be allowed to include new CHP facilities in their compliance calculation.

Commenters said that the EPA developed regional renewable energy generation targets based on
state

- level RPS and that the EPA's methodology assumes all states in each region can achieve by 2029 the average of the 2020 requirements of state

- level RPS in that region. Commenters said that the EPA's methodology is fatally flawed, producing state

- level renewable energy generation targets that are neither feasible nor adequately demonstrated. Commenters explained that historical renewabl e energy generation in Southern Company's retail footprint, excluding existing hydroelectric power, is almost exclusively 95.7%) from biomass (see Table 9 depicting historical biomass generation from Alabama, Florida, Georgia, and Mississippi and its share of the state's total renewable energy generation.) Commenters added that only a small portion of each state's 2012 biomass generation comes from facilities whose primary purpose is electricity generation (see Table 10); the majority of biomass generation is produced from wood product

related facilities (e.g., wood product manufacturing, pulp and paper mills, paper manufacturing, and paperboard mills). Commenters stated the generation from these facilities has fluctuated on an annual basis likely due to con stantly changing demand for wood products (e.g., dimensional lumber and paper products). For example, in 2010, commenters said that Alabama's biomass generation decreased 22 percent but it experienced a year

- to

- year increase of 18.5 percent in its 2011 bio mass generation. Commenters concluded that the EPA has thus erred in including this highly variable, primarily non

- electricity sector generation in a state's baseline and annually escalating renewable energy targets from it.

Commenters noted that the EPA' s proposed approaches for determining the appropriate RE goal for each state consider biomass

- based generation to be carbon neutral, but recent EPA guidance indicates that only a limited subset of the biomass currently used to satisfy state RES requirement s will be considered carbon neutral for purposes of state 111(d) compliance plans (citing Biomass Memorandum from Janet G. McCabe, Acting Assistant Administrator, OAR, to Air Division Directors, Regions 1

- 10, Nov. 19, 2014). As with hydropower, commenters said, the EPA should treat biomass in a manner consistent with state RES rules and enable all RES

eligible generation to count towards a state's compliance determination. Commenters added that the EPA should to evaluate the potential for carbon sequestrati on in forests to play a role in meeting state targets and to provide guidance on how this tool could be deployed. Commenters added that the EPA averaged state RES requirements to create regional RE goals without regard to the proportion of compliance that states expect to come from biomass generation. Commenters64 noted that both the proposed and alternate approaches include biomass when determining the stringency of state RE goals and biomass is treated as a zero

- carbon emitting resource. Commenters said the EPA should modify any final rule to ensure that any biomass included as part of Building Block 3 impacts the calculation of state goals in a manner that is consistent with how the Agency ultimately requires states to account for that generation as part of compliance. Commenters concluded that, to the extent that biomass is treated as zero

- emitting generation for purposes of calculating state RE goals in the final guidelines, the EPA must provide consistent treatment of biomass for compliance purposes.

Com menters said that requiring Idaho to acquire incremental RE based on other states' RPS rules ignores Idaho's existing zero

- emission renewable hydroelectric generation. For example,
commenters stated , during the 2012 baseline year, Idaho had 15,499 GWh of t otal generation; of that, only 2,044 GWh was from carbon emitting sources (1,640 GWh from affected units) while Idaho generated 13,454 GWh from non

- carbon emitting sources. According to commenters, this means that Idaho has already offset more than 6.5 tim es the amount of its in

- state carbon

emitting generation with existing non

- carbon emitting generation within its borders. On this basis, commenters stated that Idaho meets an RPS of 87% zero

- carbon emitting energy.

Commenters said that the EPA appears to recognize that some approaches to biomass

- based power production can yield minimal reductions in GHG generation due to release of CO2 from soils during land clearing associated with the production of biomass. Commenters said that this raises two issues:

• T he EPA should limit eligibility of certain types of biomass

- based generation, based on recognition that life

- cycle GHG benefits are minimal or negative.

• The EPA should evaluate the impact of such biomass

- based generation systems on the state RPSs used as a basis for building block 3 assessments, and adjust its analysis to reflect the reduced GHG benefit of some biomass

- based generation systems.

Comment 3 5 3 4 : Commenters stated actual RPS in NV does not match the rate the EPA used.
Response 3 5 3 4 : State RPS requirements are not a factor in quantifying the amount of cost

effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detail in section V.E. of the f inal rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.
The following are summaries of the specific public comments under this comment:

C ommenters stated the actual effective rate of Nevada's RPS is not reflective of the RPS rate the EPA used in its regional RE averaging due to differences between the Nevada program and the EPA's proposal in the types of allowable renewable energy sources and compli ance mechanisms. C ommenters stated that, if other states with RPS programs are similarly situated, then the regional RE averages may be too high in the western and other regions. C ommenters stated the65 planned RE generation in states with high RPS percentag es may represent not so much a "best system of emission reduction," but instead the degree of favorability in that state's political environment for adoption of ambitious renewable energy mandates along with adequate resources for doing so.

C ommenters refe rred to comments made by Nevada DEP "Agencies

. " C ommenters stated the Agencies pointed out that Nevada's RPS currently does not apply to all utilities, so that 12% of the load is not covered at all. C ommenters agreed that Nevada's existing RPS does not act ually deliver renewable energy at the level it would appear because of multipliers and other factors that dilute its effectiveness. C ommenters stated that Nevada could easily include the other utilities in the RPS and close some of the program's loopholes to better comply with the CPP. C ommenters stated many states have a stronger RPS than Nevada's and neighboring California is already on a trajectory to achieve 33% renewables by 2020. C ommenters stated Nevada's renewable resources are among the best in the country. C ommenters stated Nevada is better positioned than almost any other state to enjoy high levels of renewable energy penetration; and complying with the CPP would not require a huge change. C ommenters supported higher targets for Nevada and stated a more robust RPS would provide thousands of jobs and a more diversified, stronger economy. C ommenters stated the calculation of renewable energy potential must take into account the rapid changes in the levelized cost of energy for renewable resources. C o mmenters stated we are not only approaching but in many locations have already reached grid parity, meaning that renewable resources such as wind and solar are competitive with or beating fossil fuels in the marketplace.

Comment 3 6 3 5 : A number of commenters asserted that state

- specific analyses are needed.
Response 3 6 3 5 : State RPS requirements are not a factor in quantifying the amount of cost

effective RE that is part of the BSER in the final rule.

The methodology that produces target generation levels under building block 3 is described in detail in section V.E. of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.

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

C ommenters stated that a more systematic analysis, which takes into account each state's unique opportunities and challenges in developing renewables, is needed before setting regional goals. C ommenters stated that, of the six states grouped with Arkansas in the South Central region, only Kansas has a state

- established renewable portfolio standard (RPS) in place, yet the proposed Rule assumes that every state in the South Central Region can meet RE targets based on that single state's RPS. C omment ers stated the use of a single state's policy to set regional goals is legally unsupportable and arbitrary, especially in regions with only one existing RPS policy out of six total states. C ommenters stated that, while the proposed Rule's stated intent was to create regions that group states with similar renewable profiles, in the South Central Region, of which Arkansas is a part, four of the other five states have significantly greater renewable energy (RE) potential than Arkansas, primarily wind.66 C omment ers stated the EPA failed to take into account Indiana's unique potential for renewable energy use when they employed a regional average to calculate Indiana's growth rate. C ommenters stated that, just because Indiana's region might be able to achieve a 6 percent year

over

- year growth rate in renewable generation does not mean that is an appropriate figure for Indiana. C ommenters stated the proposed rule fails to make allowances for the substantial degree of political uncertainty that belies present

- day gro wth in renewable energy generation. C ommenters stated this oversight by EPA is a significant one: Independent experts have argued that uncertainty in the future of tax law and subsidies has a substantial impact on investment decisions in the solar industry , for instance. C ommenters cited a study and stated Indiana has limited solar resources because it is in a region of the country that has the lowest annual average solar radiation

. C ommenters stated that, while Indiana has added significant wind power assets to its generation portfolio since 2008 and EPA assumes new capacity can continue to be added without difficulty, there is a risk that the best siting locations are being used up and the pr ice of producing an additional megawatt of wind power will ramp upward as more capacity is added.

C ommenters urged the EPA to adhere to a consistent policy of using actual state data and future growth for renewable also based on specific state information. C ommenters stated the preferred approach in this Building Block calculated using renewable potential from political policies in neighboring states is not based on any practical information that a renewable policy in one state can be repeated in another. C ommenters stated the EPA does not provide any reasonable justification for the groupings of states in Building Block 3. C ommenters requested that the renewable provisions in Building Block 3 be revised to devise state

- specific renewable potential based on the NREL alternative that is further modified to include data from all states instead of just 16 states.

C ommenters recommended the EPA reconsider BSER within building block 3 and perform further analysis regarding to what extent generation at affected EG Us can be replaced by expanded amounts of lower

- carbon generating capacity given the realities of these technologies and historic and current investment choices.

C ommenters expressed concern that the renewable resource targets proposed by the CPP do not

a lign with New Hampshire's existing Renewable Portfolio Standards (RPS). C ommenters stated the development of new renewable energy sources relies heavily on geographical factors and permitting requirements within each state and it is not realistic to requir e states to achieve renewable goals that are impacted by the RPS requirements of neighboring states as proposed in the CPP, especially if state RPS requirements are not currently being met, as evidenced by the use of alternative compliance payments (ACPs).

C ommenters stated the consideration of both renewable energy and energy waste reduction should be considered on a state

- specific basis considering technical and economic opportunities and limitations. C ommenters stated some RPS apply to renewable resource s that are unique in that state, and which may have limited or no applicability to other states in the regions defined by EPA in building block 3. C ommenters stated that including the potential contribution from these uniquely defined and limited resources in the calculation of the renewable energy average for the regions creates an unrealistic expectation that other states without such resources can achieve a comparable level of renewable development. Commenters stated s ome of these uniquely eligible

resou rces contained in existing RPS include: ocean tidal and ocean thermal resources (i.e.67 Delaware); offshore wind energy (i.e. Maryland) ; energy efficiency (i.e. North Caronia, where up to 40% of RPS can met with EE); energy recovery from swine and poultry w aste (i.e. North Carolina, ~10% of RPS must be met from these resources); coal mine methane (i.e. Pennsylvania); "clean coal" (i.e. Ohio); municipal solid waste (i.e. Michigan); "advanced nuclear" (i.e. Ohio) "densified fuel pellets" (i.e. Wisconsin); pyro lysis of municipal solid waste (i.e. Colorado); solar light pipes (i.e. Wisconsin); compressed air, fly wheel, and battery storage (i.e. Montana); and solar pool heating (i.e. Nevada).

C ommenters stated the EPA must develop a renewable energy goal that is founded on state

specific analysis, availability, costs, and energy use. C ommenters started it is unlikely that North Carolina is representative of the other seven in terms of renewable energy potential since such potential is highly dependent on geograph ical and climate particulars. C ommenters stated Florida has much more shoreline than North Carolina, is flatter and contains none of the Appalachian Mountains, and is southernmost of all the states in the region. C ommenters stated all of these features wil l have a great impact on Florida's renewable energy potential and the rule must account for that. C ommenters stated the EPA must demonstrate that renewable energy projects are both adequately demonstrated and technically feasible in Florida, are of a reaso nable cost and have the implementation potential upon which the final budgets are based; otherwise, the rule does not support that renewable energy projects are BSER and therefore can be relied upon for budget goals.

C ommenters said that renewable energy i s not evenly disbursed and available within the United States as a fuel source. States and utility companies utilize clean energy resources that are technically and economically viable in their geographic area in order to cost

- effectively provide electrici ty to their customers, the c ommenters added. Commenters stated r egional averaging in the proposed rule ignores the fact that renewable energy potential is state

- specific and depends on the state's natural resources, existing transmission system, and curren t renewable energy development. The southeast United States is particularly short of these resources, the

c ommenters said, and added that according to the DOE's NREL, the southeast United States is devoid of any wind resources.

Likewise, c ommenters said th at the NREL's Photovoltaic Solar Resource map , which reflects nominal solar resources in Kentucky . Commenters expressed that energy from regions that have rich resources of renewables will have to be developed to meet their own region's goals set out in th e plan, but also for other region's goals as well. Yet, the commenters speculated, renewable

resource

- rich states which plan on developing significant amounts of renewable energy within their SIP may be reluctant to share those resources with states that a re not rich in those resources. In addition, the commenters said, without construction of significant amounts of long

- distance high

- voltage transmission lines, states in the southeast will be unable to meet goals assumed and set out in the proposed rule.

C ommenters indicated that the proposed CPP establishes regional groupings to set common RE goals for individual states. Commenters added Michigan is included in the North Central region. Commenters stated i t is inappropriate to base any evaluation of Michig an's renewable potential on the successful installation of RE resources, or the RE resource potential, of other states. Commenters stated Michigan is uniquely impacted by the presence of the Great Lakes and such proof is readily available in the form of th e NREL's individual maps on a state's potential for68 renewable energy resources. C ommenters attached the NREL wind speed profile for the United States to demonstrate this point . Commenters provided Figure 2 (titled: "US Annual Average Wind Speed at 80 m")

, which shows the U.S.'s wind profile, in meters/sec, at a height of 80
meters.
As clearly depicted in Figure 2, the c ommenters said that Michigan lacks the renewable wind generation potential as other states in the North Central Region. As further proof of the stark differences in the region, the c ommenters noted that with the October 10th, 2014 announcement by MidAmerican Energy, the state of Iowa is on track to provide approximately 50% of their residential demand by wind generation resources. Commenters stated that c learly, Iowa, along with the other Great Plains states, is a grossly improper comparison to Michigan's renewable energy potential. Thus, c ommenters requested that the individual states be allowed to set their own renewable energy goals, as the y know their renewable energy resources potential best. Commenters argued s tates should also be allowed to form their own regions as geographically appropriate (e.g. a Great Lakes states region).

C ommenters disagreed with EPA's method of basing individual state RE generation levels on conditions and standards adopted in other states. As an initial matter, commenters asserted the EPA fails to properly account for the differences that exist between states within the same region, especially in a region like th e Southeast that consists of eight states that span from Kentucky to Florida (north

- south) and North Carolina to Mississippi (east

- west).

C ommenters disagreed with the EPA's plan to base the RE generation levels of Georgia and six other states on a single RPS that was deemed financially and environmentally appropriate for one
state. C ommenters expressed that this is especially true where (as here) the EPA simply assumes

- without attempting to demonstrate as true

- that all states within the Southeast regio n can meet the targets in North Carolina's RPS. Commenters stated t he EPA's own IPM modeling results indicate that for Georgia, RE growth will be virtually nonexistent. As a more appropriate alternative measure, the c ommenters encouraged the EPA to perform a systematic analysis of each state within a region and develop a scenario that accounts for the distinct challenges and resources of each state.

Comment 3 7 3 6 : C ommenters stated the EPA must account for state

- specific factors in Georgia

. Response 37 3 6 : State RPS requirements are not a factor in quantifying the amount of cost

effective RE that is part of the BSER in the final rule. Further, building block 3 is both quantified and applied at the level of the interconnection, rather than at the state

- level

. The methodology that produces target generation levels under building block 3 is described in detail in section V.E. of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.

Biomass is not considered part of the best system of emission reduction in this rule and therefore it is not included in goal

- setting or compliance evaluations. However, similar to other technologies outside of BSER, biomass may be considered as a part of a state’s plan to meet the emission guidelines.69 For more information regarding Building Block 3, refer to s ection V.E of the final rule preamble of the CPP

. A discussion regarding the use of some biomass feedstocks for compliance purposes can be found i n s ection s VIII.I and VIII.K of the final rule preamble of the CPP

. A discussion regarding the current status of the development of the revised Framework and how information from the revised Framework and the related peer review processes could be used to inform how states and EPA assess biogenic CO 2 can be found in s ection s VIII.I and VIII.K of the final rule preamble of the CPP . For more information regarding the Framework, see: http://epa.gov/climatechange/ghgemissions/biogenic

- emissions.html

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

C ommenters suggested that, instead of proposing a CO2 emissions compliance rate for Georgia that is based, in part, on one state's RPS, the EPA should include that amount of RE that is based on the development of reasonably achievable RE generation that balances rat epayer costs and reliability with readily available RE technologies. C ommenters stated that certain forms of RE are appropriate to consider when determining state RE levels for compliance. As a general matter, the c ommenters agreed with the EPA's approach regarding hydroelectric power. Specifically, EPA was correct not to include 2012 hydropower generation

- including pumped storage hydropower generation

- in determining a state's RE for goal calculation purposes. Commenters stated t he large degree of varia tion that occurs in hydropower generation may cause distorted state targets, and thus hydropower generation should only be considered in calculating compliance with a state goal and not when deriving the state goal itself. C ommenters said that given the li mited availability of geothermal and wind power in Georgia, remaining possible RE sources that may be used to meet the proposed performance standards rate in the Proposal are biomass and solar.

C ommenters agreed that biomass co

- firing at coal facilities a nd biomass electric generating facilities should be counted as RE, but stated the EPA must determine how biomass will be treated in state 111(d) plans now, if states and utility stakeholders are to have that option for meeting CO2 goals. C ommenters urged t he EPA to expeditiously finalize the Biogenic Framework, so that states can use those findings in the development and submittal of section 111(d) plans. C ommenters stated that, up to this point, the EPA has provided confusing and inconsistent treatment of biomass in the Proposal. C ommenters stated biomass is given consideration as a source of RE in the preamble (79 FR 34,923/2, 34,924/3 & 34,925/1) and the continued hope is that the EPA will provide a clear path forward for the use of biomass as a RE fuel i n state 111(d) plans. C ommenters stated planning for the use of biomass in the future has long lead times associated with the planning, design, acquisition, permitting and construction of a power plant facility. Additionally, the c ommenters said that such hurdles are substantially raised by the uncertainties regarding the permitting requirements for such facilities and the role they might play in complying with state performance goals. Commenters stated that biomass is a viable option in Georgia for genera ting power, both as a sole source and co

- firing with other fuels, but not if delays in making critical determinations regarding its role in the reduction of carbon emissions continue. C ommenters strongly encouraged the EPA to diligently move forward with f inalizing its Biogenic Framework, and to take any other steps needed to fix the70 status and role of biomass combustion for power plants within the context of the emission guidelines.

C ommenters stated that unlike in some of the southwestern States, Concentr ated Solar is not an attractive option in Georgia for the generation of electricity, given the current state of the technology. Commenters said s olar PV is currently the only technology theoretically useful in Georgia to generate electricity from sunlight. C ommenters noted a bout 7,000 MWac solar capacity would be required to fulfill the State's RE goals (ignoring 2012 RE levels). Commenters stated t he availability of the technology ; however

, must be balanced with considerations of cost and reliability. The commenters explained t he system was not designed to respond to large variations in both load and generation. The commenters added i ntermittent resources like solar PV can change significantly from minute

- to

- minute. Also, the c ommenters explained that syst em operators must keep the system in balance with changing customer demand by controlling available generation resources. Commenters stated that a dding a significant amount of intermittent generation resources further complicates the system operator's bala ncing responsibilities. The commenters said s ystem operators utilize conventional, controlled generation technology to balance the required load, and to maintain a constant system frequency and voltage. Commenters continued stating that a dding significant amounts of intermittent generation to replace conventional, controllable generation could result in fewer resources for use in maintaining system frequency and voltage (and therefore reliability). Commenters said t o compensate for the added variability cau sed by intermittent generation resources, utilities will need to spend additional capital on equipment and will experience higher operating expenses on existing conventional generating facilities. Commenters stated existing conventional generating faciliti es will be required to provide more balancing services, resulting in more frequent cycling operations and higher operating and maintenance costs. Commenters stated their summer peak period typically runs from 3 to 8 p.m., while solar PV typically peaks fro m noon to 1 p.m., with steep declines in production past that point. Commenters said f rom 3 to 4 p.m., for example, solar PV typically produces 30% (at best) of peak production. Commenters stated that a dding 7000 MWac would require the addition of almost that much other generation to meet peak demand and to satisfy spinning reserve requirements, so as to maintain suitable margins for frequency and voltage control. Thus, the commenters expected, while costs of solar PV have declined considerably in the past few years, applying the technology at the levels proposed will cause significant cost increases for end

- use customers in Georgia.

C ommenters stated that, as an electric cooperative, they have the responsibility to provide safe, reliable and cost effective electric power and, as such, they have a duty to ensure that new generation added provides the least

- cost solution for meeting energy needs. At this time, the

c ommenters asserted that considerations of cost and reliability

- if properly accounted for by t he EPA

- would reduce the increase in RE that the Agency concludes can reasonably be achieved between now and 2030. In determining state RE goals, the c ommenters asserted that the EPA must account for state

- specific factors; had it done so the c ommenters asserted that the EPA would have concluded that solar is not a viable option in Georgia for generating substantial amounts of electricity. The commenters asserted f ailure to consider these costs and impairments to system reliability is arbitrary and capric ious.71 Comment 3 8 3 7 : Commenters stated the EPA's reliance on IPM leads to an overestimate of the amount of RE that can be achieved.
Response 38 3 7 : The final methodology is based on observed historical patterns of deployment and expected levels of future performance. IPM projections are used to validate the technical feasibility and cost

- effectiveness of the final methodology . The EPA updated IPM from proposal to reflect the latest data on the cost and performance of RE technologies, as well as limits to

r eflect the increasing grid integration costs that may accompany high levels of RE penetration. The methodology that produces target generation levels under building block 3 is described in detail in section V.E. of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.
The following are summaries of the specific public comments under this comment:

C ommenters stated the CPP overestimated the capacity factor of renewable generation in their model and in the establishment of state emission rates.

C ommenters stated the EPA's reliance on an inaccurate model leads to a large overestimate of the amount of RE that can be achieved in Ohio and only reinforces the level of inaccuracies in this proposal. C omment ers stated the IPM projects, under the state

- only policy case, 3,001 MW of new wind capacity in Ohio by 2025 and, under the regional compliance plan, this is increased to 4,955 MW of new wind power in 2025. C ommenters stated that, while Ohio EPA recognizes the potential for wind power in the state given recent rapid growth in the wind sector, wind power does not, and cannot, supplement or replace the base

- load power supplied by coal and natural gas fired power plants. C ommenters urged the EPA to consider th e highly

- localized nature of wind

- power and its ability to serve a small portion of the overall grid. These results clearly indicate that location and base

- load reliability concerns were not considered fully in the IPM projections. C ommenters stated the Oh io EPA examined wind capacity projections from EIA's 2014 Annual Energy Outlook and, between years 2012 and 2030, the largest annual change in wind capacity for the RFCW region, of which Ohio is a part, was 37 MW. C ommenters stated the EPA's projection of 3001 MW of new wind capacity in Ohio by 2025 under the state

- only scenario represents the addition of 195 MW each year starting in 2012 and concluding in 2025. C ommenters stated the EPA is projecting a growth rate in wind capacity 5.3 times greater than th at projected by EIA which the Ohio EPA finds difficult to comprehend.

C ommenters also stated that EPA's proposed renewable energy generation goals are drastically higher than the states can achieve within EPA's proposed timeline. C ommenters stated that

com paring present

- day estimates of the expected baseline renewable energy growth to the renewable energy totals EPA applies in Building Block 3 reveals just how unreasonable, arbitrary, and capricious the Agency's estimates of potential renewable energy gener ation are. C ommenters referenced and cited The Marchetti Report, which compares estimated renewable energy generation under Building Block 3 assumptions in the EIA's Annual Energy Outlook (AEO) 2013 baseline analysis, and in EPA's IPM runs projecting the r esults of state

- focused implementation of the Proposed Guidelines (State Option 1). Based on additional information provided by the c ommenters , they stated that although states may have some available measures at their disposal that could lead to some incr emental increase in renewable energy generation from the status quo over this timeframe, expecting the nation as a whole to nearly quintuple its72 annual growth rate for renewables and increase its expected renewable energy generation by more than one third over projected levels is simply unreasonable. C ommenters also provided information from the Marchetti Report specific to Georgia and Alabama.

C ommenters indicated that the EPA assumes renewable energy growth of 86 percent from 2020 to 2030, an assumption that far exceeds the agency's own modeling results. The EPA's modeling of the least cost strategy shows 325 TWh of non

- hydro renewable generation by 2030 , yet EPA's set state CO2 rates assume 525 TWh, almost 33 percent more, the c ommenters said. Under the plan, renewable generation would grow at unprecedented rates in many states, with southeastern states presumed to increase renewable generation by 13% ea ch year, the c ommenters added. Commenters stated ERCOT and other grid operators have expressed concern that the CPP's proposed requirements would require grid operators to significantly modify their grid operations to integrate increased proportion of rene wable resources. C ommenters further believed that the EPA has not shown that it has taken into account the intermittent and unreliable nature of these sources. Additionally, commenters added, the transmission infrastructure needed to capture additional ren ewable energy sources will take 5 to 15 years to install, and will not be available by the 2020 deadline in the CPP. C ommenters said that the WPSC points out that "EPA started its Wyoming calculation with the wrong number, applied an unrealistic growth fac tor and reached a wrong conclusion". The WPSC goes on to correctly calculate the formula for Wyoming, demonstrating that the mistake made by EPA was large enough to frustrate any conceivable state effort to comply with the goal for Wyoming, the c ommenters noted. C ommenters indicated that the WPSC demonstrates that the EPA could reach the correct Block 3 goal for Wyoming by substituting 666,212 MWh for the 4,369,107 MWh in the EPA calculations, and 1% growth factor for the 6.095% proposed by EPA. C ommenters asserted such example demonstrates EPA's unrealistic expectation for this building block.

C ommenters expressed concern that, while the EPA's modeling of the least cost strategy shows 325 TWh of non

- hydro renewable generation by 2030, the EPA set state CO2 rates assuming 525 TWh

-- almost 33 percent more.

C ommenters stated the four parsed IPM runs that are available demonstrate that the Agency's Building Block 3 targets are far too costly and do not represent realistic estimates of the potential Renewable En ergy generation available to achieve the Proposed Guidelines. C ommenters stated the EPA is proposing to find that it is achievable for states to increase their overall Renewable Energy generation to 522,723 GWh by 2029, with an annual growth rate from 2020 to 2029 of roughly 7.1 percent. C ommenters stated that, although the target Renewable Energy generation levels that make up this total were used to calculate each state's interim and final CO2 emission goals, the EPA's IPM model runs predict that actual R enewable Energy generation growth will be only a small fraction of this target under the least

- cost approach to compliance with the Proposed Guidelines. C ommenters stated IPM predicts that under both the state

- focused and region

- focused compliance approach es, Renewable Energy generation will reach only 356,063 GWh by 2029, and will grow at an annual rate of 1.1 percent from 2020 to 2029. (Marchetti Report). C ommenters stated this level of generation is only 1.7 percent greater than the Renewable Energy gene ration that EPA predicts in 2029 under its own Base Case analysis, and is actually 7.6 percent lower than the EIA predicts will occur in 2029 in the absence of any emission guidelines. C ommenters stated the EPA's own analysis severely undermines the Agency 's prediction of the level of increased Renewable Energy generation that is achievable,73 and demonstrates that the Agency has failed to accurately consider factors such as cost and feasibility. C ommenters stated the IPM results suggest that rapid growth in Renewable Energy generation is so costly that states are able to achieve only negligible incremental increases in Renewable Energy generation above the status quo (at best), and they must instead rely more heavily on other components of EPA's selected BSER in order to comply with the Proposed Guidelines. C ommenters stated this, in turn, will increase the cost of those other building blocks in ways that EPA has failed to analyze in the Proposed Guidelines.

Comment 3 9 3 8 : Commenters expressed concern regarding the interstate nature of much renewable energy.
Response 39 3 8 : The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly in adopting a regional approach to RE and quantifying targe t generation in terms of incremental, rather than total, RE generation . The final methodology is described in detail in section V.E. of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.

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

C ommenters suggested the EPA recalculate building block 3 goals with proper data and attribute renewable resources consistently. C ommenters stated Building block 3 could be improved by changing two data sets:

1. C ommenters stated the hydropower on the Oregon/Washington and Oregon/Idaho border should be evenly split between the border states. C ommenters stated this approach would be most consistent with EPA's proposed approach of applying regional targets based on the physical location of generation.

2. C ommenters stated the 2012 stack of non

- hydro renewables in each state should be adjusted to be consistent with existing RPS policies. C ommenters stated that renewable projects located in Oregon that serve California load should be used to set California's target; renewable projects located in Washington to serve Oregon load should be used to set Oregon's target. C ommenters stated data from the Nor thwest Power and Conservation Council on the recipient of non

- hydro renewable energy generated in the Northwest is available. C ommenters stated FERC Form 1 and FERC's Electric Quarterly Report contain the information needed to make most or all of the data corrections needed.

C ommenters stated that, if the final rule retains the current approach of including all renewables physically within a state in the calculation of each state's goal, then the EPA should issue clear guidance that any such renewables inc luded in a state's baseline and goal calculation shall be available to that state for compliance purposes.

C ommenters stated a key to facilitating the development of RE resources to meet state CO2 targets is that RE MWh need to be recognized in the state in which the RECs are retired, not the states in which they are generated. C ommenters stated corralling the MWh in the states where the RE is generated will encourage inefficient use of capital. C ommenters asserted that, while74 States will likely work with stakeholders within their footprint initially to style SIPs that allow their stakeholders to comply with the CPP, this will be a difficult task because different stakeholder will need different measures to achieve compliance, and strategies that help one

e ntity comply will put another entity in jeopardy of non

- compliance. C ommenters suggested that States are not likely to turn their attention to regional compliance until they have crafted their SIPs and forcing RE to reside within the state as the CPP curre ntly proposes, ignores the fact that areas of the country vary in their ability to generate RE. C ommenters asserted that States that do not have weather that is favorable to production of energy from RE need to be able to purchase RE from outside their bor ders and be able to use the MWh in the denominator in order to meet state CO2 targets. C ommenters stated the final rule must contemplate the transfer of the RE across state borders for new renewable projects. C ommenters stated that recalculation of the

current rates would be overly complex for the exiting RE but new RE should be handled differently than existing. C ommenters stated that long term contracts are typically necessary to obtain financing for RE projects and the financial burden for new RE project s will ultimately rest with the load that secures these projects' financing and the benefit of the MWh produced by these assets should accrue to the customers that shoulder the cost burden. C ommenters stated that, to style the rule any other way will stifl e new RE projects and cause capital to be invested inefficiently when capital will already be scarce because of the required duplication of assets necessary to meet reliability and environmental requirements. C ommenters stated renewables are heavily depend ent on resource location and restricting the ability to develop renewable projects through zoning and environmental studies in the areas with high wind force or sun hours significantly limits the overall amount of available RE and forces projects to areas which may not have the same resources. C ommenters stated that placing the same capital into areas with fewer resources raises the average cost per MWh and the overall cost of compliance with the CPP.

C ommenters supported allowing renewable energy purchase s from out

- of

- state, with bundled RECs, in order to assist in compliance with the CPP. As such, commenters stated, the p roposed renewable energy generation levels are achievable for all states within the SWEA region.

C ommenters stated the EPA failed to ac count that most portfolio standards may be satisfied with
out

- of

- state power. C ommenters stated this evinces a legislative recognition that it may be economically preferable for a state to import some or all of the resources needed to meet the in

state man date. C ommenters stated this principle, however, is lost in EPA's vision of renewable energy "best practices." C ommenters stated that, by assigning state X an initial renewables goal of, for instance, 10 percent based on that state's portfolio standard of that amount, the EPA is concluding that the "best" system for that state entails in

- state generation of 10 percent renewables; accordingly, the EPA's goal assumes the state will develop the necessary amount of renewable resources in

- state. C ommenters state d however, state X's legislature, in allowing the portfolio standard to be met with out

- of

- state generation, did not conclude that generating in

state renewable energy at 10 percent represents wise public policy; to the contrary, the legislature may have a ssumed that most of the mandated renewable generation would be imported. C ommenters stated the EPA is arbitrarily using state legislation to set an in

- state renewable target that the legislation itself did not establish.75 C ommenters stated the EPA's relian ce on existing state RPS goals fails to address the fact that many States permit out

- of

- state generation to meet RPS obligations; as a result, state RPS goals are not a good proxy for each state's renewable energy generation potential.

C ommenters stated t he EPA's assumptions regarding renewable energy are unrealistic and do not recognize the fact that many utilities build renewable energy generation into their portfolio by purchasing energy from outside the state. C ommenters stated it is unclear in the Pro posal how that impacts the targets that EPA has set for each state.

C ommenters stated that it is therefore neither fair nor appropriate for the EPA to allow a state to claim full credit for RE generated in another state. Credit for renewable energy must b e equitable. C ommenters said that in North Dakota, approximately 60% of the electricity produced is exported to other states. However, the commenters noted, the Proposed Rule requires North Dakota to reduce emissions from 100% of the coal

- fired units that produce this electricity. Commenters stated s ince North Dakota must address all coal

- fired electrical generation, the EPA must formulate an equitable method for crediting renewable energy. C ommenters indicated that the Proposed Rule would allow other state (s) to take credit for RE generated in North Dakota even though they have no responsibility for GHG emissions from electricity generated in North Dakota from coal that is exported to the other state(s). Much of the exported wind energy generated in North D akota actually displaces coal generation in North Dakota; yet, North Dakota may not get credit for that renewable energy, the c ommenters pointed out. C ommenters stated that there are reasons RE sources are placed in a state other than the state that has th e RPS. These include the availability of the resource for generating the power (wind, water, sunshine, etc.), available land and transmission lines, and tax incentives, the c ommenters explained. States that host renewable energy that is exported do not jus t reap benefits, there are consequences, the

c ommenters said. C ommenters indicated that land lost to production, visual impairment of the landscape and wildlife impacts are just a few of the impacts on a state. C ommenters asserted that it is therefore neither fair nor appropriate for the EPA to allow a state to claim full credit for RE generated in another state.

C ommenters suggested the EPA allow for the unencumbered import and export of RE and their corresponding greenhouse gas compliance value across state lines. Commenters stated maintaining this approach is important in order to allow states the greatest flexibility to achieve the aggressive 111(d) goals set by the EPA. C ommenters stated that preserving this flexibility would be consistent with current state renewable programs which cross state borders and allow the flow of renewable, and soon climate attributes, to meet the supply and demand of the states which have different goals and different resources. C ommenters stated th e reduction of carbon intensity should follow the contract path and apply to the state which is importing the 111(d) compliance attribute /REC. C ommenters stated that, while the import/export should not be limited to contiguous states or ISO regions, it is not appropriate to allow international imports. In addition, for grid reliability reasons, commenters said states should be required to have a balanced mix of both base

- load and intermittent renewables. C ommenters said that restrictions or prohibitions on imports and exports will have several unintended consequences: (1) rather than creating a robust, national and cost

- effective renewable market, artificial barriers and price signals will result and (2) rather than minimizing the patchwork of renewable pro grams with varying degrees of success, this inefficient program will be reinforced . Commenters concluded that states have an enormous challenge creating programs to maximize their resources to meet76 aggressive program requirements, and any limits on the int erstate flow of renewable attributes

-- including any requirement that those attributes be bundled with electrical generation

-- will skew this program in favor of a small subset of available renewables, decrease cost effectiveness, and decrease flexibility to the states.

Comment 40 39 : Commenters expressed concerns regarding offset crediting.
Response 40 39 : The BSER is premised, in part, on affected sources procuring incremental RE to
rep lace their own generation. A successful demonstration of rate

- based compliance, whether on an affected source basis or through the application of a state goal as described in section VII of the final rule preamble of the CPP

, precludes the double

- counting of a single megawatt

- hour of output. Refer to section VIII.G of the final rule preamble of the CPP for further detail on actions taken to adjust the CO2 emission rate of an affected EGU.
The following are summaries of the specific public comments under this comment:

Commenters said that allowing a transfer of green offset credits between States under Building Block 3 creates a double offset problem if coal generation has to be offset once in the State where it is generated, and again in the State where it is distributed and sold. Commenters added that the EPA has indicated that the final rule may allow wind generation MW hours to be transferred by their owner to any State rather than count them in the State where they are generated as they are under Building Block 3. This creates a double offset problem, the
commenters asser ted.

C ommenters indicated that Minnesota's RPS applies at the retail/distribution rather than at the wholesale generation side of the interstate sale of electricity. Under the Minnesota RPS, wholesale coal

- fueled electricity generated in North Dakota and sold in Minnesota is partially offset by wholesale wind power generated in North Dakota and sold in Minnesota, the

c ommenters said. This crediting occurs at the retail customer level in Minnesota, the c ommenters added. C ommenters also stated that the same coal

- based generation will now have to be offset again in North Dakota at the generation/wholesale side of the transaction, because the offset credited at the retail level in Minnesota will not be counted in North Dakota at the wholesale side of the transa ction. Commenters said that it appears that the same MW of coal generation will have to be offset twice: once at the wholesale

- generation side of the transaction in North Dakota, and again at the retail

- distribution side of the transaction in Minnesota. Co mmenters stated that if the EPA allows (either expressly or by default) the transfer of such credits under any final rule, the EPA must also address double offset problem.

Comment 41 4 0 : Commenters stated that the proposal would not allow sufficient time for the design, approval, and implementation of state and/or regional compliance strategies needed to achieve the proposed renewable energy goals.
Response 41 4 0 : The EPA addresses considerations related to the technical feasibility and associated grid inte gration costs of significant RE penetration in both section V.E of the final77 rule preamble of the CPP and in chapter 4 of GHG Mitigation Measures TSD supporting the final CPP . The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly the adoption of a phase

- in period from 2022 through 2023 that would enable appropriate time for investments and planning to accommodate an increase in RE.
The following are summaries of the specific public comment s under this comment:

C ommenters stated the EPA fails to fully appreciate the costs and implementation challenges faced by large

- scale renewable energy projects. C ommenters stated that, for example, the CREZ project in Texas, which was designed to transmit 18 MW of wind generation to population centers, took eight years to construct; even if started today, such a project could not be completed until mid

- way through the interim compliance period.

C ommenters stated there are a number of state

- specific factors impact not only the amount of potential renewable resources available, but also impact the feasibility and rate at which such resources may be developed. C ommenters stated that these factors include geography, topology, energy markets, seasonal differences, transmission considerations, state regulatory processes, and project siting rules associated with certain endangered species and other environmental
programs. C om menters stated that implementation, generation (and related transmission) planning involves input and decisions from a number of entities, such as various state regulators, regional transmission organizations, and independent system operators. C ommenters s tated that the proposal would not allow sufficient time for the design, approval, and implementation of state and/or regional compliance strategies needed to achieve the proposed renewable energy goals. C ommenters stated that EPA did not evaluate the impac t of regulatory processes on the timing and feasibility of developing renewable energy resources. C ommenters stated that timing related challenges are introduced by the number of regulatory agencies that must evaluate and approve the addition of renewable resources, including the necessary arrangements to connect those new generating resources to the grid, as well as by the number of agencies that evaluate and balance the impacts of multiple projects across multiple jurisdictions. C ommenters stated this inc ludes agencies whose obligations are very diverse, including cultural and historic resource agencies, marine, fish and wildlife services, aviation authorities, state and federal land management agencies, and others.

C ommenters stated that there are signifi cant concerns and uncertainties pertaining to the mechanics of implementing and managing interstate issues associated with how states that support the development of out

- of

- state renewable resources obtain credit for such resources in their compliance plan s.

Comment 42 4 1 : C ommenters stated the EPA failed to account for the transmission that must be built to accommodate the amount of renewable resources it projects.
Response 42 4 1 : The EPA addresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporti ng the final CPP . The resources and data provided in this comment were valuable in finalizing the78 building block 3 methodology, particularly the adoption of a phase

- in period from 2022 through 2023 that would enable appropriate time for investments and pla nning to accommodate an increase in RE.
The following are summaries of the specific public comments under this comment:

C ommenters stated it is naive to think that states can reach agreement amongst their internal stakeholders and achieve regional agreements in one year's time. C ommenters stated that, due to some of the remote locations of the prime renewable resources, transmission infrastructure upgrades or additions are often necessary. C ommenters stated a significant variable is the right of way/easement process, which is highly dependent on landowners and can also be influenced by public opinion. C ommenters stated that, just as t he permitting of renewable facilities encounters an increasing number of permits and approvals with long study periods, so too does the construction of power lines to move energy from the renewable facilities to load centers. C ommenters stated the NERC est imates a 10 to 15 year timeline for transmission construction. C ommenters stated this country has never built this level of transmission and pipeline expansion and generation. C ommenters stated the EPA's assumption that East Kentucky Power Cooperative

can essentially create an RE portfolio by 2020 or 2030 is arbitrary, unreasonable and unjustified.

C ommenters stated that, because the ability to send renewable power from the east side of the grid to the west side is very limited, Basin Electric cannot use i ts east side wind resources to make up for a reduction in coal

- based generation in Wyoming. C ommenters stated that building adequate renewable resources in Wyoming to make up for reduced coal

- based generation may be impossible, and certainly could not be a ccomplished in time to meet the interim goals. C ommenters noted that renewable resources are built where the conditions are best for them, not to serve as replacements for coal

- based stations as determined by state boundaries.

C ommenters stated that, even if North Dakota could site, permit and build all of this additional renewable power, the EPA fails to address the obvious need for new transmission to support this renewable development. C ommenters stated a host of experts has already warned EPA of the lon g lead times needed to construct transmission in order to support the very aggressive renewable resource provisions in the Proposed Rule. C ommenters stated the major reason that the SPP cites as to why the EPA's proposal will lead to "cascading outages and voltage collapse" is because it will take at least eight years to build transmission necessary to support the alternative resources the rule will r equire. C ommenters stated the Director of FERC's Office of Electric Reliability also warned the EPA that "it is difficult to get transmission built for [renewable] generation when it is remote from loads, e.g., wind farms." C ommenters stated FERC Commissio ner Tony Clark testified to Congress that "[i]n the case of large renewables like utility

- scale wind and solar, transmission investments are likely to be needed to hook up remote generation to the existing transmission grid." C ommenters stated the EPA's fa ilure to even consider the need for additional transmission, let alone the time and multi

- billion dollar cost involved, undermines Building Block 3. C ommenters stated Building Block 3 is also based on a misunderstanding of state renewable portfolio standar ds and EPA's role as an environmental rather than an energy regulator

. Commenters stated the EPA's assumption that large amounts of renewable power can be developed and brought to market within the proposal's compliance time lines fails to account for79 the significant cost and time needed to build the necessary transmission. C ommenters referred to a FERC Order which stated " ... increased adoption of [renewable portfolio standard measures] has contributed to rapid growth of renewable energy resources that a re frequently remote from load centers, and thus [increase the] need for transmission to access remote resources .... " As a result, "additional, and potentially significant, investment in new transmission facilities will be required in the future to meet reliability needs and integrate new sources of generation." C ommenters stated that, as the Edison Electric Institute has reported, "[l]engthy, complicated, and costly siting and permitting processes continue to be major barriers to installing new transmiss ion lines and upgrading existing lines." C ommenters stated the EPA does not include any information in its proposal as to the cost or time needed to build transmission; the EPA simply (and arbitrarily) assumes that the needed renewable resources will becom e available when needed.

C ommenters stated the EPA's failure to consider the need for additional transmission, let alone the time and multibillion dollar cost involved, fatally undermines building block three. Commenters stated a host of experts has warne d EPA of the long lead times needed to construct transmission in order to support EPA's renewable resource targets. C ommenters stated the major reason that the Southwest Power Pool (SPP) cites as to why EPA's proposal will lead to "cascading outages and vo ltage collapse" is because it will take at least eight years to build transmission necessary to support the alternative resources the rule will require. C ommenters stated the Director of FERC's Office of Electric Reliability warned EPA that "it is difficul t to get transmission built for [renewable] generation when it is remote from loads, e.g., wind farms." Commenters stated FERC Commissioner Tony Clark testified to Congress that "[i]n the case of large renewables like utility

- scale wind and solar, transmis sion investments are likely to be needed to hook up remote generation to the existing transmission grid."

Comment 4 3 4 2 : Commenters stated the EPA should analyze potential constraints from a generation and transmission line perspective prior to determinin g RE capacity and the appropriate RE re

- dispatch capability.
Response 43 4 2 : The EPA addresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both section V.E of the final rule preamble of the CPP and in chapter 4 of GHG Mitigation Measures TSD supporting the final CPP . The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly the adoption of a phase

- in period from 2022 through 2023 that would enable appropriate time for investments and planning to accommodate an increase in RE.
The following are summaries of the specific public comments under this comment:

C ommenters expressed concern that, while the growth of renew able generation is highly dependent upon permitting, financing, transmission access and technical challenges posed by integration of intermittent electricity sources into the grid, there is no indication that EPA has taken those factors into account. C omme nters stated the EPA's failure to consider the need for additional transmission, let alone the time and multibillion dollar cost involved, fatally80 undermines building block three. C ommenters stated that, while the EPA assumes that the needed renewable reso urces will become available when needed, that assumption is arbitrary. C ommenters stated a host of experts has warned EPA of the long lead times needed to construct transmission in order to support the EPA's renewable resource targets. C ommenters stated th e major reason that the SPP cites as to why EPA's proposal will lead to "cascading outages and voltage collapse" is because it will take at least eight years to build transmission necessary to support the alternative resources the rule will require. C ommen ters stated the Director of FERC's Office of Electric Reliability warned EPA that "it is difficult to get transmission built for [renewable] generation when it is remote from loads, e.g., wind farms. C ommenters stated FERC Commissioner Tony Clark testified to Congress that "[i]n the case of large renewables like utility

- scale wind and solar, transmission investments are likely to be needed to hook up remote generation to the existing transmission grid." C ommenters stated the EPA's assumption that large

amou nts of renewable power can be developed and brought to market within the proposal's compliance time lines fails to account for the significant cost and time needed to build the necessary transmission. C ommenters noted that, as FERC has stated,"...increased adoption of [renewable portfolio standard measures] has contributed to rapid growth of renewable energy resources that are frequently remote from load centers, and thus [increase the] need for transmission to access remote resources... " As a result, "add itional, and potentially significant, investment in new transmission facilities will be required in the future to meet reliability needs and integrate new sources of generation."

C ommenters stated the EPA assumed that Kentucky will achieve its generation needs by deploying up to 2% renewable generation (approximately 1,734 GWh by 2030). C ommenters stated the IPM models only deployed 9 MW of new wind capacity by 2020 in the policy case,

accor ding to the Resource Adequacy and Reliability Analysis TSD Appendix A2 on page 14 for SERC

- N region. C ommenters stated data from a recent LKE capacity solicitation indicate that, to meet 1,734 GWh of renewable energy from the state of Kentucky and nearby s tates, would require the equivalent of over 670 MW of wind or 1,200 MW of solar capability. C ommenters stated this amount of renewable energy resource would most likely result in significant transmission infrastructure needs for either in

- state or out

- of

- s tate sources. C ommenters stated reliance on out

- of

- state generation is concerning given the competition for energy between generating states and other importing states (as contemplated under Building Block 3). C ommenters stated that transmission planning m ust be completed across import and export seams between Transmission Planning and Balancing Authorities to verify enough Available Transfer Capability (ATC) exists to facilitate firm transmission transaction. C ommenters stated that, without sufficient firm transmission arrangements, congestion and reliability concerns are exacerbated and could require further transmission line construction. C ommenters stated that, by the dynamics of the proposed compliance calculation, any over

- estimation by the EPA in sett ing the reduction goals based on renewable energy development and utilization in Kentucky will need to be offset by over twice the amount of reduction from fossil sources. C ommenters stated LKE is seeking approval to construct a proposed 10 MW solar projec t that will require approximately 100 acres of available land at an existing site. C ommenters stated that, with that as the expected land requirement, to install 1,200 MWs of solar energy to meet the Building Block 3 energy calculation above, it could requ ire up to 12,000 acres for solar panel installations, which is not a practical assumption. C ommenters stated that, to provide 670 MW of wind generation in Kentucky, over 250 wind generators would be required. C ommenters stated that, as the EPA's IPM model only deployed 9 MW of wind generation in Kentucky, the balance of wind81 energy would have to be imported, triggering the need for fully evaluating the transmission system capability.

Comment 44 4 3 : Commenters expressed concerned regarding grid reliability due to RE increases.
Response 44 4 3 : The EPA addresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both section V.E of the final rule preamble of the CPP and in chapter 4 of GHG Mitigation Measures TSD supporting the final CPP . The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly the adoption of a phase

- in period from 2022 through 2023 that would enable appropri ate time for investments and planning to accommodate an increase in RE.

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

C ommenters stated that wind, solar, and other renewables can make up no more than roughly 20 percent of a given grid, with the exception of large scale hydro power. C ommenters stated wind and solar are limited because (1) they're intermittent, requiring expensive back

- up generation in order to adequately respond to fluctuations in demand; (2) there does not exist at this time any way to store solar or wind energy, and there are no practical technologies on the horizon; and (3), their generators must be located where the resources are located, as opposed to the best location to put a generator, which translate s to higher transmission costs.

C ommenters stated the EPA is overestimating the ability of electricity storage technologies and that it cannot be counted on to address reliability issues with RE sources. C ommenters stated the EPA offers that electricity st orage technologies have the potential to enhance emission performance and provide generation during periods when intermittent wind and solar generation are unavailable due to natural conditions (79 FR 34924). C ommenters stated electricity storage technolog y has not advanced to a degree that it can be reliably considered. C ommenters stated the DOE reports that "at present, the U.S. has about 24.6GW of grid storage, 95% of which is pumped storage hydro." [U.S. Department of Energy, Grid Energy Storage Report, December 2013.] C ommenters stated DOE acknowledges "not every type of storage is suitable for every type of application, motivating the need for a portfolio strategy for energy storage technology" and that there are "four challenges related to the widespr ead deployment of energy storage: cost of competitive energy storage technologies (including manufacturing and grid integration), validated reliability & safety equitable regulatory environment, and industry acceptance." C ommenters cited the following from DOE: "Industrial standards for grid storage are in their infancy. Industry acceptance could also gain ground when we reduce the uncertainty surrounding how storage technology is used, and monetized, at scale. Ultimately, it will be the experience and real

- world use of storage that will provide the confidence and desire to expand installed storage."

C ommenters stated that requiring the degree of RE proposed for implementation in such a short time will undoubtedly create reliability issues. C ommenters state d the EPA cannot promote energy storage as a viable option or demonstrated technology that is technically or economically feasible to address the intermittent nature of RE. C ommenters stated that, at this time, it is only82 technology such as simple cycle co mbustion turbines that can be counted on to reliably address the intermittent nature of RE and these sources will increase CO 2 emissions compared to renewable sources. C ommenters stated this is a consideration that U.S. EPA has evidently not accounted for under this proposal.

C ommenters stated that, while a municipal utility must be able to provide electricity 24/7, no renewables compete with the output of a coal plant operating 24/7 and no renewable options are currently demonstrated to be available and c ost

- effective, the c ommenters stated . Commenters stated that Florida has no major wind energy and practically no new hydroelectric power available. While the use of solar energy has potential and usage is increasing, large

- scale solar has low potential, pr imarily due to limited capacity (not available when the sun is not shining) and the large amount of land that is needed for the installation of solar panels, the c ommenters noted. Solar energy will continue to be of limited value until it is consistently available when the energy is needed and therefore dispatchable like other baseload generation, the c ommenters said

. Commenters do not believe that solar energy will replace baseload generation until sometime well into the future when battery storage improves and is available for a reasonable cost.

C ommenters said that renewable resources should continue to be developed even though these resources will be limited by their inh erent intermittent availability . Commenters asserted that these natural and renewable resources should be developed where feasible without creating a financial burden to consumers. Commenters stated w hile these renewable sources supplement conventional res ources and reduce the consumption of certain fuel driven generation, they cannot meet the on

- demand response for electricity required by the consumer. Therefore, the commenters said, more conventional baseline generation resources are going to be needed in the future to meet reliability standards.

C ommenters said that, while renewable sources are already a significant component of the

c ommenters ' energy portfolio and will become even more so in near the future, replacing the generation currently provided by Eckert and Erickson exclusively with renewables is not a viable option from either an economic or reliability standpoint. C ommenters said that, while renewable energy has been a prominent component of their company's energy portfolio for many years, its i ntermittent generation capacity, however, means that renewable sources of energy cannot meet Lansing's energy demands.

C ommenters indicated that the EPA fails to recognize that renewable generation is variable and, thus, not equivalent to fossil

- fuel fired generation. According to the commenters, v ariable generation cannot be dispatched at controlled loads and, therefore, is not available for both stabilizing the grid for reliability purposes and as capacity resources. Additionally, commenters added, re

- di spatch to renewable generation would further jeopardize reliability and grid stability.

Comment 45 4 4 : Some commenters did not support a regional approach for renewable energy based on state RPS requirements

. Response 45 4 4 : State RPS requirements are not a factor in quantifying the amount of cost

effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detail in section V.E. of the f inal rule83 preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.
The following are summaries of the specific public comments under this comment:

C ommenters stated the EPA's approach to calculating region

- wide ren ewable energy targets is flawed because Indiana, North Dakota, and South Dakota have renewable portfolio goals rather than renewable portfolio standards.

C ommenters disagreed with the EPA approach of using an average of the region's existing renewable por tfolio standards to calculate the feasible level of renewable energy that could be expected from each state in the region. C ommenters stated that, because the EPA used non

Indiana benchmarks to set Indiana's goal under Building Block 3, the EPA incorrectly decided that state legislatures outside Indiana were qualified and able to correctly assess the future potential of Indiana's renewable energy sector when they were crafting policies for their own states. C ommenters stated they were unaware of any feasibi lity assessment the EPA employed when the agency elected to treat the benchmarks contained in existing renewable portfolio standards as achievable at a reasonable cost. C ommenters stated it is important to note that simply because state legislatures in oth er Midwestern states are attempting to facilitate the installation of a certain amount of renewable energy in their states in the coming decades, success is not guaranteed. C ommenters stated it is inappropriate to hold Indiana to an unproven standard decided by those other legislatures.

C ommenters stated the EPA's regional approach fails to adequately address differences in renewable energy potential between similarly located States.

C ommenters stated that EPA's proposal to base BSER in part on regional "best practice" targets that are based on some states' political decisions to adopt renewable portfolio standards (RPS) is arbitrary because it ignores the decisions of dozens of states that have chosen not to adopt such standards. C ommenters provided the example that in two of the regional "best practice" areas, the target 2030 level of renewable energy deployment was set by reference to a single state's RPS target. C ommenters stated EP A provides no explanation for why it has effectively disregarded the political judgments of the nearly 50% of states without RPS programs, while relying on the political judgments of states that have elected to adopt such programs. C ommenters stated EPA's proposal does not evaluate the technical or economic feasibility of achieving the targeted levels of renewable energy deployment in each state, and evaluation of the energy and economic feasibility of implementing each proposed "best system of emission red uction" is a statutory requirement of Section 111 (42 U.S.C. 7411(a)(1)). C ommenters stated that EPA's failure to evaluate the technical and economic viability of EPA's renewable energy BSER building block is therefore inconsistent with the statute. C ommen ters stated EPA's use of regional average renewable energy targets applied to individual states would displace the roles traditionally performed by state legislatures and regulatory agencies, and it also conflicts with the Integrated Resource Plan processe s that many state public utility commissions utilize for long

term planning of electric supply and demand resources. C ommenters questioned whether Congress ever intended Section 111(d) to enable such a far

- reaching expansion of EPA's regulatory authority u nder the Clean Air Act.84 C ommenters stated the EPA applies a regional approach which averages existing State RPS targets in a given region and then applies that average target to each State in that region, based on the assumption that renewable energy oppor tunities are uniform within a region. C ommenters stated the EPA's broad

- based regional approach fails to account for differences in renewable energy potential among States. C ommenters stated the mere fact that two States are in relative geographic proximit y does not mean that they have the same potential to produce renewable
energy.

C ommenters stated that, if U.S. EPA is to rely on current RPS programs in the states as "best practices" then U.S. EPA must take them at face value and allow those programs, as implemented in each state, to fully qualify for implementation under this proposal.

C ommenters stated the EPA did not adequately consider generation in its regional RPS calculations. C ommenters provided a table with data compiled from the EIA Net Generat ion by State by Type of Producer by Energy Source (EIA

- 906, EIA

- 920, and EIA

- 923) which shows RE generation data for each state in Ohio's region. C ommenters noted the data show there is significant variation in the generation amongst the states, with three of the states, Ohio, Pennsylvania, and West Virginia producing 70% of the regional total. C ommenters stated that, from an RE perspective, two of the states in this region, West Virginia and Virginia, have determined that establishment of RE portfolios are not an economically feasible action for their state, yet both have renewable generation above New Jersey, Maryland, Delaware, and Washington D.C., which have highly ambitious 2020 RE RPS goals. C ommenters expressed concern that these non

- RPS states were n ot somehow factored into U.S. EPA's averaging in setting RPS goals, thus giving great weight to states in the East

- Central region with highly ambitious 2020 targets, but little or no real renewable generation.

C ommenters stated it is arbitrary for the EPA to assume that each state is capable of achieving similar levels of renewable energy generation as its neighboring states. C ommenters stated the EPA acknowledges that state RPS goals reflect policy objectives including both feasibility and costs and not me rely renewable energy potential. C ommenters stated these policy objectives vary significantly from state to state within individual regions. C ommenters stated the proposed regional approach is simply based on NERC regions and does not reflect similarities

- - or the lack thereof

-- between states based on renewable energy potential. C ommenters stated the EPA's failure to account for factors specific to each state's potential renewable energy generation leads to several inequitable and unreasonable results. C omme nters stated that, for example, the renewable energy target for the entire ten

- state Southeast region is based solely on North Carolina's 2020 RPS goal of 10 percent and assumes a renewable energy growth rate of 13 percent per year for each state.

C omment ers stated the EPA arbitrarily grouped States into regions based on NERC and RTOs, despite the fact that each States' renewable energy potential had no bearing on the establishment of these regions. C ommenters stated the flaws in this approach are apparent upon a review of the technical potential analysis the EPA references. C ommenters stated that analysis shows that when comparing each States' combined solar, wind, and biomass potential, a 198 percent difference exists among the States in the Southeast reg ion. C ommenters stated the flaws in Building Block 3 are further evidenced by EPA's inconsistent choice to set differing Building85 Block 3 goals for States within the same region while claiming that those States contain similar renewable energy potential.

C ommenters stated that setting state goals based on regional targets presents a number of problems as well. C ommenters stated renewable energy potential varies significantly within the regions EPA used; for example, Wisconsin has significantly less wind po tential than does South Dakota, but both states are in the same region used by EPA to set the building block 3b goals. C ommenters stated there is little logic in grouping such different states together in such an arbitrary manner. C ommenters stated that gr ouping states together regionally in setting an RPS

based goal may further enhance differences among states and additionally "penalize" early adopting states that have high RPS goals. C ommenters asserted that States in regions that have taken early action via aggressive RPS standards will be required to achieve more in the future than they would have if they were in a region with less ambitious goals. C ommenters stated such groupings create artificial differences among the goals for the different states dep ending on the renewable policy decisions made by other states in their region.

C ommenters stated by not accounting for the regional differences in power supplies, states are treated unfairly. C ommenters stated the application of regional renewable energy i n the development of the building blocks is an oversimplification of what is possible in different
states. C ommenters stated the consideration of both renewable energy and energy waste reduction should be considered on a state

- specific basis considering te chnical and economic opportunities and limitations . Commenters stated Michigan has already done extensive work regarding the availability and practicality of expanding in both sectors, and the c ommenters provided copies of those reports as appendices to th eir c omment s. Commenters stated substituting more generalized assumptions regarding Michigan's capability in place of carefully

examined state data is not appropriate or wise.

C ommenters did not agree with the EPA's proposed methodology for renewable ener gy generation goals . Commenters stated that it is arbitrary for EPA to assume States can achieve similar RE within a region . Commenters stated renewable energy potential is state

- specific and depends on the state's natural resources (e.g., solar insolation , wind speed, terrain, biomass resources, hydro availability, etc.), existing transmission infrastructure, and current renewable energy development . Commenters stated that by ignoring variances in state

- by

- state resource potential, EPA has taken a generali zed approach to establish regional targets across the nation.

C ommenters stated that averaging regional RPS targets is not representative for the Southeast

. Commenters provided a discussion on why some states have not opted for an RPS and some states with an RPS have backed off ambitious targets due to cost and technical issues

. Commenters suggested EPA should not set regional renewable targets based on renewable energy generation levels that have not yet been achieved but are only projected to be achieved in the future . Commenters said that s tate renewable standards are not proxies for a state's renewable generation potential, but are rather a policy choice, just as new nuclear is a policy choice, made by each individual state with regard to the type and a mount of renewable energy they want to encourage within a specific cost range and timeframe . Commenters stated that EPA's methodology arbitrarily ties each state's goal to the RPS goals of other nearby states, which often do not actually reflect each state 's highly unique mix of renewable energy potential, and, as a result, the state renewable generation targets are overly aggressive and do not accurately86 represent actual growth potential in each state . Commenters provided a detailed discussion of the South east states, noting that seven of the eight states in the group do not have an RPS and as a result North Carolina becomes the standard for the entire region . Commenters discussed that in Alabama, Georgia and Tennessee, industrial CHP sources burning wood o r wood

- derived products constitute over 90 percent of each state's 2012 RE generation that is used as its baseline, and these sources have little potential for growth . Commenters stated that this approach ignores whether or not states have the same ability to deploy increased amounts of renewable generation

. Commenters stated EPA's use of RPS requirements also fails to consider key policy design elements of state RPS programs that serve to reduce the stringency of the standard . Commenters provided a discuss ion on the North Carolina RPS in relation to the rest of the Southeast region

. Commenters stated that if EPA moves forward with this approach in the final rule, EPA must adjust RPS goals to reflect these policy design elements to acknowledge that RPS manda tes usually require a lesser amount of in

- state renewable generation . Commenters noted that since it is responsible for serving all or portions of seven of the states in the Southeast, EPA's generalized approach for regional targets has a direct impact to its Block 3 target levels

. Commenters provided additional information on the structure of TVA and its renewable energy goals for 2020.

C ommenters stated that the renewable energy generation goals that EPA has calculated for each state are unachievable . Com menters stated EPA's methodology for determining these goals is fatally flawed because it arbitrarily ties each state's goal to the RPS goals of other states, which often do not require as much renewable energy generation as they appear to and reflect each state's unique mix of renewable energy potential . Commenters stated that EPA relied on state RPS goals that are based on capacity rather than generation, such as Kansas . Commenters stated EPA's renewable energy generation targets for some states are unreasonably aggressive and do not take into account factors affecting the actual renewable energy growth potential in each state

. Commenters stated that even EPA's IPM modeling results indicat e that predicted renewable energy generation by the end of the compliance period will not come close to the renewable energy targets EPA used in its goal calculation. Accordingly, the c ommenters suggested EPA must withdraw the Proposed Guidelines and reduc e its renewable energy generation targets to more realistic levels.

C ommenters said that the EPA's approach to calculating states' renewable development potential also presents challenges. First, the c ommenters asserted that the EPA's proposal to take a

re gional average of State Renewable Portfolio Standard ("RPS") targets and apply the average to all states in the region imposes the policies in one State on its neighbors. It also in effect rewards states who have not adopted RPS targets, as their regional average is lower, the c ommenters added. Indeed, regions of the country with the highest technical potential for developing renewable resources have some of the lowest targets for bringing those resources online, while states with relatively lower technical potential are faced with the highest targets in the country, the c ommenters noted. In New York, for example, the c ommenters said that the NREL study cited by EPA in its Alternate Approach finds New York has a technical potential to meet up to 5 percent of its electricity demand with renewable energy, while its target under EPA's proposed rule is five times that (at 25 percent), the c ommenters stated.

C ommenters stated the EPA's use of the state RPS requirements in a region to calculate regional goals is il logical and flawed . Commenters said that the EPA does not adjust the RPS87 requirements which it applies to all generation in a state for the amount of load (consumption) in the state that is covered by that state's RPS. For a state that is net exporter of e lectricity, its RPS reflects at most the amount of in

- state consumption that must be supplied by RE, and not the total generation in the state. This can have a profound effect in states like West Virginia or Wyoming which export more than half of their gen eration, the c ommenters said. Commenters stated i t also means that net importing states bear less of the RE burden, which is effectively transferred to the states from which they import electricity. C ommenters said that the EPA also does not adjust the sta te RPS targets to reflect that fact that most states RPS requirements are not imposed on 100 percent of the load in the state. Commenters also said t hese values, which are available in the "Database of State Incentives for Renewables& Efficiency," range fr om 10 percent to 100 percent and average approximately 80 percent. C ommenters added that the EPA use of the state RPS requirements does not reflect the fact that many states have Alternative Compliance Payments or other penalty mechanisms that are availabl e to the entities regulated under their RPS requirements . Commenters noted that the RPS programs in many states also allow importation of RE generated out of state, or the purchase of credits for actions in other states. Therefore, commenters stated the RE generation or consumption in a state may be significantly less than that implied by the RPS.

Comment 46 4 5 : Tribal and Territorial

– Commenters opposed mandatory regional application of RE goals.
Response 46 4 5 : In the final rule, the EPA applies building block 3 generation at the interconnect

- level. This methodology does not distinguish between affected sources or RE development opportunities within an interconnection, including those on tribal lands. For more detail on the building b lock 3 target generation methodology, refer to section V.E of the final rule preamble of the CPP and chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP

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

In c omments on the tribal and territories SNPR, c ommenters stated that the Proposed Rule raises uncertainty about the ability to develop renewable projects on tribal lands that could be part of a state's renewable goal under Building Block 3 (79 FR 64551

- 2). C ommenters stated that, although the use of regional renewable energy goals might address this (depending upon how they are applied), the Navajo Nation is opposed to mandatory regional application of RE goals. C ommenters stated there is a simpler solution to the problem: RE developed in one jurisdiction should be permitted to count toward another jurisdiction's goals provided that they are not double

- counted. C ommenters stated that, in practice, jurisdictions could enter into agreements in what would effectively be optional regional RE programs. C ommenters stated it would not be necessary for EPA to establish regional RE goals.

Comment 47 4 6 : C ommenters suggested use of a weighted average in the regional calculation based on state RPS requirements

.88 Response 47 4 6 : State RPS requirements are not a factor in quantifying the amount of cost

effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detail in section V.E. of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.
The following are summ aries of the specific public comments under this comment:

C ommenters stated that, rather than treating each state equally, EPA should consider an electricity

- generation weighted approach so that small States with lower generation levels can't cause such dr amatic shifts in a region's renewable energy goal under block 3.

C ommenters stated it is inappropriate that the ambitious 2020 RPS targets of Maryland, Delaware, and Washington D.C were given equal weight in the averaging calculation, despite the fact that these states contributed far less than 1% of the region's RE and only 7.6% of the region's total generation. C ommenters stated that Washington D.C. has a highly ambitious renewable target, yet contributed no renewable generation to the grid in 2012. C omme nters stated that, despite what U.S. EPA describe d as similar RE potentials amongst the state in this region, it is clear that these states share little in common with the other states in the region in terms of electric generation capabilities. C ommenters stated that, if the EPA is to pursue regional averaging in setting renewable goals (which Ohio EPA does not agree with), a weighted average that takes into account the total generation contribution of each state, the renewable contribution of each state, a nd accounts for the fact that several states found the creation of a renewable portfolio to be uneconomical must be developed. C ommenters stated that, absent this, the current proposed methodology places great burden on those states which generate far more electricity, discounts those states with no renewable portfolios, and requires very little of those states with little generation capacity.

Comment 4 8 4 7 : C ommenters objected to the EPA's method for determining the average RPS requirements.
Response 48 4 7 : State RPS requirements are not a factor in quantifying the amount of cost

effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detail in section V.E. of th e final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.
The following are summaries of the specific public comments under this comment:

C ommenters stated the EPA incorrectly assumes that averaging the RPS requirements of the states in a given region actually reflects the full level of RE investment that is reasonably achievable for that region. C ommenters stated, for example, the North Central region covers nine states and has an average RE percentage requirement for 2020 of 15 percent, which is driven by the RPS requirements in five of these states: Illinois, Michigan, Minnesota, Missouri, and Wisconsin. C ommenters stated that three of the four states that do not have RPS requirements (Iowa, North Dako ta, and South Dakota) are among the nation's leading states in onshore wind89 development, generating approximately 25, 15, and 24 percent (respectively) of their total in

state electricity from wind in 2012. C ommenters stated that, because there are no RPS requirements in Iowa and the Dakotas, the RE target for the North Central region does not reflect the robust performance of wind

- generated electricity in those states. C ommenters stated that, while there is some merit to EPA's view that RPS policies repres ent the judgment of state legislatures about what level of renewable energy development is feasible, this does not hold true for states without RPS policies, since zero RE is not a reasonable judgment as to the state's potential for economic RE.

C ommenter s objected to the EPA's method for determining the average RPS requirements. C ommenters stated that, by relying on just a single state's RPS requirements to direct the renewable investment of nine states, EPA's approach largely entrenches the status quo rather than considering whether greater renewable penetration is achievable. C ommenters s tated that, as another example, the Southeast has the lowest average RE percentage requirement of only 10 percent, which is based on the RPS requirements of just one state: North Carolina. C ommenters stated that, according to NRELs technical potential anal ysis, states in the Southeast region could generate over 30 million GWh annually from utility

- scale solar stations. C ommenters stated that, in 2012, these states generated just 348 GWh from solar plants, a tiny fraction of their technical potential and les s than .04 percent of the total electricity generated in these states. C ommenters stated there are neither technological nor economic barriers to increased penetration of renewable resources in the Southeast market; rather, the problem is one of political will and inertia based on decades of reliance on fossil fuels.

C ommenters stated that, in calculating the regional target based on state RPS programs, EPA had to decide how to handle the facts that different states have targets set for different years and that not all states have 2030 targets; however, the way that EPA chose to deal with this was arbitrarily conservative. C ommenters stated the agency derived a "2020 effective RE Level" for each state RPS, interpolating for those states without a specific t arget for 2020 and then established the average 2020 effective RE level for each region as the 2030 target for that region. C ommenters stated the EPA effectively ignored the many state RPS goals for the years beyond 2020 that are more ambitious than the "e ffective 2020" targets. C ommenters stated that, even if one were to accept EPA's rationale that the judgment of state's legislature is a proper estimate of the full level of RE achievable in that state, there is no reason to take the states average judgmen t about what level is achievable in 2020 and make that a 2030 target.

Comment 4 9 4 8 : C ommenters suggested the EPA apply regional renewable targets to retail electric sales.
Response 49 4 8 : State RPS requirements are not a factor in quantifying the amount of cost

effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detail in section V.E. of the f inal rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.
The following are summaries of the specific public comments under this comment:90 C ommenters stated that, if building block 3 targets were based on s tate retail electric sales rather than the physical location of generating resources, the problems identified with the renewable energy assumptions would vanish. C ommenters stated the EPA already used retail sales data in the application of building block 4. C ommenters stated changing building block 3 to a load

based calculation would not dilute national emission reductions and would more closely align with existing RPS policies upon which the renewable assumptions are based. C ommenters recommended keeping the regional renewable energy targets the same

- 21 percent in the west, 25 percent in the northeast, etc.

- but the proposal would apply those targets to 2012 retail electric sales data for each state. C ommenters stated the goal

- setting calculation would assume that each state would meet half of its regional target by January 1, 2020, 75 percent of its target by January 1, 2025 and its entire regional target by January 1, 2030. C ommenters stated such a stair

- step approach aligns with many RPS policies in t he country and reflects the fact that new renewable energy typically enters the grid in sizeable chunks as a result of utility

- scale projects. C ommenters stated this approach would not assign existing renewable resources to any particular state for purpose s of goal

- setting and, as a result there would be no disruption of the existing REC trading system if states wanted to use it for compliance and no concerns about data errors in determining the physical location of the generating units.

Comment 50 49 : Commenters stated the EPA’s approach is flawed because it does not include states with no RPS in its calculations.
Response 50 49 : State RPS requirements are not a factor in quantifying the amount of cost

effective RE that is part of the BSER in the final r ule. The methodology that produces target generation levels under building block 3 is described in detail in section V.E. of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.

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

C ommenters stated the EPA's calculation of regional renewable energy goals is flawed because the average includes only values from states with RPS programs; states with no RPS (zero values) are excluded from the calculation. C ommenters stated this approach is defective and leads to illogical and discriminatory results imposing greatly different and unjust requirements on the individual states

Comment 51 5 0 : Commenters objected to the use of a single state's RPS for all states in a region.
Response 51 5 0 : State RPS requirements are not a factor in quantifying the amount of cost

effective RE that is part of the BSER in the final rule.
The methodology that produces target generation levels under building block 3 is described in detail in section V.E. of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.91 The following are summaries of the specific public comments under this comment:

Kansas

-- South Central

C ommenters stated the only state in the South Central region with an RPS is Kansas, which is set to achieve a mix of 20% generation from renewables by the year 2020. C ommenters stated that, in the absence of an RPS in the other five s tates, the proposed Rule extrapolated Kansas' RPS to all six states in the region, a move that gets ahead of state regulators, state policy and law makers without regard to the achievability of such a standard. C ommenters stated that compounding the RPS ex trapolation error is the fact that Kansas' RPS of 20% is capacity based, not energy

- based. C ommenters stated the proposed Rule made an error using the capacity

- based RPS value. C ommenters stated the Arkansas Electric Cooperative Corporation (AECC) estimated the
energy

- based standard is closer to 12%. C ommenters stated that, even if the intention is to rely on a single state's RPS to set a regional target (an error in and of itself, in AECC 's estimation), the South Central region's RPS should be no greater than 12%. C ommenters stated the 20% capacity

- based number for Arkansas equates to a renewable energy target in 2029 of 4,709 GWh, but given Kansas' RPS is actually 12%, Arkansas' renewable energy target in 2029 would be, at most, 2,872 GWh, a figure that is 60% lower than the proposed Rule mandates.

C ommenters stated that an additional error in the proposed Rule is that it states that the average RPS within the region is applied across all states in the region. C ommenters stated the proposed Rule simply applied Kansas' 20% RPS to all six states, without taking an average. C ommenters stated the average of 20% applied to 6 states in the region is 3.33% capacity

- based or 2.0%
energy

- based; as opposed to 20% capacity

- based or 12% energy

- based. C ommenters stated the correct mathematical calculation, for the purpose of extrapolating and enforcing an RPS average across a region, is the aggregate renewable energy percentage (20% capacity

- based, or 1 2%
energy

- based) divided by the number of states (6) in the region. C ommenters concluded the RPS standard set for the South Central region is wrong on its face, and even with corrections, is unachievable.

C ommenters stated the Kansas RPS is an improper ba sis to establish region

- wide standards. C ommenters stated the EPA failed to show that Kansas 2020 RPS has been "adequately demonstrated" for Texas or other states in the South Central region. C ommenters stated that, given the unique design, and its relianc e on gross generation capacity rather than sales, Kansas' RPS should not have been considered as a basis for other states. C ommenters stated Kansas' RPS enacting legislation provides for clear reasons that its RPS should not be used as a model for other RP S. C ommenters stated that the Kansas Corporation Commission has identified its RPS standards as a unique example; one that should not serve as a model for other states: "Kansas' standard differs from other state's renewable portfolio standards in that it i s based on gross generation capacity rather than total retail sales. In general, the gross generation capacity is the amount owned or leased by a utility minus the auxiliary power used to operate the facility. The auxiliary power is determined by performin g a test of each facility. If it is not practical to perform the test on any particular facility, the nameplate net capacity of the facility will be used."

C ommenters stated Kansas' RPS provides numerous exceptions and provisions not contemplated in the R ule Proposal that mitigate the ultimate impact and burden of the RPS, including that an operator may purchase renewable energy credits ("REC") and still comply with the RPS.92 C ommenters stated Kansas' RPS also excuses generators from paying a penalty under the law if the RPS would cause the "affected utility's total revenue requirement to increase one percent or greater." C ommenters stated this is a critical limitation on the ultimate burden of the RPS; though Kansas sets the RPS at a very aggressive goal, this provision serves as a backstop that the harm cannot be too great on Kansas' electricity consumers. C ommenters stated this type of backstop is not contemplated in the Rule Proposal, and makes the aggressive Kansas RPS an inappropriate measure for other states.

C ommenters stated Kansas' capacity requirements cannot be used to accurately establish a region's generation requirements, but this is what EPA has done. C ommenters stated that, by using Kansas' 20% capacity target, and then applying it as a gene ration target (for example, imposing a 20% generation target in Texas), it is significantly, and without basis, inflating the renewable generation target for Texas.

North Carolina

-- Southeast

C ommenters stated the EPA wrongly assumes that the state of Alab ama can increase its in

- state renewable energy generation to a level that would satisfy North Carolina's renewable energy and energy efficiency portfolio standard. C ommenters stated the EPA plainly ignores the compliance options of North Carolina's program , which are not limited to in

- state renewable energy generation but include energy efficiency, demand reduction, and the utilization of out

- of

- state renewable energy credits. C ommenters stated it is wrong for EPA to base its assumptions for Alabama's expec ted in

- state renewable energy generation levels on a standard that was not limited to renewable generation alone. C ommenters stated the EPA's proposal assumes Alabama can add in

- state generation from costly intermittent renewable energy sources by over 415 percent. C ommenters stated meeting such a level would equate to the installation of over 5,000 megawatts of wind capacity, or 9,000 megawatts of solar capacity. C ommenters stated that renewable generation on these scales, in the state of Alabama, is not p ractically, technically, or economically feasible.

C ommenters stated the EPA misapplied the State Renewable Portfolio Standards (RPS) in developing regional goals. C ommenters stated that, because North Carolina is the only State within the Southeast regio n with an RPS, EPA based its Southeast regional goal entirely on North Carolina's Renewable Energy and Energy Efficiency Portfolio Standard (REPS). C ommenters stated that, in applying the North Carolina REPS to the region as a whole, the EPA failed to cons ider that the REPS allows the use of many additional resources and provides a number of off

- ramps, which are not considered in defining EPA's mandatory State emission goals. C ommenters stated some of the resources allowable under the REPS include demand

- si de management, energy efficiency measures, electricity demand reduction, existing hydro resources, credit multipliers for biomass, and out

- of

- State unbundled renewable energy credits. C ommenters stated the EPA excluded some of these resources as methods fo r complying with Building Block 3, despite using the value of these methods to calculate the Building Block 3 goals. C ommenters stated the EPA double counted the improvements that could be gained from other resources by including them in the goal computati on for both Building Blocks 3 and 4. C ommenters stated these errors resulted in a significantly more stringent goal for the Southeast region than can be achieved.93 C ommenters objected to the EPA's explicit exclusion of credit multipliers within a States' plan because it results in greater stringency of the Building Block 3 goal. C ommenters stated, for example, North Carolina's REPS allows triple credit for the first 20 MW of b iomass renewable energy generation capacity located within a certain area. C ommenters stated the EPA failed to take into account how the exclusion of credit multipliers would affect the achievability of the State goals. C ommenters stated North Carolina's R EPS also permits the use of renewable energy certificates derived from out

- of

- State renewable energy facilities to comply with REPS requirements. C ommenters stated the EPA erred in not reflecting the allowance for out

- of

- State energy credits in its Buildin g Block 3 goals. C ommenters stated that, even if North Carolina's renewable potential were equivalent to Alabama's (it is not), EPA cannot take only the numbers from the North Carolina REPS and ignore the critical fine print.

C ommenters stated that, becau se capacity factors for wind and solar vary widely across the Southeast region, the application of one state's goal to an entire region is arbitrary. C ommenters objected to the application of a regional index affecting 8 states based on the goal establishe d by one state's legislature, without analysis that such a number applies fairly to the other states. C ommenters stated that South Carolina has, as have many southern states, some access to solar and wind, but far less than is available in other states, an d noted that capacity factors for wind and solar vary widely across the region, thus the application of one state's goal to an entire region is arbitrary.

C ommenters said that the EPA justifies the development of state RE generation levels based on other states' RPS and judgments of feasibility and cost

- effectiveness. Commenters stated that in their opinion this is clearly arbitrary

. Regardless of the efficacy or validity of the NC RPS, it cannot substitute for the reasoned deliberation of the proper RPS g oals for a state by that state's officials, using that state's legislative, administrative and judicial processes to derive the appropriate standards, the c ommenters asserted. Commenters stated that w hat works and may be appropriate for NC may be entirely unsuitable or acceptable for any other state, including any state in the southeast like Georgia.

C ommenters said that North Carolina's plan does not represent the reasonable RE goal for the region (or perhaps even NC) . Commenters explained that the standar d is actually a Renewable Energy and Energy Efficiency Portfolio ("REEEP") Standard that, instead of being a mandate for NC utilities to generate a certain percentage of their electricity from renewable resources by a date certain, is a combined program fo r RE and EE where regulated parties can use a combination of renewable generation, energy efficiency projects or reductions in electrical demand (Demand Side Management or "DSM") to meet the standard. C ommenters said that Public utilities are subject to a REEEP Standard that increases from 3% of "retail sales" in 2012 to 12.5% of "retail sales" in 2021. Public utilities may use reduced energy consumption from the implementation of "Energy Efficiency Measures" (a defined term that does not include DSM) to

sa tisfy 25%

- 40% of this requirement, and can use "Electricity Demand Reduction" to meet 100% of the requirement, the c ommenters added. All participants can meet 25% of their requirement with DSM, the c ommenters noted, and that amount grows to 40% for compl iance after 2021. Commenters stated a utility could meet all of its requirements under this standard through electricity demand reduction or a combination of electricity demand reduction and energy efficiency measures, according to the c ommenters . In addit ion, the statute authorizes the North Carolina Utilities Commission to delay or modify

- in whole or in part

- all of the94 substantive requirements of the NC REEEP Standards upon a showing that such action is in the "public interest," the c ommenters said . C ommenters stated utilities need only to demonstrate they have made a reasonable effort to comply. Thus, the only mandatory RE requirements in the standards relate to minimum generation from solar power, swine and poultry waste, the

c ommenters noted. The st atute only requires that 0.2% of total electrical generation come from solar power, with an additional 0.2% from swine waste, both by 2018 and that 900,000 MWh come from poultry waste by 2014, the c ommenters additionally said. Commenters stated that this i s hardly a hard

- and

- fast RPS established for NC utilities that the EPA can rely on to establish what it considers to be a "reasonable" RE goal for all states in the southeast

- 10% of generation from RE and an additional EE

- based GHG emission reduction req uirement of 10%. No southeastern state, including NC, has made a determination that these levels of reduction are appropriate, and NC's REEEP Standard does not support the EPA's arbitrary determinations, the

c ommenters asserted.

C ommenters objected to the EPA's method for determining the average RPS requirements. C ommenters stated that, by relying on just a single state's RPS requirements to direct the renewable investment of nine states, EPA's approach largely entrenches the status quo rather than consider ing whether greater renewable penetration is achievable. C ommenters stated that, as another example, the Southeast has the lowest average RE percentage requirement of only 10 percent, which is based on the RPS requirements of just one state: North Carolina . C ommenters stated that, according to NREL ’ s technical potential analysis, states in the Southeast region could generate over 30 million GWh annually from utility

- scale solar stations. C ommenters stated that, in 2012, these states generated just 348 GWh f rom solar plants, a tiny fraction of their technical potential and less than .04 percent of the total electricity generated in these states. C ommenters stated there are neither technological nor economic barriers to increased penetration of renewable

resou rces in the Southeast market; rather, the problem is one of political will and inertia based on decades of reliance on fossil fuels.

C ommenters stated that the proposed methodology for renewables in Building Block 3 relies on the current population of ren ewable portfolio standards (RPS) by region, and that the Southeast is obviously the outlier among other regions, as only one of the eight states has an RPS

. Commenters stated that states and utility companies utilize the clean energy resources that are
tec hnically and economically feasible in their geographic location in order to cost

- effectively provide electricity to their customers, while meeting federal and state environmental requirements . Commenters stated that an understanding of the regional resourc e potential of energy sources is critical to crafting sound energy policy . Commenters stated that States and utilities have made decisions to invest in generation assets commensurate with the technical and economic feasibility in their region, and the 2012 generation baseline included in the proposed rule is a result of those decisions . Commenters stated that according to the EIA, the source of state generation by fuel source data used in the proposed rule, the 2012 non

- hydro renewable generation in the Sou theast is 98% biomass and mostly from industrial Combined Heat and Power (CHP), noting that it is uncertain what contribution biomass

- fueled generation may be able to have in the future . Commenters also stated that the wind and solar capacity that has been added in the Southeast comes at a higher cost than other non

- emitting options because of high capital costs and reduced capacity factors and therefore these resources are not ripe for widespread deployment in the Southeast.95 C ommenters stated that, while the EPA has effectively assumed that, in the Southeast region one state's particular political decision to adopt an RPS represents a meaningful estimate of the "feasibility and cost of the best practices scenario" (79 FR 34867), the EPA's approach is arbit rary and unreasonable for at least two reasons. C ommenters stated that, first, the EPA has provided no evidence that North Carolina's decision to pass an RPS for the state was in any way informed by or predicated on an assessment of the actual feasibility of generating that level of RE in the state. C ommenters stated that North Carolina's decision could have been due to a combination of factors, including the state's political ideology and history, the income level of electricity consumers, the presence of RE manufacturers in the state, and a host of other fact ors other than the availability of resources. C ommenters stated the EPA points to no evidence that supports its assertion that the North Carolina state legislature adequately considered whether the levels of RE prescribed by the state's RPS would be achiev able given cost and resource constraints.

C ommenters objected to the use of a single state's RPS to set a region's RPS target. C ommenters stated that North Carolina's RPS is in fact an RE and EE portfolio standard that allows affected utilities to comply with the standard with many measures that do not qualify as RE in EPA's Proposed Rule. C ommenters stated these include solar water heating, electricity demand reduction, and energy efficiency, as well as combined heat and power systems powered by non

renew able fuels and existing hydropower. C ommenters stated that, as NERC points out in a recent assessment of the reliability impacts of the Proposed Rule, if the EE component of North Carolina's RPS program is excluded (as it should be), the state's effective renewables target would be only 7.5%. C ommenters stated that additional evidence that North Carolina's RPS is not based on an assessment of the feasibility for in

- state generation at the level of the RPS includes the ability for electricity suppliers to me et 25% of the standard with the use of RECs imported from outside the state.

C ommenters said that the South Central Region (of which Texas is part) is one of two regions the EPA has identified that has set RE targets based solely on a single state's RPS

. F or the South Central Region, the EPA projects onto the other states in that region, including Texas, a target based only on the 2020 RPS goal of Kansas. The EPA assumes that Texas can meet targets based on this single RPS and ignores the fact that other st ates in that Region, including Texas, have different renewable generation potentials, the c ommenters noted. Commenters stated that in their opinion, the EPA provides no explanation of why it assumes that the Kansas RPS is achievable in Texas (or other stat es in this region). In addition, the c ommenters asserted this model would require the application of the Kansas RPS and investment in RE resources within Texas no matter how inefficient and costly they could be. Commenters stated t his application of the Ka nsas RPS onto Texas is irrational and arbitrary, and is not "adequately demonstrated" in Texas.

C ommenters said that the EPA grouped states together into six regions for determining state renewable energy goals. However, the commenters said states within t he same region can and do have very different solar or wind potential. For example, the c ommenters indicated that Louisiana and Kansas have dramatically different wind resource potential, but are included in the same region. Specifically, data from NREL in dicates that, based on 2012 values, Kansas has 7.8 times and 10.5 times more potential capacity and generation, respectively, than Louisiana, the

c ommenters noted. Commenters stated t he EPA's proposal to assign Louisiana the same96 renewable energy goal as K ansas, given the known differences in their wind resource potential, is unreasonable

.

Comment 52 5 1 : C ommenters stated that the most troubling aspect of applying the Kansas RPS to Texas is that Texas has an RPS that has already been fully implemented.
Response 52 5 1 : State RPS requirements are not a factor in quantifying the amount of cost

effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detail in sectio n V.E. of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.
The following are summaries of the specific public comments under this comment:

C ommenters said that the State of Texas has already determined what the best approach is for their state to increase renewable energy generation and has fully implemented both the mandated as well as voluntary increases in RE generation under that program. Commenter s stated that i mposing an additional target based on another state's RPS the EPA unfairly penalizes

- or said another way, overburdens

- Texas for acting early to develop and implement an RPS. If the rule is promulgated as proposed, the EPA will require su bstantially more RE development from Texas, over and above what has been accomplished, while significantly less will be required for other states that have not yet put the effort that Texas has into developing RE resources, the

c ommenters said. The flaw of simply applying another state's RPS across an entire region is further compounded for Texas, because EPA did not even consider or account for the efforts Texas has made to increase RE, the c ommenters concluded.

In 1999, the Public Utility Commission of Te xas (PUCT) adopted a rule, Goal for Renewable Energy, that sets the state's RPS based on a bill enacted by the Legislature as part of restructuring in Texas, the c ommenters said. The Texas RPS mandates the installation of 5,000 MW of new renewables by 2015 and set a target of 10,000 MW of renewable energy capacity by 2025, according to the c ommenters . According to the annual compliance report prepared by the ERCOT, the progr am administrator for the Texas Renewable Energy Credit Trading Program, Texas surpassed its 2025 target in 2009 and had 13,359 MW of renewable energy capacity (of which more than 12,000 MW was wind) in 2013 relative to 1999, c ommenters indicated. The RPS a pplies to "retail entities" in Texas: investor

- owned utilities that have not unbundled, retail electric providers in deregulated areas, and municipal utilities and electric cooperatives that offer customer choice, the c ommenters noted. Each retail entity i n Texas is allocated a share of the mandate based on that retailers pro rata share of statewide retail energy sales, the c ommenters said . Commenters explained that the program administrator allocates RPS requirements among retail entities by dividing each entity's total retail energy sales in Texas by the total retail sales in Texas of all retail entities, and multiplying that percentage by the total statewide RPS requirement for that compliance period. C ommenters said that the RPS includes a voluntary targ et of 500 MW of renewable energy capacity from resources other than wind by 2015. The commenters explained e ven though the PUCT has the authority to establish alternative compliance payments, the PUCT has declined to do so, meaning that the 500 MW target r emains voluntary. The PUCT does award a "compliance premium" for each non

- wind Renewable97 Energy Credit (REC) generated after December 31, 2007 (see below regarding the Texas REC program), the c ommenters noted. Compliance premiums are the functional equival ent of a REC for RPS compliance purposes and may only be awarded to non

- wind facilities that were installed and certified by the PUCT after September 1, 2005, c ommenters added. This method effectively doubles the compliance value of electricity generated b y renewable resources other than wind, the c ommenters said. C ommenters said that the PUCT also established a REC trading program that began in July 2001 and will continue through 2019. For each megawatt

- hour (MWh) of qualified renewable energy that is mete red and verified in Texas, one (1) REC is earned, the

c ommenters explained. A retail entity must annually retire one (1) REC for each one (1) MWh requirement it has, the c ommenters added. Also, the c ommenters indicated that an administrative penalty of $50 per MWh has been established for providers that do not meet the RPS requirements.

Comment 53 5 2 : Commenters did not support the alternative approaches.
Response 53 5 2 : IPM projections are not the basis for building block 3 target generation levels expressed in the final methodology. Specific to several comments, the IPM projections supporting the technical feasibility and cost

- effectiveness of building block 3 are no longer constrained by the application of the benchmark development limiter describe d under the Alternative RE approach at proposal. The final methodology is described in detail in section V.Eof the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP

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

Commenters stated that, recognizing that RPSs have historically been significant drivers for RE development, the proposed RE approach (based on a region's average RPS) is more appropriate than any of the a lternative approaches as described in the "Alternate RE Approach" technical support document and the NODA.

Commenters stated that an adjustment to the proposed approach should also take into account the secondary (and even tertiary) standards which many s tates have. C ommenters stated that using technical RE potential does not take into account economic constraints or projected needs for new capacity. C ommenters stated the fact that a few states have a high development rate compared to technical potential d oes not mean that the same level of development is feasible in all states. C ommenters stated the conditions surrounding the development in those leading states may be very different from the conditions in other states. C ommenters stated the technical poten tial basis described in Option 1 of this technical support document creates tremendous burdens for some states, including New Mexico, while barely affecting other states. C ommenters stated that using Option 1 would require that by 2030 New Mexico's RE goal would represent 73% of total electricity sales. C ommenters stated this is not remotely possible for New Mexico.

Comment 54 5 3 : Commenters objected to the EPA's use of capacity

- based RPS.98 Response 54 5 3 : State RPS requirements are not a factor in quantifying the amount of cost

effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detail in section V.E. of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP.
The following are summaries of the specific public comments under this comment:

C ommenters stated the EPA's calculation of regional renewable ene rgy goals is flawed because some state RPS are designed as capacity (MW) only standards, yet EPA assumes that these are energy (MWh) produced standards in their goal calculations.

C ommenters stated that the EPA states that it uses only energy

- based RPS sta ndards in assigning targets. C ommenters stated that, because Kansas has a capacity

- based RPS, Kansas was assigned the South Central Region's average target of 20% of generation as a default. C ommenters stated that, besides Kansas, Texas has the only other RPS target in the South Central Region and, like Kansas, Texas' RPS target is capacity

- based. C ommenters stated that, because no other states in the region have RPS standards, the EPA had no energy

- based RPS targets in the region that could establish an en ergy

- based target for the region. Thus, the EPA used an arbitrary energy

based RPS target of 20% for Kansas and the rest of the South Central Region. C ommenters stated the Kansas Corporation Commission (KCC) estimated the amount of renewable energy that wo uld count toward Kansas abatement using the Kansas RES standard of 20% of capacity. C ommenters stated capacity is determined by taking the average peak demand from the previous three years and, currently, the average peak demand is about 1,750 MW and is gr owing slowly. C ommenters stated an extremely optimistic estimate of 20% of peak demand in 2030 would be 1,900 MW. C ommenters stated that, while Kansas's wind resources are excellent, the best generation sites have been taken for the most part, therefore, a realistic assumption is that renewable resources that count toward the RES would have a capacity factor of 35%. Given both of these assumptions, C ommenters stated the KCC's estimate of the renewable generation that would count toward Kansas abatement woul d be 5,825,400 MWhs and, with these estimates, the Kansas GHG goal is 1,950 lbs./MWh.

Similarly, c ommenters stated that the EPA also improperly extracts the Kansas numeric standard without applying the other determinates in the Kansas RPS statute. Commenters stated that in their opinion, t he most obvious problem is that while the EPA RE target is based on additional
energy generation to replace fossil

- fuel generation, the Kansas RPS is based on increasing RE capacity . Capacity provides power at all times, while generation is only available when fuel (i.e. wind) is available to produce power, the c ommenters said, and added that the two are not comparable. In addition, the c ommenters said that the Kansas RPS counts renewables that the EPA does not, spe cifically hydropower. The Kansas RPS also allows subject utilities to satisfy the RPS by entering into contracts to purchase power generated from renewable sources in other states, the c ommenters added. Finally, those entities that are subject to the Kansa s RPS and the Existing Unit NSPS are not the same, the c ommenters noted. As a separate issue, the

c ommenters also said that there is a significant flaw in mandating generation as opposed to capacity to attain the state targets in Building Block 3. Mandatin g generation does not recognize the reality that wind is inherently unpredictable and intermittent, and ultimately entities cannot control how often the wind blows (i.e., wind generation), the c ommenters said.99 C ommenters said that in developing Building Bl ock 3, the EPA arbitrarily grouped states into six designated regions and set targets for the use of RE sources based on the assumption that each state can evolve to meet the average level of RE use in its region. Oklahoma, Texas, Louisiana, Arkansas, Kans as, and Nebraska are grouped together in the "South Central Region," yet significant differences in energy generation strategies exist across those states that render Building Block 3 an arbitrary, meaningless and impractical method for reducing CO2 emissi ons, the c ommenters said.

C ommenters added that the EPA's 20 percent renewable

- use goal that the Proposed Rule applies to all states in the region mirrors Kansas's renewable energy standard ("RES"). However, the EPA does not appear to recognize that Kansas ' RES goal is based on peak demand capacity (measured in MW) since Block 3 imposes state targets based on net electricity generation (measured in MWh), the c ommenters asserted

. Capacity (MW) and generation (MWh) are two very different values: generation

- ba sed targets will require higher amounts of capacity to meet a targeted generation given that wind turbines have an operational capacity factor (annually) that is less than 100 percent, the c ommenters added. Wind in Oklahoma generally operates at about a 40 percent capacity factor, which means that achieving a generation

- based target as set in Block 3 requires two and half times the actual turbine infrastructure, the c ommenters further said. Consistent and predictable correlations between renewable capacity (MW) and renewable utilization (MWh) are challenging in developing an enforceable compliance plan among utilities, the c ommenters concluded.

Comment 55 5 4 : C ommenters generally supported the alternative approach.
Response 55 5 4 : The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly in the removal of the technical potential limiter. The final methodology is described in section V.E of the final rule preamble of t he CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP

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

C ommenters further added that the EPA also invites comment on an alternative approach to
qu antification of the renewable generation to support the BSER. Unlike the proposed RE scenario that relies on a regional application of state RPS commitments, the alternative approach relies on a state

- by

- state assessment of RE technical and market potentia l, the c ommenters noted. In general, the c ommenters supported the EPA's proposed alternative approach. Recognizing that states, even within a single region, have different technical and market potential considerations when implementing new renewable genera tion resources is an important concept for use in section 111(d) state plans, the c ommenters added . Commenters asserted that this approach would be more representative of actual state conditions than the approach formally proposed in the rule. The EPA shou ld not mandate (or adopt any approach that effectively forces) states to include renewable energy development in state 111(d) plans, the c ommenters stated.

The c ommenters added that, however, using an average development rate based on the top third (16) st ates as a benchmark utilizes an unsupported analytical methodology . Commenters asserted the EPA should use appropriate state feasibility/potential studies and apply market potential100 using robust modeling (such as IPM) to determine reasonably achievable RE generation targets for computing an alternative and more representative set of goals for each state . Commenters recommended, however, that the EPA consider using actual feasible potential hydropower for each state as the basis for calculating the targeted total renewable generation, as opposed to the greater of the calculated average development rate and each state's 2012 conventional hydroelectric generation. In the Alternative RE Approach TSD, the EPA states that the IPM model was not configured to recogn ize the estimated costs and market impact of new hydropower resources, the c ommenters noted. The current method, using 2012 hydropower generation levels, as a basis for potential new hydropower development is a significant modeling deficiency, the c ommente rs added. Commenters stated that in their opinion, this method assumes that the cost, performance and resource availability of existing resources is comparable to new small hydro and low power hydro as outlined in the U.S. Department of Energy's hydropowe r feasibility assessments. Commenters stated t he EPA should consider configuring the IPM model to utilize the estimate costs and market impact as well as feasibility for these new potential hydro resources for each state. Commenters concluded that i f such modeling enhancements are not undertaken, the EPA should include the alternate approach to setting a renewable target in the final rule and compute an alternative set of goals for each state.

Comment 56 5 5 : Commenters supported a cap on in

- state RE generation.
Response 56 5 5 : The EPA has adopted a regional approach to building block 3 that obviates the need for a state

- level cap on RE.
The following are summaries of the specific public comments under this comment:

C ommenters supported the EPA's propos al (79 FR 34868) to cap the amount of new renewable electricity generation assumed in in each state's building block #3 target so that the new renewable electricity generation target in building block #3 does not exceed the electricity generation from the existing affected EGUs in the state. C ommenters stated that placing a cap on new renewable energy generation in a state will help ensure that EPA does not set renewable energy targets for states that cannot be supported by the state's electricity grid.

C omment 57 5 6 : C ommenters stated it is imperative for building block #3 that the EPA rely upon renewable electricity generation for reporting compliance with the interim and final emission targets rather than renewable electricity consumption.
Response 57 5 6 : Building block 3 is quantified and expressed in terms of renewable generation, not consumption.

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

C ommenters stated the EPA's 111(d) draft rule uses renewable electricity gener ation, not consumption (or any metric of renewable energy credits (RECs)), for creating the 2012 baseline renewable electricity figures. C ommenters stated these generation

- based figures are then101 extrapolated to create each state's interim and final buildin g block #3 targets. C ommenters stated it is important that EPA recognize that renewable electricity generation and consumption are not the same for states because of the interstate trade in renewable electricity. C ommenters stated some states are net impor ters of renewable electricity while others, such as Montana, are net exporters. C ommenters stated the method for states to comply with the targets should reflect the method for setting the targets; i.e., states should be able to use renewable electricity g eneration to meet the generation

- based target. C ommenters stated that, if EPA intends to rely on renewable electricity consumption for compliance, consumption

- based targets should be set.

C ommenters stated a further reason for using renewable electricity g eneration rather than consumption in calculating building block #3 and in demonstrating compliance with the interim and final emission targets is that the location where renewable electricity is generated is easier to track than where it is consumed and wi ll provide EPA with larger CO2 emission reduction figures than using state

- specific renewable electricity consumption figures. C ommenters stated the U.S. Energy Information Administration (EIA) has very complete and exact data on where renewable generation is located, so tracking the location of renewable generation is very easy. In contrast, C ommenters stated total U.S. renewable electricity consumption that is attributable to any one state is, in reality, significantly less than total renewable electricit y generation for several reasons. C ommenters stated that, according to the National Renewable Energy Laboratory (NREL), 48.6 million MWh of renewable electricity were voluntarily consumed by residential, commercial, and industrial customers in 2012, but on ly a portion of this voluntary renewable electricity consumption, roughly a third, was attributable to any one state. C ommenters stated that approximately 30 million MWh of renewable electricity consumption, 15% of the total renewable electricity generation in the country in 2012, likely was not attributable to a particular state even though it was officially "consumed." C ommenters stated much of this discrepancy is because of the unbundled REC purchases of large corporations intended to meet a portion of their total corporate electricity consumption that span many states. C ommenters stated millions of MWh of RECs generated in 2012 are likely to have gone unsold during the year as total renewable electricity generation exceeded 218 million MWh in 2012 but compliance and voluntary renewable electricity markets combined totaled less than 135 million MWh, leaving 83 million MWh of renew able electricity generation unaccounted. C ommenters stated some of this 83 million MWh likely was purchased and "consumed" by electricity providers that are not subject to state RPS regulations but millions of MWh of RECs were also likely banked by electri city providers and REC brokers for RPS compliance or sale in future years. C ommenters stated that, as a result, neither the states, EPA, nor the US Department of Energy have an accurate accounting for how many MWh of renewable electricity were officially " consumed" in 2012, both nationally and for individual states. C ommenters stated that, without knowing exactly what renewable electricity consumption in each state was in 2012, EPA lacks a firm basis for projecting what achievable levels of renewable electr icity consumption will be for each state between 2020 and 2030. C ommenters stated REC markets can be complicated as some electricity consumers buy and consume energy bundled with RECs, others just buy the RECs while consuming other electricity, while other s buy the RECs in order to retire them without any electricity consumption (such as environmental groups). C ommenters stated this could lead to many difficult challenges in tracking RECs and determining which states have claim to the avoided carbon emissio ns associated with them.102 C ommenters stated that, even if it is assumed that EPA could effectively quantify a baseline for renewable electricity consumption in each state, every state's building block #3 target will need to be recalculated if EPA continues to rely upon renewable electricity consumption for compliance in the final rule instead of generation. C ommenters stated the reason for this is to account for the discrepancy between each state's renewable electricity generation and consumption. C ommenters stated the national total amount of reported renewable electricity in 2012 will have to be revised downward to account for the disparity between reported 2012 renewable electricity generation and 2012 renewable electricity consumption. C ommenters stated
t he smaller baseline 2012 renewable electricity consumption figures for the states will result in smaller 2020

- 2030 renewable electricity consumption figures and a smaller reported reduction in total CO2 emissions for building block #3 (unless EPA also incr eases its renewable electricity growth assumptions).

Comment 5 8 5 7 : Commenters expressed concern regarding what RE generation qualifies for compliance purposes.
Response 58 5 7 : Incremental generation from each of the RE t echnologies under building block 3

• utility

- scale solar PV, concentrating solar power, onshore wind, geothermal, and hydropower

• are fully creditable under compliance. Refer to section V.A. of the final rule preamble of the CPP for additional detail on the use of non

- BSER measures to achiev e standards of performance.

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

Commenter s recommended that the EPA provide additional guidance to states on RE eligibility such that states may determine the extent to which exist ing RPS eligibility standards align with 111(d) eligibility standards and therefore prospective and historical eligible reductions from RPS programs. Commenter s stated that, currently, states can review EPA's state goal calculations and cost expectations t o get a sense of what features and stipulations for RPS and other REC

- based compliance measures will be needed to meet EPA's cost expectations, but the EPA should consider providing baseline qualifications for RE used in a state plan, including banking, ag e of facility, resource types, sourcing, use of unbundled RECs, etc.

Commenter s stated the EPA must assure states that existing RPS programs and any such new programs can be fully utilized in state 111(d) plans to meet CO2 reduction goals including
waste

- to

- energy. Commenter s stated the EPA must assure states that existing RPS programs and any such new programs can be fully utilized in state 111(d) plans to meet CO2 reduction goals including renewable energy credit qualification and accounting these progra ms afford. Commenter s stated this will ensure the full benefit or credit of renewable energy including
waste

- to

- energy (WTE) can be used in state plans. Commenter s stated this will not only maintain alignment with existing state RPS programs, but also with Federal statutes and policies that already provide WTE the full renewable energy benefit or credit including Section 45 of the103 federal renewable energy production tax credit legislation. Commenter s stated EPA confirmation that State RPS programs can be included in 111(d) state plans would ensure WTE continued ability to compete in wholesale markets against other renewable sources of electricity and provide needed f lexibility required for states to achieve their CO2 emission performance goals while minimizing electricity cost impacts when 111(d) plans are implemented. Commenter s stated WTE facilities play a vital role in solid waste management but in many areas opera te in extremely challenging markets for waste disposal and electricity (dominated by inexpensive natural gas). Commenter s stated inclusion of WTE in 111(d) plans and full credit for its power generation ensure WTE facilities will continue in their vital wa ste management role while playing a major role in reducing CO2 emissions in the Power Plant sector to help states and EPA reach the performance goals. Commenter s stated that, with more than 63% of the nation's waste being landfilled, there are many opportu nities to deploy new WTE facilities as landfill diversion targets increase in, industry and cities and municipalities. Inclusion of WTE in 111(d) will ensure the viability of WTE in renewable power generation and solid waste management.

Commenter s stated the EPA should calculate the goal in a manner that is consistent with recognized compliance measures. Commenter s stated that, as currently drafted, the EPA appears to have calculated the goal on the basis of statewide renewables (in 2002 and 2012); however

, these projects are not all interconnected with affected EGUs and therefore would not qualify as standards of performance "for" affected stationary sources. Commenter s stated that, if the rule is applied to Alaska, while EPA cannot require off

- grid projec ts, the EPA should allow states to count the carbon dioxide emission reductions achieved in rural locations (not interconnected with an affected EGU) towards compliance. Commenter s stated this principle applies to both the RE and EE building blocks and is discussed below as an in

- state renewable energy credit (REC).

Commenter s stated Alaska should receive credit for renewable projects that came online between 2012 and June 18, 2014. Commenter s noted the EPA states that State Plans cannot claim credit for r eductions in CO2 emissions resulting from pre

- existing programs, measures etc. unless the "action" leading to the reduction took place after the date of the proposal

- June 18, 2014. Commenter s stated the EPA takes the position that this provision "would n ot apply to existing renewable energy requirements, programs and measures because existing renewable energy generation prior to the date of the proposal of the emission guidelines was factored into the state

specific CO2 goals as a part of building block 3 ." Commente rs stated the proposed regulatory language creates an ambiguity that would be significant to the State of Alaska: Eva Creek Wind commenced generation in 2013; if the final rule is applied to Alaska, EPA should clarify that all RE projects that c ommenced generation between December 31, 2012 and June 18, 2014 may also count toward state compliance.

Commenter s supported the position that new and incremental hydroelectric generation may be credited to compliance. Commenter s stated there is some ambig uity in the materials overall and requested an unambiguous statement regarding how hydroelectric will be treated if the proposal advances. Commenter s asked the EPA to clarify that new renewable hydroelectric generation, and upgrades to existing hydroelectr ic generation, would be a qualifying adjustment to the state's emission rate.

Commenter s stated the EPA should also credit states with actions taken to replace hydroelectric generation capacity lost because of federal permitting requirements. Commenter s st ated that, for104 example, the generation capacity of Chugach's Cooper Lake Hydroelectric project will be reduced substantially, by about 50%, due to a FERC relicensing requirement to divert water for fisheries restoration; to offset this loss, Chugach and th e state have invested substantial funds to divert another stream, Stetson Creek, into Cooper Lake. Commenter s stated the full measure of generation capacity made possible by the Stetson Creek diversion should be treated as an incremental gain (even to the extent it replaces the incremental loss).

Commenter s stated the EPA should also allow compliance credits for actions that make more renewable generation available to offset generation from "affected EGUs." Commenter s stated that, for example, the amount of Bradley Lake hydroelectric power that can move north to the Anchorage and Fairbanks load centers is limited by the capacity of the transmission lines; any future upgrades to the transmission system that allow generation at "affected EGUs" to be replaced b y renewable (or less carbon intensive) generation should be credited against emission target.

Commenter s stated the EPA should also allow compliance credit for electric generation from landfill gas. Commenter s stated that using landfill methane for electric generation captures significant efficiencies and reduces overall GHG emissions.

Commenter s stated that upgraded hydroelectric generation which occurs after the baseline period should be included in state co mpliance demonstrations. Commenter s stated the EPA failed to consider all zero carbon emitting resources available in Kentucky with the exclusion of new or upgrades hydroelectric energy. Commenter s stated that, in this case, hydroelectric energy

resources operated by LKE are first to dispatch when available and thus would off

- set fossil emissions.

Comment 5 9 5 8 : Commenters agreed that existing measures should be allowed to count during the compliance period.
Response 59 5 8 : In the final methodology, building block 3 is quantified as RE incremental to the BSER data year of 2012. The standards of performance reflect this adjustment to incremental RE from total RE, which is more consistent with the concept of replacing affected source generation.

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

Commenter s supported the EPA proposal to allow existing solar measures to count towards compliance, but requested that EPA provide clear guidance on this in the final rule. C ommenter s interpreted the EPA's proposal regarding existing measures to mean that state measures which exist after the June 18, 2014 proposal date can be used to drive emissions reductions during the compliance period (2020

- 2030). However, c ommenters stated that be cause building block 3 was factored into determination of the state goals, existing renewable energy measures and actions can count if implemented prior to June 18 2014. Therefore, c ommenters stated that the MWh from renewable energy capacity installed pur suant to an existing measure or program any time prior to 2020 can be counted towards compliance during the compliance period (2020

- 2030) if the existing measure is included in a state's implementation plan. C ommenter s provided, for105 example, if 1000 MW of solar capacity was installed in 2013 pursuant to an RPS and the state includes the RPS in its compliance plan, then emissions displaced by MWh from the 1000 MW of solar capacity during the compliance period (2020

- 2030) can count towards the state's 111(d) compliance requirements in that period.

Commenter s agreed that existing measures should be allowed to count during the compliance period, and can help states meet interim compliance goals set forth in the original proposal. C ommenter s stated that this is consistent with EPA's interpretation of the BSER as including measures taken by states to reduce emissions across the electric system. Further, c ommenter s stated that this is consistent with the cooperative model promoted by Section 11 1(d) and the Clean Air Act, which provides states with significant flexibility in determining the best method for reducing emissions. C ommenter s noted that allowing states to count existing measures towards compliance recognizes the investment already made by states towards emission reduction, and will allow states to carry forward programs that are in motion without distorting current markets.

Commenter s noted that during the comment period there has been significant confusion regarding exactly which exist ing renewable energy measures can be counted towards compliance and when credit will be given. C ommenter s stated that this confusion is already threatening potential emission reductions by slowing project development because states and EGUs are uncertain w hich actions will count towards compliance, and when these actions can count. Therefore, while c ommenters supported the proposal put forth by the EPA as interpreted above,

c ommenters requested that in the final rule the EPA more clearly state which actions can count towards compliance and when such actions count.

Commenter s stated the renewables target should continue to include existing renewable resources and existing renewables must continue to count for compliance with state emission goals. Commenter s s upported the EPA's proposed approach of including existing non

- hydro renewable generation in its calculation of each state's base

- year emissions and allowing states to include existing renewables for compliance purposes beginning in 2020. Commenter s stated this approach appropriately recognizes states like Nevada with a long history supporting the installation of renewable energy. Commenter s stated that, regardless of the reason for development, renewable energy generation achieves meaningful greenhouse gas emissions reductions by augmenting or displacing more carbon

- intensive resources. Commenter s stated excluding existing renewables would result in significantly increased costs and would exacerbate many issues raised herein related to increased penetration of renewables and the need to develop new resources in accordance with demand. Commenter s stated it is therefore critically important that EPA retain in its final rule the flexibility for states to utilize existing renewable resources for compliance purpo ses.

Comment 60 59 : Commenters asked for guidance regarding non

- ratepayer compliance options.
Response 60 59 : The use of non

- BSER measures, such as energy efficiency and distributed generation, to achieve standards of performance is described in detail in section V.A of the final rule preamble of the CPP

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

Commenter s stated that while EPA's draft rule encourages the use of energy efficiency and renewable energy as compliance options, it provides little guidance and limited support for the inclusion of non

- ratepayer compliance options ope rated outside of conventional investor

- owned utility programs overseen by state public utility commissions.

Commenter s expressed concern that in not adequately addressing these options, the EPA is making it difficult for states to recognize emissions redu ctions resulting from the billions of dollars in annual energy investments in energy efficiency and renewable energy investments made by municipally

- owned electric utilities and cooperatively owned utilities. C ommenter s stated that in just one such example , the Austin, Texas City Council approved Austin Energy's investment to achieve 800 MW of energy efficiency and 200 MW of solar over the next several
years.

Comment 61 6 0 : Commenter s expressed concern that a state's renewable potential is calculated using widely

- recognized renewable generation sources such as biomass and hydropower, but EPA does not allow these and other sources to be used for compliance.
Response 61 6 0 : The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, in which the only RE technologies used to set the standards of performance are eligible for compliance. The final methodology is described in section V.E of th e final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP and the use of non

- BSER measures to achieve standards of performance, such as biomass, is described in section V.A of the final rule preamble of t he CPP

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

Commenter s stated the shortcomings in the renewable assumptions are multiplied by determining a state's renewable potential using widely

- recognized renewable generation sources such as biomass and hydropower, but EPA does not allow these and other sources to be used for compliance. Commenter s requested that the renewable provisions in Building Block 3 be revised to: (1) confirm that biomass is a renewable resource eligible for compliance and (2) revise state goals to exclude from the standard

- setting those renewable resources that are not eligible for compliance.

Commenter s stated that, while there are a wide variety of generation technologies that should be eligible measures for compliance in state plans, the EPA should not include all of these technologies in BSER for the purposes of setting state goals. Commenter s stated that each of the technologies contemplated in building block 3 has its own unique characteristics and potential within each state. Commenter s asserted that States and utilities within the states ar e not starting from scratch, they are continuing on a spectrum of investment and portfolio diversification choices that ratepayers will shoulder

- this must be taken into consideration in EPA's final guidelines. Commenter s stated the EPA should refrain from advocating, even inadvertently, for one low

- carbon generation choice over another.107 Commenter s stated the EPA's failure to reduce the goal based on its limitation of compliance options results in an even more stringent and unachievable goal for the Southea st region.

Commenter s asserted that state RPS targets designed to include existing hydro units are unfairly used to establish regional renewable energy goals in building block 3 that exclude existing hydro generation units. Commenter s stated most states' R PS include existing and/or new hydroelectric generating units as eligible resources for demonstrating compliance and the contribution of existing hydroelectric units is included in the "effective" 2020 RPS rates that EPA used to calculate the renewable ene rgy goals for each region. Commenter s stated that, in using these regional targets to develop regional growth rates and individual state renewable goals in building block three, EPA relies on baseline renewable generation from 2012 that excludes hydroelect ric generation. Commenter s stated that, for the purpose of calculating a baseline level of RE generation in each state, the EPA adopted a broad interpretation of RE generation to include any

non

- fossil renewable type, with the exception of generation from existing hydroelectric power facilities.

Commenter s stated the misalignment in EPA's proposal between the renewable generation reflected in a state's goal

- setting calculation and the renewable generation available for compliance with the emission goals must be corrected.

Comment 62 6 1 : Commenters indicated that CPP should be revised to take into account that municipal utilities have limited RE options.
Response 62 6 1 : The EPA believes all affected sources have the opportunity to participate in building block 3, as described in section V.E of the final rule preamble of the CPP

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

Commenter s said that while many municipal utilities are committed to investing in renewable electricity generation resources, they have experienced challe nges because of their small size and tax exempt status. Commenters stated municipal utilities do not receive the production tax credit for wind energy or the investment tax credit for solar energy. Commenters added that another barrier to investing in ren ewable energy for municipal utilities is their relatively small size. Commenter s stated most developers are building wind farms on a scale much larger than what is needed by a single municipal utility.

Commenter s said there are many barriers to renewable investments for municipal utilities and the rule should be revised to reflect these challenges. Commenter s stated that, as a small, municipal utility, it does not have the same universe of renewable options as other utilities in the state. C ommenter s indic ated that it does not have a large customer base with which to spread the higher cost of renewable investments. Commenters stated that m unicipal utilities cannot take advantage of Federal incentives for wind development, like the production tax credit, whi ch makes wind projects more costly for utilities like the irs.108 Comment 63 6 2 : Commenters supported the potential for additional wind energy.
Response 63 6 2 : The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly in the reevaluation of wind cost and performance assumptions. The final methodology is described in section V.E of the final rule pre amble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP

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

Commenter s stated the draft plan should be more ambitious in terms of setting t argets and dates for reductions in carbon emissions. Commenter s stated they see a significant missed opportunity to fully harvest the tremendous benefits available to increased deployment of wind energy. Commenter s stated 35 percent wind energy by 2050 is ambitious, but achievable. Commenter s stated that later this year the Department of Energy will release an updated version of its wind vision report which provides a roadmap for getting to 35 percent wind energy by 2050 which would avoid $520 billion in damages from climate change, save $16 t o 103 billion in public health and environmental costs and save consumers about 3 percent on their electricity costs. Commenter s stated the EPA's final plan should take this increase in its carbon emission reduction targets for 2030 to reflect wind energy potential contributions documented by DOE. Commenter s stated wind energy is widely available, affordable, reliable, and it's already providing meaningful carbon reductions. Commenter s stated the industry has shown the ability to install a lot of wind capac ity in a short amount of time: since the end of 2005, on average, the U.S. has doubled its wind energy capacity every 36 months, including a record 13 gigawatts in 2012. Commenters stated they currently get about 4 percent of their electricity from wind en ergy nationwide.

Commenter s stated that, while they support the rule, the EPA's assumptions related to renewable energy are very conservative relative to the amount of timely and cost

- effective reductions truly available from renewable sources and that th e final rule can and should require emissions reductions that could go further and faster than proposed in the draft rule. Commenter s stated the wind energy industry is already producing significant carbon emissions reductions while lowering costs to consu mers and benefitting the economy. Commenter s stated the current fleet of wind turbines, for example, reduced carbon emissions in 2013 by nearly 127 million tons, the equivalent of reducing power sector emissions by more than 5 percent when compared to 2011

.
Commenter s stated wind technologies evolved significantly in the last 15 years. Commenter s cited DOE and stated the average nameplate capacity of newly installed wind turbines in 2013 was 1.87 MW, 162 percent higher than in 1998

- 1999; average hub heigh ts installed in 2013 was 80 meters, 45 percent greater than in 1998

- 1999; average rotor diameter in 2013 was 97 meters, 103 percent greater than in 1998

- 1999; and larger turbines are driving higher capacity factors for wind projects and allowing for increa sed generation from these resources.

Commenter s estimated that distributed wind (DW) can produce multi GW of electricity in roughly the same timeframe the EPA is discussing for emissions reductions in the proposed rule, which is on par with offshore wind p ower's potential, for example, and other technologies.

Commenter s stated the EPA underestimates the potential of wind energy in the Southeast. Commenter s suggested that the IPM model results under EPA's Alternative Approach may109 underestimate the electricit y from wind power in the year 2030. Commenter s stated that, while IPM shows approximately 5,671 gigawatt hours of electricity from wind power in the year 2030 are attributed to Arkansas, Georgia, Kentucky, North Carolina, South Carolina, Tennessee and Virg inia, the wind energy already being or planned to be purchased by southern utilities from
out

- of

- state projects results in about 8,000 GWh of wind energy (based on a 35% capacity factor).

Commenter s suggested that the Southeastern states have out

- of

- state wind energy resources available. Commenter s stated that newly proposed high voltage direct current transmission projects could substantially increase the amount of low

- cost wind energy resources available to southern states. Commenter s stated two large

- sca le HVDC projects have been proposed to connect the Plains' strong wind resource to the South's strong energy demand: the Plains & Eastern Clean Line is an HVDC project designed to connect up to 3.5 gigawatts (GW) of wind energy from the plains to Tennessee and the South beyond and the Southern Cross is an HVDC project designed to connect up to 3 GW of wind energy from Texas to northern Mississippi, and into other parts of the Southeast. Commenter s stated that, due to the higher wind speeds, the cost of wind energy resources from these HVDC projects will be extremely cost competitive. Commenter s stated that several utilities throughout the Southeast have already purchased wind energy via existing transmission lines and these purchases are significant because most states in the south do not require utilities to purchase renewable energy via renewable portfolio standards. Commenter s stated some utilities have made the wind energy purchases because costs are less than utility avoided costs. Commenter s stated wind power purchase agreements are typically secured for twenty years and provided a list of utility companies in the south purchasing wind
energy.

Commenter s stated the costs associated with onshore wind deployment are overestimated by EPA. Commenter s stated that, while the EPA cost assumptions for onshore wind generation begin at $2,258 per kW in the year 2016 and decline to $1,864 per kW by the year 2050, a new Lawrence Berkeley National Laboratory report documents recent low wind

- power prices and overall c ost reduction trends for the wind industry. Commente rs stated that, in 2013, average power purchase agreement (PPA) prices reached $25 per MWh. Commenter s stated that, since many of the installed projects last year were able to qualify for the federal Prod uction Tax Credit (PTC), or a similar incentive, the reported PPAs may reflect a reduction of approximately $15 per MWh when taking into consideration the PTC. Commenter s stated that average PPA prices fell approximately 64% between 2009 ($70 per MWh) and 2013 ($25 per MWh). Commenter s stated that, overall, wind energy prices are declining due to lower wind turbine prices and higher wind turbine performance (in terms of capacity factor output). Commenter s stated recent turbine prices have been in the $900

- $ 1,300 range per kW of generation capacity, with total installed average costs of approximately $1,630 per kW in 2013. Commenter s stated that operations and maintenance costs associated with newly constructed wind farms dropped from $23 per MWh (or $55 per kW of installed capacity) in the 1990s to about $9 per MWh (or $23 per kW of installed capacity) for projects developed since 2010.

Commenter s stated wind turbine technology has advanced significantly since modern turbines were first designed in the 1980s . Commenter s stated multi

- megawatt machines, taller turbine hub heights and longer blades have greatly contributed to increased power generation and lower costs. Commenter s stated wind farm projects have now been proposed in every state in the110 South. Comme nter s stated the particular type of turbines likely to be deployed in the South are Class III turbines, based on International Electrotechnical Commission (IEC) Standard 61400. Commenter s stated Class III turbines are designed to operate in lower wind spee d areas and could achieve capacity factors of 40

- 50% in areas across the South.

Comment 64 6 3 : Commenter s indicated that, while wind resources are better in the SPP Plains states and along the Gulf coast than in Arkansas, a significant portion of Arkansas' renewable requirement will probably be met with imports of wind from the west and south.
Response 64 6 3 : The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly in the reevaluation of wind cost and performance assumptions. The final methodology is described in section V.E of the final rule pr eamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP

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

Commenter s stated those imports can be concentrated in off

- peak hours and seasons, as needed to accommodate transmission constraints, with local Arkansas fossil generation carrying more of the load on peak. Commenter s explained that Arkansas has major transmission i nterconnections with the Gulf coast, through Entergy's transmission system, and with the wind

- rich SPP. Commenter s stated about 30% of Arkansas load (SWEPCo, OG&E, Empire District, and the Carroll, Ozarks, Arkansas Valley, and Southwest Arkansas coops) is in SPP, and the state should have little difficulty sourcing Plains wind energy. Commenters said t he Arkansas utilities have significant amounts of out

- of

- state wind capacity in service or under contract, including about 200 MW for the Arkansas electric co ops, 500 MW for SWEPCo (of which about 100 MW would be attributed to Arkansas), and 800 MW for OG&E (of which about 80 MW would be attributed to Arkansas)

. The Plains and Eastern Clean Line would deliver 3,500 MW of power to converter stations in central A rkansas and the Memphis area over a high

- voltage DC line from the wind

rich Oklahoma Panhandle and surrounding areas of the Texas Panhandle and Kansas,
commenter s claimed. Completion of the project is expected in 2018, well before the compliance period und er the Plan, the c ommenters noted. The central

- Arkansas converter station would deliver 500 MW, the c ommenters noted. In addition, c ommenters stated Arkansas can access some of the 3,000 MW to be delivered in the Memphis area over a number of transmission ties listed by the commenter s . Commente rs stated the reduced utilization or retirement of the various fossil plants would free up capacity on the lines to bring capacity and energy from Memphis to Arkansas's load centers. Commenter s stated the 500

- MW conve rter station, delivering wind energy at a 40% capacity factor, would meet EPA's renewable target through 2025, even without any in

- state wind, solar, or hydro, or imports over the existing alternating

- current transmission system or from the Memphis

- area co nverter.

Commenter s said that some commenters vastly overstate the costs of renewable energy in Arkansas. C ommenter s cited to MISO which shows the renewables costing $237/ton of carbon reduction, implying a renewable cost of $250/MWh at EPA's estimate of the Arkansas coal emission rate after the Block 1 heat

- rate improvement, or about $100/MWh if the wind is backing down NGCCs. Commenter s stated that, since utilities have been purchasing wind energy at $50/MWh or less, and since wind energy saves on fuel, variable O&M, and capacity costs,111 MISO's claimed costs of renewables are vastly overstated. C ommenter s said that wind imports appear to be a low

- cost resource, and provided the following examples:

• Austin purchased 300 MW of wind in February 2014 at about 2.6

- 3.6 cents/kWh;

• SWEPCo purchased 359 MW in January 2012 that were "expected to slightly lower SWEPCo's projected overall cost to customers;"

• Public Service of Oklahoma contracted for 600 MW o f wind in October 2013 and said, "Estimates show the agreements will reduce customer costs by $53 million in the first year, with annual savings growing over the 20

- year length of the contracts;"

• in September 2012, Alabama Power purchased 400 MW from wind farms in Oklahoma and Kansas under a "20

- year contract for wind [that] locks in a price for power that's lower than it could cost the company to generate it;"

• the Annual Economic Impacts of Kansas Wind Energy 2014 Report reported that power from the 2012 wind farms at Ironwood and Post Rock cost $3.5 cents/kWh; and

• the DOE's 2013 Wind Technologies Market Report (August 2014, Figure 46) reports wind contract prices for the Interior region (including Oklahoma, Kansas, and the Texas Panhandle) falling from a bout 3.5 cents/kWh for 2011 contracts to about 3 cents/kWh in 2012 and 2 cents/kWh in 2013.

Commenter s said that Arkansas is part of a vigorous multistate power market, as demonstrated by the overlap of service territories with state lines, by the out

- of

- state ownership of many Arkansas power plants, and by the participation of the Arkansas utilities in the SPP and MISO energy markets. Commenters explained e specially under the mass

- based compliance approach, renewables procured anywhere in the interconnect ed regions will contribute to Arkansas's compliance, so long as they reduce the operation of the fossil

- fired power plants.

Comment 6 5 6 4 : Commenter s expressed concerns regarding technical performance of wind turbines.
Response 65 6 4 : The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly in the reevaluation of wind cost and performance assumptions. The final methodology is described in section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP

. The following are summaries of the specific public comments under this comment:112 Commenter s indicated that there are technical performance issues associated with wind turbines that need to be investigated before the EPA can assume that environmental dispatch in favor or rapid installation of wind power is possible.

Commenters said that, there are challenges to the deployment of distributed wind power at the St ate level. Commenters said, there are often permitting barriers to distributed wind power deployment. Commenters said, permitting turbine structures can be onerous and take longer than they should because local jurisdictions are focused on the permitting a nd environmental impacts of much larger, utility

- scale wind farm installations. Commenters said, EPA should ask states to specify what they are doing to streamline permitting for appropriately placed distributed wind turbines (and other relevant structures ). Commenters said, EPA should consult with DOE and the Federal Energy Regulatory Commission about this ongoing permitting issues as well, seek their input and assess whether there are actions they can take to support "model permitting" at the State and lo cal levels.

Commenters said that, another challenge is the avoided costs under the Public Utility Regulatory Policies Act (PURPA), because many distributed wind power projects around the country are developed as "Qualifying Facilities" under PURPA. Commen ters said, utilities sometimes artificially reduce the avoided cost calculations by using historical costs rather than "next added increment" costs as referenced in Section 210. Commenters said, the effect is that distributed wind power installations sized above net metering limits get paid unfairly low returns for their excess generation. Commenters said, the impacts can be significant in many distributed wind power markets because there is considerable excess generation during peak months of the year. Com menters said, low avoided costs tend to drive down the sizing of a distributed wind power system so as to minimize excess production, reducing financial returns and environmental benefits. Commenters said, states, as part of their implementation plans and corresponding compliance reporting, ought to review avoided cost filings of local utilities to confirm they are truly reflective of the costs of building new power plants.

Comment 66 6 5 : Commenters expressed concern that the Proposal overestimates the pot ential for RE in WV.

Response 66 6 5 : The final building block 3 methodology does not rely on RPS requirements or
state

- specific deployment estimates, but rather cost

- effective RE at an interconnection level. The EPA addresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP

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

Commenter s estimated that the renewable energy building block, representing 52% of West Virginia's reduction requirement, would translate to the construction of approximately 2,200 new two Megawatt wind tur bines across the Mountain State. C ommenter s stated this is simply implausible given the constraints on siting wind energy capacity in West Virginia, as well as the need to provide transmission linkages and back

- up natural gas generation capacity.113 Commente r s expressed concern that, in West Virginia, the EPA's proposal overestimated the potential for additional wind farm development. Commenter s stated that additional wind farm development is impractical due to mountainous terrain, contentious permitting hist ory, private ownership of lands, and cost. Commenter s also stated a considerable share of West Virginia's potential wind is already developed. Commenter s stated there are only two wind farms in West Virginia with any near

- term development potential and the se could contribute only 6.7 percent to the state's RE goal as advanced by the proposed regulation. Commenter s stated that, based upon the existing capacity factor (25.2 percent), West Virginia would need a wind capacity of 4,654 MW to generate the target goal of 10,273,036 MWh. Commenter s stated this would require an additional 4,070 MW of wind capacity to be installed from 2020 to 2030 in West Virginia, which is nearly seven times the state's current capacity. Commenter s stated Industry estimates that in 2012, a utility

- scale wind turbine costs $1.3 million to $2.2 million per MW of nameplate capacity installed and, given the state's mountainous terrain, the cost in West Virginia would be at the high end of that range, or an overall $9 billion investment t o support the EPA goal. Commenter s stated that, while recent studies by National Renewable Energy Laboratory (NREL) and others highlight the wind potential, there is much more to a wind project than access to favorable wind speeds. Commenter s stated that, to draw an erroneous conclusion from wind maps that West Virginia is deficient in wind development does not consider development issues confronted by the wind industry. Commenter s stated the state's mountainous terrain with steep hillsides presents significant competitive challenges. Commenter s stated the fact that existing wind projects take advantage of formerly surface

- mined lands speaks to the development costs of leveling land and putting in new roads to allow for ongoing maintenance. Commenter s stated wind development remains a contentious energy source in West Virginia. Commenter s stated that, while national environmental groups such as the Sierra Club and the Union of Concerned Scientists support wind development, local environmental groups su ch as the West Virginia Highlands Conservancy and Friends of Blackwater are opposed. Commenter s stated West Virginia encourages environmentally responsible wind projects, but history teaches us that there will be significant opposition to the expansive lev el of development that would be needed to meet the EPA Building Block 3 goal using wind generation.

Commenter s referred to a report from the NREL that assesses the land

- use requirements for modern wind power plants. Commenter s stated three wind farms in W est Virginia were identified with an average total area per unit capacity of 14.05 hectares per MW. Commenter s stated the 4,070 MW wind capacity West Virginia would need to satisfy its target goal would have a total area impact of 57,184 hectares, or 571.8 km2, which represents one percent of the land within West Virginia's state boundaries. Commenter s stated the fact that over 80 percent of the surface area in the state is privately owned represents a significant barrier to additional wind power developmen t because the State cannot force land owners to develop this potential resource. Commenter s stated that, considering that the practical locations for wind farms are along the front range of the Allegheny Mountains in the northern and central eastern counti es of the state, the total area impact would be close to four percent of the total land within those areas of West Virginia. Commenter s stated that, in 2010, NREL performed a study to determine the wind energy potential of each state and that NREL determin ed that the wind energy potential for West Virginia is only 1,883.3 MW of installed capacity. Commenter s stated this is 1,300 MW of additional capacity that could potentially be developed. Commenter s stated that, if wind resources in West Virginia were to be developed to NREL's estimated potential (an additional 2,869,776 MWh over currently operating wind projects at a 25.2 percent capacity factor), the114 State would still require an additional 7,403,260 MWh of electric generation from another renewable resou rce to meet EPA's proposed goal. Commenter s stated that, compared to other states, a considerable share of West Virginia's potential wind is already developed and the state has the second highest amount of potential wind capacity in place in the region.

Co mmenter s did not agree with the EPA that West Virginia can grow its renewable energy output from the current 4% of total electric generation to 14%. Commenter s stated that, when the EPA's numbers were examined in the WVU Discussion Paper, however, it becam e clear that growth to 14% was unreasonable. Commenter s stated the WVU Discussion Paper found that even a more modest 7% increase would be difficult to attain. Commenter s stated West Virginia currently has a wind generation capacity of 583 MW from the sta te's 327 wind turbines currently in operation. Commenter s stated wind turbines need to be strategically placed in order to actually capture wind and in West Virginia

-- one of the 10 smallest states in the U.S. by size

-- the amount of land suitable for wind t urbine placement is a mere 0.60% of the state. Commente rs stated that, in order to produce the excess wind energy required by Block Three, West Virginia would need to add 1,046 additional wind turbines to 0.60% of the land in the state, which equates to
ap proximately 145 square miles of suitable land for wind turbine placement. Commenter s stated West Virginia, the Mountain State, would no doubt lose a great deal of its natural beauty if every mountain were topped with multiple wind turbines. Commenter s stat ed these concerns are backed by a recent policy brief from the Union of Concerned Scientists. Commenter s stated that despite this policy brief's support of the Clean Power Plan, it found that West Virginia was one of four states where EPA's renewable proje ctions were far greater than what they projected was possible.

Comment 67 6 6 : Commenter s stated the EPA has not demonstrated the feasibility of adding, in the amounts EPA proposes, to the substantial amount of wind generation already occurring in Texas.
Response 67 6 6 : The EPA addresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both section V.E of the final rule preamble of the CPP and chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP

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

Commenter s stated Texas generates more electricity from wind than any other state and is already utilizing the most productive wind sites for generation. Commenter s stated that, by 2030, EPA's building block 3 renewable goal for the state of Texas is approximately 8 6 million megawatt

- hours, a 153% increase above 2012 levels, which would require over 31,000 MW of total renewable capacity (an additional 19,000 MW over existing renewable capacity). Commenter s stated the EPA fails to recognize that sites for future wind generation would be lower producing sites as compared to existing wind generation. Commenter s stated the EPA's building block 3 proposal does not accurately account for the future cost of utilizing these new sites, including transmission build

- out that wou ld be needed to support the amount of additional wind and renewable generation required under building block 3.115 Comment 6 8 6 7 : Commenters expressed support for solar energy.
Response 68 6 7 : The resources and data provided in this comment were valuable in f inalizing the building block 3 methodology, particularly in the reevaluation of solar cost and performance assumptions. The EPA has maintained distributed generation technologies as non

- BSER measures that affected sources may rely upon to achieve standards of performance for a number of reasons, including data limitations, the heterogeneity of distributed generation opportunities, and the desire to maintain balance between program flexibility and stringency. The final building block 3 methodology is descri bed in section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP

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

Commenter s supported the proposed 111(d) approach and stated there is more that the EPA can do. Commenter s stated this approach allows states to take advantage of solar as part of a diverse compliance portfolio. Commenter s supported the inclusion of solar and other outside of the fence measures in the definition of the best system of emissions reduction, BSER. Commenter s stated there are certain areas that can be strengthened in respect to solar in building block three. Commenter s stated building block three is based on incomplete data and does not reflect current solar capacity on market projections. Commenter s stated solar capacity in market projections are much higher than stated in the proposed rule. Commenter s stated Pennsylvania can meet the 49 percent emissions reduction with renewable energy resources, including solar, wind, biomass and hydroelectric, while incorporating energy storage, energy pricing for solar in the way of tariffs and enhancing the state's current alternative energy portfolio standard, partic ularly the solar share requirement. Commenter s stated that all of these resources can meet the challenge through the competitive market, forces that will produce results at no or little cost to consumers while cleaning up our air and providing good jobs wi th the real growth of solar. MSEA, PASEIA and SEIA would be very happy to help with that process to go through.

Commenter s stated that, based on the growth of solar in markets with favorable solar policy, including New Orleans, analysis shows that Louisia na has a tested opportunity to increase distributed solar generation, both at the utility scale and residentially. Commenter s stated that allowing energy users the freedom to generate their own energy reduces the cost of generation from the utility perspec tive, and increases the efficiency with which the energy is distributed as a result of reduced line

- loss. Commenter s stated that generation from rooftop solar can displace generation from peaking resources, like natural gas. Commenter s stated that a recent study, showed a net benefit in nearly all scenarios analyzed. Commenter s stated they have seen an impressive increase of residential PV systems as a result of falling system and installation costs, and as a result more people are interested in their energ y choices than ever before.

Commenter s stated solar energy reduces carbon pollutants and offers a positive economic return while generating affordable and reliable energy, and as a cost

- effective clean energy source, solar avoids a number of costs associa ted with fossil fuel resources. Further, c ommenters stated, solar enjoys widespread bi

- partisan support from policymakers and the general public throughout the United States. C ommenter s stated the U.S. solar industry grew by 53% from 2012 to 2013, accounti ng for nearly 30% of all new electric generating capacity added to the U.S. grid in 2013.116 C ommenter s also stated an additional 7.3 GW of solar capacity are expected to be added in 2014, bringing the cumulative U.S. total to over 20 GW

- enough to power more than 4 million homes. C ommenter s also stated the U.S. solar industry now supports 143,000 employees at more than 6,100 companies spread across all 50 states. C ommenter s stated the EPA has already recognized the importance of renewable energy and the role for renewable energy to play in this transition, and has included renewable energy as a part of the best system of emission reduction (BSER) that has been adequately demonstrated to reduce emissions from affected EGUs.

Commenter s stated the EPA's rule sho uld use solar potential in the renewable energy building block. Commenter s stated that would result in a significant increase in Montana's reduction target. Commenter s stated that Montana has an excellent solar resource, but it remains virtually untapped. Commenters stated that there are currently about 1,000 customers with solar arrays across NWE's service territory. Although rooftop solar installations have steadily increased in the last several years, the 1,000 solar installations represent less than one tenth of one percent of NWE's total electricity supply, the c ommenters added. Currently, there are no utility scale solar projects in Montana, the c ommenters said. Commenter s stated that, while studies on Montana's solar potential are limited, the Interst ate Renewable Energy Council estimates that 19% of Montana's energy needs could be met with distributed solar resources and the NREL calculates Montana's utility scale solar technical potential to be over 6 GW.

Commenter s stated that, since the solar reso urce is very similar in North Carolina and Arkansas, Arkansas should be able to install at least as much solar in the next five and a half years as North Carolina has in the last three and a half years. North Carolina added about 430 MW of solar in 2011

- 20 13, and another 70 MW in the first half of 2014, the c ommenters noted. Commenter s stated that photovoltaics are an important resource category in jurisdictions with much less sunshine than Arkansas, including Ontario, Massachusetts, Vermont, Germany and mo re recently Minnesota and Wisconsin. C ommenter s provided the following are some examples of the falling costs of utility

- scale solar: Georgia Power recently contracted for 515 megawatts of PV capacity, planned for build

- out in 2015 and 2016, at an average price of 6.5 and Georgia Power received bids for 5,100 MW; in Texas, Austin Energy recently signed a PPA for 150 megawatts of solar for less than 5 cents per kilowatt

- hour; in Colorado, Xcel Energy agreed to purchase 170 megawatts of solar power, after fin ding that they were less expensive than natural gas plants; Xcel Energy Minnesota contracted for 187 MW of PV capacity for an expected levelized price of 7.3/kWh over 25 years; and in Utah, Rocky Mountain Power has contracted for 400 MW of solar at prices below its estimates of avoided cost. C ommenter s suggested that solar is especially valuable in areas with existing or future T&D constraints, to avoid need for additional facility investments. Commenters said s ome smaller utility

- scale PV facilities can
pr ovide these benefits, as can most customer

- sited solar installations.

Comment 6 9 6 8 : Commenters expressed concerns regarding solar capacity and growth potential.

Response 69 6 8 : The final building block 3 methodology does not rely on RPS requirements or
state

- specific deployment estimates, but rather cost

- effective RE at an interconnection level. The EPA addresses considerations related to the technical feasibility and associate d grid integration117 costs of significant RE penetration in both section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP

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

Commenter s noted that solar implementation is still relatively young in its lifecycle, and continues to show promise as a growing constituent of the total electric power generation. However, commenter s said, even in the 5 years of records, t he growth rate has already slowed substantially, and won't be able to sustain the average year

- over

- year growth to reach the EPA's required target of 22,109,614 MWh by 2029. Commenter s said that this is 100 times greater than the current generation level a nd reflects an unachievable average growth rate of 44% per year sustained for 13 consecutive years. Commenter s suggested that the EPA take a more practical approach to promoting the development of renewable energy under the proposed rule by quantifying the potential in each state before determining a "conservative estimate" of available renewable energy. In order to support the EPA in a determination of promoting solar,
commenter s presented three possible scenarios, some of which are very aggressive, but th at represent a much more sound approximation of what Florida can be expected to achieve by 2030. In the first approach, commenter s assumed 13% average year

- over

- year growth beginning with 2012's demonstrated renewable energy generation beginning in 2017, but looking only at solar (no biomass growth). The second scenario developed by commenter s evaluated considers an estimation of pot ential solar generation in year 2029 using a quadratic curve. The third scenario developed by commenter s was based on an approach that uses an average year

- over

- year growth rate that is founded in a statistical analysis of actual data.

Commenter s did not agree with the EPA that West Virginia can integrate 410 MW of solar energy capacity by 2030. C ommenter s stated that, given West Virginia's total installed solar capacity is currently only 1.9 MW, this would call for an increase in solar capacity of 21,479%

, which is an unreasonable amount of growth for one state in less than 15 years. Commenter s objected that the EPA method is not based on a state

- specific analysis.

Comment 70 69 : Commenters recommended the EPA include distributed generation in building blo ck 3.
Response 70 69 : The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly in the reevaluation of solar cost and performance assumptions. The EPA has maintained distributed generation tec hnologies as non

- BSER measures that affected sources may rely upon to achieve standards of performance for a number of reasons, including data limita tions and EM&V concerns . The final building block 3 methodology is described in section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP

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

Commenter s stated distributed PV capacity (as of June 2014) will generate 10,450,000 MWh/year and displace 7,206,000 MT of CO2 per year. C ommenter s stated the mode of carbon displacement for distributed PV is identical or slightly better than utility PV, as distributed PV118 does not need to factor in line loss. C ommenter s stated distributed PV is clearly an effective means of reducing emissions and must be included in building block 3.

Commenter s suggested that, in order to capture all cost

- effective methods of reducing carbon dioxide emissions from EGUs, the EPA could co nsider revising its Block 3 assumptions to expressly consider and include distributed generation. Commenter s stated the City of Chicago has demonstrated, through local programs, the important role that individual residences, businesses, and public building s have in reducing reliance on fossil

- fuel fired generation.

Commenter s said that the Block 3 model does not include distributed generation as a major source of renewable energy capacity, despite the fact that net metered capacity now makes up about half of total U.S. solar PV capacity according to the EIA.

Commenter s stated the EPA must include all forms of solar, including distributed solar, in its final determination of the BSER. Commenter s stated that, while they generally agreed that renewable energy measures, and solar measures especially, are necessarily part of the BS ER, the

c ommenters were concerned that building block 3, as it is currently calculated is incomplete because it does not contain current solar market data and it does not include distributed solar. Commenter s stated that, as a result, the EPA's proposal do es not accurately reflect the emissions reductions achievable through application of the BSER. Commenter s stated distributed solar, utility solar and CSP are all a system of emissions reduction that is technically feasible, is implemented at reasonable cos t, is driving solar innovation, and does not negatively impact the electric system. Commenter s stated these forms of solar energy are adequately demonstrated to reduce emissions from covered sources and for these reasons, the EPA must include solar as part of building block 3 in its determination of the best system of emissions reduction. Solar energy measures are technically feasible and are being installed across the nation today, the c ommenters added. Commenters stated Missouri's net metering law allows up to 940 MW of solar, an amount which would generate a further 18,000 jobs and over $2 billion in economic activity in the Missouri economy (SEIA/GTM Research U.S. Solar Market Insight).

Commenter s said that States and utilities can leverage homeowners own capital and promote distributed generation by continuing or implementing effective net metering policies and by providing performance

- based incentives. Commenter s said that net metering allows owners of distributed gen eration systems (such as rooftop PV) to sell excess power back to the grid, generally for the full retail price. Commenters said i n place in 43 states, these policies have contributed substantially to the growth of residential solar in the U.S. and have pr ovided value and benefits to the home or facility net metered and the grid system

. Commenter s stated that performance

- based incentives (PBI) programs that offer homeowners an upfront rebate on the cost of distributed generation technologies (with the dolla r size of the rebate linked to the kW size of the system) have been highly successful at promoting growth of rooftop solar PV in the U.S. As the cost of rooftop PV systems continues to decline, however, some states have transitioned away from upfront, capa city

- based rebates toward performance

- based incentives (PBI), the c ommenters added. As opposed to providing a $/kW rebate when the system is purchased, PBIs offer a $/kWh incentive as an installed system actually generates electricity. PBIs can reduce expe nses for states and utilities while continuing to support deployment of residential solar systems, the c ommenters said.119 Comment 71 7 0 : Commenter s stated distributed generation (DG) installations are inherently situational and need to be modeled at the loca l distribution system level.
Response 71 7 0 : The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly in the reevaluation of solar cost and performance assumptions. The EPA has maintained distributed generation technologies as non

- BSER measures that affected sources may rely upon to achieve standards of performance for a number of reasons, including data limitations and EM&V concerns. The final building block 3 methodology is described in section V.E of the final rule preamble of the CP P and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP

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

Commenter s stated each utility has a unique situation that must be assessed before determining to what degree renewable energy can be deployed , and stated that, while the EPA makes a projection regarding additional renewables that can be added to the electric system in order to decrease utilization of fossil

- fuel fired generation, this projection includes a number of assumptions that ignore the on

- the

- ground realities faced by many operators based on the principle argument of "because someone else did it, you can." Commenter s added the Proposed Rule estimates for renewable resources need to reflect the increasing costs of integration with the increased penetration of these resources. Commenter s said that, while its members support developing and deploying DG, DG must be implemented in a safe, reliable, and cost effective manner. Although Minnesota has been a proponent of many DG initiatives, the c ommenters stated DG installations are inherently situational and need to be modeled at the local distribution system level. Because benefits and costs to the distribution system vary greatly with penetration of DG, cost

- based principles are critical, the c ommenters said. Commenter s stated that efforts to
cost

- effectively integrate PV and other resources to benefit the grid can also help ensure the long

- term viability of the electric grid that our economy and society depend upon.

Commenter s said that rates paid to DG customers should be consistent with con ventional methods used by utilities to value energy resources and to compensate comparable utility

- scale resources. Under that framework, the c ommenters added that utility

- sponsored community solar is likely to yield greater net benefits than rooftop solar . For example, in some PV deployment models, especially those that seek to monetize wealth transfers from taxpayers and other utility customers, the value to some individual consumers may be greater, but inequities will be introduced and overall costs to t he community will be higher, the c ommenters explained.

C ommenter s added that in developing DG resources, the role of government is not to pick winners and losers, but to develop decisional tools and trusted data. Commenters stated that in their opinion t o avoid this consequence arising from its rule, the EPA needs to provide improved policy resources, and develop objective case study data on cross

- resource optimization. This type of optimization promises to allow the commenters member communities to make ob jective and informed tradeoffs resulting in DG projects that are most beneficial to the community, the

c ommenters said. Commenter s stated locally owned and controlled utilities know how to facilitate new, more efficient, and cleaner ways of meeting custome r demand. Commenter s said that supporting innovation is necessary for electric supply diversification, which helps the utility120 minimize sharp cost increases or supply disruptions that can come from over reliance on one generating technology. Commenter s sta ted the Proposed Rule oversteps all of these community

based initiatives in favor of a brute force modeling approach.

Comment 72 7 1 : Commenter s stated renewable baseload or dispatchable generation, such as biopower, is needed to reinforce the variable generation resources, wind power and solar photovoltaics.
Response 72 7 1 : Maintaining sufficient baseload and ramping capacity to reinforce variabl e generation resources is a critical aspect to the IPM modeling used to demonstrate the technical feasibility and cost

- effectiveness of the building block 3 target generation levels. Refer to chapter 4 of the GHG Mitigation Measures TSD supporting the fina l CPP for further detail.

Specifically in regards to biopower resources, b iomass is not considered part of the best system of emission reduction in this rule and therefore it is not included in goal

- setting or compliance evaluations . However, similar to ot her technologies outside of BSER, biomass may be considered as a part of a state’s plan to meet the emission guidelines.

A discussion regarding the use of some biomass feedstocks for compliance purposes can be found in s ection s VIII.I and VIII.K of the fin al rule preamble of the CPP

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

Commenter s stated encouraging the deployment of diverse bioenergy resources will serve to insulate ratepayers from fuel price volatility caused by widespread reliance on natural gas. Commenter s stated diverse biopower will also tend to insulate electric utilities from severe impacts due to supply curtailments when natural gas demand spikes, such as during the extreme low temperatures of the January 2 014 "polar vortex" event.

Comment 73 7 2 : Biomass and BSER

. Many commenters commented on the perceived role of biomass in the baseline, goal setting and compliance, as well as how to account for biomass in those efforts. Some thought that biomass should not be included in establishing the baseline, targets, and com pliance, other thought that it should be included, and others still just commented that it should be treated consistently (included or excluded in all three components). Some commenters asserted that biomass should be counted as carbon neutral within build ing block assessments, whereas others asserted that it should be counted as full emissions. Some commenters thought that states should be able to choose whether or not to include biomass as part of state compliance measures. C ommenter s wanted inclusion of dedicated biomass plants in compliance assessments

. Response 73 7 2 : Biomass is not considered part of the best system of emission reduction in this rule and therefore it is not included in goal

- setting or compliance evaluations. However, similar to other technologies outside of BSER, biomass may be considered as a part of a state’s plan to meet the emission guidelines.121 For more information regarding Building Block 3, refer to s ection V.E of the final rule preamble of the CPP

. For more information regarding biomass in the IPM baseline projection, refer to EPA v5.13 Base Ca se Documentation Supplement to Support EPA’s Proposed Carbon Pollution Guidelines for Existing Electric Generating Units in the docket.

A discussion regarding the use of some biomass feedstocks for compliance purposes can be found in s ection s VIII.I and VI II.K of the final rule preamble of the CPP

. In November 2014, the agency released a second draft of the technical report, Framework for Assessing Biogenic Carbon Dioxide for Stationary Sources . The revised Framework, and the EPA’s Science Advisory Board ( SAB) peer review of the 2011 Draft Framework , finds that it is not scientifically valid to assume that all biogenic feedstocks are “carbon neutral” and that the net biogenic CO 2 atmospheric contribution of different biogenic feedstocks generally depends on various factors related to feedstock characteristics, production, processing and combustion practices, and, in some cases, what would happen to that feedstock and the related biogenic emissions if not used for energy production.

A discussion of the use of biomass feedstocks and associated biogenic CO2 assessment can be found in in s ection s VIII.I and VIII.K of the final rule preamble of the CPP

. A discussion regarding the current status of the development of the revised Framework and how information from t he revised Framework and the related peer review processes could be used to inform how states and EPA assess biogenic CO 2 can be found in s ection s VIII.I and VIII.K of the final rule preamble of the CPP. For more information regarding the Framework , see: http://epa.gov/climatechange/ghgemissions/biogenic

- emissions.html

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

Commenter s stated they believe that one of the biggest flaws of the approach to RE as BSER in the proposed rule is inclusion of wood biomass in the 2012 Baseline and the calculated average regional growth target. C ommenter s said that the EPA has not established at this time if b iomass electric generation is "carbon neutral" or not, even in light of EPA's release of a second draft of the Framework/or Assessing Biogenic CO2 Emissions from Stationary Sources and corresponding memos.

Using EIA data, c ommenter s determined seventeen st ates have over one third of their RE generated by wood

. Commenters stated i f future EPA rulemaking determines that a portion of this wood is not carbon neutral or allows some fraction of the CO2 emitted as a pollutant, it would drastically impact the achie vable RE in many states. Commenters said u ntil this decision is made, the EPA cannot include baseline generation from wood to establish RE growth rates and future generation targets . Commenters asserted t he EPA must remove wood generation from 2012 RE gene ration for each state, and recalculate everything for the affected states.

Commenter s stated the EPA must be consistent in accounting for biomass emissions, both in its state goal calculations and in its regulations for compliance demonstrations, by either adjusting the "effective" 2020 RPS rate to exclude biomass, or to definitively affirm that states can rely on122 biomass as a carbon neutral resource in developing implementation plans. Commenter s stated that, as with hydroelectric generation, many state RPS are designed to include the contributions from biomass resources. Commenter s stated the EPA uses the contribution of biomass resources to determine the baseline renewable generation for each state that is then used to develop the building block 3 goals; h owever, the EPA had not made a determination of whether states would be able consider biomass for compliance purposes at the time of its proposal. Commenter s stated that, on November 19, 2014, EPA released its second draft of the Framework for Assessing Bi ogenic Carbon Dioxide Emissions from Stationary Sources, and anticipates seeking further review of the Framework through the Science Advisory Board and public comment. Commenter s stated the revised Framework does not provide definitive answers on these iss ues, only proposed calculations that require detailed inputs in order to determine whether, and to what extent, biogenic energy sources may be relied on to reduce CO2 emission rates or mass emissions in the context of the proposed CPP. Commenter s stated that, at present, all EPA has committed to do is to second

- guess state plan submittals based on criteria that it has not clearly defined.

Commenter s opined that EPA incorrectly assumes zero CO2 emissions from all renewable sources in Building Bloc k 3. Commenters stated the 2012 renewable generation levels used by EPA as the basis for its future renewable generation levels for Building Block 3 include various forms of biomass, and commenter s noted that they do emit CO2

. C ommenter s stated these bioma ss CO2

- emitting fuels include: black liquor, landfill gas, municipal solid waste, sludge

, and wood wastes. C ommenter s further opined that, therefore, EPA has not properly accounted for additional CO2 emissions from biomass sources in Building Block 3, due to the Agency's failure to examine each state's renewable generation mix. Commenter s pointed out that the EPA issued second draft of its Framework for Assessing Biogenic Carbon Dioxide from Stationary Sources does not clearly define biomass as a zero

- emiss ion renewable resource; and that the EPA should therefore definitely determine that biomass fuels are carbon neutral and that their use for electricity generation constitutes as a zero

- emission renewable resource.

Commenter s said by lumping bioenergy with all other renewables, and biomass and waste

burning as if they reduce emissions as effectively as wind and solar, EPA may be inadvertently promoting these technologies as mitigation measures in the GHG rule. Further, c ommenters asserted counting these emis sions as zero can also introduce significant errors into the estimate of present day power sector CO2 emissions and target emissions rates, which are likely to be carried forward as states attempt to meet target emissions goals. Commenters state d this prob lem is most apparent for those states where bioenergy and waste

- burning contribute a significant share of total CO2 emissions.

Commenter s stated that biomass co

- firing could have a significant impact on their state's future, as right now it is very coal de pendent. However, in some areas the transportation of fuels to the plant would be cost prohibitive, and therefore c ommenters requested the option to utilize biomass co

- firing only where it is cost effective, and not have it forced upon their state.

Comment er s stated that EPAs proposed approach sets state RE goals based on 2012 total generation, 2012 RE generation, and regional RPS averages. Commenters stated 2012 generation data and many of these RPSs do not differentiate on the basis of biomass feedstocks' lifecycle CO2 implications. Commenter s stated that a lifecycle analysis was considered in setting state RE123 goals under the alternative RE approach, even though existing biomass generation helps determine state RE targets. Commenter s stated that in a memor andum issued (Memorandum from Janet G. McCabe) before the CPP comment deadline, EPA indicated that biomass generation would be analyzed for compliance purposes based on a feedstock lifecycle analysis. Commenter s stated that EPA should clarify its treatment of biomass in goal

- setting and compliance.

Commenter s also stated that EPA should clarify the treatment of biomass co

- fired with coal, as some TSDs indicate that co

- fired biomass is included in states' baselines, while the RIA indicates that biomass co

- fi red with coal was treated as RE. Commenters also asserted that EPA should clarify whether the useful thermal output from biomass CHP units was included in states' baselines.

Commenter s stated the whether the EPA intends for biomass to be considered a carbo n

- neutral energy source or not, it should provide regulatory consistency in its treatment of biomass generation and not inadvertently penalize states with biomass generation. Commenter s encouraged the EPA to treat biomass units consistently in both target setting and target compliance calculations, and to ensure that final rule language includes applicability criteria referenced in the proposed rule preamble.

Commenter s stated that biomass co

- firing is a promising technology, but U.S. EPA errors in allowing for unrealistic biomass usage in the IPM model and until the technology has matured and sufficient engineering data and experience are gathered, U.S. EPA should refra in from this unrealistic assumption. Commenters w ere concerned that biomass co

- firing could have negative impacts on existing controls, impacting both their efficiency and potentially increasing the amount of maintenance necessary to maintain adequate leve ls of controls.

Commenter s asserted that NREL and the EPA overestimate the amount of biomass that is both available and suitable for fuel use. Examples they gave include methane from human/animal waste and crop residues, both of which make unlikely fuel so urces. Commenters noted that most biomass co

- firing plants are unable to burn many of the potential fuel sources EPA considers viable in their proposal and states that all new co

- firing plants are being built to accommodate wood burning, not crop residue o r other waste biomass. Lastly, c ommenters stated how biomass isn't always available year round, and will therefore need to be stored, which will be expensive.

Commenter s agreed that the EPA should include sustainable biomass and waste wood utilization in B uilding Block Three, Renewables, as a source of reliable and dispatchable low carbon electricity. Commenter s supported the inclusion of any measure that mitigates CO2 as credit towards goal achievement, but did not believe that other measures should be req uired as a facet of BSER.

Commenter s added that the EPA treats biomass units as carbon

- neutral resources for goal

- setting purposes, by including their MWh of generation in the denominator of the formula in Building Block 3, but including no CO2 emissions i n the numerator for these units. Commenter s w ere concerned, that in compliance, the EPA implies that biomass would not be treated as a carbon

neutral resource, since it refers to the EPA's Biomass Accounting Framework for 111(d) plan development where the methodology describes adjusting top

- of

- stack biogenic CO2 emissions124 based on the particular feedstock and location. Commenter s noted that the EPA acknowledges that in the review of the Framework, the Science Advisory Board indicated that biomass cannot be considered " ... carbon neutral a priori, without an evaluation of the carbon cycle effects related to the use of the type of biomass being considered." 79 FR 1446. Commenter s said that states are penalized in the goal setting formula for having biomass pl ant because treating such plants as carbon neutral (i.e., not including those plants' CO2 emissions) in the goal setting formula makes the goal more stringent, while treating as non

- carbon neutral for goal compliance then discounts the use of biomass for g oal achievement. Whether the EPA intends for biomass to be considered a carbon

- neutral energy source or not, commenter s said that it should provide regulatory consistency in its treatment of biomass generation and not inadvertently penalize states with bio mass generation. Commenters noted similar concerns and stated that to the extent that such a mismatch makes its way into the final rule, the EPA's assumptions regarding the trajectory of future renewable energy use will be unrealistic and arbitrary.

Commen ter s also noted inconsistency in the EPA's treatment of biomass when the Agency included existing biomass in the 2012 baseline as renewable energy in justifying a more stringent emission guideline, but does not allow biomass to count toward compliance. Com menter s concluded that the EPA must provide consistent treatment of biomass and should modify any final rule to ensure that any biomass included in the emission guideline calculation be consistent with how the EPA will allow states to account for biomass g eneration in compliance.

Commenter s stated that BSER must deal with total emissions not a subset of electric generators. Commenter s asserted that biomass electric generators must be included in the performance standard for 100% of their emissions. Comment er s concluded that the urgency of climate change demands that we arrive at the best system of emissions reduction and that is not what has been proposed.

Commenter s questioned if, given that the source of the energy is a natural, renewable source (biogas), this energy should be considered under Block 3 or if it fit better under Block 4.

Commenter s disagreed with the EPA's assumption in building block 3 that there are zero CO2 emissions from all renewable sources. Commenter s stated that the EPA has not deter mined yet whether, or to what extent, such biomass fuel sources such as black liquor, landfill gas, MSW, sludge, and wood wastes, will be considered CO2

- neutral for compliance purposes, citing its not

yet

- finalized Biogenic CO2 Accounting Framework. Commen ter s added that the EPA should address this compliance risk and regulatory uncertainty by examining each state's renewable generation mix and recalculating its targets based on corrected renewable sources figures, including any determination it makes on bi omass.
Commenters added that the state emission limiting goals proposed by the EPA for renewable energy in building block 3 are extremely optimistic, and it should amend its definition of affected facilities to fully account for CO2

- neutral biomass fuel st reams in all of its CO2

- related NSPS rulemakings.

Commenters stated that EPA needs to provide additional guidance and clarity with how biomass can be incorporated in compliance demonstrations under Building Block 3.12 5 Commenters said that the EPA's proposed BB 3 goals for Florida for renewable energy are extremely optimistic, and if Florida utilities have any hope of achieving CO2 emission reductions envisioned in BB 3, the EPA must amend its definition of affected facilities to fully account for carbon neut ral biomass fuel streams in each of the three CPP rules.

Commenter s described Michigan's significant biomass resources and recommended that biomass be considered carbon neutral. Commenter s suggested that Michigan's definition of biomass meets the requirements of Building Block 3. Commenter s suggested that the final rule should clarify what types of biomass can count toward Building Block 3. In cases where a generator uses multiple fuels, su ch as a woody biomass plant that burns both woody biomass and tire

derived fuel (which is not considered renewable in Michigan), commenter s said that the generation reported would include all of the MWh generated, but RECs would only be awarded for the ren ewable portion of the generation. Commenter s also said that however biomass is treated in the rule, the EPA should treat it the same in both the goal setting and the compliance demonstration. Commenter s added that Michigan does not agree that biomass be in cluded in the numerator as "other generation" since this is a carbon neutral source of energy. Commenter s said that the treatment of biomass in the final rule should only appear in the denominator as new biomass energy production comes on line and counted as a renewable resource. Commenter s agreed that biomass should be explicitly included as a compliance option for Building Block 3.

Commenter s said that the EPA's inconsistent biomass policy undermines the RIA.

Commenter s said that the "illustrative" compl iance scenarios used in the RIA to calculate the costs and benefits of the Proposed Rule include only those sources "included in the calculation of the state goals." Commenter s said that this means that the RIA's scenarios include biomass co

firing, but ex clude "dedicated" biomass facilities. At the same time, commenter s stated, the RIA recognizes that individual states might include "sources of generation" other than those considered in state goal setting in calculating their own emissions rates for compli ance purposes. Commenter s w ere concerned that this leaves open the possibility that individual states may rely on expanded biomass energy generation as a compliance measure. Although the RIA acknowledges this possibility, commenter s stated that it does not fully or fairly account for its costs and benefits, e.g., the RIA does not consider the costs of CO2 from biomass combustion at all. Commenter s said that the RIA's failure to include dedicated biomass generation in compliance scenarios also omits consider ation of the relatively high cost of this generation. Although the RIA does not consider these costs, commenter s added that it does appear to count employment from biomass plant construction and operation as a benefit, which obviously skews the resulting a nalysis. Commenter s added that the RIA's exclusion of dedicated biomass from its compliance scenarios also results in a potential undercounting of costs related to conventional and toxic pollutant emissions. Commenter s noted that a recent study of 88 air p ermits for bioenergy facilities shows that permitted criteria air pollutant emission rates for biomass facilities typically exceed those for coal facilities on a lbs/MWh basis, and vastly exceed those for natural gas facilities by more than 800% for every major pollutant.

Commenter s stated that the EPA considered biomass energy as a renewable energy source in calculating the state emission reduction goals under Building Block 3. Commenters stated that by relying on state renewable portfolio standard (RPS) programs to calculate each region's potential for renewable energy in its BSER analysis and excluding the biogenic CO2 emissions from the126 total renewable energy CO2 emissions, EPA has implicitly incorporated biomass energy as carbon neutral

. Commenters con tended that biomass energy is included as a renewable energy source in all state RPS programs and an important option for addressing GHG emissions.

Commenter s stated that the EPA must fully account for all biomass CO2 emissions

. Commenters stated that the Proposed Rule effectively ignores CO2 emissions from biomass energy generation in both target

- setting (by treating biomass energy as zero

- carbon "renewable" energy) and compliance (by allowing states to determine whether or not to count biomass CO2). Comme nters stated that EPA has provided neither a clear explanation nor an adequate evidentiary justification for this approach

. Commenters asserted that these errors must be corrected before the Proposed Rule can be finalized

.
Commenter s stated that bioenergy is a costly way to "reduce" CO2 emissions as biomass power plants are expensive to build and require substantial and ongoing infrastructure investments. Commenters stated that bioenergy is substantially more expensive than onshore wind, per kilowatt

- year, including both the initial infrastructure investment and ongoing fixed and variable
costs. Commenters stated that replacing some coal with low levels of biomass co

- firing may result in stack CO2 increases.

Comment 74 7 3 : Commenters stated it is critical t hat the EPA utilize up

- to

- date data in the development of the Clean Power Plan in order to enable more accurate compliance planning.
Response 74 7 3 : The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly in the reevaluation of solar and wind cost and performance assumptions. The final building block 3 methodology is described in detail in section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitigation Measures TSD supporting the final CPP

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

Commenter s stated that, as the rule is cur rently written, out

- of

- date data is sometimes used when more current information is available. Commenters stated, for example, in terms of solar, the data used does not reflect current solar capacity or market projections; today's solar capacity is already exceeding the estimates the EPA has used. C ommenter s stated this is also the case for other resources such as hydropower.

Commenter s recommended that the EPA use the most up

- to

- date technology data to determine renewable energy potential per state. Commen ter s stated that, based on the new wind turbine technology, it is clear that Louisiana's coastal area has some of the country's best wind resources. Commenter s stated that, while the National Renewable Energy Lab maps used data from the year 2000 to determ ine wind energy potential, other NREL studies show that Louisiana has a wide range of renewable generation opportunities to apply to the state's energy mix. Commenter s stated that solar, hydro, and biomass are all local resources that have been largely unt apped. Commenter s stated that hydropower is a reasonable baseload energy opportunity.127 Commenter s stated the agency should use the most recent cost and performance data for renewable energy technologies, such as wind and solar. Commenter s stated that, by th e time the rule is finalized, the EPA should have access to final 2014 data and the agency should use that information in establishing state targets and building from the most recent data on renewable generation is critical, given the rapid growth in deplo yment of these resources in recent years. Commenter s stated the EPA's assumptions should be updated to reflect new NREL resource assessments, more recent data from actual projects, and credible studies projecting continued cost reductions and technology im provements through 2030

.

Comment 75 7 4 : Commenter s stated there are errors that need to be corrected under the proposed approach

. Response 75 7 4 : The errors cited by the commenter relate to RPS requirements, which are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rule. The final building block 3 methodology is described in detail in section V.E of the final rule preamble of the CPP and in chapter 4 of the GHG Mitig ation Measures TSD supporting the final CPP

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

Commenter s stated that, in reviewing the spreadsheet and the inherent calculations EPA relied on to establish the state goals for N orth Carolina, NCDENR discovered a number of errors or incorrect assumptions in the calculations. Commenter s provided an Appendix C which details these concerns. Commenter s trusted that the EPA will make the recommended corrections as outlined in Appendix C so that the final goals for North Carolina will be based on correct assumptions. Commenters stated o ne area of concern include the misrepresentation of the state's Renewable Energy and Energy Efficiency Portfolio Standard.

Comment 76 7 5 : Commenters asserted that EPA has no Section 111 authority over RE technologies.

Response 76 7 5 : The incremental RE that affected EGUs may procure to demonstrate compliance with their relevant rate

- or mass

- based goals under the final CPP is not regulated under Section 111. Qualifying compliance resources are not affected EGUs. Refer to the applicability definition provided in the preamble for additional information.

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

Commenters stated that regarding Block 3, except possibly for renewable generation technologies such as biomass, EPA has no Section 111 authority over these generation technologies (nuclear, renewable) at all. Commenters said that first, they do not release any air pollution, p reventing the EPA from making an endangerment finding involving these units under Section 111. Commenters said that further, the definition of stationary source requires that the source "emits or may emit any air pollutant." Commenters said since nuclear a nd non

- biomass128 renewable generation emit no air pollutants of any type, it forecloses the ability of EPA to propose any rules regarding these generation technologies.

Comment 77 7 6 : Commenters stated the utilization of imported low

- and non

- emitting generation from Canada as a CO2 emission reduction measure should be provided in the final rule as a compliance option for affected EGUs to adjust their CO 2 emission rates.

Response 77 7 6 : The EPA will work with states using the rate

- based approach that ar e interested in allowing the use of RE from Canada to adjust CO 2 emission rates. In these cases, all conditions for creditable domestic RE must be met, including that RE resources must be incremental and installed after 2012, and all EM&V standards must be met. For additional information, refer to section VIII of the preamble.

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

Commenters said that, the emphasis on maximizing flexibility for states is a hallmark of EPA's
propos al. Commenters said, that the final rule should specifically recognize and leverage the integrated nature of the North American electricity grid, and promote the continued two

- way flow in cross

- border electricity trade. Commenters said, the rule should cle arly affirm that states will have the flexibility to allow affected entities to utilize the importation of low

- and non

emitting electric generation from Canada as a CO2 emission reduction measure (including in their respective state plans, where appropria te).

Commenters stated the utilization of imported low

- and non

- emitting generation from Canada as a CO2 emission reduction measure comports with EPA's assurance that "[s]tates may also identify technologies or strategies that are not explicitly mentioned in any of the four building blocks and may use those technologies or strategies as part of their overall plans." [79 Fed. Reg. at 34,837]

Commenters stated in step with the above discussion, CEA notes with encouragement that EPA's commitment to flexibility also encompasses a pledge not to confine states to the four building blocks determined to constitute BSER. Comm enters added EPA makes a definitive declaration along these lines during its discussion of how BSER was determined: "[E]ach state has the discre tion to adopt emission reduction measures other than the measures found by the EPA to comprise the BSER." [79 Fed. Reg. at 34,879]

Commenters added here again CEA sees strong grounds upon which a state can argue for the ability to leverage integration with Canada as part of its strategy for maximizing CO2 emission reductions under the 111(d) framework. Commenters stated if states are able to clearly demonstrate how the importation of low

- and non

- emitting generation from Canada can translate into measureabl e, meaningful decarbonisation of their electric generation fleets, then CEA believes that: (i) it is incumbent upon the EPA to offer certainty to interested states that they will have this option at their disposal; and (ii) any signal to the contrary repre sents an undue limitation on states' ability to look beyond the four BSER building blocks for permissible actions to achieve their rate

- based goals.129 3.3.2 Current level of performance

This section discusses methodologies and data used to assess the current performance of Cleaner Generation technologies under building block 3.

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

Comment 1: The ba selines used in the setting of building block 3 targets in the EPA’s proposal were developed using erroneous data or assumptions for some states not representative of actual performance.
Response 1: The final methodology for building block 3 relies on incr emental generation from the BSER data year of 2012, which eliminates the need to set a baseline level of generation. Further, State RPS requirements are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rule . The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenter s stated that the EPA should carefully consider large year

- to

- year fluctuations that occur and whether such anomalies, such as variations in hydropower and plant outages, had an undue influence on the proposed baseline in certain states. Commenters noted that if this is the case, then the EPA s hould work with those states to make appropriate adjustments to the final rule.

Commenter s stated that the EPA should not adopt the use of a renewable generation floor equal to the amount of the state's actual 2012 renewable generation for states that exce ed the regional
average. Commenters stated that this would penalize states for taking early action in adopting renewable energy policies. Commenters stated that Iowa and other early actors should be rewarded for taking a leadership role in installing renewable generation. In a footnote, Commenters stated that Iowa utilities' customers have paid for the renewable generation, and setting a floor based on Iowa's 2012 renewable generation would not appropriately reward them for their early investments.

Com menter s used the analogy of a car to highlight flaws with the EPA's approach. Commenters stated that the EPA assumes that because for one car at one point in time a speedometer indicated a speed of 60 mph that is the car's velocity of travel for the entire trip. Commenters noted that just because the car has that speed at one point does not mean that it can or should be maintained for the entire trip. Commenters stated that the EPA further assumes that this speed, or rate as applied to the proposed rule, ca n be applied to all states with no determination as to whether it is achievable or cost effective. Commenters stated that states are not fungible as related to RE potential; the EPA cannot assume that a rate achieved by one state in one year can be achieve d by another state. Commenters further stated that the alternative also overburdens states which130 have developed RE early. Also, c ommenters stated, since the alternative is still based on generation and not capacity, it does not account for the fact that wi nd and solar are unpredictable and intermittent renewable resources. Commenters stated that for the above reasons, the EPA should re

- propose the rule and set RE targets based on what is achievable for each state, taking into account cost and energy require ments as required by the CAA.

Commenter s stated the baseline numbers appear to be erroneous in multiple states, both on a cumulative and individual renewable technology basis. Commenters stated that the EIA data also appears to include data derived from al l generation sectors. Commenters stated that extending the baseline beyond the electric sector, not only modifies the cumulative values (sometimes significantly), but also is not a representative reference point in determining final compliance targets. Com menters suggested that actual renewable generation values, as reported by the states, should be utilized to begin with the most accurate data set, as not doing so will ultimately lead to erroneous targets and conclusions. Additionally, the c ommenters state d, the characterization of biomass as a renewable resource that counts historically and not as future resource option is inconsistent. Commenters stated the methodology to reach the final targets is a far more important consideration than the baseline valu es selected, but more accurate baseline values simply helps to provide the clearest reference point to then determine realistic State targets.

Commenter s stated EPA used 2012 data as a baseline to establish individual state goals in building block 3, but a single year can be an anomaly, and EPA should have used a more robust set of data in calculating its goals. Commenters stated increased generation from renewable resources coupled with changes in the total generation produced in 2013 and 2014 impact both the regional growth factor calculated by EPA and the resulting individual state renewable goals. Commenters stated using 2013 generation data would decrease the regional renewable energy growth rate calculated by EPA. Commenters provided a table summarizin g this decrease for three regions as an example. Commenters stated the change in the growth rate using 2013 data can have a significant impact on the renewable energy goal that EPA calculates for state goals. For instance, the c ommenters stated that utiliz ing 2013 data reduces the interim and final renewable energy goals for Arkansas by 15% and 22% respectively. Commenters also stated that likewise, for Louisiana the interim and final renewable energy goals are reduced by 10% and 17% if using 2013 as a base line. Commenters stated EPA's selection of 2012 as the single baseline year in its goal calculation efforts is unreasonable and arbitrary.

Commenter s stated that if EPA establishes state baselines, they must be representative of actual performance related to the goals of the rule and must not, for example, work against states or entities that took early action contributing to that goal. Commenters stated that EPA also must consider significant year

- to

- year variations that have occurred, and will continue to occur. Commenters stated that many states have observed, for instance, anomalies in hydropower and plant outages had an undue influence on their baseline in the proposal. Commenters suggested EPA should work with those specific states and others with conc erns, to make needed adjustments in any final rule to show how such an approach works over time.

Commenter s stated that the EPA assumes that current RES requirements are a reasonable foundation on which to develop state RE requirements, but this does not account for the fact that the RES ( the c ommenters are referring to the RES for the state of Missouri) only applies to131 Investor Owned Utilities and not to all utilities. Commenters stated that this assumption inserts error in the baseline determination for RE.

Comment 2: EPA should a pply UCS Recommended Percentage Targets Using the Amount of Creditable RE in a State

. Response 2: The final methodology for building block 3 relies on incremental generation from the BSER data year of 2012, which eliminates the need to set a baseline level of generation. Further, State RPS requirements are not a factor in quantifying the amount of cos t

- effective RE that is part of the BSER in the final rule. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this c omment:

Commenter s proposed that the EPA apply UCS recommended percentage targets using the amount of creditable RE in a state. Commenter s suggested that EPA may also want to consider modifying how the baseline RE generation and starting RE performance lev el is determined for each state. Commenters mentioned an alternative to setting the baseline on current RE generation: the EPA could require states, working with their utilities and affected EGUs, to account for renewable energy generation, which they woul d be able to take credit for under the CPP as of the date they submit their state plan. Commenter s stated that this would most often involve in

- state RE generation less RECs owned by out

- of

- state persons and any RECs generated
out

- of

- state but owned in

- sta te plus any RECs generate out

- of

- state but owned in state (referred to as sponsored renewable energy. Commenters stated that the denominator for determining the starting RE performance level and target level of performance would be overall consumption of

e lectricity in the state in the starting and compliance year. Commenters further stated that state target would increase from the sponsored RE baseline to the target RE performance level via an EPA determined methodology. Commenter s stated that states will need to audit their current level of sponsored RE in order to design a state plan that achieves their RE targets.

Commenter s expressed that their suggested approach would allow states which currently export a large amount of renewable energy to establish a more accurate baseline; it would also ensure that states which import a large amount of renewable energy would start at a higher RE baseline and are not allowed to backslide or remain stagnant early on in the compliance period.

Commenter s noted that using this process from the outset will allow the EPA the opportunity to resolve at the outset questions about how states will allocate credit for projects with multiple sources of policy support. Commenter s then noted that states would have greater certainty a bout how different RE policies will work within their plans, and it will allow the EPA to test the sufficiency of existing REC trading systems for compiling this type of information so that refinements to the system can be made in time for the plan perform ance period.

Comment 3: Baselines Do Not Account for Displaced Coal

.132 Response 3: The final methodology for building block 3 relies on incremental generation from the BSER data year of 2012, which eliminates the need to set a baseline level of generation. The BSER is forward

- looking in identifying cost

- effective opportunities for emission reductions from 2012; however, the cost and availability of these emission reduction opportunities is the result of many factors, including previous actions. The final bu ilding block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenter s stated that based on EPA's goal calculations, both a lower baseline emission rate and high levels of RE and ZE in the baseline year cause a state's ultimate performance goal to be more stringent. Commenters stated this is because EPA does not account for the coal

- fired megawatts that already have been displaced by RE and NGCCs. Commenters stated e xisting (i.e., pre

- 2012) RE and ZE therefore negatively impacts early

- acting states by making the baseline emissio ns rate artificially low. Commenters stated for example, RE displaced a significant amount of coal generation in Minnesota prior to 2012. Commenters referenced retirement of coal

- fired units that were replaced with NGCC facilities, noting these coal retire ments resulted in significant reductions in CO2 emissions and the state's average emissions
rate. Commenters also noted the addition of new wind farms and additional large amounts of purchased wind power. Commenters stated this wind power, which needed the more flexible,
gas

- fired generation that Xcel Energy built to replace the retired coal plants, also resulted in reduced utilization of the new NGCC units. Commenters stated that absent the retirement of these coal

- fired units and the new wind investments, Minnesota's baseline emission rate would have been significantly higher. Commenters stated that applying EPA's goal calculation methodology to this higher baseline emission rate would have resulted in less stringent performance goals for Minnesota.

Comme nter s also stated that existing hydropower and nuclear energy is not explicitly included in states' baselines even though they displace other fossil

- fuel fired generation. Commenters stated that where such sources would have had an aggregate CO2 emission r ate greater than states' baselines under the Proposed Rule, existing hydropower and earlier investments in carbon

- free nuclear contributes to artificially low baseline calculations.

Comment 4: The EPA’s approach to r enewable portfolio standards for s tate s meeting building block 3 r equirements is inappropriate for some states and does not account for regional disparities.
Response 4: State RPS requirements are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rule. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenter s stated that it was inappropriate for the EPA to rely on the NC REPS when setting renewable energy goals for Florida under Building Block 3. Commenters stated that NC's REPS requirements may be met using hydroelectric, biomass, and renewable power imported from133 other states, and up to 40 percent of the NC renewable requirement may be met with energy efficiency. Commenters stated that it was inappropriate to base Florida's renewable goal on a goal that combines renewables and energy efficiency and to have another goal for energy efficiency in Florida. Commenters stated that the EPA must account for these discrepancies and adjust Florida's goal accordingly. Commenters also expressed concern over EPA's assumptions regarding renewable energy in the Southeast.

Commenter s noted that the state of Iowa is a leader in wind energy generation. Commenters stated that Iowa recognizes and appreciates that the EPA has awa rded Iowa's early investment in renewables by using a regional average to calculate state goals. Commenters stated that the same unit of renewable energy may be used to show compliance with both a state RPS and a 111(d) state plan. Commenters expressed sup port for the proposed rule's position on this issue and stated that there was no reason this should not be allowed. Commenters also noted that allowing this would permit states to use the same unit of renewable energy to show compliance with the state's RP S and 111(d) which would reward the state for adopting proactive policies.

Commenter s described the EPA's plan for regional groupings (and RPSs) as a hodgepodge which is not demonstrated, which does not exist anywhere in the real world, and the methods for constructing it were intellectually arbitrary. Commenters stated that the EPA failed to account for exemptions for municipal and coop utilities including those based on purchase of out

- of

- state power. Commenters also criticized the EPA's assumption that t he levels of nuclear generation will continue are based on nothing better than speculation.

Commenter s pointed out that the EPA failed to account for the wide regional disparities in the availability and cost of renewable resources in the U.S. when it assi gned a de facto RPS for each state within a given region. Commenters noted that the EPA failed to consider some states' existing renewable mandate credits certain types of renewable resources in ways that reduce the absolute amount of renewable generation is required to satisfy the mandate. Commenters provided Delaware and Colorado as examples since both offer a credit multiplier for specific types of renewable generation. Lastly, c ommenters noted that increasing reliance on renewable energy would require t he construction of additional transmission lines which would take years to build.

Commenter s noted that the EPA should not finalize its proposed RE target for Texas by applying the RPS of Kansas to Texas while ignoring the existing Texas RPS.

Commenter s ex pressed concern over the EPA assumption that adopting RPSs would be "best practices" for all states which do not currently have one. Commenters stated that the EPA fails to note that RPSs are an independent legislative choice meant to trade off higher elec tric costs for the presumed environmental and economic development of renewable power. Commenters pointed out that many states which possess significant wind and/or solar resources have chosen to adopt portfolio standards, and many states which do not poss ess significant quantities of renewable resources have chosen to avoid adopting portfolio standards. Commenters made the point that whether or not one state has adopted portfolio standards has no bearing on the standards another state chooses to adopt or n ot adopt; therefore there are not "best practices" which can be imported from state to state. Commenters also stated that the EPA is not in the position to dictate to states what "best practices" should be in terms of renewable energy.134 Commenters stated th at the EPA contradicts itself by claiming that states that have adopted renewable portfolio standards demonstrate "best practices". Commenters noted that the EPA's goals would require states to achieve more renewable resources than most states would mandat e in that state's applicable portfolio standard. Commenters stated that what the EPA refers to as best practices are in reality EPA outcome

- driven assumptions as to the type of portfolio standard that it thinks state legislatures should adopt.

Comment 5: Georgia's RE Target Should Be Less Than or Equal to 7.5%

. Response 5: State RPS requirements are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rule. The final building block 3 methodology sets target generation levels at the interconnect

- level and is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenter s stated EPA misinte rpreted North Carolina's Renewable Energy and Energy Efficiency Portfolio Standard (REPS) when setting the renewable energy target for Georgia and other Southeastern states. Commenters stated that based on North Carolina's REPS, Georgia's RE target should be no more than 7.5%. Commenters stated that North Carolina's REPS Secondary Target for electric membership corporations and municipalities is 10% by 2018 and thereafter. Commenters stated that North Carolina's REPS statute section 62

- 133.8(c)(2) states t hat "An electric membership corporation or municipality may meet the requirements of this section by any one or more of the following" including: (c) Purchase electric power from a renewable energy facility or a hydroelectric power facility, provided that no more than thirty percent (30%) of the requirements of this section may be met with hydroelectric power, including allocations made by the Southeastern Power Administration." Commenters further stated in this case North Carolina's REPS allows the use of up to 30% of existing electric hydro generation to be counted towards the 10% REPS target. Commenters stated that in EPA's proposal the use of existing electric hydro generation is not allowed; so the exclusion of hydro generation would effectively reduce the comparable RE secondary target to 7% for EMCs.

Comment 6: Allow s tates to a djust the e mission r ate from "Affected EGUs" to r eflect r eductions in c arbon e missions from o ther f ossil f uel c arbon e mission s ources

. Response 6: There is no building block 3 target generation level expressed for Alaska. Refer to section VIII. I for detailed guidance on incorporating CO2 emission reduction measures in state plans.

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

Commenter s asserte d that the proposed rule does not clearly explain what RE and EE measures may be used to adjust the statewide emission rate for compliance purposes. In particular the rule, Commenters opined that it is unclear with respect to the extent to which a state mu st demonstrate135 that RE and EE measures factually result in reduced generation at "affected EGUs." Commenters reported that most electric power in Alaska is generated from fossil fuels such as natural gas or diesel fuel and carbon reductions are being achie ved in many communities not connected to "affected EGUs." Commenters stated crediting Alaska for new RE generation not connected to "affected EGUs" also makes sense because EPA used statewide RE generation figures for Alaska's baseline and target rate. The refore, c ommenters requested that EPA clarify that the rule would allow states to adjust the emission rate from "affected EGUs" to reflect reductions in carbon emissions from other fossil fuel carbon emission sources.

Comment 7 : A consistent definition of renewable energy technologies for the goal computation
p rocess is requested.
Response 7 : All RE technologies that are used to quantify building block 3 target generation levels may be used to demonstrate compliance with the standards of performance. Further, the EPA has provided additional guidance on non

- BSER measures that may be used to ach ieve standards of performance in section V.A.6 of the preamble. Refer to section VIII.G.1.b for further guidance on actions taken to adjust the CO2 emission rate of an affected EGU.
The following are summaries of the specific public comments under this co mment:

Commenter s noted that certain types of renewable generation which were included in the goal setting as zero carbon would not be contributed to compliance demonstration under the proposed rule. Commenters requested a consistent definition of renewabl e energy technologies for the goal computation process and for state compliance purposes.

Comment 8 : The EPA's method of incorporating renewable energy into Building Block 3 only accounts for renewable generation in a specific state and fails to address t he export and import of renewable energy between states , e.g., for Wisconsin

. Response 8 : The EPA has finalized a building block 3 methodology that is premised on the regional availability of incremental RE, which is described in detail in V.E of the prea mble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenter s stated EPA's method of incorporating renewable energy into Building Block 3 only accounts for renewable generation in a specific state and fails to address the export and import of renewable energy between states. Commenters stated that f or example, in 20 13 Wisconsin generated only 48 percent of the renewable energy it used, with the remaining 52 percent being imported from other states.136 Comment 9 : The EPA is requested to exempt certain states and/or utilities from the proposed rule.
Response 9 : The final rule applies to all affected sources.

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

Commenter s described how the EPA assumes that 12% of electric generation in 2030 will be from renewable energy sources, but Delaware stat e law already requires 25% by 2025.

Commenter s noted that Delaware will better the EPA emission rate by 10% and that the state already has a carbon tax, a Renewable Portfolio Standard, and an energy efficiency goal. Commenters stated that for these reason s, Delaware should be exempt from the EPA plan.

Commenter s described how the Heartland utility procures over 50% of its power supply from renewable energy resources, including hydropower and wind power. Commenters stated that the EPA treats all utilities e qually under the state

- centric approach, without regard to the efforts of individual utilities to reduce their carbon footprint. Commenters noted that Heartland and other utilities that have reduced their reliance on coal

- fired generation would be penalize d along with utilities that have taken no (or minimal) action. Commenter s called for the EPA to revisit the rule in order to exempt utilities, such as Heartland, that already obtain near or more than 50% of their energy supply from renewable energy resources.

Comment 10 : The EPA is requested to account for Florida's limited ac cess to renewable

r esources

. Response 10 : The EPA has finalized a building block 3 methodology that is premised on the regional availability of incremental RE, which is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

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

Commenter s noted the EPA has not appropriately accounted for the fact that Florida has limited access to renewable resources. Commenters referenced the EIA, which stated that Flori da had zero MWH from wind, geothermal, and hydroelectric generation over the past 12 months and only 153,000 MWh from solar power. Commenters requested that the EPA account for Florida's limited access to renewable resources and to provide a public comment period on its analysis.

Comment 11 : Examples of current renewable energy p rojects are described.

Response 11 : The resources and data provided in this comment were valuable in reinforcing the role of RE as part of the BSER and in finalizing the building b lock 3 methodology.137 The following are summaries of the specific public comments under this comment:

Commenter s reported the Wheat Belt Public Power experienced a balanced energy portfolio from TriStar G&T. Commenters noted that they used natural gas and coal, and their system provided them with a reliable and efficient portfolio.

Commenter s described how EverPower is a developer, owner, and operator of utility

- scale wind energy projects. Commenters stated that the current fleet of turbines in US currently reduces emissions by 127 million tons, which is the equivalent of 20 million cars off the road each year. Commenters also stated that wind energy accounts for more than 50,000 jobs across the country, and there are 550 manufacturing facilities across 44 s tates which supp ly the industry in various
ways , c ommenter s also noted that the average cost of wind has declined by 43 percent in the past four years.

Commenter s noted that RE only represented 2 percent of generation (including hydropower) in Ohio in 2012. Commenters noted that Ohio expects to have 9 percent of 2020 generation from renewables. Commenters also noted that the EPA stated that RE generation in 2012 wa s 12% nationally with over half of the states having established almost 20 percent of 2020 generation by renewables.

Commenter s described actions made by Northeastern Utilities in supporting New England's goals. Commenters stated that NU is expanding renew able and low

- carbon generation through direct investment as well as by developing infrastructure to bring renewable and low

- carbon resources to market, which includes hydro, to their electricity customers CL&P, NSTAR, PSNH, and WMECo. Commenters stated tha t NU has committed billions of dollars to long

- term contracts for the purchase of energy and/or RECs from renewable projects within the New England region.

Commenter s described a Seminole Electric Cooperative policy which has been in place for years to acq uire additional renewable resources. Commenters stated that Seminole's Board Policy No. 308 expressly commits it to develop and utilize numerous requests for proposals for renewable PPAs and entering into those that are cost effective. Therefore, c ommenter s stated, renewable options which are reasonably available and cost effective are already being utilized in Florida, and the EPA is wrong in assuming that Florida can do substantially more.

Commenter s discussed the current renewable capacity and legislatio n related to renewable in the state of South Carolina. Commenters noted that SC has added new solar power capacity every year since 2012. Commenters stated that the South Carolina legislature passed Act 236 in 2014; the law increases net metering, increase s the size of systems permitted to net meter t enfold following a utility c ommission proceeding, and seeks to make investments in distributed generation near 3% of peak generation. As noted by the commenter s , the Act is expected to lead to 300 MW of new sol ar generation in SC. Commenters stated the SC is projected to generation an additional 500,000 MWh of renewable energy by 2021.

Commenter s described projects in the states California, Iowa, and Colorado in order to illustrate how renewable are adequately d emonstrated technology. Commenters noted that some states already rely on renewable to meet a significant and growing portion of their electric generation138 needs, and they are doing so at reasonable costs to consumers while realizing economic benefits. Comm enter s described how California has a state goal of 33 percent RPS by 2020; the state leads the nation in generating capacity from geothermal, biomass, solar PV, and solar thermal projects, and it is second in the nation in wind and hydropower generation c apacity.

Commenter s used Iowa as an example of how renewable will allow for greater reductions than the EPA has projected for most states. Commenters referenced the Natural Resources Defense Council in stating that Iowa is now the nation's leader in wind energy generation with 27 percent of its power coming from wind; Iowa is planning on retiring 4 coal plants by 2016. Commenters noted that Iowa is already on track to meet the 16 percent carbon reduction target set by the EPA before the standard is even in effect. Commenters used Iowa as an example of how deploying renewable is possible, affordable, economically beneficial, and can result in reductions beyond the modest targets proposed by the CPP. Also noted by Commenters is the use of a state solar tax

cr edit which lead to an increase in distributed solar by turning rooftops, parking lots, and other areas into sources of electricity generation. Commenters stated that Iowa also focuses on energy efficiency. Commenters referenced the NRDC and described how I owa can create over 2,500 jobs and save an average of $6/month on home electricity bills by including energy efficiency in their state plan. Commenters described how electric companies are set to invest over $900 million dollars on energy efficiency in Iow a over the next five years.

Lastly, commenter s described the efforts made by Colorado to develops its vast renewable energy resources, which include wind, solar, biomass, and geothermal; Colorado has an ambitious renewable portfolio standard, a substantial rebate program, a strong net metering policy, and other market incentives. Commenters stated that Colorado has the fifth largest solar PV market and the tenth largest wind market in the U.S. Commenters also stated wind accounted for 11.3 percent of Colora do's electricity generation in 2012; solar PV was growing at a rate of over 50 percent. Commenters noted that Colorado was ranked the single fastest growing state economy in the nation by Business Insider.

Commenter s described current emissions reductions and efficiency mandates occurring in the state of Oklahoma. Commenter s stated that Oklahoma utilities have already achieved meaningful CO2 reductions and have improved the efficiency of their power

- generation fleet. Commenter s noted that approximately 15 p ercent of Oklahoma's electricity generation is from wind power. Commenter s used OG&E as an example; OG&E accounts for almost 15 percent of the state's wind generation. Commenter s stated that OG&E and other state utilities have incorporated wind generation into their portfolios, and they have invested in a major transmission line between Oklahoma City and Woodward, Oklahoma. Commenter s noted that the carbon intensity of Oklahoma's utility sector had been reduced by 18 percent since 2005, and emissions are ex pected to drop even further.

Commenter s described efforts by NorthWestern Energy and their customers to invest in acquiring and expanding renewable energy. Commenters noted that in 2006 NorthWestern Energy had 5000 MW of new generation projects in Montana, most of which were wind generation projects seeking access to markets outside of Montana. Commenters noted that NorthWestern Energy's supply portfolio is already comprised of over 50% renewable. Commenters described the Mountain States Transmission Intertie (MSTIE) project which NorthWestern Energy attempted to develop to provide transmission service for new generation139 projects; MSTIE was a 500 kV transmission path from Montana to southeast Idaho, but the project was halted in 2012 as a result of a l ack of firm commitments that transmission capacity would reach markets and because of the daunting federal permitting processes. Commenters raised the question of who would finance and construct the many new transmission lines which would be required to al low the expansion of renewable, particularly on the timeline and scale proposed by the CPP. Commenters also questioned who would purchase large amounts of renewable energy originating in Montana.

Commenter s described current utilization of renewable energy within the state of Texas. Commenters described the current amount of wind generation within the state; as of April 2014, Texas has 12,755 MW of wind generation capacity which accounts for more than 20% of the total U.S. wind capacity and the greatest amo unt of wind generation of any state in the country.

Comment 12 : Arkansas' starting level of performance value in EPA's proposed goal

- setting formula is based solely on biomass and wood

- derived fuels generation reported to the Energy Information Administr ation and that combusting biomass for energy does not produce a one

- for

one increase in net CO2 emissions.

Response 12 : The EPA has finalized a building block 3 methodology that is premised on the regional availability of incremental RE, which is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD. Biomass is not considered part of the best system of emission reduction in this rule and therefore it is not included in goal

- setting or compliance evaluations . However, similar to o ther technologies outside of BSER, biomass may be considered as a part of a state’s plan to meet the emission guidelines. A discussion regarding the use of some biomass feedstocks for compliance purposes can be found in Section VIII.I and Section VIII.K of the preamble.

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

Commenter s noted that Arkansas' starting level of performance value in EPA's proposed goal

setting formula is based solely on biomass and wood

- derived fuels generation reported to the Energy Information Administration and that combusting biomass for energy does not produce a

one

- for

- one increase in net CO2 emissions because biomass is part of the natural carbon cycle. Commenters stated that biomass fuels should be treated in the same way as other renewable products, such as wind and solar, for compliance purposes sin ce EPA applies the renewable energy annual growth in the goal

- setting formula to existing biomass generation.

3.3.3 Target level of performance

This section discusses specifics regarding the target level of performance as it applies to building block 3. The methodology for quantifying RE target generation levels under building block 3 is a modified version of the alternative RE approach from proposal, with adjustments that reflect the data and information the EPA collected through stakeholder comments.140 C ommenters have raised a number of issues related to this subsection which are organized by topics (comments) below. Responses are provided for these topics.

Comment 1: Comments expressed s upport and opposition to regional target setting approach based on state RPS requirements

. Response 1: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E.6 of the preamble and in the GHG Mitigation Measures TSD.

A discussion regarding the use of some biomass feedstocks for compliance purposes can be found in Section VIII and Section VIII.K of the preamble.

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

Commenters stated concerns and opposition to the regional approach for setting RE targets based on state RPS requirements

.
Commenter s stated EPA's calculation of regional RE energy goals is incorrectly premised on an average of the "effective" renewable g eneration in 2020 for each state in the region. Regardless of whether a state RPS has been established, commenter s stated the EPA should work closely with each state to determine the potential for future RE development to serve as a basis for assumptions u sed in BB3.

Commenter s questioned the EPA's justification for using average regional targets instead of a state by state approach in determining the contribution of RE growth in calculating the state goals. Commenter s stated that due to the EPA's methodolo gy, the final RE goals for each region are less than the original RE goals the EPA calculated by averaging state RPS goals. Commenters asserted that the differences are large and highly variable among the regions, ranging from 9% below the original regiona l goal for the East Central Region, to 40% below the regional goal for the North Central region, which the c ommenters contend ed wa s due to a failure to determine RE potentials on a state by state basis.

Commenter s stated the CPP should conduct a state by state analysis of RE options instead of grouping states by region. Commenters said there is a great deal of variability from state to state on the type of RE generation available and the capacity factors and transmission available to move the renewable gen eration to the load centers and each state should be allowed to set targets based on its resources. For example, c ommenters noted they provide renewable generation to member owners through PPAs from wind projects in Missouri and Kansas. Commenters added
t h e projects, although in adjoining states, have very different capacity factors; for example, in 2013 for the 4 Missouri wind projects it was 31.4% while in Kansas it was 42.5%.

Commenter s stated grouping disparate states into regions lacks a rational basi s. Commenters asserted EPA's own data shows that in many of the regions, a single state dominates the statistics, such as Texas and New York, which have far greater total renewable resources available for achieving the growth rates that EPA's primary propo sal would expect. Commenters141 stated that the narrowest margin in total RE resources is nearly 300%, for the North Central region, where South Dakota has nearly three times the renewable resources as the state with the lowest RE potential, Wisconsin. Commen ters also stated that the largest margin is found in the Northeast region, where New York has over 100 times the potential RE resources as the state with the fewest resources, Rhode Island. Commenters quoted EPRI, who stated, "EPA's 'best practices' scenar io for developing state

- specific renewable energy targets assumes state equivalency for regional calculations of resource potential. This assumption is problematic when regions are large and encompass states with appreciably different renewable energy reso urces."

Commenter s said EPA's presumption that RE

- based power generation can be equally deployed in all states within a given region, despite significant geographic and infrastructural differences among such states. As a result, c ommenters said such an approach dramatically overstates RE generation potential in several states, including Pennsylvania. For instance, c ommenters said within the East Central region there are considerable meteorological and topographical differences among these st ates: coastal states such as Virginia and Maryland have much greater opportunities for wind and solar development as compared to Pennsylvania and West Virginia,

c ommenters said NREL's GIS

- based analysis of state RE potentials shows significant differences in photovoltaic and both onshore and offshore wind

- based generation potentials in Pennsylvania and West Virginia as compared to Virginia, Maryland and Ohio, making EPA's methodology in calculating RE targets on a regional basis unreasonable.

Commenters sta ted EPA inappropriately applies regional average RE targets without regard for
state

- specific factors. For their southeastern states, the c ommenters said the assumptions would increase RE generation ranging from 262% to over 400%. Commenter s added that EPA should setting a mass

- based target that would be equivalent to a rate

- based target, believing a pay

- as

you

- go approach would make for exact equivalence.

Commenter s said EPA's assertion that states considered feasibility and cost in the political process i s most likely accurate and that state objectives vary from state to state. Thus,

c ommenters asserted state RPS are not a true reflection of technical and economic feasibility. Additionally, c ommenters said the potential cost of RE deployment is sometimes d ealt with outside of the target itself. Commenters said a number of state RPS laws include cost caps or other language that would adjust targets and timing of compliance based upon cost, so the targets are responsive to higher than contemplated costs. Fina lly, the c ommenters said all state RPS laws were initially enacted prior to 2010, with the majority of them enacted prior to 2005. Thus, the

c ommenters asserted any analysis performed in relation to cost and feasibility given the local resources is likely out of date given the rapid advancement in the cost and performance of RE technologies.

Commenter s said BB3 targets should be re

- evaluated and noted that a number of states have already met the regional target. Commenters noted that other state RPS laws h ave future year adjustments that should be taken into account beyond what was on the books in 2012.

Commenter s supported inclusion of current state RE/ EE standards , which are set by law, and determination of future goals based on more recent growth rates of RE (2009 to 2013).142 Commenter s stated EPA based state RE targets on regional RE rates, even though the regions poorly reflect the varied RE potential for many states. Commenters stated, as a result, some states, notably states in parts of the Southeast U.S., are assigned RE targets that are manifestly impossible to achieve, thus putting additional and unfair burdens on those states.

Commenter s stated that the regional approach essentially assumes that the same categories and levels of renewable generati on achieved in certain states are achievable in all states in the region. Commenters also stated that it applies policy choices made in certain states directly to other states in the region with no justification as to whether such a policy is feasible in t hat state.

Commenter s preferred the alternative approach based on in

- state feasibility. However, the

c ommenters said that if EPA decides to finalize the RPS methodology for the RE component of BB3, EPA must implement the following actions/corrections:

Fina lize the use of out

- of

- state RECs for compliance because many RPS programs allow the use of out

- of

- state RECs to meet the state commitment, and therefore provide the financial incentives for those resources. Ensure that the measures used to develop the reg ional RPS goals and the subsequent state targets are consistent with the measures allowed for compliance. Adjust the target setting calculations to include all RE in 2012 used to satisfy the state

- specific RPS (not just the RE generation located within the state). Adjust the regional RPS goals and the subsequent state targets as deemed necessary for the allowance of alternative compliance payment provisions in many states' RPS programs, and allow for distributed RE generation in state compliance plans.

Comm enter s said states portfolio requirements typically can be satisfied with RE generated in other states. Commenters said it may be economically preferable for a state not to import some or all of the resources needed to meet the in

- state mandate. Commenters stated that by assigning state X an initial renewables goal of, for instance, 10% based on that state's portfolio standard of that amount, EPA is concluding that the "best" system for that state entails in

- state generation of 10% renewables. But c ommenters noted that state X's legislature, in allowing the portfolio standard to be met with out

- of

- state generation, did not conclude that generating in

- state RE at 10% represents wise public policy. Thus, the c ommenters concluded that EPA is arbitrarily using state legislation to set an in

- state RE target that the legislation itself did not set.

Commenters stated the proposed and alternative approaches were supportable but warranted modification. Commenters supported the UCS alternative approach.

Comment er s did not support the UCS proposal for the following reasons:

• Use of the 2009

- 2013 growth rate may overestimate the ability of states to develop renewable resources in the long term. The renewable development growth rate over this period reflects an unp recedented build out of renewable energy, helped in large part by a drastic reduction in prices due to a large economic contraction and a global supply glut.

• The proposal requires states that have made early efforts in expanding renewable energy developmen t to do even more. The proposal would lower the interim and143 final goals in these states and constrain the limited flexibility to use other building blocks to achieve compliance. Under the UCS proposal, the western region would be required increase renewabl e energy generation from approximately 14% of retail sales to approximately 31% of retail sales.

• The proposal assumes compliance would be facilitated by an unlimited REC market, which is inconsistent with the current EPA proposal.

Commenter s said they can not comment on the technical feasibility and reasonableness of BSER under the proposed approach for RE as it would apply to Tennessee as RE is currently not managed within a state infrastructure by a single entity that lends itself to understanding potenti al contribution and growth of RE to Tennessee s electricity demands. Commenters said dispatch of its generation portfolio, including RE resources, is not based on state boundaries. Commenters said that during their current IRP process, they are treating RE as a resource that competes on par with more traditional generation options, including fossil fuels and EE. Because the IRP process is ongoing, the c ommenters stated it is undetermined what the future growth of RE will be within the TVA service area, maki ng it particularly challenging to posit how a state plan may credit RE. Commenter s asserted that it is critical that EPA allow states to perform state

- specific analysis with the assistance of utilities, PUCs and others around RE to determine what is feasib le given each state's particular circumstances. Commenters said states may then be able to give EPA meaningful comments regarding RE's potential contribution to BSER. If EPA is determined to use the proposed RE approach, c ommenters recommended EPA consider incorporating state progress to

- date in achieving RPS requirements.

Commenter s recommended that the EPA completely replace the current methodology for calculating RE targets with a methodology based on progression of technology costs for the two dominant IRGs, wind and solar PV, and based on models of state wind patterns and solar irradiance. Commenters stated the progression of technology cost should justify the total amount of IRGs deployed nationwide, and the relative usage of each IRG. Commenters asse rted that EPA would be justified in arguing that no feasible scenario will result in increases in the cost of wind and solar PV generators and that all probable technology developments in RE between now and 2030 will serve only to increase the general avai lability of renewable generators. Commenters suggested the following:

Use models of wind patterns and solar irradiance to classify the quality of various regions of the country for IRG deployment. EPA could then fill in the highest

- quality regions with IRG s until 13% of total generation (or some other quantity justified by the cost analysis suggested in the first point) is provided by those IRGs, i.e. identify the sunniest places, and put solar PV there. Identify the places with the highest quality sustaine d winds, and put wind turbines there. Apply that generation to the state goals of the states where the modeled IRGs are located.

Commenter s said that EPA should adjust the RE growth assumptions to more accurately reflect the potential in states and regions . As technology and deployment prices continue to plummet, Commenters said many states have already, or will soon, meet the level of RE generation that EPA assumed that wouldn't be met until 2020. Commenter s agreed that the bar should be set higher.144 Commenter s said because the current proposal will increase generation from renewable sources by only 2% above BAU in 2030, it does not meet the BSER standard, but rather represents the status quo without taking into account any of the technological and mar ket dynamics that will likely drive further RE development over and above current BAU forecasts.

Commenter s said that EPA's growth rate formula serves as a growth cap, constraining states from doing more. Commenters stated EPA should eliminate this constr aint as many states are seeing wind and solar growth rates of well above the highest regional rate of 15%. Additionally, the c ommenters said the EPA model has not accounted for the growth of renewables beyond the 2020 end date of many state RPS plans. Comm enters said assuming renewable levels will be the same in 2030 as they are in 2020 is unreasonable and EPA should update its model to better account for potential growth in state RPS requirements.

Commenter s said should the EPA default to the current RPS approach in setting state targets, several key changes must be made. First, the c ommenters stated EPA should use the highest RPS in a region to set the state targets, not the average RPS. Secondly, the c ommenters said EPA should use 2030 RPS targets, not 2 020 targets in setting the state goals. As the compliance period for the CPP extends out to 2030, not 2020, selecting the RPS goals for 2020 severely limits the RE potential for an entire decade. Commenters added that selecting a 2030 RPS goal sends a clear message on the potential for a state to include renewables as part of a balanced state energy portfolio by 2030.

Commenter s w ere opposed to the use of RPS requirements to establish RE targets and stated that many RPS targets

- including Connecticut's

- include the possibility of alternative compliance payments, which can be paid in lieu of acquiring RE generation and protect against significant ratepayer impacts if the market cost of RE generation exceeds certain levels. Commenters said that Connectic ut's RPS was enacted in 1998 and was not intended to address climate change. Rather, the c ommenters said it was designed to achieve several objectives: diversify the state's energy resource mix to promote reliability, provide a hedge against volatile fossi l fuel prices, improve environmental conditions by reducing air emissions, create clean energy jobs, and enhance the quality of life in the state. Accordingly, c ommenters said that while many RPS

eligible RE technologies can improve environmental condition s by reducing air emissions and creating clean energy jobs, ultimately technical and economic feasibility dictate which RE technologies are brought to market to satisfy RPS targets. Commenters stated these technical and economic circumstances are not neces sarily aligned with the CPP goal of reducing CO 2 emissions.

Commenter s were generally supportive of RE as a means to reduce carbon emissions but opposed EPA's proposed methodology for estimating RE's contribution to reduced carbon emissions, and preferred the Alternative RE approach. Commenters stated they have significant concerns with the proposed approach, including the issue that Tennessee currently has no RPS requirement, nor does it have a traditional PUC or single entity charged with keeping track of RE generation. Also, the c ommenters said the use of RPS requirements established within other states, even if only applied to states within a similar region, is unreasonable for setting BSER. Commenters stated using RPS requirements to estimate potential RE growth targets is unsound given that often such requirements are established without any consideration to resource potential, costs, and feasibility with respect to achievability.145 Commenters supported EPA including in its guideline a system that will a llow the power plants that serve such areas to take advantage of the energy efficiency and renewable energy opportunities available in states without affected power plants and recommends that EPA use the regional alternative approach as described in the Oc tober 30, 2014 NODA. Commenters also recommended that EPA include the potential renewable energy from such areas in its determination of the regional potential for renewable energy, which would provide for that potential to be included in the targets of st ates in the region.

Commenter s said EPA's alternate proposed approach addresses some of the key flaws in the proposed approach by focusing on state RE potential instead of individual state RES requirements. However, the c ommenters said this approach relies on unsubstantiated assumptions about the rate at which states can develop renewables and the future costs of RE generation technologies. Commenters stated EPA's proposed primary and alternate methods for setting RE generation goals raise significant conce rns about whether the proposed goals can be achieved by the states. Commenters asserted the regional approach inappropriately assumes that RES mandates are proxies for RE potential and that neighboring states have similar RE potential. Further, the c omment ers said EPA's use of RES requirements fails to consider key design features of state RES programs that serve to reduce the stringency of these programs. Finally, the

c ommenters said EPA fails to consider the technological challenges of integrating additio nal renewable generation into the interconnected power system and how the other proposed building blocks and the interconnected nature of the power system could affect a state's ability to achieve the proposed levels of RE generation.

Commenter s asserted that renewable should be used in the compliance determination for CPP but not factored in the state goal calculation as a requirement. Commenters said RE is neither as reliable nor does it generate the same quantities of electricity as traditional generati on. Therefore,

c ommenters stated it is not realistic to make the use of RE a required step in achieving compliance but should be left up to the states for determining credit towards compliance.

Commenters said EPA's approach ignores the differences and uni que challenges that exist from state to state when it comes to increasing RE deployment and provides no weight to states that have chosen not to implement an RPS. Commenters stated RE resources can vary greatly between neighboring states and even within a state. Further, the c ommenters said state RPS are often aspirational and contain "safety valve" mechanisms that slow or pause requirements if, for example, electricity rates increase above a threshold level. Thus, commenters said just because a state has a dopted a state RPS requirement does not mean that the technical or economic achievability of the standard has been demonstrated for that state or its neighboring states. Commenter s said most state programs have these fail

- safe or safety

- valve provisions to ensure that the aspirational goals of the programs will not endanger reasonable cost and reliability requirements.

Commenter s stated that EPA should update its formula to account for the displacing effects of RE. Commenters said EPA's approach in the NODA is inconsistent with EPA's treatment of BB2, in which increased utilization of natural gas plants is presumed to displace equivalent amounts of coal generation. Moreover, commenters stated the approach is contrary to EPA's description of its RE assumption s in the original proposal. Commenters said EPA's calculations did not substitute or reduce generation from fossil

- fired resources in the amount associated with146 new RE resources, with the result that EPA's target

- setting fails to capture the full extent of available carbon emission reductions. When EPA sets final state targets, commenters asserted it should use the corrected formula proposed in the NODA to ensure that RE is given full credit for its carbon reduction benefits. Commenter s added that because o f the displacing effects of RE and EE on fossil units, reliance on the four building blocks in target setting would result in over

compliance, i.e., Virginia would achieve a target rate lower than its 2030 goal. Commenter s stated this is an important reaso n to view application of the building blocks for target

- setting as distinct from their use for compliance. Commenter s said it also shows that Virginia's route to compliance is less burdensome than a narrow focus on the target

- setting would indicate. Commen ter s asserted Virginia's pursuit of measures under BB 3

- 4 will result in substantial carbon reductions, especially if those measures are allowed to displace fossil generation on a
pro

- rata basis. Commenter s suggested crediting fossil MW displaced between 2 012

- 2020 toward compliance. Commenters said this would cushion the harsh effects of the interim goals if any interim goal would remain in a final rule and would create an economic incentive for companies to bring on renewable resources as quickly as poss ible. Commenters added that this would benefit both the environment and the economy.

C ommenters stated that adequately accounting for the spatial and temporal distributions of renewable resources and their associated costs is an essential consideration in regulatory design; however, the primary approach for calculating state

- specific RE targets assumes state equivalency for regional calculations of resource potential. Commenters stated that this assumption is problematic when regions are large and encompass states with drastically different renewable resources. Commenters stated given the sizeable areas spanned by the 6 EPA regions, there is evidence of differing levels of RE resource adequacy and availability across these proposed regions.

Commenter s stated EPA's reliance on regions is misplaced and EPA makes inaccurate estimates of RE technical potential. Commenters stated that in developing its regions for regulating purposes, EPA assumed that neighboring states can achieve similar levels of RE generation and, therefore, grouped states into regions based upon NERC regions and RTOs. Commenters stated neither NERC nor the RTOs considered RE technical potential in the formation of their regions. Commenters stated the Agency justifies the assumptions by claimin g "[s]tates within each region exhibit similar profiles of [renewable energy] potential or have similar levels of renewable sources." Commenters stated this claim, however, is inaccurate, as highlighted through proper analysis of the Southeast region. Comm enters stated EPA's referenced NREL analysis compares each Southeast state's combined solar, wind, and biomass technical potential and shows a 198% difference between the highest and lowest technical potentials. Commenters stated that these states clearly do not have "similar" levels of renewable resources. Commenters stated other regions also produce incongruous results. Commenters provided the example that Texas and Louisiana are grouped together in the South Central region; however, per NREL's technical potential analysis, the Texas solar, wind, and biomass technical potential is 1,512% greater than Louisiana's technical potential. Commenters stated that if EPA's assertion that the states within a region maintain similar levels of renewable resources were true, which it is not, it contradicts the
state

- level targets produced by the Agency. Commenters stated EPA's BB3 contains different RE targets for each state within a region. Commenters stated, for example, there are 8 states in the Southeast region and yet 3 of the states (Alabama, Florida, and Georgia) have more stringent RE targets than North Carolina, whose state RPS legislation is used to establish the Southeast's147 target. Commenters also stated Florida's RE target for BB3 is 89% higher than North Carolina's target. Commenters stated that EPA's own outcomes contradict its assertion that states within a region exhibit similar renewable resource potential; these disparate starting places and outcomes strongly indicate that EPA should not rely upon a regional approach as the foundation for setting RE targets.

Commenter s said the proposed regional approach using NERC regions does not reflect similarities between states based on RE potentia l. Commenters stated a more precise and comprehensive basis for state clustering would be informed by the consideration of costs, competition and regulatory schemes. Even if renewable resources across states in a region have similar technical potentials, t he c ommenters said the approach does not consider how these profiles may have dissimilar market potentials. Commenters said identical standards for groups of states clustered by their technical potentials are not necessarily reflective of relative complian ce burdens, systems of cost recovery, and siting concerns. Commenters said that not accounting for this cost information yields a method that may overlook opportunities for lower

cost reductions that would be exploited using a more flexible approach with m ore precisely drawn regions.

Commenter s said EPA's approach to setting the RE goals for each state by dividing the states into contiguous regions is illogical and inequitable. For example, c ommenters stated in a DOE study relied on by EPA, Arizona has 5.8% of the total national RE potential, but Arizona has a RE goal based on only 3.9% of its 2012 generation; by contrast, West Virginia, which has 0.07% of the national RE potential (1.2% of Arizona's) has an RE goal based on 14% of its 2012 generation, almos t 4 times as great as Arizona's. Commenters added that if a state has done an expert assessment, it should stand as the RE goal for the state unless EPA can challenge it on a sound technical basis. Furthermore, c ommenters said that an expert assessment don e by one state cannot be assumed to have any validity for another state simply because they were arbitrarily grouped together by EPA.

Commenter s said EPA's methodology ignores the unique qualitative characteristics of each of the states in the region that should influence the setting of targets. For example, c ommenters noted that PA is a major generation state and net exporter of electricity with a large population and industrial load, while MD and DE are far smaller with reference to land areas, populatio n, generation and load but are given equal weight in calculating RE potential.

Commenter s stated EPA's approach to determining regional RE generation targets is flawed in several respects. First, the c ommenters stated, it is arbitrary for EPA to assume tha t each state is capable of achieving similar levels of RE generation as its neighboring states. Commenters noted the Agency acknowledges that state RPS goals reflect "policy objectives including both feasibility and costs" and not merely RE potential. Comm enters stated these policy objectives may vary widely from state to state within individual regions, and RE potential is highly state

specific and depends on each state's natural resources (e.g. insolation, availability of wind energy, biomass resources, etc.), existing transmission infrastructure, and current RE development. Commenters stated that the proposed "regional" approach is simply based on NERC regions and does not reflect similarities between states based on RE potential.148 Commenter s said EPA's B SER goal calculation approach does not appear to recognize that the Kansas RES goal is based on peak demand capacity (in MW), whereas state BSER targets are based on net electricity generation (in MWh). Because there is no direct or predictable correlation between the extent of RE deployment (measured in MW) and RE utilization (measured in MWh), the c ommenters said it is impossible to accurately translate capacity directly into generation (yet, this is the approach that EPA took when calculating the BB3 RE goals for each state in the South Central region).

Commenter s stated EPA's failure to account for the precise nature of existing state RPS goals leads to unreasonable results. For example, the c ommenters stated, the RE target for the South Central region i s based entirely on Kansas's 2020 RPS target of 20% RE capacity. Commenters stated that because actual generation is significantly less than capacity, a 20% target based on capacity would not come close to approximating a 20% generation

- based RE target. Mo reover, the c ommenters stated, in adopting its RPS, Kansas was building upon its experience with 24.2% average annual growth in wind from 2008 to 2012. Commenters stated no other states in the South Central region have a generation

- based RPS; the Texas RPS is also capacity

- based. Thus, the c ommenters stated, EPA erroneously imputed a RE generation

- based target to the entire region that does not exist in any state in the S outh Central region.

Commenter s said that instead of this "average" calculation, EPA should develop in the final CPP a calculation of renewable generation targets consistent with principles of rationality and efficiency.

Commenter s stated that in the South east and South Central regions, only one State in each region has a RPS in place to set the regional target, and yet EPA assumes that every state in these regions can meet targets based on that single state's RPS. Commenters stated EPA fails to provide a s ystematic look at the actual renewable potential across the states in these two regions and fails to explain why it assumes that one state in each of these two regions is representative of what all states in these regions can reasonably accomplish. Comment ers stated EPA's failure to factor states without any RPS requirement into the regional averaging is irrational and arbitrary. Commenters stated that EPA's proposal fails to recognize or consider that many state RPS policies have cost caps to ensure that t he renewable mandates are not overly costly and that these costs caps can operate to limit future renewable expansion that EPA projects is needed to achieve statewide goals.

Commenter s stated that in the South Central region, EPA used the Kansas standard, but improperly extracted the numeric standard without applying the other determinates in the Kansas RPS statute. Commenters stated that the imaginary Kansas RPS that EPA applies to establish the regional goal is based on energy, yet the actual Kansas RPS is a capacity

- based requirement established for seven utilities operating in

- state, it does not apply to any other cooperative or municipal utility in the state, nor does it apply to the load served by these utilities in other states. Commenters stated tha t the Kansas RPS also treats as renewables certain resources that EPA does not treat as renewables in the guidance

- specifically hydropower. Commenters stated Commenters stated these failures to accurately evaluate the Kansas RPS and adjust the region's

r enewable goals make the region's goal irrational, unsupportable, and capricious. Further, the

c ommenters stated, since the Kansas RPS does not apply to utilities in the state other than the seven named, or to the loads served by these utilities in other st ates, even if EPA were to adopt149 the real Kansas requirements as indicative of a region

- wide target, the target would have to be reset to represent a value consistent with the proposal's definition of renewable generation under BB3.

Commenter s also stated that Arkansas has no state RPS and limited capacity for developing renewable resources as it does not have the wind resource potential of Kansas, Nebraska, Oklahoma, or Texas. Commenters stated it has small amounts of solar resources using current technol ogies. Arkansas has the potential for developing biomass resources, but it is currently unclear whether biomass generation will be considered CO 2 neutral in the final rule. Commenters also stated it has existing hydropower with some potential for developme nt. Commenters continued that under the proposal, Arkansas has a 20% RE

- based target in 2029 of 4790 GWh, but given that the Kansas RPS is capacity

- based, not energy

- based, the Kansas RPS is actually 12% energy

- based. Commenters stated therefore Arkansas' RE target in 2029 should be 12%
energy

- based, or at most 2872 GWh, 60% lower than the proposed target. Commenters stated thus, if EPA were to adopt the real Kansas requirements as indicative of a region

- wide target, the target should be no greater than 12%

.
Commenter s stated EPA's renewable energy goal for Arkansas is based on the Kansas Renewable Portfolio standard (RPS). Commenter s stated that standard is based on nameplate capacity of the renewable resource, and not on the energy generated. Commenter s s tated also, Kansas counts existing hydropower and includes a bonus multiplier for in

- state renewable generation. Commenter s stated because of this, the Kansas RPS appears to be more stringent than it actually is, and Arkansas, as a member of Kansas's regio n, has been given significantly overstated renewable resource goals. Commenter s stated in fact, in the preamble to the proposed rule, EPA states that the renewable standard will be set based upon renewable generation and not capacity. Commenter s stated how ever, this does not seem to have been the case with Arkansas's region.

Commenter s stated EPA's broad application of regional RPS targets is flawed because it assumes that only those states that have enacted RPS requirements have assessed the feasibility and cost of RE standards. Commenters referenced the Virginia State Corporation Commission comments on the Proposed Guidelines, which stated that there are many reasons, including geographic and economic, why states have approached renewable generation diff erently. Commenters stated the decisions of other states to impose RPS requirements were not intended to (and cannot) demonstrate what is achievable in Virginia.

Commenter s said the state RE targets are unreasonably aggressive and do not take into account factors affecting the actual RE growth potential in each state and that the RE generation goals that EPA has calculated for many states are unachievable. Commenters stated EPA's methodology for determining these goals is fatally flawed because it arbitrarily ties each state's goal to the RPS goals of other nearby states, which often do not actually require as much RE generation as they appear to and reflect each state's high ly unique mix of RE potential. Commenters stated EPA's failure to account for factors specific to each state's potential RE generation leads to several inequitable and unreasonable results.

Commenter s also said the targets are based on overly aggressive as sumptions and, for Texas, Arkansas and Louisiana, are not achievable, particularly in the case of Texas since there are150 already significant amounts of existing RE capacity in the state. Commenters stated that even with all the transmission built in Texas f or RE in recent years, the transmission system is not capable of handling this additional generation. Commenters stated i t would also require much more backup generation to be built to firm up the variable renewable resources (EPA ignores the additional ca rbon emissions from this back

- up generation)

. Commenters stated and it could have serious distorting effects on the energy markets. Commenters also said that of the states in the South Central Region, only Kansas and Texas have an RPS, although Texas uses a fixed MW standard that equates to a much lower percentage. EPA has set the final RE target for Texas at 20%

- which c ommenters said seems rather arbitrarily tied to Kansas whose electricity sector is 1/10th the size of Texas'.

Commenters also stated that EPA's analysis reflects an oversimplified understanding of the nature of state RPS goals. Commenters stated that some state RPS goals are voluntary, while others only establish requirements for large electric utilities or apply less stringent secondary or tertiary RPS goals to smaller utilities, public power utilities, or cooperative utilities. But,

c ommenters stated, the Proposed Rule applies the more stringent primary RPS goals to all in

state generation and treats all goals as mandatory, artificially le ading to more aggressive renewable energy generation targets. Commenters stated that in addition, some state RPS goals allow utilities to comply through mechanisms other than actually developing in

- state renewable energy generation.

Commenter s stated EPA d eveloped BB3 goals based on an arbitrary assignment of states into regions that presume that neighboring states will have similar opportunities for the development of renewable resources. Commenters also stated that the Agency then used an average of manda tory state renewable portfolio goals in these regions to assume that what may be technically and economically achievable in terms of renewable development and generation in some states will be achievable by all states within each respective region. Comment ers stated that this approach is flawed in that EPA:

• mischaracterized the design and overstated the stringency of existing state RPS;

• incorrectly assumed that existing RPS represent achievable targets for renewable resource development in other states;

• ignored the renewable energy experience and perspectives of states with no RPS;

• did not fully consider significant geographic and economic differences between states in a region; and

• relied upon "effective" 2020 renewable energy targets that have not bee n adequately demonstrated and may not be representative of specific RPS requirements.

Commenter s stated there are serious problems with the RPS

- based methodology. Commenters stated each region spans a large swath of the country, encompassing states with vastly different renewable generation potential. Commenters provided the example of South Central region, which includes both Kansas, which has the third best wind resources in the country, and151 Louisiana, which is ranked 48th in the country in wind resources. Furthermore, the c ommenters stated not all states have RPS requirements; EPA nevertheless assumed that those states could achieve renewable increases based on the RPS requi rements of other states in their region. In fact, c ommenters stated, targets for states in two regions

- the South Central and Southeast regions

- were based on a single state's RPS. Commenters also stated EPA failed to consider that increased dependence o n renewable energy generation will require construction of additional transmission lines to access areas that have higher

- grade wind and solar resources, which are generally remote areas. Commenters stated that states must begin to achieve emission decreas es by 2020 to meet their respective interim goals; this does not allow for enough time to build the transmission lines needed to implement the RE requirements under BB3. Commenters also stated that the Existing Source Proposal leaves many key questions con cerning the implementation of the RE requirements unanswered, such as: "Upon whom are the requirements placed? Under what authority? Which state gets credit

- the energy importer or exporter

- for RE generation that crosses state lines? How will the costs o f the renewable resources needed to attain state goals be allocated and who has the responsibility to mandate such allocations?"

Commenter s stated EPA's proposed approach may overestimate what is achievable in some states, particularly those that do not ha ve existing RES mandates, and ignores policy decisions that have already been made in those states. In addition, c ommenters said EPA failed to recognize that certain RES design elements can have the effect of reducing the amount of in

- state generation nece ssary for compliance. Further, c ommenters said EPA did not adjust state RES goals to reflect the fact that generation from existing hydropower generation and other resources cannot be used for compliance under the proposed 111(d) guidelines, despite the fa ct that many state RES goals rely on these resources. Commenters said EPA also has indicated that some, but not all, biomass that is eligible under state RES programs could be used for compliance, adding further uncertainty to the RE assumptions in the pro posed guidelines.

Commenter s said EPA did not recognize that significant differences often remain among states within a given region, and what may have been demonstrated to be achievable in one state may not be achievable in another. Commenters stated e ner gy market prices, geography, topology, transmission, load, seasonality, endangered species

- related siting rules, state or local permitting and siting rules, congestion and existing energy mix are just a sample of the many factors that play a role in where renewable resources are developed

.
Commenter s said states within a region can have very different solar or wind potential

- for example, Louisiana and Kansas have dramatically different wind resource potential, but are unreasonably included in the same reg ion. Commenters asserted that NERC further highlighted this problem with the BB3 methodology in a recent report, which found that "[g]iven the combination of a low population, large land area, and very high wind resource availability, Kansas has relatively low costs to meet its RPS. However, Louisiana (ranked #48 in wind resources and double the retail sales) is assigned the same non

- hydro renewable target. To put these two States in the same region sets unattainable targets for Louisiana." Initial Reliabil ity Review at 12. Commenters said that if EPA chooses to retain a regional approach to developing state RE goals, the Agency should allow a state to change regions if it can demonstrate that another region is more representative of its RE potential, or alt ernately allow a state

- specific analysis of what is achievable within a state.152 Commenter s said the regional approach will place increased pressure on states with high capacity factor wind generation to build more wind than they currently need for their own usage. Commenters stated this approach would require planning and construction of additional transmission infrastructure in their service area for wind that will not be delivered within that area. A key issue, Commenters stated was how entities or regions outside that region would pay for such additional transmission service and infrastructure. Commenters stated issues like these need to be addressed by EPA and FERC and time given to plan and construct additional transmission infrastructure in order to acc ommodate this suggested modification. Further, Commenters asserted that any definition of "region" used by the EPA in the establishment of BB3 targets should be based on the boundaries of organized market.

Commenter s said EPA cannot set targets assuming th at multistate plans will be developed and implemented as it could result in inflated RE goals for states that are not able to engage in multi

state compliance plans. Moreover, the c ommenters stated that generation planning is typically done at the state le vel (or service territory level or organized market level in areas where RTOs or ISOs exist). Commenters also stated i t can take many years, along with many changes to existing rules and regulations, to adapt and evolve toward a regional approach in electr ic generation planning. Commenter s indicated that the guidelines do not provide sufficient time for states to design and implement the regional compliance approaches needed to achieve the proposed RE goals.

Commenter s said EPA's calculation of regional RE goals does not recognize some states existing RES requirements, making the renewable goal in some regions more stringent than if it were an average of all states in the region. Commenters said EPA ignored the fact tha t some states have made a determination that their RE resources are not sufficient for mandating a required level of RE generation in a particular state. Commenters said EPA's approach to averaging state RES mandates to develop a regional RE goal is partic ularly problematic in the Southeast and South Central regions, where many states do not currently have RES requirements because it ignores the question of whether the other states in these regions have the same potential to deploy an increased amount of re newable generation.

Commenter s said a state's RES requirements reflect that state's assessment of the potential to deploy RE generation and RE

- related policy decisions and a range of policy choices that have nothing to do with technical RE potential. Accor dingly, c ommenters said that if EPA continues to average state RES mandates to derive regional RE generation goals, they should include all states in calculating the average, even those with no RES requirements to provide an actual average of the state req uirements in the region and ensure that one state's RES is not arbitrarily and inappropriately imposed on all other states in the region. Similarly, c ommenters asserted EPA should control for states with significantly more aggressive RES requirements when determining regional RE goals.

Commenters stated EPA's proposed policy

- based approach, which groups states into regions and averages the effective 2020 generation

- based RPS for states in each region to arrive at individual state goals, results in arbitrary state renewable targets based on political considerations rather than technical availability. Commenters stated for example, only one state in the Southeast has a qualifying RPS (North Carolina) and that single state policy results in EPA assuming all eig ht states in the EPA

- defined Southeast region can meet the same target. Commenter s stated it is153 unclear why one state's policy implies that other states can meet the same level of renewable deployment, and conversely, a lack of an RPS does not indicate a s tate could not deploy renewable generation. Commenters also disagreed with EPA's conclusion that existing state policies "support the feasibility and costs" associated with the scenarios developed by EPA. Commenters stated the existing state policies refle ct policy decisions made in the states with the RPSs based on the myriad objectives of the state (which may not be the same as EPA's objective here; e.g . carbon reduction) and the projected cost and availability of renewable energy at the time the state ta rgets were passed. Commenters stated that in some states, costs are moderated with alternative compliance payment provisions that limit the need for renewable generation if costs exceed expectations. Commenters also stated many state RPS targets were also predicated on the existence of a national market for renewable energy credits to limit costs and increase availability of qualifying resources, which include many resources not considered for compliance under the proposed rule, such as large hydropower. Co mmenters stated that while EPA refers to that market, it does not use the market to justify the target renewable energy levels.

Several commenters said the goals do not account for load growth and that actual load growth should be correctly identified and reflected in CPP projections. Commenter s noted, however, NV Energy's load projections have tended to overstate load growth and, thus, historical trends should be carefully analyzed. Commenters said the load or demand for electricity is expected to increase during the period of performance from 2020 through 2029 and some of this increase in demand may be supplied by new power generation facilities not subject to the CPP, but a portion may be generated by tapping unutilized capacity in existing EGUs. C ommente rs said this will require a commensurate increase in RE/EE to maintain compliance with the rate

- based goal and that estimates of the rate of load growth vary by state and region. To assist states in their analysis of the proposal and state plan preparation , commenters recommended that the EPA use available load growth projections to adjust target RE values to better approximate the actual levels of RE that may be required to meet state rate based goals.

Commenter s said if EPA elects to redistribute RE devel opment potential on a regional basis, Maine supports reallocation on a mass

- based allocation similar to the manner in which RGGI allocates emission credits, or by peak

- load allocation as done in ISO

- NE for pooled transmission facility costs. Commenters sai d that because most fossil

- fuel EGUs are in operation more so under regular peak conditions than low

- load conditions, the peak

- load allocation is most representative of times when the most units to be regulated by EPA's 111(d) proposal would be in operatio n. For this reason, the c ommenters added that the peak

- load allocation already in use in New England is a technically appropriate allocation method.

Comment 2: Commenters had c oncerns on use of “main tiers” to determine effective RE levels.

Response 2: The EPA is not finalizing an approach to building block 3 that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

T he following are summaries of the specific public comments under this comment:154 Commenter s stated that in the GHG Abatement Measures TSD, EPA states that they "added together each state's tiers, as standardized by DSIRE, to determine states' effective RE le vels for 2020, but excluded tiers, other than main tiers, that include energy efficiency or any fossil fuel" (p. 84). Commenters questioned if it is EPA's intention to include RPS "main tiers" even if they count EE or fossil fuel (i.e. CHP) for the target

- setting.

Comment 3 : Co mmenters expressed co ncerns regarding approach to state calculations and varying energy mix.

Response 3: State RPS requirements are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rul e. The methodology that produces target generation levels under building block 3 is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

The following is a summary of the specific public comment under this comment:

Commenter s stated the characteristics of each state's renewable generation mix vary significantly in the South Central Region, which encompasses four NERC regions and three RTOs: (i) the SPP (Kansas, Nebraska, Oklahoma and the Texas Panhandle); (ii) ERCOT (remainder of Texas); and, (iii) MISO (Arkansas and Louisiana). Commenters also stated that like the Southeast Region, EPA's regional renewable generation target for the South Central Region is based on the 2020 RPS goal of one state: Kansas. Commenters stated Kansa s's 20% target in 2020, which is based upon capacity and not generation, is dominated by a single fast

- growing renewable source (wind) and is applied to states within the region with an entirely different renewable generation mix and in different RTOs. Co mmenters stated that EPA fails to distinguish the big difference between renewable capacity and generation and the intermittency of renewable resource (e.g., wind stops blowing). Commenters provided a table to illustrate how EPA misused the Kansas RPS stan dard in Arkansas.

Comment 4: C ommenters had c oncerns regarding overestimation of targets

Response 4: State RPS requirements are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detail in V.E of the preamble a nd in the GHG Mitigation Measures TSD.
The following is a summar y of the specific public comment under this comment:

Commenter s stated that industrial CHP facilities in Arkansas burning wood or wood derived fuels comprised 95% or more of the state's total renewable generation between 2008 and 2012. Commenters stated these industrial CHP sources experienced 1.6% average annual growth between 2008 and 2012; however, EPA applied the Kansas RPS, in which wind comprised almost 100% of state's total renewable gen eration, at a 24.2% average annual growth between155 2008 and 2012. Commenters stated EPA's application of a RPS from a state with rapidly increasing renewable wind energy to a state whose primary RE source has remained almost flat results in a significant an d unreasonable overestimation of renewable generation in that state.

Commenter s stated EPA also failed to account for factors limiting certain renewable generation in particular states

- factors that would prevent certain states from meeting their goals. C ommenters noted that Arkansas cannot reasonably quadruple its growth rate of 1.6%, as it would be required to do to meet its RE target. Similarly, c ommenters stated Kentucky has very low wind and solar generation potential.

Comment 5: C ommenters were c onc ern ed regarding use of solar and EIA’s forecasts and EPA IPM results.

Response 5: The EPA has updated its cost and performance assumptions for utility

- scale solar technologies.

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

Commenter s stated that if EPA has authority to include RE in its goal setting methodology, EPA would need to thoroughly examine each state's renewable generation mix and as well as EIA's RE forecasts and EPA's own IPM results.

Commenter s stated EPA should more accurately account for the growth trajectory for solar power, including reductions in cost that will in turn have a greater impact on solar energy's ability to decrease emissions.

Comment 6: Commenters stated g oals n eed to recogniz e states individual circumstances

. Response 6: State RPS requirements are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

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

Commenter s said BB3 has flaws that work against certain regions and states. Commenters

ass erted the RE regional goals should be computed based upon all states in the region and reflecting the appropriate Arizona RE goal. Commenters asserted that each state's RE MWh was limited to its 2020 RPS goal

- in Arizona, the total RE energy could not exc eed 10%. Commenters stated this has the effect of lowering a state's lbs CO2/net MWH goal and accounts for 5% of the reduction in Arizona's proposed goal. Commenters said that in calculating the 2020 effective RE levels for the Western region of 20.625%, E PA left out the states with a zero target. Commenters asserted these states with zero targets should be included in the calculation of the156 average, which would reduce the average to 16%. Commenter s agreed that states with no RPS (zero values) should not be excluded from the calculation.

Commenter s stated EPA arbitrarily concluded that the RE capacity of some states can be used to set RE goals for other states, which have different resources and econ omic circumstances. Commenters said the states cannot be compared in the way EPA has done. Commenter s asserted EPA should revise its methodology for renewable energy based on resource availability and market realities.

Commenter s said EPA should consider the disparities in renewable potential between states, noting, for example, Arkansas is in an unusual position in that it sits next to windy states, but has little wind potential of its own. Commenters stated the same wind turbine will produce considerabl y more electricity for the same investment in Kansas, Oklahoma, or Texas than it will in Arkansas. For that reason, Commenters said EPA should consider both the regional potential and the in

- state potential in setting its target. Most importantly, Commente rs urged EPA to structure its rule in a way that encourages placement of RE facilities in consideration of the location of the resources, and not state lines on a map.

Commenter s stated EPA's calculation of RE goals in BB3 is flawed because it ignores indi vidual state determinations in favor of regional RE benchmarks that are arbitrarily assigned. Commenters stated that concerns regarding the applicability of RPS programs from one state to another, as well as the methodology used to calculate state RE goals are further exacerbated by EPA's arbitrary design of six regions in BB3. Commenters stated that in defining these regions, EPA incorrectly assumed that what may be achievable, but not yet demonstrated, in terms of RE development and generation in some sta tes (with the aid of subsidies from the Federal Production Tax Credit and from the investment of out

- of

- state utilities and customers) is achievable by all states within each respective region. Commenters said EPA assumes that states within each region exh ibit similar profiles of RE potential or have similar levels of renewable

resources. However, c ommenters stated EPA's rationale is not supported by the technical information referenced by the agency in the proposed rule or by the consideration of RPS in th e regional calculations. Commenters said examples of conflict between EPA's characterization of individual state RPS and the technical data used to support EPA's proposal are provided below for the South Central, Southeast, and East Central RE regions. Co mmenters stated that in each region, an objective assessment of the existing state standards and technical data evaluating resource availability and cost would result in much lower targets than those established in EPA's guideline.

Commenter s stated that t he South Central region is not homogenous in terms of potential renewable resources as four states have far superior resource potential, greater access, and lower cost renewable development options. Commenters stated that as a result, Arkansas and Louisian a are unfairly and inappropriately penalized and burdened with unrealistic goals that cannot be
cost

- effectively achieved through the development of in

- state resources. Commenters stated that to achieve their goals most cost

- effectively, these states would have to rely on the development of out

- of

- state resources without certainty regarding if or how such projects would be treated by the host states. Commenters also stated that in terms of differences in renewable resource potential, consider the average wi nd speed or solar resource across the region, a key variable in evaluating the feasibility of wind energy developments, and the availability of potential solar157 resources. Commenters provided figures from the U.S. DOE NREL that indicate that there is signif icant variability across the U.S. and within the South Central region, which indicates significant differences in the opportunities for developing wind energy and solar resources. Commenters stated Arkansas and Louisiana bear a far closer visual resemblanc e to the states in the Southeast region (Alabama, Florida, Georgia, Kentucky, Mississippi, Tennessee and the Carolinas) than they do to the states in the South Central region.

Commenter s also stated that while EPA claims to have based its determination of "achievable" state goals based on average values for existing state programs, only one state in the EPA

defined South Central region, Kansas, has a mandatory RPS that was considered by EPA. Therefore, c ommenters stated, the Kansas RPS, and only the Kansas RPS, is the sole basis for determining the RE goal for all states in the South Central region, regardless of differences in the geographic potential or cost

- effectiveness for achieving such a goal among states in the region. Commenters also stated EPA also gave no consideration to provisions within the Kansas RPS, such as implementation of cost mitigation measures and in

- state renewable credit multipliers, that reduce the overall stringency of the program. Commenters quoted the Kansas Corporation Commission that "Kansas' standard differs from other state's RPS in that it is based on gross generation capacity rather than total retail sales. In general, the gross generation capacity is the amount owned or leased by a utility minus the auxiliary power used to o perate the facility." Commenters stated that based on EPA's own statement that it "did not [intend] to include [RPS] targets that were capacity

- based," the Kansas RPS should not have been considered in determining the renewable energy goal for the region, and the South Central region would have no qualifying RPS upon which to base a regional goal.

Comment 7: Commenters noted v arying state

- level technical resource potential

. Response 7: State RPS requirements are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detail in V.E of the preamble a nd in the GHG Mitigation Measures TSD.

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

Commenters stated that Section 4 of the GHG Abatement Measures TSD assumes that all states in each region can achieve by 2030 the average of the 2020 requirements of RPS states in that region. Commenters stated that to accomplish this, the TSD assumes that states within each region exhibit similar levels of renewable resources, an inference made from state

- level technical resource potential projections reported in a NREL GIS

- based analysis. Commenters stated that a review of this NREL report reveals a rathe r wide variation in renewable technical potential for specific regions and by renewable resource; for example, the technical potential for biomass varies significantly across virtually all regions. Commenter s also stated additionally, in the NREL study, al l biomass feedstock land resources were considered available for biopower use. Commenters stated competing uses of available land and biomass resource, such as for biofuel production, were not considered. Commenters stated this could further affect the te chnical resource potential for biopower within a region. Commenters stated the variation of renewable158 resource technical potential is perhaps the most pronounced for the West region. Commenters said significant variability in renewable technical resource i s indicated for hydrothermal, urban photovoltaic (PV), rooftop PV, concentrated solar power (CSP), and hydropower.

Commenter s stated that even if renewable resources across states in a region had similar technical potentials, the primary RE approach does not consider how these profiles may have dissimilar market potentials. Commenters stated that accounting for heterogeneous abatement cost functions for renewable resources across states is an important element in reaching specified emissions targets while minimizing abatement costs (or conversely in reducing more emissions for a given expenditure level). Commenters stated identical standards for groups of states clustered by their technical potentials are not necessarily indicative of relative compliance bu rdens, especially in the presence of grid integration costs, siting concerns, and the provision of balancing flexibility from existing assets. Commenters stated that inadequately accounting for this cost information may overlook opportunities for lower

- cos t reductions in other states or building blocks, which would be exploited in an approach with broader coverage and greater flexibility.

Commenter s stated that a more appropriate and comprehensive basis for state clustering would be informed by the market p otential for RE development, which would include technology costs, fuel costs (e.g., for biomass), investor response, regional competition for other resources, learning

- by

- doing and network effects, regulatory limitations, and public acceptance. Commenters stated these externalities will influence regional RE costs. Commenters noted EPRI assessed and reported the regional costs for deployment of renewable generation in two key reports.

Commenter s stated that many state RPS goals include hydroelectric power generation, but EPA does not include existing hydroelectric power towards compliance with its Proposed Guidelines. Commenters stated that including this component of the RPS in the Building Block 3 goals without allowing states to rely on existing hydropo wer for compliance will substantially increase the amount of new renewables required in each state, even in states that have already reached their own RPS goals.

Commenters stated that m any state RPS goals include hydroelectric power generation, but EPA do es not include existing hydroelectric power towards compliance with its Proposed Guidelines. Commenters stated f or example, New York counts hydroelectric power towards its 29 percent RPS target, and this source accounted for 83 percent of the state's renew able generation in 2012. Commenters stated i ncluding this component of the RPS in the Building Block 3 goals without allowing states to rely on existing hydropower for compliance will substantially increase the amount of new renewables required in each sta te, even in states that have already reached their own RPS goals.

Commenter s stated the regions were formed arbitrarily, and EPA did not group states with comparable RE resources. Commenters asserted EPA did not consider whether or not a particular
state w ithin the region possessed the same renewable resources as the benchmark state, which is a crucial oversimplification. For example, c ommenters noted that NREL estimates that Kansas ranks number two in the country for wind energy potential based upon potent ially developable wind capacity, Texas ranks number one, and Nebraska ranks number four

- by comparison,159 Arkansas ranks 28 and Louisiana ranks 39. Commenters added that the NREL Wind Resource Map below shows dramatically that Louisiana, Arkansas, and even most of Texas have very different wind resources than Kansas, Nebraska, Oklahoma, and northwest Texas. Commenters said NREL estimates that Kansas has more than 950,000 MW of potential wind resources with >30% capacity factor

- by comparison, Arkansas and L ouisiana have 9,000 MW and 410 MW of potential wind resources with >30% capacity factor, respectively.

Commenter s also noted a study DOE conducted in 2008 showing projected wind capacity development from a 20% national RPS scenario that noted that some st ates, such as Louisiana and Mississippi, have lower quality wind resources, and that, even under the modeled "20% RPS policy scenario," there would be virtually no wind capacity development in Louisiana by 2030. Yet, c ommenters stated, EPA projects that Louisiana will be able to nearly triple its current non

hydro RE production of roughly 2,430,000 MWh per year to 7,572,000 MWhs by 2030. Realistically, c ommenters said lack of a wind resource leaves only woody biomass, waste heat recovery, geothermal, off

- shore wind, and solar PV as RE alternatives. Commenters noted that virtually all of Louisiana's current RE production is from pulp and paper plant "black liquor" waste that is not scalable like wind.

Comment 8 : Commenters express ed concern regarding the NREL report.

Response 8: The technical potential limiter is not included in the final methodology for quantifying building block 3 generation. The final methodology is described in section V.E of the preamble and in the GHG Mitigat ion Measures TSD.

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

Commenter s stated EPA attempts to determine the technical potential of state renewable resources by relying on a 2012 NREL report. Commenters stated that this report by design only represents resource potential, with some caveats, however, as the report notes: "The estimates do not consider...economic or market constraints, and therefore do not represent a level of renewable generation that might actually be de ployed." Commenters stated the report indicates that these "economic or market constraints" include technology and fuel costs, policy considerations, regulatory limits, and regional competition with other energy sources. Commenters stated that EPA also ack nowledges the significant limitations of this study. Commenters stated that other factors that impact the amount of the technical potential resources that can actually be developed include seasonal impacts, transmission considerations, state regulatory pro cesses, and project siting rules and limitations associated with certain endangered species and other environmental programs. Commenters stated these issues present technical, cost, regulatory, and practical challenges that can and do limit actual opportu nities for developing these potential resources, yet, EPA did not consider these factors in deriving the technical potential or assumed development rate for each resource.

Commenter s discussed the EPA approach in which a benchmark development rate for each renewable technology based on the arbitrary average of the top 16 states for each resource was developed. Commenters stated the benchmark rates from this limited number of states are then160 incorrectly applied to all states. Commenters stated EPA's approac h is fatally flawed as the agency incorrectly assumes that the technical potential and experience of 16 states is sufficient for establishing renewable energy goals for all other states. Commenters stated EPA's reliance on historic renewable energy development in only the top 16 states disregards the fact that experience of these limited states may not be applicable or achievable by other states, as the top performing states are typically those with the greatest renewable generation potential, greatest access to transmission, and have lower development costs. In addition, c ommenters stated, EPA made no attempt to evaluate the quality of the resources developed, the manner in which they were funded (ou t

- of

- state entities, federal tax credits, grants, etc.), or other drivers for development that may not be applicable to other states. Commenters stated that given that subsidies such as the federal production tax credit and investment tax credit have alrea dy expired or are scheduled to expire before the states even file their compliance plans, it is not reasonable to expect that past development of renewable resources is necessarily indicative of future development potential as experienced in recent years w hen these tax benefits were available. Further, c ommenters stated, EPA did not consider whether existing renewable resources represent opportunistic or nuanced circumstances for development that cannot be readily replicated or expanded.

Commenter s stated t hat the NREL report acknowledges these state differences by estimating potential renewable resources based on varying assumptions on the capacity factors that would be expected from each technology. For example, commenters said NREL provides state

- specific estimates of capacity factors for photovoltaic resources. Commenters noted that for the states in the EPA

- defined South Central region, the capacity factors for photovoltaic resources ranged from 19.6% (Louisiana) to 23.8% (Kansas), and stated EPA does no t consider that the development rates derived from the top performing states may not be achievable by other states that are not able to utilize their resources at the same rate due to differences in the availability of the resource. Commenters stated the a gency has provided no rationale for why it is appropriate to assume that the development achieved to date by select states, with different technical, cost, and policy considerations, is replicable and represents what is achievable by all states going forwa rd; nor has EPA provided any rationale for using prior growth rates as an indication of achievable future growth, particularly given the technical challenges associated with incorporating increased renewable energy into the power supply system, such as the need for additional transmission investment.

Comment 9: Commenters stated concerns with the a pproach to quantifying RE potential

. Response 9: State RPS requirements are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

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

Commenter s said some state RPS are designed as capacity (MW) only standards, yet EPA assumes that these are energy (MWh) produced standards in their goal calculations. Commenters161 added that most state RPS programs apply to only a fraction of the ele ctricity consumed in the state, excluding for example municipal and cooperative generators, yet EPA applies its RPS requirements on 100% of the generation in the state.

Commenters said that in both of the proposed RE approaches, the goals are based, in par t, on prior renewable development trends, yet prior growth is not necessarily an indication of future growth. Often, c ommenters stated, the most rapid and cost

- effective gains are achieved in the early years of development and in those areas with the great est resource potential and the greatest potential to deliver and integrate these resources (i.e., available transmission). In addition, commenter s stated many of the prime areas for RE development are located far from load centers, requiring new transmissi on to be built to deliver the power to load centers, with a typical transmission line requiring 5 years or more to site, permit and construct, particularly if it crosses federal or tribal lands. Commenters stated l arge

- scale transmission projects, such as high voltage overlays and those needed for RE integration can involve even longer lead times. For territory on federal land, Commenters added it would take multiple years to design and permit new transmission lines. Commenters said that addition of increme ntal renewables to the grid (especially if geographically far from load) potentially will come at an increasingly higher cost. Also, c ommenters said EPA's approaches are predicated on the assumption that large quantities of new RE can be integrated into th e grid but has not accounted for the technical challenges related to integrating and managing large quantities of renewables into the existing transmission and distribution systems. Commenter s agreed that any approach to quantify RE potential should take i nto account transmission constraints and the issues surrounding new transmission construction that come from siting, permitting, environmental impacts, and landowner opposition.

Comment 10 : Commenters expressed s upport and opposition to the target rates.
Response 10: The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, which is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Several commenters asserted the targets should be strengthened. Commenter s asserted the CPP goals for RE should be strengthened, noting that the RE target for 2020 proposed in the CPP is actually lower than the EIA projection (9%) under a business

- as

- usual scenario, and the CPP's 2030 target of 12% is barely higher than the EIA's business

- as

- usual projection of 10%. Commenters stated g iven the significant levels of RE generation already achieved by many states, a more ambitious national goal is clearly within reach. Commenters stated that Florida, in particular, could deliver significantly higher levels of RE generation; the state has the third

highest potential for rooftop solar potential in the U.S., but current ly ranks only 12th in installed capacity. Commenter s asserted we should work toward a much larger emission reduction goal of 35 to 40% reductions below 2005 levels in 2020.

Commenter s stated EPA's target is only marginally more ambitious than what the U.S . EIA projects for RE generation under its business

- as

- usual case. Worse, c ommenters stated that in162 2020, EPA's RE targets are less than what EIA says will be achieved under business as usual. Commenters said EPA's methodology in determining the potential for BB3 was more of an "average system of emissions reductions" rather than the best system. Commenter s added that EPA's methodology results in 17 states with lower RE targets than the level that the Lawrence Berkeley National Lab projects they will reach by meeting existing RPS mandates.

Commenter s support ed development of RE targets, but thought they could be strengthened. Commenters said that setting a low floor for RPS states will not create enough of an incentive to move these states forward where they need to go. Commenters stated that Colorado, for example, while a national leader in growing a clean energy economy, should have a S IP that pushes it forward and brings other states along. Commenters added that the final rule should allow periodic review of progress toward targets and encourage early efforts to reduce emissions by giving full credit to emissions reductions achieved by projects that are completed prior to 2020.

Commenter s stated that for the 29 states that have RE standards in place; 21 of them, including Colorado, would have to do little or nothing more than to achieve the current RES targets in order to meet or exceed the proposed targeted EPA use to calculate their emission reductions requirements for 2030. Commenter s stated EPA is underestimating 2030 levels of RE

- these are lower than even the current RE generation from nearly all states with RPS/RES.

Commenter s fu lly support ed EPA's determination to include RE generation as a separate BB, but felt the target must be significantly increased and the time line for requiring contributions from this source accelerated. Because of the critical need for RE, EPA should est imate the full potential of RE available to the power system. Commenters added that EPA has adopted a target

limiting selection methodology, artificially constrained its estimates of the achievable energy generation target rates and of the cost

- effectivene ss of RE, that it must correct in the final rulemaking.

Commenter s stated that the NREL estimated that untapped offshore wind resources in the U.S. are so abundant they could power the entire country. Commenters added that current trends show how much pote ntial for dramatically increasing renewable generation exists:

• Wind capacity increased by 75% and solar capacity by 473% from 2009 to 2013.

• The national average cost of wind power has dropped more than 60% since 2009, making it competitive with new fossil fuel plants in many regions.

• Solar photovoltaic system costs fell by about 40% from 2008 to 2012, and by another 15% in 2013.

• The trends of improved technologies and reduced costs are expected to continue.

Commenter s asserted the targets are overly conserv ative, and this is principally the result of the methodology used, which creates state

- level targets using regional averages of existing state RPS
statutes. Commenters said achievable, cost

- effective targets are not well reflected in existing state mandate s which tend to understate the potential for RE deployment. Commenters stated that developing targets based upon these existing statutes, and pulling down these targets by163 including states with no RPS goals, creates an artificially low target for BB3. Comm enters asserted that a methodology which averages in and is partially defined by do nothing approaches cannot be BSER. Commenters urged EPA to determine that the target

- setting methodology used in the draft guidelines falls short of the BSER standard, and replace it with a methodology more reflective of a true BSER, such as a modified version of the Alternative Renewable Energy Approach described by EPA, updated with more realistic assumptions of technology costs and growth rates. Commenters recommended the following with respect to Building Block 3:

• Higher RE targets should be established.

• No state target under the CPP should be based on assumptions projecting lower renewables use in future years than actually exists in 2014.

• The methodology for calculating targets should use a modified version of the Alternative Renewable Energy approach, not a framework based upon averaging existing statutes.

• The potential contributions of distributed renewable generation, which appear to have been omitted to date, must be fully accounted for.

• The assumptions used for target setting under the proposed Alternative RE Approach should be updated to better reflect actual renewable technology deployment and pricing, yielding more accurate estimates of renewables potential
over t he time horizon of the CPP.

• If EPA continues to use a target

- setting approach based upon existing state policy, it should modify the approach proposed in the draft rule, replacing this with a framework that is defined on the basis of best practices rather than one based on average practices.

Commenters stated EPA underestimated RE's likely growth and its potential role within the BSER and should make significant improvements in how it calculates the BB. Commenters said by choosing the regional average RE s tandard approach, the EPA severely underestimates the potential deployment of clean energy into the grid. Commenters stated the "best practices" approach simply averages the political environment for RE several years ago and that high achieving states like Maine, Minnesota, South Dakota and Iowa were already exceeding what EPA expects the state to achieve by 2030 under this scenario for 2012. Commenters also noted that North Dakota, the windiest state the country, is only expected by EPA to generate 15% of its electricity from renewables, an amount that it was already achieving in 2012. Given the low price of wind energy, c ommenters said there is no reason to think that high achieving states will stop the growth of their clean energy generation

- after all, clean energy is competing economically with fossil generation, and holding down overall electricity prices. If EPA wants to use RE standards as a proxy for RE potential, commenter s said it would be better to use the highest RE standard for that region, giv ing a closer approximation of the medium term potential carbon pollution reductions through RE for that region. Commenters stated EPA described an alternative method based on the technical and economic potential to calculate RE generation building block, w hich would likely be a better estimate of clean energy's potential, but a better164 way would be to use the Union of Concerned Scientists (UCS) model in the BSER. Commenters said UCS estimates that the EPA could almost double RE targets within the BSER, from 12% of total 2030 U.S. electric sales to 23%; and found that deploying higher levels of RE would be a cost effective way of reducing carbon pollution. Commenter s added that adoption of a more aggressive approach will reinforce the need for New York's conti nued long term support for RE while further aligning the CPP with the objectives espoused in the 2014 draft New York State Energy Plan to reduce carbon intensity from the energy sector by 50% by 2030 and a key component of the state's overall climate pollu tion reduction goal of 80 % by 2050. Commenter s added that they had concerns about impacts to wildlife from all developments, and seeks to safeguard wildlife from undue harm. Thus, the c ommenters asserted strong state and federal involvement is needed to g uide RE development to ensure that it is done responsibly and in a wildlife

- friendly manner. Commenters asserted that with careful planning, renewables can be developed in a way that provides significant electricity generation for consumers while protectin g wildlife and habitat.

Commenters said this "average system" approach fails to represent the BSER and fails to account for demonstrated growth in states over the last several years, producing overly conservative targets that are already being exceeded by several states. Commenters urged EPA to assume a rate of RE deployment more consistent with recent historical rates of deployment. Commenters encouraged EPA to adopt UCS' Demonstrated Growth approach, as it would produce targets more in step with recent trends, more accurately reflecting the role that RE can play in reducing carbon emissions. Commenter s added that EPA should update its formula to correctly account for emissions reductions from RE because it is inconsistent with the way in which EPA discus sed the RE/EE BSER assumptions in the proposal. Commenters said EPA's calculations did not substitute generation or reduce generation from fossil

- fired resources in the amount associated with new RE/EE resources. As such, Commenters stated EPA should revis e its formula for setting the state targets and adopt the corrected approach proposed in the NODA to ensure that incremental renewable resources do in fact reduce the equivalent level of fossil

- fired generation. Commenters also supported the approach, offe red by the UCS, which found that EPA's approach significantly underestimates the potential role of RE in allowing states to reduce carbon emission.

Comment 11: Commenters stated issues with e stimating the effective 2020 rate

. Response 11: State RPS requir ements are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detail in V.E of the preamble and in the GHG Mi tigation Measures TSD.

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

Commenter s stated EPA's calculation of RE goals in BB3 is flawed because it is premised on "effective" 2020 rates calculated by EPA that do not reflect the specific requirements within those existing RPS programs. Commenters stated the EPA's use of "effective" 2020 RPS requirements reflects rates that are overstated due to the failure to consider RPS provisions that165 reduce the overall stringency of indivi dual state requirements. In addition, the c ommenters stated, the future effective 2020 RPS rates have not been "adequately demonstrated," which the CAA defines is a necessary prerequisite for determining BSER. Commenters said that in the design of most RPS , states acknowledged the challenges associated with increased development and utilization or renewable resources by including provisions that gradually increase implementation over two decades, that allow for alternative compliance plans in lieu of

renewa ble resource development, and that reduce the stringency of standards in order to mitigate retail cost (cost caps) or transmission reliability impacts. Commenters stated that EPA acknowledges that full compliance to date has been challenging with RPS that are much lower that the effective 2020 rates considered in BB3 by stating that " ...recent improvements in RPS compliance rates indicate to the EPA the reasonableness of current RPS growth trajectories. Commenters stated w eighted average compliance rates a mong all states have improved in each of the past three reported years (2008

- 2011) from 92.1% to 95.2% despite a 40% increase in RPS obligations during this period. " Commenters stated EPA further acknowledges that these less than 100% compliance rates i nclude considerations that are not accommodated by EPA's proposal "The RPS compliance measure cited is inclusive of credit multipliers and banked RECs utilized for compliance, but excludes alternative compliance payments, borrowed RECs, deferred obligation s, and excess compliance. This estimate does not represent official compliance statistics, which vary in methodology by state."

Commenter s stated that regardless of how the percentage of historic RE is calculated, the regional renewable goals developed by EPA have not been adequately demonstrated. For example, Commenters stated, the agency calculated regional goals for the East Central and Southeast regions of 16% and 10%, respectively; however, the maximum RE demonstrated in 2012 by individual states in th ose regions was 4.2% in the East Central Region and 3.2% in the Southeast Region

- states that do not have mandatory RPS programs.

Commenters said that state RPS statutes contain a number of "off

- ramps" related to cost, reliability, and crediting provisions that can result in a lower standard and that EPA gives no consideration to these off

- ramp provisions in estimating the "effective " 2020 rate.

Commenter s said EPA arbitrarily creates a national RE target by lumping states into zones and then asserting a standard renewable percentage based on its analysis of "best practices." Commenters said many states meet their RPS through a trada ble REC system, a system that does not appear to be easily transposable into state plans. Commenters also said many state RPS have off

- ramps, cost caps, and alternative compliance options, one of which can be EE improvement. Commenters asserted that f a st ate's RPS allows EE to be counted as RE, EPA should reduce that state's RPS assumption in the state goal calculation.

Comment 12: Commenter s expressed c oncern regarding RE offset potential

. Response 12: The BSER no longer includes energy efficiency under building block 4. The EPA believes that the replacement of affected source generation with RE is technically feasible, adequately demonstrated, and cost

- effective. Refer to preamble section V.A and V.E for additional information.166 The following is a summary of the specific public comment under this comment:

Commenter s disagreed that RE offsets existing fossil fuel generation to any appreciable extent as empirical data suggests intermittency and demand fluctuations nullify any supposed zero

- sum relationship. Additionally, c ommenters said offsetting RE against the baseline would exacerbate all of the other problems with the calculations for BB4, by requiring an absolute reduction in demand every year between now and 2030.

Comment 13 : Commenter s showed concerns on the use of the NC REPS for the Southeast and South Central Regions.
Response 13: State RPS requirements are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rule. The methodology that produces target gen eration levels under building block 3 is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

Biomass is not considered part of the best system of emission reduction in this rule and therefore it is not included in goal

- settin g or compliance evaluations. However, similar to other technologies outside of BSER, biomass may be considered as a part of a state’s plan to meet the emission guidelines.

A discussion regarding the use of some biomass feedstocks for compliance purposes c an be found in Section VIII.I and Section VIII.K of the preamble.

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

Commenter s stated that has misread North Carolina's REPS. Commenters said EPA neglected to account for the fac t that the 10% 2018 goal includes EE measures (which EPA separately addresses in BB4), out of state energy production, thermal energy, and existing hydroelectric energy. Additionally, c ommenters stated the methodology, proposed by EPA, to apply an overall growth rate to individual states' current renewable penetration levels, results in a requirement that states with currently heavy investment in RE increase their renewable production substantially, while a state that has relatively no renewable penetration will be required or expected to barely increase its renewable investment. Commenter s EE measures can be used by an electric power supplier to comply with the requirements of the REPS. Furthermore, c ommenters said EPA has double counted EE in its calculati ons by utilizing the NC REPS that includes EE as its proxy for RE generation in BB3 and then separately calculating reductions based on achievable EE in BB4. Commenters said IOUs can fulfill up to 25% of the REPS requirements up until 2020 through EE measu res. Commenters stated i n 2021, this limitation is increased to allow IOUs to comply with up to 40% of their REPS requirements through EE measures. With the exception of small set

- asides for energy from solar, swine waste and poultry waste resources, c omme nters stated NC REPS legislation contains no limit to the amount of EE and DSM measures that can be used to satisfy the REPS by EMCs and municipalities. Commenters asserted that actual approximation of RE generation anticipated as a result of the REPS, 3.7 5%, is far lower than EPA's 10%. Commenters said that when 3.75% is inserted into EPA's application of BB3, in place of 10%, the resulting BB3 reduction adjusts from a 165 lbs/MWh reduction to a reduction of 67 lbs/MWhr.167 Commenter s said states in the South eastern region were given a RE target of 10% of statewide electrical generation and this regional approach was based on the assumption that the potential to expand RE resources varied by region. Commenters stated the figure for the Southeastern region is b ased upon the average of all RPS of all states in that region, however, North Carolina is the only state to have such a standard. As such, c ommenters stated North Carolina became the standard for the region. Commenters stated it is, however, a combined ren ewable energy/efficiency standard that allows utilities to meet a portion of their targets through efficiency measures, rather than the deployment of new renewable energy generation. Commenters questioned if EPA has considered the effect of this on its BB3 calculations.

Commenter s stated EPA misinterpreted NC REPS when setting the RE target for Georgia and other Southeastern states. Commenters stated that based on North Carolina's REPS, Georgia's RE target should be no more than 7.5%. Commenters stated EPA based the Southeast regional RE target of 10% on North Carolina's REPS; however, the North Carolina standard contains provisions which allow both RE and EE measures to satisfy the requirements. Commenters stated EPA's Southeast Regional RE Targe t is based on North Carolina's (NC) REPS Primary Target of 12.5% for Investor Own Utilities (IOUs) by 2021 and thereafter. Commenters cited North Carolina statutes that discussed how electric public utilities in the state may meet the requirements through RE resources or through reduced energy consumption through EE

measures. Commenters stated North Carolina's statute has defined 'renewable energy resources' to include over 16 different potential fuels that are not known to be significant or sustainable

ren ewable resources in Georgia. Commenters also stated that by comparison, EPA states that "The East Central and Southeast regions show moderate to strong resources in both biopower and rooftop PV potential." Commenters also stated that the statute states tha t up to 40% of the North Carolina 12.5% RPS target can be met by the implementation of energy efficiency measures, which translates to an effective RE target of 7.5%. Commenters stated that because of the inconsistencies between the handling of RE in the p roposed section 111(d) rule and the flexibilities incorporated in North Carolina's REPS, they asserted that EPA misinterpreted the North Carolina requirements when setting the RE target for Georgia and other Southeastern
states. Commenters stated that base d on North Carolina's REPS, Georgia's RE target should be no more than 7.5%.

Commenter s stated that thermal energy is not included in EPA's definition of RE generation on which it bases its calculation in BB3, though it can be used by an electric power su pplier to comply with North Carolina's REPS requirements. Commenters added that the statutes impose no limit on the amount that can be used for compliance. Theoretically, the c ommenters said an electric power supplier could satisfy its entire requirement b y purchasing or generating thermal energy (with the exception of a small set

- aside for electricity from swine waste).

Commenter s stated the proposed rule relies heavily on the North Carolina RPS for guidance on what is achievable in this part of the countr y, as it is the only state with an RPS in the Southeastern region. Commenters stated the North Carolina standard includes several items that may not be achievable or applicable to Georgia and does not properly fit within the confines of the proposed rule. Commenters stated the renewable standard allows for energy efficiency to be 25

- 40% of the renewable goal for all IOUs and 100% for Municipal and Cooperative Utilities. Commenters stated the goals outlined are not directly applicable to the methods used to craft reduction potential in the proposed rule. Commenters also stated the RPS is based on a mandate168 from North Carolina legislature to achieve goals, not on technical feasibility resulting from a detailed study of resource availability. Commenters stated that identifying the BSER for renewables to comply with this rule should rely upon robust scientific study to determine Georgia's potential and should be parsed with realistic accounts for current technological and economic constraints. Commenters said the final rule must be modified to reflect a realistic and feasible target for Georgia that is a compliance option and not a mandated level of RE.

Regarding the NC RPS, commenter s said that just because a state is leading in renewables does not necessarily m ean that the other states in that region are capable of meeting the same level of renewable generation.

Commenter s stated the Agency significantly misconstrued state

- level RPS in developing regional targets. Commenters stated primary and secondary percenta ge requirements ("tiers") for specific renewable resources (e.g., solar) were considered by EPA when initially determining a state's total renewable energy compliance potential. EPA excluded tiers that included energy efficiency or any fossil fuel unless i t was part of a primary tier. Commenters stated a region's target was then determined by averaging the individual state's 2020 renewable energy compliance requirements within a region. Commenters stated North Carolina's REPS was the only state program in t he Southeast region and thus established the region's target. Commenters stated Commenters stated the use of a single state program to establish goals for an entire region is completely misplaced. Commenters stated North Carolina's program contains numerou s eligible compliance options that were not taken into account in BB3. For example, the c ommenters stated, compliance options for covered entities in North Carolina include: demand

- side management, EE measures, electricity demand reduction, existing hydroe lectric resources, credit multipliers for biomass, and out

- of

- state unbundled REC. Commenters also stated demand

- side management, EE measures, and electricity demand reduction are eligible resources within North Carolina's REPS primary tier; thus, EPA did not exclude these resources. Commenters stated electric public utilities in North Carolina may use EE measures to meet up to 25% of the REPS requirements through 2020 and up to 40% beginning in 2021 and electricity demand reduction is allowed to meet up to 100% of a utility's requirement. Commenters stated EPA's proposed guidelines do not recognize these resources as eligible for meeting its BB3 RE targets

- in fact, these resources are captured, in part, by requirements in BBs 1 and 4. Commenters stated Co mmenters stated EPA has made two errors: (1) EPA excluded numerous compliance options available under North Carolina's REPS that significantly increased its stringency; and (2) the Agency double counted potential compliance measures across building blocks. Commenters stated, the stringency of BBs 1, 3, and 4, for at least the Southeast region, are based on identical

measures

- EE measures and electricity demand reductions.

Commenter s stated EPA's limited definition of renewable technologies further increas es the stringency of North Carolina's program. EPA's proposed guidelines, compared to North Carolina's program, narrow the types of renewable technologies that count toward compliance with a state's goal by defining renewable energy as technologies that ar e "fueled by the sun, wind, water, organic matter, and other resources regularly replenished by physical or biological cycles." Commenters stated the North Carolina REPS defines RE resources much more broadly: "Solar electric, solar thermal, wind, hydropow er, geothermal, or ocean current or wave energy resource; a biomass resource, including agricultural waste, animal waste, wood waste, spent pulping liquors, combustible residues, combustible liquids, combustible gases, energy crops, or169 landfill methane; wa ste heat derived from a renewable energy resource and used to produce electricity or useful, measurable thermal energy at a retail electric customer's facility; or hydrogen derived from a renewable energy resource." Commenters stated that North Carolina's REPS, furthermore, specifically allows a hydroelectric power facility with a generation capacity of 10 MW or less to count towards compliance, whereas EPA explicitly excluded pre

- existing hydroelectric power generation as an option for compliance with stat e goals. Commenters stated EPA, however, did not reduce the stringency of North Carolina's program to account for these limited compliance options when setting a renewable energy target for the Southeast region within BB3. Commenters agreed that fuels such as landfill methane gas and hydropower should count toward compliance.

Commenter s said it should be noted that the definition of a RE resource in North Carolina is not limited to emission reducing technologies. Commenters stated b iomass, pulping liquids, methane captured from poultry and swine farms are all examples of resources eligible to comply with the North Carolina REPS where their use as a fuel may actually increase carbon emissions when compared to certain traditional forms of generation

. Commenters stated biomass utilized for compliance was not backed out with the other elements in this analysis as biomass is also included in the 2% figure for current RE generated in state that EPA relied upon for its starting point to apply the growth rat e. However, c ommenters noted that the inclusion of biomass in both instances attributes carbon reduction to resources that have not been proven to do so.

Commenter s said EPA's initial decision to use the North Carolina REPS as a proxy for the entire South east region is flawed because it uses the only REPS in the region, while for other regions, EPA used an average of portfolio standards across the region to approximate each region's potential. Commenters said that by simply using the only REPS in the regio n, EPA has assumed that all states in the Southeast have a similar potential to North Carolina. Commenters said if North Carolina had not passed its REPS, if EPA would expect the Southeast region to have 0% renewables in its application of BB3. Likewise, C ommenters asked if one other state had made a goal of 1%, would the goal for the entire region then drop to 5.5%?

Commenter s stated the RE target for the entire Southeast region is based solely on North Carolina's 2020 RPS goal of 10% and assumes a RE gro wth rate of 13% per year for each state. Commenters stated that in Georgia and Alabama, industrial CHP sources burning wood or wood

derived products (such as pulp and paper mills) constitute over 90% of each state's RE generation. Commenters stated between 2008 and 2012, these industrial CHP sources grew at an annual rate of only 2.1% in Georgia and actually declined by 5.1% annually in Alabama. Commenters stated these sources have little potential for growth, so in order for Georgia to achieve its state re newable energy target, other renewable energy sources would need to increase by over 44% per year. Accordingly, co mmenters stated, EPA's approach is inherently defective because it does not account for these state

- specific limits on achievable renewable e nergy potential.

Commenter s stated that in the Southeast Region, EPA set targets based on North Carolina's RPS but many of the other states do not have the same wind capacity. Commenters stated EPA's GHG abatement measures TSD, citing an NREL study, claim s that states in each region exhibit similar RE potential, but other SE states lack onshore wind potential, and it is the only renewable option close in terms of cost to sources it would be replacing. Commenters questioned what renewable170 resource(s) does E PA expect these states to deploy. Commenters also questioned how does the Agency account for potentially mandating renewables for states in which RE generation (i.e. offshore instead of onshore) could be significantly more expensive.

Commenters stated tha t in the Southeast and for Florida, Georgia and South Carolina where their member utilities operate, the most cost effective source of RE, wind power, is not a feasible or cost effective resource and neither wind nor solar generation produces reliable base load power. Commenters said EPA eliminated a number of important modifying features included in the N.C. REPS when establishing the renewable requirement for the Southeastern states in the proposed rule. Commenters stated N.C. REPS caps the cost of the pr ogram for retail, commercial and industrial customers

- EPA ignores this legislatively imposed limiter on the program. Further, Commenters asserted N.C. REPS includes EE, demand reduction and the ability to buy RECs as components of its 10% requirement

- a ll features that would reduce the absolute costs and stringency of the portfolio standard. Commenters added that N.C. REPS directs the state PUC to develop a procedure for modifying or delaying provisions if the Commission determines that it is in the publ ic interest to do so

- there is no such feature in the proposed rule which specifically rules out "backsliding" from mandatory standards, no matter what real world conditions states confront in the future.

Commenter s said it is unreasonable for EPA to predicate RE requirements for multiple states, each with completely different RE resources and completely different energy resource and infrastructure bases, on the renewable plan for N.C. and to impose on those other st ates an RPS from a single state in the region that contains none of the cost and feasibility safety valves provided by that state. Commenters urged EPA to reconsider the decision to ignore state

mandated price caps, alternative compliance options and progr ammatic off

- ramps when imbedding the REPS into the NSPS as the model program.

Commenter s stated EPA's NODA proposal is not acceptable because section 111(d) grants states the authority to set standards of performance

- not EPA or, by proxy, NREL. Commente rs stated EPA's nomination of NREL to set RE targets in EPA

- proposed state goals will further overstep the authorities EPA has under the law. Commenters added that RE penetration has an impact on the grid that extends beyond just feasibility. Commenters st ated NERC has repeatedly made clear that the increased penetration of variable resources can and will strain the grid making the assessment of RE targets a decision that requires assessments beyond NREL's area of expertise. Commenters asserted states are b est suited to ascertain the level of RE penetration that they may choose in developing state plans. Commenters urged EPA to assess the wisdom of setting in place a process (allowing NREL to set RE targets) that will establish a national reduction goal that will become inviolate without allowing an opportunity for comment to affected entities.

Commenter s stated the calculation of the regional renewable energy goal for the Southeast region relies on the RPS of only one state, and thus the North Carolina RPS, and only the North Carolina RPS, is the sole basis for determining the renewable energy goal for all states in the Southeast region, regardless of the unique design aspects of the North Carolina program or different geographic potential or cost

- effectiven ess for achieving such a goal among states in the region. Commenters stated the North Carolina RPS contains a number of unique elements that significantly affect the extent and types of specific renewable resources that may be applicable to171 other states in the region. Commenters provided the following examples of these unique provisions:

• Up to 40% of the standard can be met through energy efficiency measures;

• Up to 25% of the standard can be met by using out

- of

- state renewable credits; and

• ~10% of the stand ard must be met by energy recovery from swine and poultry
waste.

Commenter s stated the U.S. Department of Energy's Database of State Incentives for Renewables & Efficiency (DSIRE) describes the North Carolina standard as follows: "Due to the combined circu mstances that it 1) has fairly stringent per

- account cost caps, 2) allows for energy efficiency and conservation measures to comprise 25% of General Requirement compliance through 2021 and 40% thereafter, North Carolina's REPS [Renewable Energy Portfolio S tandard] can function in ways similar to an Energy Efficiency Resource Standard (EERS). However, commenters stated since it does not require specific annual targets for efficiency and demand

- side management, it is not formally considered by DSIRE to be an EERS." C ommenter s stated by including both EE measures and renewable resources in a single goal, North Carolina's standard is far different from the goals EPA claims to be establishing for groups of states on a regional basis. Commenters also stated EPA's methodology, which sets both EE and renewable goals as part of the state goals, effectively ignores the dual role those measures play in North Carolina, and has increased the state's standards. Commenters stated EPA should have adjusted
t he actual percentage to reflect this duality, and reduced the renewable portion of the North Carolina and Southeast regional goals.

Commenter s stated one major reason for EPA's overestimation of renewable generation relates to its broad selection of RE tar gets for specific regions, without any detailed examination of or justification for these targets. Commenters stated EPA's Southeast Region has an effective RE target of 10% by 2029, which is based on North Carolina's REPS of 10% by 2020. Commenters stated this region generally encompasses most of the SERC, as well as the Florida Reliability Coordinating Council (FRCC). Commenters stated the North Carolina REPS allows utilities to meet the REPS requirements through various mechanisms. Commenters stated two mechanisms that EPA failed to consider in its adoption of the 10% renewable target for the entire region are utilities' ability to (i) reduce energy consumption through energy efficiency measures and (ii) purchase renewable energy certificates (REC) from o ut

- of

- state facilities. Specifically, Commenters stated, the North Carolina REPS allows a utility in 2020 to meet 25% of its REPS requirement through energy efficiency and another 25% of its REPS requirement through RECs, which could reduce the effective 2 020 in

- state renewable generation target to 5.0%. Therefore,

c ommenters stated, EPA has not only overestimated North Carolina's target, it has overestimated the 2020 target for the Southeast Region and the 2020 to 2029 renewable generation levels in those states.

Commenter s stated that the statute for North Carolina's REPS state that "an electric public utility may meet up to forty percent (40%) of the requirements of this section through savings due to implementation of energy efficiency (EE) measures

. " Co mmenters noted that EPA accounts for172 EE in proposed BB4, thus the "RE Factor" for the Southeastern U.S. should be adjusted downward to account for this issue.

Commenter s stated that in North Carolina (the basis for the Southeast region target), utilities c an demonstrate compliance using EE measures. Commenters stated that consistent identification of what is and is not a qualifying resource will be important and may be a difficult task if EPA retains an RPS

- based approach for setting BB3 targets.

Commenter s stated that the EPA does not account for the fact that states define renewable resources that are subject to their portfolios differently than EPA. Commenters noted EPA used the North Carolina standard for the Southeast region and stated that the EPA ext racted the numeric standard without applying the other determinants in the North Carolina RPS statute. Commenters stated that the North Carolina REPS counts existing hydropower, REC, and EE to fulfill the requirements. Commenter s also stated there are prov isions in the North Carolina REPS that allow utilities to petition for a waiver if mandates are not attainable. Commenters stated the use of the appropriate determinants would reduce the effective 2020 in

- state renewable generation target for the Southeast region to 5%, half of what EPA proposed.

Commenter s stated that the EPA does not consider the details of North Carolina's RPS in applying it across the Southeast, and the requirements of the RPS do not line up with the requirements of the Clean Power Pla n. Commenters said that North Carolina's standard includes eligible resources that EPA does not include in Building Block 3, such as hydroelectric generation, landfill gas, biomass, and CHP/cogeneration. Commenters also said that North Carolina allows ener gy efficiency measures to account for 25 percent of a utility's requirement (40 percent after 2021), and electricity demand reduction can meet up to 100 percent of a utility's renewable energy requirement. Commenters asserted that even if it were appropria te to assume that North Carolina's RPS represents a good proxy for other state's renewable energy development potential, the eligible technologies counted in North Carolina's RPS do not align with EPA's specification of Building Block 3, and are not reason ably supported for application with respect to other states, such as Mississippi.

Commenter s stated EPA underestimated NC's RE potential.

Commenters stated North Carolina's RE and EEPS goal allows utilities to meet 25% of their requirements by reducing ene rgy consumption through EE measures, and another 25% of their requirements by purchasing RECs from out

- of

- state facilities. Commenters stated that thus, the 10% RPS target EPA assumed for North Carolina effectively requires in

- state RE generation to reach only 5% by 2020 with remaining 5% achievable through EE and RECs. Commenters stated because North Carolina's RPS alone sets the regional target for the entire Southeast region, EPA's target is roughly 100% too high for 8 states. Commenters said other state s, along with North Carolina, have built cost

- control mechanisms into their RPS goals to reduce the requirements for utilities if compliance becomes too burdensome. Commenters stated that EPA did not account for any of these flexible compliance mechanisms when dictating regional RE generation targets; it should do so.173 Comment 14 : Commenter s requested c onsideration for credit multipliers.
Response 14: State RPS requirements are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

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

Commenter s stated that another inconsistency between North Carolina's REPS and EPA's application of the program is the presence of a cre dit multiplier. Commenters stated the first 20 MW of biomass RE generation capacity located in North Carolina clean fields RE demonstration parks receive triple credit. Commenters stated that EPA states that multiple credits cannot be included as a measure in a state plan. Commenters stated this discrepancy is not limited to EPA's application of North Carolina's program. Commenters stated that 12 of the 29 state renewable programs contain credit multipliers, though EPA ignored the impact that credit multipl iers have on the stringency of the state standards. Commenters stated RECs derived from out

- of

- state RE facilities are also a compliance option under the North Carolina REPS and may be used to meet up to 25% of the program's requirements. Commenters stated the 25% threshold does not even apply to an electric public utility with less than 150,000 North Carolina retail jurisdictional customers as of December 31, 2006. Commenters stated EPA assumed that the stringency of North Carolina's program was reflective of the renewable resources available within the state's boundaries; this is not the case.

Commenter s stated EPA erred by omitting from consideration the effect of multipliers for differing technologies. For example, c ommenters said that in New Mexico, sol ar PV generation satisfying certain conditions qualified for a 3

- fold multiplier, resulting in a lower level of required renewable generation than was assumed by EPA in calculating New Mexico's BB3 goal

Comment 15 : Commenter s had concerns regarding the a pplication of NC’s secondary requirements for smaller utilities

. Response 15: State RPS requirements are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

The following is a summary of the specific public comment under this comment:

C ommenter s stated that further undermining the REPS as a stan dard setting tool, North Carolina is one of six U.S. states to establish secondary requirements for smaller utilities

- EMC and municipalities. Commenters stated that in developing the Southeast region's BSER renewable energy target, EPA only considered th e primary targets that solely affect electric public utilities. Commenters stated the Agency falsely states that "by only considering primary requirements, there is additional inherent conservatism in the RPS estimates, as additional state

- level RPS obliga tions are not included in the calculated targets." Commenters stated this conservatism,174 however, is eroded by applying the calculated primary target to the entire region's total net generation, which includes generation from EMC and municipalities. Comment ers stated this application of North Carolina's program also ignores the fact that, in North Carolina, EMC and municipalities are able to use existing hydroelectric generation for compliance. Commenters stated that only five of the 29 state programs analyz ed by EPA cover a state's entire load; for example, Arizona's RPS only covers 58.6 percent of the state's load.

Comment 16 : Commenters state d NC allows use of out

- of

- state REC for compliance.

Response 16: State RPS requirements are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detail in V.E of the preamble a nd in the GHG Mitigation Measures TSD.

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

Commenter s stated that out

- of

- state RECs can be used by an electric power supplier to comply with the requirements of the REPS. Commenter s said out

- of

- state purchases will not increase the level of renewable generation in the state but are acceptable for meeting the 10% requirement of electric power suppliers

- IOUs, EMCs and municipalities can fulfill up to 25% of the REPS requirements by purchasing out

- of

- state RECs.

Commenter s stated that yet another difference between North Carolina's program and EPA's BB3 is the treatment of banked RECs. Commenters stated the North Carolina REPS allows banking of RECs which encompasses "electricity or e quivalent energy supplied by renewable energy or reduced by the implementation of an energy efficiency measure." Commenters stated a REC can be used in the year in which it was acquired or any subsequent year, thus entities with a compliance obligation can bank RECs for an indefinite period of time. Commenters stated that EPA states that the use of banked RECs is not an approvable compliance option within a state's plan.

Comment 1 7 : Commenter s noted NC’s p enalties for noncompliance with state

- level RPS

. Response 17: State RPS requirements are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detail in V.E of t he preamble and in the GHG Mitigation Measures TSD.

The following is a summary of the specific public comment under this comment:

Commenter s stated EPA established the stringency of Building Block 3 based on the presumption that states are required to meet state

- level RPS. Commenters stated that this is a large oversight. Commenters cited the NCUC's final rules, stating that there are no specified175 penalties or alternative payments for noncompliance with state's RPS. Commenters stated that EPA has indicated that cost containment mechanisms or off ramps are not an option within an approvable state plan. EPA states, "[a]lthough these ACP [alternative compliance] payments may be directed to programs to promote the deployment of renewable energy technologies, the se payments are not equivalent to renewable energy generation and should not be accounted as such." Commenters stated that this discrepancy is not limited to North Carolina, as twenty

- one of the 29 state programs have explicit cost containment mechanisms.

Comment 1 8 : Commenters asserted the EPA approach ignores NC REPS cost cap

. Response 18: State RPS requirements are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detail in V.E of the preamble a nd in the GHG Mitigation Measures TSD.

The following is a summary of the specific public comment under this comment:

Commenters stated EPA's plan to apply the terms of the North Carolina REPS in an overly prescriptive and rigid manner to the Southeast regi on ignores one of the most fundamental aspects of the North Carolina policy

- the renewable energy goals in the North Carolina REPS are conditioned on an explicit cost cap set forth in the REPS statute. Commenters stated that under the North Carolina REPS, the state's utilities may pass to customers the "incremental costs" they incur to comply with the REPS. Commenters stated that the REPS statute, however, imposes a limit on the amount of such incremental costs that can be imposed on customers. Commenters stated, for example, the statute expressly provides that residential customers can be charged no more than $34 per year for the incremental cost of REPS compliance. Commenters stated that obviously, the cost cap provisions of the North Carolina REPS protec t consumers, but just as importantly, the REPS framework limits the obligations of the North Carolina utilities. Commenters cited the North Carolina REPS statute that specifically states that "[a]n electric supplier shall be conclusively deemed to be in co mpliance with the requirements of [the North Carolina REPS] if the electric suppliers total annual incremental costs incurred equals an amount equal to the per

- account annual [cost caps set forth herein]." In other words, c ommenters stated
commenters state d once a North Carolina utility incurs costs for REPS compliance equal to the statutory cost cap, that utility's compliance obligations cease, regardless of whether the utility has met the renewable energy goals set forth in the North Carolina REPS. Commen ters stated that thus, EPA has, in effect, used North Carolina's flexible and cost

- constrained renewable energy goals to now seek to misapply them in a wholly inflexible manner without regard to the cost to

consumers. Commenters also stated that EPA compou nds this error by misapplying those goals beyond North Carolina to an artificially created Southeast region.

Comment 1 9 : Commenters had North Carolina state target concerns.176 Response 19: State RPS requirements are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detail in V.E of the preamble a nd in the GHG Mitigation Measures TSD.

The following is a summary of the specific public comment under this comment:

Even if EPA is unwilling to depart from using existing REPS goals as the best method for establishing BB3 reductions, commenter s said EPA s hould allow states with established REPS to use these in their calculation. Commenters said NC established its REPS based on what was technically achievable for the state, so NC's BB3 reductions should adopt the complete NC REPS as the standard for NC. Com menters said t his would entail recalculating NC's emission standard based on the REPS as established in the NC general statutes, said the commenters, including all means by which NC electric generators may comply with the statute. Commenters said it would reestablish NC's standard based on retail electric sales rather than generation and require adjusting NC's reductions under BB4 to eliminate double counting since up to 25% of REPS compliance can be satisfied through EE.

Comment 20 : Commenters supported l ink ing performance

- based regulations with state targets

. Response 20: The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, which is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.

The following is a summary of the specific public comment under this comment:

C ommenter s supported linking performance based regulations with state targets. Commenters listed 10 principles for designing performance

- based regulations that w ould result in a utility earning higher rate of returns if they perform well under the targets set by the state. Commenters supported providing flexibility by allowing flexibility for annual goals by setting an 8

- 10 year target and allowing for benchmarks to be achieved in a cluster of 2

- 3 year increments. Commenters concluded that it would benefit states policymakers, regulators, and the utility customers by creating a market

- based solution to policy goals and shifting risk to the utility in exchange for g reater revenue opportunities. C ommenter s suggested that EPA encourage states to adopt performance

- based rates that allow electric utilities to make money during the energy transition for high carbon sources to clean energy sources. Commenters added that th e federal agencies can assist states in setting good solid measures and metric for set performance goals of reducing greenhouse gases and using energy efficiency.

Comment 2 1: Commenter s suggested the EPA underestimated RE growth potential

. Response 21: The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly in reevaluating the assumed cost and performance of wind and solar RE technologies. The final methodology does not use state RPS requ irements to177 quantify cost

- effective RE and is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the sp e cific public comments under this comment:

C ommenters contended that EPA underestimated the potential for growth of RE. Commenters added that the rule should rely on resource availability, which is already measured in each state, instead of basing assumptions on RPS and said RPS are a floor and not a ceiling. Commenter s added that EPA rightly includes wind/solar resources in setting state targets, but the availability and quality of opportunities assumed is too low, leaving substantial achievable reductions off the table. Commenters stated EPA should analyze resource availability and costs on a state and regional basis rather than limiting the assessment of potential development to mandated RE and state RPS. Further, c ommenters asserted that EPA should remove any artificial limits on RE growth and use the annual RE growth factor for each state that reflects the renewable potential for states and regions.

Commenter s contended that EPAs proposed rule "significantly underestimates" the role of renewables in establishing state

- level emissions targets, and fails to reflect the falling cost of renewables. Commenters compared a business

- as

- usual (BAU) scenario against a natural gas fuel switching, scenario, and a 30% RPS to determine which strategy achieves the greatest emission reductions at the lowest cost. Commenters stated that the comparison showed that the 30% RPS can reduce Wisconsin's CO2 emissions below EPA targets, at a lower cost than the fuel switching scenario. Commenters added that these results were shown under conditions where fossil fuel prices rise steadily at 2% annually, and a scenario where natural gas prices reflect historical volatility observed from 1998

- 2013. Commenters stated that the 30% RPS produced lower costs than the fuel switching scenario under each simulation, illustrating the

v alue of renewables as a hedge against price volatility. Commenters referenced the UCS analysis which found that ramping up RE deployment to 23% by 2030, compared to 12% of total retail sales under the proposed rule, would increase average electricity price s by just 0.3% per year above a BAU scenario. Commenters stated that the UCS results are even more favorable than the results of modeling for the state of Wisconsin. Commenters added that the analysis supports an aggressive shift to RE in Wisconsin, and ac ross the nation, is clear.

Commenter s said the regional growth factor should not be used as it limits the ability of many states to reach the regional target with no rationale for why such limitations would occur. Commenters stated there is ample evidence that the targets are achievable within the timeframe of the CPP at reasonable cost. Commenters asserted EPA should assume each state can meet the regional target rather than limit RE adoption through the regional growth factor. Commenters asserted EPA's ca lculation underestimates the ability to grow renewables; states that have not implemented RPS, and essentially have not made it a point to deploy RE, bring down the regional growth factor. Commenters said eliminating the regional growth factor's unnecessar y constraint on states achieving the calculated RE targets results in incremental RE target of 139,791 GWh in 2030

- if both 2030 RPS targets are used and the growth factors are eliminated, the net increase to RE targets is 195,735 GWh in 2030, a 37% incre ase.178 Comment 22 : Commenters expressed Wyoming specific target concerns.
Response 22 : The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are sum maries of the specific public comments under this comment:

Commenter s stated roughly two

- thirds of the electricity generated in Wyoming is consumed by users outside the state, but EPA did not account for this in the baseline data used to establish the
sta te's goal, as all of the electricity generated in the state from both fossil fuel and RE was used to establish the CO2 lb/MWh rate for 2012. Commenters said assumptions made in the goal calculation should be based on reasonable options for demonstrating co mpliance in the future. Commenters said many questions have been raised about how the "credit" from RE would be distributed among the states for purposes of demonstrating compliance in the future. Based on calls with EPA staff, the c ommenters said they und erstand that Wyoming would bear the burden of carrying all the fossil fuel energy produced in the state regardless of where it is consumed and receive no credit for any RE produced in Wyoming that is consumed out of state. Commenters stated t his would put the state at an extreme disadvantage in any negotiation with other states regarding multistate plans. Commenters asserted EPA's accounting method disadvantages energy exporting states like Wyoming, making compliance with the Proposed Rule impossible and sa id EPA must use a consistent accounting method in establishing state goals and compliance options.

Commenter s stated EPA's proposed RE growth is unreasonable because it did not consider how states with RPS set their goals, including the start date of the RPS and how much RPS were already in place at the times the goals were set. Specifically

, c ommenters noted the average annual growth rate in the West Region for states that have a RPS is 0.95%. Commenters stated
t he most aggressive growth directive came fr om Washington at 1.5% annually, which considered its baseline year to be 2012. Commenters said no state with an RPS initiative considered a 6% growth rate, even though they envisioned increasing demand for electricity and had the legislation in place to en courage RE development. Further, c ommenters said state RPS are established state goals and EPA's data does not indicate if those goals are being achieved. Thus,

c ommenters consider ed a reasonable RE growth to be the average annual RPS growth rate of the We st Region, which is 0.95%; Wyoming cannot support a 6% annual RE growth rate.

When establishing the goal for Wyoming's reduction in CO2 emissions from power plants,
commenter s said EPA failed to consider the inter

- dependency that some states located in the western region have on the same utility system; demands on the energy system are not exclusive to the supply residing within the state borders. What was uniform, said the com menters, was the need for reliable (time

- of

- dispatch) energy to sustain the system that may be supporting multiple states. On the west side, Wyoming shares a utility system (PacifiCorp) with Idaho, Utah, Washington, Oregon, and Northern California. Comment ers stated Wyoming customers constitute less than 10% of the total, and Wyoming energy is less than 20% of the system's total. On the northeast side, Commenters stated Wyoming shares a utility system (Black Hills Corporation) with South Dakota and Montan a , and that o n that system, Wyoming customers represent less than 4% of the total customers served. Commenters added t hese facts demonstrate179 that Wyoming is not creating the demand for more resources, and, therefore, those new resources would not be invested into on behalf of Wyoming. Commenters concluded that not including base load and reliability as part of its analysis makes EPA's analysis incomplete.

Commenter s said Wyoming, has a maximum RE amount of approximately 10.2 million MWh, but applying the 6% regional growth factor between 2017 and 2030 yields only 9.4 million MWh of RE generation in Wyoming. Commenters said that because the state is only expected to satisfy the regional growth requirements, rather than its maximum RE amount, it falls short of that maximum amount by some 800,000 MWh.

Comment 23 : Commenters expressed Maine specific target concerns.
Response 23: The BSER is forward

- looking in identifying cost

- effective opportunities for emission reductions from 2012; however, the cost and availa bility of these emission reduction opportunities is the result of many factors, including previous actions. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

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

Commenter s said that by not including hydropower production as part of Maine's existing RE when applying BB3, the proposed rule ignores the profound effect that Maine's existing hydropower facil ities have had in preventing CO 2 emissions over many years. Commenters said that, according to EIA, Maine generated 84,713,011 MWh of electricity from hydropower between 1990 and 2012. Commenters stated i f this electricity had been generated at a NGCC plan t meeting the new construction standards of 1,000 lbs of CO 2 /MWh proposed in the NSPS, it would have resulted in well over 84 billion lbs of CO 2 emissions. Commenters stated that i n reality, the avoided emissions would have come from a less efficient EGU, and would consequently have been much greater. Commenters stated Maine continues to reduce their carbon footprint by adding new wind generation capacity, working with developers to encourage investment in offshore wind energy generation capacity, exploring opportunities to increase their hydropower generation capacity, and through participation in RGGI, which generates revenues used in implementing demand

- side management programs. Commenters stated EPA's methods do not recognize Maine's leadership in avoidi ng and reducing dependence on fossil fuels and avoiding and reducing GHG emissions. Commenters stated t he efforts and investments that have been made over the years by states like Maine should be recognized regardless of whether they were started or accomp lished prior to the date of EPA's proposed rule. To recognize these established and ongoing benefits, the commenters stated EPA should establish a standard maximum CO 2 emission rate for all states, and apply it inclusive of all EGUs. Commenters said

s tates that have contributed and continue to contribute more to the problem of atmospheric carbon can justifiably be required to bear the greatest burden in reducing emissions. Commenters also said s tates that have generated the least atmospheric carbon should n ot be required to make up the difference for states that have generated hundreds of times more. Commenters added that EPA should use Maine as an example to other states, to show that it is possible to economically provide needed energy to residents and to industry without damaging the environment.180 Comment 24 : Commenter s asserted there is a n eed to revise Ohio’s RPS requirement

. Response 24: State RPS requirements are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detail in V.E of the preamble a nd in the GHG Mitigation Measures TSD.

The following is a summary of the specific public comment under this comment:

Commenter s stated Ohio's RPS requirement was recently revised downward from the figure EPA used in its renewable energy calculations, and prior to the issuance of a final rule, EPA should revise Ohio's renewable energy target to reflect that change.

Comment 25 : Commenters expressed Kansas specific target concerns.

Response 25: State RPS requirements are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rule. Target generation levels under building block 3 are quantified and assigned at the interconnect level, rather than the state

- level. The final methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

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

Commenter s said EPA should adjust the interim and final Kansas emission goals to better reflect that portion of RE generation that is credited to another state for use toward their compliance obligations. Commenters said the interim and final emission goals would ha ve the reapportioned quantity of electrical generation from renewable sources removed from the denominator of the goal setting equation and new interim and final goals would be calculated for Kansas. Commenters also said that if EPA is planning to reapport ion RE generation to other states for future compliance obligations, EPA should also reapportion other types of electrical generation. Commenters stated EPA should subtract from the numerator and denominator of the goal setting equation for Kansas that por tion of electrical generation and associated emissions and credit both of these values to the numerator and denominator of other states that receive electrical generation from Kansas' coal

- and other fossil

- fired generation. Commenters added that Kansas sh ould be able to consider credit for future compliance from out of state sources such as NGCC generation. Commenters were not opposed to alternative methods of crediting and deducting electrical generation sources from the Kansas goal setting equation for f uture compliance demonstration in other states. However, c ommenters did oppose any alternative reapportioning methodology that will adversely affect the proposed Kansas interim and final emission goals and ability to comply with those goals.

Commenter s sai d EPA did not correctly interpret the applicability of the Kansas RE standard and the administrative regulations adopted by the Kansas Corporation Commission to implement181 them. Commenters said only IOUs and electric cooperatives are subject to the Kansas R ES. Commenters also said EPA should have included Texas' RE standard in developing the regional rate, not only Kansas. In using Kansas's nominal 20% RES for fixing the regional RE level at 20%, Commenters said EPA failed to take into account two factors ab out the Kansas standard: (a) the standard does not apply to all electric utilities in

- state, but to IOUs and electric cooperatives only

- i.e., not municipal utilities; and (b) according to the standard, "[e]ach megawatt of eligible capacity in Kansas insta lled after January 1, 2000, shall count as 1.10 megawatts for purposes of compliance." Thus, c ommenters stated for calculation purposes when used to compare standards among different states, the actual (or effective) 2020 RES/RPS used for Kansas should be (20% / 110%) x (7,974/8,473) = 17.1 %, or 17%.

Comment 26 : Commenters stated reasons why the Texas target is unrealistic.
Response 26: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final b uilding block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenter s stated BB2 includes flawed assumptions on nuclear energy and arbitrarily and unrealistically assumes as a vast expansion of renewable energy in Texas. Commenters stated EPA derived this capricious and unrealistic goal by arbitrarily lumping Texas with fiv e other states, of which only Kansas has a planned RPS. Commenters stated the EPA methodology ignores all differences between states. Commenters stated that in this calculation, EPA ignores Texas's own statutorily mandated RPS standard of 5,880 MW of renew ables capacity. Instead, Commenters stated , the proposed rule averages all existing RPS targets in a "region" and assigns the "average" to each state. Commenters stated there is no basis to use Kansas's RPS as the basis for a 20% energy RPS for Texas. Comm enters stated Kansas's RPS is tailored to Kansas

- a capacity

- based RPS which includes biofuels and hydropower

- and is inappropriate for the intermittent zero carbon dioxide emitting renewable resources of Texas. Commenters stated that conversion of Kansa s' 20% capacity RPS to a 20% energy RPS for all states in EPA's South Central grouping is the very definition of arbitrary. Commenters cited The Kansas Corporation Commission comments to EPA:

"EPA states that it uses only energy

- based RPS standards in assi gning targets. Because Kansas has a capacity

- based RPS, Kansas was assigned the South Central Region's average target of 20% of generation as a default. Besides Kansas, Texas has the only other RPS target in the South Central Region. Like Kansas, Texas's R PS target is capacity

- based. Because no other states in the region have RPS standards, EPA had no energy

- based RPS targets in the region that could establish an energy

- based target for the region. Thus, EPA used an arbitrary energy

- based RPS target of 20% for Kansas and the rest of the South Central Region."

Commenters stated additionally, Kansas's RPS has numerous safety valves should retail rates rise above 1%. Commenters stated EPA failed to analyze the likelihood that these cost containment provisions e ffectively bind the Kansas RPS (or its application in other states) to a lower standard.182 Commenters also stated that application of one state's renewable standard to other states is arbitrary because it does not account for the relative size of the states; Kansas's electricity sector is 1/10th the size of Texas's electricity market, accounting for only 6% of the South Central state region's retail power sales, and has the third

- best wind resources in the country. Commenters stated that a 20% renewable stand ard for Kansas implies approximately 2,800 MW of wind generation capacity (at a 35% annual capacity factor) whereas the same standard for Texas implies over 25,000 megawatts of wind generation capacity. Commenters stated such results clearly demonstrate t hat the BB3 component of the emissions calculation is both disparate and arbitrary.

Commenter s stated the EPA's approach for estimating potential future renewable energy in Block 3 is arbitrary and flawed. Commenters stated the EPA has not justified the r ationale for dividing the country into the specified regions for renewable energy. Commenters stated that some of the regions have multiple state RPS included in the average while the South Central Region and the South Eastern Region only have one state RP S used for each region. Commenters stated the EPA's assumption that Kansas' renewable energy goal is applicable to the entire South Central Region is flawed and without any technical merit, especially considering that Texas' total generation is ten times that of Kansas and represents the majority of generation in the South Central Region. Furthermore, c ommenters stated , the EPA's growth rate approach penalizes states with more renewable energy in 2012 and rewards states that have little renewable energy in that year. Commenters stated EPA's approa ch actually rewards some states by giving credit under BB3 while Texas is assumed to be able to more than double the state renewable generation, even though Texas produces approximately 11% more non

- hydro renewable energy than the combined total of the sta tes that received credit for their renewable energy.

Commenter s also stated the EPA did not provide a rational explanation for why the Texas RPS was excluded from EPA's consideration in this Block 3 analysis for the South Central Region other than a footno te in the GHG Abatement Measures TSD stating that the EPA did not include targets that were capacity

- based. Commenters stated this unsupported conclusory statement cannot support the EPA's exclusion of Texas' RPS. Commenters also stated the Kansas Renewabl e Energy Standards Act is in reality a form of a capacity

- based RPS. Commenters stated that according to Kansas Statutes Annotated (K.S.A.) 66.1258, Kansas' renewable energy portfolio requirement is for net renewable generation capacity as a percent of pea k demand. Furthermore, c ommenters stated , Kansas' Renewable Energy Standards Act established an exception in K.S.A 66

- 1261(b) to exempt a utility from administrative penalties if the utility can demonstrate that the retail rate impact for the utility has r eached or exceeded the 1% level set in K.S.A 66

- 1260 and the utility has not achieved full compliance with the renewable portfolio requirement in K.S.A 66

- 1258. Commenters stated this stop

- gap measure to avoid excessive costs that might result from the Ren ewable Energy Standards Act was not considered by EPA.

Commenter s stated the 8% growth rate EPA has applied has a disproportionately large impact on Texas because Texas produced more non

- hydro renewable energy in 2012 than the other five states in the Sou th Central Region combined. Commenters stated the Texas renewable energy target under Block 3 reaches the 20% cap and results in an assumption that Texas can increase its renewable generation by 52 million MWh by 2029; however, Arkansas, Louisiana, and Neb raska are expected to increase their renewable energy far less than Texas because their renewable generation in 2012 was a very small percent of their total generation. Commenters stated183 Commenters stated the total increase in renewable generation assumed for all five other states in the South Central Region is less than half what EPA assumed for Texas only. Commenters stated EPA's approach actually rewards other states for implementing less renewable energy and penalizing Texas for implementing more renewa ble energy in 2012.

Commenters also stated that four states are receiving credit for their 2012 renewable energy generation: Iowa, Maine, Minnesota, and South Dakota. Commenters stated the EPA's block

- by

block calculations for these four states show that t heir state goals become less stringent at Block 3. Commenters stated that Texas produces approximately 11% more non

- hydro renewable energy than these four states combined, yet despite the tremendous efforts Texas has made to become the nation's leader in w ind energy, the EPA is not only not giving Texas credit for its 2012 renewable energy generation, EPA assumes that Texas can more than double its renewable energy generation by 2029. Commenters stated the EPA's arbitrary approach in evaluating renewable en ergy potential is rewarding these four states and penalizing Texas.

Commenters stated that the EPA's assumption that Texas can more than double the state's renewable energy generation fails to consider a multitude of local, state, and federal factors, for example: geographic siting issues such as land use restrictions; transmission infrastructure requirements and restrictions; and local, state, and federal laws. Commenters stated that while not subject to TCEQ permitting requirements, construction of new wi nd capacity is not exempt from environmental and other legal considerations; the federal Endangered Species Act and the Migratory Bird Treaty Act are just two examples of legal factors that can impact a wind generation facility's viability. Commenters stat ed that local legal issues can also be a factor, such as common law nuisance claims. Commenters stated that EPA's proposed approach does not consider any of these factors because the EPA arbitrarily, and incorrectly, applied Kansas' RPS to the entire South Central Region. Commenters stated that the EPA did not consider these factors in the alternate renewable energy approach and the NREL report did not consider any of these factors. Commenters stated that EPA's flawed approach of setting the benchmark based on states with technical potentials exponentially lower than Texas' technical potential did not take such factors into consideration and, while IPM is essentially a "black box" model, the TCEQ does not see any means for IPM to take these factors into cons ideration either.

Commenter s said that is comparing apples to oranges when basing Texas' target on the Kansas standard. Commenters stated EPA's goal

- setting methodology uses a mw

- hr basis for BB3, but the Kansas standard is based on renewable capacity, not the actual mw

- hr of electricity produced by that capacity. By using a capacity standard to set a mwt

- hr target, the c ommenters said

, EPA overstates the Texas target substantially and that if the Kansas goal was converted to a mwt

- hr basis, the Texas 20% target would drop to approximately 12%. Commenters added that the Kansas RPS is capacity

- based, not generation

- based, and applying it to o ther states greatly overstates the renewable generation required.

Comment 2 7 : Comments concerning Pennsylvania’s proposed targets

.184 Response 27: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. T he final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenter s stated EPA's proposed renewable targets

- which are based on a complex formula that expects states to adopt RPS at or similar to levels mandated in neighboring states

- appear to disproportionately burden Pennsylvania. Commenters stated that under EPA's propo sal, PA would have to add more than 30,000 Gigawatt

- hours of renewable generation by 2030

- the second

- most of any state in the country and an increase of almost 800% over current levels. Commenters stated this appears to have been the result of EPA effect ively punishing Pennsylvania for having implemented a RPS before the baseline 2012 year, as a cursory review of carbon emission states in regions of the country where states by and large have not adopted such standards indicates such states are not expecte d to significantly increase renewable generation targets or reduce their carbon emissions to the degree that Pennsylvania is. Commenters stated that EPA also appears to have included Washington, D.C.'s renewable electric supply mandates into the northeaste rn region's renewable building block

- even though Washington, D.C. is not a state and does not have any power generation.

Commenter s said Pennsylvania is expected to increase its renewables by eightfold over the next 15 years, and they believe that happene d because EPA incorporated Washington D.C.'s renewable supply mandates, even though they only actually have one power plant in the city, and it actually powers the Capital. Thus, c ommenters asserted the renewable supply requirements are informing a renewab le generation requirement, which they feel is a bit perverse.

Commenter s said EPA incorrectly projects that BB3 can reduce emissions in Pennsylvania by 323 lbs CO 2 /MWh. Commenters said EPA's calculation is based on an average of predicted RE for 8 states, 2 which do not currently have RPS; and does not account for the fact that Pennsylvania exports approximately 42% of its generation. Thus, c ommenters said Pennsylvania would need to enact and implement an RPS based on load within the state of 25% by 2030, o ver 3x the level of its current RPS. Had EPA used the level of RPS currently in effect in Pennsylvania, c ommenters asserted it would have calculated potential reductions at 180 lbs CO 2 /MWh instead.

Commenter s said EPA's projected growth rates discriminates against states like PA that have successfully developed state RPS programs. Commenters stated m any states, such as IA, ND, SD, (in the EPA North Central Region) have far greater RE resource potential than PA yet none have enacted RPS programs. Commenters stated the same inconsistency exists in the RE potential in the South Central Region with an RE potential much higher than PA but that are assigned a target for the region of only 8%. Commenters stated t his t arget compares starkly Commenters stated to the average for the East Central Region of 17%. Commenters said EPA's proposed method fails to recognize the potential for RE resource development in these states while imposing unrealistic annual growth rates on PA.

Commenter s added that EPA targets will require PA ratepayers to pay additional amounts for
out

- of

- state REC with no benefit to the PA economy and primarily benefit other states in185 meeting their targets. During the most recent reporting period, the c o mmenters said that more than $50 million was expended by PA electric utilities to purchase Tier I credits to meet their RPS requirements. Commenters stated t he majority of these credits were purchased from RE generators from IN and IL. As a result, the c om menters said a significant portion of RE resources that form the basis for EPA's computation of potential RE resources to meet future targets derives from out

- of

- state sources that not only receive the revenues but are benefitted by enhancement of their RE resource industries including job growth. Commenters said EPA must consider the inherent inequity in the derivation of the PA RE targets vis a vis the burdens placed on other states.

Comment 2 8 : Commenters stated the EPA o verestimated Texas wind capacity

. Response 28: The capacity factors assigned to Texas wind resources in the EPA’s analysis represent expected annual production. The 8.7% value referenced by the commenters was applicable to the capacity of ERCOT resources, not the expected output. The EPA ’s modeling of
cost

- effective RE assumes continues to assume 8.7% of total capacity is credited against total reserve margin capacity.
The following are summaries of the specific public comments under this comment:

Commenter s stated EPA overestimates the generating capacity of Texas wind from a reliability standpoint. Commenters stated that in determining the BSER for Block 3, EPA uses a capacity factor for Texas wind of between 39% and 41%. Commenters stated that for reliability purposes, ERCOT previously assigned wind an 8.7% wind capacity factor which was the estimated availability of wind during summer peak. Commenters stated that ERCOT recently approved a new methodology for calculating wind capacity factor, and under its new methodology, ERCOT will us e historical performance of wind generation facilities in different parts of the state to predict the percentage of installed capacity ERCOT can expect during summer and winter peak conditions. Commenters stated the installed capacity factors for non

- coast al wind generation facilities (which constitute the majority of installed wind capacity in Texas) resulting from this new methodology are expected to be substantially below the capacity factor EPA assigns to Texas wind energy.

Comment 2 9 : Commenters had c oncern s regarding Virgin i a mandatory goals

. Response 29: The EPA has updated it cost and performance assumptions for onshore wind and solar. Additionally, the EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is descri bed in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

Several commenters viewed the general methodology of RE goal setting for states as flawed, for reasons related to the use of regional averages that do not apply to specific state situations and the calculation of renewable generation excluding what has been adequately demonstrated in a state. Many commenters voiced support for the carbon neutral treatment of biomass and one186 voiced the same treatment for black liquor. Other comment ers raised concern over inconsistent treatment of biomass in the baseline, goal setting and compliance scenarios., with one noting that whether biomass is treated as carbon neutral or not, the treatment of biomass across these three components should be co nsistent and in some cases will need to be adjusted to reflect consistent
treatment.
Biomass is included in the IPM baseline projection. Biomass is not considered part of the best system of emission reduction in this rule and therefore it is not included i n goal

- setting or compliance evaluations. However, similar to other technologies outside of BSER, biomass may be considered as a part of a state’s plan to meet the emission guidelines.

For more information regarding Building Block 3, refer to Section V.E of the preamble.

For more information regarding biomass in the IPM baseline projection, refer to EPA v5.13 Base Case Documentation Supplement to Support EPA’s Proposed Carbon Pollution Guidelines for Existing Electric Generating Units in the docket.

A dis cussion regarding the use of some biomass feedstocks for compliance purposes can be found in Section VIII.I. and Section VIII.K of the preamble.

In November 2014, the agency released a second draft of the technical report

, Framework for Assessing Biogenic Carbon Dioxide for Stationary Sources

. The revised Framework, and the EPA’s Science Advisory Board (SAB) peer review of the 2011 Draft Framework , finds that it is not scientifically valid to assume that all biogenic feedstocks are “carbon neutral” and that the net biogenic CO 2 atmospheric contribution of different biogenic feedstocks generally depends on various factors related to feedstock characteristics, production, processing and combustion practices, and, in some cases, what would happen to that feedst ock and the related biogenic emissions if not used for energy production.

For more information regarding the revised Framework , see: http://epa.gov/climatechange/ghgemissions/biogenic

- emissions.html

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

Commenters stated that Virginia's Mandatory Goals are calculated based on, among other things, a 16% regional renewable generation "target level" that the Proposed Regulation asserts is achievable. Commenters stated that to create the 16% regional target applied to Virginia, EPA lumps eight states into an "East Central" region and then uses state RPS requirements established by six states other than Virginia. Commenters stated both this calculation and the asserted

r ationale for its extrapolation to Virginia are flawed. Commenters stated that a fundamental problem with EPA's addition of future renewable generation into the calculation for Virginia's Mandatory Goals is that it does not establish what has been adequatel y demonstrated in Virginia, as required by the CAA. Commenters stated that for the eight states in the "East Central" region in which EPA places Virginia, EPA's data shows that the renewable generation in 2012 ranged between 1 to 3%, with Virginia at 3% fo r that year. Commenters stated this is the level of renewable generation that has been adequately demonstrated in Virginia. Commenters stated that other states have future legislative requirements, and no assurance that they will be met, does not change th e reality in Virginia.187 Commenters stated that even if the legislative process of one state could establish a level of renewable generation that has been demonstrated in Virginia, which would not justify giving less weight, or no weight at all, to Virginia' s legislative determination to not impose RPS requirements. Commenters stated that EPA's math is wrong; by using a simple average of the six states with mandatory RPS goals to calculate the East Central regional target, EPA treats six states proportional t o each other and ignores the other two states (Virginia and West Virginia). Commenters stated that for purposes of determining what is achievable in Virginia, Delaware's legislative determinations regarding achievable RPS levels and load counts as much as those of Pennsylvania or Ohio, which have much larger in

- state generation fleets and loads, and more than those of West Virginia and Virginia (which is disregarded).

C ommenters stated EPA's data demonstrates why a simple average for calculating a regional target is wrong. Commenters said the states in EPA's "East Central" region that have higher future RPS requirements are those with relatively little generation compared to the others in this region. Commenters stated that Delaware, D.C., Maryland, and New Jersey generated approximately 111 million MWh in 2012 and are assigned "2020 Effective RE Levels" between 19 to 22%. Commenters stated that in contrast, Pennsylvania, Ohio, Virginia, and West Virginia generated approximately 500 million MWh in 2012 and a re either ignored in the calculation or assigned a "2020 Effective RE Level" no greater than 9%. Commenters said there is no rational basis, legally or mathematically, for giving such undue and unintended influence to certain legislatures at the expense of others, including Virginia.

With respect to the growth rate determined by EPA, commenters stated that Virginia is assigned 12% and 16% interim and final renewable levels that, when plugged into EPA's formula, significantly lower the carbon emission rates in the Mandatory Interim Goal and Mandatory Final Goal, respectively. Commenters stated the renewable levels assigned to Virginia are the highest in the East Central region. Commenters stated that even though EPA relies on the legislative determinations of states with renewable requirements to determine what is achievable across a region, the final result of EPA's calculation is that states with such requirements are actually expected to achieve less than Virginia, which has no renewable requirement. In fac t,

c ommenters stated, for the states with renewable requirements, EPA's formula sets renewable levels for those states that are lower than the figures built into the regional target that was then applied to Virginia. Commenters stated the results of EPA's formula are illogical: Virginia is expected to achieve renewable levels that are calculated based on other States' renewable requirements that the EPA's formula does not ultimately expect those States to achieve.

Commenter s stated EPA's calculation of RE g oals in BB3 is fundamentally flawed because it relies upon RE targets that have not been adequately demonstrated. Commenters stated that t he Virginia State Corporation Commission also expressed concern that the regional renewable goals proposed by EPA had not been adequately demonstrated by noting that: "Another fundamental problem with EPA's addition of future renewable generation into the calculation for Virginia's Mandatory Goals is that it does not establish what has been adequately demonstrated in Virg inia, as required by the plain text of the Clean Air Act. For the eight States in the East Central region in which EPA places Virginia, EPA's data shows that the renewable generation in 2012 ranged between 1 to 3%, with Virginia at 3% for that year. This i s the level of renewable generation that has been adequately demonstrated in Virginia. That other States have future legislative requirements, and no assurance that they will be met, does not change the reality in Virginia."188 Commenter s stated the assumpti ons about the level of EE achievable in Virginia are unattainable and arbitrary and cannot reasonably be used to lower a carbon emission rate assigned to the Commonwealth. Commenters said Virginia has an EE goal, rather than a requirement, which EPA disreg arded and, in effect, "vetoed" by the different policies of other states

- states with demographics, climates, load and generation profiles different from those of Virginia. Commenters stated t he result of' incorporating the proposed unsupported extrapolat ion of a 1.5% annual "energy efficiency policy performance" onto Virginia is that the proposal forces 1.2% and 9.3% "savings targets" into the denominator of the formula that calculates Virginia's mandatory goals, inappropriately driving down the carbon em ission rates assigned to Virginia.

Commenter s said that to reflect Virginia's true RE potential, EPA should: (i) update RE costs to ensure costs reflect up to date information; (ii) ensure that the growth rate of RE deployment is at least as aggressive as historical rates; (iii) assume full compliance with current RPS requirements that are set by state law; (iv) account for actual and expected RE growth between 2013 and 2017; (v) update its formula to correctly account for emissions reductions from RE; and (vi) clarify that out of state RECs can be used towards compliance to ensure the most cost effective use of RE.

Commenter s noted that the Virginia RE target is driven by the dominance of biomass in the state relative to the other states in the region from which the regional RE targets were calculated. Commenters stated that if biomass and black liquor were no longer considered carbon neutral and removed from the 2012 baseline, Virginia would have the lowest starting point (at 1.3 percent

- tied with Ohio) in the region and a much lower 2030 renewable target. Commenters stated that if either of these types of renewable generation are not considered carbon neutral, then the starting point for Virginia should be adjusted accordingly.

Commenter s said described Dominion's significant investment in renewable wood biomass and said that it is important for their customers that biomass emissions be carbon neutral for purposes of this rule. Commenter s added that the EPA relied upon state renewable portfolio standard (RPS) programs, some of which recognize biomass as non

- emitting, in its calculation of the renewable component of the building blocks used to determine the state targets for purposes of this rule. Commenter s said that the EPA included biomass in the 2012 state renewable generation baseline from which the renewable compo nent of the state targets was calculated. Commenter s shared the concerns of the Virginia SCC about the draft rule in effect exporting public policies from states with higher electric rates and bills to Virginia. Commenter s said that it would be a paradoxic al outcome to calculate a goal based on components of state RPS standards that could not be met by the resources counting under these very standards. Commenter s provided an example of such impacts and concluded that it is imperative that the EPA move forwa rd with guidance on the treatment of biomass in the context of GHG emissions for this rule. Commenter s said that states should be able to use the megawatt hours from both existing and new biomass

based units, including the biomass portion of fossil fuel

- fi red units that co

- fire with biomass, for compliance with this rule (and for RPS purposes). At a minimum, commenter s said, waste wood and forest residuals should be considered carbon neutral for purposes of setting the state goals and compliance with the st ate goals of this rule, as well as any future accounting framework. If the EPA does discount biomass in a regulatory accounting framework, commenter s said, it must recalculate the state renewable components and state reduction targets.189 Commenter s raised similar issues and noted that the EPA's proposal treats CO2 emissions from biomass generation inconsistently. Commenter s said that in establishing each state's emission rate goal, the EPA included a state's existing 2012 biomass generation in the d enominator of the goal calculation and appropriately acknowledged its carbon neutrality by not including its CO2 emissions in the numerator. Commenter s cited several EPA statements in the preamble that affirm this action by referencing the benefits of biom ass generation. Commenter s noted that the EPA's compliance modeling treated biomass differently than the goal calculations and historic regulatory modeling. In all of the EPA's IPM scenarios, including both the base case and the compliance scenarios, comme nter s said, an emission factor of 195 lbs/MMBtu was assigned to biomass combustion. Commenter s stated that the EPA must maintain consistency with the goal calculations and treat CO2 emissions from biomass generation as carbon neutral.

Comment 3 0 : Comment ers expressed concerns with the Tennessee target.
Response 30: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

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

Commenter s said it is illogical for EPA to assume Tennessee has a similar capacity or technical potential for and ability to deploy RE as North Carolina, and this approach clearly disregards any state specific resource characteristics or context that contributes to a state's RPS or its potential to achieve its RPS. Commenters stated RPS are enacted for a variety of reasons and are frequently specific to each state and its accompanying characteristics, including geography, attracting industry, political context, and o ther economic development priorities. Commenters asserted EPA's methodology for the treatment of RE essentially forces, state

- specific decisions upon other states while ignoring the contrary decisions of the other states.

Commenter s stated that by failing to capture any of the recent or expected growth in RE in Tennessee between 2012 and 2017, EPA's approach ignores the significant investments that are already underway. Since 2012, the c ommenters said TVA's RE generation has increased by at least 376 MW and these increases are expected to continue due to ongoing declines in the price of RE technologies and future commitments that are expected under TVA's 2015 integrated resource planning process. Commenters urged EPA to update its projected RE generation tar gets for Tennessee both in the final rule and again in 2017, basing them on its actual renewable generation levels in 2017 as well as its abundant potential for future growth.

Commenter s further stated that UCS identified several problems in EPA's treatmen t of Tennessee's RE potential: EPA fails to account for both (1) the continued growth and falling costs of RE projected by market experts and (2) the RE deployment rates that states are already achieving. Commenters asserted EPA should revise and update se veral of its underlying assumptions and that to reflect Tennessee's true RE potential, EPA should: (i) update RE costs to ensure costs reflect up

- to

- date information; (ii) ensure that the growth rate of RE deployment is at least as aggressive as historical rates; (iii) account for actual and expected RE growth between 2013 and 2017; (iv) update its formula to correctly account for emissions reductions from RE;190 and (v) clarify that out of state RECs can be used towards compliance to ensure the most cost effe ctive use of RE. Doing so, commenters stated, will show that Tennessee can reach a much higher RE target, around 13% of 2030 electricity sales, at a reasonable cost.

Comment 31 : Commenters stated d ecisions of states to have RPS should not be basis for sta tes that do not.
Response 31: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

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

Commenter s stated that, as a major renewable energy developer, it does not support the EPA's approach to assessing state renewable energy potential by comparison with RPS levels in other states that are at best arbitrarily related. Commenters said a number of empirical, well

- grounded studies of state renewable potential are readily available, and would form a better basis for this important component of a low carb on future. Commenters also said that state policies, such as RPS requirements, are important in terms of renewable development, but cannot reasonably be considered the only determinant of a state's potential.

Commenter s stated the basis relied upon by EPA for assuming future RPS requirements are achievable targets that States have already assessed feasibility and costs cannot lawfully be applied, much less in the haphazard manner proposed by the Proposed Regulation. Commenters stated the Proposed Regulatio n incorrectly assumes that the States that have enacted mandatory RPS requirements and only those States have assessed the feasibility and costs of RPS requirements. Commenters stated that if, as EPA assumes, the legislature of one state can speak to what is achievable in another, which it cannot in this context, which assumption would have to work both ways. Commenters stated there are many reasons, including geographic and economic, why States have approached renewable generation differently, and, just as Virginia's legislative decision not to impose RPS requirements in Virginia was not intended to, and cannot, speak to what is achievable or unachievable in other States, the decisions of other States to impose RPS requirements were not intended to, and can not, demonstrate what is achievable in Virginia. Commenters stated to foist in

- state decisions upon other States, and to do so while ignoring the contrary decisions of other States, is arbitrary, capricious, and unlawful.

Commenter s stated EPA has ignored details that reduce the stringency of existing RPS, has not considered the renewable energy experience of states without mandatory RPS programs, and has failed to fully consider differences in the availability of potential renewable resources between
stat es. As a result, c ommenters stated , the agency has derived state renewable energy goals in building block 3 that are technically and cost

- effectively flawed, and that are inconsistent with the prior assessment of these resources by individual states. Comme nters stated that prior state experiences are claimed to be strongly valued by EPA in their development and application of renewable energy targets in the calculation of state goals. Commenters stated that ironically, EPA ignores these "expert assessments" of state regulators in establishing the renewable energy goals for states that have mandatory RPS or that have previously evaluated potential191 opportunities for developing renewable resources. Commenters stated that a review of the renewable energy goals t hat EPA used to develop building block 3 reveals that EPA's goals are more stringent than the effective 2020 RPS goals for 14 states, while for 12 of these states the building block 3 goal is less than the RPS target derived from its own expert assessment.

Commenters stated EPA's calculation of RE goals in BB3 is fundamentally flawed because it excludes consideration of states without mandatory RPS programs. Commenter s stated that for states without mandatory RPS, the agency made no effort to investigate o r defer to prior state determinations of the adequacy or cost

- effectiveness of integrating renewable resources into their generation portfolios. Commenters stated had EPA done so, there would have been no reason to deviate from the conclusions reached by t hese state legislatures and regulators, nor is there any reason to attempt to impose more stringent requirements in the establishing the BSER. Instead,

c ommenters stated EPA ignored the decision of those states without an RPS in the calculation of the regi onal average RE goals because the agency did not deem them to be "leading states." Commenters stated the agency failed to consider that perhaps these states have previously evaluated RE opportunities and determined that they were not currently technically feasible or
cost

- effective. Instead, c ommenters stated , EPA's process forces states to conform to the policies developed by other states that are based on different considerations of feasibility, cost, and public interest.

Commenter s stated Louisiana is an example of one state that has evaluated opportunities for RE and determined not to implement an RPS program. Commenters stated

, i n 2010, the Louisiana Public Service Commission approved a Renewable Energy Pilot Program for the state with the goal of determining whether an RPS is suitable for Louisiana. Commenters stated that as part of the program, an AEP subsidiary, Southwest Elect ric Power Company (SWEPCO), conducted an all

- source Renewable Request for Proposal, bids were received for 46 proposed RE projects, and only 14 were for projects to be located in Louisiana (one wind, five solar, three waste heat recovery, four biomass, and one landfill gas project). Commenters stated the balance of bids came from other states within the same RTO, the Southwest Power Pool (SPP) states. Commenters stated the most practical source of renewables that could be secured to serve SWEPCO customers w as from a portion of a wind project being developed in Kansas. Interestingly, c ommenters stated , the single wind project that was proposed to be located in Louisiana was more than three times the cost of the selected wind energy bid from Kansas. Commenters stated none of this experience was considered by EPA in the proposed rule, and Louisiana's decision to not to establish an RPS based on the current lack of cost

- effective and technically feasible renewable resources is ignored in the calculation of the So uth Central region goal.

Commenter s stated that with respect to states that have previously evaluated opportunities to develop renewable resources and decided that a state RPS was currently not feasible and/or economic, EPA has ignored that state experienc e and applied RE goals that may not be technically or cost

- effectively achievable with in

- state resources. Commenters referenced the Louisiana Renewable Energy Pilot Program, noting the program ended in 2013 with the LPSC concluding that while the program "was a useful means of gaining valuable information and experience with renewable resources," "a mandatory RPS is not warranted at this time...[because] the levelized cost of renewable technologies exceeds the cost of conventional resources." Commenters st ated that despite this experience and these conclusions from the192 LPSC, EPA utilizes as 20% RE target in calculating the proposed state goal for Louisiana. Commenters also stated that ironically, but consistent with the findings of the LPSC, EPA's Alternati ve Approach found that the technical potential for additional renewable energy in Louisiana is very small, and that even when modeled with a $30/MWh advantage over other available resources, no new renewable capacity would be added in Louisiana by 2030.

C ommenter s referenced comments submitted by the Virginia State Corporation Commission (SCC) which further highlight the concern that state decisions to not establish RPS programs has been ignored by EPA in the building block three calculations. Commenters s tated t he SCC noted that "The fact that Virginia does not have a mandatory RPS requirement is not considered at all in EPA's calculations or the extrapolation of other States' RPS requirements on Virginia." Commenters stated that even if the legislative pr ocess of one state could establish a level of renewable generation that has been demonstrated in Virginia, which would not justify giving less weight

- indeed, not weight at all

- to Virginia's legislative determination to not impose RPS requirements. Comm enters stated EPA's math is wrong.

Commenter s stated the state of Arkansas is another example of one that does not have a mandatory RPS, and for which EPA has applied a RE target in the state goal calculation that is premised on the standards established for the state of Kansas that has superior potential renewable resources that could be developed more cost

- effectively. Commenters stated the RE target applied to Arkansas in building block 3 is one example of the absurd results produced by EPA's flawed met hodology. Commenters stated that EPA includes Arkansas in the South Central region, which EPA determined has a 20% RE target and annual growth rate of renewable resources of 8.3%. Commenters stated if Arkansas would have instead been included in the Southe ast region (that has a lower regional target of 10%), one would expect that Arkansas would have a lower RE goal; however, the Southeast region has a lower baseline level of renewable generation relative to its regional target, which translates into an annu al RE growth rate for states in the region of 13.4%. Commenters stated , thus, in this example, Arkansas would move to a region with a lower RE target (from 20% to 10%), but would have a more stringent RE growth rate (from 8.3% to 13.4%) leading to a higher 2030 RE goal.

Commenter s said EPA does not accurately represent the standards that states have actually adopted and that most state standards contain "off

- ramps," where the state could acquire a lower amount of renewable resources than the numerical level s set forth in the standards depending on impacts on cost or grid reliability. Commenters stated t hese "off

- ramps" also represent legislative choices that EPA ignores given its view that it should be the arbiter of "best practices" for renewable resource d evelopment. Commenters added that that states define renewable resources that are subject to their portfolios differently than EPA.

C ommenters said EPA fails to account for the fact that municipal and cooperative utilities typically are exempt from portfol io standards. For instance, c ommenters stated that although Montana has a 15% RPS, that standard does not apply to consumer

- owned utilities, public power projects, or generators owned by out

- of

- state utilities. As a result, c ommenters said Montana's RPS is far lower than EPA assumes, thus, EPA has no basis to cite state portfolio standards in proposing regulations that would encompass municipal and cooperative load.193 Comment 3 2: Commenters stated West Virginia target was unachievable.
Response 32: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

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

C ommenters said West Virginia's target is unachievable. Commenter s stated EPA has tasked West Virginia with an unrealistic RE goal of 14% increase based on the 2012 total state RE generation

- a to tal of 10,273,036 MWh from new low

- and zero

- carbon generating capacity by 2030. Commenters stated that excluding 2012 RE generation from hydropower, as the proposed rule directs, this amounts to nearly an 800% increase (792.3%) over the 1,296,563 MWh prod uced through these sources in the base year for West Virginia. Commenters stated this RE goal was developed using an arbitrary methodology that did not take into account the realistic potential of renewable resources available. Commenters stated that creat ing state

- specific goals from neighboring states, RPS is completely misguided. Commenters also stated a RE portfolio standard is a matter of state

- level energy policy that EPA and the federal government have no authority to dictate to states.

Commenter s s tated it may be difficult for West Virginia to achieve the proposed targets. Commenters added that alternative and RE standard does not provide incentives for development of renewables. Commenters added that West Virginia has significant wind solar, biomas s, and hydro resource potential.

Comment 33 : Commenter s expressed concerns regarding the a bility to Michigan to achieve goals

. Response 33: The data provided in this comment were valuable in finalizing the building block 3 methodology, which is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.

The following is a summary of the specific public comment under this comment:

Commenter s stated Michigan should achieve, or come close to achieving the emission reductions set forth in Building Blocks 3 and 4 if it can also achieve reductions in CO2 emissions equivalent to those in Building Blocks 1 and 2. Commenters state d Michigan is required to have 10 percent of its electricity sales come from RE by 2015, and Michigan is on track to meet this standard; however, the USEPA has not adequately described which RE resources will "count", both in terms of the energy source (bi omass, incremental hydropower, etc.) and the facility's initial operational date. Commenters stated that if the agency accepts the emission reductions from: 1) a wide variety of RE sources, and 2) all RE facilities that use the eligible energy sources, wit hout regard to the facilities' construction dates as long as they are operating within the 2020 to 2029 timeframe, then Michigan should be capable of matching the USEPA's RE targets for the state and probably would not need to pass a more stringent RPS in the immediate future. However,

c ommenters stated , a renewal of the RPS, possibly with greater stringency, may be warranted194 because there is the risk that if legislation does not replace their current standard, then Michigan's 2015 level of RE will slip bel ow 10 percent from 2015 to 2030, making it more difficult for Michigan to meet its final and interim goals.

Comment 34 : Commenters stated Alabama's target is unreasonable.
Response 34: The final building block 3 methodology does not rely on RPS requirements or
state

- specific deployment estimates, but rather cost

- effective RE at an interconnection level. The EPA addresses considerations related to the technical feasibility and availabilit y of regional RE resources in both the preamble (section V.E) and GHG Mitigation Measures TSD.

Biomass is not considered part of the best system of emission reduction in this rule and therefore it is not included in goal

- setting or compliance evaluations

. However, similar to other technologies outside of BSER, biomass may be considered as a part of a state’s plan to meet the emission guidelines.

A discussion regarding the use of some biomass feedstocks for compliance purposes can be found in Section VIII .I and Section VIII.K of the preamble.

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

C ommenters asserted Alabama's targets are unreasonable. Commenter s stated EPA's proposal consists of unreasonable assumptions about Alaba ma's access to renewable energy because it identifies potential RE targets for individual states by looking at the regional capacity of RE, without considering the actual availability of renewable resources within each state.

Commenter s conducted an intern al study to determine what, if any, measures could be taken to comply with the BB3 goals, which indicated that to replace the Lowman coal

- fired projected energy production in the compliance period with solar would require, depending on natural gas prices, installation of solar capacity occupying an area ranging from 2,200 to 12,000 acres at a cost of from $1.4 to $7.7 billion dollars. Commenters said this is unworkable and that Alabama also has a limited capacity for many types of renewable generation, such as wind energy. Additionally, commenters stated the areas in which Alabama could conceivably establish some additional renewable generation, such as biomass or hydropower, are ignored by EPA in the proposed rule. Commenters asserted the best option for RE (although still not at the levels identified by EPA) in their region is biomass, which EPA fails to even include as an option. As such, c ommenters said the proposal unduly discriminates against the region; even if biomass were includ ed in the proposal, it would not provide enough generation to replace the generation from Lowman.

Comment 35 : Commenters asserted Minnesota targets should recognize state's early action and credit nuclear generation.195 Response 35: The BSER is forward

- looki ng in identifying cost

- effective opportunities for emission reductions from 2012; however, the cost and availability of these emission reduction opportunities is the result of many factors, including previous actions. The final building block 3 methodology , which does not rely on RPS requirements, is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

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

Commenter s said Minnesota's Next Generation Ene rgy Act of 2007 provided for several climate action friendly measures, including the setting of Minnesota GHG emission reduction targets relative to 2005, an aggressive RPS and expanded Minnesota customer conservation. Commenters stated t his energy

- based R PS initiated a glide path for expanded Minnesota RE starting in 2005 and continuing to 2025, and was updated with renewables targets through 2030. Commenters noted that i n EPA's June 18, 2014 proposal, EPA's base option assigns a 15% RE target for CPP targ et determination in the Minnesota region. Commenters stated EPA asked for comments on the imposition of an alternative RE value for state target setting that gives consideration to RE potential for in

- state development.

Commenter s recommended that EPA give deference to Minnesota's RPS as satisfying BB3 requirements by recognizing Minnesota's early action for renewable deployment as sufficient for satisfying EPA's targets. Commenters also suggested that EPA provide full credit for nuclear generation that has its licensing renewed to an overall 80

- year facility life. Minnesota RE measures were established by the Minnesota legislature, giving consideration to feasible rates for RE deployment and the ability of electric generating systems to assimilate the dispa tch of intermittent RE resources without creating system reliability problems. Commenters stated EPA should not implement its suggested expansion of renewable targets to "resource potential" in Minnesota, instead recognizing that the magnitude and pace of RE deployment in Minnesota has already been exhaustively assessed and provided for in the RPS established by the Minnesota legislature and Minnesota regulators. Commenters also added that Minnesota customers have paid for these renewable assets and other r esource actions and should receive full credit.

Commenter s stated that in the case of Minnesota, the state RPS cited by the EPA fails to consider the state actually includes three different RPS requirements. Commenters noted there is one for Excel Energy, one for other investor

- owned utilities, and one for municipals and cooperatives. Commenters also noted the State of Minnesota excludes from the RPS requirement electricity load for the mining and ore processing industry , which makes up a substantial load in parts of the
state. Commenters said the recalculated RPS for the state, adjusted for these factors, is 25%, which lowers the requirement for the region that includes Minnesota from 15% to 14.1%.

Comment 36 : Comment er s expressed concern regarding Missouri's ability to meet the target.
Response 36 : The final building block 3 methodology does not rely on RPS requirements or
state

- specific deployment estimates, but rather cost

- effective RE at an interconnection level. The EPA addresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.196 The following are summaries of the specific public co mments under this comment:

Commenter s did not believe Missouri could expand to the goal set by EPA and stay within the 1% rate cap established by the Missouri Renewable Energy Standard ("RES"), adopted by the Missouri legislature. Commenters stated c ompliance with the RES is not limited to renewable generation sited in Missouri, nor is it based on the presumption that exclusively siting all renewable generation for RES compliance in Missouri is possible or likely. Commenters said RES allows for purcha ses of RECs, purchases of RE (with RECs), and use of RECs from utility

owned renewable generation from both in and out of Missouri. At present, c ommenters added, RES applies only to investor

- owned utilities in Missouri and not municipal utilities or rural electric cooperatives; compliance with RES is subject to a 1% rate impact limitation functioning as a constraint on current RES portfolio targets. Accordingly, the c ommenters said that to the extent EPA used RES targets in its emission formula, such target s may overstate achievability. Commenters stated that b y making a requirement that undermines the RES, EPA improperly substitutes its policy judgment for that of the Missouri legislature.

With regard to wind generation, commenter s said many factors constra in development, including capital and financing constraints, technical and logistical constraints, site permitting and land lease agreements. In addition, c ommenters stated the current RES compliance requirement of a 1% rate cap limit, makes EPA's RE goal is unachievable.

Commenter s encouraged EPA to treat existing goals under state law as reductions that will already occur. Commenter s stated that when determining the BSER for Missouri and other states, EPA should consider the pre

- existing legal obligations under which EGUs are operating in their respective states. In the case of RPS, EE resource standards, and similar state law obligat ions, the c ommenters said EPA should view the reductions that will occur as a result of these policies as the context in which its CPP will function; at minimum, BSER for BB3 and 4 should presume full compliance with these state laws.

Commenter s said this approach has special significance in Missouri, which requires IOUs to achieve 15% RE by 2012

- and said implementation of this law has been far from smooth. Commenters stated several utilities have attempted to comply by using RECs unconnected with
any po wer delivered to Missouri, despite the law's prohibition of such methods of compliance. Commenters stated a number of other schemes and questionable interpretations of the law have been proposed to avoid compliance with the RES law. Although Missouri has m ade substantial progress in RE, the c ommenters were concerned that individual utilities may fail to comply. Commenters stated EPA should view the 15% RE target as achievable and already

- in

- progress when EPA determines BSER for BB3. Commenter s added that wh ile Missouri's RES requires all IOUs to increase their usage of RE to at least 2% by 2011, 5% by 2014, 10% by 2018 and 15% by 2021. While some investor

- owned power was generated from renewables prior to 2011, the

c ommenters said no utilities in Missouri re tired RECs associated with RE power delivered to Missouri before 2011

- any RECs representing "clean energy attributes" of RE were either not retired, or sold to other states to count towards their active RES compliance requirements before 2011.197 Comment 3 7 : Commenter s had c oncern s regarding Illinois' ability to meet state target.
Response 37: The final building block 3 methodology does not rely on RPS requirements or
state

- specific deployment estimates, but rather cost

- effective RE at an interconnection level. The EPA addresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.
The following is a summary of the specific public comment under this comment:

Commenter s said the Illinois RPS increases procurement qu antities over time, and each new procurement is subject to a cap on increases in customer rates of approximately 2%. Through procurements made by the Illinois Power Agency (IPA), the c ommenters stated suppliers meets RPS quantity requirements while staying below the statutory cap. To comply with EPA's proposed rule, the c ommenters said the Illinois state legislature may need to increase the rate cap that was originally adopted to protect customers from significant cost increases. Further, the

c ommenters sta ted the Illinois RPS allows procurement quantities to be met through the procurement of RECs from in

- and out

- of

- state suppliers. To the extent that out

- of state procurements are not allowed under the CPP, the c ommenters said customers would bear additiona l costs. Commenters added that Illinois has a new Governor and it is uncertain what future policy positions the new administration will take to meet the requirements of the RPS while addressing the potential for compliance under CPP, assuming such "beyond the fence line" measures required to be implemented by distribution companies are determined to be lawful.

Comment 3 8 : C ommenters expressed c oncerns regarding Washington State targets

. Response 38: The information provided in this comment was valuable in finalizing the building block 3 methodology, which is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public comments u nder this comment:

Commenters stated that EPA asks for comment on a situation unique to Washington, where the state's RE target generation (under the primary proposed approach) exceeds the state's 2012 fossil

- fueled generation level. EPA asks whether the t arget should be capped at the baseline 2012 fossil

- fuel level. Commenters stated that regardless of the target setting approach taken by EPA, they support setting the target such that the difference between a state's RE target and its corresponding level o f RE does not exceed the state's reported baseline fossil

- fuel fired generation. Commenters noted that in doing so EPA is asking, from a target setting perspective, that no more than 100% of a state's generation be derived from carbon pollution free genera ting resources relative to the baseline. Commenters stated it is clear that asking that the entirety of a state's generation be carbon pollution free is a sufficiently stringent upper bound for setting the RE target for any given state.

Commenter s stated t here is no reason to limit the methodology by modifying the approach for quantifying the RE generation component of each state's goal so that the difference between a198 state's RE generation target and its 2012 level of corresponding RE generation does not e xceed the state's reported 2012 fossil fuel

- fired generation.

Comment 3 9 : Commenters were concerned regarding the Kentucky target.
Response 39 : The final building block 3 methodology does not rely on RPS requirements or
state

- specific deployment estimates, but rather cost

- effective RE at an interconnection level. The EPA addresses considerations related to the technical feasibility and availabilit y of regional RE resources in both the preamble (section V.E) and GHG Mitigation Measures TSD.

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

Commenter s said EPA gave Kentucky the third

- lowest carbon

- reduction target of al l 50
states. Commenters asked why Kentucky is at the bottom when they are the ones with the most health benefits to gain from shifting to cleaner energy sources. Commenters asserted that, according to recent reports, the utilities in Kentucky will get more than halfway to the EPA target without taking a single step and that the bar is not high enough.

Commenter s said biomass is the only opportunity for in

- state renewables in Kentucky. Commenters stated that OMU has a 28 MW allocation of capacity from the SE PA Cumberland River dams and manage 62 MWs of that capacity for all the Kentucky municipal electric utilities. Commenters said bringing in wind from the upper Midwest is a possibility, but would be more expensive than generation at ESGS. Commenters stated that c urrently wind receives a $19/MWh tax credit which makes the cost of wind at the bus as low as $29/MWh but delivered to OMU the cost would be approximately $52.45/MWh

. However, c ommenters said if the tax credit were to go away the cost would rise by t hat $19/MWh making the all in cost as high as $71.45/MWh.

Commenter s added that bringing in wind energy to serve the load and assuming that 20% of capacity is replaced by wind, the incremental cost to OMU would be $2.5 million/year for transmission. Comme nters said that while wind can be purchased for $29/MWh, that is the price at the point of generation. To move it to OMU, the c ommenters said , will expose OMU to "transmission congestion

, " a real cost that will drive the cost up. For 2013 the congestion from the wind rich areas to the LGE/KU interface was $11.69/MWh, said the commenters, making the delivered cost of wind energy approximately $52.45/MWh. Commenters said wind energy capacity factors typically are in the high 20% to the low 30% and are not well correlated with peak demand. Assuming all wind energy is consumed by OMU retail customers, the c ommenters said the net annual impact to customer is $11 million more in required revenue, representing a rate increase of approximately 12% to OMU residential customers and ESGS capacity factors would not be impacted because it would only create more surplus energy that would be sold into the wholesale electric market. Commenters stated wind i s not a dependable source of energy, noting that on the hottest day of the year when market prices for wholesale power are the highest, wind is not likely to be there and thus the wind capacity must be backed up by some other form of dependable capacity. A s such, c ommenters said OMU would still rely on coal units to meet load obligations and because the volume of wind energy is unknown it is uncertain how they would be able to rely upon the CO2 offsets as part of the compliance plan. Finally, c ommenters199 sta ted the Kentucky Legislature has for at least the past 7 years not allowed RPS to come before the full house or senate for a vote. Commenters said BB3 is usurping the Kentucky Legislature's intent that RPS not be mandated in Kentucky.

Comment 40 : Commente r s expressed concern regarding the Mississippi target.
Response 40: The final building block 3 methodology does not rely on state

- specific deployment estimates, but rather cost

- effective RE at an interconnection level. The EPA addresses considerations related to the technical feasibility and associated grid integration cos ts of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.

The following is a summary of the specific public comment under this comment:

Commenter s said Mississippi averages 52 in/yr rain and wind is intermittent at best during peak load seasons. Commenters added that no significant renewable generation has been built in Mississippi other than biomass, due to the prevailing weather conditions, so the assumption by the EPA that Mississippi can achieve a 10% RE standard seems arbitrary and is unsupported by the facts.

Comment 41 : Commenters expressed concerns regarding the South Carolina target.
Response 41: The resources and data provided in this comm ent were valuable in finalizing the building block 3 methodology, which is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenter s said t here are differences between South Carolina and other states in the amount and type of renewables available for electric production and that the state does not have the resources to meet a renewable requirement of 10% by 2030.

Commenter s stated UCS identif ied several problems in EPA's treatment of South Carolina's RE potential: EPA fails to account for both (1) the continued growth and falling costs of RE projected by market experts and (2) the RE deployment rates that states are already achieving. Thus, th e c ommenters said the RE potential represented in BB3 is likely to be quite conservative relative to the actual potential for deployment of resources such as solar and wind in South Carolina by 2030. Commenters stated that technical potential estimates, recent cost declines, and reliability studies as referenced herein indicate that South Carolina can achieve and significantly exceed the levels of RE envisioned in BB3, such that RE/EE could serve as the primary means o f compliance with their state emissions target. Commenters stated EPA should revise and update several of its underlying assumptions, which will show that South Carolina can reach a higher RE target than EPA assumes at a reasonable cost.200 Comment 42 : Comme nters had Georgia specific concerns.
Response 42: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology does not rely on state

- specific deployment estimates, but rather cost

- effective RE at an interconnection level. The EPA addresses considerations related to the technical feasibility and availability of regional RE resources in both the preamble (section V.E) and GHG Mitigation Measures TSD.

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

Commenter s said that 8 years ago a Southern Company subsidiary, Georgia Power, and other Georgia utilities committed to be the nation's first to construct new nuclear power units in almost 30 years. While utilities across the country will benefit from the path paved with Votgle 3 and 4, this step was taken to further diversify the fleet and help prepare for upcoming GHG requirements. Rather than reward the State of Georgia, the c ommenters said EPA us ed the zero

- carbon energy source to further penalize the state for its early actions.

Commenter s urged EPA to update its projected RE targets for Georgia both in the final rule and again in 2017, stating Georgia's RE target should be based on its actual RE generation levels in 2017 and its abundant potential for future growth. Under its Demonstrated Growth approach, the

c ommenters said UCS has determined that Georgia can achieve more than 22 million MWh of RE generation by 2030, almost double EPA's projections. Commenters stated if Georgia were to achieve even 3/4 of the UCS projected levels of RE penetration, and displace fossil generation (along with EE increases under BB4), Georgia could reach its target reduction without any natural gas re

- dispat ch; in fact, Georgia would exceed the target, reaching an emission rate of 782 lbs/MWh.

Commenter s stated the low level of existing RE generation in the Southeast region results in the second highest annual growth factor of any region. Commenters said Geor gia's 2012 RE generation was about 3% of total generation, well below the national average of 6.5%. Given the combination of Georgia's current level of RE generation and the regional growth factor of 13%, Georgia's RE target grows rapidly from 4.4% in 2020 to 8.3% in 2025, reaching the regional RE target in 2027. Commenters stated Georgia does not have a mandatory RPS and the amount of generation produced by the hypothetical RPS predicated on use of the NC RPS greatly exceeds EPA's 2020 target for Georgia a nd is equivalent to the 2030 target set by the EPA for Georgia. Commenters said the Southeast region's RE potential is not nearly as high as it is in other parts of the country. Nevertheless, Commenters said Georgia's technical potential for RE generation greatly exceeds the state's 2012 total generation: indeed, Georgia's utility

- scale solar potential alone is over 45 times greater than current state generation. Commenters added that a states' ability to use renewables for 111(d) compliance will depend, in part, on EPA's decision in the final rule on whether qualifying RE must be sited within the geographic boundary of the state, or whether a state's purchase of RECs from other states may count towards compliance. Because Georgia does not currently have an RPS, the c ommenters asserted that utilities have no obligation at present to buy RECs from anywhere. Commenters asserted that because Georgia has few incentives in place to encourage renewable construction in

- state, it is likely that the most201 cost

- effectiv e strategy to pursue BB3 will come through bundled out

- of

- state REC purchases. Commenters stated b undled purchases would include both delivered energy and RECs, meaning that Georgia will be able to claim both generation and emission benefits associated wit h these RECs.

Comment 4 3: Commenter s had concerns regarding the Florida target and stated u se of NC RPS unreasonable and unlawful.
Response 43: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.
The following is a su mmary of the specific public comment under this comment:

Commenter s said the RE target that EPA calculated for Florida under BB3 arbitrarily ties Florida's goal to an oversimplification of North Carolina's 2020 RPS goal and is unreasonable and unlawful. Co mmenters said EPA's analysis does not consider that North Carolina's RPS goals allow utilities to comply through mechanisms other than actually developing in

- state RE. More specifically, the c ommenters said North Carolina's RPS goal allows utilities to mee t 25% of their requirements by reducing energy consumption through EE measures, and another 25% by purchasing RECs from out

- of

- state. Thus, commenters stated the 10% RPS target EPA assumed for North Carolina effectively only requires in

- state RE to reach 5 % by 2020. Commenters said use of North Carolina's RPS results in levels roughly 100% too high for 8 states, including Florida.

Comment 44 : Commenters expressed Nevada target concerns.
Response 44: The EPA is not finalizing an approach that relies on sta te RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.
The following is a summary of the specific public comment under this comment:

Commenter s questioned how the state agencies came to their assumptions about existing and future RE opportunities in Nevada. Commenters stated s tarting with a calculation showing that only 2,510,974 MWh of Nevada's 2012 RE production could be used for section 111(d) compliance, the State Agencies assume 4,943,138 MWh of RE by 2029 (rather than the 6,364,153 MWh assumed by EPA) is a more feasible g oal to use in establishing Nevada's adjusted emission rate goals. Commenters said the state agencies' 2029 RE target is difficult to understand, given the significant RE generation that has been added since 2012 and is projected to occur over the next 15 y ears. Commenters included a Table 1 comparing the state agencies' calculations to EPA's assumptions and NV Energy's projections from its proposed SB 123 implementation plan. Commenters stated NV Energy's projections, like those of the state202 agencies, only consider RE used to serve Nevada load, and exclude RE exported to serve load in other states.

C ommenter s said the state agencies' proposed target is too low compared to both EPA's assumptions and NV Energy's forecast. For example, c ommenters noted that NV Energy's forecast of RE production shows that it alone could reach the state Agencies' 2029 target for Nevada around 2017. Commenters said the state agencies' target of 4,943,138 MWh equates to only 13.72% of NV Energy's forecast system energy by 2029, whi ch is 4 years after Nevada's RPS hits 25% of retail sales. By comparison, the c ommenters stated NV Energy's forecast shows RE for 2015 is expected to already be 11.47% of system energy. Commenters asserted the Nevada agencies are essentially asking the EPA to assume that Nevada's transition to RE, which has been accelerating over the last few years, will decelerate and then almost stall out over the next 15 years. Commenters said Nevada will have no problem generating enough RE to meet BB3's assumptions jus t under a business

- as

- usual approach, and EPA's goal of 18% by 2029 is easily attainable.

Comment 45 : Commenters asserted the Colorado target is unachievable.
Response 45: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

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

Commenter s asserted the plan overestimates the reduction that will be achieved by Colorado's RES and does not account for the use of multipliers. Commenters said that while the stated mandate is 2 0

- 30% for the major electric suppliers, there is additional credit given in the RES for the use of specific resources: for example, solar resources brought on line prior to June 30, 2015 have a "three times" multiplier for compliance with the RES. Commente rs stated this will reduce the overall energy generation from renewable resources. Also, the c ommenters said not all renewable generation credited in Colorado is required to be generated in Colorado: for example, Tri

- State Generation and Transmission Assoc iation is WREA's wholesale supplier and also serves 18 of Colorado's 22 electric cooperatives. Commenters said Tri

- State has generation assets in 5 states to serve its membership requirements, including a 30MW solar facility in New Mexico, thus, while the overall generation for Colorado's cooperatives may approach 20%, it will not all be generated inside the state.

Commenter s stated that another factor to consider is that Colorado's RES actually allows credit for eligible generation resources not considered in the EPA Plan, including industrial waste heat, biomass from beetle kill and methane from landfills and coal mining. Commenters acknowledged that combustion from burning biomass and methane emits greenhouse gases, but they asserted the overall benefit f rom combusting these fuels should be accounted for in the Plan.203 Comment 46 : Commenter s raised Utah

- specific concerns on the target that the EPA calculated for that state.
Response 46: State RPS requirements are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rule. Target generation levels under building block 3 are quantified and assigned at the interconnect level, rather than the state

- level. The final methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenter s said that the assumed contribution of renewables to Utah's final CO 2 emission target is based on policy decisions, including RPS, made in other states that are outside Utah's control. Commenters asserted these assumptions do not reflect the technical potential of renewable generation in Utah, and are ina ppropriate for Utah.

Commenter s also stated that the EPA's treatment of renewable electricity further complicates the target calculation. Commenters stated Commenters stated the EPA used a state jurisdiction method to include renewable resources located i n Utah in the state's rate

- based target, but has since suggested allocating credit for Utah's renewables to out

- of

- state renewable power purchasers. Commenter s indicated that 60 percent of Utah's renewable electricity generation in 2012 was exported, infla ting Utah's building block 3 target proportionally. Commenter s stated that excluding exported renewable electricity from Utah's goal computation would reduce Utah's 2030 compliance gap by 56 lbs CO2/MWh. Commenter s expressed concern about this potentially inconsistent approach in allocating credits for renewables, asserting that consistency is required between how the EPA sets state CO2 emission targets, and how states are allowed to meet those targets. Commenter s concluded that the EPA's inconsistent and u nclear method for calculating the state's CO2 emissions target impedes the State of Utah's ability to provide substantive feedback on the EPA's proposed rate

- based target.

Comment 4 7 : Commenters expressed Louisiana specific concerns on target.
Response 47: The final building block 3 methodology does not rely on RPS requirements or
state

- specific deployment estimates, but rather cost

- effective RE at an interconnection level. The EPA addresses considerations related to the technical feasibility and availab ility of regional RE resources in both the preamble (section V.E) and GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Concerning Louisiana, commenter s said EPA's estimates do not consider (in mos t cases) economic or market constraints, and therefore do not represent a level of renewable generation that might actually be deployed. Thus, c ommenters stated that even where states have similar potentials, the NREL recognizes that there may be other fac tors which inhibit the development of the same RE sources in one area and not another yet EPA conducted no such state

- specific analysis.204 Commenter s stated Louisiana's RE technical potential differs substantially from that of Kansas, Nebraska, Oklahoma, and Texas, not surprising given the geographical differences in this region of the country. According to the NREL's estimates, the c ommenters said Nebraska and Oklahoma have approximately 3x the RE potential of Louisiana, Kansas 4.5x more, and Texas 12.2x mor e. Discounting offshore wind power, which cannot be deployed in a timeframe needed for it to facilitate compliance with the proposed rule, the c ommenters stated Oklahoma has 3.6x the RE potential of Louisiana, Nebraska 3.9x more, Kansas 5.7x more, and Texa s 15.1x more. Consequently, the c ommenters said that EPA's assumption that Louisiana can meet the RPS of Kansas, which, per EPA's own data, has almost 6x the RE technical potential, is incorrect.

Commenter s said, in 2005, J. Kennedy and Associates, Inc. was engaged to assist the LPSC in conducting a feasibility study of implementing an RPS requirement in Louisiana. Commenters stated that report concluded that "due to the lack of availability of renewable res ources in Louisiana and the current energy production capabilities, an RPS was not feasible." Accordingly, the co mmenters stated the LPSC decided not to establish an RPS, but did create a voluntary "green pricing tariff' on a trial basis. Commenters stated that f or the trial, Entergy Gulf States Louisiana, LLC (EGSL) agreed to implement a pilot program known as "Geaux Green". Commenters explained that program began in 2008 and offered customers the opportunity to voluntarily purchase 100 kWh blocks of RE at an additional cost of $2.25 per block; EGSL used the premiums to acquire RE to meet the customer demand. Commenters said the program had limited success in attracting customers and was eventually terminated. In 2009, the c ommenters said LPSC recognized th at the recent volatility in natural gas prices (natural gas spiked to $14/1000 Btu in mid

- 2008) warranted the re

- evaluation of an RPS for Louisiana. At the direction of the Commission, c ommenters said the LPSC staff held task force meetings, received

comme nts from interested parties, and performed a detailed review of the best practices of other states that had established RPS requirements, then in 2009, issued a broad report on RPS policies. Commenters stated t he report detailed various RE technologies tha t would be suitable for Louisiana

- generation from rice hulls; wood, mill, and forest residue biomass; municipal solid waste; bagasse; cogeneration; energy efficiency; and wood co

- firing in coal

- fired boilers

- and contained a cost impact evaluation. Foll owing this, the c ommenters said LPSC decided to implement a 3

- year RE pilot program (REPP) to investigate the viability of an RPS. Commenters stated the REPP required Louisiana's utilities (Entergy, Cleco, and SWEPCO) to evaluate and implement RE resources , and included a research component and an RFP component for larger new RE resources. At the end of the 3

- year REPP period, the c ommenters said LPSC staff concluded:

"[B]ased on the information filed by the utilities, as well as Staff's participation throu ghout the process, a mandatory RPS is not warranted at this time. The data provided by Cleco, Entergy, and SWEPCO indicate that the levelized cost of renewable technologies exceeds the costs of conventional resources. For example, the levelized cost of a c ombined cycle gas turbine is below the cost of any of the major renewable technologies (wind, solar, biomass). Current prices for natural gas have put renewable technologies at a cost disadvantage."

Commenter s added that although Louisiana does not have an RPS, it has incentivized programs that promote the wise use of the state's natural energy resources to enhance both conservation205 efforts and economic development. In fact, the c ommenters stated the Louisiana legislature has declared that:

increasing the consumption of RE resources promotes the wise use of Louisiana's natural energy resources to meet a growing energy demand, increases Louisiana's use of indigenous energy fuels, and fosters investment in emerging renewable technologies to stimulate economic development and job creation in the state; and Louisiana should actively encourage the manufacture of new technologies through promotion of emerging energy technologies.

Commenter s stated Louisiana provides several incentives, such as a tax credit for th e purchase and installation of new solar and wind energy systems installed at either a residence or a residential rental apartment complex and property tax exemptions. Commenters said the LPSC also requires publicly owned utilities and rural electric coope ratives to offer net metering to customers with systems that generate electricity using solar, wind, hydropower, geothermal, or biomass resources. Commenters said utilities must provide customer

- generators with a meter capable of measuring the flow of elec tricity in both directions and pay for meter itself, with net excess generation credited to the customer's next bill indefinitely. Additional incentives include a home energy loan program administered by the DNR, and a green jobs corporate or income tax

cr edit for qualified capital infrastructure projects that are directly related to "green" industries, including the RE power industry. Thus, Commenters asserted Louisiana has instituted a number of programs and tax credit offerings that encourage the develop ment and use of RE and implementation of demand

- side EE measures. Commenters asserted EPA should not assume its simplified analysis supplants the expertise and experience of Louisiana's PSC and electric utilities. Commenters concluded that imposing a de fa cto RPS on Louisiana's citizens is neither economical nor necessary.

Commenter s said that even if an RPS was established in Louisiana, the state has low wind and solar resources. As a result, the c ommenters said most RE will have to be transported from oth er states. Commenters said it appears that EPA has given permission to Louisiana to use the wind and solar energy developed in other states as part of its RPS standard, but high RE states, such as Kansas, may not be willing to give those renewable wind resources away without a lega l fight Without sufficient RE from other states, the c ommenters said Louisiana will be handicapped in meeting this emissions target. Even if Louisiana is able to use renewables from Kansas or other states as part of the rate based standard, the transmissio n and backup generation resources needed when the wind does not blow may not exist today, according to the commenter s

. Commenters added that any additional time and cost required cannot be calculated without a detailed study that would have to extend beyon d the comment period timeframe. Additionally, commenters stated the IPM model is not set up to determine hourly dispatch

. Commenters stated thus, cannot accurately predict the additional costs and resources needed to integrate renewables into Louisiana's e nergy system.

Commenter s said EPA's calculated average annual growth factor of 8.35% for Louisiana is unrealistic and that non

- hydro RE generation in Louisiana has actually been falling over the past decade. Commenters were concerned because RE resources a re some of the most expensive to deploy, and will have a considerable impact on the cost of complying with the proposed rule. Commenters said use of a regional average is highly subjective and assumes that the states in a region are similar in terms of the ir specific policies and incentives regarding RE development206 and assumes that all states included in a region are comparable in terms of their technical potential for RE generation

- this is clearly not the case for Louisiana and the region in which it

was assigned.

Commenter s said EPA's approach effectively sweeps under the rug over 10 years of Louisiana

specific analysis in favor of its own generalized approach, which is inconsistent with the basic tenets of the CAA and with traditional utility resource planning practices in Louisiana that seek to acquire supply and demand side resource on a least

- cost basis. Commenters concluded there is no way an approach that averages projected RE generation additions over a geographic region that spans from the plains of Nebraska to the Gulf of Mexico can be consistent with these least cost resource procurement practices.

Commenter s asserted the amount of RE is not practically achievable for Mississippi. Looking at the particulars of the proposed goal, the 2012 baselin e RE for Mississippi is 1,509,000 MWh, which is almost all from biomass energy generation from pulp and paper mills, according to the
commenter s . Assuming that this can be counted towards compliance (the rule is not clear that biomass can be counted as zer o carbon), the c ommenters said it would result in the state having to develop over 4,000,000 MWh of additional RE generation. Commenters said Mississippi has no wind potential nor the solar capacity that western states have. In fact, the c ommenters asserte d the future year IPM runs that EPA performed did not indicate any additional RE for Mississippi because the results showed RE generation was too costly. Therefore, the c ommenters concluded there is no basis to require an increase of new RE to this magnitu de due and that mandating it is an excessive and unnecessary cost for rate payers.

Commenter s added that the alternative goal approach did not project any solar or wind generation because they were not considered cost effective and included only a small a mount of biomass; most projected RE is from hydroelectric generation based on a feasibility study, not proven technology. Commenters said hydroelectric generation is not an available resource for Mississippi. Based on the alternative approach and ruling ou t hydroelectricity and biomass (due to its uncertainty in accounting), the c ommenters said the future RE goal for Mississippi should be zero.

Comment 4 8 : C ommenters had c oncerns regarding proposed East Central Region goals

. Response 48: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summ aries of the specific public comments under this comment:

Commenter s stated the six of the eight states in the East Central region have a mandatory RPS that was used by EPA to calculate the regional and state goals. Commenters stated even though both Virgi nia and West Virginia have evaluated renewable energy opportunities and adopted RPS policies, EPA gives no consideration to this experience in calculating the regional goal. Commenters stated that interestingly, the RPS for the District of Columbia is incl uded in the calculation of the regional average, but the District of Columbia had zero renewable generation207 in 2012, and its standard focuses on the utilization of out

- of

- state renewable resources as a percentage of sales. Commenters stated EPA has not pro posed a state goal for the District, and should have excluded its RPS from the calculation of the East Central regional goal. Commenters stated EPA must also consider the renewable energy experience of Virginia and West Virginia, along with other geographi c and cost

- effectiveness differences for renewable energy development that exist across the entire region.

Commenters stated EPA's own data demonstrates why a simple average for calculating a regional target is wrong. Commenters stated that the States in EPA's East Central region that have higher future RPS requirements are those with relatively little generation compared to the others in this region. Commenters stated Delaware, D.C., Maryland and New Jersey generated approximately 111 million MWh in 2012 and are assigned 2020 Effective RE Levels between 19 to 22%. In contrast, c ommenters stated , Pennsylvania, Ohio, Virginia, and West Virginia generated approximately 50 0 million MWH in 2012 and are either ignored in the calculation or assigned a 2020 Effective RE Level no greater than 9%. Commenters stated there is no rational basis

- legally or mathematically

- for giving such undue and unintended influence to certain l egislatures at the expense of others, including Virginia.

Commenter s identified several defects with EPA's grouping methodology. First, c ommenters said DC has a state

- designated RPS goal of 20% (among the highest) but possesses no fossil generation, limite d renewable generation and imports almost all of its power. Commenters stated i nclusion of DC as part of the East Central Group biases the results insofar as it has no traditional generation resources and no emissions

. Consequently, the c ommenters said the re is no in

- state generation that would be offset by DC's renewable credits.

Commenter s said EPA's proposed state emission rate goals in the East Central Region must be recalculated due to the passage of S.B. 310 in Ohio just prior to the publication of EP A's proposed rule. Commenters stated Ohio S.B. 310 amended EE and alternative energy resource mandates (including renewable mandates) by imposing a 2

- year pause on EE, peak demand reduction and RE resource requirements. Commenters stated it eliminated both the RE resource in

- state requirements and advanced energy resource requirements, thereby reducing the former alternative energy resource mandate by half. Due to the timing of Ohio SB 310, the c ommenters said EPA did not reflect the impact of this new stat e law in the BB3 calculations for the East Central Region, and must recalculate these goals based on its passage.

Commenter s said EPA erred in its computation of RE targets by taking the arithmetic average of the six states with RPS programs, which amounts a regional average of 16%. Commenters stated that VA and WV were assigned an effective RE level of 0% but not included in the averaging calculation and that including the values from these two states, as would be appropriate, would have produced a lower r egional compliance target of 12%. By excluding these two states, that have chosen not to enact RPS targets, the c ommenters said EPA penalizes the rest of the region with a higher regional compliance target that translates into higher required targets in th e 2020

- 2029 timeframe. Commenters asked EPA to recalculate its East Central regional compliance targets to correctly reflect only those states that have promoted RE.208 Comment 4 9 : Comment er s expressed concern on use of the Kansas RPS for South Central Region

. Response 49: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

T he following is a summary of the specific public comment under this comment:

Commenter s noted that Kansas is the only state in EPA's South Central Region that has an RES/RPS in percent form. Commenter s stated that Texas' standard of 10,000 MW by 2025 was

n ot used by EPA, apparently because it is explicitly capacity

- based (i.e., not in percent form). However, commenters stated the Kansas RES

- and other states' standards expressed in percent
terms

- are capacity

- based, a fact which EPA overlooked when utiliz ing the DSIRE data. Commenter s asserted that there is therefore no objective reason to exclude Texas' RPS for use in finding RE levels. For the South Central Region, commenters proposed that the Texas standard of 10,000 MW be converted to a percent value, then averaged with Kansas' 17.1 percent (the value that commenter s derived for the Kansas standard after making other suggested revisions). Commenter s suggested that the easiest way to do this (and a conservative way considering growth) is to divide the 10 ,000 MW Texas standard by the state's latest available total generating capacity

- using the 2012 unit capacity supplied by EPA the 2012 total generation capacity for Texas is 148,944 MW. On this basis, commenter s calculated that in percent terms, the Texa s renewable standard is therefore 10,000 MWh/148,944 MWh = 6.7%. Commenter s concluded that averaged with the effective Kansas RES of 17.1 %, the Kansas

- proposed RE level for the South Central Region should be 11.9%. Rounded to the nearest percent, this is 12%.

Comment 50 : Commenters expressed the n eed for cons ideration of capacity

- based RPS.
Response 50: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

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

Commenters noted that in the South Central region, the Kansas RPS is capacity

- based despite EPA stating in the proposal that it did not include capacity

- RPS targets.

Commenter s stated EPA should also review its conclusions for the South Central region under an RPS

- based approach. Commenters stated that i t was the ir understanding that, when calculating the regional averages, EPA did not include capacity

- based RPS targets; however, in the South Cen tral region, EPA based the regional renewable energy goal on the Kansas RPS, which is capacity

- ba sed. Commenters stated that without the Kansas renewable goal, there are no states with qualifying RPS programs in the South Central region. Commenters stated that instead of a 20 percent regional goal, the target for the South Central region should be either zero percent (if EPA were to follow its existing methodology) or 10 percent (if EPA were to follow its methodology for Hawaii and Alaska).209 Commenter s state d that while the proposal indicates that "EPA does not include targets that were capacity

- based," it appears that it did exactly that in the South Central region. Commenters questioned as to why this took place and if EPA plans to examine this issue furthe r. Commenters also questioned if EPA analyzed the different targets that would have resulted from a regi onal generation

- based target.

Comment 51 : C ommenters had c oncerns regarding crediting of in

- state and out

- of

- state generation.
Response 51: The final building block 3 methodology does not rely on RPS requirements or
state

- specific deployment estimates, but rather cost

- effective RE at an interconnection level. The EPA addresses considerations related to the crediting of RE resources in section VIII of th e preamble.
The following are summaries of the specific public comments under this comment:

C ommenters said the final rule should recognize that RE generation should be credited where the RECs apply, not to the state where the RE is generated. Commenter s n oted that the RE generated by existing renewable are often used in other states for RPS compliance, and that portion of the RE is not available for use in the state where it is generated. Commenter s added that a state specifying a floor on the amount of RE that must be produced within the state has determined that locally

- produced RE will likely be much more expensive than RE produced in another state. Commenter s said the state whose customers are paying for RE should receive compliance credit for that RE i n its 111(d) plan. Commenter s said that existing RE resources have been significantly financed and used by out

- of

- state customers; and commenter s said EPA erred in ignoring interstate electricity trade in the proposed rule, giving no consideration to this fact and giving states where the physical asset is located 100% of the credit in their goal calculation. Commenters said many existing RPS include out

- of

- state RE generation, meaning that the Proposed Rule's RE targets reflect the assumption that out

- of

- st ate RE generation can be counted towards compliance. Commenters asserted that since these RE targets are incorporated into each state's CO2 goal, the goals inherently assume that some states will rely on out

- of

- state RE generation to meet their targets. If EPA bars states from doing so, the c ommenters said states will face greater difficulties in meeting EPA's CO2 emissions targets because the targets are based on the assumption that states can rely on RE projects both within and outside of their borders. T o remain consistent with its foundational calculations and minimize the burden on states,
commenter s said EPA must finalize this proposed approach and allow states to include out

- of

state renewable generation in their plans. Commenter s stated that EPA's ap proach is not consistent with the general nature of the interconnected electric system, which is not bounded by state borders and supported an approach that more closely aligns each state's target with the resources that will be available to that state for compliance purposes.

In contrast, commenters suggested that to be consistent in the interstate treatment of renewable energy and fossil energy, EPA assign both the coal

- fired emissions and the credits for the reductions from RE generation to the state in which they are located. Commenter s stated that use of (in some cases only a portion of) existing RE resources in a state to calculate the baseline, then allowing other states where the renewable generation is used to count the generation toward210 reductions in CO2 is patently unfair to ratepayers and unconstitutional. Commenters said that for a regional facility, it is not only customers living in a state with a renewable mandate who pay for the construction and operation of those resources. For a regional ut ility, the c ommenters said all members pay the same rates for their power supply, which includes an amount necessary to recover the costs of renewable wind energy.

Several commenters stated that EPA should recalculate the baseline and compliance targets to reflect emissions reductions achievable for each states considering RECs and where the RE is credited. Commenter s stated that for states that define a limit on the use of imported RECs as a means of compliance, the EPA should recalculate the state RPS p ortion that includes only the amount of RE that must be produced in the state, not that which can be supplied from outside the state in the form of RECs. Commenter s said this recalculation should be done so the rule would not inadvertently discourage state s from serving as host for RE facilities in excess of their own compliance requirements, if that is the most economic location for RE to be constructed or operated. Commenter s asserted EPA's approach to determining a regional average RE component of existi ng generation needs to be corrected to also include consideration of RE that may be distributed across an international border. Commenter s also stated that in the recalculated targets, EPA should account for the credit multipliers that some states apply to certain resources and that any state RES mandates used by EPA in setting regional or state RE goals should be discounted to reflect these credit multipliers.

Commenters stated EPA did not consider RES design elements that reduce the required levels of in

- state RE generation when setting regional RE goals. Commenters said the regional RE goal calculations do not recognize important elements of individual state RES programs, such as the use of out

- of

- state RECs for compliance, alternative compliance payments and credit multipliers for certain resources; mechanisms that serve to reduce the actual levels of in

- state RE generation needed to satisfy RES mandates. Commenters stated EPA's failure to consider these factors results in inflated state RE goals that may not be achievable by certain states. Commenters also stated s tate RES mandates are not proxies for a state's potential to deploy more RE generation, but rather, Commenters stated reflect policy choices made in each state with regard to how much and what type of renewable resources it wants to encourage, at what cost and in what timeframe. Commenters said this is underscored by the fact that at least 23 of the 29 states with an RES allow compliance deviations due to cost impacts, supply constraints or reli ability

concerns. Commenters added that 11 states allow compliance deviations based on a force majeure finding or if utilities have made good faith efforts to comply but cannot because of factors beyond their control.

Commenters said that, although the CPP proposal contemplates the possibility of allowing states to credit out

- of

- state RE that they fund and support, EPA must recognize that a state does not have control over the permitting, siting, and regulation of facilities located outside its borders. Com menters said that state RPS contain necessary options and flexibility with regard to this and that such flexibility, however, may be lost if a state's RPS becomes a part of the federally enforceable CPP.

Comment 52 : Comment er s expressed support for the r egional treatment of RE.211 Response 52: The resources and data provided in these comments were valuable in finalizing the building block 3 methodology, particularly in recognizing the interstate nature of RE. The full methodology is described in section V.E of the preamble and in the GHG Mitigat ion Measures TSD.

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

Commenter s stated both existing and new renewables should receive regional treatment in any goal setting methodology. Commenters stated that Maine electrici ty generation exists in a regional marketplace, and this existing regionalized market extends beyond electrical energy to include the renewable attributes of that energy. Commenters stated that over two

- thirds of the wind power projects in Maine under cons truction or in permitting are under direct contract with
out

- of

- state entities and more will serve regional load. Further, c ommenters stated , all of the existing wind generation in Maine is qualified and receives revenues from the sale of RECs into other N ew England state RPS programs. Commenters also stated hydroelectric and biomass facilities located in Maine also sell energy and RECs out of state. Commenters stated that whatever final specific methodology is adopted by EPA, the goal setting methodology s hould reflect the reality of the existing regionalized renewable energy contracts, transfers and markets that exist in New England and New York that result in new and existing renewable projects including wind, hydroelectric and biomass serving regional lo ad and regional customers outside of Maine. Commenters stated it is unfair to allocate responsibility for new or existing renewables in BB3 entirely to Maine because the wind resource exists within Maine but serves out of state load.

Commenter s stated EPA' s approach for determining state

- by

- state CPP targets ignores ownership rights in generating resources. Commenters said that while state targets were established by considering generating resources within a state and electricity customer retail sales in th e state, actual sourcing of electricity to service those sales may come from both within and outside state borders. Commenters said electric utilities may own or operate electric generating resources in one state that may or may not serve electricity custo mers in that state. Commenters said joint ownership, assignment and long

- term sales are commonplace in the electric industry, due to the high capital cost, long

- lived assets and economy of scale benefits larger assets offer. By allocating the renewable att ributes of a generating resource to a state, regardless of whether the owner of the generating resource resides in that state or uses the generation to serve customers in that state, the c ommenters asserted EPA has effected an unlawful taking of property r ights.

Commenter s stated EPA's approach for determining state

- by

- state CPP targets ignores ownership rights in generating resources. Commenters said that while state targets were established by considering generating resources within a state and electrici ty customer retail sales in the state, actual sourcing of electricity to service those sales may come from both within and outside state borders. Commenters said electric utilities may own or operate electric generating resources in one state that may not serve electricity customers in that state. Commenters said joint ownership, assignment and long

- term sales are common in the industry, due to the high capital cost, long

- lived assets and economy of scale benefits larger assets offer. By allocating the rene wable attributes of a generating resource to a state, regardless of whether the owner of the generating resource resides in that state or uses the generation to serve212 customers in that state, the c ommenters asserted EPA has effected an unlawful taking of p roperty rights.

For example, commenter s noted renewable generation constructed in North Dakota to help meet the Minnesota state

- mandated RPS is counted toward North Dakota RE goals in the TSD. Commenters said that when EPA established their CPP target por tion for BB3 renewables, EPA referenced each state's retail electricity sales and assigned a percentage for qualifying RE. In turn, the c ommenters said , the EPA 15% renewables target was established by EPA analysis based on the average RPS for states in th e region with an RPS. However, c ommenters said CPP state renewables BSER targets may also include state approved RPS qualifying RE options (such as existing hydro) that EPA is proposing will not be recognized for CPP proposed compliance. Consequently, the c ommenters said , the relative stringency of a CPP renewables target set in a state is affected by considering both renewables deployed in other regions that qualify for satisfying a state RPS and renewables that EPA has not determined will count for CPP

co mpliance. Thus, the c ommenters stated , EPA creates situations where resources deployed and paid for on behalf of electric utility customers in one state may have their underlying RE value attributed to another state.

Commenter s also recommended that any a sset or PPA recognized, approved and paid for by utility customers be credited when accounting for CPP compliance. In the case of Minnesota Power, its significant North Dakota wind investments, PPAs and Canadian Hydro PPAs should be included and credited t owards Minnesota compliance with the CPP. Commenters said customers risk disaggregation from the benefits of RE resources for which electricity customers have been paying when renewal is due. Commenters said a PPA may expire and may be up for renewal at th e time when capital investment serviced by satisfaction of a state RE standard is still under cost recovery.

Comment 53 : Commenter s asserted there were i nsufficient RE resources to meet state goals

. Response 53: The resources and data provided in these comments were valuable in finalizing the building block 3 methodology, particularly in recognizing the interstate nature of RE. The full methodology is described in section V.E of the preamble and in the GHG Mitigat ion Measures TSD.
The following is a summar y of the specific public comment under this comment:

Commenter s stated an example of the incorrect outcomes from EPA's flawed methodology is that the required expansion of RE resources does not necessarily occu r in the states with the most abundant renewable resources and the most cost

- effective opportunities. Commenters stated for example, in the South Central region, Kansas has the second largest amount of RE potential in the region, but increases their RE gen eration by the lowest amount of any state in the region. Meanwhile, the c ommenters said , states such as Arkansas and Louisiana, with the least abundant and more expensive RE resources, are required to increase their RE development and generation the most. In fact, the c ommenters stated , EPA's goal calculations assume that only 0.03% of the potential generation from renewable resources in Kansas would be developed, with no additional increases occurring after 2023. Further, c ommenters stated , despite the fac t that Louisiana has213 only 16% of the potential renewable resources of Kansas, EPA's goal presumes that Louisiana would increase its annual renewable generation by 830 GWh more than the increase assumed for Kansas. Commenters provided a summary figure discu ssing these issues for the South Central region.

Comment 5 4 : Commenter s recommended focusing in

- state RE target based on that state’s technical and economic potential.
Response 54: The resources and data provided in these comments were valuable in finalizing the building block 3 methodology, particularly in recognizing the interstate nature of RE. State RPS requirements are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rule. The full methodology is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.

The following is a summary of the specific public comment under this comment:

Commenter s stated because the EPA has structured its building block methodologies to express the best system of emission reductions on an individual state basis, it recommended that the focus of establishing an in

- state renewable generation target should be on the technical and

ec onomic potential for the expansion of renewable generation within the boundaries of the individual state. Commenters stated that such an approach is different than the EPA's proposed derivation of an in

- state renewable generation target from an averaging o f the renewable portfolio standards in the corresponding region. Commenters stated renewable portfolio standards are a mechanism by which to drive investment in renewable energy through the participation of a state in a larger regional market. Commenters s tated that through an RPS approach, renewable resources are incentivized to build at the most economically and technically feasible location within the borders of the defined RPS market

- borders that generally correspond to the regional grid in which the state operates, rather than aligning with individual state boundaries. Commenters stated that in establishing aggressive RPS policies, states consider the potential for the regional market to fulfill the demand created by the state policy, and do not

neces sarily require the siting of all incentivized renewable energy to occur within their individual state borders; to do so would be to ignore the benefits and realities of participating in a regional transmission organization. Commenters stated that contrary to these fundamentals, the EPA's proposed methodology relies on state RPS goals to yield in

- state renewable generation targets and does not fully capture the benefits of the RPS mechanism as a regional tool. Furthermore, the

c ommenters stated , the EPA's pr oposed approach neglects to appropriately incentivize renewable energy in states and regions that previously disregarded the benefits of investing in a cleaner energy infrastructure. Commenters stated for example, the Southeast regional renewable energy
ge neration target corresponds to only 10 percent as proposed by the EPA since only 1 of the 8 states in the identified region previously adopted a renewable portfolio standard. Commenters stated this is in stark contrast to the 25 percent regional renewable energy generation target proposed for states in the Northeast.214 Comment 55 : Commenters expressed concern regarding the RE growth assumption methodology

. Response 55: State RPS requirements are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rule. Target generation levels under building block 3 are quantified and assigned at the interconnect level, rather than the state

- level. The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly in the reevaluation of solar cost and performance assumptions. The final methodology is described in detail in V.E of the prea mble and in the GHG Mitigation Measures TSD.

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

Commenter s stated BB3 reductions should be based on economic RE potential. Commenters stated RE reductions are an important compone nt of the guidelines, and in crafting this building block, EPA should leverage what is known about the economic potential of different RE resources and the potential for RE markets to meet this economic potential. Commenters stated that for states without an RPS, basing RE targets off the RPS of neighboring states may significantly under

- represent the state and regional potential. Commenters also stated that for states with an RPS, basing RE targets off the RPS of neighboring states may significantly over

r epresent the state and regional potential. Commenters stated that the alternative approach put forth by EPA is not subject to this concern, as EPA combines state

- specific RE technical potential assessments with a methodology to determine state

- specific eco nomic potential by RE category.

Commenter s stated that, though not preferred, if EPA continues with its proposed methodology for establishing BB3 targets, it should consider that the methodology is based on the nominal RE generation requirements in state R PS, but most state RPS pertain only to a portion of electric load. Commenters stated that EPA is likely to receive comments requesting that BB3 targets be based on the effective level of RE in state RPS, rather than the nominal level. Commenters stated that if EPA were to make such a change, BB3 RE targets would be reduced. Commenters stated it would not support such a change where the result is less than the achievable economic RE potential in the state.

Commenter s stated electricity demand growth wil l vary by state (e.g., EPA assumes 45% growth in California between 2012 and 2030, but

- 23% "growth" in Wisconsin). Commenters said EE/RE are easier to implement in a growth environment, but there is no adjustment for that in the EE/RE target.

Commenter s s aid that EPA should adjust the RE growth assumptions to more accurately reflect the potential in states and regions. As technology and deployment prices continue to plummet,

c ommenters said many states have already, or will soon, meet the level of RE gener ation that EPA assumed that wouldn't be met until 2020.

Commenter s said EPA should consider the rapidly declining costs of RE sources and recent improvements in technologies when determining the level of RE each state could potentially produce in complying with the CPP. In 2013, the c ommenters said CO 2 emissions were 15% below 2005 levels as a result of a reduction in the carbon intensity of power generation and215 slowed demand growth. Commenters asserted emerging trends in the marketplace are driving these c hanges and could allow for a transition to a low

- carbon future at a much lower cost than commonly assumed, with net financial benefits for power companies and customers potentially accruing in some parts of the country. Commenters said these benefits inclu de public health benefits from replacing old, inefficient, and heavily polluting power generation with new, cleaner forms of generation. Commenters said their analysis (www.wri.org/publication/seeing

believing

- creating

- new

- climate

- economy

- united

- states) sh ows that most states could generate a lot more of their electricity from economically competitive renewable sources than is commonly assumed.

Comment 56 : Commenters stated the EPA should use a weighted average.
Response 56: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summ aries of the specific public comments under this comment:

Commenter s stated it is more appropriate to use a weighted average, so as not to create unattainable goals based on the RPS averages, where many of the states with high RPS contribute much lower am ounts of energy to the grid, such as Maryland or Washington D.C. Commenters also stated it asserted that the quantification of RE generation needs to include cost factors, availability during critical periods of energy demand, land use and environmental im pacts, and effects on reliability of the electric grid due to meteorological variability.

Commenter s stated that in the East Central region, the renewable target was inflated by including the relatively high RPS's of Delaware and DC, which only produce 3 p ercent of the region's renewable energy, and questioned if EPA has considered basing its target on a generation

weighted basis.

Commenters stated an approach that would address some of the concerns would focus on actual renewable generation or future gener ation in each state that is weighted for load factor. Commenters stated if the regional averaging approach is carried forward, they proposed that the RE target level of performance should include all states in each region in the calculation, irrespective o f whether that state has a formal RPS or not. Then, the c ommenters continued stating that using some measure of actual current or projected

- for

- 2020 renewable generation, a weighted average where the load (electricity usage) in each respective state is fac tored into the average could be calculated. Commenters stated this results in calculated regional RPS values that more accurately reflect the total amount of RE generation in each state comprising those regions. In addition, the c ommenters stated , it provi des a more reasonable assessment of RE potential in accordance with the concept that Building Block 3 serves as a component of the proposed best system of emissions reduction.

Comment 5 7 : Commenter s recommended u se of region

- specific potentials for RE development

.216 Response 57: The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, which is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.
The following is a summary of the specific public comment under this comment:

Commenter s stated that based on EPRI research, a more effective and comprehensive basis for state aggregation would be informed by the region

- specific potentials for renewable energy development, which wou ld include technology costs, fuel costs, network effects, and regulatory requirements. Commenters stated investor response, regional competition for other resources, learning

- by

- doing and network effects, regulatory limitations, and public acceptance also should be considered.

Comment 5 8 : Commenter s stated the EPA should delineate RE technologies available for compliance

. Response 58: All RE technologies used to establish building block 3 generation are eligible for compliance. Additionally, the EPA has described the use of non

- BSER measures to achieve standards of performance in section V.A of the preamble.

The following is a summary of the specific public comment under this comment:

Commenter s stated it strongly urges the EPA to delineate in the final r ule the renewable energy technologies used in the goal computation process and those that are available to the states for compliance purposes. Commenters stated that whatever the ultimate decision by the EPA with respect to the qualifying renewable technol ogies, c ommenters urged consistency between target

setting and compliance options so that the stringency of the nationwide goal is maintained. Commenters noted that this specificity and consistency is needed across all building blocks and for all proposed methodologies; if a reduction potential or technology is considered when computing a state's target, then that same mechanism should be available to the states for compliance purposes. Commenters strongly recommend ed that this consistency is a fundamental of all elements contained in the final rule, whether addressing renewable technologies such as hydroelectric or biomass resources, new natural gas combined cycle units, or any other component of the BSER determination.

Comment 5 9 : Commenters expressed s up port and opposition on setting a floor.
Response 59: The final building block 3 methodology does not rely on RPS requirements or
state

- specific deployment estimates, but rather cost

- effective RE at an interconnection level. The regional quantification and application of building block 3 has eliminated the need to evaluate
state

- specific RE minimums or maximums. The final methodology for building block is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:217 Numerous commenters generally supported setting a floor for RE targets, and several suggested methods for setting a floor or situations in which a floor should be set. Commenter s suggested using each state's RPS goals as a floor for achievable renewable generation in that state. Commenters supported a floor for cases where the target

- setting methodology produces a result below 2012 RE levels. Commenter s supported use of a floor and said that sett ing actual 2012 RE generation as the floor is one methodology that could be utilized, but this underestimates the ability to deploy RE. Commenters said that another methodology for establishing a floor would be to use the greater of 2012 generation or a pa rticular state's own RPS target for 2030. Commenter s recommended looking at the current existing renewable infrastructure in each state and using that generation to set a generation "floor" that all states must maintain moving forward. Commenter s stated a state's existing generation and, if applicable, its existing state RPS requirement, should both serve as a floor to set the minimum level of emissions reductions available for that state. Commenters stated u sing a level lower than the state has already dem onstrated (either through generation or a state RPS target) would indicate a lower level of emissions reductions than the state has found to be available. Commenter s said if a floor is established, low RE generation states would be required to generate a m inimum level if they will not meet the target generation by 2030. Alternatively, states like North Carolina that established its REPS based on what is technically achievable, should be allowed to adopt the REPS as the standard under BB3. Commenter s support ed requiring the same region

- wide RE generation level across states as a floor.

Several commenters opposed setting a floor for RE targets. Commenter s opposed use of a floor in calculating RE targets, stating the goal of any rule should be to achieve desir ed reductions in the most economically efficient manner. Commenters said that if states choose to achieve compliance with their targets on a regional basis, then no rule should (1) discourage or "discount" any otherwise eligible RE measure in any state fro m counting towards regional compliance, nor (2) burden any state with an obligation to exceed its pro rata regional share (per MWh of generation) of RE. If a state either has or acquires more than its pro rata regional share of RE, the c ommenters stated th at surplus should (1) be available and credited toward reducing the state's own remaining compliance requirements, or (2) be applied toward meeting the compliance requirements of the region. Commenter s said establishing a floor for states with large
amount s of existing RE which they cannot go below seems arbitrary when there is no floor that states with little or no RE must achieve. Commenters said this would penalize forward thinking states for their existing accomplishments in lowering EGU CO2 rates. Inst ead, the c ommenters said a state's final CO2 rate should be based on achievable and realistic CO2 reductions at the effected EGUs. Commenters stated RE should only be used as a means to achieve that goal, giving states the flexibility to move between build ing blocks as they see fit to meet their goals to minimize cost and maintain reliability of electric generation. Commenters stated that including a RE floor in the BB changes it into a separate RE mandate. Commenters said EPA should be completely indiffere nt regarding how a state meets the final CO2 emission reduction target and therefore should not include a RE floor. Commenter s asserted instituting a floor based upon 2012 RE generation would require some states to supply more RE than those states' regiona l share would otherwise require, which could cost consumers more. Commenters said application of a floor would overturn a basic premise of this proposal

- that a state's achievable RE is based on regional targets. Thus, c ommenters concluded, once a state's share of those regional targets is met, the state should not be further obligated.218 Several commenters did not agree with using 2012 as a baseline year for the floor. Commenter s suggested EPA use an earlier baseline year or allow states to accumulate a ban k between 2012 and 2020 to use for compliance in subsequent years. Commenter s said BB3 targets should be re

evaluated and noting that some state RPS laws have future year adjustments that should be taken into account beyond what was on the books in 2012. C ommenters did not support the use of a single baseline year, particularly due to the year

- to

- year variability of hydropower. Commenter s said that because each state's target emission rate builds from its power generation system as it functioned in 2012, an nual variations in hydro generation mean a snapshot taken of single year may not be an accurate representation. Commenters asserted using an average of 2011

- 2013 data may soften the impact of this variability, though did not have a preference for a specifi c approach. Commenter s suggested a 3

- to 5

- year generation average. Commenter s encouraged EPA to use a baseline methodology that accurately accounts for the power generation system in each state regardless of the magnitude of the practical change compared t o the Proposal. In addition to changing the "starting point" for each state, the c ommenters said this adjustment could have an impact on states" target emission rates by changing the available NGCC capacity in EPA's goal computation calculations.

Several commenters did not agree with EPA's "best practices" approach. Commenters stated there are no "best practices" for state RPS. Commenters said EPA fails to note that RPS represent a legislative choice to trade off higher electric costs for the presu med environmental and economic development benefits of renewable power. As such, the c ommenters stated there are no "best practices" that can be imported from one state to another, nor can EPA dictate to states what RE "best practices" should be. Commenter s asserted that what EPA calls "best practices" are really only EPA's desired assumptions as to the type of portfolio standards that EPA thinks state legislatures should adopt. Commenter s stated that the "best practices" method relies on the belief that an individual state's RPS was based on an assessment of the actual feasibility of generating that level of RE within the state rather than other factors, such as state politics or income level of consumers. Commenters also said the EPA provides no evidence t o support its assertion the levels of RE prescribed by one state's RPS could be achieved in every other state in the region, given cost and resource constraints. Commenters stated the EPA's rule oversimplifies often

- complex state RPS programs by attempting to translate the top

- line renewable energy goals into an MWh goal without including the varying program components often included in those programs, such as credit multipliers, REC importation, use of EE or other measures, and cost caps. Commenter s stated that by failing to incorporate a state's own RPS commitments in its BSER determination, in which a regional average RPS target is applied to states that have already exceeded that target, EPA undermines its own justification for the Best Practices Approac h. Commenter s noted that not all states are participating in RE, which can impact target compliance with goals outside of those states' RE capability.

Several commenters stated that the EPA should consider early action taken by states to increase RE use a nd decrease emissions. Commenters said EPA must consider investments made prior to 2012 and state

- by

- state assessments when determining RE targets and allow states, companies and customers who have taken early action to use both new and existing RE to comp ly with the proposed goals. Commenter s also stated that it is important that EPA retain in its final rule the flexibility for states to utilize existing renewable resources for compliance purposes. C ommenter s supported EPA's approach, which included existi ng non

- hydro renewable generation in its calculation of each state's base

- year megawatt hours and proposes to allow219 states to include existing renewables for compliance purposes beginning in 2020. Commenters stated this approach appropriately recognizes co mpanies and customers with a long history of supporting the installation of renewable energy. Commenter s added that states that have already taken significant steps to reduce their carbon footprints reasonably expect their efforts to be reflected in and su pported by the Clean Power Plan. Commenters stated that EPA's proposal has the opposite effect: states that have taken early action to reduce emissions are penalized and asked to go further at greater expense than those states that have done less. Commente rs stated that the penalties for taking positive action can and should be remedied in order to better accommodate state actions consistent with EPA's overall objectives. Commenter s opposed establishing a "floor" based on 2012 generation, as this would pena lize states for early actions.

Comment 60 : C ommenters expressed concerns regarding the c riteria for reapportioning state RE targets

- total electricity sales vs total generation.
Response 60: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

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

C ommenter s stated total generation is the most appropriate criteria for reallocation of RE generation within regions. Commenters stated t he only exception is with EE

, which, by its nature, tracks sa les rather than generation (by lowering demand at all facilities that serve that state). However, c ommenters said RE is more closely tied to total generation than to total sales, so reapportionment should track generation.

Co mmenters suggested EPA use annu al state retail sales of electricity as the basis for the target (the same as BB4), instead of total in

- state electricity generation. Commenter s stated that in most cases the targets set by RPS policies in states are applied to the total retail sales withi n a state, as opposed to the in

- state generation total or as a capacity target within a state. Commenters stated that EPA's proposed approach is contrary to this fundamental design approach of most RPS policies. Commenters suggested that using retail sales as the basis for the target also creates an important link to BB4 where an analogous EE resource standard approach is used (essentially a RPS for EE). Commenters stated EPA justifies the in

- state generation target approach by implying that the primary mot ivation for state RPS policy is to increase in

- state renewable generation. Commenters stated that reducing GHG emissions and catalyzing RE development, regardless of location, are clearly major factors as well. Commenters stated that given that most RPS po licies allow RE to come from a broad geographic area demonstrates that state RPS policies are more broadly focused than on just encouraging in

- state renewable generation. Commenters stated Commenters stated this approach is also consistent with using RECs to track compliance, since they may come from out of state.

Commenter s suggested EPA adjust the regional average RPS target to reflect the RPS targets in state laws or regulations multiplied by the amount of statewide retail sales to which those RPS targe ts apply. Commenters stated that in practice, RPS policies do not require that the full effect of their "simple" targets be achieved. Commenters stated that all RPS policies have some220 conditions or limitations on scope that result in the effective target o f the RPS being less than the "simple" target outlined in the law, and typically the difference is not insignificant. Commenters stated that for Washington, given the limited coverage of the law, and given cost cap provisions and other aspects of the law, the effective RPS target for Washington is about 10%, in contrast to the "simple" target of 15%. (For example, the Washington RPS has a "simple" target of 15% by 2020 embedded in the state's Energy Independence Act (Chapter 19.285 RCW) that applies to 17

o f the 63 utilities in the state, covering about 80% of the load in the state. Therefore, the load

weighted RPS target for Washington is around 12% 2020.) Commenters stated that ideally, the RPS targets used to develop the regional "proxy RPS" target would take into account the full spectrum of qualifiers that might apply, but projecting all of these effects out to 2030 may be prohibitively difficult. Therefore, c ommenters r ecommended at least accounting for the retail sales (i.e., load) to which the RPS targets apply, instead of assuming all load is affected.

Comment 61 : C ommenters noted c oncerns on the EPA’s target

- setting methodology

. Response 61: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

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

Commenter s recommended the following improvements to EPA's methodology to more accurately reflect best practices and existing trends of RE growth. Commenters stated that many of the state RPS goals extend beyond 2020, yet EPA used 2020 targets only in determining average regional RPS levels for the states for a 2030 emissions reduction target. Commenters suggested EPA reassess regional targets based on the last target year in state law: whether it b e 2015, 2020, 2025 or another year, in setting the 2030 renewable target.

Commenter s stated some states have multiple RPS targets for different load serving entities (for example, one target for IOUs and another for coops or municipal utilities; or one tar get for larger utilities and another for smaller utilities). Commenters stated that in any state with multiple targets, EPA should use the larger of the targets in formulating the regional average. Commenters stated that since EPA seeks BSER, it should use the highest renewables targets being adequately demonstrated by states. Commenters stated while some states may have determined that lower targets are acceptable for some classes of utilities, they did not do so in the context of seeking the BSER. Comment ers stated the higher targets, which have been demonstrated to be economically and technically achievable, clearly demonstrate BSER. Commenter s agreed it would be better to use the highest RE standard for a region to give a closer approximation of the medium term potential carbon pollution reductions through RE that region.

Commenter s suggested EPA eliminate growth rate constraint, and choose bes t of: existing generation, existing state RPS requirement, and state goal based on the regional RPS average. Commenters agreed that RPS are instructive in evaluating BSER opportunities. Commenters stated some states have achieved higher RE generation and i ntegration than is required by their221 RPS, indicating that an RPS should not be a cap on renewable generation; however, in EPA's target

- setting methodology, some state targets fall below existing generation and existing state RPS requirements.

Comment 62 : Commenter s asserted the EPA should i ncentivize states already meeting their targets

. Response 62: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is descri bed in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.
The following is a summary of the specific public comment under this comment:

Commenter s stated that for a state where renewable generation (based on 2012 levels) already meets or exceeds the regional renewable energy target proposed under this quantification in Building Block 3, its obligation under the target is capped at its share of the r egional renewable energy target. Commenters also stated that similarly, once a state meets its share of the regional renewable energy target from 2017

- 2030, its obligation is capped. Commenters stated one alternative approach would be to incentivize states that have already met the renewable energy target to continue promoting renewable development and consider this 'added' renewable generation as an overall contribution to the regional renewable energy target. Commenters stated Commenters stated such an ap proach could better account for the economic and market externalities that will impact individual state renewable energy deployment within a region.

Comment 63 : Commenters questioned the v alidity of RPS to establish RE targets

. Response 63: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

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

Commenter s stated EPA's proposed approach of averaging a region's RPS goals to establish a target renewable energy level also is valid. Commenters stated individual states within a geographic region generally sha re similar levels of renewable energy technical potential, among other characteristics that may make grouping appropriate. Commenters also stated that the lack of a RPS program does not mean that a state has no or less renewable energy potential than its

n eighbors.

Commenter s stated that RPS is not a reasonable foundation for quantifying renewable generation potential because they are based at least partly on state policy choices, which naturally disqualify RPS from being a reasonably scientific basis upon which to quantify renewable energy potential. Commenters said state

- specific politics plays a key role in whether states adopt renewable portfolio standards and the stringency of those standards and provided an example of Illinois.222 Commenters said in that state, political negotiations to fix the State's 2007 RPS have been dragging on for years without yielding a resolution, illustrating the peril in using standards that may be outdated and are subject to the prevailing political winds.

Comment 64 : Commenters expressed WECC region specific concerns.
Response 64: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamb le and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenter s said that western states exhibit differing generation profiles with hydropower and natural gas generation comprising a sig nificant amount of generation within the Pacific coast states, while the intermountain states have been more heavily dependent on coal

- fired generation (although this generation serves other parts of the west as well). Commenters stated this translates to significant differentiation among states in terms of which compliance pathways are available to them and to what degree. Further, c ommenters said hydropower is subject to significant variation on an annual and seasonal basis due to changes in rainfall, sno wpack, and other reasons, which can have a significant effect on baseline assumptions and, ultimately, compliance responsibility under the state goals.

Commenter s said that in the West region, multiple states (Idaho, Wyoming, Utah) have no RES requirements and one state, California, has the most aggressive RES requirements in the country. Commenters stated California's RES dramatically increases the regional RE goal and EPA made no effort to control for its aggressive RES requirement as an obvious outlier a mong state RES mandates in the West region. Commenters said California was able to set such an aggressive RES, in part, because other states in the region have not. Commenters asserted that much of the renewable generation built in the West is relied upon for compliance with California's RES, and may be unavailable to count toward compliance with the RE goals in the state in which the facility resides

- further increasing the stringency of many of these western states' goals as proposed. Alternatively, c omm enters stated California may have trouble finding RE to import if the other western states now need the generation to meet their own stringent in

- state RE goals, making it more difficult for California to achieve its goal.

Comment 6 5: T ribal and Territorial

– Commenter s expressed Navajo National RE investment
cost concerns.
Response 65: The application of building block 3 is premised on the availability of incremental RE at the interconnection level. Procurement of incremental RE need n ot result from direct ownership or project development, as described in section V of the preamble.

The following is a summary of the specific public comment under this comment:223 Concerning tribal nations, commenter s stated the Navajo Nation is working to de velop RE projects on Navajo land, with the energy to be used by others. Commenters said Navajo Nation is highly dependent upon capital from others to finance these RE projects. However, as the Navajo Nation noted during its consultations with EPA, c ommente rs said the Proposed Rule and Supplemental Proposed Rule have created some obstacles toward development of these projects, which EPA should rectify. Commenters said that, unlike wealthier states or territories, the Navajo Nation does not have the resources to pursue these projects without partnering with project developers. Commenters added that these RE projects are crucial for providing valuable employment opportunities for impoverished families on the Navajo Nation.

Comment 66 : Tribal and Territorial

– Commenter s asserted RE will become economic burden to Navajo Nation

. Response 66: The application of building block 3 is premised on the availability of incremental RE at the interconnection level. Procurement of incremental RE need not result from direct ownership or project development, as described in section V of the preamble.

The following is a summary of the specific public comment under this comment:

Regarding tribal concerns, commenter s said there would be no CO 2 benefit in replacing one carbon

- fre e source with another, so setting a renewables goal offers no real benefit in terms of CO 2 reduction, but does place an unnecessary economic burden on the Navajo people. Commenters asserted that while it could be argued that future growth in Navajo Nation electricity demand could be met from RE sources, the historical trends for electricity demand on the Navajo Nation have been flat to shrinking, roughly a 0.5% per year annual reduction in demand. Therefore, commenters stated until the Navajo Nation can dev elop a more vibrant economy that actually increases electricity usage, applying goals for RE based upon future demand growth will be harmful to the already weak Navajo Nation economy.

Commenter s specifically opposed EPA's setting a goal of 0.37% of total generation that may grow to 1% of total generation. Commenters said that most of the electricity generated on the Navajo Nation is used off of the Navajo Nation and setting such a percentage, which would be exclusively applied to the Navajo Nation, would b e a very large portion of its electricity demand. Commenters stated that, unlike other states or territories that are primarily reliant on fossil energy for electricity, electricity used by the Navajo Nation comes mainly from carbon

- free

sources. Commenter s said there would be no CO 2 benefit in replacing one carbon

- free source with another. Therefore, commenters stated that setting a renewables goal offers no real benefit in terms of CO 2 reduction, but again places an unnecessary economic burden on the Nava jo people.

Comment 6 7 : Tribal and territorial

– Commenter s expressed concern that BB3 does not apply to Navajo Nation.224 Response 67: The application of building block 3 is premised on the availability of incremental RE at the interconnection level. Procurement of incremental RE need not result from direct ownership or project development, as described in section V of the preamble. Buil ding block 3 is applied to affected EGUs within an interconnection rather than jurisdictions.

The following is a summary of the specific public comment under this comment:

Regarding the Navajo nation, commenter s said that because the electricity in the Na vajo Nation is mainly hydro

- electric, BB3 does not apply. Commenters said that applying the proposed methodology to the tribes would result in no additional emission reductions required for the Navajo Nation, and thus no change in its goal.

Comment 6 8 : C ommenters had co ncerns regarding BB3 target assumptions and need for modification

- support and opposition.
Response 68: The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly in the reeva luation of solar cost and performance assumptions.

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

Commenter s said the rule's targets are much lower than what is possible and the majority of states have mandatory/voluntary RE portfolio standards, many of which require more RE than EPA predicts. Commenters said many states have huge RE potential to meet their enti re electricity needs and all should be required to greatly increase their reliance on clean RE such as wind and solar. Further, Commenters said those states that have been more ambitious should be forced to go further, and coal dependent states should be f orced to make substantial shifts from coal to clean RE.Commenters supported use of RE as a compliance option but stated EPA's proposed and alternative approaches should be based on an updated and fair assessment of each state's RE potential. Commenters sup ported the approached offered by the Union of Concerned Scientists (UCS) in a recent report. In both approaches, the c ommenters stated EPA's assumptions regarding the amount of renewable generation that can be feasibly and at reasonable cost added to the g rid are overly conservative. Commenters stated the UCS report showed that EPA significantly underestimated the potential role of RE in setting state targets. Commenters stated several of the issues UCS identified are evident in EPA's treatment of renewable s potential: EPA fails to account for both (1) the continued growth and falling costs of renewables projected by market experts and (2) the RE deployment rates that states are already achieving. Commenters stated that updating and revising several of the u nderlying assumptions will show that states such as Alabama and South Carolina can reach a higher RE target than EPA assumes at a reasonable cost. Commenter s stated Georgia will have almost double the amount of RE that EPA assumes as a result of recent sig nificant investments in solar and wind. Commenters stated that i n a period of just four years, Georgia Power Company is poised to grow its solar portfolio from approximately 50 MW to over 900 MW, and its wind portfolio from zero to 250 MW

. Commenters state d showing that EPA's assumed annual growth rate for Georgia of 13% is overly conservative.225 Comment 69: C ommenters expressed c oncerns with the EPA’s RE projections

. Response 69: The final building block 3 methodology does not rely on RPS requirements or

s tate

- specific deployment estimates, but rather cost

- effective RE at an interconnection level. The EPA addresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (se ction V.E) and GHG Mitigation Measures TSD. Biomass is treated as a non

- BSER measure in the final rule, please refer to section V.A.6 of the preamble for additional detail.

A discussion regarding the use of some biomass feedstocks for compliance purposes can be found in Section VIII.I and Section VIII.K of the preamble.

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

Commenter s stated the state targets set by EPA are not feasible or adequately demonstrated. Commenters stated EPA made several errors in developing BB3: (1) EPA misconstrued state RPS; (2) EPA did not adequately consider the costs associated with renewable generation; (3) EPA treated biomass inconsistently; and (4) EPA ignored factors that hinder the development of RE.

Commenter s said EPA's projections for renewable expansion are beyond other projections, including some of EPA's own. Commenters stated EPA's assumed growth in non

- hydro renewable capacity is out of line with other predictions and likely to be unattainable.

Comment 70 : Commenters stated there is a n eed to consider Rural and Small Electric Coops in goal setting.
Response 70: The EPA addr esses the availability of cost

- effective RE to all affected sources in section V.E.6.

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

Commenter s stated most small and/or rural coops, municipal utilities, and competitive elec tricity suppliers in Montana do not currently consume significant percentages of RE and do not operate or participate in programs to promote EE, with the exception of a few western Montana coops that purchase most or all their power from the Bonneville Pow er Administration. Commenters said these small electricity providers represent half of the retail sales of electricity annually in Montana and are not regulated by the state's PSC. Commenters said it will be more challenging to grow the procurement of RE/EE by small electricity providers along the same trajectory as larger utilities in urban states, or even the expected average size electric utility. Commenters said small electricity providers lack the existing institutional structures for the procurement of RE/EE. Commenters said EPA should revise its BB3 & 4 methodologies to account for the more limited resources of smaller electricity providers.226 Additionally, commenter s noted that Montana's RPS, as is the case with many state RPS programs, does not apply to electric coops, municipal utilities, or small competitive electricity providers. As a result, commenters stated EPA's methodology for determining the growth in RE in the various regions of the country overestimates the potential growth in RE by ignoring the often significant percentages of total state retail sales that are not subject to state RPS programs or other requirements to procure specific percentages of retail sales from renewable reso urces. Commenters suggested EPA rerun its BB3 calculations to take into account the portion of state retail electricity sales that do not have to comply with a state's RPS requirements.

Commenter s said EPA should be aware that states such as New Mexico wit h a large rural population and many rural electric cooperatives often have secondary and even tertiary standards. Commenters stated these standards are necessarily lower than those for IOUs due to the demographics of the rural population as well as transmi ssion constraints of rural areas. Commenters said focusing only on primary standards in setting a regional "average" RPS ignores the demographics and constraints unique to rural electric cooperatives.

Commenter s said public power utilities and cooperatives are not strangers to RE resources and as a percentage of total owned generation, public power utilities actually have a much higher percentage of RE capacity than do investor

- owned utilities: 18.5% vs 7.82%. Thus, c ommenters said there is nothing inherent to the public power model that makes it more difficult to acquire or utilize RE resources. Commenters said smaller public power utilities are uniquely well placed to incorporate large levels of RE because it can be built in smaller increments and scaled u p as demand from the utility grows, making it a preferable investment especially for small utilities, because it prevents them from having to commit too many resources to any individual power

source. Commenters added that municipal utilities are also well

- suited to RE projects, which are characterized by high up

- front capital costs and low operation and maintenance costs. As public entities, c ommenters said , municipalities can access low

- interest bond funding models to finance these projects at much lower r ates than investor

- owned, or other publicly held, utilities.

Commenter s said rural electric cooperatives, both distribution coops and generation & transmission, are also increasingly making RE part of their portfolios. Commenters stated that NRECA noted c o

- ops are making significant investments in RE generation, using loans from the Rural Utilities Service and other sources; with solar becoming more cost

- competitive, solar development is growing quickly also. In addition, c ommenters said co

- ops purchase RE from large projects such as the 31 MW Cimarron Solar Facility in New Mexico and the 7.7 MW Azalea Solar Power Facility in Georgia, and nearly 40 cooperatives have or are planning community solar programs, recognizing that solar diversifies the fuel portfo lio, and helps to build new community partnerships, a key cooperative value. Commenters added that NRECA has produced an interactive map detailing how hundreds of cooperatives are diversifying their portfolios using RE.

Comment 71 : Commenter s noted i naccuracies in the EPA’s RPS RE calculations

.227 Response 71: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

The following is a summary of the specific public comment under this comment:

Commenter s questioned how closely EPA look ed at each state's RPS. For example, c ommenters stated that Nevada's RPS only applies to certain en ergy providers above a certain threshold, which is about 60% of generation in the state. Therefore

, commenters stated

, the actual statewide RE is only 13% compared to the 22% that EPA used for its calculations. Commenters asked if EPA has considered situat ions like this occurring with other states and the effect on development of the RE goals.

Comment 72 : Commenter s expressed RPS methodology concerns

. Response 72: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

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

Commenter s stated in creating its methodology, EPA assumed it knew better than states without RPS or with below "average" RPS what the "best" resource portfolio in those states should be, based sol ely on what would reduce CO 2 and without addressing any of the many factors states consider in setting renewable goals, including the cost of renewable resources and other options available in those states, the need for economic development for different b usiness sectors, availability of other fuels in the state, availability of transmission in the state, the costs and benefits of achieving environmental, economic, and power supply goals through alternative means such as tax credits and investment incentive s, economic conditions for electric consumers in the state, and more. Commenters stated that EPA ignores the details of all of the RPS it reviewed that reflect many of these considerations, such as reliability exemptions, cost caps, and inclusion of renewa ble resources not counted as "renewable" by EPA, such as hydro, stranded gas, and coal

- bed methane.

Commenter s also said that states lacking RPS were excluded improperly in setting the average, and that EPA did not credit any fossil fuel sources (e.g., coa l bed methane in PA) in setting the targets.

Commenter s said a state's RE target should account for the amount of fossil fuel

- fired generation in the state, and that failing to do so can create a RE target that is larger than the amount of the state's 201 2 fossil fueled generation. Commenters said assuming additional RE "dilutes" the emissions rate from fossil fueled generators by adding emission free electricity to the grid, displacing power from fossil fueled sources, it makes sense not to set a target t hat exceeds a state's 2012 fossil generation. Doing so, c ommenters said , would mean that the excess RE is displacing other non

- emitting generation sources, needlessly increasing the costs of lowering fossil emissions with no noticeable emission benefits and increasing compliance costs.228 Commenter s said states with renewable portfolios tie them to power consumption rather than power generation, which appears to be a disconnect.

Commenter s asserted EPA improperly based each state's effective 2020 RPS goal so lely on that state's primary RPS. Commenters said EPA lacks a fundamental understanding of how state RPS programs work: these secondary and tertiary RPS programs do not impose additional requirements on top of primary RPS goals, but rather establish altern ative, less stringent requirements for small cooperative and municipal utilities. By disregarding secondary RPS goals and applying primary RPS goals to the entire state's generation profile, c ommenters said EPA overestimates the applicable RPS requirements in those states.

Commenter s said this error has significant effects for states in Tri

- State's service territory. Commenters stated EPA assumed that the 2020 effective RE levels for Colorado would reach 30%, but the state's primary RPS goal applies only t o IOUs. For cooperatives, c ommenters said the state's RPS requires that 20% of the energy provided to members at wholesale must be generated from RE in 2020. Likewise, c ommenters stated EPA assumed that New Mexico's statewide RPS goal is 20%, but again, th at target applies to IOUs; rural cooperatives are required to have RE account for 10% of retail sales in 2020. Commenters stated i gnoring these secondary RPS goals does not make EPA's BB3 targets more conservative

. Commenters stated that it artificially in flates them, making the proposed state goals excessively stringent.

Comment 73 : Commenter s stated t argets should remain stable.
Response 73: The concepts provided in this comment were valuable in finalizing the building block 3 methodology, particularly in the gradual introduction of building block 3 target generation over time. The final methodology is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.

The following is a summary of the specific public comment under this comment:

Commenter s said targets should be stable, ramp up steadily over time, and not be subject to sudden or uncertain shifts. Commenters state d a predictable, stable market that decreases risk for investors necessarily requires long

- term credibility in RE policy, lowers the cost of capital for developers, produces cheaper power and reduces the need for public incentives over time.

Comment 74 : C ommenters asserted f urther guidance is needed for RE.
Response 74: As part of the final rule, the EPA has provided significant guidance for states and other jurisdictions seeking to pursue emission reduction opportunities through incremental RE in section VIII of the preamble.

The following are summaries of the specific public comments under this comment:229 Commenter s said the proposed rule does not provide adequate guidance to states seeking to expand the role of RE or signal what RE policies could or should be included as part of a SIP. Commenters stated the rule should provide states a menu of policy options demonstrated to increase RE deployment.

Commenter s said significant uncertainties exist regarding the design, implementation, and demonstration of com pliance strategies to achieve the BB3 goals. Commenters stated t his includes uncertainty regarding who has the regulatory authority to require the development and operation of specified amounts of renewable resources and nuclear power, how such requirements are designed in context with RTO and state

- dispatch regulation s, how compliance is to be demonstrated, and where the compliance obligation resides.

Comment 75 : Commenter s o pposed use of minimum level of RE in Navajo Nation.
Response 75: In the final rule there is no minimum level of RE assigned to jurisdictions or affected EGUs. The application of building block 3 is premised on the availability of incremental RE at the interconnection level. Procurement of incremental RE need not result from direct ownership or project development, as described in section V of th e preamble.

The following is a summary of the specific public comment under this comment.

Commenter s agreed with EPA's methodology for applying BB3 to Indian country because it is consistent with the proposed methodology from the June 18, 2014 CAA section 111(d) proposal. However, c ommenters did not support the use of a minimum level of RE, such as EPA's assignment of 0.37% of the total 2012 generation for each area of Indian country

- an amount equal to the lowest RE generation among the 50 states in 2012

- to establish a baseline RE generation rate in 2012 for the Navajo Nation. Commenters said the Navajo Nation noted during consultation with EPA that application of BB3 is not appropriate, because the tribe's use of electricity is negligible compared to t he generation output of the power plants and c ommenters supported the Navajo Nation on this issue. Thus, the c ommenters said that, as EPA notes in the Supplemental Proposal, applying an amount equal to 0.37% of total generation to each area of Indian count ry as an RE goal results in RE generation being the primary source of electricity used on tribal lands. Commenters said this translates to 15% of load, surely an over

- aggressive goal for the Navajo Nation. In fact, c ommenters asserted, this goal is higher than more than half of the states' goals under EPA's CPP. Commenters supported the sensible use of RE generation to offset higher carbon

- emitting sources of generation; however, believed, as EPA proposed, application of BB3 on the Navajo Nation should resu lt in an RE amount of zero.

Comment 7 6: Commenter s noted i naccuracy in Delaware RPS.
Response 76: State RPS requirements are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detail in V.E of the preamble a nd in the GHG Mitigation Measures TSD.230 The following is a summary of the specific public comment under this comment:

Commenter s said there is a minor error in how Delaware's RPS reflected in BB3 for 2020

- the correct value should be 20% versus the incorre ctly stated value of 19% in the EPA proposal.

Comment 77 : Commenters had concerns regarding t reatment of low or zero emission facilities

. Response 77: The BSER is forward

- looking in identifying cost

- effective opportunities for emission reductions from 201 2; consequently, building block 3 is premised only on generation that is incremental from the BSER data year of 2012. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

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

Commenter s said should the goals be revised to assume that all low

- or zero

- emitting facilities are considered as similar to NGCC units, EPA needs to complete further evaluation on the real istic availability of these units. Commenters stated the sun doesn't always shine for solar panels and the wind doesn't always blow during the periods required to generate electricity when it is most needed , and that i f these resources are unavailable and NGCCs are operating almost to capacity, it is unclear if other forms of electricity

- producing units would be available to fill in as a backstop without violating a state plan and exceeding the state goals.

Commenter s said EPA arbitrarily excludes certain forms of zero

- carbon or low

- carbon energy from emission rate goal achievement. Given that EPA recognizes other existing forms of clean power such as wind and solar, the selective application of excluding hydropower and nuclear produces arbitrary and unfair results. For example, c ommenters said four states in the North Central region

- Iowa, Minnesota, North Dakota, and South Dakota

- would not need to grow their renewables at all because they could include their existing wind power resources in the computat ion of their final emission rate. Because the majority of existing nuclear and hydropower would not be counted in a state's final calculation, the c ommenters asserted this effectively encourages generation from new natural gas plants to be substituted for generation from existing nuclear power or hydropower plants. Commenters stated that, in the real world, such substitutions would increase, rather than decrease, carbon emissions. However, c ommenters asserted that EPA's decision to leave out existing nuclea r and hydropower, such substitutions

- or even the closure of all existing nuclear and hydropower plants

- would have either no effect on the EPA

- calculated carbon emission rate or could conceivably reduce it. If EPA's intent is to lower carbon intensity by re ducing GHG emissions from existing fossil fuel

- fired EGUs, then the

c ommenters stated EPA must create a greater incentive for all zero

- carbon and lower

- carbon energy sources without arbitrarily excluding any of these sources. Commenters added EPA must
not provide a contradictory incentive to increase carbon emissions in order to achieve a final calculated goal.231 Comment 7 8 : Commenters asserted the EPA should r emove "at risk" nuclear from BSER and goal calculations.
Response 78: Existing nuclear has been removed from the BSER. The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, which is described in section V.E.6 of the preamble and in the GHG Mitigation Measures TSD.

The following is a summary of the specific public comment under this comment:

Commenter s asserted the "at risk" nuclear component of BB3 should be removed as BSER and from EPA's calculations. Commenters asserted the proposed "at

- risk" nuclear provision penali zes states with existing nuclear capacity by assigning them more stringent goals, creating a disadvantage for states with nuclear generation. For example, c ommenters said that if Point Beach Nuclear Plant retires when its licenses expire in 2030 and 2033, this zero carbon generation will likely be replaced with non

- zero carbon generation, thus creating an additional compliance obligation for Wisconsin. If the at

- risk nuclear provision is retained, c ommenters asserted EPA should allow states' goals to be adj usted upon expiration of nuclear plant operating licenses. Commenters added that rather than penalizing states in which nuclear plants shut down, the rule should provide an incentive for nuclear units to continue to operate, and, if possible, to increase t heir output or capacity factor. Commenters stated e xcluding existing nuclear from the goal

- setting calculation, but allowing states to take credit for a portion of their nuclear generation for compliance purposes, would provide such an incentive. In additi on, c ommenters said EPA should recognize early action taken to increase nuclear plant output, such as extended power uprates.

Comment 7 9 : Commenters stated the EPA should recognize w ind energy resources and impact on energy market

. Response 79: The EPA ad dresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.

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

Commenter s said wind is recognized by MISO as an intermittent resource, with unique rules in place to accommodate its intermittency and the new transmission required to bring more wind energy from its source in the west to the concentra ted population centers that use the energy in the east. Yet wind energy, as an intermittent resource, the commenter s added, is most available when energy is least needed. In MISO's recent study of the impact of the GHG Rule,

c ommenters said it found throug h modeling that RE could not be expected to replace the fossil

fuel retirements already planned due to MATS, nor those expected to retire due to the GHG Rule. Commenters said the MISO study supports that EPA's assumptions regarding increase in RE are unrea listic, and threaten both grid reliability and an affordable energy supply for this country.232 Commenter s stated that in the GHG Abatement Measures TSD, EPA makes the point regarding the ample availability and affordability of new RE generation and the fact that this would not increase power prices. Commenters stated that this highlights a problem with RE studies that fail to take into account the negative impacts on the wider power market. C ommenters said that during nighttime hours, when wind turbines typi cally produce power, RE has been cited as a source of negative wholesale power prices in parts of the United States with large amounts of wind energy. Commenters continued by saying wind operators, harvesting the value of the Production Tax Credit, bid int o the market at a negative price in an effort to secure dispatch. Commenters said this bidding behavior drives prices down, which severely impacts deregulated nuclear units, which cannot back down generation and so must effectively pay wind operators to

no t run. Commenters said this destruction of value in deregulated nuclear units is causing them to retire before the end of their license, causing a significant increase in system

- wide CO2 emissions. Commenters stated t he cost and effectiveness of RE at larg e deployment levels in terms of reducing CO2 is not well understood and should not be seen as an easy means to lower CO2.

Comment 80 : Commenters stated that thermal energy is eligible for compliance with NC REPS.
Response 80: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

The following is a su mmary of the specific public comment under this comment:

Commenter s stated that thermal energy is not included in EPA's definition of RE generation on which it bases its calculation in BB3, though it can be used by an electric power supplier to comply with North Carolina's REPS requirements. Commenters added that the statutes impose no limit on the amount that can be used for compliance. Theoretically, c ommenters said an electric power supplier could satisfy its entire requirement by purchasing or generatin g thermal energy (with the exception of a small set

- aside for electricity from swine waste).

Comment 81 : Commenters said customer

- side RE and demand side management should be excluded.
Response 81: In the final rule, distributed generation technologies and energy efficiency

measures are non

- BSER compliance measures available to affected sources.

The following is a summary of the specific public comment under this comment:

Commenter s stated that customer

- side RE and demand side management should be exclud ed from CAA enforceable programs and state goals should be modified to reflect this exclusion. Commenters said that Colorado Springs Utilities pioneered Community Solar Gardens and offers rebates for investment in customer

- side RE and conservation. Comment ers asserted this shared233 accountability builds our community and fulfills the purposes of the proposed rule, but is totally inappropriate for CAA enforceability purposes. Commenters stated t he owners of existing sources should not be responsible for compli ance that relies on customers and independent
contractors. Commenters said the state commitment approach can be a useful tool to address this problem. Commenters said states should have the flexibility to set aside a portion of the goal for
state

- only enfo rcement, whose programs may be administered by agencies other than the environmental agency including, for example, the utilities commission, the energy agencies or building commissions.

Comment 82 : Commenter s were concerned about the EPA's feasibility analysis for annual RE growth rates for each region.
Response 82: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the pream ble and in the GHG Mitigation Measures TSD.

The following is a summary of the specific public comment under this comment:

Commenter s were concerned that EPA did not include targets that were capacity

based. Commenters questioned why only NC was used for the Southeastern states based on their legislatively adopted requirements and why the other states in the region averaged in as "zeros". Commenters stated the North Carolina RPS includes a number of modifying features th at would not be part of the renewable requirement for the southeastern states in the proposed rule; for example: cost caps for retail, commercial and industrial customers. Commenters also said NC REPS directs the state PUC to develop a procedure for modify ing or delaying provisions if the Commission determines that it is in the public interest to do so but the proposed rule does not.

Comment 83 : Commenter s asked that the EPA c larify the target percentages to be percent of a state's generating capacity.
Response 83: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

The follo wing is a summary of the specific public comment under this comment:

Commenter s stated the proposed rule is unclear as to the measurement of RE used to calculate the BB3 portion of the final goal, and should clarify that the targets are expressed as a perc ent of a state's generating capacity. Commenters stated that first, the EPA references the RE capacity in a state; however, the EPA then states that the 10% figure applies to total annual generation. Commenters stated that given the difference in capacity factor for renewables, which are accepted to have a capacity factor significantly lower than the fossil

- fuel fired generation they will replace, versus the total annual generation in MWh, the EPA should clarify that the 10% level equals 10% of a state's ge nerating capacity. Commenters stated therefore, using 2012234 benchmark figures for determining the BB3 portion of the Final Goal, RE would account for 5,745 MW of generating capacity. Commenters stated that in 2012, Florida had 1,400 MW of RE generating capa city, so Florida would need a 4,345 MW increase of renewable generating capacity to reach the figures the EPA used to calculate the CO2 emission reductions in Block 3.

Comment 84 : Commenter s encourage d the EPA to account for offshore wind potential and di stributed technologies in calculating state targets.
Response 84 : Distributed technologies, as a demand

- side resource, present unique data and technical challenges (such as the role of evaluation, measurement and verification (EM&V) procedures in verifyi ng their production, the diverse economic incentives of different parties involved in their deployment, and the variety of grid integration policies and conditions across potential deployment sites) that complicate identifying a technically feasible and co st

- effective level of generation. Consequently, the EPA is, at this time, choosing not to include distributed technologies as part of the BSER (although, as explained in section VIII.K of the preamble, distributed RE technologies that meets eligibility cri teria may be used for compliance).

Additionally, any RE technology that has not been deployed in the United States, including demonstrated RE technologies for which there is clear evidence of technical feasibility and cost

effectiveness (e.g., offshore win d), contributes no generation to building block 3 under the final methodology that is based on historical capacity deployment. These RE technologies are consequently reserved for compliance, which offers affected EGUs additional flexibility and will reduce their need to rely on other emission reduction measures or building blocks.

Refer to section V.E of the preamble for additional information.

The following is a summary of the specific public comment under this comment:

Commenter s encourage d the EPA to include and account for both offshore wind potential and distributed technologies in calculating state targets for building block 3. Commenters said there is immense generation potential from these sources, as distributed solar is rapidly growi ng, and offshore wind developments are in the works and set to come on line within the next year. Commenters stated these are both "adequately demonstrated," particularly distributed solar, which is at use in the market and growing astronomically in certai n areas. Commenters further stated that the costs and non

- air quality health and environment impact and energy requirements make these technologies reasonable and clearly affordable, and, thus, they should be included in the BSER and used to calculate carb on reduction rates under the CPP.

Commenters stated agreement with EPA's approach for determining the BSER. Commenters said renewable energy measures, and solar measures especially, are necessarily part of the BSER; however, building block 3 (renewable ene rgy measures) as it is currently calculated is incomplete because it does not contain current solar market data and it does not include distributed solar. Commenters said EPA's proposal does not accurately reflect the emissions reductions achievable throug h application of the BSER. Commenters said EPA must include all forms of solar, including distributed solar, in its final determination of the BSER. Commenters235 said distralibuted solar, utility solar and CSP are all a system of emissions reduction that is technicly feasible, is implemented at reasonable cost, is driving solar innovation, and does not negatively impact the electric system. Commenters said these forms of solar energy are adequately demonstrated to reduce emissions from covered sources. Commen ters said EPA must include solar as part of building block 3 in its determination of the best system of emissions reduction.

Commenters stated EPA can improve the proposed third building block to more accurately reflect what American clean energy is in rea lity already achieving and how much it can cost effectively grow. Commenters said the levels of renewable energy's availability and quantity assumed by the EPA are far too low, based as they are on a metric that doesn't accurately reflect reality. Commente rs said rather than basing block three on arbitrary and unambitious state RPS mandates as proposed, block three should instead be based on proven resource availability. Commenters said on a state and a regional basis, according to the proposal of alternati ve approach. Commenters said EPA should also include the full potential of distributed solar and off

- shore wind in its analysis of what is possible and cost effective.

Commenters stated in addition to fuel switching to natural gas, significant additional zero

emitting sources of energy will be required. Commenters said the equivalent of 5,000 to 20,000 MW of new zero emitting capacity will need to be added, depending on the resource chosen. Commenters said this is a substantial increase, especially when co mpared to Florida's current total capacity of 55,000 MW. Commenters said if solar energy is used, for example, it will require adding new solar capacity resources equal to about 20,000 MW, which is 37 percent of current statewide capacity from all sources. Commenters said adding new nuclear capacity would require about 5,000 MW, and biomass approximately 5,600 MW.

Commenters stated EPA should make significant improvements in how it calculates the renewable energy building block. Commenters said significant ly increasing the role that renewable energy plays in the rule is also supported by CAA Section 111, which the draft rule notes is designed to "promote the development and implementation of technology, including the diffusion of existing technology as the BSER."

Comment 85 : Commenter s asserted the EPA has underestimated the amount of RE states can
cost

- effectively employ in meeting requirements.
Response 85 : The information provided in this comment were valuable in finalizing the building block 3 methodol ogy, particularly in the reevaluation of onshore wind and utility

- scale solar cost and performance assumptions.
The following is a summary of the specific public comment under this comment:

Commenter s stated that the EPA also appropriately considered potential emissions reductions that could be achieved by utilizing renewable energy. Commenters stated that EPA has significantly underestimated the amount of renewable energy states can cost

- effectively e mploy in meeting emissions reduction requirements. Commenters noted that EPA described two potential frameworks for analyzing the potential for reduction of carbon emissions through the236 use of renewable energy. Commenters stated that one involves the use o f regional averages of renewable energy policies, and the other involves a technical

- economic potential analysis. Commenters stated that both frameworks significantly underestimate the emission reductions achievable through renewable sources because they f ail to reflect the significant reductions in the cost of renewables that have occurred in recent years. Commenters stated that urged EPA to use the most current data in evaluating the quantity of renewable energy that can be cost

- effectively employed in ea ch state. Commenters stated that this is particularly important given that renewable energy is emissions free.

Comment 23 86 : Commenters expressed concern that meeting renewable energy goals by an individual state, only perhaps or to a large extent through outside activities, for example through interstate trading of renewable energy certificates (herein "RECs"), could hurt DW in advertently, and impede EPA's broad mandate to protect the environment.
Response 23 86 : Distributed technologies, as a demand

- side resource, present unique data and technical challenges (such as the role of evaluation, measurement and verification (EM&V)
p rocedures in verifying their production, the diverse economic incentives of different parties involved in their deployment, and the variety of grid integration policies and conditions across potential deployment sites) that complicate identifying a technic ally feasible and cost

- effective level of generation. Consequently, the EPA is, at this time, choosing not to include distributed technologies as part of the BSER (although, as explained in section VIII.K of the preamble, distributed RE technologies that m eets eligibility criteria may be used for compliance). Further, the EPA believes the final rule would not be strengthened by restricting the significant compliance flexibility afforded to affected EGUs to achieve the BSER.
The following are summaries of t he specific public comments under this comment:
Commenters believed that some states may choose larger projects only, or fossil fuels, etc., with little if any regard to the environmental and social impacts of "mega

- projects" or to the important role of DG and DW at the local level. Commenters recommend ed EPA consider a minimum threshold of renewable energy generation, and a DG sub

- requirement per State. In other words, commenters explained, a reasonable floor ought to be set for each State to use its own resources (wind, solar and biomass included) to g enerate its own renewable energy to help build the nascent renewable energy industry, especially to give DG technology a footing when the "cards are stacked" against it absent forward

- thinking, and careful policies at the Federal, State and local levels. C ommenters believed a State would then have to find that energy using resources available and have to apply to EPA for a waiver from its minimum (or de minimis) threshold in

state generation requirement to go out of State. Commenters believed burgeoning tec hnologies such as DW are at a competitive disadvantage to a variety of other resources, and in particular fossil fuels, given historical and present day inequities in the marketplace, as well as the public policy realm. Commenters believed EPA must be care ful that this entire rule, when final, doesn't inadvertently dis

- incent DG and DW in particular, even as it is working to earnestly promote renewable energy generation writ large concurs with EPA's suggested floor for a renewable energy generation baseline , using 2012 figures. Commenters stated there is a clear public policy imperative to generate increased levels of renewable energy, consistent with the Administration's Climate Action Plan, and broader policies in place both at the Federal and State levels , and a237 state's reported 2012 fossil fuel generation should not be treated as a ceiling for its renewable energy generation target as the relative economics of many technologies are changing rapidly.

Comment X 87 : Commenters cited a case in point is the C PP's renewable energy goal computation for Virginia where the CPP assumes Virginia can obtain 16% of its generation from renewable sources by 2030.
Response X 87 : The EPA has revised its block three quantification based on comment. See Section V.A. and V. C. of the final rule preamble for more information.

The following are summaries of the specific public comments under this comment:
Commenters believed EPA gets that figure by averaging the future RPS requirements of six other jurisdictions in the "East Ce ntral" region: District of Columbia, Delaware, Maryland, New Jersey, Ohio, and Pennsylvania but Virginia, by deliberate policy choice, does not have an RPS program, and what those other jurisdictions aspire to do provides no knowledge of what is achievable in Virginia. In effect, commenters believed, EPA gives those jurisdictions authority to determine Virginia's electricity policies but commenters stated that no state may lawfully dictate policy to another, and "To foist in

- state decisions upon other State s, and to do so while ignoring the contrary decisions of other States, is arbitrary, capricious, and unlawful," the VSCC staff observes. Commenters continued, stating that f Virginia's renewable energy goal were based on local knowledge, it would be nowher e close to 16%, and regardless of aspirations expressed in other states' RPS programs, as of 2012, renewable generation in the East Central region ranged from only 1% to 3%, with Virginia at 3% for that year. Commenters quoted "This is the level of renewab le generation that has been adequately demonstrated in Virginia." Commenters added that even assuming those six states can achieve their RPS targets, taking a simple average of those targets is an inappropriate way to determine what is achievable in Virgin ia. Commenters argued that the CPP's methodology ignores the fact that it is cheaper to obtain a given percentage of renewable electricity in jurisdictions with relatively little generation (D.C., Delaware, Maryland, New Jersey) than in states with much la rger base loads (Pennsylvania, Ohio, Virginia, West Virginia), and "There is no rational basis

- legally or mathematically

- for giving such undue and unintended influence to certain legislatures at the expense of others, including Virginia." Commenters ob served that although Virginia has no RPS program, the State's Building Block 3 goal is at the top end for states in the region, quoting "Thus, even though EPA relies on the legislative determinations of States with renewable requirements to determine what is achievable across a region, the final result of EPA's calculation is that States with such requirements are actually expected to achieve less than Virginia, which has no renewable requirement."

Comment 11 88 : Commenters argued that the EPA's process for determining renewable energy (RE) "best practice" targets is arbitrary because it did not conform with section 111 requirements to consider feasibility and cost factors in setting the target.238 Response 11 88 : The EPA has revised its block three quantificati on based on comment. See Section V.A. and V.C. of the final rule preamble for more information.

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

The commenters noted that the EPA set each region's proposed target by averagin g the 2020 renewable portfolio standard (RPS) requirements from states within each region that have adopted RPS requirements. The commenters noted that in the Southeast, the only state with an RPS is North Carolina. Therefore, commenters stated, for the So utheast Region, the EPA has effectively assumed that one state's particular political decision to adopt an RPS represents a meaningful estimate of the "feasibility and cost of the best practices scenario" for all other states in the region.

Commenters arg ued that the EPA has not demonstrated that any such consideration by North Carolina's state government was representative of the consideration of what level of RE generation might be achievable or cost effective for the seven other states in the Southeast region. The commenters argued that the EPA did not inquire whether those other state legislatures considered the statutory factors from section 111 on which EPA and states must base their designation of BSER, and reached a different conclusion from North C arolina about the feasibility and cost of an RPS or RE. The commenters argued that this conclusion is bolstered by the fact that EPA's alternative approach projects that North Carolina can only realistically produce 2 percent of its in

- state generation fro m RE by 2030.

The commenters argued that EPA's RPS approach essentially cherry

- picked among states in setting the regional RPS targets and ignored information from other states in the region. Specifically, commenters stated, the EPA's approach ignored the fact that state legislatures in other Southeast states have considered and rejected any level of RPS commitment for their states. In so doing, the commenters argued that the EPA's approach had selected a single political decision in North Carolina with whi ch the agency agrees while ignoring the political judgment of the other seven states in the Southeast Region. The commenters argued that the EPA has not explained why it did not consider the decisions of all the states in the region. The commenters estimat ed that if the EPA were to factor in the politically

- determined RPS levels from all states in the Southeast Region (not just North Carolina) the new regional average target for 2030 would be 1.25 percent of each state's in

- state generation (i.e., 10 percen t averaged over eight states in the region). The commenters argued that EPA's failure to explain its cherry

- picking of state policies made the proposal unreasonable, arbitrary, and capricious.

Comment 20 89 : The following commenters suggest an alternative approach for the Building Block 3 proposal.
Response 20 89 : The EPA appreciates the UCS approach and is using a final methodology that relies on the most recent five years of RE capacity deployment data (2010

- 2014) to set building block 3 generation levels.
The following are summaries of the specific public comments under this comment:239 Commenters stated the UCS developed an alternative method to determine the best system of emissions reduction for building block 3. Commenters said its approach sets a nationa l benchmark for the renewable energy growth rate based on demonstrated state growth between 2009 and 2013, assuming states will meet the requirements of any state

- level renewable energy standards in place. Commenters said under the UCS approach, the amount of U.S. electricity generated from renewable energy sources in 2020 would reach 14 percent of electricity sales in 2020, twice the level achieved by the Clean Power Plan. Commenters said by 2030, renewable energy would comprise a 23 percent share of elect ricity sales under the UCS approach, compared with only 12 percent under the Clean Power Plan. Commenters said the UCS analysis found that this more ambitious commitment to renewable energy could reduce carbon pollution by 40 percent below 2005 levels, com pared with the 30 percent reduction envisioned by the Clean Power Plan. Commenters said this assumes that the new renewable energy generation displaces mostly natural gas

- fired generation.

Comment 17 90 : Commenters stated that in Building Block 3, EPA includes expanded "zero

emission" renewable energy generation, and to do so, EPA applies a regional approach which averages existing State RPS targets in a given region and then applies that average target t o each State in that region, based on the assumption that renewable energy opportunities are uniform within a region.
The following are summaries of the specific public comments under this comment:

Response 17 9 0 : The final methodology for quantifying building block 3 generation levels does not rely on state RPS requirements. The final methodology is described in section V.E. of the preamble.
Commenters said EPA also applies a growth factor that is based on the State's current renewable energy generati on to ramp up renewable energy generation until the target generation level is achieved, and central to EPA's analysis is the assumption that State RPS targets are an accurate reflection of the renewable energy potential for the State and, by extension, fo r each State in the region. Commenters posited that EPA does not adequately consider the seven following factors that call this assumption into question: Factor 1) EPA's broad

- based regional approach fails to account for differences in renewable energy pot ential among States. Commenters said the fact that two States are in relative geographic proximity does not mean that they have the same potential to produce renewable energy. Commenters said some forms of renewable energy, such as wind, vary dramatically by location even within a State. Thus, commenters said the potential for wind energy in a given State says very little about the potential for wind energy in other States in the same general part of the country. Commenters said, for example, West Virginia has been grouped with coastal States such as Maryland and Virginia with the potential to generate substantial amounts of electricity through off

- shore wind power. Commenters said the fact that Maryland and Virginia can generate substantial off

- shore wind p ower provides no basis for concluding that a land

- locked State like West Virginia can achieve comparable levels of wind

generated power. Commenters said, for other renewable energy sources, such as biomass, opportunities vary significantly between States t hat EPA has placed in the same region.240 Commenters said, for example, Minnesota, a heavily forested State with significant potential to produce energy from woody biomass, is placed in the same region with North Dakota, a State with few forest resources. Com menters said it is arbitrary and capricious to establish aggregate regional renewable energy targets without addressing key differences in renewable energy potential among the States in each region. Commenters stated that the problems with EPA's regional a pproach are exacerbated by the small number of State RPS goals that EPA uses to establish some regional targets. Commenters stated, in some cases, EPA relies on a single State's RPS goal to set a regional renewable energy target. Commenters said, for examp le, Kansas is the only State on which EPA relies in setting a renewables target of 20% in the 6

- State South Central region. Commenters said, likewise, North Carolina is the only State on which EPA relies in setting a renewables target of 10% for the 8

- Stat e Southeast region. Commenters stated, while the reasoned judgment of a majority of States in a given region may have some relevance in projecting a region's renewable energy potential, it is arbitrary and capricious to ignore the views of the majority of the States in favor of a single State. Commenters said, under any statistical assessment, a single data point is too small a sample size on which to make such a significant decision. Further, commenters stated that in order to justify the imposition of reg ional renewable energy targets, EPA must rely on something more than mere physical proximity. While, in some circumstances, commenters said two neighboring States may share some common potential for renewable energy generation, those similarities largely d isappear at the level of aggregation proposed by EPA. Commenters stated that EPA's brief two page summary of its regional approach in a technical support document is far from sufficient to demonstrate the reasonableness of this regional approach. Moreover, commenters noted that EPA offers no reason to suggest that the NERC and RTO regions that EPA relies on to group States into regions for assigning Building Block 3 goals have any relevance for assessing renewable energy potential. Commenters suggested that EPA must demonstrate that any regional division it selects for Building Block 3 has a nexus to renewable energy potential. Commenters asserted that it is arbitrary and capricious for EPA to propose a regional grouping for State renewable energy potential based on the current rulemaking record. Factor 2) Commenters said EPA's assumption that a State's RPS target accurately reflects renewable energy potential within that State is misguided. Commenters said state RPS targets may be aspirational and not necess arily supported by an analysis of renewable energy potential within the State. Commenters said, for instance, States sometimes incorporate safeguards into RPS targets in the event that they cannot be achieved. Commenters said, in some cases, States may inc lude safety valves that suspend or scale back the RPS programs if cost thresholds are exceeded. Commenters said, in other cases, States create incentives for certain types of renewable energy by offering additional credits for preferred energy sources, mea ning that the credits produced for compliance with the RPS will exceed the actual level of generation. Finally, commenters stated that States may exclude certain classes of power generators, such as municipally

- owned power plants or cooperatives, from the RPS obligations, meaning that the States' actual percentage of renewable energy generation on a State

- wide level will be less than the amount required by the RPS target. (Kavulla Testimony at 11 (noting that Montana RPS does not apply to consumer

- owned uti lities, public power projects, or generators owned by out

- of

- State utilities).) Commenters stated that it is arbitrary and capricious for EPA to ignore these issues when relying on State RPS targets under Building Block 3. Factor 3) Commenters stated that EPA's renewable targets does not fully consider the intermittent nature of many renewable energy sources, such as wind and solar. Commenters said, in some cases, challenges associated with such intermittent generation could make EPA's241 renewable energy targ ets infeasible. In Texas, for example, wind energy is both intermittent and inversely related to demand. Commenters said, for example, wind speeds are typically highest in the early morning, when demand for electricity is at its lowest. Commenters said, li kewise, wind generating capacity in some States, such as Texas, is greatest during the fall and spring months. (Written Testimony of Kenneth W. Anderson Jr., Texas Public Utility Commissioner, House Energy and Commerce Committee, "State Perspectives: Quest ions Concerning EPA's Clean Power Plan" 7 (Sept. 9, 2014)) Commenters said, in fact, if Texas were to meet EPA's proposed 20% renewable energy goal, renewable energy could, in some circumstances, exceed demand. (Id.) Commenters noted that such an occurrenc e could have significant repercussions that have not been evaluated by EPA. Commenters said, for example, a Texas Public Utility Commissioner has testified that during periods of high renewable generation, Texas could not simultaneously dispatch both nucle ar and renewable facilities as EPA assumes in its BSER analysis. (Id.) Further, commenters stated that given the long cycling time for nuclear EGUs, they cannot be utilized as reserve capacity to respond to short

- term variations in renewable generation. (I d at 7

- 9) Commenters said the potential of having to choose between nuclear and renewable generation will jeopardize the ability of Texas and other States to achieve the emission reduction targets set by EPA. Rather than simply assuming that its BSER analy sis can be achieved based on annual generation data, commenters suggested that EPA must carefully consider the shorter term, seasonal changes in energy demand and usage that could prevent a State from consistently meeting the electricity generation assumpt ions used by EPA. Commenters said not conducting sufficient seasonal modeling also renders EPA's BSER analysis arbitrary and capricious. Factor 4) Commenters noted that EPA's reliance on State RPS targets does not address the fact that many State RPS progr ams allow out

- of

- State renewable energy generation to satisfy the State's RPS goal. Commenters said, for example, a Minnesota utility may be able to satisfy its RPS obligation through construction of a wind farm in North Dakota. Commenters said, to the ext ent that a State permits such out

- of

- State compliance, its RPS standard may not be a good indicator of the State's assessment of renewable energy potential within the State. Commenters stated further complicating matters is the fact that neighboring States with the potential to export renewable energy under RPS programs may elect to enact more modest RPS programs, or forego them entirely, because it is more profitable for their utilities to sell renewable energy credits to other States. Thus, in regions whe re such interstate transfers are common, commenters stated that it would be arbitrary and capricious to assume that all States can achieve the RPS targets of the most aggressive States. Factor 5) Commenters asserted that it is arbitrary and capricious for EPA to focus on renewable energy consumption represented by State RPS goals to define State obligations for renewable energy generation. Commenters stated, under EPA's approach, for example, smaller States with little electricity generation can dramaticall y skew regional renewable energy targets by mandating the consumption of a large percentage of renewable energy imported from neighboring States. Commenters said, for example, Washington D.C. has no commercial energy generating capacity, but nevertheless h as set an effective RPS target of 20%. Commenters said including this RPS target on an equal footing with others in the East Central region produces a significant increase in the region's renewable energy generation target, despite the fact that it is not backed up by any renewable energy potential at all. Commenters stated that it is arbitrary and capricious for EPA to treat each State equally when setting renewable energy generation targets, without taking into account the specific circumstances impacting each State. Commenters said EPA does not consider a generation

- weighted approach that gives greater weight to State RPS targets selected by the States that will bear the brunt of242 any renewable energy mandate adopted by EPA. Factor 6) Commenters stated tha t EPA's growth projections for renewable energy does not fully account for the cost and implementation challenges faced by large

- scale renewable energy projects. Commenters said, particularly for States with large generating capacities, annual growth facto rs in the double digits may prove difficult to sustain. Commenters said, for example, in Texas "a State with a 20% growth factor" EPA projects that renewable energy capacity can increase by 5 million MWh per year during the interim compliance period. Comme nters said past examples of large

- scale renewable energy programs suggest that this assumption is inadequately justified. Commenters said, for example, in 2008, the Texas PUC assigned nearly $5 billion to construct the lines needed to transmit approximatel y 18,000 MW of wind power from west Texas and the Texas Panhandle to population centers. Commenters stated that this massive infrastructure project, which took more than six years to complete after authorization from the PUC, demonstrates both the time and resources needed to construct renewable energy capacity and ensure it can be delivered to customers. Commenters suggested that EPA must more fully consider these implementation challenges and how they may affect its projected growth assumptions. Factor 7) Commenters stated that EPA's calculations are arbitrary because they effectively disregard State findings that no significant RPS target could be set. Commenters stated, specifically, while EPA purported to take as determinative States' assessments of the ir own potential for renewable energy, 79 Fed. Reg. at 34,866, it in fact only took as determinative the findings by States that have adopted a specific RPS target. In contrast, commenters said EPA disregarded the conclusions of any State that considered a doption of an RPS standard, but ultimately decided that binding renewable energy targets were not feasible. Commenters said including States that adopted a voluntary RPS that is effectively a 0% RPS would dramatically alter the regional renewable energy ta rgets calculated by EPA in its BSER analysis. Thus, commenters said, for example, even though West Virginia determined that a mandatory RPS standard was not feasible for the State, EPA nonetheless disregarded that finding without any explanation, and inste ad assumed that West Virginia could achieve a 16% RPS. Commenters said incorporating West Virginia's decision not to adopt a mandatory RPS would have reduced the entire region's target from 16% to 14%.

3.3.4 Start year for state efforts

This section disc usses when and how implementation of RE measures should begin to be credit ed toward a state’s compliance with its CPP goal.

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

Comment 1: The EPA should i ncentivize e arly u tility i nvestments in RE and EE p rograms,

e mission r eduction p rograms and c arbon r educing p rojects a s m easures t owards s tate c ompliance

Response 1: Qualifying RE generation, inclusive of BSER and non

- BSER technologies, deployed after 2012 may be fully recognized in state plans for all performance occurring during a compliance period. The performance of incremental RE starting in 2020 may be creditable to243 encourage early action. Refer to section VIII of the preamble for additional information on general eligibility requirements for resources used to adjust a CO2 emission rate. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation M easures TSD.

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

Several commenters stated that the EPA should incentivize early utility investments in renewable and energy efficiency programs, emission reduction programs, and carbon r educing projects for the period between the baseline (2012) and the start of the interim period (2020) by recognizing these projects as measures towards state compliance. Commenter s supported the inclusion of measures taken during this period by noting tha t the EPA's stated goal in CPP is to achieve a 30% reduction from 2005 emission levels by 2030, making this a reasonable and logical approach. Commenter s also included wind generation and demand

- side energy efficiency as projects occurring from 2012

- 2020 t hat should be recognized towards CPP compliance. Commenter s noted that excluding emission reductions from renewable energy programs online in 2012 from compliance determination would be unfair and bad environmental policy . S everal commenters further noted that excluding emission reductions achieved from the compliance period by renewable energy brought online between 2012 and 2020 would be inconsistent with the EPA's goal in introducing this rule.

Commenter s stated that establishing 2017 as the ramp start for renewable energy has the unintended consequence of devaluing investments in renewable or efficiency within the 2012

- 2017 timeframe. Commenters noted that failure to credit these technologies installed between 2014

- 2020 as 111(d) compliance would cause businesses and utilities to delay investment in new advanced energy and carbon reducing projects until 2020. In order to prevent this, commenter s stated that the EPA should incent and credit the development of renewable energy. Commenter s supported the EPA 's proposal to permit states to count avoided CO2 from existing RE and EE measures towards compliance with state performance goals. Several commenters stated that this approach would create a strong incentive for companies to bring on new RE as early as po ssible and a more graduated compliance trajectory. Commenter s noted that it would also avoid distortive market signals and ensure consistent investment in renewable energy; this would prevent states from scrambling to meet their interim targets.

Commenter s raised the concern that states would not be able to reasonably and cost

- effectively implement compliance measures and to meet interim emissions reduction targets in the timeframe proposed by the EPA if credit is not given for action taken during the perio d between the finalizing of the proposed rule and the start of the interim period. Commenter s noted that many states had already implemented, or were in the process of developing, measures to reduce carbon emissions, which included deploying renewable ener gy and displacing fossil fuel, prior to the issuance of the draft CPP. Commenter s described how the state of Iowa has made significant investment in wind projects ($6 billion since 2003) and energy efficiency programs ($100 million annually) at great costs to Iowa's utilities and their customers. Commenter s described how the CPP fails to give sufficient credit for these programs, policies, and early actions that take place between 2012 and 2020. Commenter s stated that it is important that the CPP recognize the contribution of Iowa's investments in wind energy and energy efficiency towards meeting Iowa's CO2 emission reduction targets.244 Comment 2: Support a llowance of e arly a ction c redit and b ank c redits of r enewable e nergy and

e nergy e fficiency a dded p rior t o 2020
Response 2: Qualifying RE generation, inclusive of BSER and non

- BSER technologies, deployed after 2012 may be fully recognized in state plans for all performance occurring during a compliance period. The performance of incremental RE prior to 2022, whether in generation or avoided emissions, is not cr editable. Refer to section VIII of the preamble for additional information on general eligibility requirements for resources used to adjust a CO 2 emission rate. Under the final methodology for building block 3, there is no pre

- compliance year at which RE deployment is assumed to increase beyond baseline projections. The final methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

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

Several commenters urged the EPA to allow early actions taken by states and individual utility companies to comply with the proposed goals, and several comme nters suggested that states be allowed to bank credits for renewable energy and energy efficiency (EE) added prior to 2020.

Commenter s pointed out that several states and utilities had already begun to incorporate renewables and would do so irrespective o f the proposed rule. Commenter s cited the example of NPPD and other Nebraska utilities which are currently adding wind resources to their generation mix. Commenter s noted that any actions implemented by states prior to 2020 will begin to reflect their cont ribution to emissions reduction at that time and will begin to realize emission benefits as soon as implemented. Several commenters noted that the proposed rule provides no incentive for states to take early action by adding renewable energy prior to 2020 as there is no way for a state to benefit from early reductions for compliance purposes. Commenter s noted that this lack of incentive may create the unintended consequence of delaying actions that reduce emissions. Commenter s also noted that the proposed r ule provides no incentive for adding renewables or taking measures that go beyond what is required to meet a state's goal during the compliance period. Commenter s stated that states should be allowed to use RE generation and EE resulting from measures impl emented prior to 2020 by adding such generation to the denominator in subsequent compliance periods or to allow a state to extend beyond 2030 the impact of the final emission rate goal. Commenter s stated that the EPA should clarify that utility programs an d commitments to invest in RE and EE measures constitute 'existing measures' that states may count towards compliance.

Commenter s s aid that states could accumulate an RE and EE 'bank' between 2012 and 2020 that could be used to demonstrate compliance in 20 30 and subsequent years; commenter s called for a bank for renewable generation added prior to 2020. Commenter s called for a bank to credit new actions taken on or after January 1, 2017. Commenter s stated that the bank credits could be used for compliance p urposes beginning in 2020, and the EPA should allow any credits that exceed the state's goal during a compliance period to be banked for use in a subsequent compliance period. Commenter s noted that implementing an RE and EE bank would recognize that states who are leaders in RE and EE, and who thus have already harvested some of the 'lower hanging fruit' of cost

- effective opportunities, may require more time to reach their final goal.245 Commenter s stated that a bank would facilitate utility planning and the l ikelihood of renewable energy purchases for 111(d) compliance prior to the compliance period beginning on January 1, 2020.

Commenter s suggested that the EPA incorporated renewable energy credits (RECs) in order to be more consistent with individual state R ES programs; these programs include the ability to apply out

- of

- state resources to in

- state compliance goals. The proposal determines goals based on the geographic location of the generation resource irrespective of ownership or use, and
commenter s stated that the EPA approach must recognize that state RES programs allow for the use of out

- of

- state RECs as a compliance measure.

Comment 3: Concerned that the EPA requires the actual use of RE generation 3 years before the compliance period in 2020
Response 3: Under the final methodology for building block 3, there is no pre

- compliance year at which RE deployment is assumed to increase beyond baseline projections. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific comments under this comment:

Several commenters noted that the EPA assumed that states will begin the ramping of the actual use of RE generation in 2017, 3 years before the start of the compliance period in 2020. Commenter s called this assumption irrational. To put this timeline in perspective, several commenters stated that initial state plan submissions are not due to the EPA until June 30, 2016, and the EPA is allowing itself until June 30, 2017, to take final action approving or disapproving these plans. Thus, commenters stated the EPA's Proposed Rule would require states to begin implementing their plans before they have even received plan approval. Commenter s questioned how the E PA accounts for this in the setting of state goals. Several commenters also stated that this disconnect is even greater in light of the fact that states may delay plan submission until June 30, 2017 (for various reasons), or June 30, 2018 (for multi

- state plans), pushing final EPA approval of these plans to mid

- 2018 or

- 2019. In addition, several commenters stated that building new renewable energy generation capacity can often take several years to allow for planning, obtaining funding, seeking regulatory approval, and construction. Several commenters noted that increasing renewable energy capacity will, in many cases, also require new transmission infrastructure, which can take 8 to10 years to complete. Commenter s also raised the question of why the EPA di d not account for the time it takes to build new RE. Commenter s noted that the EPA provides no explanation as to how states could begin to increase their renewable resources in 2017 in response to the proposed rule. In effect, states need to have begun eff orts to implement building block 3 several years ago. According to several commenters, this is plainly unreasonable.

Comment 4: States do not receive compliance credit for early action taken prior to 2012.246 Response 4: The BSER is forward

- looking in identi fying cost

- effective opportunities for emission reductions from 2012; however, the cost and availability of these emission reduction opportunities is the result of many factors, including previous actions. The final building block 3 methodology is describe d in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific comments under this comment:

Commenters stated that under the proposed rule states do not receive compliance credit for early action tak en prior to 2012. C ommenters stated companies and states that have been addressing climate change through investments in RE, new NGCC units, and coal

- unit retirement are effectively given zero credit and are penalized for measures taken prior to 2012 since the EPA uses 2012, a single, late year, as the basis from which future RE goals are set. Commenter s stated that Texas electric

- cooperatives have added biomass, hydro

- electric facilities, and wind power to their generation portfolio for which they may not receive credit under the proposed r ule; and noted that Texas wind power capacity increased by 57 percent in 2007. Commenter s stated that the rule effectively penalizes environmental leadership, and, in regards to RE, states that have taken early action are affirmatively penalized because th eir maximum RE requirements are imposed much sooner than other states. Commenter s stated that states that have taken early actions may be put in the position of having to implement extremely expensive options since they have already made the most economic reductions. Commenter s pointed out that softer Block 3 targets are given to states that have developed renewable energy more slowly. Commenter s suggested that the start date of creditable GHG reductions should begin in 2005, which would account for GHG red uctions achieved by the electricity sector to date. Commenter s noted that the AECC and its Board have invested in renewable hydroelectric energy, and its members have entered into long

- term agreements to buy wind capacity from Kansas and Oklahoma. However,
commenter s noted that the proposed rule fails to give credit for these actions.

Comment 5: Issues with EPA's assumption that there will be "Neither Improvement Nor Decline in Performance" of RE generation between 2012 and 2017
Response 5: The final metho dology assumes incremental RE will continue to be deployed consistently with the EPA IPM Base Case through 2021. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific comments under this comment:

Commenters stated issues with the EPA's assumption that there will be "neither improvement nor decline in performance" of RE generation between 2012 and 2017. Several commenters called the EPA's assum ption that states would begin increasing renewable energy in 2017, but beginning at 2012 levels, an overly conservative method, and this approach was called insupportable by commenter s

. Several commenters described the increase in renewable energy from 2012 to 2013, and they also described future projects through 2017. As noted by
commenter s , non

- hydroelectric renewable generation increased 16 percent from 2012 to 2013, and it is expected to grow 35 percent by 2015. Commenter s pointed out that wind capac ity increase 75 percent from 2009 to 2013, and commenter s described how installed wind capacity247 increased by 28 percent in 2012 alone. C ommenters described the increase in solar capacity as well. Commenter s noted that solar capacity increased by 473 percen t from 2009 to 2013, and
commenter s noted that installed solar PV grew by over 83 percent in 2012. Commenter s also pointed out that the average costs of wind power and solar PV systems dropped from 2008

- 2012 by 60 percent and 40 percent, respectively.

Some commenters noted that assuming zero growth in renewable energy for a five year period is not consistent with the EPA's obligation of relying on the best system of emission reduction that has been adequately demonstrated. Commenter s noted that only six sta tes had failed to grow their percentage of renewable energy generation over the past five years. Commenter s suggested that, should the EPA keep the basic framework of this approach, the EPA must assume growth of RE generation at a rate of no less than 1 pe rcent per year between 2012 and 2017. This recommendation is based on the demonstrated growth data compiled by UCS. Commenter s suggested that the CPP should assume each state's renewable energy generation is able to grow beginning in 2012 until it meets th e regional target, rather than expecting zero growth from 2012 to 2017; Commenters also suggested that the state's renewable energy generation at the time that the CPP is finalized, rather than 2012, be used as the starting pointing from which its renewabl e generation is expected to grow. C ommenter s stated that it is clearly technically feasible and cost

effective for a state to increase renewable energy generation from the amount of annual generation it has already achieved when the Clean Power Plan is fin alized.

Comment 6: Commenters expressed concern the design of the BSER would lock in long

- term utility power sector investment that was incompatible with the intent of the final rule.

Response 6: The program start date of 2022 and the phasing in of build ing blocks 2 and 3 are designed to enable long

- term investments that are consistent with the emissions trajectory embodied by the final goals. Refer to section V of the preamble for additional information on the establishment of the BSER.

The following ar e summaries of the specific comments under this comment:

Commenters stated that states and utilities should be strongly encouraged and incentivized to meet requirements in Building Block 2 and 3 through renewable energy sources such as wind, solar, geother mal, or hydroelectric. Commenters said clean, renewable energy makes a better neighbor. Commenters said recent studies show that health savings from clean air would more than cover the cost of conversion from fossil fuel to clean energy. Commenters said th at on the other hand, construction of new gas fired plants and supporting infrastructure will lock us into continued fossil fuel combustion for the next 40 years and divert capital investment away from long term solutions. Commenters said they strongly adv ocate that a higher value be placed on building blocks that improve public health by promoting energy efficiency and clean energy than the valuation of building blocks that have lesser or opposite effects.248 3.3.5 Pace at which states improve from start year to target level

The comments in this section address the EPA's estimates of RE growth and the ability of states to meet target growth rates.

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

Comment 1: Commenters stated that the EPA h as o verestimated RE g rowth and i ts i mpact on

a nnual g rowth

. Response 1: The EPA does not believe that a lower level of RE deployment in the EPA’s illustrative compl iance modeling or AEO projections represents an ‘overestimation’ of building block 3 target generation, but rather is indicative of lower

- cost emission reduction opportunities available for compliance. This point is reinforced by observing that the cost of compliance, expressed on a $ per ton basis in the Regulatory Impact Analysis (RIA), is significantly lower than the cost

- effectiveness of building block 3, as described in the preamble. The higher cost RE opportunities identified under building block 3 w ere simply not required to demonstrate compliance. This does not mean those opportunities did not exist or were not cost

- effective, as defined by the EPA in the preamble. Additionally, the EPA is not finalizing an approach that relies on state RPS require ments to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenters opined that the EPA has overestimated renewable energy growth by 2029 and its impact on annual growth.

Several commenters stated the assumptions and methodology employed by EPA to predict renewable generation levels in Building Block 3 result in 522,723 G Wh of national renewable generation in 2029 that is included in the state goals. Commenters stated that when one compares this target to the EIA's Annual Energy Outlook (AEO) 2013, as well as EPA's IPM results projecting the consequences of compliance with Option 1 under a state

- focused compliance approach, EPA's 2029 estimate ranges between 36 and 47 percent higher than these two modeled estimates. Commenters stated this overestimation has been pointed out by NERC, which has raised reliability concerns. Co mmenters also stated EPA's overestimation is reflected in its assumed average annual growth in renewable generation. Commenters stated for the purposes of Building Block 3, average annual growth in renewable energy generation is projected at 7.1 percent be tween 2020 and 2029, compared with both AEO and IPM's projections of a more modest 1.5 percent and 1.1 percent for the same time period, respectively. Commenters asserted that, to put EPA's error into perspective, AEO's projected average annual growth in t he nation's total electrical generation for the 2020 to 2029 time period is expected to be 0.7 percent.249 Commenter s stated it should be noted that IPM incorporates AEO 2013 RPS in its Base Case v.5.13. Commenters stated t he AEO 2013 and IPM modeling result s are similar, not only because IPM incorporates AEO RPS, but also because IPM utilizes AEO 2013 projections of future electrical demand (adjusted downward by EPA to represent its goals for reduced demand through energy efficiency measures). C ommenters sta ted the reason EPA's renewable energy generation levels are below both AEO and IPM prior to 2025 is that EPA does not apply its regional growth factors until 2017.

Commenters expressed that comparing some EPA state

- specific estimates with a comparable regi onal estimate from AEO 2013 shows the same overestimation in state renewable generation. For example, c ommenters compared EPA's predicted Alabama and Georgia renewable generation levels to those from AEO 2013 for the SERC Reliability Corporation

- Southeas tern (SERC

- SE), which includes most of Alabama and Georgia, plus a small section of eastern Mississippi and the Florida Panhandle. Commenters stated the projected 2029 renewable generation levels in EPA's state goal calculations for Alabama and Georgia are almost 42 percent higher than AEO 2013 levels, even though SERC

- SE includes a larger geographical area. Commenters opined that, but more importantly, AEO SERC

- SE renewable generation levels are projected to increase only 2.0 percent annually between 2020 and 2029, whereas the target generation levels used in Building Block 3 for EPA's state goal computation are designed to increase between 2020 and 2029 by an astronomical 11.4 percent per year.

Commenter s stated EPA has significantly overestimated state re newable generation used in Building Block 3 and if one corrects for this overestimation, individual states' 2030 Final Goals and 2020

- 2029 Interim Goals would increase. Commenters stated as an example of such a correction, the c ommenters utilized EPA's app roach to estimate future renewable generation for Alabama and Arkansas using revised annual growth rates. Commenters stated their revised 2012 to 2029 regional annual growth rates were based upon AEO 2013 regional renewable generation levels for SERC

- SE (A labama) and SERC

- Delta (Arkansas). Commenters provided a table which illustrated a difference between EPA's regional growth rates and those calculated from AEO 2013, as well as the resultant 2029 renewable generation. Commenters stated that using growth ra tes derived from AEO 2013 would significantly reduce the level of renewable generation that would be incorporated into Building Block 3 for the year 2029. Consequently, the

c ommenters stated , less renewable generation will be incorporated into the denomina tor for both Alabama and Arkansas, thereby increasing each state's 2030 Final Goal.

Commenter s stated EPA's BSER determination is not feasible or adequately demonstrated in the Southeast. Commenters stated EPA developed regional renewable energy generatio n targets based on state

- level RPS, and EPA's methodology assumes all states in each region can achieve by 2029 the average of the 2020 requirements of state

- level RPS in that region. Commenters stated that EPA's methodology, however, is fatally flawed, pr oducing state

- level renewable energy generation targets that are neither feasible nor adequately demonstrated. Commenters stated there are numerous flaws exist in EPA's methodology to establish regional

- and state

- level renewable generation targets. Commen ters stated EPA arbitrarily applied regional annual growth factors to each state's historical (2012) renewable energy generation level. Commenters stated the annual renewable energy growth factor prescribed to the Southeast region is an overly aggressive 1 3 percent. Commenters stated EPA provides no documentation to support this annual growth level. EIA

- based modeling projections depict the infeasibility of EPA's growth250 assumption for the Southeast. Commenters stated EIA's most recent Annual Energy Outlook 2014 (AEO2014) contained results from 30 distinct scenarios to illustrate a range of potential outcomes under different circumstances, and not one of the 30 scenarios analyzed by EIA exceeds a 4.5 percent average an nual growth rate of renewable energy generation over the modeling horizon (2012

- 2040) in the SERC Southeast region. Moreover, the c ommenters stated

, the EIA scenarios most likely to incentivize the deployment of renewable energy generation

- the low renewa ble technology cost and $25/metric ton price on CO2 scenarios

- only project 4.5 percent and 3.3 percent average annual growth rates for the SERC Southeast region.

Commenter s stated that comparing EPA's state

- specific renewable energy estimates with SERC S outheast AEO2014 regional estimates shows EPA significantly overestimated renewable energy generation. Commenters compared EPA's projected Alabama and Georgia renewable energy generation levels to those from AEO2014 scenarios for the SERC Southeast region. Commenters stated t he SERC Southeast region includes most of Alabama and Georgia, in addition to a small portion of southeastern Mississippi and the Florida panhandle. Commenters stated EPA's projected 2029 renewable energy generation for Alabama and Geor gia are higher than all of EIA's AEO2014 scenarios for the entire region, even though the SERC Southeast region includes a larger geographic area.

Commenter s pointed out that the EPA assumes renewable energy growth of 86 percent from 2020 to 2030; this as sumption exceeds the Agency's own modeling results. Commenters stated that the EPA's modeling of the least cost strategy depicts 325 TWh of non

- hydro renewable generation by 2030, but the EPA set state CO2 rates assuming 525 TWh

-- almost 33 percent

more. Commenters further stated that the EPA's assumptions ignore each state's economically reasonable resource limitations and the cost effectiveness of each type of renewable source. Commenters pointed out that RE growth is dependent on permitting, financing, transmission access, and technical challenges posed by integration of intermittent electricity sources into the grid

. Commenters asserted that the EPA has not taken these factors into account. Commenters also noted that many RE sources are intermittent, so their performance varies seasonally and daily. Commenters also stated that the EPA's proposal involves many implausible assumptions about future energy demand, dramatic shifts in generation sources, the addition of intermittent RE generation sources, and reductions in energy use in 48 states.

Comment 2: Commenters stated that the EPA's a pproach for d etermining e mission r eduction
p otential of RE d oes n ot a ccount for d emonstrated g rowth in s tates o ver the l ast s everal y ears

w hich r esults in o verly c onservative t argets ( the UCS d emonstrated g rowth a pproach is d iscussed)

. Response 2: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly in reevaluating the cost and performance assumptions of onshore wind and solar technologies. The final methodology for building block 3 is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific public comments under this comment:251 Commenters stated that the proposed rule is overly conservative with respect to the expected level of renewable energy growth given historical trends

.
Commenter s stated that under the proposed rule 522 TWh of renewable energy generation is expected nationally by 2029; this constitutes 13 percent of 2012 net electric generation or 11.5 percent of EIA's projected 2029 net electric generation in the Refer ence Case of the 2014 Annual Energy Outlook. Commenters stated historical growth rates in renewable energy generation and the pace of improvements in technology performance and cost over the last decade indicate a high likelihood that renewable energy gene ration will continue to grow quickly. Specifically, the

c ommenters noted that net renewable generation in the U.S. grew 176 percent from 2002 to 2012. Commenters further stated that as such, the targets in the Proposed Rule are overly conservative with res pect to the potential for renewable generation growth over time.

Commenter s stated that in establishing a regional growth rate, EPA used unnecessary constraints that limited the pace of renewable energy growth. Commenters stated EPA's approach generated
gr owth rates well below what has been demonstrated in the last several years and below what is achieved in most projections for the next decade. Commenters stated that, for example, the top 16 states in solar deployment all grew at growth rates higher than 4 0%, with 11 states growing at rates above 100%, between 2009 and 2013. Commenters also stated that according to EIA data, the top 16 states in wind development have all experienced growth at rates higher than 15%, with a national growth rate of 30%, sustai ned over a longer period between 2006 and 2013. Commenters stated that in contrast, only one region in EPA's Proposed Approach is expected to meet a growth rate above 15% (East Central, 17%) in EPA's target

- setting. Furthermore, Commenters stated , when se tting a growth rate EPA should rely on the most recent available capacity data, and should not ignore new and under

- construction capacity. Commenters asserted that renewable generation is quickly growing to meet and exceed state RPS requirements, and state s with those standards have demonstrated that the levels required by these standards are both feasible and economic, and as such, assumed growth rates should more closely resemble the impressive growth from leading states during the last decade.

Commenter s stated that EPA's approach for determining emissions reduction potential of renewable energy fails to account for demonstrated growth in states over the last several years, which produces overly conservative targets which are already being exceeded by sev eral states. Commenters urged the EPA to assume a rate of renewable energy deployment that is more consistent with recent historical rates of deployment and to adopt the UCS' Demonstrated Growth approach; this approach calculates national average renewable energy benchmark growth rate of 1 percent of annual electricity sales based on actual state data from 2009 to 2013 from EIA. Commenters stated that for states below the benchmark, the EPA should assume they can gradually ramp up to 1 percent by 2020, and for the leading 15 states, the EPA should assume they can continue at their 5

- year average rate up to 1.5 percent per year. Commenters noted th at this approach would expand the role that renewable generation can play in reducing carbon emissions. Commenters discussed renewable growth in the state of Alabama under the proposed rule. Commenters noted that the EPA assumes that Alabama will have no g rowth in renewable generation between 2012 and 2017; however, Alabama's renewable investments have increase since 2012, and it is expected to further investments before 2017. Commenters noted that currently, Alabama Power's recent wind procurements provide more than 1.6 million MWh of renewable generation, an increase of 60 percent over 2012 levels. Therefore, c ommenters252 asserted that Alabama's starting point will be much higher than the EPA assumes, and showing that the state is capable of achieving annual growth rates much higher than 13 percent. Commenters stated the EPA's assumptions are overly conservative and fail to recognize Alabama's technical potential for renewable generation. Commenters urged the EPA to update its projected renewable generation t argets for Alabama both in the final rule and again in 2017. Commenters stated that Alabama's renewable target should be based upon actual renewable generation levels in 2017 as well as its abundant potential for future growth; the UCS Demonstrated Growth determined that Alabama could achieve 10.6 percent versus the EPA's 9.3 percent.

Comment 3: Commenters requested that the EPA set regional targets based on 2030 RPS targets and reasonable growth rates.
Response 3: State RPS requirements are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

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

Commenter s suggested EPA set 2030 regional target based on 2030 RPS targets and reasonable growth rates. Commenters stated EPA uses 2020 goals in states' RPS within a region to set 2030 targets, and includes no justification as to why states should only be expected to meet 2020 targets by 2030, rather than 2020. Commenters stated this approach is not consistent with EPA's jus tification for using state RPS policies in the first place; if states in a region have determined that a certain level of renewable generation is achievable by 2020, shifting that target back 10 years does not constitute the best system of emission reducti on that is demonstrated. Commenters stated EPA should instead use each state's 2030 RPS requirements to set 2030 targets, rather than using 2020 RPS requirements to set 2030 targets. Commenters stated in that way, the calculation of achievable renewable ge neration as part of Block 3 would not ignore the commitment by policymakers in some states to add renewable generation after 2020.

Commenters further stated that for states with requirements that do not continue to increase through 2030, the Best Practice s Approach should determine a reasonable growth rate based on historical market trends to estimate an achievable level of renewable energy growth between the last year in which a state has an increasing requirement and 2030. C ommenters stated one viable
ap proach to calculating growth rates utilizing market data over the last five years was recently outlined in the brief titled, Strengthening the EPA's Clean Power Plan, authored by the Union of Concerned Scientists.

Comment 4: Commenters opposed the EPA's u se of r egions to s et RE t argets

.253 Response 4: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenter s stated that EPA ’s use of regions to set RE targets is arbitrary and capricious. Commenters provided the following discussion:

"Under the Pro posed RE Approach, a state's 2029 RE target is based on the 2020 RPSs of states in the same EPA

- determined "region." EPA's use of these regions to determine RE targets is unreasonable because the methodology does not result in goals that logically reflect the amount of renewable resources in each state.

EPA proposes that a state's 2029 RE target is determined by averaging the 2020 RPSs of states in the same region. For example, EPA set the North Central Region 2029 RE target at 15 percent: the average of th e 2020 Illinois (16 percent), Michigan (10 percent), Minnesota (30 percent105), Missouri (10 percent), and Wisconsin (10 percent). EPA determined the constant rate at which each state would need to increase its RE generation each year to reach the regional RE target if these rates are applied in the period of 2017

- 2029. The constant rate of annual RE generation increase is called the "growth factor." The growth factor for the North Central Region is 6 percent. Id. EPA applied the region's annual growth fact or to each state's 2012 RE generation level to calculate a new level of RE generation for that state in the initial year of 2017. This calculation was repeated for each year in the 2018

- 2029 period, such that the 2018 RE goal would be the 2017 RE multiplie d by 6 percent, the 2019 RE goal would be the 2018 goal multiplied by 6 percent, and so on.

This methodology is unreasonable because EPA did not group states with comparable RE resources. The failure to consider the circumstances of each state results in a rbitrary and capricious RE targets. For example, the South Central Region includes Louisiana, Arkansas, Nebraska, Kansas, Oklahoma, and Texas. The only state in the region that has an RPS is Kansas. If Kansas were not included in the region, the other stat es in the region would have an RE goal of zero percent, or ten percent (using the methodology applied for Hawaii and Alaska). However, because Kansas is included in the South Central Region, EPA applied a growth factor of eight percent to the entire region

. This growth factor is imposed without consideration of the existing mix of RE resources in each state, which are situated very differently. For example, the NREL estimates that Texas ranks number one in the country for wind energy potential, based on pot entially developable wind capacity. Kansas ranks number two and Nebraska ranks number four. By comparison, Arkansas ranks 28 and Louisiana ranks 29. The disparities are due to the weather and geography characteristics intrinsic to each state. The economic potential for developing wind capacity and generation is based on the amount of windy land area available for development within a state. Areas with annual average wind speeds around 6.5 meters per second and greater at 80

- m height and showing capacity fac tors of 30 percent or greater are generally considered to be a resource suitable for wind development. Arkansas and Louisiana have significantly less suitable land for wind development; combined, they have only one percent of the available windy land of Ka nsas,254 when only geography and weather are considered. These disparities are not unique to the South Central Region. The disparate wind resources across the county are illustrated in Figure 3. EPA's failure to consider the actual renewable resources in each state renders its RE targets arbitrary and capricious."

Commenters provided a Figure 3 of wind resources of the United States.

Comment 5: Commenters commented that the EPA's handling of renewable energy (RE) in Building Block 3 is arbitrary.

Response 5: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenter s stated EPA's inconsistent treatment of RE in the calculation of state goals and the proposed methodology for demonstrating compliance is unreasonable. Commenters stated EPA calculated state emission rate goals based on the region

- wide RPSs and by applying a "growth factor" to each state to force the state to increase its RE; however, EPA ignored the reality that the RE that forms the basis for the ultimate RE goal for some states inclu des RE that is exported to other states. Commenters stated at the same time, EPA proposes to allow out

- of

- state end

users to count that RE towards compliance, even if that user serves load in a different state from where the RE is generated. Commenters sta ted the effect of this approach is that the RE goals for RE

- exporting states are disproportionately high because EPA has ignored the exported RE in applying the growth factor. Further, the c ommenters stated , since the RE

- exporting state would not be allowe d to rely on the exported RE for demonstrating compliance, EPA would impose on such states higher prospective RE obligations to achieve the emission rate goals. Commenters stated , for example, the majority of non

- hydroelectric RE generated in Oregon is use d to comply with California's RPS. Commenters stated if California is allowed to count this RE toward compliance, Oregon will be faced with a more stringent compliance burden, especially with regard to the interim goal due to the accelerated growth factor.

Commenter s stated that EPA believes that every state should adopt RPSs to increase their use of renewable resources and states that already have RPSs should adopt more aggressive standards. Commenters stated that the amount of renewable power that the EPA believes can be brought online within the compliance timeframe is unreasonable. Commenters stated that the EPA's projections assume that the country can increase the annual rate of growth of new renewable resources over projected growth rates by a factor of five. Commenters finished by stating that the notion that the country can quintuple an already unprecedented rate of renewable growth lacks a rational basis.

Comment 6: Commenters provided g eneral c omments on the ti ming to i mplement b uilding b lock 3

.255 Response 6: Building block 3 target generation is not assumed to increase beyond expected baseline performance until the first year of compliance in 2022. Further, the phasing in of the building block 3 target generation level over time ensures adequate le ad time for investments and planning necessary to begin to integrate higher levels of RE. The EPA addresses this and other considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the p reamble (section V.E) and GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenters provided opinions on the timing to implement Building Block 3. Commenter s stated that the proposed rule undere stimates the nation's capacity to move quickly to a fully renewable energy economy; the c ommenters further noted that the proposed rule should shape the direction of the rapid conversion to renewable. Conversely, commenter s stated that the EPA wishes into existence the necessary infrastructure required for Building Block 3 on an arbitrary schedule.

Comment 7: Commenters stated that m unicipal u tilities w ill r equire a dditional t ime to p rocure RE r esources to m eet b uilding b lock 3 l evels

. Response 7 : Building block 3 target generation is not assumed to increase beyond expected baseline performance until the first year of compliance in 2022. Further, the phasing in of the building block 3 target generation level over time ensures adequate lead time fo r investments and planning necessary to begin to integrate higher levels of RE. The EPA addresses this and other considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (s ection V.E) and GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenter s asserted that municipal utilities will need additional time to procure renewable energy resources to meet the levels in Building Block 3. Commenters stated that state plans should have enough flexibility to allow municipal utilities time to procure renewable generation in an economical manner. Commenters further stated that if this does not occur, then Iowa's families and b usinesses may be adversely impacted by the costs. In order to avoid adverse impacts, the c ommenters stated that the cost of procuring renewable resources must be spread over a longer period of time.

Comment 8: Commenters commented on the EPA's regional RE growth rates.
Response 8: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:256 Commenter s stated that starting in 2017, EPA applies regional annual growth factors to 2012 generation levels for all states in a region to prescribe regional goals. Thus, commenters stated EPA assumes that renewables in all states within a region will grow at the same rate to reach their targets, and will maintain their relative ranks in renewable penetration. Commenters also stated the proposal also stipulates an interim goal that averages the state's RE performance level from 2020

- 2029. Commenters stated that unlike treatment of renewable generation in state RPSs, the proposal's goals only recognize renewable resources developed within state borders. Commenters stated a state's target goal is determined by using its initial 2012 RE level multiplied annually by a calculated growth factor to reach the 2029 state target. Commenters stated that because electric systems are integrated, many renewables are developed to meet demand and/or RPS requirements in neighboring states and benefit from the grid balancing and other integration services inherent in our interstate system. Commenters stated the proposal's treatment of renewable electric generation that is transmitted and d istributed interstate is arbitrary and capricious. Commenters further asserted that the proposed rule is, in general, inconsistent and arbitrary and capricious in its treatment of all types of generation that serve multiple states.

Commenter s stated that e xisting RPS programs are typically percentages of retail sales within a state, but resources used for RPS compliance may not be limited to resources physically located within that state. Commenters further stated that this illustrates the disconnect betwee n RPS requirements and Building Block 3, which applies an RPS requirement as a percentage of generation physically located within a state. Commenters provided that they do not support the establishment of regional potential RE targets since states in a des ignated region would have no control over the policies and actions of others that could ultimately impact their own compliance. Commenters recommended that the EPA keep the Building Block 3 assumptions that RE targets and credits are derived from in

- state generation sources, and states should be allowed to use out

of

- state renewable energy certificates for compliance under 111(d) and to recalculate their renewable energy targets to account for the import and export of energy between states. Commenters state d that this would avoid double counting RE sources for compliance, and the continued exchange of renewable energy between states would not be further restricted.

Commenter s noted that the EPA's RE growth rate is unsupported by market analyses or realities of the generation market. Commenters stated that the EPA determined that Indiana had 3 percent of 2012 generation from RE, and set a future target of 15 percent by grouping Indiana in the North Central region with states that have 2020 RPS requirements and applying an average of these RPS requirements to all states in the region. Commenters stated that the EPA arrived at the 110,786,236 MWh for 2029 by multiplying the 2012 generation by 15 percent. Commenters stated that each state in the North Central regi on should have a 6 percent growth rate applied to its 2012 RE generation beginning in 2017. Commenters stated that the 2029 RE generation goal is 7 percent of 2012 generation. Commenters noted that Hoosier Energy has voluntarily invested significantly in R E facilities even though Indiana has no RPS, and c ommenters listed examples of these investments. Commenters noted that it is not clear if landfill gas and coal bed methane will be considered for RE compliance with the rule. Commenters also noted that the EPA should clarify if RE generation from Illinois can be credited for compliance by Hoosier in Indiana, otherwise utilities and cooperatives with out of state RE will lose the value of these investments made in good faith and that were made voluntarily.257 C omment 9: Commenters stated that the proposed rule requires states that are early

- acting in terms of RE to meet more stringent goals.

Response 9: The EPA is not finalizing an approach that relies on the amount of existing RE to
set state

- specific target ge neration levels under building block 3. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenter s stated EPA's proposed goal calculation methodology also requires early

- acting states to meet more stringent interim goals, and on a faster timeline than they otherwise would have been required to meet. Commenters stated the result of EPA's methodology for using regional annual growth factors to set interim and final goals is that states that had high levels of RE during the baseline period (i.e., those that had taken early action to institute an RE program) are required to meet more stringent interim goals on a faster timeline. Commenters provided the following examples and discussion:

"Minnesota's RPS requirement for Xcel Energy of 30 percent makes the North Central Region 2029 RE target higher than it would have been had Minnesota not legislated an RPS. M oreover, Minnesota's RE generation level (which, in this case, is the same as the 2029 RE target) is determined by multiplying the region's RE target (15 percent) by Minnesota's 2012 total generation (52,194 GWh), which equals approximately 7,889 GWh. Even though Minnesota's 2012 RE generation (9,453 GWh) exceeds this goal, EPA added 7,889 GWh to the denominator of Minnesota's BSER calculation beginning in 2020 and running through 2029. If Minnesota's 2012 RE were less than the state's 2029 goal, Minnesota' s annual RE goals would have been determined by multiplying Minnesota's 2012 RE by the region's annual growth factor (6 percent) beginning in 2018 to determine Minnesota's RE targets from 2020 through 2029. The growth factor would be utilized through 2029 unless Minnesota hit its maximum target in advance (at which point the growth factor would no longer be used).

Because Minnesota's 2012 RE exceeds its 2029 goal, the annual growth factor does not apply and the state is offered no ramp

- up period. Instead, Minnesota's 2020 generation level is the same as its 2029 RE target. Minnesota has no cushion to minimize the impact of the other emission reduction requirements the BSER calculation contemplates, including the unrealistic coal plant heat rate improvements and increased natural gas dispatch. Minnesota's reward for early action on RE is a more stringent final performance goal that must be reached in 2020.

Idaho also has high baseline levels of RE generation. As EPA has recognized, Idaho's 2012 renewable gene ration (including hydropower) exceeded 87 percent of total generation. The Proposed Rule would require that Idaho even further expand RE within its generation mix. The presumption that Idaho should be expected to increase its RE generation to levels above 91 percent imposes unreasonable obligations on the state. Indeed, EPA's decision to ignore hydropower in its guidance, except for the purpose of driving more, non

- hydro RE through Building Block 3, is on its face arbitrary and capricious."258 Commenter s noted that the use of a growth rate that is a certain percentage of existing RE generation leads to inequities among states by requiring more growth from states with existing RE. Commenters stated that the EPA should apply a growth rate that does not depend on a state's starting point if the EPA continues to rely on a growth rate

. Commenters listed a linear growth rate applied equitably to all states as an example of a growth rate measure that the EPA could

use. Commenters requested that the EPA consider the pra ctical limitations on growth of RE including the requirements to integrate new RE into transmission/distribution systems, the difficulty of obtaining regulatory approval for new RE, and the time to build new RE generation

sources.

Comment 10: Commenters argued against the EPA's use of prior renewable development trends to set the RE goals for Building Block 3 as an indication of future growth.
Response 10 : The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.
Response 10: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The BSER is forward

- looking in identifying cost

- effective opportunities for emission reductions from 2012; however, the cost and availability of these emi ssion reduction opportunities is the result of many factors, including previous actions. The EPA addresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.

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

Commenter s opined that the EPA has not sufficiently assessed the technical challenges associated with the increased penetration of renewa ble resources. Commenters stated that in both of the Agency's proposed approaches, the RE goals are based, in part, on prior renewable development trends, yet the prior growth of renewable resources is not necessarily an indication of future growth. Commen ters stated in some cases, the most rapid and cost

- effective gains are achieved in the early years of development and in those areas with the greatest resource potential and the greatest potential to deliver and integrate these RE resources (i.e., availabl e transmission). In addition, the c ommenters stated many of the prime areas for renewable development are located far from load centers and will require new transmission to be built to deliver the power to load centers. Commenters stated that NERC noted th at EPA's "analysis assumes that adequate transmission capacity is available to deliver any resources located in, or transferred to, the region," but that "[g]iven the significant changes and locations anticipated to occur in the resource mix, it is likely that additional new transmission, or transmission enhancements, will be necessary, and required to transport the amount of renewable generation coming online, particularly in remote areas." Commenters stated a typical transmission line requires at least fi ve years or more to site, permit and construct, particularly if it crosses federal or tribal lands. Commenters stated large

- scale transmission projects, such as high

- voltage overlays and those needed for renewable integration can involve even longer lead t imes. Commenters stated this does not include time required for ESA permitting and mitigation. In259 addition, the c ommenters stated , given the likely changes in the operational status of many existing fossil

- based units, many studies may need to be conducted to identify where new and upgraded transmission will be needed. Commenters cited NERC that "[l]ong lead times for transmission development and construction require long

- term system planning, typically a 10

- 15 year outlook." Commenters stated the addition of incremental renewables to the grid (especially if geographically far from load) potentially will come at an increasingly higher cost.

In addition, the c ommenters stated both of EPA's approaches are predicated on the assumption that large quantities of new renewable generation can be integrated into the grid. C ommenters stated EPA has not accounted for the technical challenges related to integrating and managing large quantities of renewables into the existing transmission and distribution systems. Commenters stated these challenges grow as the level of RE penetration increases. Commenters further stated that this effect has already been observed in Hawaii and Germany, where these technical challenges recently have slowed the pace of growth of renewables and have limited their cost

- effectiveness as additional grid upgrades are needed to accommodate increasing amounts of RE, and quoted the Hawaii PUC:

"The Commission believes it is unreasonable to expect that the high growth in distributed so lar PV capacity additions experienced in the 2010

- 2013 time period can be sustained, in the same technical, economic, and policy manner in which it occurred, particularly when electricity usage is declining, distribution circuit penetration levels are incr easing, system level challenges are emerging and grid fixed costs are increasingly being shifted to non

- solar PV customers."

Commenters asserted that, in order to set realistic RE generation goals, EPA must take into account the challenges associated with increased penetration of renewables when setting RE generation targets under section 111(d). Commenters stated this may entail moderating the growth of state RE goals in the later years of the proposed interim compliance period.

Commenter s claimed that the EPA's proposal is flawed since is does not consider that the most achievable growth in renewable generation has already been achieved in Texas. Commenters opined that assuming a large growth of renewable generation from the 2012 baseline is flawed since i t does not consider the incremental costs and constraints of continued growth. Commenters stated that Texas is already utilizing the sites that offer the best balance of investment in transmission infrastructure and wind resource area for renewable generat ion, and Commenters described the EPA's projections as aggressive, unreasonable, and unsupported.

Comment 11: Commenters stated that RPSs are not an appropriate mechanism for measuring future potential RE growth.

Response 11: The EPA does not believe tha t a lower level of RE deployment in the EPA’s illustrative compliance modeling indicates that building block 3 target generation is too costly, but rather is indicative of lower

- cost emission reduction opportunities available for compliance. This point is reinforced by observing that the cost of compliance, expressed on a $ per ton basis in the Regulatory Impact Analysis (RIA), is significantly lower than the cost

- effectiveness of building block 3, as described in the preamble. The higher cost RE opportuni ties identified under260 building block 3 were simply not required to demonstrate compliance. This does not mean those opportunities did not exist or were not cost

- effective, as defined by the EPA in the preamble. The EPA is not finalizing an approach that re lies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

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

Commenter s noted that RPS requirements have already been established as poor indicators of potential and likely future RE growth targets. Commenters noted that the EPA's approach assumes that RPS requirements are achievable and that states hav e already assessed feasibility and costs of adopting and achieving RPS requirements. Commenters noted that the state of Tennessee would need to increase its RE generation by a factor of five from 2012 levels to meet the EPA's proposed goal. Commenters stat ed it appears that the EPA's proposed methodology does not account for progress towards achievability of RPSs that are utilized in regional RE growth calculations. Commenters stated that they disagree with the EPA's proposed methodology for RE target level s for the above reasons.

Commenter s opined that the methodology of using North Carolina's RPS as a proxy for the entire Southeast and using it to develop and apply a growth rate to the region is flawed. Commenters noted that this methodology rewards states that have been slow to explore renewable energy, and states that have made considerable investments in renewables are expected to grow significantly

more. Commenters provided an example to display this flaw: “ Stat es A and B are in the same region and have a growth rate of 1 percent. State A had 10 percent of its generation from renewables in 2012, but State B only had 0.1 percent. Building block 3 methodologies applies the same growth rate to both states' 2012 rene wable levels, so after 10 years, State A will be expected to increase to 25.9 percent of total generation coming from renewable, but State B will only need to have 0.259 percent of total generation from renewables. ” Commenters stated that since State A had already invested in renewables, it was asked to increase its renewable generation 100 times more than State B. Commenters noted that applying a growth rate to a very small level of renewable generation results in little growth, but applying the same growt h rate to a large amount results in large growth. Commenters stated that the EPA's methodology is not rational; one expects states to pick the low hanging fruit first, so states that have already invest in renewable energy have already utilized the cheapes t, most reliable, and most abundant renewable resources first. Commenters noted that it is therefore more difficult for this state to grow. However, Commenters noted that states with little to no investment in renewable have not yet harvested the low hangi ng fruit, so they can more easily grow. Commenters further noted that Building Block 3 methodology demands states with significant investments to grow even more rapidly, and states with little to no investment remain close to previous levels. Commenters

as serted that this is 'unrealistic, economically inefficient, and truly discriminatory to selected ratepayers.' Commenters stated that proper methodology encourages growth in areas that have not yet picked the low hanging fruit.

Commenter s stated that EPA is proposing that states can increase nationwide renewable energy generation from 217,868 GWh in 2012 to 522,723 GWh in 2029, with an annual growth rate from 2020 to 2029 of roughly 7.1 percent. (EPA RIA) Commenters stated that the EPA's own Base Case modeli ng predicts much less renewable energy growth under status quo conditions,261 with only about 350,000 GWh in 2029 and an annual growth rate of 1.7 percent. Commenters
state d that may be able to incrementally increase renewable energy generation through time, but it is unreasonable for EPA to assume that states can increase renewable energy generation nationwide by nearly 250% by 2029.

Commenter s asserted that the EPA's own IPM runs demonstrate that EPA's Building Block 3 targets are too costly and do not repre sent realistic estimates of the renewable energy potential. Commenters stated IPM is able to project least

- cost capacity expansion and electricity dispatch while also accounting for constraints due to fuel supply, transmission, dispatch, and reliability. C ommenters stated EPA performed IPM modeling runs to assess how states would comply with the proposed emission guidelines under both state

- focused and region

- focused compliance approaches. Commenters stated IPM predicts that under both the state

- focused and region

focused compliance approaches, renewable energy generation will only reach 356,063 GWh by 2029, and will grow at an annual rate of 1.1 percent from 2020 to 2029. Therefore, commenters said

, the results of these IPM runs constitute EPA's estimate of the power sector compliance with the proposed guidelines at the least cost possible, within the constraints EPA imposes on the model. Commenters argued that the IPM results suggest that aggressive growth in renewable energy generation is so costly that st ates are only able to achieve modest incremental increases above business as usual. C ommenters stated this means states will need to rely on the other three building blocks in order to comply with the emission guidelines, increasing the overall cost of

com pliance and elevating EPA's cost estimates of all building blocks in the proposal.

Commenter s stated EPA should not use regional RPS targets as the basis for determining reasonably achievable future renewable energy growth; EPA should instead use the alter native RE approach that the EPA included in the proposal.

Comment 12: Commenters commented on the ability of states to meet the growth rate of renewable energy assumed by the EPA in the proposed rule.

Response 12: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The BSER is forward

- looking in identifying cost

- effective opportunities for emission reductions from 2012. The EPA addresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.

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

Commenter s remarked on the projected growth rate for the state of Alabama. Commenters stated that the EPA assumes Alabama's renewable generation in 2017 will be the same as in 2012. In 2012, Alabama's non

- hydro renewable generation was 2 percent of total generation, but, by 2017, the state will have 1.5 times more than that because of out

- of

- state wind generation and planned forays into solar power. Commenters further stated that this indicates that the EPA assumed annual growth rate of 13 percent is not unreasonable and that Alabama is likely to exceed that rate. Commenters noted that continuing cost declines have made renewable investments a great deal for utilities' customers. Commenters stated that the EPA fails to capture262 cost declines in its assumptions. Comment ers further noted that recent wind purchases by Alabama Power help to displace higher

- cost energy which the company would otherwise produce using other resources.

Commenter s stated that the EPA should remove or relax artificial limits on growth rates and that the EPA assumes that state renewable generation levels off after reaching the regional targets. Commenters also stated that the EPA should set growth rates to what the l eading states are achieving. Commenters noted that this way, growth rate is based on what states are already achieving and not on policy mandates.

Commenter s stated the growth of renewable energy at the rate determined by EPA under its proposed approach is adequately demonstrated. Commenters stated EPA reasonably relies most heavily on those states that have performed careful studies of their renewable energy potential and, because renewable energy generation capacity generally is similar in a given region, EPA reasonably extrapolates from existing state programs. Commenters stated that further, the fact that a state does not have an RPS policy does not mean it has not or cannot achieve significant growth in the generation of zero

- emission renewable energy. C ommenters stated one study found that some states without an RPS have been able to increase their percentage of in

- state renewable energy production by 6.1 percent, even more than some states with ambitious RPS standards. Commenters stated that States wit h RPSs have, on average, set a goal to obtain 20 percent of their 2020 generation from renewable resources. Commenters also stated that studies reveal many readily

- accessible renewable energy resources that can be developed at reasonable cost. Commenters s tated this is further supported by the ability of some states to achieve their renewable energy targets ahead of the RPS compliance period. Commenters stated that in fact, Texas met its 2025 goal of 10,000 MWs in 2009. Commenters stated that the general compliance with RPS targets has also been consistently high at well above 90 percent.

Comment 13: Commenters stated that the EPA should reformulate Building Block 3 in accordance with the Union of Concerned Scientists (UCS) approach.

Response 13: The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, which is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public co mments under this comment:

Commenter s commented on the RE growth in the state of Wisconsin. Commenters cited a July 2012 NREL report found that there is enormous technical potential for renewable energy in the state of Wisconsin. Commenters noted that the report found that Wisconsin has the potential for approximately 3,523 GW of installed capacity and 6,347 TWh of generation capacity. Commenters stated that it is possible for Wisconsin to expand renewable generation to 11 percent of total generation by onl y relying on in

- state resources. Commenters stated that Clean Wisconsin argues that Wisconsin can achieve energy growth greater than what the UCS "Demonstrated Growth Approach" projected. Commenters stated that by calculating the average incremental growth in renewable energy generation between 2009 and 2013 for each state, a true263 account of the renewable energy growth for that state could be used in goal setting for that state. Commenters noted that Wisconsin experienced RE growth rate of 10.85 percent bet ween 2009 and 2013; if Wisconsin maintained this growth rate starting in 2020, then Wisconsin could achieve RE generation levels of 9.873,881 MWh by 2029, which is higher than the EPA calculated growth rate. Commenters further stated that the average growt h rate is based on historical, demonstrated practice, and in the absence of RE generation growth for a state, a regional average could be used. Commenters asserted that a minimum renewable energy growth rate similar to the UCS rate would be appropriate for states that have not invested in renewable
energy.

Commenter s stated that the EPA should consider a proposal by the UCS that reformulates RE components of building block 3. Commenters stated that the UCS approach approximately doubles the amount of genera tion nationwide by 2030 without incurring significantly greater
costs. Commenters stated that they believe that the reformulation of building block 3 is superior to either of EPA's approaches, that it corrects flaws in the EPA's proposal for building block 3, and that they support UCS's demonstrated growth approach. Commenter s stated that the UCS approach reflects BSER.

Commenter s noted that the UCS's Demonstrated Growth Approach has three key features. First, Commenters stated , it is consistent with the EPA's methodology for energy efficiency targets under building block 4 by setting benchmarks for incremental RE growth in each state (1.0 to 1.5 percent annually of total electricity sales); the benchmarks are based on demonstra ted RE growth from 2009 to 2013, and states are expected to begin meeting their annual growth targets in 2017. The second point noted by the c ommenters was that the demonstrated growth approach assumes full compliance with enforceable RPS requirements in s tates that have them; states will be required to meet either its benchmark or the requirement in its RPS program, whichever is greater. The third point noted by the c ommenters was that the UCS proposal accounts for actual and expected RE development in sta tes between 2013 and 2017, so the annual benchmark for a state in 2017 applies the 1.0 to 1.5 percent incremental growth to the projected 2017 RE generation in that state. Commenters stated RE generation is expected to reach 23 percent of total electricity sales nationwide by 2030 (excepting hydropower), compared to 10 under business as usual and 12 percent under the EPA's building block 3 formulations. Commenters stated that the UCS approach predicts that nine states will reach 40 percent and 11 states wil l meet or exceed 35 percent of RE generation, and they noted that RE generation under the EPA's plan will not approach 40 percent. Commenters stated that states with strong renewable resource profiles can meet and exceed 40 percent by 2030, which is back b y evaluations by grid operators which show that they can already manage this level of RE generation.

Commenter s referenced a PJM study that indicates that "with adequate transmission expansion and addition regulating reserves," there will not be "any signi ficant issues operating with up to 30% of its energy provided by wind and solar generation." Commenters also referenced a NREL study that found that up to 35 percent of renewable energy can be integrated into the Western Interconnection without requiring e xtensive infrastructure changes. Commenters stated that the 40 percent proposed by UCS is not unreasonable, but it may be unnecessary. Commenters stated that the 40 percent issue becomes moot if the EPA chooses to use a shorter compliance period.264 Commenter s described how UCS derived the annual growth targets for each state. Commenters stated that the UCS examined EIA data for 2009 to 2013 to determine the average growth rate of RE among the states; they found that most states increased their renewable share of electricity sales by 1.0 percent annually. Commenters stated that the years between 2009 and 2013 are appropriate for use as a benchmark since they represent the most recent demonstrated performance of renewable penetrations in the electricity market t hus providing a reasonable set of expectation for continued development, and the interval captures much of the historic development spurred by states RPS policies, which is a key driver of RE growth as identified by the EPA. Commenters stated that the UCS proposal would expect states with annual RE growth less than 1.0 percent during the benchmark period to begin scaling up their renewable development in 2017 until they meet the 1.0 percent annual growth rate by 2020 and continuing to meet that target each year until 2030. Commenters stated that the 15 states that met or exceeded that 1.0 percent RE growth between 2009 and 2013 are expected to maintain their 2009

- 2013 average growth rate each year between 2017 and 2030 (or 2025 should a shorter compliance pe riod be adopted). Commenters also stated that no state would be expected to sustain a growth rate above 1.5 percent. Commenters repeated that any state with RPS policies which require greater RE development than the UCS target growth rates would be expecte d to meet the requirements of the state RPS.

Commenter s also stated that the baseline generation from which each state's RE growth begins in its projected 2017 RE generation. Commenters stated that this is determined by adding projected generation from win d and utility

- scale solar projects that will be under construction by 2016 to that actual RE generation data from 2013. Commenters noted that this is more realistic than the EPA's method of assuming zero RE generation growth from 2012 to 2017.

Commenter s l isted examples of advantages that the UCS approach has over the EPA approach. Commenters noted that the UCS approach accounts for distributed generation ("DG"), which has grown since 2008. Commenters also noted that the UCS approach expects states with RPS targets less stringent than the EPA targets to meet the RPS targets even if they fail to meet the EPA targets. Commenters stated t he last example stated that the UCS approach is based on what states have actually been achieving in recent years. Commenters stated that the EPA's formulation in is BSER Commenter s stated that the UCS approach reflects BSER.

Comment 14: Commenter s recommended that the EPA adopt the Union of Concerned Scientists (UCS) Demonstrated Growth Approach for applicable U.S. territories and Indian country.

Response 14: The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, which is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenter s requested that the EPA strengthen the CPP by adopting the UCS Demonstrated Growth Approach while accounting for the unique challenges posed by the U.S. territories and Indian Country. Commenters noted that emission reductions achieved by the CPP could be265 increased from 30 percent to 40 percent below 2005 levels by 2030 by increasing the share of RE generation.

Commenter s suggested that the EPA incorporate final emissions reductions for U.S. territories and Indian country consistent with UCS's comments specific to the treatment of states. Commenters stated that the UCS method would result in significantly more RE generation, and that the addition of this RE generation is achievable. Comm enters opined that the UCS method is a logical outgrowth of the EPA's proposed approach, but the UCS approach yields far greater RE generation levels for BSER through the application of several core components. Commenters listed the first core component to be the setting of a nation RE growth rate benchmark based on demonstrated growth by states from 2009 to 2013. The second core component listed by the

c ommenters is the assumption that there will be full compliance with current state RES policies that requ ire certain percentages of electricity to come from renewable sources. The final core component listed by the c ommenters is that the UCS method accounts for actual and expected RE growth between 2013 and 2017.

Commenter s recommended that the EPA expand its supplemental proposal to the CPP to cover applicable U.S. territories and Indian Country. Commenters provided suggestions for implementing the added areas that account for their unique electric generation profiles. Commenters noted that none of the areas covered by the supplemental proposal had documented utility

- scale non

- hydro renewable generation in 2012, which is why the EPA modified its proposed approach to bring RE generation above zero percent of retail sales by 2030. Commenters stated that this pro duces BSER values that are too conservative; the UCS instead proposed the following calculations for U.S. territories and Indian country: the ramp up of annual growth of the RE share of electricity sales begin in 2017 to equal one percent by 2020; a one
pe rcent growth rate be maintained from 2020 to 2030; assume that there will be no backsliding so covered areas will achieve the greater of the above growth rate or growth rates implied by their existing policies (for example, Puerto Rico would be held to the targets detailed in its existing RPS).

Commenter s stated that the UCS method imposes a cap on renewable generation at forty percent of total electricity sales that would be expanded to all areas would, for example, limit the amount of renewable energy gen eration under the UCS Demonstrated Growth Approach relative to what the EPA calculated for the Navajo Nation.

In the event that the EPA defers to its alternative approach and does not adopt the UCS approach, the c ommenters recommended that the EPA refer to the UCS comments for a discussion of recommended modifications to the EPA methodologies that would carry over to the U.S. territories and Indian country covered by the supplemental proposal. Commenters noted that one modification would be to adjust the ca p over time as the CPP is revised and updated to account for RE technology advances, grid integration technique advances, and falling costs.

Comment 15: Commenter s stated that the g rowth r ate for e ach s tate s hould be b ased on the

n ecessary r ate of p rogress to a chieve s tate

- l evel r enewable e nergy (RE) t arget

.266 Response 15: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of
t he preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenter s questioned why states' RE growth rates are determined by historical 2012 RE generation from other states. Commenters stated the growth rate for each state should be based on the needed rate of progress for that state to achieve its state

- level RE target rather than the rate of progress needed for the region to achieve its regional RE target.

Comment 16: Commenter s stated that a ffected u tilities h ave a r ange of RE o ptions and the

e stablishment of an RE f loor a lters the s election of the m ost c ost

- e ffective g eneration o ption
Response 16: The information provided in this comment were valuable in finalizing th e building block 3 methodology. There is no RE floor in the final building block 3 methodology, which is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under th is comment:

Commenter s stated if Building Block 3 remains a compliance option, affected utilities have within their purview a range of renewable energy (RE) options

- utility scale, distributed, or imported resources. Commenters stated all three of these renewable options present a unique set of issues in order to maximize the benefits of renewable electricity generation while ensuring state flexibility. Commenters recognized that establishing an RE "floor" is one tool to preserve exist ing RE capacity and advancing technology development, while not inadvertently creating backsliding on RE deployment. Commenters stated however, this should not be done at the expense of eliminating the use of cost

- effective fossil fuel sources. Commenters stated , for example, it is plausible that the renewable capacity in the state could decrease as aging renewable capacity is replaced with future low

- emitting and cost

- effective fossil generation. Commenters stated establishment of an RE floor alters the se lection of the most cost

- effective generation option.

Comment 17: Commenter s stated that the EPA s hould t ake i nto a ccount d ifferent r enewable
g eneration m ixes w ithin s tates by l ooking at s tate h istoric RE g rowth and a cknowledging g rowth l imitations

. Response 17: The final building block 3 methodology does not rely on RPS requirements or
state

- specific deployment estimates, but rather cost

- effective RE at an interconnection level. The EPA addresses considerations related to the technical feasibility a nd availability of regional RE resources in both the preamble (section V.E) and GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:267 Commenter s stated EPA's application of an RPS from a state with a r apidly increasing renewable energy source to a state in which its primary renewable energy source has remained almost flat can result in a significant overestimation of renewable generation capability in the latter state. Commenters suggested EPA take into account different renewable generation mixes within states by looking at state historic renewable energy (RE) growth and acknowledging the growth limitations for various types of RE, such as biomass and wood and wood

- derived fuels. Commenters referenced a letter to EPA from the Arkansas Attorney General discussing how the state has limited wind potential. Commenters stated that nearly all of the non

- hydro renewable energy that Arkansas consumes originates in nearby states. Therefore, commenters stated, EPA 's goal setting methodology related to Building Block 3 would require states like Arkansas to invest in renewable energy resources within the state no matter how inefficient and costly they might be. C ommenters stated this is a very expensive proposed meth od for compliance, and unless adjusted to reflect state circumstances, does not constitute BSER.

Commenters stated that in the Southeast Region, the Agency computed a regional annual growth rate of approximately 13 percent, with a 10 percent renewable targ et. C ommenters stated based upon these assumptions, Georgia would be able to achieve its target of 12,230 GWh of renewable generation by 2027 and Alabama would not achieve its renewable target before 2030; however, both Alabama and Georgia's renewable gene ration is dominated by industrial CHP sources burning wood or wood

- derived products, such as pulp and paper mills (in excess of 90 percent of each states' total renewable generation). Commenters stated that between 2008 and 2012, these Industrial CHP sourc es grew at an annual rate of 2.1 percent annually in Georgia, while in Alabama these same types of facilities declined by 5.1 percent annually. C ommenters stated it is highly unlikely these types of industrial CHP facilities will add the levels of renewabl e generation predicted by EPA in Building Block 3. Commenters stated that for Georgia to achieve its state target, other non

- hydro sources (e.g., wind, solar) would have to increase their output at an astounding 44.5 percent per year. Commenters opined tha t the lack of any detailed evaluation of a state's renewable energy mix has resulted in a significant overestimation of the renewable generation that is included in each state's Building Block 3 projections, and EPA must correct these overestimations for i ts method to remain valid.

Comment 18: Commenter s stated that the g lide p ath is t oo s hort and s upport ed the glide p ath b eing d etermined b y the s tate

. Response 18: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. Under the final methodology, building block 3 target generation is not assumed to increase beyond expected baseline performance until the first yea r of compliance in 2022. Further, the phasing in of the building block 3 target generation level over time ensures adequate lead time for investments and planning necessary to begin to integrate higher levels of RE. The EPA addresses this and other conside rations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comm ent:268 C ommenters expressed that the glide path requires a large amount of the mandated reductions in too short of time and that a better approach would be to allow a "glide path" determined by the state based on individual state circumstances.

Commenter s st ated that the glide path would require Minnesota to achieve 84 percent of its total mandated reductions by January 1, 2020, which is a large reduction in a short amount of time. Commenters noted that Iowa (61%), North Dakota (67%), South Dakota (67%), and Wyoming (53%) would need to make similar reductions by 2020. Commenters stated i t is not possible for states to meet these goals in less than four years given the limitations of natural gas capacity, renewable energy intermittency, the need for more transm ission, and the lack of planning and permitting time for new renewables, new pipelines or transmission, for natural gas ramp

- ups at existing plants (if feasible), or for new natural gas plants.

Commenter s also noted that the glide path fails to anticipate the time it would take to implement any state policies to create incentives or mandates for construction pertaining to Block 3. Commenters noted that Iowa, Minnesota, North Dakota, and South Dakota have abundant wind resources as well as well

- priced generation equipment and transmission capacity, but, as more renewable are added, the transmission and the distribution grid will need to be expa nded and updated to reliably meet demand. Commenters stated that the glide path fails to provide sufficient time to plan, finance, permit, and construct sufficient renewable generation, as well as NGCC to support intermittent resources, electric transmissi on, and natural gas infrastructure. Commenters stated that the states are in the best position to know what non

- emitting resources can be constructed to ramp

- up to the 2030 goal and can be entrusted to develop viable glide paths that demonstrate progress t oward the achievement of that goal.

Commenter s stated the USEPA developed the RE goals by regions without regard to potential RE opportunities or electric grid interconnections between states with higher RE potential and states with lesser RE potential. Co mmenters stated the front

- loading of RE prior to 2020 presents timing challenges that may be insurmountable. Commenters suggested a better approach would be to allow a "glide path" determined by the state with reports to the USEPA on progress beginning in 2020. Commenters stated this approach would allow states more flexibility and control of development costs to minimize ratepayer impact, while still attaining the final goal.

Comment 19: Commenter s stated that it is i mprobable that Wyoming or o ther s tates c an a chieve the EPA's p roposed g rowth r ate

. Response 19: The final building block 3 methodology does not rely on RPS requirements or
state

- specific deployment estimates, but rather cost

- effective RE at an interconnection level. The EPA addresses considerations related to the technical feasibility and availabili ty of regional RE resources in both the preamble (section V.E) and GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenter s stated it is improbable for Wyoming or anyone else to achieve this gr owth rate. Commenters stated EPA's focus on a cocktail of state RPS goals ignores the forces that have both driven Wyoming wind development and stopped its growth

. Commenters suggested EPA269 consider the EIA data for wind production from 2008 through 2013 an d provided a table of MWh produced each year. Referring to a table in their comment letter, c ommenters stated that there is not a pattern of steady growth, but instead a pattern of dramatic growth, followed by ongoing stasis. Commenters stated the reasons are not obscure and the growth was principally the result of resource acquisitions for the PacifiCorp system and the plateau from 2011 on was principally due to reaching the limits of transmission capacity in Wyoming.

Commenters stated that going forward, a reduced rate of PacifiCorp system growth and ratepayer resistance may limit investor interest in new renewables and necessary transmission. Commenters stated that they described this history of rate increases in the letter of December 16, 2013 and state d that the increases are not over. Commenters further stated that decisions are currently pending in a 2014 general rate case seeking an increase of more than 5% and a 2014 case to pass on increased energy costs. Commenters reported that, as of the fall of 2014, PacifiCorp anticipates completion of significant new transmission, known as Gateway West, in 2024. Commenters stated that the company has pursued Gateway West through many years of delays, most of which were due to federal constraints on routing and permitting of the transmission line. Commenters stated the Department of Environmental Quality describes these planning concerns and development constraints in separate comments, as well as EPA's flawed assumption of the land available in Wyoming for wind development.

Commenters asserted that they agree with the DEQ that the correct growth rate for Wyoming is no more than 1%. Commenters stated the Department of Environmental Quality has shown that this is a fair composite of the growth rates embedded in t he RPSs of the western states. Commenters stated EPA has simply considered state targets without paying attention to the rates at which the RPS states proposed to progress to those targets. Commenters stated the DEQ approach is more consistent with the EPA 's stated objective of determining an appropriate rate, and more consistent with the practical impediments to renewables development. Commenters stated that assuming EPA's construct, EPA could reach the correct goal by substituting 666,212 MWh for 4,369,10 7 MWh, and 1% for 6.095%, and re

- calculating Block 3.

Comment 20: Commenter s stated that Texas's 20 p ercent r enewable t arget (a 153 Percent i ncrease a bove 2012 l evels) e xceeds the 2012 g eneration of a ll t ypes from g eneration in 32

s tates

. Response 20 : The BSER is forward

- looking in identifying cost

- effective opportunities for emission reductions from 2012; however, the cost and availability of these emission reduction opportunities is the result of many factors, including previous actions. The final bui lding block 3 methodology does not rely on RPS requirements or state

- specific deployment estimates, but rather cost

- effective RE at an interconnection level. The EPA addresses considerations related to the technical feasibility and associated grid integrat ion costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenter s noted that the EPA assumes that Texas can increase renewa ble power to 20 percent of total generation by 2030; this is a 153 percent increase above 2012 levels. Commenters further270 noted that Texas' 2030 renewable target (86 million MWh) is more than double the amount of renewable generation which the EPA requires for the state with the next highest renewable target (California). Commenters complained that there are ten states whose total power generation across all fuel sources is less than Texas' current renewable performance and that Texas' 20 percent renewable target exceeds the 2012 total generation of all types from generation in 32
states.

Comment 21: Commenter s stated that the EPA's a ssumption that Alaska's 2002 to 2012 RE
g eneration g rowth r ate c ould be s ustained from 2017 through 2029 is incorrect, and r equests that

c alculation and c ompliance m ethodology b e c onsistent c onsidering Alaska's circumstances.
Response 21: No building block 3 generation level is applied to Alaska, Hawaii, or the U.S. territories in the final rule.
The following are summaries of the specific public comments under this comment:

Commenter s remarked on the annual renewable electricity growth rate calculated for Alaska. Commenters stated that the annual growth rate for Alaska was calculated differently than for the lower 48 states. Commenters stated that the EPA determined the difference between 2002 and 2012 RE generation and then assumed that this RE generation growth rate could be sustained from 2017 through 2029. Commenters asserted that this assumption was incorrect since the EP A has no technical basis for assuming that RE generation growth will continue; therefore, the EPA should not assume no growth in RE generation unless the EPA can identify RE generation projects that will be constructed or specific requirements that will le ad to the construction of RE generation. Commenters noted that the EPA included RE generation in calculating Alaska's CO2 performance goals regardless of offsets generation from existing affected EGUs. Commenters noted that Alaska has RE generation in remo te communities which is not connected to the affected EGU electrical grid, but the EPA only allows RE generation that offsets generation from existing affected EGUs to be used in determining goal compliance. Commenters asserted that this inconsistency crea tes artificially low performance goals for Alaska. Commenters requested that the calculation and compliance methodology be consistent to increase the likelihood that the calculated goals can be attained.

Commenter s noted that supporting data could not be f ound in order to replicate the EPA calculations used to determine the Alaska RE generation of 39,958 MWh. Commenters noted that the EPA's annual RE generation growth factor of 11.426 percent is based on the growth rate of RE generation between 2002 and 201 2 without additional details being provided. Commenters requested that the supporting data used in this calculation to be clearly identified so that EPA calculations can be verified. Commenters noted that it is not likely that Alaska will be able to sustai n the high level of RE generation growth through 2030 as the EPA assumes. Commenters stated that the 11.426 percent growth factor was conservatively included in the corrected Alaska CO2 performance goals calculations, and retaining this conservative growth rate results in lower goals than a more realistic RE generation growth rate. Commenters stated that the EPA should identify a more representative RE generation growth rate in correcting the Alaska CO2 performance goal calculations.271 Commenter s noted that A laska is fundamentally different than the lower 48 states since RE opportunities and grid infrastructures are limited. Commenters further noted that the Alaska annual RE growth factor should be assumed to be zero; the Alaska utilities cannot sacrifice elec tric reliability in an attempt to meet an arbitrarily defined goal. Commenters concluded that reliability is paramount since it can mean the difference between life and death due to the extreme climatic conditions in Alaska.

Comment 22: Commenter s discuss ed the a nticipated g rowth of s olar e nergy in South Carolina

. Response 22: The information provided in this comment was valuable in evaluating the impact of non

- BSER resources on achieving building block 3 target generation levels. The final building block 3 methodology is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.

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

Commenter s described the Distributed Energy Resource Program Act, which is a bill that was passed in the State of South Carolina on June 2, 2014. Commenters noted that the bill is designed to lessen restrictions on solar energy, and the bill would allow solar leasin g statewide through investor

- owned utilities. Commenters anticipated that solar energy would grow in South Carolina, and it will result in further reduction of South Carolina's CO2 emissions.

Comment 23: Commenters stated that in the West, the federal gov ernment owns vast portions of many states. Commenters said the use of these lands will be paramount to increasing renewable generation and siting gas and electric transmission structures and EPA must allow ample time for states to work with other federal a gencies.
Response 23: T he phasing in of the building block 3 target generation level over time ensures adequate lead time for investments and planning necessary to begin to integrate higher levels of RE. The EPA addresses this and other considerations in both the preamble (section V.E) and GHG Mitigation Measures TSD.

3.3.6 RE targets for interim and final state goals

This section discusses issues raised by commenters related to RE targets for interim and final

s tate goals. Many of the issues are related to the specific calculation of the goals and the exclusion of current renewable energy sources.

Commenters have raised a number of issues related to this subsection which are organized by topics (comments) below. Responses are provided for these t opics.272 Comment 1: The EPA's analysis of state RPS goals is oversimplified and reflects EPA's limited understanding of these goals.
Response 1: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

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

Commenters said that some state RPS goals are voluntary, whil e others establish requirements only for large, investor

- owned electric utilities or apply less stringent "secondary" or "tertiary" RPS goals to smaller utilities, municipal utilities, or cooperative utilities. But the EPA applies the more stringent primar y RPS goals to all in

- state generation and treats all goals as mandatory, artificially leading to more aggressive RE generation targets, the c ommenters said . Many state RPS goals include hydroelectric power generation, but the EPA does not include existing hydroelectric power towards compliance with its Proposed Guidelines, the c ommenters added. For example, New York counts hydroelectric power towards its 29 percent RPS target, and this source accounted for 83 percent of the state's renewable generation in 2012, the c ommenters noted. Commenters stated i ncluding this component of the RPS in the Building Block 3 goals without allowing states to rely on existing hydropower for compliance will substantially increase the amount of new renewables required in each state, even in states that have already reached their own RPS goals.

C ommenters stated that the EPA's analysis reflects an oversimplified understanding of the nature of state RPS goals. Moreover, commenters added that some state RPS goals allow utilities t o comply through mechanisms other than actually developing in

- state RE generation. For example, North Carolina's RPS goal allows utilities to meet 25 percent of their requirements by reducing energy consumption through energy efficiency measures, and anoth er 25 percent of their requirements by purchasing RE certificates from out

- of

- state facilities, the c ommenters continued. Thus, the 10 percent RPS target the EPA assumed for North Carolina effectively requires in

- state RE generation to reach only 5 percent by 2020, the c ommenters noted. Because North Carolina's RPS alone sets the regional target for the entire Sout heast region, the EPA's target is roughly 100 percent too high for eight states, including Florida, the commenters said. Commenters stated NERC has also expressed concern with EPA's flawed assumptions regarding RE potential in the Southeast region. Comment ers stated t his is not a minor error. C ommenters stated North Carolina and other states have built cost

- control mechanisms into their RPS goals in order to reduce the requirements for utilities if compliance becomes too burdensome. The EPA did not account for any of these flexible compliance mechanisms when dictating regional RE generation targets, the c ommenters said.

Similarly, commenters also said that the EPA has not been consistent in how it has developed the RE goal and how it has proposed to allow a state to demonstrate compliance. For example,

c ommenters made the following points specific to North Dakota:

• First, the goal is based on total generation of electricity (including existing hydro, wind, and coal) in North Dakota yet allows other states to c laim part or all of the273 RE that is generated in North Dakota, including existing wind power that is included in North Dakota's goal calculation. In addition, allowing other states to take credit for RE generated in North Dakota could be construed as taking a property right from the utility that generated the renewable electricity.

• Second (and as commenters also pointed out), the calculation of the goal included existing hydroelectric power, but does not let North Dakota take credit for that RE, commenters n oted.

• Third, the calculation of the goal is based on total generation in North Dakota and a regional RE standard; however, many of the RPS used to determine the regional standard are based on sales of electricity. Since North Dakota exports 60% of the elec tricity generated, there is huge difference between total generation and in

state sales of electricity. The North Dakota electricity market can only support so much RE because it is intermittent. Base load power is required for most of the annual load.

Com menters asserted there are alternatives that will correct the inequities in the Proposed Rule regarding RE which include the following:

• The state where the RE is generated gets full credit for that energy (this would be consistent with the goal setting and provides for easy accounting of the RE); or

• The utility that supplies the RE to their retail customers can dictate which state gets credit for the RE (this option would resolve any issues of EPA taking property rights from the utility); or

• The renewable goal is recalculated for each state based on the sales of electricity in that state. This is consistent with most state renewable portfolio standards and the method used in Building Block 4. It would also allow the EPA to use the proposed method for credit ing RE; or

• The EPA does not provide any guidance on the crediting of RE and allows states to come up with an agreement amongst themselves on who gets credit.

In any event, this is a complex issue that requires further dialogue and discussion between the EP A and the states, commenters asserted

.
Commenter s asserted that the EPA's use of the state RPS requirements in a region to calculate regional goals is illogical and flawed. Commenters added that the EPA's use of a simple numerical average is faulty and tha t it should at least weight the average by the amount of generation in each state. For example, c ommenters said that the EPA averages Delaware (20 percent RPS requirement, 9 TWh net generation, 2012) with the same weight as Pennsylvania (8 percent RPS, 223 TWh generation). Moreover, the EPA should recognize and include zero values for states that have determined that no mandatory RPS is appropriate for circumstances existing in that state, the c ommenters expressed.274 Commenter s said that the EPA places each s tate into one of six regions and establishes a RE target for each region based on an average of existing RPS in the relevant region. The underlying rule calculates an annual growth rate that would allow each region to reach its specific target by 2030 and the c ommenters indicated that it has several observations about this approach.

First, the commenters explained that state RPSs differ on compliance levels (percentages), types of eligible resources, and nuances in the laws that could result in less renewab le penetration than the stated compliance percentage

- for example, Washington State's Energy Independence Act does not apply to all utilities, cost caps, etc. Also, the c ommenters added that Washington State's RPS is different than those of neighboring st ates

- the State of Oregon's RPS allowed certain existing hydroelectric projects, such as low

- impact hydropower capped at 50 aMW per year generated by an Oregon utility and energy efficiency upgrades made to Bonneville Power Administration hydroelectric pr ojects located in Oregon, to be used at enactment. Commenters stated Washington State's RPS only allows incremental hydro to be used for compliance. Oregon also allows utilities with surplus resources to delay compliance until the time when utilities need to add resources to serve retail customers

- Washington State does not, the c ommenters said

.
Commenter s also added (similar to other commenters) that the underlying rule states that, "existing hydroelectric facilities are often excluded from RPS accounting." Disadvantaging renewable, carbon

- emission free hydropower seems to run contrary to the stated object ives of Federal policymakers, the c ommenters said , including Energy Secretary Ernest Moniz, who said earlier this year, "... We have to pick up the covers off of this hidden renewable that's right in front of our eyes and continues to have significant pote ntial. "

Commenter s asserted that it is important to note that in its calculation of Building Block 3B for target setting, the EPA bases its target percentages on regional average RPS objectives, which may include both in state renewable generation and out

- of

- state REC purchases. Commenters said that the EPA has requested comments on how to measure a state's renewables for compliance purposes: include in

- state generation only, or any generation for which entities within the state have purchased RECs. Of cou rse, the c ommenters said , under this latter definition, if RECs associated with part of a state's renewable generation are purchased out

- of

state, then the emission reduction resulting from those renewables displacing fossil generation will not be counted in the generating states 111(d) emission formula, but rather would displace generation in the purchasing state's formula.

Commenters stated they are small not

- for

- profit municipal utilities whose "affected units" emit less than 2.6% of Illinois' total car bon emissions from fossil

- fuel fired EGUs, and are outside the jurisdiction of the state's public utility commission. Commenters provided electric power to approximately 68,000 customers, the residents and commercial businesses. Commenters said the costs f or this electric power, and our environmental controls, are borne by our citizens, the ratepayers. Commenters said the city council invested early in transmission upgrades, including "smart" technologies. Commenters were vertically integrated utilities, ex empt from the jurisdiction of the state's public utilities commission, the Illinois Commerce Commission (ICC). As a municipal utility, commenters generated or purchased its energy outside of the Illinois Power Agency (IPA). Commenters were also exempt from the state Renewable Portfolio Standard (RPS) goals, as established by state statute, and even though outside Illinois' RPS, Commenters had acquired renewable energy that far outpaces the percentage of renewables275 within Illinois' RPS. Accordingly, commente rs were not subject to state RPS laws that are likely to serve as the basis of Illinois' plan to meet the GHG Rule being prepared by the ICC and the IL EPA. Commenters’ municipal ownership, their vertically integrated structure, and their ownership of gene ration assets make them unique in Illinois. Commenters stated, an early mover in the deregulation era, Illinois required electric generators to divest generation assets leaving the bulk of the citizens of the state subject to competitive electric market pr oviders that are separate from the transmission and distribution service providers. Commenters said Illinois' pathway to compliance with the Clean Power Plan (CPP) is further complicated by the existence of two Regional Transmission Organization (RTO) mark ets, Midcontinent Independent System Operator (MISO) and PJM Interconnection(PJM), that affect generation dispatch and pricing in different ways.

Comment 2: Commenters asserted the EPA should strengthen RE targets.
Response 2: The resources and data provi ded in this comment were valuable in finalizing the building block 3 methodology, particularly in the reevaluation of onshore wind and solar cost and performance assumptions. The final building block 3 methodology is described in detail in V.E of the pream ble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific comments under this comment:

Commenter s stated that the proposed regulations fail to advance the most promising solution to the climate crisis: renewable energy. Signif icant technological and economic improvements have been made in both wind and solar technology, the commenters expressed. Instead of challenging states to maximize the development of renewables, the rule establishes extremely weak goals for each state, the commenters said, woefully for the amount of power each state should derive from RE based on an aver aging of existing programs. Commenters said that many of those suggested goals are even weaker than what several states have planned, and in some cases already have achieved. For example, Missouri's own RE goal is five times greater than the rule's suggest ed goal for the state, and Minnesota is producing 18% of its energy from renewables today, already exceeding the meager 15% goal suggested by the rule, the commenters pointed out. Similarly, the c ommenters said that Kansas, which has far more wind potentia l than necessary to accommodate its own needs is given a suggested goal of only 20%; and many states, including those which are the worst power plant polluters, like Kentucky, are presented with negligible renewable goals of 1% or 2%.

In fact, the c ommente rs noted that the EPA predicts that the rule as proposed would have virtually no effect on the amount of renewables in 2030 compared to forecasts without the rule. Commenter s indicated that if fully implemented, the rule would result in less than 16% of th e country's electricity needs being met with renewables (including hydropower) by 2030.

An effective response to the climate crisis demands a rapid transition away from fossil fuels, clear regulatory signals, and robust governmental support, the c ommenters added. The rule should do everything possible to speed the needed shift to RE by setting technology

- forcing targets for 2030 that reflect the maximum level of renewable generation achievable in each state, the c ommenters recommended. From a policy perspec tive, the CPP must recognize and276 encourage RE as the most effective means of tackling climate change and achieving true long

term energy independence, the c ommenters also said. Commenters said that in their opinion t o do anything less would fly in the face of the oft

- repeated pledge to "base decisions on science

. "

Commenter s said the EPA asks whether an alternative approach should be considered involving the evaluation of RE potential; however

, this too applies overly conservative technical and market const raints which limit the true capacity of renewables. The commenters said that f or example, the rule completely ignores the significant potential of offshore wind simply because no offshore facilities have been built yet in the U.S. A rule that fails to "mov e the needle" on renewables, lacks any proactive policies or incentives to augment market forces, and remains stagnant with respect to technology that has been successfully implemented in other countries is of little value.

Commenters asserted that respond ing to the threat of climate change requires that the EPA challenge states to maximize sources of energy that do not burn fossil fuel. Commenters said t he rule's extremely weak set of suggested renewable goals should be replaced with ambitious requirements based on the technical potential for renewable power in each state, also recognizing the capacity of some states to become net exporters of electricity from renewable sources. Commenters said that NREL offers significant data, mapping, and analysis to sup port this, and significantly, in its comprehensive 2012 Renewable Electricity Future Study, the NREL determined:

"Renewable electricity generation from technologies that are commercially available today, in combination with a more flexible electric system, is more than adequate to supply 80% of total U.S. electricity generation in 2050 while meeting electricity demand on an hourly basis in every region of the country."

Commenters added that important research is also presented in the 2013 report titled Exam ining the Feasibility of Converting New York State's All

- Purpose Energy Infrastructure to One Using Wind, Water, and Sunlight (Jacobson, et al.) which describes a strategy to replace New York's current energy portfolio

- presently dominated by fossil fuels

- w ith one relying entirely on renewables generated in state. Expanding on this, the "Solutions Project" advocates a plan for each state in the country to achieve independence from fossil fuels by the year 2050, the

c ommenters expressed.

In conclusion, the c ommenters asserted that the bottom line is that climate catastrophe cannot be avoided if the U.S. continues to rely on fossil fuels to supply most of its energy. Commenters stated the rule should work toward a goal of transitioning to 100% RE and set aggre ssive targets

like those demonstrated in the aforementioned reports

- to require that each state meet the greatest achievable portion of its electricity with zero

- emission renewables. To this end, the c ommenters urged the EPA to set targets that will result in the United States meeting at least half of its electricity needs with zero

- emission sources of energy by 2030.

Commenter s indicated that a great weakness of this rule proposal is an over

- estimate of the market viability for climate polluting power gener ation, versus wind and solar. Commenters stated t he EPA projects coal and natural gas each will still provide about 30% (60% total) of power supply by 2030. The EPA analysis neglects rooftop solar and offshore wind, which in a277 decade or two could provide t he majority of renewable power in the U.S., the c ommenters said

. Many analyses have demonstrated this, the c ommenters noted. Commenters indicated that the Greenpeace report, "Energy [R]evolution: A Sustainable USA Energy Outlook" includes reference to thes e analyses to compare with our own ( http://www.greenpeace.org/usa/en/media

center/reports/energy

- revolution

- 2014/ ). Previous versions of the report under

- estimated renewables growth, the c ommenters noted.

In the Energy [R]evolution (E[R]), the c ommenters showed that by 2030 power generation is comprised of only 20% NG and 7% coal. Commenters said that the Energy [R]e volution report estimates what can achieved in terms of CO2 reduction from the power sector:

• By 2020, the c ommenters said they can do about twice what the proposed rule achieves. The E[R] shows that, based on 2012 levels, they could achieve a 23.34% CO2 cu t from power by 2020 versus only 12.12% for the EPA proposal, the c ommenters noted.

• By 2030, the c ommenters said they can achieve more than four times the CO2 cuts in the EPA proposal. The E[R] shows 64.54% cut from 2012, versus only 15.88% for EPA, the c o mmenters noted.

Commenter s continued and said that the EPA estimates the proposed rule will have little effect between 2025 and 2030. Commenters stated t he EPA's proposal has four options for states to consider for implementation: a weak and a weaker optio n with regional cooperation, as well as a weak and weaker option without regional cooperation. Thus, there are four different estimates for what the rule would achieve by 2020 and 2025, and th ere is no worst case estimate for 2030, the c ommenters said . Fo r the worst case scenario for 2025, the EPA estimates a less than 8% cut from power sector CO2 by 2025, whereas the Greenpeace E[R] estimates the U.S. could cut emissions by almost 23% under 2012 levels by 2020, the c ommenters said

.
Commenter s pointed to t he attached graph and chart which showed how these estimates translate into emissions reductions, with the various base years, end years, and four options in the rule proposal. This is based on data in documents the EPA provided with the rule, as well as t he most recent EPA GHG inventory, the c ommenters concluded.

Comment 3: Commenters said the methodologies used by EPA for the Proposed Approaches are overly conservative

Response 3: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summ aries of the specific comments under this comment:

Commenter s indicated that under the EPA's Proposed Approach, the Southeast region's RE target (10% of 2012 generation levels by 2030) is based on North Carolina's RPS target, which is one of the weakest (lowest) in the United States. Commenters stated i ts relatively weak goals should278 not be viewed as a useful perspective on the potential for regional development of RE. For example, c ommenters said that North Carolina utilities have already gone beyond the state goals for on

- system solar energy development. Relying on the North Carolina standard limits the Southeast to arbitrarily conservative RE generation targets and fails to recognize utility and regulator engagement in other strategies (i.e. not mandates) to accelerate market trends in Southeastern states, the c omm enters expressed.

Further, commenters said that the Proposed Approach relies on "regional growth factors" for determining target RE generation levels for each state. There is no floor to each state's RE generation level, which in part causes several state s to have 2030 RE targets below the regional target level, the c ommenters added. For example, despite the southeast having a 10% regional target for RE, Alabama (9.3%), Kentucky (1.9%), and Tennessee (5%) all have state

- level targets below the regional lev el, the c ommenters pointed out. Commenters stated the RE target generation level is a misnomer, because it is a cap, and therefore once achieved the RE generation level is assumed to remain flat through 2030. Applying such a cap is an arbitrary step that f ails to capitalize on the momentum of a particular industry, and particularly ironic given that North Carolina has already exceeded the solar portion of its standard that serves as the basis for this cap, the c ommenters argued. Commenters said i f this cap is used, based on the EPA calculations, Georgia and Mississippi reach the 10% RE generation level by 2027, North Carolina and South Carolina do so by 2028, and Virginia does so by 2026. After meeting the 10% RE generation target, the EPA's target calculati on assumes that none of these states increase RE generation any further, the c ommenters concluded.

Comment 4: Commenters stated that a 30 percent reduction in CO2 is aggressive, but reasonable
Response 4: The information provided in this comment was valuable in finalizing the building block 3 methodology, which is described in section V.E.6 of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific comments under thi s comment:

Commenter s indicated that it has identified several concerns with the NODA proposal, and support the approach taken in the Proposed Rule, which the EPA expects to result in about a 30 percent reduction in CO2 emissions from existing affected EGU s. Commenters asserted that this level of emission reduction is an aggressive, but reasonable target for 2030, and did not support significantly stricter emission performance levels.

Comment 5: Commenters stated that the CPP will have the effect of l ocki ng in natural gas infrastructure at the expense of RE generation.
Response 5: The EPA disagrees with this comment. The final rule phases in the BSER goal rates over the interim compliance period that does not require significant near

- term infrastructure d evelopment.279 The following are summaries of the specific comments under this comment:

C ommenters stated several recent studies have raised new questions about whether natural gas can form the cornerstone of a carbon

- emissions reduction strategy. In October, the Joint Global Change Research Institute's collaboration between the Department of Energy's Pacific Northwest National Laboratory and the University of Maryland published the results of work completed by five separate research teams from the United States, Australia, Austria, Germany, and Italy, the

c ommenters said . These teams independently concluded t hat abundant natural gas use displaces not only higher carbon coal

- fired generation but also generation from renewable sources and nuclear power, the c ommenters added. Commenters stated that a s a result, the abundance of natural gas from unconventional sou rces could substantially change the global energy system over the decades ahead without producing commensurate changes in emissions or climate forcing.

Similarly, commenters added, this September, researchers at the University of California, Irvine, publis hed a study that concluded that abundant natural gas supplies could slow the process of de

carbonization by delaying the deployment of renewable energy technologies unless the U.S. government enacts strong limits on greenhouse gas emissions or policies to drive electricity generation that comes from renewable sources. Commenters stated that in April, researchers at Duke University concluded that natural gas can help reduce greenhouse gas emissions but will not offer the significant pollution reductions need ed to change the global emissions trajectory. In this context, the c ommenters asserted it is important to examine whether the CPP encourages states to move quickly enough to adopt renewable energy and energy

- efficiency technologies. It is also necessary to look at the extent to which other state and Federal policies may be needed to incentivize the deployment of these technologies, the c ommenters expressed.

Commenter s also suggested that the CPP could accelerate the "lock

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

resources. Commenters warned that this could result in the overbuilding of new natural gas plants, which would reduce the incentive to add new renewable generation capacity to the grid, locking out energy resources that are truly clean.

This is just one company's perspective on the EPA's CPP, commenters said, but it is an inter esting and important one to consider, given the need to rapidly deploy zero

- carbon technologies to mitigate climate change and avoid all unnecessary commitment to new fossil

fuel

- fired infrastructure.

Comment 6: Commenters stated that the EPA used u nrealistically low RE annual growth estimates to develop the RE goals.
Response 6: The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly in the reevaluation of onshore wind and solar cost and performance assumptions. The final building block 3 methodology is described in detail in V.E.6 of the preamble and in the GHG Mitigation Measures TSD.280 The following are summaries of the specific comments under this comment:

Commenter s asserted that t he rule incorporates unrealistically low estimates both for the annual rate of growth in renewable generation, and in the renewable generation target maxima. In recent years renewable generation technologies

- particularly wind turbines and solar photovolt aic panels

- have been deployed at accelerating rates as prices for these technologies have declined, the c ommenters said . As is noted in the preamble to the Proposed Rule, for several states the proposed renewable generation target percentage for 2030 is set below the percentage of generation attributable to renewable generation in those states in 2012. In addition, the

c ommenters noted that for 17 states the Proposed Rule sets renewable generation targets for 2030 at a level that is lower than that requir ed under state law. Irrespective of whether the EPA adopts the regional approach or the alternative, state

- by

- state approach, the c ommenters stated they do not believe there is a rational basis for assuming that renewable generation in any state will
compr ise a smaller percentage of the total generation mix in any future year than it did in 2012. Accordingly, the c ommenters asserted that the EPA should establish a "floor" for the renewable generation targets at the higher of the percentage of generation att ributable to renewable sources in the relevant state in 2012, or the percentage required in 2030 under the relevant state's laws.

Comment 7: Commenters stated that the EPA’s proposed RE goals are not pushing states toward an unprecedented level of RE development, but rather toward the level of RE generation that grid operators should already be forecasting and planning for.
Response 7: The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particul arly in the reevaluation of onshore wind and solar cost and performance assumptions. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific co mments under this comment:

Commenter s indicated that the EPA notes in the preamble to the proposed rule that as coal

- fired plants retire, current power sector economics suggest that they will likely be replaced with new renewable projects, energy efficienc y savings, and combined cycle gas generation. Commenters stated most of these new lower emitting electricity sources currently have much lower construction and operating costs than coal

- fired EGUs, and this trend is also likely to continue in the coming ye ars. As a result of these cost disparities, EIA's latest Annual Energy Outlook forecasts only 2.5 GW of additional planned coal

- fired generating capacity through 2040, with nearly 90 percent of this capacity consisting of projects that are already under wa y, the

c ommenters said . Similarly, the International Energy Agency ("IEA") World Energy Outlook 2013 predicts that over three

- quarters of the capacity replacements for retired units in the U.S. will come from wind, solar, or NGCC units, according to the co mmenter s . In addition, the

c ommenters said that EIA also expects generation from renewables to be higher than was estimated in 2013 across most of the projection period, with renewable sources accounting for almost a third of the growth in generation resou rces from 2012 to 2040 as they become more
cost

- competitive with other fuels. Indeed, the c ommenters indicated that EIA projects that renewables will remain the fastest

- growing source of electric generation through 2040.281 Commenters said that in sum, the s hift in the electricity generating sector from coal to lower

emitting resources has continued at a rapid pace in recent years, and forecasts of fuel costs, capital costs, and other power sector trends continue to indicate that conventional coal

- fired
power plants will represent a shrinking percentage of generation over the foreseeable future. In this sense, the c ommenters asserted the CPP largely reflects changes that are already happening in the electric sector, as do the individual state targets included in the proposal. For instance, the

c ommenters noted that Washington's emission target for 2030 is 215 lbs CO2/MWh

- ostensibly, a very low number

- but this simply represents the fact that all but one of Washington's coal plants have already retired, with the remaining facility announced for retirement. Commenters stated
t he EPA's proposal will therefore advance the pace at which th e electric sector is changing, but will not fundamentally alter the direct of that change.

Commenter s indicated that one of NERC's two main arguments challenging the EPA's expectations for build

- out of renewable power facilities is that the EPA's RPS

- based formula overestimates states' ability to build renewable generation. While the c ommenters said NERC is correct that the use of existing RPSs to establish renewables obligations does not perfectly correspond to states' actual capacity to install wind and solar plants, the c ommenters asserted NERC understates the potential for renewable generation build

- ou t, thus artificially lowering states' renewables obligations. In fact, EPA's RPS

- based Building Block 3 target barely exceeds the "business as usual" forecasts for renewable energy development by 2030, the c ommenters said . Thus, the c ommenters concluded th e EPA's target is not pushing states toward an unprecedented level of renewable energy development, but rather toward the level of renewable energy generation that grid operators should already be forecasting and planning for. Commenters stated 29 states ( including the District of Columbia) have passed mandatory RPS goals, and another 7 states have voluntary goals. One study looking at states' compliance with their own goals found that 21 of 24 states for which data was available had virtually achieved or

e xceeded their intermediate RPS goals, the c ommenters noted. (A few states have even exceeded their ultimate RPS goals, the c ommenters said .)

Commenter s continued and stated that critically, states have historically found it easier to comply with RPS goals over time as they develop in

- state markets and build local expertise in siting and connecting renewable electricity. Commenters stated this trend should only continue as renewable energy becomes more and more affordable: in 2013, average prices for utilit y

- scale wind and solar power purchase agreements dropped to all

- time lows of $21 and $50 per MWh respectively, compared to average whole sale power prices of between $22 and $55 overall. Similarly, the c ommenters said that the EIA's estimate of the total l evelized cost of energy by resource, including installation and other costs, predicts that wind will be over $15 cheaper than coal per MWh by 2019, and $8 cheaper than conventional natural gas by 2040. Commenters cited to a projection done by Lazard Ltd., a financial advisory and asset management firm, who has concluded that already today wind energy is at least cost

- competitive with, if not cheaper than, both natural gas and coal facilities, with solar not far behind (within $10/MWh of both gas and coal). Commenters said t he consensus expectation in all of these reports is that renewable energy prices will continue to drop as renewable technologies continue to be mainstreamed. Commenters stated that i n short, the market for renewable energy has surged in a way that was not fully anticipated when states set their RPS goals, so they are no longer an accurate reflection of what can be accomplished in individual states.282 Commenters stated that even ignoring the growing strength and competitiveness of the renewabl e generation market, the EPA should not be overly concerned about replacing retiring coal plants because regions with excess (largely cleaner) electricity production will likely end up transmitting that electricity to regions that find themselves less able to replace retiring dirty power plants (see transmission discussion below). Moreover, no state is required to achieve the level of renewable energy development that the EPA used in setting its target states have flexibility to use a combination of any of the building blocks as compliance measures, the

c ommenters noted. The EPA is also not requiring RE to be built within a state for that state to take credit under the CPP, the c ommenters pointed out, and highlighted that this means that RE can be built wher ever it is most economic and there is available transmission capacity.

Comment 8: The Final Rule must adequately value and incentivize renewable generation and energy efficiency.
Response 8: The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly in the reevaluation of onshore wind and solar cost and performance assumptions. The final building block 3 methodology is described i n detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

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

Commenters stated , the least cost pathway to compliance with the rule will be increased deployment of renewable generation and energy efficiency, including demand response. Commenters stated Building Blocks 3 and 4 are critical to the EPA's approach under either alternate structure, in order to properly incentivize development and use of renewable energy

sources an d energy efficiency resources.

However, commenters said that the EPA's analysis of wind and solar generation for BB3 (using either alternate proposed framework) dramatically overstates the current costs associated with these resources and is overly conserv ative in estimating states ability to increase their renewable portfolios. Commenters expressed that the final rule must reflect current cost data (and deployment rate data) for renewable generation and more aggressive targets on a state

- by

- state basis.

Co mmenter s supported the approach put forth by the EPA regarding crediting states under building block 3. Commenters stated in order to aid state compliance with section 111(d) obligations, it would be most efficient and equitable for the EPA to model its ap proach after the best practices of existing state RPSs. Relying upon existing best practices and infrastructure will aid states in efficiently meeting their obligations, while making double counting structurally impossible, thereby maintaining the integrit y of the emissions reductions which will be achieved, the c ommenters said

.

Comment 9: The EPA has underestimated RE opportunities283 Response 9: The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly in the reevaluation of onshore wind and solar cost and performance assumptions. The final building block 3 methodology is described i n detail in V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific comments under this comment:

Some commenters asserted the renewable energy goals in the final rule should better account for the full range of renewable energy opportunities in states and be more stringent

Commenter s expressed that nationwide, the RPS

- based approach and the Alternative RE Approach result in a very similar level of renewable generation. However, commenters stated that neither a pproach fully capture the past and likely future dynamic growth in RE, including the dramatic decrease in costs.

For all of these reasons, commenter s asserted the EPA underestimated the demand and the opportunity presented by renewable energy over the next 10

- 20 years. Accordingly, the commenters argued, the renewable energy goals in the final rule should better account for the full range of renewable energy opportunities in states and, at the least, should certainly be no less stringent than the additions of generation already required.

Commenter s expressed that it is pleased the EPA has included "outside the fence" compliance options such as energy efficiency and RE in its CPP. However, the c ommenters asserted the CPP has underestimated the potential of RE as a compliance strategy for states. To seize the opportunity renewable energy presents, the c ommenters said that the EPA should strengthen state RE targets appropriately. Commenters stated r enewable energy technology is no longer "five years away" it is here, cheap, abundant, and available for use immediately. A recent UCS report found that seven states are already producing more renewable energy than the 2030 targets the EPA set for them, and an additional 17 states have laws in place that will require t hem to develop more renewable energy than the EPA mandates, the c ommenters added. Fixing state renewable energy targets to account for progress already made, and future progress already baked into state law, is just the first step, the c ommenters noted.

Co mmenter s continued by stating that renewable energy creates jobs that cannot be shipped overseas, ensures price stability as it generates power without having to pay for fuel year after year. Best of all, the c ommenters said , it generates power without rel easing greenhouse gases or other pollution. Commenters expressed that it is the right choice for our wallets, for our climate, for our health and for the long

- term prosperity and competitiveness of our country

- and for leading the clean carbon economy globa lly.

Commenter s asserted that the EPA proposal can and should be strengthened to better and more realistically recognize the tremendous potential for renewable energy and energy conservation in cutting carbon emissions.

Commenter s asserted that Building Bl ock 3 can and should provide more ambitious emission reduction estimates from renewables. For example, commenters stated the rule should be revised to reflect recalculating GHG reductions from renewables to include their role in reducing coal

fired generat ion.284 Comment 10: Some commenters questioned the methodology of using a regional approach and believe the EPA should revise the RE targets under Building Block 3.
Response 10: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summ aries of the specific comments under this comment:

Commenter s stated that for RE, the Proposal sets targets based on regional averages of existing state policies, then applies the 2020 averages as state targets for 2030. In its comments on the CPP, the c om menters indicated that AEE lists several limitations of this methodology, including (1) that it uses state RPS levels which may not fully capture the levels of cost

- effective RE potential, (and in the unique case of New York, the current RPS will be expire d by then, although it is likely to be increased and extended); (2) it only expects a state to meet a regional average rate of RE generation, even if the state's renewable generation is already above that average, (3) it assumes no RE growth between 2012 a nd 2017, even though deployment continues to rise, (4) it expects each state to achieve by 2030 only the average RE targets set for 2020. For all these reasons, the c ommenters said that the primary methodology represents a significant understatement of the RE potential available to states for carbon emissions reductions , and t he resulting targets are overly conservative.

Commenter s said that the EPA's proposed renewables approach presents many challenges that will be difficult to resolve in the final rule. Commenters stated t he EPA's methodology fails to sufficiently recognize early action for states that have already supported renewables independently or through RES programs. Commenters stated c omplicated issues, such as accounting for out

- of

- state renewabl es, would be better addressed as part of the state plan processes. A case

- by

- case evaluation of the potential for renewables for each state should be included in the final guidelines, the c ommenters also said. Commenters added that the EPA should allow sta tes to provide input to this assessment for the final goal computation, based on data and specific circumstances applicable to individual affected utility companies.

Commenter s said that under the first approach, EPA's assessment of the potential for RE to contribute to CO2 emissions targets is based on several incorrect assumptions. Commenters stated EPA's approach is arbitrary and unreasonable for at least three reasons. First, the commenters stated, EPA ignored the details of state RPS that would limit t he overall RE potential calculated by EPA. Second, the commenters added, EPA arbitrarily applied regional averages based on state RPS to states without renewable targets, ignoring the different resource potentials in each state. Third, commenters concluded

, EPA ignores costs and other technical limitations that reduce the potential for RE growth.

Commenter s asserted that the EPA's approach to setting the RE goals for each state by dividing the states into contiguous regions is illogical and inequitable. For example, the c ommenters said that according to a DOE study (cited below) relied on by the EPA, Arizona has 5.8 percent of the total national RE potential, but Arizona has a RE goal based on only 3.9 percent of its 2012 generation. By contrast, the c ommenters indicated that West Virginia, which has 0.07 percent of285 the national RE potential (1.2 percent of Arizona's) has an RE goal based on 14 percent of its 2012 generation, almost 4 times as great as Arizona's.

C ommenters stated the EPA contends that the state RPS requirements reflect expert assessments of RE technical and economic potential that can be cost

- effectiv ely developed for that state's electricity consumers. Therefore, the EPA must rely solely on those estimates for each state that has an RPS as being the best estimate of its RE potential, the c ommenters said . For example, the commenters stated, if Pennsylv ania's expert assessment is that it can achieve an 8 percent RE level by 2020, and Delaware determines that it can achieve a 22 percent RE level, it is illogical for the EPA to impose an average regional value of 16 percent on both states without showing
t hat their expert assessments are in error

.
C ommenters said that the EPA's RE calculations are unrealistic. Commenter s said that in the CPP, the EPA assumes that qualifying RE generation will increase from 213 TWh/year in 2012 to 281 TWh/year by 2020 and 52 3 TWh/year by 2030.96 This substantial increase far exceeds the EIA's RE forecast for growth from 202 TWh/year in 2012 to 275 TWh/year in 2020 to 317 TWh/year in 2030,97 and is also much greater than the projection of 356 TWh/year by 2030 included in EPA's own RIA, the commenters said. Commenter s similarly explained that in the CPP, the EPA assumes qualifying RE generation will increase from 213 TWh/year in 2012 to 281 TWh/year by 2020, and 523 TWh/year by 2030. This substantial increase far exceeds EIA's R E forecast for growth from 202 TWh/year in 2012, to 275 TWh/year in 2020, to 317 TWh/year in 2030, and is much greater than the projection of 356 TWh/year by 2030 included in EPA's own Regulatory Impacts Assessment, the commenters said.

C ommenters said th at as proposed, the EPA's RE goals do not allow the inclusion of new biomass, new landfill gas, new coal

- bed methane and new hydro as options in the portfolio approach. Commenter s said that the EPA's RE calculations are not an accurate representation of th e existing RE options because these sources are not included. Existing RPS at the state level, on which the EPA based its RE goals, include these options, commenters said. C ommenters said that the EPA must include all these RE options in the portfolio appr oach as states employ more than just wind and solar in their RPSs. Commenter s said that it should also be allowed to count new and existing combustion turbines in the portfolio compliance plans as well as its landfill gas to energy projects.

Commenter s sa id that when calculating RE potential, the EPA relied in part on a regional RE growth factor calculated using the RPS of states within that region, which was then applied to each state in that region, whether that state had an RPS in place or not. Commente rs stated t his has the potential to make RE targets very aggressive in some states that have less RE potential, as well as no enforceability, and could result in unattainable RE targets in those states. For instance, the c ommenters indicated that in the pr oposed rule, Indiana is a member of the North Central region, along with eight other states in the upper Midwest. Of these nine states, three (Indiana, North Dakota, and South Dakota) have non

- binding renewable portfolio goals, while the rest have binding RPS, the c ommenters added. Therefore, the commenters noted, the regional growth rate applied to Indiana was largely based on the renewable potential of other states. Further, the c ommenters added that within the North Central region, states like North Dako ta, South Dakota, and Minnesota have substantially larger wind speed potential than Indiana, as shown in the NREL's Annual Average Wind Speed map, yet these states are still grouped286 together in the same region for RE potential. However, the c ommenters said that the RE potential from wind speed is very different. At 80 meters high, around half of Indiana has an annual average wind speed of 6.5 meters per second (m/s), whereas the majority of areas within both North and South Dakota show an annual average win d speed of 8.5 m/s, according to the
commenter s . Because these states are grouped together for part of the RE calculation, it results in a higher calculated RE target for Indiana than is actually achievable, which in turn makes the state CO2/MWh goal rate lower than what is actually achievable, the c ommenters asserted

. Further, each state with an RPS in place defines elements within their programs very differently, the c ommenters also said. Commenters noted that according to the EIA's Annual Energy Outlook 2013, "Under [RPS], each state determines its own levels of renewable generation, eligible technologies, and noncompliance penalties." Therefore, commenters stated that using a regional approach, with out taking into account the considerations detailed above that relies in part on an average of RPS goals within those regions in order to calculate RE targets for states, is unreasonable and untenable.

Commenters stated t he EPA's North Central grouping reg ard to geography and renewable energy potential can be classified as unusual at best. States such as Minnesota, North Dakota, and South Dakota have vast potential for wind energy development while mid

- western states such as Indiana, Illinois and Michigan h ave limited potential for the same resource, the c ommenters said

. Commenters stated t o compare Indiana to the Dakotas would require the Dakotas to limit the value of their potential or make potentially unrealistic demands on Indiana. Unlike most of the oth er states in the EPA's North Central grouping, Indiana's economy relies heavily on energy

intensive heavy industry which requires low energy costs and reliable power sources to survive, the c ommenters said

. Commenters stated that e xamining the RPS standard s for the states contained in EPA's North Central grouping does not provide a reasonable basis for logical comparison. Commenters stated o ver 44% of the states contained in EPA's North Central grouping will have an RPS which expires in 2015 and one state h as a megawatt goal rather than an RPS. The remaining 44% of the states have RPS targets which extend into 2025 (except Missouri, which expires in 2021), the c ommenters said . Also, commenters stated, those states which have RPS targets expiring in 2015 have target goals of 10%, while the states with RPS goals extending beyond 2020 have RPS goals between 15% and 25% (except Indiana which has set a voluntary goal of 10%).

Commenter s said that should the EPA move forward with this rulemaking, to create a more equitable and appropriate evaluation of regional renewable potential and allow for the establishment of realistic regional goals, the EPA must re

- evaluate the existing groups as they now stand and re

- align them.

Commenter s indicated that basing renewable generation targets on regional benchmarks leads to states being expected to make significantly varying investments in new projects. Three states, Iowa, Minnesota, and South Dakota, have already met their renewables targets in terms of percentage of total g eneration, the c ommenters pointed out. Some states that have already made major investments in renewable generation, such as California and Colorado, still have a relatively long way to go to hit their projections, the c ommenters noted. In several cases, t he

c ommenters explained that neighboring states are projected to have significantly different levels of renewable generation in 2030 despite similar starting points. For example, West Virginia has a 2030 projection of 12.5 percent, from a starting point of 1.8 percent renewable generation, the287 c ommenters noted and neighboring Kentucky is starting from 0.4 percent, but its 2030 target is only 1.9 percent. It is difficult to understand why neighboring states would be expected to achieve renewable percentages that differ by a factor of over six, the c ommenters questioned.

Comment 11: Commenters stated o nly incremental growth in renewable energy should be considered eligible in meeting goals

. Response 11: The information provided in this comment were valuable in finalizing the building block 3 methodology, particularly in expressing building block 3 target generation in terms of incremental RE. The final methodology is described in section V.E of the preamb le and in the GHG Mitigation Measures TSD.
The following are summaries of the specific comments under this comment:

Commenter s said that the EPA proposes excluding existing hydropower resources from consideration under its BB3 proposal while only including incremental hydropower resources prospectively. Commenters agree d with this approach insofar as only generation from incrementally new renewable resources can result in a net decrease of CO2 emissions from the baseline. Commenters noted that crediting exi sting renewable resources that are part of the baseline with lowering CO2 emissions above the baseline is a fallacy; this can only result from incremental generation. Commenters stated this inconsistency suggests that the goals for BB3 should be examined a nd adjusted accordingly. Commenters stated o nly incremental growth in renewable energy, from the baseline year forward, should be considered eligible in meeting the CAA 111(d) goals. Commenters asserted that including existing renewable energy that is alre ady "baked in" to the baseline does absolutely nothing towards reducing CO2 emissions below the baseline.

Comment 12: Commenters r ecommend ed that the EPA consider specific resource profile and capabilities of each state in determining RE potentials
Response 12: The final building block 3 methodology does not rely on RPS requirements or
state

- specific deployment estimates, but rather cost

- effective RE at an interconnection level. The EPA addresses considerations related to the technical feasibility a nd availability of regional RE resources in both the preamble (section V.E) and GHG Mitigation Measures TSD. The BSER is forward

- looking in identifying cost

- effective opportunities for emission reductions from 2012; however, the cost and availability of th ese emission reduction opportunities is the result of many factors, including previous actions. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific comments under this comment:

Commenter s said that the EPA does not adequately justify the grouping of the states into given regions, other than to aver that states within each region exhibit similar profiles of RE potential or have similar levels of renewable resources, as inferred from a DOE study. However,288 Commenters stated , the DOE study is of technical RE potential, and the executive summary of the study states that "(t)he estimates do not consider (in most cases) economic or market constraints , and therefore do not represent a level of renewable generation that might actually be deployed." Even were the technical potentials to be reliable indicators of relative commercial RE potential, they do not support the regional RE goals that the EPA calc ulates. For example, commenters stated, the East Central region has only 2.4 percent of the national RE potential in the DOE study, but has an RE goal of 16 percent of generation, while the Southeast region, which has 23 percent of the national technical R E potential, ten times that of the East Central Region, has an RE goal of 10 percent, or one

- third less.

Commenter s further indicated that the EPA determined state RE goals by setting regional goals and then calculating a RE growth rate for the region. It then applied that regional RE growth rate to each state's 2012 actual RE (MWh) from 2017 through 2029, the c ommenters added who further said that if a state reached the regional target before 2029, it made no further increases; this happened for 20 states. Commenters stated that if a state fell short of the regional target by 2029, the lower value became its target; this happened for 24 states. As a result of these two factors, the final RE goals for each of the regions are less than the regional target ori ginally derived to calculate the growth rate, the c ommenters said

. Commenters stated the differences are large and highly variable among the regions, ranging from 9 percent below the putative regional goal for the East Central Region to 40 percent below th e regional goal for the North Central region. Commenters stated t his is favorable to a state like Arizona which had little RE in 2012 and is in the West region, which has only a 6 percent regional RE growth rate. Commenters said that as a result, the RE le vel used to calculate Arizona's final overall emission rate goal is only 3.9 percent of its 2012 generation, compared to a nominal regional goal of 21 percent. Commenters stated t his is highly inequitable b ecause, according to the DOE study relied on by the EPA, Arizona has 5.8 percent of the total national RE potential. By contrast, West Virginia, which has 0.07 percent of the national RE potential (1.2 percent of Arizona's potential) has an RE goal based o n 14 percent of its 2012 generation, almost four times as great as Arizona's, the

c ommenters added.

Commenter s argued that the overarching logic the EPA employed to derive RE goals is inconsistent with that used to derive the EE goals. For EE, the c ommente rs indicated that the EPA based the goals on the 11 most aggressive state EE targets in the U.S and for RE, the EPA based the goals on average RE targets by region. Commenters stated i f existing state practices are considered indicators of "reasonableness" then the same approach should be used for both EE and RE

. However, neither the regional approach used to set the RE goals nor the "11 best" approach used to set the EE goals adequately accounts for the unique situation in each state that determines its EE and RE potential, the c ommenters said

. Commenters asserted the EPA should have done state

- specific assessments of EE and RE to reflect these differences.

Commenter s expressed that because of EPA's methodology, the final RE goals for each region are less t han the original RE goals the EPA calculated by averaging state RPS goals. Commenters stated the differences are large and highly variable among the regions, ranging from 9 percent below the original regional goal for the East Central Region to 40 percent below the regional goal for the North Central region. Commenters stated t his results again from a failure to determine RE potentials on a state by state basis.289 Commenter s questioned the EPA's goals which are based on compound annual increases in RE of more than 10 percent in 18 states, and 16 percent or more in seven contiguous states in the East Central region (DE, NJ, PA, MD, WV, VA, and OH) and asked if these increases are reasonable. Commenters also asked if the existing grid could reliably handle that much intermittent electricity flow, particularly if the new RE generation sources are not near existing fossil generation units and distribution lines. Commenters stated in a number of states, biomass, which can be used as an on

- demand resource, comprises a large percentage of the current RE portfolio (e.g., in Virginia is 100 percent). If growth in a particular RE source, such as biomass, is limited that makes the relative amount of intermittent renewable growth even larger than the rates cited above, the c ommenters noted.

Commenter s indicated that the EPA has asked for comment on how far back in time it should consider CO2 reductions that would be considered as fulfilling the targets mandated in the proposed Existing Source NSPS. The EPA is asking for inpu t for crediting such programs before the 2020 glide path and even before the baseline of 2012, the c ommenters said , but added that clearly the EPA has not, but needs to account for the RE progress that has been made in Texas.

Commenter s suggested that the question of timing and credit should be asked another way and for Texas the question should be: given the RE capacity increases that have occurred in Texas what is the justification for requiring more ; t his is the question EPA must answer, the

c ommenters said . Further, c ommenters said that the CAA requires the EPA to set BSER based on a "degree of emission limitation that is achievable" "taking into account the cost of achieving such reduction and any non

- air quality health and environmental impact and ene rgy requirements." Commenters stated the foregoing establishes that the EPA has not determined what is achievable in Texas or for other states in the region. Commenters stated that due to the differences in RE potential from state to state the determinatio n of a target should be based on the what is achievable for each state taking into account cost and energy requirements as set forth in the CAA. Commenters asked that the Agency obtain information from the states, through a NODA or otherwise, and re

- publis h targets on a state

- specific basis.

Commenter s asserted that there are fundamental errors in how the EPA developed Building Block 3 and applied it to Pennsylvania. Commenters stated t he EPA's projections of RE savings under Building Block 3 for Pennsylvania are based on an inaccurate calculation of regional RE generation and bear little resemblance to the state's true renewable resource potential.

C ommenters stated the formula used to calculate each state's RE goals is unsupported and misinterpre ts the nature of state RPS mandates. First, the EPA assumes without basis that current state RPS mandates will be maintained at existing ramp rates rather than be revised (upward or downward) by state legislatures or public commissions, the c ommenters said . More importantly, the c ommenters asserted the EPA confused the focal point of regulation for state RPSs. Commenters stated that i n most states, including Pennsylvania, the state RPS sets mandatory minimum RE targets for load

- serving entities as a percent age of their total retail sales. Most state RPSs do not provide mandatory minimum targets for RE generation, as the EPA incorrectly
assumes, the c ommenters said

.
Commenter s stated that this distinction is important. A generation

- based RPS target, such as that contemplated in Building Block 3, would effectively require a state to ensure the generation or290 purchase of a target percentage of RE at the wholesale level (as measured against its total generation and purchased power portfolio), the c ommenters said

. But in reality, the commenters stated, a state RPS requires only that load

- serving entities (i.e. public utilities selling and distributing power to retail customers) ensure that the target percentage mandate of RE capacity is delivered at the retail leve l (as measured against its total amount of MWhs of energy sold). Thus, the c ommenters asserted there is a mismatch between how the EPA structured Building Block 3 and how most state RPSs actually work.

While EPA acknowledges that many state RPSs allow RE and RECs generated in other states to be purchased and used by in

- state load

- serving entities for compliance, commenter s asserted the Agency fails to adequately account for such implications in quantifying its state RE goals. Indeed, the EPA provides no me aningful guidance on whether RE exporting or importing states should count out

- of

- state bundled and unbundled RE toward achieving their emission targets, the

c ommenters added. There are many reasons, including natural resource availability and geography, w hy states have taken different approaches to RE generation, but the primary reasons are cost and reliability concerns, the co mmenters explained.

The EPA's failure to account for the variety of state RPS approaches and the interplay of out

- of

state renewabl es ultimately causes EPA to overstate the RE potential of states like Pennsylvania, the commenters said. In particular, the c ommenters stated that states with high RE generation will be able to claim such generation for purposes of their state plans, even though a neighboring state like Pennsylvania, whose load

- serving entities actually buy the RE and RECs from these states, cannot claim such generation for purposes of meeting its state emission goal. Commenters stated su ch circumstances fail to support a s howing that Pennsylvania can actually meet its RE targets under Building Block 3.

Specifically, under the Proposed Rule, Pennsylvania is included in a region for calculation of available RE that includes three coastal states: Maryland, New Jersey and Delaw are, the
commenters said. These coastal states have the ability to exploit offshore wind resources, while Pennsylvania as a "land locked" state cannot, the c ommenters said . Moreover, the region includes the District of Columbia, which, however, does not ha ve any electric generation within its boundaries, the c ommenters added. Nonetheless, the EPA's methodology considers a purchase requirement of 20% for imported RE in the District as part of the basis of calculating what RE is available in Pennsylvania, the c ommenters noted.

In addition, the c ommenters said that the EPA has included two states in the region that do not have any current RE policies: Virginia and West Virginia. But instead of using the actual RPS level in each state (0%) for calculating the av erage RE available for all states, the EPA simply excludes these states for purposes of calculating the average RE available for all the states in the region, the c ommenters added. Commenters said i f the EPA instead excluded these "zero RPS" states, the R E target for the region would decrease from 15.8% to 11.9%.

C ommenters stated the proposed rule's various flaws in its calculation of RE emission reductions have significant impact on Pennsylvania. Commenters said the EPA calculated Pennsylvania's RE base d on total electric generation in the State and did not account for the fact that Pennsylvania supplies a number of other states with electricity. Commenters presented a chart, which depicts that Pennsylvania is a net exporter of electricity . Commenters stated the EPA291 projects that Pennsylvania will export approximately 42% of its generation, a rate exceeded by only 4 other states. This results in an inflated calculation of Pennsylvania's available RE, the

c ommenters said

. Commenters stated t he EPA's projected 15.8% generation

- based RE target is the equivalent of a 25.1% sales

- based standard

- an especially aggressive standard considering the state's limited renewable options. Other factors further inflate the EPA's projection of RE savings achi evable in Pennsylvania, the c ommenters said , e.g., the EPA's RE calculations fail to account for load reductions contemplated under Building Block 4 (demand

- side energy efficiency savings). Commenters stated t his omission effectively raises the EPA's propo sed RE savings target another 3%.

Commenter s concluded by stating that in short, the EPA's formula and state plan methodology eliminate a low capacity RE state's ability to claim CO2 emissions displacement from out

- of

state RE, yet impose an inflated RPS target on such states based on such generation. This leaves few alternatives for meeting the CO2 emission reductions achievable through increased RE generation, the c ommenters expressed. The EPA is essentially mandating an inflated RE target reflective of a high RE capacity state on low RE capacity states, irrespective of how inefficient or exorbitantly costly it would be for that state to build additional RE, and without any regard for the wide variation in state generation fleets and energy characteristic s, the c ommenters said

. Commenters stated w ith regard to Pennsylvania, this effectively serves to double the state's current 8% RPS to 16% (if the state decides to file a state plan on its own). Commenters asserted that such an unprecedented jump is unsupp orted in the record and ultimately forces ratepayers to bear the increased costs. Thus, commenters stated, should the EPA proceed with its analysis under Building Block 3, it must revise its calculations and emission targets to ensure that all relevant fac tors are accounted for such that projected savings from renewable generation can actually be achieved. More specifically, c ommenters asserted the EPA should adopt an alternate
state

- specific approach in which threshold calculations of baseline RE and RE po tential are measured against the specific resource profile and capabilities of each state.

Commenter s said that the EPA has established target levels of RE goals by examining current mandatory state renewable portfolio standards (RPS). In the plan, the co untry (excluding Alaska and Hawaii) was divided into six regions, the c ommenters explained. Commenters added e ight states constitute the southeast region, yet there is only one state (North Carolina) in that group with a state mandatory RPS. Commenters sta ted t he wholesale acceptance of this state's RPS and applying it to the RE goals of each state in the southeast region, without consideration of specific components of North Carolina's RPS or the other seven states renewable resource environment, yield unt enable RE goals. It is no wonder that the CPP's non

- hydro RE goals of 281 Twh/year by 2020 (from a base of 213 Twh/year in 2012) and 523 Twh/year by 2030 far exceed the EIA's forecast of nonrenewable energy of 275 Twh/year (2020) and 317 Twh/year (2030) in the EIA's Annual Energy Outlook 2013, the c ommenters noted. In fact, the c ommenters stated that the CPP's untenable RE goals far outweigh the EPA's own forecast of non

- hydro RE of 356 Twh/year in 2030 as prepared in the June 2014 RIA.

Commenter s proposed the following recommendations to the EPA as EPA considers all of the comments received and revises the proposed rule accordingly. Specifically, c ommenters recommended that the EPA fix the regional averaging assumptions in the development of state RE goals in the CPP and develop state

- specific goals based on state

- specific renewable

resources.292 Commenter s recommended that the EPA use the RE goal established in a state's REPS, if one has been adopted, rather than make arbitrary adjustments to such REPS in the setting of a state's goal. For those states that have not adopted an REPS, the c ommenters recommended that the EPA allow states to choose between the RE goal as proposed or the alternative RE goal as outlined in the proposal. The states can determine which calculation approach is most appropriate for their given situation, the c ommenters suggested.

Commenter s indicated that Michigan is poised to meet its 2015 RE target of 10 percent of total electricity sales provided from RE sources. Commenters stated Mich igan will be evaluating opportunities for increased utilization of RE sources as a component of its section 111(d) compliance plan. Incentives to pursue a renewable portfolio standard that go beyond 10 percent for Michigan would be strengthened if the EPA provides the opportunity for early reduction credits (as discussed in Section II.D), the c ommenters reasoned, especially around RE generation installed between the baseline year (e.g. 2012) and 2020. In addition, c ommenters asserted the EPA should allow states to set state

- specific renewable targets that are based on qualifying RE as it is defined in that state. Commenters said s t ates should be given the flexibility to utilize a number of options to demonstrate compliance with the RE standards that are included in a 111(d) compliance plan and not just rely on RE certificates (RECs) to demonstrate compliance.

Commenters said that the EPA is proposing to set a "best practices" scenario based on RPS already established by a "majority" of states acknowledging "renewable resource development potential varies by regions." [79 FR 34866] Commenters stated t he EPA attempts to define BSER for this building block without using national averages and accounting for regional variation by comparing e ach state to a set of neighbors rather than to a single national standard. [79 FR 34867] Commenters asserted it not only varies by region, but by state, and the only appropriate analysis method would be to take into consideration what is technically feasib le and
cost

- effective within individual states.

Commenters asserted that the EPA did not adequately examine or characterize existing state RPS programs prior to regionalizing and averaging to determine state goals. Commenters indicated that it understands that RE goals are based on a percentage of total in

- state generation. Thus, in 2012, Ohio's total net generation was 129,745,731 MW

- h, and the 2020 RE target for Ohio is 0.025%, or 3,286,937 MWh, c ommenters said , which are reflected in the GHG Abatement Me asures TSD. However, Ohio's existing RPSs call for an incremental percentage of total retail sales occurring in the state, inclusive of out of state generation, the c ommenters added. This quantification varies amongst state RPSs, based on what each particu lar state felt was technically and economically feasible at the time with consideration given to the best quantification method, the c ommenters added. In combination with what the c ommenters asserted is an incorrect approach in setting renewable growth rat es based on regional averages, differences in RE portfolios amongst the states call into question the validity, representativeness, and feasibility of the RE goals.

Commenters continued stating that in a practical sense, it appears that the EPA compiled RP S targets with little regard for the variations between individual state RPS language and calculations. These variations provide the flexibility necessary for respective states to design RPS targets with the highest chance of success, the c ommenters said

. Commenters presented

e xamples of unique elements of Ohio's RPS , which include: providing the Ohio PUC with293 authority to classify any new technology as a qualifying RE resource; allowable non

- compliance with the benchmark if the reasonably expected cost of electricity exceeds 3%; approvable adjustments to benchmarks due to availability of qualifying RE resources both instate and within the PJM interconnection; the Ohio PUC may amend the benchmarks if they are not reasonably achievable due to "regulatory, eco nomic, or technological reasons" beyond reasonable control; banking of RE credits are allowed from year

- to

- year.

Commenters added that the EPA has taken the targets and benchmarks from individual state RPS as a demonstration of RE potential, however, witho ut consideration for state specific variables, the RE goal becomes more difficult to reach and more of a burden to Ohioans. To ignore these nuances embedded within state plans and force a one

- size

- fits

- all approach is enacting arbitrary, capricious and inf lexible mandates on states, the c ommenters asserted.

Commenter s said Block 3, regarding low

- carbon generation, should be revised to better reflect the economic potential within each state, along the lines proposed by the USC, rather than being based on ave rages of state policies that reflect a variety of other considerations. Commenters said that the EPA's primary proposal for determining how much each State might reduce its carbon emissions through increased use of low

- carbon generation technologies such a s renewable generation resources is based on regional averages of RE standards adopted by the states. These standards are based on a variety of considerations other than the technical and economic potential for a state to generate power using these technol ogies and consequently a number of perverse results follow, the c ommenters indicated, such as states, including Michigan, being expected by the EPA to do less by 2030 than they have already done or already require to be done by some time earlier than 2030.

Commenters explained that the EPA's alternate proposal bases its assessment of the potential contributions of renewable generation in proportion to the NREL's inventory of RE resources by state. However, c ommenters indicated that the pace at which RE reso urces can be deployed does not depend on the potential; rather the potential in a state speaks to the ultimate limits of renewable deployment in that state. Further, the c ommenters stated that the EPA proposes to accept transfers of RE credits between stat es, making the availability of resources within a state even less relevant to the pace at which a state can increase its use of renewable power generation.

Commenters therefore recommended that the final rule base Block 3 on the historical experience of RE deployment by exemplary states, much as the EPA has done in the draft rule with respect to energy efficiency in Block 4. The recent proposal by the UCS, "Strengthening the EPA's Clean Power Plan", provides an excellent example of this approach. UCS' propo sal should be eminently achievable as it only proposes that the renewables block for Michigan be about 20% renewables as a proportion of load by 2030 and Governor Snyder's administration reported in 2013 that 30% renewables by 2035 was technically and econ omically feasible without creating power reliability issues, the c ommenters concluded.

Commenter s said that the EPA state emission rates in the East Central Region must be re

calculated due to the passage of SB310 in Ohio just prior to the publication of the EPA's proposed 111(d) rule. Commenters indicated Ohio SB310 amended energy efficiency and alte rnative energy resource mandates (including renewable mandates) by imposing a two

- year pause on energy efficiency, peak demand reduction and RE resource requirements. Commenters294 said i t also eliminated both the RE resource in

- state requirements and the adv anced energy resource requirements, thereby reducing the former alternative energy resource mandate by half. Due to the timing of Ohio SB 310, the EPA did not reflect the impact of this new state law in the BSER Building Block #3 calculations for the East Central Region, the c ommenters noted and therefore said the EPA must recalculate state goals within the region based on Ohio's SB310.

Commenter s continued indicating that Ohio SB310 stated that "because the energy mandates in current law may be unrealistic and unattainable, it is the intent of the General Assembly to review all energy resources as part of its efforts to address energy pricing issues. Therefore, it is the intent of the General Assembly to enact legislation in the future, after taking into ac count the recommendations of the Energy Mandates Study Committee that will reduce the mandates in sections 4928.64 and 4928.66 of the Revised Code and provide greater transparency to electric customers on the costs of future energy mandates, if there are t o be any." Therefore, c ommenters expressed that the EPA's final 111(d) rule should provide a mechanism for re

- calculating state target rates following future Ohio legislation based on the recommendations of the Energy Mandates Study Committee.

In developin g the target RE generation levels, c ommenters indicated that the EPA calculated a hypothetical RES requirement for each region by averaging the RES requirement of each state that currently has an RES requirement within the region. Commenters added that the EPA recognizes state expertise in developing RE goals, thus justifying the use of these goals in calculating BSER goals, and cited the following from the GHG Abatement Measures TSD:

"These state goals and requirements have been developed and implemented w ith technical assistance from state

- level regulatory agencies and utility commissions such that they reflect expert assessments of RE technical and economic potential that can be cost

- effectively developed for that state's electricity consumer"

However, c o mmenters said that the EPA chose to exclude that same expertise by the state of West Virginia simply because after an exhaustive vetting and legislative process, the state determined that it could not support a mandatory RE goal. It was the state's informe d decision, developed and implemented with technical assistance from state

- level regulatory agencies, the utility commission, and interested public and private parties, no different from any other state that the EPA used in the calculation of a region's re newable potential, the c ommenters said . By excluding states like West Virginia that have determined their renewable mandate to be zero, whether through affirmative action or through a decision not to act on a legislative mandate, the

c ommenters asserted th e EPA disregards its own technical justification document. Commenters stated the EPA cannot and should not pick only those states that have concluded a specific outcome after study. Commenters thought the EPA should accept all states' expert assessment of RE technical and economic potential that can be cost

- effectively developed for the state's electricity consumer

- regardless of what conclusion that expertise leads to. Commenters said that
t o cherry pick a few states in order to produce a certain outcome un dermines the credibility of EPA's technical support for this proposal , and stated e ither all states are experts or all states are
not. Commenters stated that the EPA should recalculate the target RE generation levels under Building Block #3 by including ev ery state in the calculation, incorporating states such as West Virginia as a zero since it imposes no RE mandate.295 Commenter s said that the EPA's approach also assumes that renewable programs are emission reduction programs, but the vast majority include a lternative compliance methods or "safety valves" that do not result in emission reductions. In fact, c ommenters pointed out that environmental groups have consistently opposed the use of safety

- valves under the logic that it reduces investment in RE and al lows for emissions that would otherwise not occur without such a mechanism. However, c ommenters noted, the EPA assumes, for the purpose of setting BSER that a state will achieve its entire renewable requirement through the procurement of allowed RE and act ually achieve the emission reduction used to calculate BSER goals for individual states. Commenters stated this approach is simply not accurate and results in artificial inflation of RE assumptions and thus emission reduction assumptions. Commenters stated t he EPA must recalculate BSER in a manner that reflects the true emissions impact of all state RE requirements including calculating the impact of each safety

- valve mechanism (or alternative compliance mechanism). Additionally, within the NODA the EPA req uests feedback on ways that state

- level RE targets could be set based on regional potential for RE, the c ommenters said

.
Commenter s added that the EPA relied on historic RE development from the top 16 states. This approach overstates the RE development rat e by relying only on data from those states that have been most successful in developing their renewable generation, the c ommenters asserted

. Commenters stated that h istoric RE development should be based on the experience of all states.

Commenter s recomme nded, at a minimum, that the EPA review each state's RPS requirements and determine if the state's definition of RE is the same as the EPA's and adjust the state RE goals accordingly.

Commenter s said that establishing BSER from implementation of RE based on a state's existing fossil fuel generation is arbitrary. Commenters did not recommend this approach and recommended that to the extent Building Block 3 is determined to be a legal application of BSER, each state assess its own RE potential using appropri ate technical and economic analysis to develop state

- specific goals that are cost effective and practical. Commenters indicated that in North Carolina's case, the state's REPS represents the product of this analysis and the resulting RE target of 3.75% be used as the standard for North Carolina.

Comment 13: The EPA has failed to actually analyze the Ohio program
Response 1 3 : The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summ aries of the specific comments under this comment:

Commenter s said that the state of Ohio is one of many across the nation to have RPS developed. The EPA has used this fact on multiple occasions as justification for including RE targets. However, c ommenter s stated that it appears that the EPA has failed to actually analyze the Ohio program. Recognizing the challenges of Ohio entities, c ommenters said that Ohio state legislation included provisions in their RPS that tailor the requirements such that it is fe asible, economical and workable in Ohio. For example, c ommenters indicated that Ohio's RPS includes2 96 provisions which "electric utility or electric services company may seek a force majeure determination from the commission for all or part of a minimum rene wable

- or solar energy benchmark" (OAC rule 4901:1

- 40

- 06). This chapter sets up detailed criteria a source would need to submit to demonstrate a dire need to end their legal requirement to meet compliance obligations, the c ommenters noted. The conditions to qualify for force majeure are not effortlessly met nor are they readily given; but the state of Ohio determined them necessary for cases of extreme need when developing Ohio's RPS, commenters added. Furthermore,

c ommenters said that under OAC rule 4901:1

- 40

- 07 electric utilities or service companies "may file an application requesting a determination from the commission that its reasonably expected cost of compliance with an advance energy resource benchmark would exceed its rea sonably expected cost of generation to customers by three percent or more."

Commenter s indicted that provisions such as force majeure and cost cap have not been accounted for in the EPA's rule. Federally enforceable RE would not allow states the flexibili ty to apply such measures in cases when it is needed, the c ommenters said . States would be locked into goals that do not account for real world changes and do not allow state agencies to fully utilize their knowledge regarding these measures and what is th e most beneficial for the state, the

c ommenters noted. Commenters stated this further strengthens Ohio EPA's desire to keep measures like RE and EE as state

- only programs. Commenters also said s tates should have control over what programs are used to achie ve state RE and EE goals and if a program becomes no longer economically beneficial or technically feasible, the state can freely chose to take appropriate action without a lengthy SIP revision or enforcement by the EPA or a citizen's suit.

Commenter s conc luded that in regards to implementing EE programs in the state, Ohio has the following language in ORC 4928.66 (2)(b) [Appendix N]: "The commission may amend the benchmarks set forth in division (A)(1)(a) or (b) of this section if, after application by the electric distribution utility, the commission determines that the amendment is necessary because the utility cannot reasonably achieve the benchmarks due to regulatory, economic, or technological reasons beyond its reasonable control." Commenters stated t he EPA has afforded no similar opportunity for states to make adjustments that are warranted, yet used these very state programs to develop the goals. Commenters urged the EPA to re

- evaluate the RE and EE goals, base them on all provisions provided in the individual state RPS programs and provide needed flexibility for goals and state plans to be adjusted when warranted, without the need for anti

- backsliding provisions.

Comment 14: Technical and economic limitations to potential growth of RE in states has not been considered

. Response 14: The final building block 3 methodology is based on historical deployment of RE resources and validated by modeling the economic potential of incremental RE at a reduced cost. The EPA addresses considerations related to th e technical feasibility and availability of regional RE resources in both the preamble (section V.E) and GHG Mitigation Measures TSD

. The following are summaries of the specific comments under this comment:297 Commenter s stated that the EPA failed to consider any technical or economic consideration which would limit the potential growth of RE in states. For example, commenters said, the EPA did not conduct a renewable resource assessment for any state. Similarly, c ommenters stat ed EPA did not consider the infrastructure constraints that would inhibit significant increases in RE

, and expressed one limitation is the need for additional transmission capacity needed to incorporate new intermittent resources and the EPA also failed to assess the practical limitations associated with the construction of RE facilities. As a result of these flaws in the EPA's analysis, the EPA set RE targets for each state that are arbitrary and unreasonable estimations of renewable energy resources avail able in each state, the c ommenters concluded.

Comment 15: The EPA's p roposal d oes n ot a dequately c onsider i nfrastructure b arriers

. Response 15: Building block 3 target generation is not assumed to increase beyond expected baseline performance until the first year of compliance in 2022. Further, the phasing in of the building block 3 target generation level over time ensures adequate lead time for investments and planning necessary to begin to integrate higher levels of RE. The EPA addresses this and other considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (sec tion V.E) and GHG Mitigation Measures TSD.
The following are summaries of the specific comments under this comment:

Commenter s said that the EPA's proposed action fails to appreciate the difficulty in time and expense associated with developing new RE reso urces and associated transmission capacity. Commenters asserted , based upon its own experience, that many states will be unable to meet the EPA's interim 2020 goals because of the time it will take to develop the necessary generation and transmission infra structure.

Comment 16: Deployment of solar and wind facilities and mini

- grids are expanding rapidly in the U.S.
Response 16: The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, which is described i n section V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific comments under this comment:

Commenter s indicated that the accelerated pace and expansion of investments in the Green Alternative Non

- Hydro El ectric Zero

- Emissions Industry Infrastructure (GANHEZII) will overlap improvements to existing grid infrastructure under the CPP. The compliance phase

- in period begins in 2020 and last 9 years, the c ommenters noted. Deployment of solar and wind facilities and mini

- grids are expanding rapidly in the U.S., employing a skilled workforce, and in the case of wind power, it's Made IN America too, the c ommenters said

. Commenters stated that b y 2030, the compliance period start date, non

- hydro renewable energy generation will likely298 outpace fossil fueled EGU in the collective output

- weighted

- average of generating capacity vs

zero

- emissions.

Comment 17: Commenters questioned the EPA's proposed t reatment of b iomass

. Response 17: Commenters in this section focuse d on the role of biomass

- burning sources in RE target setting. Some c ommenter s stated that EPA's proposed goal

- setting calculation assumes without justification that biomass burning EGUs do not emit CO2. Other commenter s stated that the RE goals would be s trengthened if EPA explicitly excluded new biomass

- burning EGUs from the justification for its new targets due to the lack of guidance on accounting for biomass; the commenter s noted that the EPA can justify its reduction targets without assuming that biom ass is available and that it will reduce net GHG emissions. In contrast, some commente rs stated that the RE goals are weakened due to the fact that EPA has omitted biomass power from its goal

- setting IPM projections.

Biomass is included in the IPM baseline projection. Biomass is not considered part of the best system of emission reduction in this rule and therefore it is not included in goal

- setting or compliance evaluations. However, similar to other technologies outs ide of BSER, biomass may be considered as a part of a state’s plan to meet the emission guidelines.

For more information regarding Building Block 3, refer to Section V.E of the preamble.

For more information regarding biomass in the IPM baseline project ion, refer to EPA v5.13 Base Case Documentation Supplement to Support EPA’s Proposed Carbon Pollution Guidelines for Existing Electric Generating Units in the docket.

A discussion regarding the use of some biomass feedstocks for compliance purposes can be found in Section VIII.I and Section VIII.K of the preamble.

EPA developed the revised draft report, Framework for Assessing Biogenic CO 2 Emissions from Stationary Sources , to continue advancing our understanding of the role the use of biomass can play in s trategies to address greenhouse gas emissions. Specifically, the Framework was developed as a policy

- neutral framework for assessing biogenic CO 2 emissions from stationary

sources

— it was not developed as technical guidance in conjunction with any specific policy or program. The EPA is engaging in a second round of targeted peer review of the revised draft Framework with the SAB in 2015.

A discussio n regarding the current status of the development of the revised Framework and how information from the revised Framework and the related peer review processes could be used to inform how states and EPA assess biogenic CO 2 can be found in Section VIII.I an d Section VIII.K For more information regarding the Framework , see: http://epa.gov/climatechange/ghgemissions/biogenic

- emissions.html

The following are summaries of the specific comments under this comment:299 Commenter s said that the EPA incorporates project ions about future biomass

- based power generation when setting emission reduction targets under the ESPS. Commenters added that state emission reduction targets are based on several factors, including an estimate about the extent to which states will increa se their reliance on renewable energy. In the proposed RE approach described in the "GHG Abatement Measures Technical Support Document," the EPA establishes each state's RE baseline level using a dataset that includes electricity generated from biomass

com bustion, the c ommenters noted. Commenters explained that the Agency then extrapolates each state's renewable generation target, i.e., the amount of nominally zero

- carbon RE that the EPA estimates the state can produce on an annual basis by 2030 from those baselines. The renewable generation targets are used to determine each state's overall CO2 reduction targets, the

c ommenters said

. Commenters also said t he EPA's proposed approach sets targets based on renewable portfolio standards averaged across regions and assumes that the use of all RE technologies will grow at the same rate. Importantly, c ommenters stated that the EPA's proposed calculation includes biomass

- burning EGUs and assumes without justification that biomass

burning EGUs do not emit CO2.

Comme nt ers expressed that the EPA should explicitly exclude new biomass

- burning EGUs from the justification for its proposed targets. Commenters stated the EPA currently has no accounting system to distinguish biomass that will result in low

- carbon pollution fr om that which will result in high pollution. Commenters stated the EPA recently started to outline an approach for exempting certain categories, but the approach is still undefined and contains elements that are unlawful. Furthermore, the EPA can justify i ts reduction targets without assuming that biomass is both available and will reduce net GHG emissions, the c ommenters further noted. Commenters asserted that a s detailed in broader comments on the ESPS being submitted by several of the undersigned organiz ations separately, there is ample evidence to support much stronger RE targets and that the EPA's targets will be stronger if they explicitly exclude new biomass.

C ommenters stated that in their understanding of the science relating to biomass for energy, there are clearly both good and bad forms of bioenergy. Commenters focused their attention mainly on those forms of biomass and beneficial use of methane that are widely agreed to be beneficial to climate mitigation in the near term and long term. The CPP, c ommenters said , as written, profoundly underappreciates the potential of diverse bioenergy resources to mitigate climate change. Commenters acknowledged that the proposed rules clearly support smart bioenergy, as noted in the Preamble where the EPA states, "broadly speaking, burning biomass

- derived fuels for energy recovery can yield climate benefits as compared to burning conventional fossil fuels." Yet, c ommenters said the EPA failed to include new bioenergy in its IPM computer model of renewable energy growth, saying:

"The analysis in this TSD does not consider biomass renewables in its evaluation of renewable development potential for BSER (Best System of Emission Reduction), but the preamble discusses the possibility of a path for states to consider it in their plans."

C ommenters stated that by omitting biomass power from IPM projections of new renewable energy generation potential, the EPA weakens the renewable energy goals for states. Commenters thought i t also could result in some opportunities for bioenergy to be overlooked by
states. Commenters added that this is especially odd because in the EPA's modeling for the proposed rule, existi ng biomass electricity (mainly standalone biopower and some cofiring) is300 included, and has zero associated carbon emissions. In other words, existing biopower in the IPM is assumed to be a priori carbon neutral, the c ommenters said . Although the EPA does n ot offer any rationale for this omission, nor for the inconsistent treatment of existing biopower emissions, this occurs in the context of the ongoing debate over the accounting of biogenic carbon emissions from biopower, the c ommenters added. Commenters s tated i n the preamble to the Clean Power Plan, EPA states that "while biomass and other biogenic feedstocks have the potential to reduce the overall level of CO2 emissions resulting from electricity generation, the contribution of biomass

- derived fuels to atmospheric CO2 is sensitive to the type of biomass feedstock used, and the way in which the feedstock is grown, processed, and ultimately combusted as a fuel for energy production." Commenters concluded by noting that this debate has not been resolved by the EPA having issued Second Draft Biogenic Carbon Assessment Framework on November 19.

In contrast to commenters who largely believe that biomass should be considered carbon neutral,
commenters noted that the Proposed Rule improperly treats biomass combu stion as "zero

carbon" renewable energy in calculating state targets. Commenter s said that this is contrary to the scientific literature, is not supported by any adequate explanation or justification and is inconsistent with the EPA's own modeling assumpti ons considering that the EPA's IPM model runs incorporate a non

- zero emissions factor for CO2 from biomass combustion. In this modeling, commenters said that generation and emissions from "[n]ew and existing non

- hydro renewable capacity" are explicitly "in cluded in the average emissions rates that are evaluated against the state goals for compliance." Moreover, commenters said, CO2 emissions from biomass consumption are included in the average emissions rate subject to the CO2 constraints. Commenter s stated that it does not appear that the EPA used its own modeling assumptions in setting emissions targets for individual states. Commenter s said that the Proposed Rule, as set forth in the GHG Abatement TSD, includes biomass generation as "renewable energy," wh ile the Goal Computation TSD includes all renewable generation in the denominator of the target

setting equation, but does not include any associated emissions in the numerator. C ommenters stated this means that all renewable generation, including biomass generation, is effectively considered "zero

- carbon" in setting state targets. Commenter s concluded that the Proposed Rule neither explains nor justifies this treatment, which contradicts both the IPM model assumptions and EPA's acknowledgments elsewhere in the Proposed Rule that the net atmospheric effects of bioenergy generation may vary considerably depending on feedstocks and generation methods.

Comment 18: Many states have less stringent RPS goals for co

- ops and municipal utilities
Response 18: State RPS requirements are not a factor in quantifying the amount of cost

- effective RE that is part of the BSER in the final rule. The methodology that produces target generation levels under building block 3 is described in detail in V.E of the preamble a nd in the GHG Mitigation Measures TSD.
The following are summaries of the specific comments under this comment:

Commenter s indicated that many states have less stringent RPS goals for co

- ops and municipal utilities, but the EPA only applied the more string ent primary RPS goals for these states.301 Commenters asked why the EPA claims that doing so is "inherently conservative" and further asked if this does not make state goals more stringent.

Comment 19: States with geographical locations where natural resourc es are available have an advantage over other states; this creates inequities
Response 19: The final building block 3 methodology does not rely on RPS requirements or
state

- specific deployment estimates, but rather cost

- effective RE at an interconnection l evel. The EPA addresses considerations related to the technical feasibility and availability of regional RE resources in both the preamble (section V.E) and GHG Mitigation Measures TSD.
The following are summaries of the specific comments under this comme nt:

Commenter s said that there are a few issues of concern in EPA's inclusion of renewable energy in the state goal calculation. The EPA includes renewable energy in the state goal calculation by calculating a baseline level of RE generation in each state and setting a target level of performance, the c ommenters explained. Renewable energy is largely dependent on the availability of natural resources such as sun, wind, and water, the c ommenters continued, adding that states with geographical locations where these natural resources are available have an advantage over other states that lack the same resources. Commenters stated t his introduces yet another inequity amongst the states since renewable are included in the state goal calculation. For instance, c om menters asserted states with wind power will potentially meet their state RE goal much sooner than other states that do not have this same natural resource as readily available.

Comment 20: Integrating new wind and solar resources will increase the challenges of reliably operating the ERCOT grid.
Response 20: The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly in the imposition of intermittent RE limits at the IPM region level, as described in section V.E.6 of the preamble and in the GHG Mitigation Measures TSD. The EPA addresses this and other considerations related to the technical feasibility and availability of RE resources in both the preamble (section V.E) and GHG Mitigation Measures TSD.
The following are summaries of the specific comments under this comment:

Commenter s said that integrating new wind and solar resources will increase the challenges of reliably operating the ERCOT grid. In 2013, almost 10% of the ERCOT region's annual generation came from wind resources. To accommodate this level of intermittent generatio n,

c ommenters explained that ERCOT has needed to evaluate impacts on operational reliability and improve wind output forecasting capabilities. The increased penetration of intermittent renewable generation, as projected by the modeling results, will increa se the challenges of reliably operating all generation resources, the c ommenters continued. Commenters stated i f302 there is not sufficient ramping capability and operational reserves during periods of high renewable penetration, the need to maintain operatio nal reliability could require the curtailment of renewable generation resources. Commenters anticipated t his would reduce production from renewable resources, leading to possible non

- compliance with the proposed rule deadlines.

Commenters added that based on the CSAPR and $25/ton CO2 scenario, intermittent renewable generation sources will contribute 22% of energy on an annual basis in 2029. Commenters stated that h owever, during 628 hours of the year intermittent generation will serve more than 40% of syst em load. During 128 hours, instantaneous renewable penetration will be higher than 50%, and the peak instantaneous renewable penetration from the model results is 61%, the c ommenters added. Commenters added that the significant change from present experien ce is that the highest renewable penetration hours will be driven by maximum solar production during relatively high wind periods. These periods occur during the day (8 a.m. to 5 p.m.), as opposed to early morning hours (usually 2 to 4 AM), as currently ex perienced in the ERCOT region, the c ommenters said

. Commenters stated t he high instantaneous renewable penetration hours in 2029 occur year round except for the July

- September period. Commenters said that Figure 11 ( titled: "Days with Highest Instantaneous Penetration of Renewables") shows generation output by fuel type for the days with the highest instantaneous penetration of renewables in 2029 in the $25/ton CO2 scenario.

Commenter s explained that due to load growth, the lowest net load (defined as total load minus generation from intermittent energy resources) in 2029 is higher than the current record (14,809 MW in 2014 and 17,611 MW in 2029). Therefore, during low net load hours there will be no significant change compared to current operating condition s in terms of MW of thermal generation online, inertial response and frequency response available during generation trip events, the c ommenters further explained.

C ommenters stated significant increase can be seen in net load ramps compared to current
expe rience. Commenters stated w hile the net load down ramps in 2029 are still largely defined by decreases in load at night, as is the case currently, the highest net load up ramps are defined by rapid solar production decline at sunset and simultaneous declin e in wind production during evening load pick

- up. Commenters presented Table 19 (titled: "Maximum Ramp

- up and Ramp

Down") , which displays the maximum ramp

- up and ramp

- down in 202.9 in the $25/ton CO2 scenario. Commenters also presented Figure 12 (titled: " Highest Three Hour Net Load Ramping Day") , which shows wind and solar generation output and customer demand (load) on the day with the highest three hour net load ramp in 2029 from the CSAPR and $25/ton CO2 scenario.

Commenters stated that the simulation model assumes perfect foresight and ensures that there is a sufficient amount of thermal generation with sufficient ramping capability committed to follow such rapid net load ramps. In real time operation, however, the c ommenters said that accommodating th e maximum ramps resulting from simultaneous solar and wind generation decline would be more challenging. Commenters stated that a t times, the existing and planned generation fleet will likely need to operate for more hours at lower minimum operating levels and provide more frequent starts, stops, and cycling over the operating day. Commenters stated i t is important that market mechanisms are adopted so that the need for flexible generation (with short start

- up times and high ramping capability) is reflected in real

- time energy prices. Market mechanisms to include dispatchable load resources could also help to address flexibility needs,303 the c ommenters thought. Enhancing wind and solar forecasting systems to provide more accurate wind and solar generation proj ections will become increasingly important, the c ommenters also said. Commenters stated r egulation and Non

- Spinning reserves will need to be increased to address increased intra

- hour variability and uncertainty of power production from wind and solar. Also

, c ommenters added that tools available to system operators must be enhanced to include short

- term (10

- min, 30

- min, 60

- min, 180

- min) net

- load ramp forecasts and simultaneous assessment of real time ramping capability of the committed thermal generation to assist operators in maintaining grid reliability.

Commenters asserted that though all solar capacity additions predicted by the model were utility

scale, it is likely that a significant portion of future solar generation capacity will be embedded in the di stribution grid (e.g., rooftop solar and small scale utility solar connected at lower voltage levels). Commenters stated ERCOT does not currently have visibility of these resources. To produce accurate solar production forecasts, the c ommenters said that E RCOT would need to have improved information regarding the size and location of distributed solar installations. Additionally, to ensure grid reliability, there would need to be increased consideration of operational activities on the distribution and tran smission systems, the c ommenters added. Commenters stated they are currently pursuing a rulemaking to improve and expand the data submitted annually to the PUCT on distributed generation facilities.

Based on ERCOT's modeling, the majority of new renewable generation resource additions are anticipated to be solar, the c ommenters said. However, if instead ERCOT sees a large amount of wind resource capacity additions, then the reliability impacts may be more severe, the

c ommenters predicted. Commenters stated w ind production in West Texas results in high renewable penetration during early morning hours, when load is lowest

. Commenters further added that a larger expansion in wind production relative to solar may result in lower net loads and significant reliab ility issues. Commenters said that if ERCOT cannot reliably operate the grid with these high renewable penetration levels, then production from these resources will be curtailed to maintain operational reliability. Should this occur, c ommenters said , it wo uld reduce production from renewable resources, leading to possible non

- compliance with the proposed rule deadlines.

Comment 21: B elieve that 2030 RPS targets should be used over 2020 RPS targets
Response 21: The EPA is not finalizing an approach that rel ies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

The following are summaries of the specific comments under this comm ent:

Although commenters support the Alternative Approach , c ommenters were compelled to point out a number of opportunities to improve the calculations under the Proposed RPS Regional Approach. Commenter s said that should the Proposed Approach be utilized, the EPA should use 2030 RPS averages for 2030 targets rather than 2020 targets. Commenters thought that utilizing the average 2020 RPS as a target for 2030 within a region underestimates the ability of renewable energy to deliver achievable and cost effec tive emissions reductions. This simple304 change impacts the regional RE targets, the annual regional growth factors, and thus the proposed goals in 41 states, resulting in a total increased RE target of 64,316 GWh in 2030, the

c ommenters said

.
Commenter s stated should the EPA default to the current approach (RPS approach) in setting state targets, several key changes must be made. Commenters stated that w hile they are not in favor of the current approach (RPS approach), should the EPA default to this, the re are two key changes that must be made: use the highest RPS in a region, and use 2030 RPS targets.

First, c ommenters said that the EPA should use the highest RPS in a region to set the state targets, not the average RPS. The current approach groups state s into 6 different regions and takes the average of the 2020 RPS goals for those states in that region and multiplies this by the total 2012 generation for the region, the c ommenters explained. The EPA chose this RPS approach for two principal reasons, the c ommenters indicated: First, in establishing the requirements, states have already had the opportunity to assess those requirements against a range of policy objectives including both feasibility and costs

. Second, c ommenters said

, that renewable resource development potential varies by region, and the RPS requirements developed by the states necessarily reflect consideration of the states' own respective regional contexts. The highest RPS goal in the region still fits within the principal reasons the EPA used, as the state will have weighed the feasibility and cost of the RPS policy against other policy objectives, yet still arrived at the aggressive RPS goal, the c ommenters continued.

Furthermore, commenters noted that there are many instances where solar deployment has exceeded RPS deployment schedules, indicating that the RPS goal could have been more aggressive. For example, in New Jersey, Pennsylvania, Arizona, California and Massachusetts, solar has already exceeded the RPS goals, the c ommenters point ed out. These aggressive goals are an indication that higher levels of renewable energy deployment are viewed as possible in each respective region, the c ommenters thought. Also, a recent report from former Senator Jeff Bingaman notes that only five of twe nty

- nine states have fallen below 90 percent of expected annual progress toward RPS targets, the c ommenters said

. Secondly, commenters recommended that the EPA should use 2030 RPS targets, not 2020 targets in setting the state goals. As the compliance peri od for the CPP rule extends out to 2030, not 2020, c ommenters asserted that selecting the RPS goals for 2020 severely limits the renewable energy potential for an entire decade. For example, c ommenters stated that the RPS goal for HI is set for 40 percent by 2030, compared to just 25 percent by 2020. Minnesota also has a 10 percent solar target by 2030, in addition to other RPS goals. Today, 2020 RPS goals are less than 6 years away, and by the time the rule is made final, less than 5 years away,

c ommenters noted. Commenters added that utilities are already planning for these RPS requirements in 2020 as part of their short term planning processes. Selecting a 2030 RPS goal sends a clear message on the potential for a state to include renewables as part of a balanced state energy portfolio by 2030.

Comment 22: The EPA should solely rely on the IPM model for setting the state targets.305 Response 22: The information provided in this comment was valuable in finalizing the building block 3 methodology, particularly in relying on IPM projections to validate building block 3 target generation levels from both a cost and technical feasibility perspective. The final building block 3 methodology is described in section V.E of the preamble and in the GHG Mitigation Measur es TSD.

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

Commenter s said that the EPA should solely rely on the IPM model for setting the state targets. Unlike the technical potential, the IPM model takes into account the cost of bu ilding renewable generation, as well as grid conditions in a state and a number of other factors, the c ommenters explained. In addition, c ommenters noted that the IPM model considers the resource potential that is considered by NREL's technical potential. Commenters asserted that with the correct solar data inputs, the IPM model provides a realistic projection of solar energy potential at the state level that can be relied upon for setting state goals.

Further, commenters indicated there is precedent to rel y solely on the IPM model for setting the renewable targets in each state under the alternative approach. Commenters said that the EPA currently uses the IPM model to analyze the impact of air emissions policies on the U.S. electric power sector such as th e Clean Air Interstate Rule, Cross State Air Pollution Rule (CSAPR), the Mercury and Air Toxics Standards (MATS), and the proposed Carbon Pollution Standards for New Power Plants. Further, the c ommenters said that the EPA also notes that for the developmen t of its latest power sector modeling platform, the EPA has increased its external engagement with state air quality planning officials, power company representatives, regional transmission organizations, and others who have provided input on the data, ass umptions, and structure of EPA's Power Sector Modeling Platform v.5.1, which shows that the model includes feedback from a variety of stakeholders, and can be used reliably to set the state targets for compliance.

Comment 23: Other approaches to setting t he renewables portion to the state targets, such as the UCS' demonstrated renewables growth approach, show double the amount of RE potential
Response 23: The methodological elements provided in this comment were valuable in finalizing the building block 3 methodology, which is described in section V.E.6 of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific comments under this comment:

Commenter s said that other approaches to setting the renewables portion to the state targets show double the amount of RE potential using the correct data for renewable energy. Other approaches to setting the renewables portion to the state targets, such as the UCS' demonstrated renewables growth approach, show double the amount of RE potential using the correct data for renewable
energy, the c ommenters stated

. Commenters stated the UCS demonstrated growth approach would improve on the EPA's proposed approach by inco rporating the following core components:306 "Setting a national renewable energy growth rate benchmark based on demonstrated growth in the states from 2009 to 2013.

Assuming full compliance with current state RES policies, as set by law that require certain
p ercentages of electricity to come from renewable sources.

Accounting for actual and expected renewable energy growth between 2013 and 2017."

Commenters added that the UCS state level RE targets begin in 2017, the proposed start date for state implementati on plans, and ramp up through 2030. To determine each state's 2017 generation levels, the UCS uses actual generation data from 2013 (the EPA's approach uses 2012 data) and adds projected generation from wind and utility scale solar projects known to be und er construction through 2016, the c ommenters said

.

Comment 24: Has not been adequately demonstrated that non

- combustion renewable sources can serve as providers of base load power.

Response 24: The EPA addresses considerations related to the technical f easibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.

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

Commenter s did not believe that it h as been adequately demonstrated that non

- combustion renewable sources can serve as providers of base load power. Commenters did not believe that the differences in generation dispatched to serve various demand levels were considered fully in either the RE goal setting calculations or the IPM model. Thus, commenters stated , there are significant grid reliability concerns that have not been adequately addressed. Commenters strongly encouraged the EPA to take into account how those renewable sources, available to each individual state at reasonable cost, fit into the generation mix and how those units would serve on the grid, in both vertically integrated and deregulated powe r markets. A clear distinction between base load and non

- base load capable renewable sources must be made in both the goal setting and IPM projections, the c ommenters said

.

Comment 25: Commenters asserted that the EPA can increase the RE targets and shoul d reevaluate its methodology and inputs.
Response 25: The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, which is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.

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

Some commenters asserted that EPA can increase the RE targets and should reevaluate its methodology and inputs.307 Commenter s stated the EPA should assume greater annual growth rate for r enewable energy initiatives, which is more accurate and realistic. The EPA's assumed average annual RE growth rate of 0.65% results in 12% national renewable energy production by 2030, the c ommenters said and recommended the EPA increase this assumed annual rate and national renewable energy production potential.

Commenter s continued by stating that in order to calculate state goals for renewable energy production in its proposal, the EPA divides the natio n into six regions and establishes conservative regional targets for renewable energy by averaging the 2020 targets of existing
state

- level RPS within each region. RPSs set a proportion of renewable electricity that utilities are required to supply over ti me, the c ommenters said . The EPA then calculates the annual growth rate needed to achieve the regional target in 2029, using state renewable energy generation levels in 2012 as the baseline, the c ommenters continued. Under the EPA's assumptions, the c ommen ters indicated that the CPP would result in 12% renewable energy production on a national level by 2030. However, the c ommenters asserted the EPA's assumptions do not accurately reflect current state policies and RPS targets as noted below.

While commenter s did not recommend specific national or state targets, the EPA's estimates clearly do not reflect the reality of state renewable energy policies. As such, c ommenters stated that the EPA should reevaluate its methodology for calculating state's RE potentia l and adjust its targets. For example, the EPA may want to consider the methodology outlined in the paper titled Strengthening the EPA's CPP by the UCS, the c ommenters recommended, which more accurately reflects current RPS policies and results in national renewable energy production of 23% by 2030 (see Attachment A). Commenters described their methodology :

• First, commenters used EIA data to calculate each state's average renewable energy growth rate over the five

- year period from 2009 to 2013. Commenters f

o u nd that, on average, states increased their renewable share of electricity sales by 1 percent annually (EIA 2014). This growth rate serves as our national benchmark, the c ommenters noted. The 2009

- 2013 benchmark period accounts for the recent rapid growt h in wind and solar technologies; it eases fluctuations in development due to uncertainty around federal tax credit expirations and extensions and captures much of the historic development spurred by state RES [Renewable Electricity Standard] policies

- a ke y driver of renewables growth,

c ommenters said . Further, c ommenters stated that 11 of the 15 leading states that have achieved growth rates at or above the national benchmark from 2009 to 2013 have also achieved a 1 percent or higher average annual growth rate over a 10

- year period from 2004 to 2013.

• For states below the 1 percent national benchmark, commenters assumed that they gradually ramp up to that rate from 2017 to 2020. Commenters explained that this period therefore serves as an opportunity for sta tes that have not been as active in deploying new renewable energy sources to catch up to the national benchmark. Further, c ommenters said that the renewable energy is assumed to grow after 2020 in these states at an annual rate of 1 percent of total sales through 2030.308 • For the 15 leading states among those that have been deploying renewable energy at or above the national benchmark, commenters increased their respective renewable energy targets from 2017 to 2030 at each state's average annual growth rate d uring the five

- year benchmark period, up to a maximum of 1.5 percent per
year. Commenters viewed this as a reasonable upper limit that can be sustained over time in states with strong renewable energy potential. Moreover, a 1.5 percent growth rate is consistent with renewable energy targets set by leading RES states, the c ommenters noted.

• Comme nter s finally stated that to account for full compliance with mandatory state RES laws, it assumed that states achieve the greater of two measures: the generation projected by our growth rate approach; or the level needed to meet states' respective RES tar gets for each year from 2017 to 2030, as projected by the Department of Energy's Lawrence Berkeley National Laboratory (LBNL 2013). To ensure reasonably achievable renewable energy penetration rates during the compliance period , c ommenters also capped the total share of renewable generation for any state at 40 percent of total state electricity sales, a level that several studies by grid operators, utilities, and government agencies have shown can be achieved at the state and regional level in this timefram e while maintaining reliability. Only seven states hit this cap prior to 2030.

Commenter s expressed that the EPA should significantly increase its targets for renewable
energy. Commenters cited to a 2014 analysis by the Union of Concerned Scientists (UCS) found that states can increase their share of electricity generation from renewable energy sources by nearly double the EPA targets

- 23 percent rather than 12 percent. The UCS analysis is based on reasonable, even modest assumptions, involving past growth i n renewables and state

- law renewable

- energy targets, the c ommenters said . For states performing below the national average of 1 percent annual growth in renewables, UCS assumes the states can merely bring their growth up to average, the c ommenters noted. C ommenters added that it then projects that high

performing states can achieve growth of 1.5 percent, a figure consistent with the targets set by the laws of leading states. Commenters said that for each state, UCS then assumes that the state will meet the greater of UCS's projected growth rate or the state's legally required rate.

Commenter s asserted that the EPA should apply a recent renewable energy annual growth rate based on 2013 renewable energy generation values. The EPA should set the renewable energy target as the higher of the two methodologies, either a flat regional renewable energy level

a pplied to a state, or the annual growth rate based on 2012 renewable energy generation levels, the c ommenters said

. Commenters stated t he EPA should ensure that renewable energy generation targets do not act as ceilings.

Commenter s asserted that if the EPA raised its projections for building blocks three and four, which are the renewable energy and energy efficiency blocks, that we would see a higher carbon emissions reduction level and create unprecedented economic development for the state and job growth through increased energy efficiency to annual savings of 1.5 percent, increasing renewable energy up to 15 percent of the state's generation, and full deployment of combined heat

- power systems.309 Comment 26: There may be boundary issues associated state emi ssion rate goals.
Response 26: The final building block 3 methodology does not rely on RPS requirements or
state

- specific deployment estimates, but rather cost

- effective RE at an interconnection level. The EPA addresses considerations related to the techn ical feasibility and availability of regional RE resources in both the preamble (section V.E) and GHG Mitigation Measures TSD.
The following are summaries of the specific comments under this comment:

Some commenters expressed that there may be boundary Issues associated state emission rate goals.

Commenter s stated that if the EPA finalizes guidelines that allow a state to include in its compliance plan any renewable, regardless of where it is generated (which c ommenters support), then it may be necessary for the EPA to revise state

- specific goals to reflect the renewable power produced in 2012 that was assigned to another state. Commenters stated this would result in a decrease in the stringency of the emission rate goals for states that exported renewabl es in 2012.

Commenter s indicated that the EPA's assumptions regarding RE are unrealistic and do not recognize the fact that many utilities build RE generation into their portfolio by purchasing energy from outside the state. Commenters said that it is uncl ear in the proposal how that impacts the targets that the EPA has set for each state.

Commenter s said that in determining the emission reductions possible from renewable resources, the EPA establishes annual RE targets based on the physical location of ren ewable power plants. Commenters stated this approach is problematic because it does not correspond with the way most existing RPS work. While existing renewable power projects are used to set targets for the state where they are located, those same project s may not be available to that state for CPP compliance because they are used by other states to meet RPS goals, the c ommenters explained. For instance, c ommenters said , 55% of the renewable power generated in Oregon in 2012

- and used to set Oregon's targ et

- is used to meet other states' RPS goals. Further, the c ommenters stated that the EPA's proposed approach also creates a mismatch between CPP renewable power targets and equivalent RPS goals for individual states, because the EPA bases its targets on t he states' generating capacity while most RPS obligations are based on retail electric power sales. Commenters provided a solution which was for the EPA to improve its proposed approach to renewable energy by applying regional renewable targets to retail e lectric sales rather than total electric generation, which would solve compliance issues and more closely align with the RPS policies that help justify EPA's approach.

Commenter s asserted the Proposed Rule is inconsistent in how it calculates the Building Block 3 goals and how it would allow states to demonstrate compliance with those goals. The EPA calculated state emission rate goals based on the amount of non

- hydroelectric RE generated in a state, even if some or all of that RE generation is being used t o meet out

- of

- state RPS, voluntary corporate goals, or other commitments, the c ommenters said . At the same time, the EPA proposes to allow the end

- user to count that RE towards compliance with the end

- user's target, even if that user serves load in a diffe rent state from where the RE was generated, the310 c ommenters said . See 79 Fed. Reg. at 34,922. Commenters asserted the EPA must be consistent in how it accounts for RE that is generated in one state and purchased by an entity in another
state. Commenters exp ressed that if the EPA allows the purchasing state to count the RE towards compliance with its state goal, then that energy should not be included in the calculation of the generating state's goal. To address this problem, c ommenters suggested that the EPA remove all RE from the calculation of BSER, but continue to allow its use for compliance by the end

- user.

Commenter s indicated that the EPA bases its RE goals on generation in a state, but state RPS programs are based on consumption in the state; a certai n percentage of electricity sales, not generation, must come from RE sources. For a state that is a net exporter of electricity, its RPS reflects at most the amount of in

- state consumption that must be supplied by RE, the c ommenters said . Therefore, c ommen ters asserted that basing the RE goal on in state generation has a profound adverse effect in states like West Virginia or Wyoming which consume in

- state less than half of their generation.

Commenter s indicated that existing renewable energy resources have been significantly financed and used by out of state customers . Commenters stated the EPA, which generally ignores interstate electricity trade in the proposed rule, gives no consideration to this fact and gives states where the physical asset is located 100 percent of the credit in their goal calculation.

Comment 27 : The Agency has not provided a workable coordinating mechanism for implementing BB3, which requires extensive coordination between states.
Response 2 7 : The final building block 3 methodology does not rely on RPS requirements or
state

- specific deployment estimates, but rather cost

- effective RE at an interconnection level. Additionally, building block 3 target generation levels do not exceed baseline proje ctions until 2022, providing ample time for state coordination and planning. For additional resources and guidance related to incorporating CO2 emission reduction measures in both single state and multi

- state plans, refer to section VIII of the preamble. T he EPA addresses considerations related to the technical feasibility and availability of regional RE resources in both the preamble (section V.E) and GHG Mitigation Measures TSD.
The following are summaries of the specific comments under this comment:

Comm enter s said that the EPA's Building Block 3 would require extensive coordination between States, yet the Proposed Rule does not provide for any workable coordinating mechanism. For example, c ommenters indicated that PowerSouth is participating in a variety of renewable energy projects, including funding, in part, the construction of the Vogtle nuclear power plant in Georgia and a wind energy project development in Iowa. Commenters stated that a lthough these projects will generate power in other States, some of it will be consumed in Alabama and Florida. Commenters asserted the EPA must provide a workable method for the inclusion of energy generated in one State, but consumed in another state into state goal calculations and compliance. In doing so, c ommenter s encouraged the EPA to allow States consuming out

- of

s tate renewable energy to include that generation as a credit towards their compliance with Building Block 3 goals. The EPA's current proposal for state

- by

- state regulation with no workable coordination among States is a salient example of how this Proposed Rule is untenable311 on its face, the c ommenters said . The unworkable nature of EPA's proposal cannot be addressed by a simple fix and the EPA must withdraw its Proposed Rule and address these issues, th e

c ommenters said

. Commenters stated a s currently written, EPA's proposed Building Block 3 is arbitrary and capricious

.

Comment 28 : The EPA should address the fundamental inconsistency between goal setting and state plan compliance options regarding renewable energy
Response 28: The final building block 3 methodology does not rely on RPS requirements or
state

- specific deployment estimates, but rather cost

- effective RE generation at an interconnection level. Building block 3 is comprised of increment al RE and all BSER RE technologies are fully creditable in compliance. The EPA believes these adjustments from the proposed rule address the
commenter s’ concerns regarding a disparity between goal

- setting and compliance. The final building block 3 methodol ogy is detailed in section V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific comments under this comment:

Commenter s indicated that i n the proposed rule, goal setting is based on net generation within a state's boundaries. All of a state's RE generation (except hydropower) was used to determine the starting point, ramp

- up rate, and final RE goal for Building Block 3, regardless of whether that energy is exported and used for compliance with an RPS in ano ther state, the c ommenters said

. For states that are net exporters of RE, this creates a more stringent goal than would exist if the methodology relied on consumer sales, the c ommenters added. In addition, the commenters also said , compliance options for state plans seem to favor giving credit for RE to consuming states through the use of renewable energy certificates (RECs) or other purchases. Commenters said that importing states are allowed to claim the credit for RE without a d ownward adjustment to their goals (related to in

- state RE generation) while exporting states would not be allowed to claim credit, even though their goals were made more stringent. Commenters stated t his favors consuming states at the expense of producing states , and that t he exporting state is, in effect, paying for the RE credit options of importing states.

Commenter s asserted that two options exist for addressing this fundamental inconsistency. Each option offers both advantages and disadvantages while a ddressing the disparity between goal setting and plan compliance options, the c ommenters noted.

Option 1

- Commenters recommended adjusting the goal setting methodology to be based on consumption rather than production. This aligns more closely with RPSs, th e c ommenters said

, which are also based on consumption. This has the disadvantage of ignoring the other drivers of RE, such as tax incentives, the c ommenters also said. Currently, c ommenters indicated that tax incentives are important for attracting develo pment of RE resources, but those incentives will become less attractive to states if they are not considered in the CPP.

Commenters expressed that the Final Rule should recognize that exporting states may have made a significant investment in RE developmen t (e.g., Production Tax Credits and other tax incentives) and that importing states are only making an investment to the extent that the312 purchase price exceeds the cost of other available electricity generation. If so, the commenters stated, an allocation agreement may be necessary to give CPP credit to both the exporting and the importing states. This allocation could be based on dollars spent or it could be based on other criteria agreed to by participating states, the c ommenters suggested. This eventuali ty should be stated explicitly in the Final Rule language, the c ommenters said

, and added that as it currently reads, the importing state is favored.

Option 2

- Commenters recommended changing the requirements for claiming credit for RE generation to align with the goal setting methodology by allowing producing states to claim credit for all in

- state RE generation. Commenters asserted that this has the advantage of being sim pler and reducing the possibilities of double counting. However, c ommenters said , it has the disadvantage of overlooking the contribution that RPSs have historically made as significant drivers for RE development. (Note, however, that as RE resources reach cost parity with fossil fuel resources, the RPSs will have less significance, the c ommenters said .) It may also have the unintended consequence of dis

- incentivizing RE development in states where consumption is low, the c ommenters concluded.

Comment 29: Renewable Energy Resources Need to be Allocated to the Correct Utilities (States)

Response 29: The final building block 3 methodology does not rely on RPS requirements or
state

- specific deployment estimates, but rather cost

- effective RE generation at an interconnection level. The process for incorporating CO2 emission reductions in state plans is pr ovided in section VIII.G of the preamble. The final building block 3 methodology is detailed in section V.E of the preamble and in the GHG Mitigation Measures TSD.

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

Commenter s stated to have a significant portion of their renewable energy assets located outside of Wisconsin where the renewable resources are more efficient and cost effective. Commenters stated that f or example, their Top of Iowa III facility is located in Iowa, but conn ected to Wisconsin through the regional transmission grid. Since the commenter s ' customers pay for this renewable generation, c ommenters stated that they should receive credit for those resources in both state and Federal compliance programs. Commenters st ated that the EPA should correct the accounting for renewable resources in the state goal calculation by including resources owned or contracted by an entity in a state which are located outside of their physical boundaries.

Comment 30: There should be s ymmetry between goal calculation and compliance calculation

. Response 30: The final building block 3 methodology does not rely on RPS requirements or
state

- specific deployment estimates, but rather cost

- effective RE generation at an interconnection level. Building block 3 is comprised of incremental RE and all BSER RE technologies are fully creditable in compliance. The EPA believes these adjustments from the proposed rule address

c ommenters concerns regarding a disparity between goal

- setting and compliance . The process313 for incorporating CO2 emission reductions in state plans is provided in section VIII.G of the preamble. The final building block 3 methodology is detailed in section V.E of the preamble and in the GHG Mitigation Measures TSD.

The following ar e summaries of the specific comments under this comment:

Commenter s asserted there should be symmetry between goal calculation and compliance calculation. In the case of RE, the EPA has included all of the RE generated within each state for the 2012 baseline from which it has calculated the RE building block, the c ommenters said . Y et,

c ommenters stated , the EPA is proposing another approach for crediting renewable generation for compliance with the goals. In the preamble, the EPA states:

"The EPA is proposing that, for renewable energy measures, consistent with existing state RPS
po licies, a state could take into account all of the CO2 emission reductions from renewable energy measures implemented by the state, whether they occur in the state or in other states. This proposed approach for RE acknowledges the existence of renewable en ergy certificates (REC) that allow for interstate trading of RE attributes and the fact that a given state's RPS requirements often allow for the use of qualifying RE located in another state to be used to comply with that state's RPS." 79 FR at 34922.

Wh ile c ommenters supported the flexibility afforded to states to follow the REC market for RE having interstate characteristics, there should be symmetry between goal computation and compliance demonstration. If the EPA's proposed solution is promulgated, Ne vada would not receive the benefit of the RE that is exported out

- of

- state for its compliance, even though that RE was used to calculate Nevada's Building Block 3, the c ommenters argued. In addition,

c ommenters were concerned that Nevada may not be allowed to receive the benefit of RE generated on Tribal Lands for export out of state or for in

- state generation without the benefit of a multijurisdictional agreement regardless of whether the tribe is subject to its own emissions reduction goal. Commenters rec ommended that if RECs are used for compliance purposes, then the RE Building Block should be recalculated to remove the portion of RE that is exported to other states. Commenters stated t he same logic should apply to fossil fuel generated for out

- of

state usage.
In order to determine Nevada's new RE goal assuming RECs can be used for compliance, the EPA's methodology for calculating Nevada's RE goal was reviewed by the commenter s

. Commenters found that the EPA used the 2012 total RE generation reported unde r EIA Form

923 to calculate Nevada's RE goal. Commenters stated t he RE generation reported on this form is not accurate , and b ased on publicly available information on the power purchase agreements (PPAs) for a number of facilities in Nevada, 800,523 MWh o f RE in 2012 was generated for out

of

- state use. Commenters pointed to Attachment 2. Commenters concluded t his constitutes 27% of the 2,968,630 MWh (Nevada's total RE generation) used to calculate Nevada's final (2029) RE and emission rate goals.

Commenter s referred to a letter submitted on September 18th in response to the proposed rule and prior to the issuance of this proposed supplemental rule. In that letter commenter s requested that there be a clarification for the part of that rule that has created an obstacle for renewable energy development on the Navajo Nation. Commenter s stated that Page 34922 of the proposed314 rule, not the proposed supplemental rule, the proposed rule, opens up for comment whether renewable energy generated on the Navajo Nation can be used to meet the goals of the state 111(d) plan. Commenter s thought that needs to be clarified because right now the experience has been since this proposed rule was issued this past June that it has stifled renewable energy development on the Nava jo Nation, and they hope that this can be fixed immediately within this
process.

Comment 31: The EPA has misinterpreted North Carolina REPS
Response 31: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summ aries of the specific comments under this comment:

Commenter s expressed that the methodology relies on the EPA's interpretation that the North Carolina REPS will result in RE accounting for 10% of North Carolina's electric generation in 2020. Commenters st ated t he 10% figure used by the EPA is not an accurate reflection of the actual renewable generation that will result from the REPS in North Carolina for several technical reasons. The attached Tables A through C provide the EPA with an appropriate estimat e of the actual amount of RE the State anticipates to generate (or produce) as a result of the REPS, the c ommenters said

.

Comment 32: Commenters do not support increasing the percentage of renewables (excluding large hydro) used in Wyoming to between 2% and 25%.
Response 32: The information provided in this comment were valuable in finalizing the building block 3 methodology, in which incremental hydropower is included as a contributing RE technology. The final building block 3 methodology is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific comments under this comment:

Commenter s stated they do not support increasing the percentage of renewables (excluding large hydro) used in Wyoming to between 2% and 25%.

C ommenter s asserted that excluding hydroelectricity as a renewable resource is counter

- intuitive. Commenters stated h ydroelectric power does not result in carbon emissions, utilizes a replenished natural resource (water), and can provide reliable and planned production of electricity. Commenters also stated hydroelectric power is one of the most renewable resources and should fundamentally be included in your analysis and part of the goal going forward. Solar and wind renewable resources are, and should be, part of the overall generation portfolio and as such should be supported, the c ommenters stated . However, they are more costly and intermit tent (i.e., electrical production from solar projects does not occur between sundown and sunrise) and must be firmed with peaking resources such as natural

- gas fired generation, the c ommenters315 added. Commenters explained t his increases the integration cost s on the overall system and strains not only resources but relationships in the broader multi

- state, multi

- user consortium.

Comment 33: Specific utility's status in Colorado, South Dakota and Wyoming
Response 33: The final building block 3 methodology does not rely on RPS requirements or
state

- specific deployment estimates, but rather cost

- effective RE generation at an interconnection level. The process for incorporating CO2 emission reductions in state plans is pr ovided in section VIII.G of the preamble. The EPA addresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.

The foll owing are summaries of the specific comments under this comment:

Commenter s provided a table with the renewable energy (RE) targets in the proposed rule for the states of Colorado, South Dakota, and Wyoming, along with the current state RE policy, the
comp liance status for each of our utilities.

Commenter s said that Colorado's statutes include a Renewable Energy Standard (RES). Commenters stated t he RES, and associated commission rules, require the Black Hills to meet specific percentages of its retail sales with renewable energy. The RES in 2014 is 12 percent of retail sales; 20 percent for 2015

- 2019; and 30 percent for 2020 and beyond, the c ommen ters said

. Commenters stated t he statutes also provide that the retail rate impact on customers not exceed 2 percent annually. Commenters said u tilities comply with the RES in Colorado using Renewable Energy Certificates (RECs), where one REC is created wh en one MW of eligible energy resource generates energy for one hour. Commenters stated Black Hills Colorado Electric is complying with the RES using a combination of RECs generated from an expired purchased power agreement, small distributed generation pro jects, and small wholesale renewable (wind) generation.

Commenters said that currently, the largest wind energy project attached to Black Hills Colorado's system is the Busch Ranch Project. Black Hills co

- owns with a third party this 29 MW generation proje ct and the company is currently evaluating proposals in response to a competitive solicitation for up to 60 MW of eligible energy resources in accordance with Colorado's Electric Resource Planning rules, the c ommenters noted. Commenters said that a s a

resu lt of this solicitation, the Company may acquire the energy and associated RECs from an additional 60 MW of eligible energy resources beginning as early as 2015

.
Commenter s indicated that the Colorado Commission's Electric Resource Planning and Renewable Energy Standard Rules authorize the Colorado Public Utilities Commission to approve the recovery of the cost of all renewable resources while ensuring the annual cost impact on customers does not exceed 2 percent annually. Commenters said t he most recent m odeling of Black Hills' renewable portfolio indicates that through 2020 the Company will spend approximately $59 million more for renewables than for equivalent energy generated with conventional resources.316 Commenters continued and stated that Black Hills Power has purchase power agreements for hydropower and wind energy. Commenters explained that the Happy Jack and Silver Sage purchase power agreements provide Black Hills Power (South Dakota) with 35 MW of wind
power. Commenters stated that i n 2013, renewa ble resources served approximately 5.04% of the total retail sales for Black Hills Power. Cheyenne Light Fuel and Power (Wyoming) has purchase power agreements for 25 MW of wind energy from the Happy Jack and Silver Sage wind facilities, the c ommenters sai d

. Commenters noted that i n 2013, these renewable resources served approximately 5.8% of the total retail sales for Cheyenne Light.

C ommenter s stated Black Hills Power and Cheyenne Light will continue to pursue prudent renewable energy generation and purc hase opportunities that will achieve environmental improvements at the lowest reasonable cost to customers. Commenters described that the major barrier of renewable energy generation at a reasonable cost to customers, for both Black Hills Power and Cheyenn e Light, is the ability to dispatch the energy. Commenters said b ecause renewable energy is intermittent, the cost of regulating this energy becomes a significant barrier. Commenters stated s ome of Black Hills Power's additional challenges are due to the p hysical location of their system and quality of renewable opportunities. In addition, commenters added, if renewable energy generation is not connected to their transmission system, the price to deliver energy becomes difficult to overcome.

Commenter s que stioned the approach in establishing Building Block 3 state RE goals that do not consider the reality of the current generation portfolio or the economics of selecting additional generation. Commenters supported state flexibility in meeting the state goals with the most economic generation considering other reliability constraints.

Comment 34: Feasibility of Renewable Energy Goal in Florida
Response 34: The final building block 3 methodology does not rely on RPS requirements or
state

- specific deployment estimates, but rather cost

- effective RE generation at an interconnection level. The process for incorporating CO2 emission reductions in state plans is pr ovided in section VIII.G of the preamble. The EPA addresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.

The foll owing are summaries of the specific comments under this comment:

Commenter s expressed that the renewable energy generation goal that the EPA has calculated for Florida is unachievable. Commenters stated t he EPA's methodology for determining the goal is fat ally flawed because it arbitrarily ties the state's goal to the RPS goals of other nearby states, which often do not actually require as much renewable energy generation as they appear to and reflect each state's highly unique mix of renewable energy poten tial. As a result, c ommenters said , the state renewable energy generation targets, including that for Florida, are unreasonably aggressive and do not take into account factors affecting the actual renewable energy growth potential in each state. Commenters stated t he EPA's own IPM modeling results indicate that predicted renewable energy generation by the end of the compliance period cannot even come close to the renewable energy targets the EPA used in its goal calculation. Accordingly,317 c ommenters urge d th e EPA to withdraw the proposed state goals and reduce its renewable energy generation targets.

On the other hand, commenter s said that under the EPA's proposed method of determining the potential for renewable energy development in each state, Florida's fi nal renewable energy target is 10 percent of total 2012 generation by 2029. The 10 percent goal is aggressive the c ommenters said , but they believe is achievable considering the time frame established for compliance. Commenters stated they have successfull y built large utility scale solar projects in Florida and

are prepared to extend this experience and construct additional renewable energy in Florida to achieve compliance with the CPP and grow additional jobs in the state. Working in partnership with stat e and Federal agencies

, the c ommenters asserted

, they can overcome any reliability or other impediments given the long lead time to achieve the 2030 emissions target.

Commenter s appreciated the effort the EPA has taken in an attempt to create what they bel ieve is an achievable, yet challenging, requirement to reduce carbon intensity from the nation's power sector. However, c ommenters asserted the EPA's interim and final budget goals need to be adjusted to reflect the corrections in the technical data to ref lect the achievable CO2 emission goals while still having a reliable electric network. These adjustments also need to take into account the timing required to implement the significant changes that would be required by the electric industry, the c ommenters said

. Commenters expressed t he interim and final budget is unachievable for the City of Tallahassee utilities as a key component of the State of Florida's goal.

Commenter s said that the EPA's building blocks 3 and 4 assume about 10 percent of Florida's generation will come from renewable energy by 2030, as well as a 10 percent reduction in electric demand. However, c ommenters indicated that Florida's projected growth rate a nd lack of cost effective RE resources make the 10 percent assumption unrealistic.

Comment 35: The EPA's RPS

- Based Approach to Setting Renewable Energy Best Practice Targets Is Arbitrary in Light of EPA's Own Assessment of South Carolina's Available RE Re sources. Response 35: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The regional targets are based on observed patterns of historical deployment for each of the BSER RE technologies and the tar get generation levels are validated through modeling projections to be technically feasible at reasonable cost. The EPA addresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in bot h the preamble (section V.E) and GHG Mitigation Measures TSD.

In regards to biomass, it is not considered part of the best system of emission reduction in this rule and therefore it is not included in goal

- setting or compliance evaluations

. However, simila r to other technologies outside of BSER, biomass may be considered as a part of a state’s plan to meet the emission guidelines.

For more information regarding Building Block 3, refer to Section V.E of the preamble.318 A discussion regarding the use of some biomass feedstocks for compliance purposes can be found in Section VIII.I.2.c and Section VIII.K.1 of the preamble.

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

Commenter s believed the EPA's approach to setting state goals is arbitrary and capricious and the EPA should adjust South Carolina's goal to reward rather than punish the state for making significant investments in zero

- carbon generation.

Commenter s said that under the Proposed Rule, the EPA has calculated the RE compon ent of South Carolina's emission goal under building block 3 by grouping it into a region (the Southeast Region) with eight other states and assuming that the "average" level of RPS commitment across those states constitutes the "best practice" for renewab le generation in South Carolina. Commenters asserted the EPA's approach is arbitrary and capricious for a number of reasons. First, c ommenters said that the EPA's assertion that South Carolina's RE "best practice" target is achievable is contradicted by EP A's own analysis of the available renewable energy resources in the state. Second, c ommenters said that the EPA's method for setting regional standards based on individual states' RPS levels, with no consideration given to those states without an RPS, is arbitrary and capricious. Commenters recommended that if the EPA persists in setting state goals ba sed on projected renewable energy development in South Carolina, it should use the proposed "Alternative" resource

- adequacy based RE approach, rather than the policy

- based RPS approach. In the alternative, c ommenters suggested that the EPA should average t he RPS levels from all states in each "best practice" region to determine the appropriate regional average including those states that have decided not to impose any RPS obligation on their utilities.

Commenter s said that under the Proposed Rule, the EPA h as calculated South Carolina's emission goal using the assumption that by 2030, 10% of South Carolina's in

- state generation will be provided by RE. This level equates to the regional "best practice" scenario that the EPA developed for the eight states in t he Southeast Region, the c ommenters explained. The EPA asserts that this level of renewable energy reflects the "resource development potential" of the Southeast Region, the c ommenters added. The EPA has also made available an "Alternative RE Approach" tha t does attempt to evaluate states' technical and economic potential for increasing states' RE generation, the c ommenters said

.
C ommenter s stated as a general matter, the EPA's decision to set each state's renewable energy target based solely on the politi cal decisions of a handful of neighboring states is arbitrary and capricious because the Agency has made assumptions about each state's potential for developing its RE resources without any evidence in the record to support those assumptions. Commenters
st ated t he EPA's RPS

- based approach is particularly arbitrary in South Carolina's case.

Commenters asserted that the arbitrariness of the EPA approach is evidenced by the fact that the RE goal is not based on South Carolina's RE resource development potentia l and is contrary to EPA's own assessment of the state's technical and economic potential for increasing its in

- state RE generation. Commenters stated that the EPA's failure to base South Carolina's RPS

- based RE target on any actual data or projections abo ut what might be achievable in the state fails to satisfy the statutory criteria that emission limits under section 111 must reflect the degree of emission319 reduction that is achievable" through application of "adequately demonstrated" systems of emission r eduction.

Moreover, c ommenters said that the EPA's proposed RE target is clearly not achievable when viewed in light of the RE deployment that the EPA's Alternative RE Approach projects South Carolina could achieve in light of technical and market constrai nts. Commenters stated t he EPA's Alternative RE Approach is based on two criteria, both of which are logically necessary to making a finding that any particular level of RE generation is achievable or adequately demonstrated in light of costs, energy requi rements, and other statutory factors. The first criterion, c ommenters said , is the "technical potential benchmark," which the EPA determines by scaling each state's theoretical technical potential for each type of RE generation to the average development r ate for that technology among the top 16 states nationwide. As the EPA correctly notes, c ommenters indicated that this "technical potential" criterion is insufficient in and of itself to demonstrate that any particular level of RE development is adequately demonstrated because data about theoretical technical potential ignores restrictions such as "grid limitations, costs associated with development, [and] quality of resource." Because of the constraints of the National Renewable Energy Laboratory study on which EPA's technical potential estimates are based, c ommenters asserted the EPA's projections also likely "overstate electricity production potential because a given site cannot produce RE simultaneously from multiple technology types."

Commenters continu ed and referred to the second necessary criterion, which the EPA calls the "market potential" for deployment of each RE technology, represents the "market potential for RE generation that can be developed in each state." Commenters stated a lthough the EPA' s approach to developing the market potential figures is seriously flawed, the Agency has at least attempted to estimate the amount of generation that a state could deploy in light of cost constraints.

Commenters stated t he EPA's alternative approach

- thou gh flawed

- clearly demonstrates that the proposed RPS

- based approach to setting state "best practice" targets for RE is completely out of proportion to South Carolina's true potential for developing additional RE generation. Whereas the RPS

- based approach w ould set South Carolina's RE target at 10% of its in

- state generation in 2030, the EPA's own technical and market potential approach projects that the amount of RE that is realistically achievable for South Carolina by that date amounts to only 1% of South Carolina's in

- state generation, the c ommenters said

. Commenters stated that i n other words, the EPA's arbitrary RPS

- based regional approach to determining the RE component of BSER over

estimates the amount of RE South Carolina could reasonably deploy by a n order of magnitude. For this reason alone, commenters stated, EPA's determination of the RE component of state goals is extremely arbitrary in South Carolina's case. Clearly, c ommenters said , according to EPA's own analysis of resource potential, South C arolina's proposed level of RE is neither achievable nor adequately demonstrated.

Commenters concluded with although the EPA may not include beyond

- the

- unit measures in the BSER because such measures cannot legally form the basis for guidelines or performance standards under section 111, the Proposed Rule's "Alternative RE" approach to quantifying instate RE potential appears to be a more sound approach than EPA's RPS

- based regional best practices approach. If the EPA finalizes its proposal to include RE in the BSER, c ommenters320 urged the EPA that it should, at the very least, adopt an approach that evaluates RE development potential by reference to the resources and costs of implementing designated levels of RE generation in each state, rather than to a handful of states' political decisions to impose an RPS.

Commenter s indicated that the EPA propos es a 10 percent renewable energy goal for South Carolina based on the renewable portfolio standard in North Carolina without any analysis or justification. In doing so, the c ommenters said , the EPA has excluded biomass production, despite the fact that it is included in North Carolina. Since South Carolina has significant biomass production, this is especially damaging to South Carolina, the c ommenters explained. Finally, while c ommenters expressed that they are very committed to energy efficiency, they are extremely concerned that the EPA applies its assumed 1.5 percent annual energy savings rate evenly to all states. Commenters stated South Carolina's population demographics, as well as its high industrial load percentage, suggest that its target should be different from Colorado or Washington.

Comment 36: Nebraska targets may be unachievable
Response 36: The final building block 3 methodology does not rely on RPS requirements or
state

- specific deployment estimates, but rather cost

- effective RE at an inter connection level. Building block 3 target generation levels do not increase beyond projected baseline levels until 2022. The EPA addresses this and other considerations related to the technical feasibility and associated grid integration costs of signific ant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.
The following are summaries of the specific comments under this comment:

Commenter s said that in Nebraska, Building Block 3 calls for increasing RE generation from 4% in 2012 to an annual average of 8% from 2020 to 2029, with a final target of 11% renewable energy generation by 2030. Commenters stated that w hile Nebraska has significant wind generation potential, it also faces significant challenges in transmitting this generation from areas of high wind potential to areas of high electricity demand. Building or upgrading transmission lines is a complicated, time

- intensive process that ca n take up to 8.5 years, and much of Nebraska's wind potential resides in ecologically sensitive areas, including the Nebraska Sandhills and Central Flyway, requiring additional considerations, the c ommenters added. Commenters indicated that given that the proposed CPP's interim compliance period begins in 2020, Nebraska may not have sufficient time to study, plan, and install the necessary infrastructure to achieve enough emission reductions under Building Block 3 to comply with the state emission goal.

Co mment 37: Utility Plans Regarding Renewable Energy Resources.
Response 37: The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, which no longer rely on state RPS requirements to set a regional321 target for RE. The final methodology is described in section V.E.6 of the preamble and in the GHG Mitigation Measures TSD.

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

Commenter s indicated that in 2012, Tennessee's existing non

- hydro power renewable generation constituted 1 percent of all generation, equivalent to 836,458 MWh. Commenters stated t his existing generation together with the expected growth in renewables under Building Block 3b accounts for 4 million MWh of zero

- emission ge neration. Due to Tennessee's low starting point in 2017, when the regional annual growth factor of 13 percent is applied, the c ommenters said that Tennessee does not reach the regional 10 percent target, but rather only achieves 6 percent renewable generat ion by 2030.

However, commenter s indicated that Tennessee has made significant new investments in renewable energy since 2012, the year the EPA chose as a baseline year for compliance
purposes. Commenters stated t hese additions will help propel Tennessee t oward meeting EPA's proposed target. Commenters stated TVA invested in 120 MW of new solar capacity in 2013. In 2014, c ommenters added

, that TVA made a similar investment of 126 MW, consisting of 10 MW for smaller

- scale, rooftop solar under its Green Power Providers program; 16 MW for mid

- size projects under the Solar Solutions Initiative; and 100 MW under the utility scale

- size Renewable Standard Offer. Commenters stated TVA has announced its 2015 solar programs, which total 130 MW

- 10 MW Green Power Prov iders, 20 MW Solar Solutions Initiative, and 100 MW Renewable Standard Offer. Commenters added that according to Patty West, Director of TVA's Renewable Energy Programs, "These programs balance low

- cost and cleaner energy resulting in a renewable portfolio that is good for all 9 million consumers in the Valley."

Commenters noted that TVA has also been very bullish on wind power and TVA is currently sixth in the nation among all utilities in terms of wind power capacity. The utility currently contracts for over 1,500 MW of wind from wind farms in the Midwest, according to the commenter. This wind power avoids 818,000 metric tons of CO2 a year, the equivalent of taking 144,000 cars off the road, the c ommenters noted. These 1,542 MW of wind power are comprised of nine power purchase agreements from wind farms in Iowa, Kansas, Illinois, the majority of which are the result of a TVA request for proposals in December 2008, the c ommenters said . At the time these PPAs were announced in December 2012, c ommenters said that Ms. West stated, "We're confident that wind power will continue to demonstrate its value, effectiveness and potential in the years to come." Commenters continue d and in terms of in

- state wind capacity, TVA has 29 MW installed

, and said that 27 MW are being procured through a contract with Invenergy to purchase power from the Buffalo Mountain wind farm near Oak Ridge, Tennessee.

Commenter s said that taking into account the 376 MW of solar capacity and 2 7 MW of land

based wind capacity that has or will be added since 2012, Tennessee's emission rate decreases from 1,293 lbs/MWh to 1,271 lbs/MWh, a reduction of 22 lbs/MWh.

Comment 38: Adjust South Dakota Goal322 Response 38: The CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule provides analysis and explains the adjustment that the EPA made to the state

- level 2012 data for South Dakota to better reflect fossil generation in an average year over a 1990

- 2012 baseline.

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

C ommenter s stated if the EPA does not adjust the emission rate goal for South Dakota to correct the capacity factor for Deer Creek, Big Stone likely would be required to reduce generation beginning in 2 020 in order for South Dakota to meet its proposed interim emission rate goal. This would cause a generation gap in the MISO region, which could not be mitigated by redispatch to units in SPP like Deer Creek, the c ommenters asserted . It is unlikely , commen ters said, that the owners of their facility and the other owners of the Big Stone Plant would have sufficient time to construct new generation to replace the shortfall from Big Stone. Thus,

c ommenters stated that the generation gap that would be caused by the premature retirement of Big Stone would raise reliability concerns for North Dakota, Montana, South Dakota, and possibly other states within the MISO region.

Comment 39: South Dakota and Montana annual RE targets.
Response 39: The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. Consequently, the amount of baseline RE has no impact on regional target generation levels or growth rates. The final buil ding block 3 methodology is described in detail in V.E of the preamble and in the GHG Mitigation Measures TSD.

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

Commenter s said that in South Dakota, where 50% of energy production is from hydropower, the EPA calculated an annual RE target of 1,818,150 MWh, twice what the target would have been by excluding hydropower to quantify BSER related RE generation potential. Due to the way the EPA determined the RE targets, South Dakota's 2020 RE goal is the same as its 2029 RE goal, and South Dakota must meet its 2029 RE goal beginning in 2020 with no ramp up period, the c ommenters stated

. Commenters noted i n Montana, where 41% of energy production is from hydropower, the EPA calculated an annu al RE target of 2,722,706 MWh. Commenters stated i f hydropower were excluded in order to quantify BSER related RE, the annual RE target would have been 1,652,132 MWh. For South Dakota, the EPA's proposed methodology results in a 35% reduction in CO2 emissi on levels in a state that contributes just .15% of the total U.S. power sector CO2 emissions, the c ommenters noted, which equates to about a .05% reduction in U.S. power sector CO2.

Comment 40: Concerns with the levels of renewable generation projected by the EPA both in Ohio and nationwide

- short timeframe323 Response 40: The final building block 3 methodology does not rely on RPS requirements or
state

- specific deployment estimates, but rather cost

- effective RE at an interconnection level. The EPA addresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.

The following are summaries of the specific comments under this comm ent:

Commenter s said that the EPA states RE in 2012 represented 12% electricity generation nationally (including hydropower) which is up from 9% in 2005. [79 FR 34866] In addition, the EPA found more than half of the states have established state

- level RE with an average of almost 20% of 2020 generation supplied by renewables, the c ommenters said . [79 FR 34858] However, commenters stated, in Ohio, 2012 RE represented only 2% of generation (including hydropower) and Ohio is expected to have 9% of 2020 genera tion from renewables

.
Commenters were concerned with the levels of renewable generation projected by the EPA both in Ohio and nationwide, in particular the amount of generation from renewable sources projected to come online in a relatively short timeframe. Under the proposed rule, 11 states a re projected to have 20% or more of their net generation coming from RE by 2030, c ommenters said . [GHG Abatement Measures TSD, Page 4

- 24] Commenters said t his number seems overly optimistic, when it is considered that the growth of renewable and carbon neu tral generation is a relatively recent phenomenon , and stated that e ven Ohio's RPS did not take effect until 2008

.
Commenter s recounted the EPA's methodology for calculating the building block 3 targets, and noted the values obtained for Ohio at each step. Commenters said that Ohio's interim goal is 6% and the final goal is 11% of RE generation in the state. [79 FR 34867, Section 4 GHG Abatement Measures TSD]

Commenter s stated that Ohio is to grow RE within the state from 1% to 11% under this proposal, and because Ohio is a large generator of electricity this represents 13,776 GW

- hs. Commenter s pointed out that states in the commenters ’ region that are small generators, such as Delaware, will only be required to achieve 1,038 GW

- hs. Commenters found this exp ectation unreasonable. Commenters stated the only way to accurately determine RE potential that is technically and economically feasible is to determine it based upon the specific state's ability.

Comment 41: Provisions used to avoid double counting of th e same MWhs of renewable energy in more than one state's compliance calculations.
Response 41: The final building block 3 methodology does not rely on RPS requirements or
state

- specific deployment estimates, but rather cost

- effective RE generation at an in terconnection level. The process for incorporating CO2 emission reductions in state plans is provided in section VIII.G of the preamble. The EPA addresses considerations related to the technical feasibility and associated grid integration costs of signific ant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.
The following are summaries of the specific comments under this comment:324 Commenter s said that the EPA is proposing language in the CPP that allows states to count out

of

- state renewable energy towards their compliance obligations provided provisions are made to avoid double counting of the same MWhs of renewable energy in more than one s tate's compliance calculations.

Commenters indicated that the inconsistency in this position is that the EPA has established a 2030 emissions target for Utah by including all in

- state renewable energy in calculating the goal for the state and then proposes to require the state to remove those renewable energy sources that are under a PPA and exported out

- of

- state from the calculation of its post

- 2012 emissions rate. The effect of this language is to increase the 2030 compliance obligation beyond what the EP A has proposed in the rule, the c ommenters asserted . To rectify this inconsistency the EPA should either eliminate exported renewable energy from Utah's goal calculation or allow Utah to account for these resources in its post

- 2012 emissions rate calculati on, the c ommenters suggested.

Commenter s indicated that this scenario evaluated how the stringency of Utah's 2030 emissions rate target would change if exported renewable energy sources were not included in the calculation of the state's emissions goal. (N ote: The effect of allowing Utah to account for imported renewable energy in its 2013

- 2030 emissions rate calculation and goal calculation is addressed under item 5, Treatment of Exported Renewable Energy, in the Compliance Scenario section of this memoran dum, the c ommenters noted.) Commenters concluded that when exported renewable energy is removed from the calculation of Utah's 2030 emissions rate goal, the goal increases 56 lbs/MWH to 1,378 and the state's compliance gap drops from 391 lbs/MWH to 335 lbs /MWH.

Comment 4 2 : C oncern over the targets proposed for the State of Oklahoma.
Response 4 2 : The EPA has finalized a rule that provides significant flexibility over the interim compliance period, including the phasing in of both building 2 and 3 requirements.
The following are summaries of the specific comments under this comment:

Commenters called attention to the Interim Goal and the "Cliff Effect"

. Commenter s asked the EPA to consider removing the interim goal and allow the states to determine appropriate mile stones to ensure compliance with final goal. Commenters stated that it has approximately $250M in debt that would be at risk. Commenters stated [ t his] d oes not include new debt associated with adding new generation and transmission resources. [In summary, c ommenters noted that] the interim goal and timelines will put severe consequences on Oklahoma rate payers.

Commenter s indicated that in Oklahoma, the B lock 3 target translates into an 83 percent increase from the 2012 baseline levels. Commenters stated that the EPA essentially presumes that all generation growth during this timeframe will be provided by RE sources. Commenters asserted this is both unreal istic and underestimates the need to shore up variable renewable resources with new, reactive fossil generation

- a dynamic which is exacerbated by the NODA's proposal to further force coal

- based reductions, already marginalized due to the Block 2 increase in NGCC utilization, in order to accommodate yet more renewables (wind) generation

- based gains. In325 addition to problems inherent in the terms of Block 3, its application highlights the precarious position States may find themselves in with respect to ener gy reliability, the c ommenters concluded.

Comment 4 3 : T argets set for Texas are unreasonable.
Response 4 3 : The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The BSER is forward

- looking in identifying cost

- effective opportunities for emission reductions from 2012; however, the cost and availability of t hese emission reduction opportunities is the result of many factors, including previous actions. The EPA addresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.
The following are summaries of the specific comments under this comment:

Commenter s stated the proposed rule's methods of designating renewable regions and calculating renewable energy goals is unrealistic and misguided. Commenters said that s pecific to Texas, ERCOT anticipates that by 2029, variable energy renewables will comprise 22% of the energy production in the region. Commenters stated the assumptions about the level of renewable energy that can be achie ved in Texas under the Proposed Rule are completely unrealistic, as they are based on a single state

- Kansas. Commenters added that as NERC points out, Kansas accounts for only 6% percent of retail power sales and has the third

- best wind resource availabili ty in the country. Yet, c ommenters said , the Proposed Rule imposes a renewable standard designed for Kansas on states like Louisiana that have double the retail sales and rank 48th in wind resource availability. The Proposed Rule also ignores that the Kans as Renewable Portfolio Standard is a capacity based standard, not an energy production standard as envisioned under the Proposed Rule, the c ommenters added. The Proposed Rule simply translates the Kansas 20% capacity goal into a goal that 20% of the energy produced in Texas (i.e., consumed kWh, not installed kW) come from renewable resources, c ommenters said . Finally, c ommenters concluded that the Proposed Rule fails to consider that Kansas allows the use of crops for biofuels to count as renewable electric ity and allows alternative compliance payments (payments made in lieu of actually installing the required renewable capacity, which effectively act as a cost cap) such that Kansas may not actually be achieving even its more limited 20% installed capacity g oal. Taken together, commenters stated it's their opinion that the Proposed Rule sets an unattainable renewable target for Texas (and other states like Louisiana).

Commenter s indicated that Texas's current generation from renewables is already substantiall y higher than the U.S. average, yet EPA's proposal would penalize Texas for this early progress. Commenters stated t he amount of wind generation that the EPA proposes for Texas is simply massive. Texas is already first in the nation at 34 million MWh of re newable generation, or nearly 8% of the state's total 2012 generation. The EPA's analysis assumes Texas' reliance on renewable power will increase 153% by 2030 to 86 million MWh

- more than double the amount of 2030 renewable generation as the EPA assumes wi ll exist by 2030 in California, the state with the next highest increase, the c ommenters added. Commenters stated a t the 20% renewable target in the rule, Texas renewables would exceed the 2012 total power generation across all fuel326 sources of 32 other sta tes. Commenters stated it is unreasonable, arbitrary, and capricious for the EPA to require Texas to meet the lion's share of building block 3's renewable goals for the entire U.S.

Commenters presented Table 4 ( titled: "Texas Renewable Generation (2008

- 201 2)") , which shows that production from renewable generation in Texas essentially doubled in the four years from 2008 to 2012.

Comment 46 4 4 : RE status in Virginia, including utility plans regarding RE resources and the possibility of Virginia's estimated renewable generation rate.
Response 46 4 4 : The resources and data provided in this comment were valuable in finalizing the building block 3 methodology. The final building block 3 methodology does not rely on RPS requirements or state

- specific deployment es timates, but rather cost

- effective RE at an interconnection level. The EPA addresses considerations related to the technical feasibility and availability of regional RE resources in both the preamble (section V.E) and GHG Mitigation Measures TSD.

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

Commenter s asserted the prospects for significant additional renewable electricity generation in Virginia are not high. Commenters stated Dominion Virginia Power has installed, and contin ues to look for opportunities to install, solar electric generating equipment in Virginia. However,

c ommenters said that the scale of these projects is very small compared to the scale of solar generating projects in the "sun belt" states, e.g., California , Nevada and Arizona. Wind turbines have been installed and are operating to a limited extent in Virginia, but the prospects for large scale wind generation are totally unknown and speculative at this time, c ommenters explained. Commenters stated l arge sca le land

- based wind turbine farms face significant ecological and aesthetic hurdles in Virginia. Dominion Resources is evaluating the feasibility of relatively large scale wind turbine facilities off Virginia's shore line, but again, c ommenters indicated th at the prospects for realization of this possibility is unknown and speculative at this time. Finally,

c ommenters stated that the prospect for any additional hydroelectric generation is Virginia is very low. Commenters added that rather than adding any new dams in Virginia, recent years have seen several existing dams removed to return rivers to free

- run conditions. In short,

c ommenters concluded that the prospects for any significant new solar, wind or hydroelectric generation in Virginia are totally uncer tain and speculative at this time. Thus, c ommenters questioned the EPA's assessment that Virginia could achieve a 12 percent annual average renewable generation rate by the year 2029.

Commenter s said that another reason the emission rates for Virginia are set unreasonably and unlawfully low is the EPA's inclusion of significant amounts of new renewable generation and energy efficiency in the denominator of its mathematic formula. Commenters stated a lthough the proposal sets state

- specific Mandatory Goals, t he calculation of Virginia's Mandatory Goals disregards real world considerations specific to Virginia. In this regard, the Proposed Regulation arbitrarily and capriciously extrapolates renewable and energy efficiency policy requirements of other States th at have not been achieved, c ommenters asserted. Commenters stated there is no327 analysis as to how these aspirational levels of renewable generation and energy efficiency, derived from other states that have their own particular geographies, existing infrast ructures, and political considerations, could reasonably be achieved in Virginia or whether such levels can be achieved in a cost effective manner given Virginia's particular circumstances. Although the Proposed Regulation purportedly recognizes that "stat es differ in important ways," the EPA's generic approach to this aspect of its calculation ignores geographic differences that cannot be reasonably ignored, c ommenters noted. Again, the end

- result of this unrealistic approach is that it deprives Virginia o f the flexibility needed to achieve carbon reductions at a reasonable cost while still maintaining reliable service, c ommenters concluded.

On the other hand, commenter s said that the EPA applied RPS that have been established by states in the same region t o quantify RE potential in states that do not have an RPS. Because Virginia does not have a mandatory RPS, the c ommenters indicated that the target is calculated assuming the state will meet the East Central region's RE goal of 16 percent by 2030. However, the c ommenters stated this target is not far from Virginia's voluntary RPS goal of procuring 15 percent of the power sold in Virginia from eligible RE sources by 2025.

Commenters indicated that in 2012, Virginia's existing renewable generation made up 3 p ercent of generation, equivalent to 2.4 million MWh. Commenters explained t his level does not reflect the plans of both Dominion and Appalachian Power to add higher, though still quite modest, levels of renewable generation to their energy portfolios

. Commenters stated f or example, Dominion received approval from the State Corporation Commission to construct and operate 30 MW of distributed solar resources and to purchase 3 MW of distributed solar from its customers.

Commenters said it referenced filin gs from Dominion's 2013 IRP that assume that the 30 MW solar resources would operate at a 15 percent capacity factor and the 3 MW solar resources would operate at a 13.9 percent capacity factor. In addition, c ommenters said that Dominion received a grant f rom the DOE to develop two offshore wind test turbines that will produce a total of 12 MW of generation. Commenters also said it referenced filings in the Dominion 2013 IRP docket that assume that this resource would operate at a 40 percent capacity factor

.
Commenters concluded by stating that applying the existing level of generation that the EPA assumed in the 2012 baseline as well as the solar and offshore wind resources that are under development results in a reduction from 998 lbs/MWh to 952 lbs/MWh, a decrease of 46 lbs/MWh.

Comment 4 5 : Reconsider Idaho's goal and treat Idaho like Vermont and the District of Columbia
Response 4 5 : Vermont and the District of Columbia do not have affected EGUs, and therefore they are not be required to submit a state p lan. However, Idaho does have affected EGUs and therefore have CO2 emission goals . The CO2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule provides analysis and explains the adjustment that the EPA made to the state

- level 2012 data fo r Idaho to better reflect fossil generation in an average year over a 1990

- 2012 baseline. See also sections I.A.1 and VI.D of preamble to CPP Final Rule.328 The following are summaries of the specific comments under this comment:

Commenter s said that in 2012, 87% of Idaho's in

- state generation came from zero

- carbon emitting sources. Commenters stated Idaho has projected that by 2020, 88% of its instate generation will be carbon free due to the continual addition of generation by new zero

- car bon emitting sources within the State. Also, c ommenters indicated that Idaho utilities also operate successful Energy Efficiency programs that are continually evaluated by the Idaho PUC and participate regionally in the Northwest Energy Efficiency Alliance

. Commenter provided Table 1: 2012 Idaho generation in MWh provides additional data to support this point.

For these reasons, c ommenters said that Idaho's current generation mix already meets the Proposed Rule's intent. Commenters added Idaho's generation mix exceeds the allocation of

zero

- carbon emitting energy and NGCC generation that the EPA seeks to achieve in the 48 states that have greater carbon intensity than Idaho. Commenters explained that Idaho's emission profile is much more like Vermont's profi le than that of the other states covered by the proposal. Accordingly, commenters stated Idaho should not be required to further reduce carbon emissions through a state performance goal

. If the EPA requires Idaho to further reduce emissions, the EPA may ultimately force Idaho to resort to energy sources that would increase overall carbon intensity, c ommenters asserted

. Commenters stated as an example, if Idaho is required to comply with th e rule as written, at least one Idaho utility would be forced to: (1) operate its peaking plants more often, at a higher cost to consumers and with greater emissions than its NGCC units; (2) rely on market purchases which can be costly, unreliable, and hav e unknown carbon profiles; (3) replace existing zero

- carbon emitting generation with new intermittent zero

- carbon emitting generation sources at a higher cost; and/or (4) build a new NGCC with a potentially higher emission rate under 111(b).

On October 30, 2014 the EPA released its NODA, which acknowledges that Idaho already produces/saves more MWh through RE and EE than it generates from affected units,
commenter s said. Commenters added t his is illustrated in the NODA which would adjust the goal

- setting eq uation. Idaho has 2,514,502 MWhs of existing renewable generation, a figure which does not include hydropower and EE, and only 1,639,922 MWhs of affected unit generation, c ommenters said

. Commenters indicated that by subtracting the emissions that would be displaced from existing renewable generation, Idaho's calculated goal emissions rate on a lbs/MWh basis would be a negative number. The fact that Idaho has more than mitigated carbon emissions of its affected units by the amount of EE and RE it has curren tly accumulated, the EPA should reconsider Idaho's goal and treat Idaho like Vermont and the District of Columbia,

c ommenters concluded.

Comment 4 6 : Commenters indicated that the proposed RE target for Arkansas is unnecessar i ly low.
Response 4 6 : The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, which is described in section V.E.6 of the preamble and in the GHG Mitigation Measures TSD.329 The following are summaries of the specific comments u nder this comment:

C ommenter s stated some parties have complained that the EPA based its renewable target for Arkansas on the Kansas RPS, on the grounds that Kansas has a larger potential for wind energy than does Arkansas (e.g., AECC September 2014 Comme nts at 20). Commenters stated that i n fact, the Kansas RPS is 20% in 2020, while the EPA target for Arkansas is only 2.6% in 2020 and 7.2% in 2030. Commenters said t he Plan's state goals are modest compared to the renewables targets that have been shown to be feasible by many other states that are no better positioned than Arkansas for renewables development

. . Commenters presented Table 4

, which compared the EPA renewable targets for Arkansas with the RPS in other states without particularly large potential for low

- cost wind (such as Kansas, Nebraska, Oklahoma, and Texas) or solar (such as Nevada, Arizona, and Colorado).

Commenter s pointed out that it is important to recall that replacing coal and other fossil fuels is an environmental program, and like othe r pollution controls required by EPA and ADEQ, that program may cost money. Commenters added that the EPA does not require any particular mix of resources to achieve compliance. Commenters noted that SWEPCo expresses its concern that "Without codification of the renewable and EE targets EPA might disapprove of mass goal. [EPA] Likely would require state EE and RE legislation' (October Presentation 1 at slide 15), but so long as each generator's emissions are limited to a level that collectively meets the st ate (or regional) requirement, the EPA's goal will be met. Nothing in the Plan regulates how the reduction in operation of the covered units is achieved, whether through legislative mandates, Arkansas PSC regulations, or economic decisions made by the plan t owners to stay within the carbon

- emission allowances they are given in the State Implementation Plan, c ommenters indicated.

Commenter s pointed to a study by NREL, which estimated that Arkansas had potential of 9,200 MW and about 26,900 GWh of wind resour ces, using just 1.34% of the state's land, and with the following limits:

•

- assuming only 80 m hub height, even though new turbines are increasingly being built with hubs at 100 m or above.

•

- including only sites with capacity factors over 30%.

•

- excluding 6 0% of the high

- wind land area, to reflect "protected lands (national parks, wilderness, etc.), incompatible land use (urban, airports, wetland, and water features), and other considerations."

Commenter s said that the EPA goals assume that Arkansas would ad d only about 630 GWh of renewables by 2020 and 4,700 GWh by 2029, so Arkansas could meet the entire renewable target with 17.5% of the in

- state high

- wind potential.

Comment 4 7 : The EPA's unsupported building block 3 and 4 calculations exacerbate the burdens on coal

- fired EGUs, imposing economic and reliability impacts.330 Response 4 7 : See section V. E o f the final preamble of the CPP for the EPA’s response to this
comment.
The following are summaries of the specific comments under this comment:

Commenter s said that the EPA's flawed analyses under Building Blocks 3 and 4 cause the rule's proposed emission targets to significantly overstate the level of reductions that can be reasonably achieved through increased renewables and demand

- side EE measures. Resul ting shortfalls in a state's emission reductions relative to the EPA's emission target must be made up elsewhere, the

c ommenters noted. Specifically, in Pennsylvania, where EPA's Building Block 3 and 4 emission targets significantly overstate what reductio ns can be achieved, additional reductions from the State's coal

- fired EGUs will be required to make up the deficit, the c ommenters asserted.

Commenter s indicated that this added stress on coal

- fired EGUs is made worse in light of the way in which EPA's sta te emission targets are calculated. Commenters stated b ecause emission reductions under Building Blocks 3 and 4 are accounted for only in the denominator of EPA's calculations (as compared with Building Blocks 1 and 2), to make up any shortfall, Pennsylvan ia must eliminate more coal MWh of generation beyond the deficit under Building Blocks 3 and 4. In other words, c ommenters stated EPA's inflation of the reductions achievable through RE and EE measures has a multiplier effect on what must be achieved by co al

- fired EGUs, making already precarious requirements even less achievable. The end result for states like Pennsylvania is even more coal retirements and added detriment to sources' ability to operate economically, the c ommenters noted. Commenters stated EPA must consider and mitigate such unintended, unreasonable economic and reliability impacts in any final rule, as failure to do so would further render it arbitrary and capricious.

Comment 48 : Commenters wanted to ensure that credits could be used to de monstrate compliance.
Response 48 : See section V. D o f the final preamble of the CPP for the EPA’s response to this
comment.
The following are summaries of the specific comments under this comment:

Commenter s said that the EPA should ensure that EE measures by water companies and RE installations at their facilities are clearly eligible as a source of credits to states developing their state plans.

Commenter s asked that since the EPA did not remove out

- of

- stat e renewables from the state RPS goals used to calculate regional RE goals, if the EPA would allow the use of RE credits for CAA section 111(d) compliance.

Comment 49 : Request for clarification if solar/wind/hydro/geothermal/landfill/biomass can all be used to demonstrate compliance with goal.331 Response 49 : The RE technologies used to set the building block 3 generation level are utility

scale solar PV, CSP, onshore wind, geothermal, and hydropower. Other RE technologies are eligible for compliance cr edit as non

- BSER measures. See section s V.A and V. E of the final preamble of the CPP for the EPA’s response to this comment.
The following are summaries of the specific comments under this comment:

Commenter s said that in footnote 30 to Section II.C of th e proposed rule, the EPA refers to the new generating capacity of the following renewable power generating technologies

- "solar, wind, hydro, geothermal, landfill gas, and biomass." Commenters requested further clarification from the EPA on whether actual g eneration from all six of these technologies, plus energy generated from wastewater treatment, can be included in the total annual generation number the state uses to demonstrate compliance with its emission goal. Commenters asserted that generation from

s olar, wind, hydro, geothermal, landfill gas, and biomass should all be counted as renewable generation in the denominator of the state's compliance calculations.

Comment 5 0 : Suggested revision to RE goal setting calculation method
Response 5 0 : The EPA has adopted a goal

- setting methodology that reflects replacement of affected EGU generation with incremental RE. This replacement applies equally to all affected EGUs. Refer to section V and VI of the preamble for additional information.

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

Commenter s indicated that the EPA introduces an issue in the NODA regarding a disparity of treatment between building block 2 and building block 3 in the goal setting formula. Specifically,

c ommenters s tated that the treatment of RE is different in that the RE generation (MWh) is added to the denominator, but the displacement of emissions and generation from affected fossil generation that would result is excluded from the numerator.

Commenters asserted it is more accurate and consistent for the EPA to remove displaced emissions from EGUs from the numerator, remove associated generation from those EGUs from the denominator, and then add the RE generation to the denominator as well. Furthermore,

c ommenter s expressed that the EPA should assume that RE generation will displace the highest emitting resources first in order to achieve the best system of emissions reductions.

Comment 5 1 : Commenters stated that the NODA's a lternative RE and EE g oal c alculation will

e xacerbate the r eliability and e xcessive c ost i mpacts

. Response 5 1 : See section V.A

. of the final preamble of the CPP for the EPA’s response to this
comment.
The following are summaries of the specific comments under this comment:332 Commenter s indicated that the NODA proposes that the state CO2 emissions rate goals be recalculated with the assumption that for every MWh of RE that is generated and every MWh saved by EE that these values would be added to the denominator of the goal calculation and the equivalent CO2 emissions subtracted from the numerator. The result of this recalculation will be to substantially reduce the state emissions rate below the current values which are already too low for the grid to safely and reliability operate, c om menters asserted

. Commenters added t he EPA provides no justification for this potential alternative other than some commenters have asked for it. Clearly, c ommenters said , these commenters seek only to eliminate coal generation regardless of the cost to ut ilities, cooperatives and rate

- payers. Commenters noted t hese comments establish the danger of reducing coal operation and retiring coal units at the level of the current goals. Commenters said that the costs are too high, the potential benefits too small, and the impact of dramatically higher electricity rates is too real for the poor in this country.

Comment 52 : Commenters provided suggestions regarding how RE should be treated in determining state goals, including in relation to generation shift to NCCU units and demand

- side EE.
Response 52 : See section V.E of the final rule preamble to the CPP for the EPA’s response to this comment.
The following are summaries of the specific comments under this comment:

Commenters contended that EPA should not incorporate renewable energy into the BSER determination, and instead, renewable energy should be allowed as a compliance option for
states . Commenters argued that EPA's attempts to set renewable energ y targets for states rewards some states for lesser efforts, while penalizing early leaders in renewable energy . Commenters also questioned if EPA had legal authority to consider renewable energy in the BSER determination.

Commenters supported EPA's approa ch that excludes existing hydro in the state goal setting, but allows new and incremental hydro to count toward compliance . Commenters asserted that, like existing nuclear generation, existing hydro is a mature technology that doesn't need economic support under the CPP in most cases. C ommenters suggested that if the EPA decides to include existing hydro in the state renewable targets, base it on a rolling average of three most recent years of data to smooth year

- to

- year variability.

Commenters provided co mments on how to properly account for emission reductions of BSER as a system. In their statements, commenters argued that the Proposed Rule treats the increased utilization of lower

- emitting existing NGCC differently from increased generation from other low

- and zero

- carbon sources and from energy savings . Commenters noted that EPA's description of Building Block 3 showed that EPA intended to reflect the reduced utilization of affected EGU's and not just the addition of zero carbon generation, and therefo re, the y suggested that the final Clean Power Plan should treat generation from nuclear energy, renewable energy and existing NGCC in the same way . Commenters continued by stating the energy savings that constitute Building Block 4 replace MWh that would otherwise be needed from generation sources, these savings should also be treated the same as redispatch to existing NGCC

.333 Commenters stated that in order to calculate the impacts of Blocks 3 and 4 in a way that is consistent with the approach for Block 2, EPA should remove emissions associated with displaced EGUs from the numerator of each state's carbon intensity numerator. Commenters stated a ffected EGU MWh should also be removed from the denominator, and the equivalent number of MWh should be added back based on low

- and zero

- carbon generation from Block 3 and energy savings from Block 4.

C ommenters expanded their discussion by stating, that to properly evaluate the system

- based impacts of Building Blocks 3 and 4, EPA should calculate the incremental MWh of nuclear generation, renewable generation, and energy savings . Commenters clarified that, for nuclear generation, only under

- construction nuclear should displace 2012 fossil fuel

- fired generation. For renewable generation, the commenters suggested th at EPA should add all MWh representing renewable generation to the denominator in calculating each state's rate. However, the commenters clarified, EPA need only displace fossil generation representing the renewable energy that is incremental to that produ ced in 2012. Finally, the commenters concluded that all energy savings would be considered incremental to 2012 generation and so all efficiency MWh would displace existing generation.

Comment 53 : The following commenters believe that states which have already implemented carbon

- free generation should be given credits for their prior actions.
Response 53 : The BSER is forward

- looking in identifying cost

- effective opportunities for emission reductions from 2012; however, the cost and availability of these emission reduction opportunities is the result of many factors, including previous actions. The final building block 3 methodology is described in detail in V.E of the preamble and in the GHG Abatement Measures TSD.
The following are summaries of the speci fic comments under this comment:

Commenters stated EPA's proposal penalizes states that have acted to reduce GHG emission intensity through investment in carbon

- free generation, including renewable energy and nuclear generation. Commenters said besides ign oring the actual proportion of carbon

- free resources present within state boundaries through its failure to include existing nuclear and hydroelectric generation, EPA requires early acting states to meet more stringent interim and final performance standar ds. Commenters said EPA must recognize the significant efforts that states have made to reduce GHG emissions in the absence of a proposal such as that being contemplated by EPA. Commenters said meeting these goals comes at a cost, since renewable energy ge neration can be more expensive than traditional fossil fuel

- fired generation. Commenters said these added expenses result in the imposition of greater costs to the customer, which they have already been saddled with for several years. Commenters said EPA s eeks to increase the renewable goals of states that have already achieved real GHG reductions while asking less of states where such opportunities still exist, and this is neither equitable nor cost

- effective. Commenters said some argue that providing cred it will enable states to get by without doing anything, but the real story is that these states have been generating real reductions for years without a rule in place.334 Comment 54 : Long

- term implications of EPA’s treatment of RE
Response 54 : The BSER is forward

- looking in identifying cost

- effective opportunities for emission reductions from 2012; however, the cost and availability of these emission reduction opportunities is the result of many factors, including previous actions. The final building block 3 methodology is described in detail in V.E .6 of the preamble and in the GHG Abatement Measures TSD.
The following are summaries of the specific comments under this comment:

Commenters stated EPA's treatment of renewable energy also has long

- term policy im plications. Commenters explained that the Proposed Rule affirmatively penalizes states and companies

- like Western Farmers

- that have been at the forefront of renewable energy development and creates unworkable conflicts and potential legal disputes betw een and among states. Commenters stated there is no clear way for states to account for renewable generation and the reduction of generation through energy efficiency without disrupting existing energy contracts, chilling the development of new renewables, and unfairly penalizing states and rate payers that have paid for the development of existing renewable resources, and these problems cannot simply be resolved by the states in the implementation of the Proposed Rule, and are the result of EPA exceeding i ts authority under the CAA.

Comment 55 : Commenters suggested that EPA should establish stricter standards based on renewable energy and energy efficiency under Building Blocks 3 and 4.

Response 55 : The resources and data provided in this comment were valua ble in finalizing the building block 3 methodology, particularly in the reevaluation of onshore wind and solar cost and performance assumptions.

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

Commenters stated that EPA's standa rds can be tightened to achieve significantly more carbon reductions. Commenters said significant additional reductions can be achieved through renewable energy and energy efficiency. Commenters said that demonstrated, updated cost and performance standard s show that dramatic reductions can be affordably achieved with the no carbon solutions of building blocks 3 and 4

- renewable energy and energy efficiency. Commenters said EPA's current proposal vastly underestimates those reductions and must be changed t o realize these further achievable reductions.

3.3.7 Cost effectiveness of RE

This section discusses issues related to cost

- effectiveness of CO 2 emission reduction through Cleaner Generation Sources (Building Block 3). The comments in this section address cost effectiveness of RE and provide additional information both supporting and disagreeing with the EPA's cost models and associated analyses. State

- specific issues are ad dressed, as well as issues related to integration of RE into the electric power grid and potential effects of RE

- related incentive programs.335 Commenters have raised a number of issues related to this subsection which are organized by topics (comments) belo w. Responses are provided for these topics.

Comment 1: Commenters provided general information (not necessarily referring to independent studies) in support of the EPA's analysis and that RE is cost effective.
Response 1: The resources and data provided i n this comment were valuable in finalizing the building block 3 methodology, which is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Comment er s stated the growth in renewable generation expected by the Proposed Rule is feasible and cost effective with today's technologies. Commenters stated the long

- term growth in renewable energy deployment has been accompanied by continuous improvements in t echnology performance and cost. Commenters stated in 2013, the national average price for wind power purchase agreements (PPAs) hit an all

- time low of $25/MWh. Commenters stated the system prices for residential and commercial PV, for example, declined 6

- 8 percent per year, on average, from 1998 to 2013. Commenters stated projections by the National Renewable Energy Laboratory (NREL) and Lawrence Berkeley National Laboratory (LBN L) show that this sustained price drop over eight years is expected to continue, with solar eventually reaching widespread grid parity. Commenters also stated recent market data indicates that average levelized cost of electricity (LCOE) of renewable gener ation has already become cost competitive with conventional sources, particularly in resource

- rich regions. Commenters stated in the latest figures from Navigant Consulting, LCOE for utility

- scale photovoltaic (PV) and onshore wind generation were $0.08/kW h and $0.06/kWh, respectively, compared to $0.075/kWh for coal.

Commenter s stated Building Block 3 is cost effective. Commenters stated previous renewable energy generation has been cost effectively deployed. Commenters stated that a NREL and Lawrence Berkeley National Laboratory review of the costs and benefits of increased renewable energy deployment (as anticipated under RPS compliance) found that the estimated incremental cost from 2010

- 2012 (the cost above and beyond what would have been incurred without an RPS) was on average approximately 1 percent of retail electricity rates and well below the cost caps that most state legislatures have adopted as part of their RPS. Commenters stated that in the study's analysis of state s with restructured markets, incremental costs ranged from 0.1 percent to 3 percent of retail rates. Commenters stated regulated states have fared similarly, experiencing incremental costs no higher than 3.5 percent of average retail rates, and in one case , savings of 0.2 percent. Commenters stated this data derives from 29 states, most with policies in effect for more than five years.

Commenter s stated that additional renewable energy generation is also predicted to be cost

effective to develop. Commenters stated NREL found that if utility

- scale solar and wind are deployed in prime areas to meet RPS mandates, the renewables, including transmission costs, could be cost competitive with new NGCC power plants in 2025. Commenters stated that

a lthough NREL's stu dy was limited to the Western Electricity Coordinating Council, it identified336 a range of scenarios where renewables would cost the same or less than NGCC by 2025 , and that EIA estimates that even before then, by 2019, the cost for wind would be less than a ll forms of coal

- fired power. Notably, commenters stated, even large utilities long known for their significant coal plant portfolios, such as Duke Energy, have invested heavily in renewable
energy.

Commenter s stated that EPA correctly incorporates renewab le energy and energy efficiency as components of its BSER. Commenters stated the emission reduction strategies from energy efficiency and renewable energy are already being deployed today in New York to cost

effectively secure significant reductions in car bon pollution, beginning to fulfill the goal of this Proposal.

Commenter s stated that r egardless of the reduction in demand, the most economical generation resource will be dispatched to meet energy demands. Commenters stated that contrary to EPA's asserti ons in the State Plan Considerations TSD (at 25), it is not zero

- carbon resources that are the lowest cost resources. Rather, Commenters stated , for most companies (including Basin Electric) coal

- based base load facilities are consistently the least expens ive units to operate. Therefore, c ommenters stated while these programs are best practices for companies in long

term planning and can result in lower emissions of CO2 over time, they are unlikely to lead to EPA's stated goal of reduced generation at coal

- based facilities.

Commenter s described the success ful development of solar and wind energy in Colorado and focuses on the results of a bidding process as part of the Public Service Company of Colorado renewables acquisition process in a period following 2016 and 2018. Commenters stated that the results of the bidding process were "a marketplace test of the cost of renewable energy supervised by a public record at the Public Utilities Commission that show new wind and solar come in at lower than system average costs here in Colorado. And we hold for your

co nsideration that if we can do it here, it can be done elsewhere as well."

Commenter s stated that n umerous studies have shown that this transition needs only the political will to make it happen. Commenters stated that new nuclear reactors cost billions of dollars and take many years to bring online, and renewable energy, and especially efficiency are much cheaper and their development is already underway.

Commenter s provided examples to illustrate that solar and wind energy measures can be implemented at a reasonable cost, and that cost should not be an impediment to including these renewable resources as part of the BSER. Commenters stated t he examples included descriptions of First Wind's solar energy projects in Utah and Hawaii and the wind energy project s in Hancock County Maine.

Commenter s stated that "today, renewable energy is more cost

- effective in more regions of the country than ever before, and prices continue to decline" and provided examples of prices for wind and solar generation and prices in PPAs in various states including: Georgia and Texas. Commenters continued by saying that "these examples are consistent with Google's experience in the market. Significant technology development and cost reductions for renewable energy resources have persi sted over time and are expected to continue apace. To be sure, these renewable energy prices have been supported by federal and state policies and tax incentives.337 However, as for any energy technology, including fossil fuel technologies, government support and policies have played a critical role in driving down the unsubsidized cost of the technologies and taking them to greater scale. The Clean Power Plan can help play that role going forward for renewables."

Commenter s state d that "t he EPA must not weake n Georgia's proposed target because renewables and energy efficiency measures are cost

- effective energy solutions for Georgia."

Commenter s note d that it is important to adapt to changing grid operations "as renewable energy becomes a larger component of t he electricity sector and the generation profile of the electric resources available throughout the day is changing." "This can be done economically, if supported through appropriate policies, pricing options, and program offerings." " The Western Wind and Solar Integration study found that not only is a high renewable energy penetration achievable, but also that any increases in costs or emissions associated with increased cycling of fossil fuel power plants are nominal compared to the overall cost and emi ssions savings associated with reduced generation from fossil fuel power plants."

Commenter s stated that "renewable energy is neither reliable nor dispatchable and is therefore not a perfect substitute for conventional forms of generation, like fossil fue led sources. Moreover, even if one could overcome the reliability and dispatch issues, the costs of producing many types of renewable energy are still not economically justified. Basing economic development programs on more costly, less reliable energy sou rces that cannot be dispatched is a

non

- starter."

Commenter s stated that "w ind and solar resources have been deployed by states, utilities, and merchant generators. Commenters stated t hese technologies have been growing rapidly and are becoming more cost

- effective strategies for CO2 emission reductions than approaches that continue to rely on conventional generation resources." Commenters provide d statistics to illustrate the point.

Com menter s note d that " more than a dozen studies conducted by independent grid operators, state governments, academic experts, and others have found that wind energy benefits consumers by reducing electricity prices, and utilities are taking note". Commenters stated a n example includes the DOE Wind Technologies Market Report 2012. Commenters stated that this report show how "cost savings with wind power are apparent across the country. Commenters stated

n ewly released DOE data shows that consumers in the state s that use the most wind energy have fared far better than consumers in states that use less wind energy. Commenters stated s upporting arguments are also provided in the American Council on Renewable Energy's report and the Outlook for Renewable Energy in America.

Commenter s describe d how EPA could be more aggressive in the targets for RE based on dramatic since the costs of RE have fallen dramatically. Commenters provide d examples of this for solar energy.

Commenter s highlighted the cost

- effectiveness by d escribing the results of a modeling exercise looking at the CPP scenarios for the State of Wisconsin using the MyPower modeling software and a spreadsheet model. " Both models show that the 30% RPS can reduce Wisconsin's CO2338 emissions below EPA's targets, a t a lower cost than the fuel switching scenario. These results were shown under conditions where fossil fuel prices rise steadily at 2% annually, and a scenario where natural gas prices reflect historical volatility observed from 19998

- 2013. The 30% RPS
pr oduced lower costs than the fuel switching scenario under each simulation, illustrating the value of renewables as a hedge against price volatility." "The results of both modeling exercises mirror results of recent analysis performed at the national level by the Union of Concerned Scientists (UCS). The UCS analysis found that EPA's proposed rule significantly underestimates the role of renewables in establishing state

- level emissions targets, and fails to reflect the falling cost of renewables."

Comment 2: Commenters agreed with the general finding that RE is cost effective, and in support cite the results of independent studies.
Response 2: The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, which is described in section V.E of the preamble and in the GHG Mitigation Measures TSD.

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

Commenter s stated supporting analyses verify that higher renewable deployment in the alternative approach is cost

- effective and achievable. Commenters stated independent modeling studies have also determined that the higher nation al penetrations of renewable energy projected in the commenters ’ updated Alternative Approach are both technically and economically achievable. Commenters stated t hese studies should serve as further confirmation that much higher levels of renewable energy can and should be included in the Best System of Emissions Reduction. Commenters stated that all three of the supporting analyses referenced rely on NREL's Renewable Energy Deployment System (ReEDS) model. Commenters stated that like IPM, ReEDS is a long

- term capacity

- expansion model for the deployment of electric power generation technologies and transmission infrastructure throughout the contiguous United States. Commenters also stated that ReEDS features the following capabilities to model renewable

ene rgy:
"[ReEDS] addresses a variety of issues related to renewable energy technologies, including accessibility and cost of transmission, regional quality of renewable resources, seasonal and diurnal load and generation profiles, variability and uncertainty of wind and solar power, and the influence of variability on the reliability of electric power provision. ReEDS addresses these issues through a highly discretized regional structure, explicit statistical treatment of the variability in wind and solar out put over time, and consideration of ancillary service requirements and costs."

Commenters provided information on recent analyses by the National Renewable Energy Lab (NREL) and U.S. Department of Energy (DOE) demonstrate the potential for much higher

rene wables penetration than EPA's proposed targets, even under restrictive sensitivity cases. Commenters provided further detail on the scenarios modeled. Commenters stated the ReEDS modeling suggests that EPA could set significantly higher renewables targets without a significant impact on electricity prices, and depending upon the scenario and year, solar and339 wind generation levels are two to three times higher in ReEDS than EPA's targets and, in many cases, electricity price projections are lower than EPA's.

Commenters also provided information on a Union of Concerned Scientists (UCS) assessment of the technical and economic feasibility of a proposed "demonstrated growth" approach to target

setting which results in 995 TWh of renewable energy. Commenters sta ted UCS also found that the incremental cost of high levels of RE deployment under their proposal was at or below $30/MWh, assuming national trading of RECs. Commenters also discussed the results of the analysis related to the impact on natural gas and ele ctricity prices. Commenters stated that in the UCS analysis, the national average price of natural gas delivered to the electricity sector would be 9% lower than business

- as

- usual by 2030. Commenters also stated that at the regional level, consumer electri city prices would range from a 3.7% reduction to a 3.4% increase, while power sector natural gas price reductions would range from 8% to 17%.

Commenters also provided information on preliminary results from DOE's Wind Vision report. Commenters stated that the early release of this analysis shows "that increasing wind power from 4.5% of U.S. electricity use in 2013 to 10% in 2020, 20 percent in 2030, and 35% in 2050 is technically and economically feasible. Achieving these targets would require less than 5% of the country's available wind resource potential and would result in a less than 1% (0.1 cents/kWh) increase in electricity costs by 2030, and a 2% reduction in electricity costs by 2050. In addition, the study found that achieving the Wind Vision (compa red to a baseline scenario) would result in cumulative (2013

- 2050) savings of:

• $400 billion in avoided global climate change damages from reducing power plant carbon emissions by 12.3 Gt of CO 2

- equivalent (a 14% reduction);

• $108 billion in avoided health and economic damages from reducing particulate matter, nitrous oxide, an d sulfur dioxide emissions; and

• $280 billion in lower consumer natural gas bills and total electric system costs that are 20% less sensitive to natural gas price fluctuations."

Commenter s stated EPA Properly included the addition of renewable energy in the BSER. Commenters stated electricity generation from renewable resources

- such as wind, solar, or geothermal

- has been demonstrated to be a cost

- effective means of displacing emissions from fossil fuel generation. Commenters stated , given the nature of the electricity grid, the addition of renewable energy will directly result in reduction in other generation. Commenters also stated that there is ample evidence that it is fossi l

- fuel fired generation that is reduced as additional renewables are brought on

- line. For instance, c ommenters stated , the New York State Department of Public Service conducted extensive modeling of the economic and environmental effects of that state's re newable portfolio standard and concluded that increased renewable energy generation would displace generation from higher

- emitting sources, primarily natural
gas

- , coal

- , and oil

- fired units. Commenters stated renewable energy also meets EPA's cost criteria. Commenters stated recent analysis by Lazard suggests that the costs of carbon abatement from building a new wind or solar project, relative to building a new coal or gas plant, are within EPA's range of $10

- $40/tonne and, particularly in areas with strong wind resources, can result in net savings to electricity customers. Commenters also stated a recent LBNL survey of state340 renewable generation cost assessments found that most states which assessed benefits of RPS policies determined that the policy resulted in net benefits due to, among other things, pollution reductions, economic development, and natural gas price suppression.

Commenter s stated that earlier this year a study was conducted by PJM, the region al grid operator, on the impacts of integrating up to 30 percent renewable energy by 2026. Commenters stated that the study found that by using 30 percent solar and wind we would save up to 16 billion dollars per year on electricity production because it w ould replace the least efficient and most expensive power plants. Commenters stated t he study also found that there would be no significant reliability issues from phasing in this level of renewable energy, even with current technology.

Commenter s praised the levelized cost of low carbon options analysis performed in Lazard and referred to the results of that analysis, stating that "one can go technology

- by

- technology, region

by

- region and even plant

- by

- plant, which, in theory, is what the EPA will let the state do. Using the mid

- points yields exactly the same rank ordering of the options as standing the ranges side

by

- side. The ranges for efficiency, and wind, overlap as the lowest cost resources. The ranges for gas and Solar PV with the cost trend overlap as the next least costly options. In the context of the nuclear debate, when we look at ranges, nuclear cannot compete with efficiency, wind, gas, biomass, solar PV anyplace in the U.S. It is barely competitive with gas with CCS, geothermal, microturbines, and solar thermal with storage. Storage is projected to be the least cost peaking power, just 10 percent more costly than the higher nuclear projections."

Commenter s provided examples of various analyses including a 2012 analysis from Citi Research, a Cre dit Suisse analysis, a Mckinsey study, a Sanford Bernstein analysis, to support the argument that on the residential

- scale, solar is already competitive with electricity off the grid. Commenters also stated that utility

- scale solar will be competitive with gas

- fired power in the medium term, and utility

- scale wind is already competitive with gas

- fired power.

Commenter s also stated that "McKinsey reaches the same conclusion as Citi and Credit Suisse in projecting cost parity for solar with conventional gener ation within the next decade, but they go on to argue that this can have a dramatic impact on the marginal demand for conventional

resources. Commenters stated t he report argued that the growth of solar has an "outsize" effect on the demand for base load g eneration." "By altering the demand side of the equation, solar directly affects the amount of new capital that utilities can deploy at their predetermined return on equity. In effect, though solar will continue to generate a small share of the overall US energy supply, it could well have an outsize effect on the economics of utilities and therefore on the industry's structure and future." In addition, c ommenters point ed out that claims of natural gas price volatility will be discredit since "reducing suppl y pressures with renewables would dampen any volatility."

Commenter s further stated that "the electricity sector has moved well beyond the point where environmentalists and renewable advocates argue for the possibility of a transformation. We now have Wall Street analysts and important segments of the utility industry not only observing the ongoing transformation, but also noting the need for institutional and infrastructural change to smooth it. This economic transformation makes it clear that base load sh ould not be characterized as a myth; rather it is an antiquated concept that has outlived its economic341 usefulness and is rapidly becoming obsolete." "The electricity system is well into the transition from a "fuel based" traditional load

- following centrali zed electrical grid to an active and smart "renewables

- based" electrical distribution system that integrates distributed supply with managed demand."

Commenter s provided examples of utilities that have been taking advantage of what they call low and stable long

- term pricing available from renewable energy generators. Commenters stated t hose examples include Austin Energy, CPS Energy in the San Antonio area, the LA Department of Water and Power, and Massachusetts Municipal Wholesale Electric Company.

Comment er s cited examples of analyses that demonstrate that RE energy is already cost effective, including a 2012 analysis by the Michigan Public Service Commission and a report by Deutsche Bank.

Comment 3: Commenters state d that they do not think RE is cost ef fective and describe the costs and emissions that they say the EPA is not considering.
Response 3: The EPA addresses considerations related to the technical feasibility and cost

effectiveness of building block 3 generation levels, particularly as it relates to the grid integration costs of significant RE penetration

, in both the preamble (section V.E) and GHG Mitigation Measures TSD. The EPA’s determination of cost

- effectiv eness is the result of EPA analysis.
The following are summaries of the specific public comments under this comment:

Commenter s state d that "t he EPA misunderstood the Lawrence Berkeley National Laboratory Study. A large deployment of RE will cause larger price increases than cited in the LBNL Study." "The EPA fails to note these studies covered what were then the early years of the State programs in which the RPS requirements were fairly modest (in the low single digits). Most State programs do not require significant renewable energy deployment until the post 2020 timeframe. A small percentage requirement of a new generation resource, even if very costly, will not drive very large price increases, as the increased costs are spread over a large amount of el ectricity load."

Commenter s also stated that "the LBNL study does not demonstrate that RE is a cost effective means to lower CO2 emissions because an analysis using energy system models show cost of CO2 Reductions from RE Exceed $50/ton. Further

, c ommente rs state d that "in citing Germany as an example of an effective RE program, the EPA provides a helpful opportunity to look at the cost effectiveness of RE programs in lowering CO2 emissions, especially in regions with relatively modest technical potential" and provided data from the German experience to show that the German experience demonstrates conclusively that RE requirements are among the most costly ways to lower CO2 emissions.

Regarding solar and wind, commenter s provide d data and describe d the results of published literature showing "that when the required amount of back up generating capacity is included in cost calculations, wind and solar remain among the most costly energy resources, even after the inclusion of externalities. In fact, m ost existing wind and solar energy resources were342 constructed not because they were the low cost means to lower CO2 emissions or to produce energy, but to comply with or take advantage of policies created to satisfy other objectives (interest group technol ogy preference, employment, energy security, etc.)." Commenters then conclude d that there is enough "analytical evidence demonstrating that electricity generated from wind and solar do not produce cost effective CO2 reductions and therefore should not be p art of the EPA's BSER determination. "

Commenter s also provide d examples of how, as RE requirements increase, ratepayer prices will increase noticeably and why current penetration levels and associated rate increases are meaningless predictors of expected r ate increases with greater renewable energy penetration rates."

Commenter s stated that "EPA fails to appropriately account for the full costs and rate impacts of its RE proposals." "The costs of increased renewable energy go beyond the cost of RE technolog ies and must include lost revenues incurred by Louisiana's utilities." Commenters provide d estimates for the increased costs.

Commenter s describe d the negative impacts that aggressive goals on renewable energy penetration can have in electric cooperatives and provides the example of Minnkota Power Co

op. "In 2007, Minnesota passed what was at the time the most aggressive Renewable Energy Standard (RES) in the country, a mandate requiring a 25 percent renewable energy portfolio by 2025. As with the conservat ion mandate, Minnesota policy makers believed they were treating utilities fairly by requiring the same renewable energy requirement for most of them." "Combined, Minnesota electric cooperatives have lost around $70 million annually in similar MISO transac tions, largely because of our steep daily demand curves and lack of 24

- hour, seven

days

- a

- week load."

Commenter s stated that renewable energy brings a large cost to Georgia communities. "Because solar energy appears to offer the most long

- term promise in Georgia, it was chosen as the appropriate renewable resource to include in the evaluation. The added cost to our communities for this Building Block is estimated at $1.7 billion over the 2020 through 2030 period."

Commenter s stated that "requiring their cu stomers to pay for additional renewables integration at this point will increase rates and not result in a significant reduction in carbon dioxide emissions, particularly since integrating additional intermittent generation requires significant investment in carbon

- emitting ancillary equipment (e.g., simple cycle gas plants) for grid frequency and imbalance regulation."

Commenter s stated that they do not think that costs factor in impacts in wildlife. Commenters stated " Wind power destroys flying birds, and now there are articles coming out about the new solar plants catching birds on fire."

Commenter s state d that "EPA's proposed rule states that, by deriving its renewable targets from existing state RPS mandates, the result, represents a conservative estima te of cost

- effective generation that could actually be developed by states." Commenters stated that w hat is cost effective in one state will not automatically be cost

- effective in another.343 Comment 4: Commenter s argue d that RE is not cost effective in Arkansas and provide the reasons why, e.g., limited RE availability.
Response 4: The final building block 3 methodology does not rely on state

- specific deployment estimates, but rather cost

- effective RE at an interconnecti on level. The EPA addresses considerations related to the technical feasibility and availability of regional RE resources in both the preamble (section V.E) and GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenter s stated Arkansas has limited wind potential and nearly all of the non

- hydroelectric renewable energy that Arkansas consumes originates in nearby states. Therefore, c ommenters stated , EPA's goal

- setting methodology for Building Bloc k 3 would require states like Arkansas to invest in renewable energy resources within the state no matter how inefficient and costly they might be, or to purchase a substantial portion of the renewable energy in its Building Block 3 target from other state s that will already be forced to develop other renewable generation to satisfy their own overly stringent targets. Commenters stated EPA did not analyze such costs in its Regulatory Impact Analysis. Even then, c ommenters stated , given practical constraints on renewable capacity, states such as Arkansas would likely be unable to meet EPA's goals even by purchasing renewable energy credits from other states.

Comment 5: Commenter s argue d that R E is not cost effective in West Virginia and provide the

reasons why, e.g. limited RE availability.
Response 5: The final building block 3 methodology does not rely on RPS requirements or state

specific deployment estimates, but rather cost

- effective RE at an interconnection level. The EPA addresses considerations rela ted to the technical feasibility and availability of regional RE resources in both the preamble (section V.E) and GHG Mitigation Measures TSD.

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

Commenter s provided a discussion on the costs associated with solar resources in West Virginia. Commenters stated hat as determined in a project conducted by West Virginia University for the EPA titled "Sustainable Energy Parks on Mine

- Scarred Lands in Appalachia," West Virginia's best po tential solar power resources are located in the southern part of the state, where former surface

- mined lands exist that have few options for reuse. Commenters stated these lands would be the best potential locations for solar power development and have be en explored for such development. However, c ommenters stated , the incentives which states that are heavy utilizers of solar power have in place, e.g. net electricity imports and high electricity prices, do not yet exist in West Virginia. Commenters provide d the following discussion:

“ The report found that the best potential solar resources in West Virginia are near Welch and have a potential expected output of 4.72 kWh/m2/day. The report also found that financing arrangements were critical to the payback pe riod of a potential solar power project, including the ability to receive tax credits and solar renewable energy credits (SRECs). Without SRECs, the344 levelized cost of energy produced ranged from 21 to 27 cents/kWh, depending on ownership
structure.

F or net electricity importing states such as California and New Jersey, solar power often helps to avoid purchasing wholesale electricity at times when it is most expensive, such as during peak load hours in the late summer afternoons. For West Virginia, one of t he largest power exporting states, the ability to avoid this type of cost does not exist. Furthermore, peak demand for electricity in West Virginia occurs in the winter, often at times of the day when potential solar power output is zero. As of October 201 4, California had about 5,500 MW of utility solar power resources connected to the grid. Total installed solar electric generating capacity in California is closer to 8,000 MW. Any solar power installed in West Virginia would have to be accomplished withou t the benefit of avoided peak energy prices which has enabled solar power development in California, and without access to what California has

- some of the best solar power resources in the nation.

In terms of peak capacity needed to serve load, solar pow er is unlikely to be able to contribute at all in West Virginia. While there would be energy savings associated with solar photovoltaic (PV) investment in West Virginia, the total avoided costs are likely to be much lower than states such as California, Ma ssachusetts and New Jersey where solar capacity is already in place. And while electricity prices are rising in West Virginia and solar power prices are falling, levelized solar energy costs are not forecast to be competitive with current generation before 2030.

"Solar grid parity" is a term used to illustrate the continuing decline in the cost of solar power produced electricity in comparison to generally increasing retail electricity prices. Solar grid parity at the state level is typically defined as ave rage electricity rates minus the levelized cost of generating solar electricity. Solar grid parity by this definition is expected by some analysts to reach 36 states in 2016, if the 30 percent tax credit on system costs remains. West Virginia is not one of those states, due to its comparatively low electricity r ates, despite recent increases.

This definition of parity is incomplete because it compares the retail cost of electricity that includes the costs of transmission and distribution, costs that can't b e avoided when integrating solar energy because the grid must still be maintained. States such as Arizona are deciding that distributed, net

- metered solar PV owners must pay a fee to support the distribution grid.

The EIA projects that solar PV costs will decline to 13 cents/kWh in 2019 for systems with a capacity factor of 25 percent. Because solar insolation in West Virginia is lower, a capacity factor of only 13 to 15 percent is possible, which results in higher costs per kWh.

In West Virginia, the costs of solar power generation would have to be passed on to ratepayers, many of whom are low

- income. Nearly one quarter of West Virginia families have incomes of less than 150 percent of the poverty line ($35,325 for a family of four)35 placing the State eigh th in the nation and about five percent above the national average of 19.6 percent. Families in this situation spend a disproportionate nine to ten percent of their income on utilities, fuel and public services, whereas the average family pays a little ove r seven percent of their income on the same goods and services. Rate increases would pose a particularly acute problem for low income households.345 Renewable Energy Summary

There are currently no utility

- scale solar power installations in West Virginia. The state has one announced 35 MW solar power grid project in the permit stage. Based on the efforts of private developers to build wind, hydro and biomass generating capacity over the last decade, it is extremely unlikely that more than 1.8 million MWh of add itional generation can be added to the West Virginia portfolio by 2030. This would leave the state 8.5 million MWh short of the EPA's goal of 10.3 million MWh of new renewable generation, which would only come from solar energy or purchased power. If all t he energy were to come from in

- state solar power, at a capacity factor of 15 percent, this equates to about 6,450 MW of installed solar PV.

The proposed regulation includes the option to purchase RE via a power purchase agreement (PPA). If the estimates of feasible RE additions shown in the following table are accurate, about 8.5 million MWh would need to be obtained either from installed solar power or energy purchased from other states via PPAs. At the current installed cost for utility solar power of $3 per watt, the investment in 6,450 MW of solar PV would amount to $19 billion. As costs are projected to decline, costs would be somewhat lower when expenditures actually take place. The extension of the production tax credit and investment tax credit would also lower costs. It is still likely to be more expensive for West Virginia to develop in

- state solar power resources to meet the goal, so it is assumed that the choice would have to be the purchase out

- of

- state wind energy.

Wind PPAs are at all

- time lows , especially for projects in the interior region. For the years 2011 to 2013, generation

- weighted average, levelized wind PPA prices were $53/MWh for contracts in the Great Lakes region and about $58/MWh for the Northeast region. Prices in both regions

are higher than the national average and represent the relevant markets that would be available to West Virginia. If the production tax credit were to be removed, these prices would rise.

As shown above, the states of Illinois and Indiana have considerable amounts of untapped wind resources. However, purchasing wind power would result in uncertain avoidance of generating costs, because West Virginia is a net generator of electricity. States that are net importers of electricity have much more certain benefit s, because they are able to avoid both the fuel (variable costs) and capacity (fixed costs) associated with the energy purchased. ”

Comment 6: Commenter s argue d that RE is not cost effective in Minnesota and provide d the reasons why.
Response 6 : The final building block 3 methodology does not rely on RPS requirements or state

specific deployment estimates, but rather cost

- effective RE at an interconnection level. The EPA addresses considerations related to the technical feasibility and availability of regi onal RE resources in both the preamble (section V.E) and GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenter s stated that "although SMMPA's current generation portfolio includes some

renewa ble resources and SMMPA plans to expand its renewable fleet to meet state standards, those resources are not a perfect substitute for the baseload generation provided by Sherco. In346 particular, it costs more to generate electricity from renewable plants. Fu rther, the intermittent nature of wind and solar power makes those resources unreliable sources for baseload generation." "Over the past 5 years MISO has given us capacity credit for 8% to 17% of the name plate rating for our wind generation. Accordingly, even with an expanded renewable portfolio, to fully meet its members' energy demands with reliable and affordable energy, SMMPA will need to rely on Sherco's baseload generation to hedge against market prices in serving its load, particularly during peak l oad periods. "

Comment 7: Commenter s provided arguments to show that RE is not the least cost option.
Response 7: The building block 3 generation levels represent a cost

- effective means of replacing affected EGU generation but are nonetheless associated with a positive $/ton cost. Incremental RE does not have to represent a cost

- saving measure to qualify for inclusion in building block 3.
The following are summaries of the specific public comments under this comment:

Commenter s stated that OMU's integrated resource plan found "OMU's coal fired Elmer Smith Generating Station was the lowest cost source of supply available to OMU for the next 10 years. Sources evaluated were natural gas combined cycle, natural gas combustion turbine, and purchase of OMU's supply requirements from the market. In each scenario, the least cost option for OMU's ratepayers was to continue to operate ESGS."

Comment 8: Commenters provided additional information on the costs of RE integration onto the grid.
Resp onse 8: The resources and data provided in this comment were valuable in finalizing the building block 3 methodology. Distributed generation technologies are not included as part of building block 3. The EPA addresses considerations related to the technical feasi bility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenter s stated there are signi ficant additional costs and constraints not factored into the EPA's analysis of Building Block 3. Commenters stated the value of the grid has been recognized by numerous stakeholders and EPA pays it no mind in its analysis of what is best in terms of CO2 e missions. Commenters suggested the Agency review the following documents:

1. EPRI Cost of Grid Service: Energy an d Capacity Costs (see page 21);

2. EEI, The Value of the Grid;

3. NARUC resolution

- encouraging state commissions and policymakers to continue to
engag e in collaborative dialogue regardi ng DG policies and regulations;347 4. MIT, The Future of the Electric Grid

Commenters stated since DG customers use the grid in more complex ways than other customers, they are contributing to additional costs that utilities wi ll incur to transform their distribution systems from the one

- way delivery of power into a far more complex two

- way system. Commenters stated these costs can include investments in new control systems, including IT infrastructure, communications hardware a nd software, and protective equipment. Commenters stated they can also include operating procedures and training to ensure the safety of the workforce and the public. Commenters stated EPA should correct its building block 3 estimates to reflect the increa sed costs of integration that come with increased penetration of renewables and increasing heat rates as more marginal generators are forced to follow intermittent renewables.

Commenter s stated the desire "to ensure that EPA has fully captured the capital and operating costs of the additional replacement generation and transmission that will be needed to ensure reliability under the Clean Power Plan scenarios." Commenters stated that the primary cost consideration is “t he intermittency of the generation and the financial cost of replacement (backup) resources necessary to ensure the reliability of the electric grid. Construction of additional generating capacity to back the intermittent generation along with the additional transmission and infrastructure sig nificantly increases the capital cost of meeting the Clean Power Plan rules. In addition, operation of higher

- priced resources for reserve adequacy will increase overall system costs. ”

Commenter s stated that "there is a limit to the amount of RE capacity that can exist in any region that is not subject to dispatch (wind and solar) before it impacts grid stability. Without the ability to store energy from these intermittent resources, equivalent capacity must exist or be built to supply power when the RE is not available. Independently these RE sources are already expensive and when the back

- up energy sources, typically natural gas combustion turbines, are included in the cost of generation, wind and solar energy become even more expensive. Additionally, win d and solar generators are known to adversely impact power quality and require compensatory measures to address reactive power." Commenters questioned if EPA considered these costs in their analysis of Building Block 3 and the impact that expanded use of R E might have on grid stability.

Comment 9: Commenters provide d what they think is additional information on the costs of RE integration onto the grid.
Response 9: The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, which is described in section V.E.6 of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public c omments under this comment:

Commenter s stated a number of technical studies by independent grid operators, utilities, and national laboratories have demonstrated the feasibility of wind penetrations of 40% and higher. Commenters referenced studies from NRE L's Renewable Energy Futures, the Nebraska Power348 Association, the Minnesota Department of Commerce and PJM which studied wind and solar penetration/integration/reliability. Commenters stated if EPA does decide to impose such a cap,

non

- variable renewables, such as biomass and geothermal, should not count towards it.

Commenters stated the cost associated with integrating variable renewable energy onto the grid is typically lower than or comparable to the cost of integrating conventional resources. Commenters stated even at 40% wind penetration across SPP, the Nebraska wind integration study found wind's total integration cost to be around $2/MWh of wind energy. Commenters stated , for comparison, the cost of accommodating conventional generator forced outages on a real U.S. power system was calculated to be $2 per MWh of all load served on that power system. Commenters also stated data from the ERCOT grid operator confirm that wind's integration cost is significantly lower than that of conventional generators' integration cost, on both a per

- MWh of generation basis and a total basis.

Commenter s suggested that EPA's assumptions ignore state's economically reasonable resource limitations and the cost effectiveness of each type of renewable source. Commenters also stated that EPA is " not considering all the challenges posed by integration of intermittent electricity sources into the grid, for example, permitting, financing, transmission access and technical challenges. "

Commenter s stated that " The CPP did not consider the costs and project delays due to right

- of

way obtainment related to expanding renewable energy transmission project to accommodate the requirements of the rule."

Commenter s pointed out that "EPA's assumption that large amounts of renewable pow er can be developed and brought to market within the proposal's compliance time lines fails to account for the significant cost and time needed to build the necessary transmission."

Commenter s stated that "experience in operating power systems with wind energy is increasing worldwide, leading to an emerging set of best practices." These practices have helped balance concerns regarding the variable nature of wind generation." Commenters cited the use of centralized wind energy forecasting systems by ISOs and the refinement of scheduling and commitment processes as examples.

Comment 10: Commenters describe d regulatory considerations and government incentives that should be considered in the cost effectiv eness analysis.

Response 10 : The cost

- effectiveness of building block 3 generation levels was analyzed by the EPA without assuming extension of the production tax credit. Please refer to the IPM documentation for additional information on the regulations modeled by the EPA that affect the competitiveness of RE resources.
The following are summaries of the specific public comments under this comment:

Commenter s asserted renewables are an important source of electricity; however, systems must be in place to ensure that artificial market mechanisms or regulations are not established that349 encourage the deployment of assets favoring of a single technology that could aggravate the intention of ensuring a reliability electrical system. Commenters also stated ther e is also a synthetic benefit constructed for Building Block #3 to the extent that investment tax credits confound the stand

- alone cost

- effectiveness of that building block, which falsely enhances its attractiveness under BSER. Commenters questioned what i s the true cost

- effectiveness of Building Block #3.

Commenter s sa id to "support the application of solar and wind in the manner described by the proposed rule. However, this needs to be tempered to the market forces as Congressional action on ITC and PTC c ould have significant impact on these renewables and future build out. EPA has ignored these issues and instead has looked to environmental dispatch rather than market pricing."

Commenter s argue d that "the EPA should exclude soon to expire federal tax incentive when evaluating the cost of RE". Commenters describe d that purchased power agreements (PPA) "are not an appropriate measure of the competitiveness of different technologies as they do not

a ccount for costs hidden or obscured by government subsidies such as Production Tax Credit or Investment Tax Credits. For example, the Production Tax Credit allows developers of wind RE to offer PPAs at a substantial discount to what they would otherwise re quire if they had to pay for their investment without the tax credits. The EPA would have to make the assumption that the Production Tax Credit for wind and the Investment Tax Credit for solar RE will continue beyond their current congressionally mandated 2016 expiration dates for their claims of competitiveness to be valid."

Commenter s stated that t he Proposed Rule relies on compliance with the current renewable energy standard (RES) for MO to assess the probability of achieving the target in both the
prop osed base case and the proposed alternate case. Although the Proposed Rule relies on the RES, it is not parallel to the state

- determined system. "State compliance with the MO RES is subject to a one percent customer rate impact limitation. The cost of comp liance to build new wind or solar farms in MO would quickly exceed the rate cap issued under state directives cost of compliance to build new wind or solar farms in MO would quickly exceed the rate cap issued under state directives and support from the sta te legislative process and approved by the people of MO."

Commenter s state d that utilities need to make money, "but in order to keep the utilities whole, they have to be incentivized to create programs where they make a margin or an extra margin on
progr ams that will integrate high levels of renewable energy affordably because just a haphazard goal or just only solar net metering is really not going to get us there."

Commenter s argued that "subsidies for renewables have a much higher rate of return". "Sub sidies play a crucial and unavoidable role in energy policy decisions. Renewables are in the early stage of development and receiving subsidies. " "With a much smaller level of subsidy to drive innovation and economies of scale, the renewables have achieved dramatically declining costs in a little over a decade, which is exactly the economic process that has eluded the nuclear industry for half a century." "The dramatic increase in innovative activity with relatively low levels of R&D subsidy and much lower cumulative levels of total subsidies, reflects the decentralized nature of innovation in the renewable space and leads to the dramatic pay

- off in350 terms of declining price. As we have seen, while wind had the earlier success, solar is now catching up."

Comm enter s stated that "EPA completely fails to acknowledge the effect of federal subsidy programs on the cost of renewable energy development and the significant uncertainty surrounding the future availability of these subsidies. For example, the costs cited in the GHG Abatement Measures TSD for wind power purchase agreements reflect the benefit of the federal Production Tax Credit (PTC) for wind, along with the additional benefit from modified accelerated cost recovery systems." "This tax credit was a major d river of growth in wind capacity. The wind PTC expired at the end of 2013, however, and its chances for future renewal are uncertain. Likewise, the costs EPA cites for solar power purchase agreements reflect the benefit of the federal Investment Tax Credit (ITC). But the solar ITC subsidy is scheduled to be substantially diminished after 2016, substantially increasing the cost of new solar development. Without addressing the future status of these subsidies and their effect on the cost of future renewable e nergy development, EPA cannot claim that its Building Block 3 targets are achievable."

Commenter s s tated that policies that encourage development of RE capacity and discourage premature retirement of nuclear capacity could be useful elements of CO2 reducti on strategies and are consistent with current industry behavior. Commenters stated c osts of CO2 reductions achievable through these policies have been estimated in a range from $10 to $40 per metric ton.

Comment 11: Commenters in this summary discuss ed co nsiderations to improve cost

effectiveness for small utilities serving low income populations.
Response 11: The EPA has phased in the requirements of building block 3 generation levels to provide additional flexibility and time for all affected EGUs.

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

Commenter s said that "Some of Iowa's smaller utilities do not have the same options to add renewables as the larger investor

- owned utilities do, because of their smaller size. For example, one Iowa municipal utility has coal generation, no NGCC plants, and some wind generation in Minnesota. The utility has tried to invest in Iowa wind generation without success, because the scale at which it can invest does not match the size of mos t wind generation projects. These smaller utilities also do not have large customer bases over which to spread costs as larger utilities. In addition, federal incentives such as production tax credits are not available to municipal utilities, and are thus not available to partially offset the cost of renewable generation for these utilities. Some of Iowa's municipal utilities and rural electric cooperatives will need more time than the year 2020 to change their generation portfolio to include additional low er emitting and carbon

- free sources. Granting these utilities additional time in which to make the required changes will allow them to spread the associated costs for their customers over a longer period of time and minimize the cost impact on Iowa familie s and businesses. Too aggressively advancing the rules for these smaller utilities would have a negative impact on family expenses in the impacted communities. When thinking about what is a reasonable cost increase to impose on customers, EPA should also c onsider lower income utility customers."351 Comment 12: Commenters describe d various RE industry specific needs that do not seem to have been fully considered in EPA's cost effectiveness analysis.
Response 12 : The EPA addresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenter s stated the EPA's determination of state goals for renewable generation does not fully reflect the economic aspects of renewable resources. Commenters stated resource limitations exist due to permitting, market saturation, transmission access, and project financing issues. Commenters stated many prime wind locations have difficulty obtaining the necessary permits and are often objected to at the local level. C ommenters also stated many high

- grade wind sites are also located in remote areas. Commenters stated energy generated from these locations requires large capital investments to build transmission infrastructure to interconnect to the BPS. Commenters stated location matters, and sites with high capacity factors are limited.

Commenters stated the expiration of the production tax credits (PTCs) and potential reduction of the investment tax credits (ITCs) for RE resources in the coming years will impact investm ent decisions and the economics of new resources. As a result, c ommenters stated the marginal cost of new RE generation increases, which could impact the long

- term development of RE

resources. Commenters stated there is also the implicit need to increase a ncillary services as a result of the increased variable resource output. Moreover, c ommenters stated , there are higher production costs associated with more non

- hydro renewable generation due to a combination of increased capital costs and low

- capacity ope rating factors. Commenters stated overall, significant cost uncertainties will directly impact the electric industry's plan to quickly adapt to the CPP requirements.

Commenter s provided a list of key considerations that were not included in EPA's cost

eff ectiveness analysis, citing a NERC report as reference, and that include :

• "resource limitations due to permitting, market saturation, transmission access, and project financing issues. "

• "The expiration of the production tax credits (PTCs) and potential reduction of the investment tax credits (ITCs) for RE resources in the coming years will impact investment decisions and the economics of new resources. As a result, the marginal cost of new RE generation increases, which could impact the long

- term develop ment of RE resources."

• "The implicit need to increase ancillary services as a result of the increased variable resource output."352 • "Higher production costs associated with more non

- hydro renewable generation due to a combination of increased capital costs a nd low

- capacity operating factors."

Comment 13: Commenters specifically state d that the EPA needs to change its cost modeling assumptions and data and describe the changes needed.
Response 13: The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly in the reevaluation of onshore wind and solar cost and performance assumptions.
The following are summaries of the specific public comments under this comment:

Commenter s stated building block 3's economic modeling should reflect expected cost reductions from renewable technologies over time. Commenters stated in addition to technological advances, 'technology learning' through deploy ment has been shown to consistently drive down cost as the volume of technology deployed rises. Commenters stated Section 111(d) state compliance plans are likely to encourage additional renewable capacity installation and therefore cost reductions, on top of the cost reductions driven by ongoing renewable energy growth.

Commenters stated the current IPM modeling conducted by EPA assumes minimal capital cost reductions for wind and solar energy through 2030, with wind costs declining from $2,258/kW in 2016 to $2,250/kW in 2018, $2,220/kW in 2020, $2,123/kW in 2025, and $2,039/kW in 2030. In contrast, c ommenters stated , the Department of Energy report found that the current installed cost of wind energy in 2013 was $1,630/kW. Commenters stated it is deeply co ncerning that under the current IPM modeling inputs, even though the model assumes continued cost reductions, the wind cost in 2030 is still 15

- 25% higher than the wind cost seen today.

Commenters stated in the case of wind energy, EPA should rely on the c ost reduction projections included in the forthcoming Wind Vision report, which NREL has provided to EPA. In addition to capital costs, c ommenters stated EPA should also incorporate these documents' projections for reductions in O&M costs, which are listed as 'OpEx' in the Wind Vision document. Commenters stated the Wind Vision document also contain the necessary data for assessing current and future wind performance, i.e., capacity factor. Commenters stated the ReEDS model that was used for the Wind Vision analysis contains a detailed representation of hourly renewable plant output in 17 time slices, which can be readily mapped to the hourly wind generation profiles employed in the IPM. Commenters stated Wind Vision contains detailed data on expected wind p lant capacity factor improvements, broken down by wind resource class. Commenters stated these wind resource classes can be readily translated to the resource classes in the IPM, and used to modify the region and class

- specific hourly wind generation profi les employed in the IPM.

In addition, c ommenters stated Wind Vision's extensive dataset of regional wind supply curve information should be used by EPA to characterize the economically viable renewable energy resource in each region. Commenters stated EPA should take care not to double count353 transmission interconnection costs, regional cost multipliers, and other factors that are already included in both the IPM and the Wind Vision cost numbers.

Commenter s also stated the Alternative Renewable Energy Approa ch and the NODA Renewable Energy Approach do not include estimates of offshore wind generation that is likely to be deployed. Commenters stated while offshore wind is relatively new to the United States, it is well established globally with a market that a dded over 1,700 MW in 2013, bringing total installed capacity to 7,031 MW. Commenters stated in the U.S., there are 4,900 MW of proposed offshore wind projects in advanced stages of planning, with some projects likely to begin construction in the near futu re.
Commenters stated EPA must update the cost data it relies on to assess potential growth in renewable energy. Commenters provided the following discussion:

"Renewable energy costs have fallen dramatically and renewable energy performance has improved in recent years. These changes are well recognized and consistent with the price declines expected as an industry experiences the kind of growth that the renewables industry has seen in the U.S. and abroad. But EPA's analysis fails to account for either the cost reductions that have already occurred or the cost reductions that can reasonably be expected to continue. EPA must properly account for these cost reductions and re

- analyze the quantity of renewable energy that is available.

In EPA's analysis of renew able energy (conducted through its Integrated Planning Model (IPM) Base Case v5.13,4), EPA adopts load forecasts and new technology costs from the Energy Information Administration's (EIA) Annual Energy Outlook 2013 (AEO2013). More recent industry data demonstrate that modeling assumptions used for the cost and performance characteristics of new generating technologies are significantly out of date. These cost estimates are especially important because, as discussed below, the costs for new generation te chnologies constrain the amount of renewable energy available to reduce carbon pollution under the Clean Power Plan.

AEO2013's assumptions are outdated and do not reflect the dramatic cost declines seen in recent years. In fact, we find that AEO2013's cost assumptions for renewables are 46% above current averages for wind and solar technologies. This is not surprising, given that the AEO2013 cost assumptions were based on projects completed in 2012 and reflect pricing contracts that may have been signed sev eral years prior to project completion.

Since 2010, the cost of building utility

- scale solar projects has declined by about 50 percent from $3400/kW to $1500

- 1800/kW in 2014. These declines are consistent with NREL's modeled prices using its bottom

- up mode ling methodology

- NREL estimates that the price of solar declined to $1800/kWdc in Q4 2013. The declines are also reflected in average PPAs for utility

scale solar which, in the past year alone, have dropped from $123/MWh to $86/MWh, with several projects reporting prices (including incentives) below $70/MWh

- competitive with new NGCC plants.

Wind prices have experienced similar declines since 2010. The capital cost of developing onshore wind turbines has also declined, from $2260/kW to $1750/kW on averag e. LBNL354 reports that PPAs for wind projects (including incentives) fell, after peaking briefly at $70/MWh in 2009, to a national average of $25/MWh in 2013. Moreover, technology improvements have allowed for taller wind turbines, enhancing performance thro ugh faster and steadier wind speeds at higher elevation. As a result of these advances, Lawrence Berkeley National Laboratory (LBNL) researchers have indicated that average capacity factor has increased by 10 percent across all wind classes since 2012. Tal ler wind turbines significantly expand the geographic area suitable for wind turbines.

Lazard estimates that the current range of LCOEs for onshore wind, without any subsidies, is between $37/MWh and $81/MWh. In contrast, EIA's out

- of

- date estimate project s that the LCOE in 2019 will be between $70/MWh and $90/MWh.

There is no basis for EPA to rely on AEO2013's out of date data when it has before it recent government and credible industry analysts' cost data, e.g. NREL, LBNL, BNEF and Lazard. AEO2013's use of installed costs means that the data presented will have an 18

- month or greater time lag. As LBNL has noted installed cost data "may reflect transactions that occurred several or more years prior to project completion" and therefore are often unable to a ccurately reflect current prices in such a rapidly changing industry. In this case, the delay causes the analysis to miss key data showing major price declines, and therefore significantly overestimate current costs and underestimate recent performance. EP A can also check the monthly FERC

- issued grid interconnection report, which shows the utility

- scale projects that have both been approved for interconnection or commissioned as a new generating resource for the regional transmission authorities that lie un der FERC jurisdiction.

Importantly, there is no reason to believe that the declines in cost will not continue. DOE/NREL Sunshot Vision study, which constructs a detailed roadmap for continued cost declines in solar PV technologies, projects that solar syst em prices can drop 75% between 2010 and 2020. In its 2014 update on Solar PV pricing trends, NREL also predicted that solar prices are still on track to meet the Sunshot goal of $1/Wdc by 2020 for utility

- scale systems. This would place utility

scale solar projects in direct competition with NGCC plants, without any incentives or carbon policy. Likewise, many industry analysts predict that wind and solar will become increasingly competitive with new NGCC plants and will make up a major market share of new U .S. demand. As noted, average PPAs for utility

- scale solar in the past year alone have dropped to levels (including incentives) competitive with new NGCC plants. Meanwhile, a new Deutsche Bank report predicts that distributed solar power will be cheaper th an average retail electricity prices in 36 states by 2016 (47 states if the 30% ITC is extended).

Recent analysis also shows that higher penetrations of renewable energy are feasible. Detailed analyses performed on the PJM grid, the Eastern Interconnect, a nd Western Interconnect have all found that renewables can provide up to 10% of generation on major ISOs with little to no additional costs, and can provide up to 30% of total generation with only minor adjustments to the existing grid and proper system pl anning. The findings of these studies demonstrate that it is technically achievable to incorporate higher levels of renewable energy into the existing grid than what has been proposed in EPA's target

- setting.

There is no basis for EPA to rely on outdated cost information in its analysis when it has more recent data available showing that current costs are lower. This is particularly true because the355 cost differential is dramatic. Based on NRDC's analysis of recent data, the costs EPA relied on are 46 perce nt above current average costs for, respectively, wind and solar energy. As explained in detail below, the lower costs mean that substantially more renewable energy can and should be included in the state targets."

Commenter s stated that EPA relies on out dated assumptions about the costs of renewable energy and continues by saying that "as UCS notes, the price of wind and solar have dropped precipitously in recent years, fueling tremendous growth in these technologies." Commenters provided specific data il lustrating the declining trend, in particular for the Southeast. Commenters also stated that "the solar and wind cost declines projected by UCS and others are the product of rapid technological advances, so it is understandable that the proposal does not

a dequately capture them", but that EPA should fix that in the final rule, in particular for Alabama.

Commenter s cited a report conducted by the Natural Resources Defense Council to say that "EPA used outdated information to estimate the cost and performance of renewable energy. Current estimates show renewable energy is close to half as expensive as suggested by the agency's data. EPA should recalculate its price estimates to help states understand the true costs and benefits of using renewable energy as a c ompliance option."

Commenter s encouraged "EPA to reconsider some of its modeling decisions to more accurately reflect the capacity for renewable energy deployment. First, the model used by EPA for Block 3 uses cost data from projects completed in 2012 to estimate the future cost of renewable energy." "The EPA model should more accurately represent these price trends by updating the cost and performance assumptions for renewable energy technologies to more recently forecasted industry data. One way to bette r account for these market dynamics is to adopt a technical

- economic potential analysis of renewable energy capacity in each state, similar to the proposed alternative approach, instead of using regional renewable portfolio standard (RPS) averages."

Commen ter s stated that "the analysis of which renewable resources are economic should start with current, accurate data on the cost of renewable technology deployment. For projecting future economics and performance, we recommend reliance on what we believe to b e credible projections available from the U.S. Department of Energy and the National Renewable Energy Laboratory."

Additionally, commenter s stated to support the following modification, which is outlined in more detail in the AWEA comments: Periodic review of BSER to account for new technology developments and cost reductions.

Commenter s suggested that "in the final rule, EPA should update its cost numbers and strengthen the state targets to reflect the emission reductions available based on current data on availability and cost." "Analysis by the Natural Resources Defense Council using the IPM model of a similar but more ambitious set of intensity

- based targets illustrated that we could cut CO2 pollution from power plants by 21 to 31 percent (relative to 20 12 levels) by 2020, and 25 to 38 percent by 2025. The reductions are equivalent to 470 to 700 million short tons relative to the Reference case in 2020, and 560 to 860 million short tons in 2025. The estimated cost ranges from no increase over the Referenc e case to about $14.6 billion in 2020, depending on the level of emission reductions356 and the package of solutions employed. But the benefits in saved lives, reduced illness, and climate change avoided would be $28 to $63 billion, far exceeding the estimate d costs."

Commenter s cited the NRDC's December 1 comments urging "EPA to make several changes to building block three in order to properly reflect the amount of renewable energy that can be deployed at reasonable cost. NRDC presented up

- to

- date data that r eflect the dramatic cost reductions and performance improvements in renewable energy technologies such as solar and wind that have occurred in recent years but are not reflected in EPA's analysis. Current data show that wind and solar costs are each approx imately 45 percent lower than EPA assumed in its analysis." Commenters urged "EPA to ensure that the rate of renewable energy deployment assumed in EPA's analysis is at least as fast as the historical rates of deployment."

C ommenters said that EPA is not capturing the full potential of RE and that the CPP needs to reflect the dramatic cost reductions that have occurred in recent years.

Commenter s added that "current data show that wind and solar costs are each approximately 45 percent less costly than EPA assumed in its analysis."

Commenters also stated that the cost results for BB3 are similar to those for BB2 and "with even modest corrections, renewables would clearly be less expensive on average than natural gas."

Commenters suggested the need to "Improv e cost assumptions for renewable energy in integrated planning model (IPM) frameworks. In the alternative method for determining renewables targets, EPA limited the targets by the economic potential determined by IPM modeling. However, the assumed cost ass umptions for renewable technologies are higher than recent real

- world experience."

Commenters stated that EPA's "assumptions about the cost and deployment rate of energy efficiency and renewable energy are markedly outdated." Commenters cited information f rom "Reinventing Fire (RMI, 2011) to support the argument and further say that "naturally you want your assumptions to be conservative, but we see no sound reason to make them much worse than we now observe in the marketplace let alone those we can reasona bly expect from the solid record and durable prospect of falling costs and accelerating adoption for both efficiency and renewables."

Commenters stated that cost declines have made renewable investment a great deal for utility
customers and this is one of the reasons why utilities will meet but more likely exceed EPA's growth rate projections. As examples

, c ommenters describe d what has happened with the Advanced Solar Initiative adopted by Georgia's Power Company, Alabama Power agreements to import cost

- eff ective wind generation from the Midwest, along with associated renewable energy credits (RECs), from Oklahoma and Kansas.

Commenters also point ed out that EPA's IPM modeling assumptions are out date. "The solar and wind cost declines projected by market e xperts are the product of rapid technological advances, so it is understandable that the proposal does not adequately capture them. However, EPA should ensure that the final rule does include updated cost projections. In addition, EPA should use those upda ted projections to more accurately quantify the amount of renewable energy that can be deployed at reasonable cost in Tennessee" and other states.357 Commenters state d that " EPA must recalculate the costs assigned to renewable energy, which would establish t hat it overestimated those costs and as a result underestimated the amount of renewable energy that can be deployed in the states, which in turn underestimated emission reductions that should be attributed to renewables, let alone state reduction targets. " Commenters describe d the findings of the September Levelized Cost of Energy Analysis

- Version 8.0 by Lazard Ltd in support of the statements.

Commenter s asserted that "the reformulation of Building Block 3 developed by the Union of Concerned Scientists is superior to either of EPA's approaches". "As far as costs go, UCS conservatively estimates that the demonstrated growth approach would have only a marginal increase in electricity prices above EPA's proposal." "Given that consumers will feel little to n o noticeable effect in the cost of electricity under the UCS approach, there is every reason to believe that utilities in both regulated and restructured states will easily absorb the regulatory costs of this proposal. In regulated states, utilities will c ontinue to receive guaranteed returns on prudent capital expenditures, while utilities in market

- based systems will pass on minor costs to consumers without significant reductions in demand. Section 111 merely requires that a BSER not impose "exorbitant" c osts that would cripple the regulated industry, and the additive costs of UCS's demonstrated growth approach are far from exorbitant." "One reason for the modest costs of the demonstrated growth approach is scaling effects. That is, the more widespread a p articular technology or method of generation becomes, the less costly it is to produce, install, and operate. This can result from traditional economies of scale, reductions in administrative burdens and other "soft costs" due to increased public support f or the technology, and "next

- of

- a

- kind vs. first

- of

- a

- kind"

- type benefits."

Commenters further s tated that "an additional feature of renewable energy is that the system integration costs decrease as these resources become more dispersed due to system

- wide reductions in the variability of generation. While an individual renewable source has variability of generation, a larger pool of such resources distributed across a broad geographic area (such as a metropolitan region) have less variability and require lower backup or ancillary services costs." Commenters provide d data to support this argument. Commenter s urged "EPA to adopt the UCS' approach or one similar in order to maximize the role that clean energy will play in reducing CO2 emissions from our electricity sector. However, if EPA nevertheless decides to retain the basic approach it laid out in its rul e proposal, EPA should make the changes discussed above to comply with the BSER mandate in the Clean Air Act."

Commenters highlight ed the following as main considerations that EPA fails to take into
account:

• EPA overestimates the cost and underestimates t he potential contribution of efficiency (particularly compared to nuclear power).

• EPA falls to analyze how this could affect the cost and quantity of carbon reduction in the next two decades.

Commenters stated EPA ignores the potential to reduce carbon e missions by transforming the electricity system from the 20th century approach that increases generation to meet load to one358 that uses information and control technology to integrate distributed supply with active management of demand.

Commenters state d " We do not mean to suggest that the transformation of the electricity sector is a simple task. While falling costs and rising renewable load factors are the engines that are driving the change, it requires substantial new physical and institutional infrastr ucture that is centered on system integration and management." "Cost recovery to ensure the deployment of adequate facilities, a problem that plagues electricity markets in general, can be compounded by the expanding role of decentralized resources with lo w operating costs. Incentives to innovate and compensation for intensive system management is a new challenge."

Commenters also presented data to illustrate how the expansion of solar capacity will cause the daytime power demand to collapse. Commenters sta ted that "For companies selling electricity into merchant or competitive markets like California, this is disaster. Demand during what was one of the most profitable times of day disappears. With it, the need for part of the merchant disappears too, for al l but the dinner hour. And that is the issue competitive generators face globally in the 2020

- scenario: how to live off demand on two hours per day." Therefore, commenters added "the net load to be met by non

- solar resources declines by about 17%. Assuming that most of that load is fossil fuel, this represents a major reduction in CO2 emissions. This is a benefit, not a problem. However, the challenge resides on meeting the demand during the non

- daytime hours when there will be a much higher demand peak." C ommenters stated that e nsuring the reliability of this system is a challenge that requires the transformation of the system to two

- way management of supply and demand" and cite d the work by "Lovins" and the "Regulatory Analysis Project", which provide s a n umber of measures that can be implemented in a dynamic electricity system that actively manages supply and demand

.
Commenters asked " that the EPA consider not just the fuel costs in terms of CO2 production involved in power generation but also the life cyc le costs" and cites "the intensive amount of processing and manufacturing required to produce solar cells, actually puts their carbon life cycle cost close to that of a natural gas power plant (120 g

- CO2 per kWh produced for Natural gas, versus 110 g

- CO2/k Wh solar)."

Comment 14: Commenters describe d cost trends in RE without explicitly suggesting changes to the EPA's analysis.
Response 14: The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly in the reevaluation of onshore wind and solar cost and performance assumptions.
The following are summaries of the specific public comments under this comment:

Commenters present ed long term cost trends for nuclear, wind and solar and use those trend to illustrate that "the economic competitiveness of these generation resources reflects technological and economic progress. Over the course of fifty years of commercial nuclear power i n the U.S., construction costs have risen substantially and persistently and there are no indications that this pattern will change any time soon. The cost of small modular reactors, which have been359 touted as the next big thing to save nuclear power, are l ikely to be much higher than the renewables and investment in SMRs has collapsed, with both Westinghouse and B&W, the two largest firms pursuing the technology in the U.S., throttling way back on investment. Wind already has much lower overnight costs than nuclear and solar soon will. The projections for the cost of new nuclear reactors have been rising steadily for over a decade. While other factors affect the cost of power, construction costs are the key factors that affect the EPA analysis and the key fa ctors in the current debate, particularly for the major, non

- fossil fuel generation sources, which are very capital intensive."

Commenters also present ed and describe d trends in operating costs and merit order dispatch to illustrate that "the trends in ope rating costs are similar to the trends in construction costs. In contrast to the increasing operating costs of nuclear reactors, operating costs for wind have been declining. In the mid

- 1990s nuclear reactors would have been dispatched before wind with a

s ubstantial operating cost advantage. Two decades later, wind has a substantial advantage, which is likely to grow in the years ahead. Wind operating costs have fallen twice as fast as overnight costs. Thus, it is not coal or gas or subsidies that is giving aging nuclear reactors heartburn, it is the superior economics of wind and efficiency combined with the increasing operating costs of aging nuclear reactors that has made the aging reactors uneconomic."

Commenters stated that "Not only are RE resources fu lly capable of replacing fossil fuel

- fired generation from a technical standpoint, these clean technologies have undergone dramatic price reductions in both the long

- and near

- terms, and are now at or near grid parity with, or are cheaper than, fossil

- fire d options in many parts of the country. This trend will only increase in the coming years as wind and solar technology become increasingly economical in both the U.S and around the world." Commenters described the work of Lazard as evidence of this argumen t.

Comment 15: Commenters noted that the cost of implementing renewable energy has decreased in recent years and urged the EPA to update its RE cost assumptions, as they are greatly overestimated.
Response 15: The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly in the reevaluation of onshore wind and solar cost and performance assumptions.
The following are summaries of the specific public comments under this comment:

Commenters noted that for wind, EPA projects capital costs of $2.26 per watt in 2016 to $2.04 per watt in 2030; however, the U.S. Department of Energy (DOE) has determined that wind projects installed in 2013 were already much cheaper than these projections, with pricing in the $0.90 to $1.30 per watt range. Commenters also noted that for solar, EPA's IPM modeling assumes solar PV installed costs of $3,098/kW based on the Energy Information Administration's (EIA) Annual Energy O utlook 2013 but that more recent information compiled by the Natural Resources Defense Council assessed the cost of solar PV as being almost half that, $1,770/kW. Commenters stated that updating these assumptions would lower the levelized cost of solar ene rgy from $224/MWh to $153/MWh.360 Commenters noted that solar has seen significant price declines; solar PV costs fell by about 40 percent from 2008 to 2012, and by another 15 percent in 2013 while experience in other countries suggests that even greater pri ce reductions are likely. Commenters noted that installed prices in the United States remain relatively high compared to other countries, which demonstrates the potential for additional cost declines. Commenters noted that solar cost declines are already t ranslating into very low power purchase agreement ("PPA") prices in the South as utility

- scale solar has reached lows of under 5 cents per kWh.

Commenters also noted that the national average cost of wind power has dropped more than 60 percent, making it c ompetitive with new fossil fuel plants in many regions; a trend which is expected to continue. Commenters noted that wind pricing is at an all

- time low and as a result, utilities are increasingly selecting wind as the low

- cost option. Commenters stated tha t nine states produced more than 10 percent of their electricity output from wind power alone in 2012

- in 2007, only one state did (Environmental Defense Fund. A safe and prosperous America: cutting carbon pollution from power plants and deploying American innovation). Commenters stated that the decline in turbine prices has produced a significant reduction in the capital costs of these projects and while EPA projects capital costs of $2.26 per watt in 2016 to $2.04 per watt in 2030, the U.S. Department of E nergy (DOE) has determined that wind projects installed in 2013 were already much cheaper than these projections, with pricing in the $900 to $1300 per kW
range.

Commenters noted that EPA's cost assumptions for onshore wind generation of $2,258/kW in 2016 to $1,864/kW by 2050 are substantially higher than actually reported wind energy capital
costs. Commenters noted that a new LBNL report documents recent low wind power prices and overall cost reduction trends for the wind industry and that wind energy pric es are declining overall due to lower turbine prices and higher wind turbine performance in terms of capacity factor output. Commenters stated that recent turbine prices have been in the $900

- $1,300/kW range of generation capacity with total installed aver age costs of $1,630/kW in 2013. Commenters noted that average PPA prices reached $25/MWh in 2013 and since many of the installed projects last year were able to qualify for the federal Production Tax Credit (PTC), or a similar incentive, reported PPAs may reflect a reduction of approximately $15/MWh when taking PTC into consideration. Commenters pointed out that average PPA prices themselves fell 64% between 2009 ($70/MWh) and 2013 ($25/MWh). Commenters also noted that operations and maintenance costs assoc iated with newly constructed wind farms dropped from $23/MWh (or $55/kW of installed capacity) in the 1990s to about $9/MWh (or $23/kW of installed capacity) for projects developed since 2010.

Commenters noted that EPA's IPM used an installed cost of $3,3 64 per kW

- alternative current (ac) for utility

- scale PV starting in 2016, dropping to $2,859 per kW

- ac in 2030 and $2,533 per kW

- ac in 2050 and stated that these "forecasted prices"

-- even as far out as 2050

-- are extremely high and inconsistent with today's prices and trends. Commenters noted, for example, that utility

scale PV projects installed during the second quarter of 2014 averaged a price of $2,130 per kW

ac and notably, this price has dropped by 52% since the second quarter of 2011. Commenters said that similar price drops have occurred in the commercial (54%) and residential (42%)
sectors. Commenters stated that analysts anticipate the downward cost trend to continue based on further economies of scale and innovation through areas such as better sol ar performance. Commenters also noted that levelized PPA prices have been dropping steadily by about361 $25/MWh per year since 2007. Commenters conducted several analyses to determine solar PV net dependable capacity factors for Southeastern utilities and demonstrated that tracking and fixed solar systems have dependable capacity factors of at least 60% and 50% in the Southeast. Commenters stated that these are significant levels that show that solar is particularly valuable because it can be used to meet generation needs when demand is highest.

Comment 16: Commenters describe and suggest changes to the EPA's IPM modeling assumptions for wind ener gy. Response 16: The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly in the reevaluation of onshore wind cost and performance assumptions.
The following are summaries of the specific public comments under this comment:

Commenters stated the wind capital cost assumption for the year 2016 that is used in EPA's IPM run, $2,258/kW in 2011 dollars, is 39% too high relative to current installed wind costs, documented to be at $1,630/kW for installed wind project costs in 2013 by the Department of Energy and Lawrence Berkeley National Laboratory's dataset. Commenters stated , while wind costs have rapidly declined and continue to decline, with wind purchase prices falling by more than half ove r the last five years, the DOE/LBNL report estimates wind projects slated for installation in 2014 are likely to see an average installed cost of $1,750/kW. Commenters stated this is because the 2013 projects were heavily concentrated in the interior regio ns of the U.S., which has below average costs for wind plant installation relative to other regions. Commenters stated , thus, LBNL concludes that $1,750/kW may be a more representative indication of wind's current installed costs on a national basis. Regar dless, Commenters stated , even in this case, the capital cost figure used in EPA's IPM run for 2016 is 29% too high.

Commenters also stated IPM's wind O&M costs are also significantly too high relative to current
costs. Commenters stated IPM assumes fixed O&M costs of $38.86/kW/year, while the DOE/LBNL report indicates costs of $28/kW/year in 2013, as indicated by a Bloomberg analysis of the pricing of 5

- year full

- service O&M contracts. Commenters stated , before beginning the more difficult task of estimati ng how renewable energy costs will decline in the future, EPA should ensure that its current year assumptions for renewable energy costs are brought in line with reality.

Commenters stated the wind cost declines are not reflected in EPA's analysis and proc eeds to provide examples with data illustrating the decline and its causes.

Comment 17: Commenters describe d and suggest ed changes to the EPA's IPM modeling assumptions for solar energy.362 Response 17: The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly in the reevaluation of solar cost and performance assumptions.
The following are summaries of the specific public comments under th is comment:

Commenters stated that for solar, new industry data demonstrate that EPA's IPM cost assumptions are significantly out of date and provides examples to illustrate the point.

Commenter s describe d an alternative way to perform the scenarios modeli ng that "includes an application of a dollar 30/MWh cost reduction or similar incentive for zerocarbon technologies and would lead to even higher levels of distributed solar deployment to achieve cost effective emissions reductions." "As distributed PV is a unique, customer sited generation resource, it may be difficult to represent the technology in a wholesale power model such as IPM. Instead, it is more accurate to rely on separate modeling that fully accounts for market dynamics at the customer level. F or example, NREL has developed the Solar Deployment System model (solarDS), a modeling complement to ReEDS which projects distributed PV installations by state based on system prices, retail rates, and consumer economics."

Commenters further stated that " Based on data from the latest U.S. Solar Market Insight Report (Q2 2014), the costs for utility PV are at dollar 1.81/watt, while the costs for residential and commercial PV (which together make up the distributed solar market) are at dollar 3.92/watt and dollar 2.39/watt, respectively. This places solar on track or close to meet the 2030 SunShot goals. Therefore, the Sunshot assumptions can be used as a trendline for 2030 solar costs. "The 62.5 percent Sunshot cost assumptions to use are: dollar 1.50/watt for utility PV as in input directly into the IPM model dollar 2.25/watt for residential DG PV and dollar 1.88/watt for commercial DG PV for use with the 62.5 percent capacity projections as inputs directly for the solarDS model, which is then hardwired int o the IPM model."

Comment 18: Commenters state d that the IPM modeling results show that the BB3 targets are too costly.
Response 18: The EPA disagrees with this comment. There is a fundamental difference between compliance modeling and the quantification of a cost

- effective amount of building block 3 generation. The amount of incremental RE deployed by IPM in pursuing a least

- cost sol ution in response to the application of goal rates has no bearing on the analysis the EPA relies on to establish building block 3 generation levels. The EPA addresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenters stated the four parsed IPM runs that are available demonstrate tha t the Agency's Building Block 3 targets are far too costly and do not represent realistic estimates of the potential renewable energy generation available to achieve the Proposed Guidelines. Commenters stated EPA performed IPM modeling runs to assess how s tates would comply with the Proposed363 Guidelines under both state

- focused and region

- focused compliance approaches, and thus, the results of these IPM runs constitute EPA's estimate of representative scenarios in which the power sector is operating in comp liance with the Proposed Guidelines at the least cost possible, within the constraints EPA imposes on the model.

Commenters stated IPM model runs predict that actual renewable energy generation growth will meet only a small fraction of EPA's target under t he least

- cost approach to compliance with the Proposed Guidelines. Commenters stated IPM predicts that under both the state

- focused and region

- focused compliance approaches, renewable energy generation will reach only 356,063 GWh by 2029, and will grow at an annual rate of 1.1 percent from 2020 to 2029, far short of EPA's target of 522,723 GWh by 2029. Commenters stated this level of generation is only 1.7 percent greater than the renewable energy generation that EPA predicts in 2029 under its own Base Case analysis, and is actually 7.6 percent lower than the EIA predicts will occur in 2029 in the absence of any emission guidelines. Commenters stated EPA's own analysis severely undermines the Agency's prediction of the level of increased renewable energy gen eration that is achievable, and demonstrates that the Agency has failed to accurately consider factors such as cost and feasibility. Commenters stated the IPM results suggest that rapid growth in renewable energy generation is so costly that states are abl e to achieve only negligible incremental increases in renewable energy generation above the status quo (at best), and they must instead rely more heavily on other components of EPA's selected BSER in order to comply with the Proposed Guidelines. Commenters stated this, in turn, will increase the cost of those other Building Blocks in ways that EPA has failed to analyze in the Proposed Guidelines.

Commenters state d that "EPA"s own IPM runs demonstrate that EPA"s Building Block 3 targets are far too costly an d do not represent realistic estimates of the potential renewable energy generation available to achieve the proposed emission guidelines.

C ommenter s further described that that "EPA's IPM model predicts that under both the state

focused and region

- focuse d compliance approaches, renewable energy generation will grow at an annual rate of 1.1 percent from 2020 to 2029. This level of generation is only 1.7 percent greater than the renewable energy generation that EPA predicts in 2029 under its own Base Case

a nalysis, and is actually 7.6 percent lower than what the EIA predicts will occur in 2029 in the absence of any emission guidelines. This analysis severely undermines EPA's prediction of the level of increased renewable energy generation that is achievable, and it demonstrates that EPA has failed to accurately consider factors such as cost and feasibility. The IPM results suggest that rapid growth in renewable energy generation is so costly that states are only able to achieve negligible incremental increase s in renewable energy generation above the status quo, and they must instead rely more heavily on other components of EPA's selected BSER in order to comply with the emission guidelines. This, in turn, will increase the cost of those other building blocks in ways that EPA has failed to analyze in its proposal."

Comment 19: Commenters agree d that solar energy is cost effective and provide information in support even if they do not completely agree with the EPA's assessment.364 Response 19: The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly in the reevaluation of solar cost and performance assumptions.
The following are summaries of the specific public comments under th is comment:

Commenters stated it does not advocate for the RPS approach, but agree with EPA that solar energy is reasonable cost as part of building block 3 under the RPS approach. Commenters stated that under the RPS approach, the EPA has examined the co st of implementing renewable measures under an RPS policy. Commenters agreed that the cost of deploying renewable energy measures, including solar, through state RPS policies is reasonable cost. Commenters stated that a May 2014 joint study from LBNL and N REL analyzing the state level cost and benefits estimates from RPS policies found that over the 2010

- 2012 period, average estimated incremental RPS compliance costs in the U.S. were equivalent to 0.9% of retail electricity rates when calculated as a weight ed

- average (based on revenues from retail electricity sales in each RPS state) or 1.2% when calculated as a simple average. Commenters stated for states with a restructured electricity market, this estimated incremental RPS compliance cost for retail rates can also be expressed in terms of the cost per unit of renewable energy required, estimated in the range of $2

- $48/MWh. Commenters also stated for states with a regulated electricity market, the costs are in the range of minus $4

- $44/MWh. Commenters state d the study also looked at the cost of renewable energy to reduce emissions through state RPS policies. Commenters stated the estimates of the benefits ranged from approximately $4

- $23/MWh of renewable generation, depending on the cost value assumed for CO 2, cumulating to roughly tens to hundreds of millions of dollars on an annual basis depending on the state. Commenters stated the joint study also looks at a number of other benefits, including economic impacts and wholesale market price reductions.

Commenters stated solar energy measures will continue to be reasonable cost because industry costs are expected to decline in the future. Commenters stated costs across the solar industry are falling rapidly, which will lead to reduced overall costs for im plementing solar measures to reduce emissions from affected EGUs. Commenters provided additional detailed discussion on the following: installed costs, future installed costs, balance of system costs, and raw material
costs.

Commenters stated current inst alled costs for solar show that solar energy is already a cost

competitive emissions reduction technology and prices continue to decline rapidly. Commenters also stated that future costs of solar are forecasted to decline as well, citing several third

- part y verified studies. Commenters also stated that CSP, which historically has been limited to larger utility

- scale plants and relatively fewer installations, has comparatively less price history and can be expected to have a more granular price trajectory. C ommenters also stated for PV systems, it is also important to recognize the balance of system costs in comparison to the panel costs, citing reports that found that solar financing and other non

- hardware costs now comprise up to 64% of the total price of r esidential solar energy systems. Commenters stated as total installation costs have declined and continue to decline at a more rapid pace than previously expected, solar is increasingly cost competitive with alternative sources of energy and other carbon e mission reduction measures. In addition, c ommenters referenced a study which also examined the cost and availability of the future supply of sourced materials for PV panels which ultimately found365 no concern over the availability of PV materials even in the scenario of planned significant deployment of solar PV globally. Commenters stated these facts illustrate that solar energy measures can be implemented at a reasonable cost, and that cost should not be an impediment to solar energy inclusion in the BSER.

Commenters agree d that s olar energy measures can be implemented at a reasonable cost and provides data and examples to support this argument. Commenters also stated that "in Colorado, the costs of installed solar energy is coming down even more than natio nal averages" and cites information about the Comanche Solar Project as example. In particular, "the costs for distributed solar systems have come down dramatically as well and are below the national average in most of Colorado. These facts prove that sola r energy measures can be implemented at a reasonable cost, and that cost should not be an impediment to including solar energy as part of the BSER."

Commenters state d that "solar energy is already a cost competitive emissions reduction technology" and pre sent data on average percent drop in costs nationwide during the periods 2010

- 2013, 2010

- 2014 and 2006

- 2013 to support their argument.

Commenters further stated that "with the maturation of the solar industry in Louisiana, we have seen both materials c osts, and install costs continue to fall. As competition increases in other markets across the country, these factors will continue the downward trend in cost nationwide. These facts prove that solar energy measures can be implemented at a reasonable cost, and that cost should not be an impediment to including solar energy as part of the BSER."

Commenters further elaborate d on what has been reported for trends in Maryland and cites "a paper written by professors from Yale University, the University of Tex as

- Austin, the University of Wisconsin

- Madison, and Lawrence Berkley National Laboratory, which found that residential and small commercial solar PV prices vary considerably across geographic space, as shown in the differences in the county average pri ce per watt." "Within the Northeastern states diagram, Maryland's pricing is quite uniform, and closely follows national averages. The paper examined a data subset of roughly 100,000 recent residential and small commercial installations, and we are confide nt that their findings are an accurate representation of the Maryland market."

Commenters argue d that "Solar technologies can be deployed quickly and easily in many locations, making it an extremely flexible energy resource. It consumes no fuel, thereby sh ielding customers from the fuel price volatility risks associated with fossil fuel generation."

Further commenters provided citations to documents that describe additional benefits of solar power. For example, commenters stated "solar PV consumes no water , unlike steam cycle thermal power plants such as fossil and nuclear plants, which consume enormous quantities of water. Solar power also provides substantial air and water quality benefits. Coal plant emissions cause asthma, heart disease, water pollution , and many other harmful impacts. Solar power also benefits electrical transmission system by providing generation at or near the point of consumption to lessen the strain on an aging grid and reducing the need for expensive new transmission and distributi on infrastructure. Solar can also reduce system energy losses when installed at or near load centers

- losses that can be as high as 20 percent at peak times." "Solar power can also provide significant ratepayer savings" and "the greater reliance on renewa ble366 energy sources like solar would help reduce the economic risks associated with overreliance on natural gas." "Finally, solar power investments create jobs and increased economic investment." In particular, "taking better advantage of the solar resource would create needed jobs in South Carolina."

Commenters stated that "Arizona is the ideal state for widespread expansion of solar generation. Rapid growth of this technology is pushing down electricity generation costs for renewables and further cost redu ctions are expected through 2020. "The National Renewable Energy Lab reported that between 2008 and 2013, installed solar photovoltaic (PV) capacity increased over 15 times in the US, and prices for PV modules fell 80%." "This strategy can achieve cost

eff ective compliance, drive job creation and keep Arizonans' hard

- earned dollars in the local economy."

Comment 20: Commenters described how solar energy represent a reasonable cost to utility companies.
Response 20 : The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly in the reevaluation of solar cost and performance assumptions.
The following are summaries of the specific public comments under th is comment:

Commenters stated solar energy measures should be included in the BSER because they are a reasonable cost system to reduce emissions from affected EGUs as solar energy measures are reasonable cost to utilities. Commenters stated utilities are i ncreasingly procuring solar energy because solar energy technologies, including utility PV, distributed PV, and CSP, have become reasonable cost resources when compared to other resources. Further, c ommenters stated , the various forms of solar technologies provide significant economic benefits beyond cost, such as price certainty, hedge value, and avoided infrastructure investment. Commenters stated one of the primary methods of procurement is through a Power Purchase Agreement (PPA) with a solar developer. Commenters stated many utilities are now signing PPAs in the $50

- $60/MWh range over 20 to 25 years, offering price certainty to both utilities and ratepayers without any of the fluctuation in costs that accompanies fossil

- fuel plants, which are subject to variability in fuel costs throughout their operating lives. Commenters stated , in fact, Recurrent Energy, a developer of utility

- scale solar PV, recently executed a power purchase agreement with Austin Energy in Texas for less than $50/MWh. Commenters sta ted these costs will continue to decline as economies of scale are achieved.

Commenters also stated solar projects being offered and installed today show that solar is already
cost

- competitive with new and existing fossil generation in certain circumstances. Commenters stated for example, in 2013 Xcel Energy received approval from the Colorado Public Service Commission to procure 170 MW of solar strictly on a cost competitiveness basis. In addition,

c ommenters stated , solar recently outbid natural gas in a competitive evaluati on for utility resource planning in Minnesota. Furthermore, c ommenters stated , a recent NY Times article notes the following: "According to a study by the investment banking firm Lazard, the cost of utility

- scale solar energy is as low as 5.6 cents a kilow att

- hour, and wind is as low as 1.4 cents.367 In comparison, natural gas comes at 6.1 cents a kilowatt

- hour on the low end and coal at 6.6 cents. Without subsidies, the firm's analysis shows, solar costs about 7.2 cents a kilowatt

- hour at the low end, with wi nd at 3.7 cents." Commenters stated these competitive costs are one of the reasons utilities are looking to include solar systems as part of a balanced energy portfolio.

Commenters also stated solar energy offers price certainty to utilities because the fu el is free once the system is constructed. Commenters stated this allows costs to be transparent and fixed over the length of the contract, which may be anywhere from 10

- 30 years. Commenters stated that even when conventional fossil

- based generators offer long

- term contracts, the actual energy price paid usually varies along with the underlying fluctuating fuel prices. As a result,

c ommenters stated solar is seen as a valuable hedge against volatile fossil fuel prices.

Commenters also stated distributed PV allows utilities to avoid significant infrastructure costs. Commenters cited a recent McKinsey analysis which noted the following avoided costs with the deployment of distributed PV:

"The impact on national energy systems can be significant. A recent repo rt by the California Solar Initiative estimated that 1 to 1.6 GW per year of solar power generated by consumers would supply the equivalent capacity of adding a new 500kV transmission line, estimated to cost nearly $1.8 billion in capital costs. Distribute d generation could also provide other benefits, such as lower line losses due to shorter distances transmitted, productive use of unutilized real estate (rooftops), and environmental benefits. It could be particularly relevant for heavily congested

areas w here adding new infrastructure is impractical. Distributed generation can also make the grid more resilient, since it would continue to function when central infrastructure is out of commission. If renewable generation costs continue to fall and energy sto rage capabilities grow rapidly, we can imagine entire neighborhoods or factory complexes being served through distributed solar power. This could make remote housing and manufacturing plants more viable by reducing the transmission capacity required from t he grid or even eliminating the need to access the grid altogether."

Comment 21: Commenters describe d how solar energy represent a reasonable cost to ratepayers.
Response 21 : The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, which is described in section V.E.6 of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenters stated solar energy measures are being adopted by states and utilities around the country because they are reasonable cost to ratepayers as well. Commenters stated ratepayers are typically billed for their consumption of electricity in kWhs. Commenters st ated the charge per kWh may include transmission and distribution services, or they may be billed separately. Commenters also stated utility

- scale solar operates much in the same manner as a traditional fossil fuel plant, and the energy is generally sold t o utilities at the wholesale price in the same manner as fossil plants. Therefore, c ommenters stated the ratepayer will often see no difference368 on their electric bill when energy comes from a wholesale solar generator rather than a wholesale fossil fuel ge nerator.

Commenters stated similarly, distributed PV has a negligible impact on the ratepayer and has been shown to provide a benefit to ratepayers in many circumstances. Commenters stated the benefit to the ratepayer will depend largely on whether the sys tem is owned or leased, as well as other factors including where on the grid the system is located. Commenters stated if the system is owned or leased by the ratepayer, they will often be able to sell the excess energy they generate back to their utility r educing their overall bill. Commenters stated if the system is installed pursuant to a power purchase agreement, the ratepayer may be able to procure energy at a rate that is lower than the rate provided by the utility through a power purchase agreement. F urther, c ommenters stated , ratepayers may be able to avoid some transmission and distribution service costs that they would be subject to if they were purchasing energy from a central station plant, as the solar system is located on the customer site.

Com menters stated there are numerous third party verified studies that have looked at the costs and benefits of distributed PV to the ratepayer. Commenters stated that while some studies show a net benefit and others a net cost to ratepayers, when taken as a whole the studies clearly show that distributed PV is reasonable cost to ratepayers. Commenters referenced a recent report by the Rocky Mountain Institute which completed a meta

- analysis of 16 distributed PV cost

- benefit studies, reflecting diverse levels of distributed PV penetration levels and included in their comments a chart which shows a summary of the costs and benefits of including distributed PV to the grid.

Comment 22 : Commenter s argue d that solar energy is not cost effective and describe d the reasons why.
Response 22: The EPA disagrees with this comment. The cost

- effectiveness of all power sector resources is the result of many factors, including the existing regulatory context. The EPA appropriately considered current law in evaluating building block 3 generation levels.

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

Commenter s argue d that solar energy is not cost effective and provides examples of the extent on which " current renewable solar generation i s propped up with significant federal grants and tax credits", stating that without the current financial support from federal appropriations, even the renewable generation currently in existence would not be "adequately demonstrated". Further,

c ommenters state d that "because of the need for huge federal appropriations to give this rule support for required renewable energy expansion, the City strongly suggests that the EPA devotes its attention to working with Congress to pass this rule in a separate bill, with the necessary funding to support it. As it stands, the creative adaptation of Section 111(d) of the 1970 Clean Air Act still must have Congressional approval for the financial support."

Comment 23: Commenters provided information to show that wind e nergy is cost effective.369 Response 23: The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, which is described in section V.E.6 of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

In particular, commenters describe d a study developed by PJM, which concluded that "under its 20 and 30 percent wind energy penetration level scenarios, there would be massive reductions in wholesale prices, as much as 21 billion annually in one scenario. These study results are consistent with a number of other studies which demonstrate that the price suppression effects of wind energy, when it competes with other generating resources in th e wholesale electricity market, such as the PJM market, basically wind, when it competes, is usually one of the lower cost forms of energy at that time, and it will box out other types of energy that are more expensive, thus reducing what we call the clear ing price of energy, and lowering the cost, ultimately, to consumers."

Comment 24: Commenters provided considerations for analyzing RE cost

- effectiveness in the RGGI states.
Response 24:

Comment 25 2 4 : Commenters provide d cost

- effectiveness considerations specific to the Southeast states.
Response 25 2 4 : The EPA does not rely on the data sources listed below for the final rule. The EPA addresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenters stated EPA has not adequately considered the costs associated with renewable energy development in the Southeast. Commenters stated EPA pri marily relies on two inadequate cost analyses regarding its renewable energy determinations. Commenters stated

, first, using EIA

- based levelized cost assumptions, the Agency claims the cost to reduce CO2 emissions through renewable energy deployment ranges from $10 to $40 per metric ton. Commenters stated EPA, however, did not provide any supporting documentation for this analysis, and it is unclear how the dollar per metric ton statistics were calculated, including whether and to what extent EPA considered the regional availability, performance, and costs of renewable energy resources and technologies. Regardless, c ommenters stated , the Agency has ignored integration costs stemming from the large penetration of intermittent generation resources (i.e., VERs). Commenters stated EPA's second cost analysis relies in part on publicly available reports that detail "modest" rate impacts du e to state RPS. Commenters stated these statistics are inapplicable in the Southeast. Commenters stated through 2012, 85 percent of the nation's renewable electricity, motivated by RPS programs, has been generated by wind.370 Commenters stated Alabama, Florid a, Georgia, and Mississippi do not have adequate wind resources and would need to rely on more expensive solar to meet EPA's renewable energy target. Commenters stated that undeniably, the cost impacts of EPA's Building Block 3 in the Southeast region will be substantially more than the cost impacts of current state

- level RPS. As such, c ommenters stated EPA has not adequately considered the costs associated with renewable energy development.

Commenters stated that using the U.S. Energy Information Agency's most recent installed costs for utility scale photovoltaic (PV) of $3,873 per kW, the installed cost of 4,345 MW of PV is $16.8 billion. Commenters stated that when determining the need for new electric generating facilities, Florida law requires the consi deration of renewable energy resources; however, under these same statutes, Florida's citizens are protected from funding excessive capital projects, because the FPSC must also consider cost

- effectiveness. Commenters stated that as cost

effectiveness is a mandate under State law, they are concerned about the reasonableness of the cost of renewable energy technologies used to develop the Block 3 component of the Final Goal. Commenters stated the cost of achieving the CO2 emissions reductions using a proposed 10 percent renewable energy component for calculating the Final Goal does not appear reasonable.

Comment 26 2 5 : Commenters provide d cost effectiveness considerations specific to GA.
Response 26 2 5 : The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, which is described in section V.E.6 of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public c omments under this comment:

Commenters stated that "in both its preferred and alternative approaches, EPA's assumptions regarding the amount of renewable generation that can be feasibly and at reasonable cost added to Georgia's grid are overly conservative . As UCS notes in its report, EPA significantly underestimates the potential role of renewable energy in setting state targets. Several of the issues UCS identifies are evident in EPA's treatment of Georgia's renewables potential: EPA fails to account for both (1) the continued growth and falling costs of renewables projected by market experts and (2) the renewable energy deployment rates that states are already achieving. SELC agrees with UCS that EPA should revise and update several of its underlying assu mptions. Doing so will show not only that EPA's current assumptions are reasonable, but that Georgia can in fact reach a much higher renewable energy target almost double the levels assumed by EPA at a reasonable cost."

Comment 27 2 6 : Commenters describe d clean energy financing alternatives, which may have an impact in the cost

- effectiveness of RE energy.
Response 27 2 6 : The EPA addresses considerations related to the technical feasibility and cost

effectiveness of significant RE penetration in both the pre amble (section V.E) and GHG Mitigation Measures TSD.371 The following are summaries of the specific public comments under this comment:

Commenters suggested innovative financing alternatives that the states can consider to spur low

carbon investment. Specifically, c ommenters mentioned green banks and financing mechanisms such as credit enhancements, on

- bill financing, long

- term and low

- interest

- rate loans, loan guarantees, and revolving loan funds. Commenters also described the examples of Connecticut Clean Energy Finance and Investment Authority and it Commercial and Industrial Property Assessed Clean Energy program. Commenters stated green banks ca n help states remove barriers to clean energy deployment. Commenters also said that s tates struggling to overcome these market barriers should consider clean energy financing authorities to drive new in

- state investment.

Commenters stated that to keep the utilities whole, they have to be incentivized to create programs where they make a margin or an extra margin on programs that will integrate high levels of renewable energy affordably because just a haphazard goal or just only solar net metering is really not going to get us there.

Comment 28 2 7 : Commenters call ed for a more comprehensive analysis, going beyond cost effectiveness, and describe d considerations for states to evaluate cost benefit from the proposed rule.
Response 28 2 7 : The EPA has phased in the building block 3 generation levels to provide an appropriate planning horizon for RE investments. Cost

- effective RE under building block 3 is not costless RE. The EPA has determined that a $37/ton cost is reasonable for building block 3. The EPA addresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.
The following are summaries of the spec ific public comments under this comment:

Commenters stated EPA's proposed renewable energy generation goals are drastically higher than most states can achieve within EPA's proposed timeline. Commenters stated a balanced assessment of renewable generation, as a supply resource that is required to determine the lowest cost BSER, requires an examination of all the components that are involved in producing, distributing, and consuming electricity. Commenters stated these components are intertwined and causally linked, and that no one element can be meaningfully addressed without touching on the others. Commenters also stated since value

- of

- service propositions are inherently uncertain, subjective, and speculative, objectively analyzing the various cost and bene fit components is all the more difficult. Commenters stated for example, there are numerous ways to think about PV project economics. One common approach is to derive a benefit

- cost ratio with the net present value (NPV) of project benefits in the numerato r and the NPV of project costs in the denominator. Commenters stated that using this equation, a benefit cost ratio greater than one indicates the project is economically beneficial because the ratio can only be greater than one if project benefits exceed the costs. Commenters stated a ratio less than one means that costs exceed benefits and the project is not economically beneficial. Commenters stated EPA has372 failed to provide a methodology that would give states the flexibility needed to do this in the time frame required.

Commenters stated although the benefit

- cost conceptual framework is simple, there is no single, standard modeling approach that w ould be accepted by all for this purpose; the results and conclusions can differ depending on how the analysis is conducted. Commenters stated there are at least three key elements of the modeling that will affect the results: (1) the structure of the bene fit

- cost equation in terms of the variables included and how the terms are arranged; (2) the values assigned to the variables; and (3) the perspective from which the analysis is conducted. Commenters stated that the following illustrates some key costs tha t are borne by the utility, but often debated during cost

- benefit analysis. Commenters stated EPA should allow these states to consider these as inputs to their cost models.

1. DG does not avoid most utility fixed costs of service. The greatest cost savings f rom distributed PV resources are avoided variable fuel costs (provided that distributed PV generation displaces fossil fuel generation and not other renewables) or electricity otherwise purchased in wholesale markets.

2. DG can result in little or no distribu tion cost savings because many DG systems are not designed to improve the safety or reliability of the grid, and generally do not provide backup power in the case of an outage. However, one of the reasons PV is

more appealing than other variable resources is the fact that it has a more consistent output with better coincidence to peak load times.

3. Investments in the transmission and distribution system might never be completely avoided, just deferred. To the extent that DG actually produces fixed cost saving s, measuring the part that the utility may avoid or defer is challenging.

4. Even when the DG system fails to produce energy, the utility remains obligated to provide uninterrupted service (generation, transmission, and distribution) to the DG customer."

Commenters stated utilities should have an active role in any DG cost

- benefit or valuation study as they play an indispensable part in the integration and interconnection of PV. Commenters also stated utilities also have critical information on the cost to serve all customers and on the renewable energy project's contribution toward that cost. Commenters stated EPA appears to recognize the need for more time to implement its proposal in its NODA, and that EPA should absolutely add more time for states and a ny sources subject to regulation to provide recommendations for cost

- optimal renewable generation deployment.

Comment 29 2 8 : Commenters said in order to fully assess the feasibility and potential costs of implementing the types of renewable goals envisione d in the proposed rule, more information is needed regarding the final level of renewable energy to be considered in establishing the state goal; the mechanisms available to resolve interstate issues regarding the "credit" for renewables procured in one st ate for the benefit of customers in other states; the mechanisms that will be373 acceptable to the states and EPA for purposes of demonstrating compliance; and, the location, size, and design of new renewable capacity must be known to adequately evaluate the cost of transmission improvements necessary to support those facilities and to assess whether additional generation resources are needed during periods when the renewable resources are not available.

Response 29 2 8 : The resources and data provided in this c omment were valuable in finalizing the building block 3 methodology, which is described in section V.E.6 of the preamble and in the GHG Mitigation Measures TSD. Additional guidance on interstate issues and the crediting of incremental RE is presented in s ection VIII of the preamble

.

3.3.8 Nuclear energy

This section discusses specifics of the EPA’s proposed approach to the inclusion of nuclear generation under building block 3 of the CPP. The EPA proposed to include certain aspects of nuclear generation in the computation of the building block 3 goals. T he comments in this section address the EPA’s proposed approach to the inclusion of nuclear generation in building block 3.

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

Comment 1: Several commenters recommended that the EPA treat nuclear power equally with other non

- emitting sources, by accounting for 100% of nuclear power generation in the baseline and in the BSER calculations.

Response 1: EP A acknowledges the comments and has decided to treat zero

- emitting sources consistently in the final rule in the following important respects. First, while the proposal included all existing RE but only a portion of existing nuclear in BSER and as resourc es eligible for compliance, the final rule excludes all existing RE and all existing nuclear from BSER and from compliance, which reflects equal treatment of existing non

- emitting and nuclear sources. Second, from a compliance perspective, generation from any incremental zero

- emitting capacity, including nuclear, may be recognized under rate

- based compliance, which reflects equal treatment of nuclear with non

- emitting sources for compliance purposes. Nuclear and other zero

emitting sources are equally reco gnized for compliance notwithstanding that incremental RE is in BSER while incremental nuclear is not (please see section V.A of the preamble for further discussion of the decision to exclude nuclear power from BSER), because either incremental RE or other qualifying zero

- emitting measures (including incremental nuclear) may be used interchangeably for compliance.

In addition, while this rule does not include an explicit measurement of nuclear power in the baseline or in BSER, the baseline (and hence the BS ER computation which relies on that374 baseline) includes an implicit measure of avoided CO 2 emissions that is captured in the effect of existing nuclear generation on baseline fossil

- fuel fired generation and emissions. Because that effect is sustained in t he quantification of this rule’s performance rates, existing sources will be required to maintain that emission performance whether or not an existing nuclear unit is retired. Furthermore, in the event that a nuclear unit is retired, any replacement fossi l fuel

- fired capacity built must be compliant with applicable new source performance standards for CO 2 . Therefore, EPA believes that the industry, states, and federal energy regulators will be incentivized through this regulatory structure to maintain low

- and zero

- emitting capacity wherever possible to assist the power sector in meeting these CO2 performance requirements.

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

Commenters stated that the carbon abatement value of ea ch MWh generated by such sources is generally the same, regardless of whether it is generated by nuclear, hydropower, geothermal, solar, wind or other zero

- emission sources. Commenters cited California as an example, and noted that the EPA would include al l of the electricity generated from California's Shiloh Wind Power Plant, which came online in 1989; six percent of the electricity generated from its Diablo Canyon Nuclear Power Plant, which came online in 1985

- 1986; and none of the electricity generated from its Stenner Canyon Hydropower Plant, which came online in 1985. Commenters also stated this different treatment occurs even though all three plants are approximately the same age, and when operating, all three plants provide carbon

- free generation.

C ommenters stated that the EPA's differing treatment of existing zero

- emission sources is not justified. Commenters stated that all zero

- emissions generation (e.g., nuclear, geothermal, wind, solar and hydropower) have climate benefits and the dissimilar tr eatment of existing zero

emission generation is not warranted.

Commenters continued, "Non

- hydro renewable energy, nuclear energy, and hydropower receive vastly different treatment under the proposed rule, which EPA does not explain

- let alone justify

even t hough the purpose of the proposed rule is 'to address greenhouse gas emissions from existing fossil fuel fired electric generating units.' EPA's failure to provide such an explanation violates basic administrative law principles. An agency rule is arbitrar y and capricious where the agency 'failed to consider an important aspect of the problem,' or 'offered an explanation for its decision that runs counter to the evidence before the agency.' Motor Vehicle Mfrs.' Ass'n v. State Farm Mut. Auto. Ins. Co., 436 U .S. 29, 43 (1983). A court 'may not supply a reasoned basis for the agency's action that the agency itself has not given.' Id. (quoting SEC v. Chenery Corp., 332 U.S. 194, 196 (1947)). Indeed, EPA must 'explain [its] decisions with precision,' and the Admi nistrator must 'cogently explain why [she] has exercised [her] discretion in a given manner.' Am. Lung Ass'n v. EPA, 134 F.3d 388, 392 (D.C. Cir. 1998) (second and third alteration in original)."

Commenters stated that existing nuclear power plants will e ventually need to be replaced as they retire, and it is critical to reducing U.S. CO2 emissions that they are replaced with equally non

emitting energy technologies, whether they are nuclear, renewable, hydroelectric, or fossil with CCS. Commenters conclud ed that the EPA has recognized the importance of maintaining the existing level of renewable zero

- emitting generation by including 100 percent of existing renewable energy in the 2012 baseline for goal

- setting, but that only protects about 15 percent of375 th e country's low or zero

- carbon generation. Commenters recommended, to better recognize existing conditions in 2012, as well as the likely future, the EPA should also include 100 percent of existing nuclear in the 2012 baseline.

Commenters stated that the P roposed Rule treats existing nuclear capacity different than it does other large, existing sources of zero

- CO2 emissions electricity, such as hydropower and renewable energy facilities. Commenters stated that the EPA makes assumptions about how much existi ng nuclear power is at risk due to 'continued economic challenges,' yet does not do so for existing hydro and renewable sources that also face economic and non

- economic challenges that could reduce capacity through shutdowns or retirements. Commenters conc luded that the Proposed Rule provides no rationale for treating existing CO2

- emission free resources differently.

Commenters stated, any and all proposed EPA rules should support and encourage the continued use of existing nuclear generation. Commenters s aid support of this zero

- emissions resource is essential to maintaining the nation's clean air generation portfolio; the policy choices EPA made in this rulemaking may well dictate the fate of many of the nation's nuclear units and consequently the nation' s ability to meet its CO2 reduction objectives. Commenters said when the operating license of an existing nuclear generating unit expires, the state goal for the resident nuclear plant should be subsequently adjusted; EPA should also support the NRC's curr ent license renewal process to allow further operating license extension of units with 60

- year licenses, to no less than 80 years. Commenters said it is important that zero CO2

- emitting resources be treated equally, regardless of age or technology, to prov ide cost

- effective CO2 reduction solutions for consumers.

Commenters advocated that two basic principles govern the structure of any carbon reduction program: 1) Avoided emissions have the same compliance value as emission reductions, and 2) all zero

- emiss ion sources (nuclear, renewables, hydro, energy efficiency) displace emissions from affected units and should receive appropriate credit. Commenters then stated that aspects of EPA's proposed rule under Section 111(d) fail to meet these fundamental criteri a. Commenters stated that renewable energy, nuclear energy and hydro receive vastly different treatment under the proposed rule, and that nuclear energy does not receive appropriate credit. Commenters said existing renewables are included in the rate

- setti ng formula; existing nuclear energy is not (save for six percent of existing nuclear generation considered at risk); existing hydro is ignored. Commenters said EPA's proposal does not explain why different generation sources are treated differently under t he rule, and does not provide appropriate credit for existing nuclear power plants.

Commenters stated that existing nuclear should be removed from the goal setting calculation because it is a regional resource only affecting at varying levels 30 out of th e 49 states under this proposal. Commenters quoted the EPA's approach for renewables: "'The EPA first quantified the amount of renewable generation in 2012 in each state. EPA then summed these amounts for all states in each region to determine a regional s tarting level of renewable generation prior to implementation of the best practices scenario. Hydropower generation is excluded from this existing 2012 generation for purposes of quantifying BSER

- related RE generation potential because building the methodo logy from a baseline that includes large amounts of existing hydropower generation could distort regional targets that are later applied to states lacking that376 existing hydropower capacity. The exclusion of pre

- existing hydropower generation from the basel ine of this target setting framework does not prevent states from considering incremental hydropower generation from existing facilities (or later

- built facilities) as an option for compliance with state goals." Commenters stated that the same argument cou ld be made for treatment of nuclear under Building Block 3; borrowing from EPA's rationale, existing nuclear generation should be excluded from existing 2012 generation for purposes of quantifying BSER because of the regional disparity of the nation's nucl ear fleet.

Commenters stated that the proposed rule perpetuates a policy of supporting renewable generation while largely ignoring the contribution of existing nuclear plants in avoiding carbon emissions. Commenters said for example, in determining each st ate's initial emissions rate and its emissions goals, EPA has proposed to include all megawatt

- hours of electricity presently generated by wind and solar generating facilities; doing so provides states with a strong incentive to preserve all such renewable resources. Commenters said however, EPA proposes to include only six percent of the generation from a state's existing nuclear fleet; that approach leaves a state largely indifferent to the early retirement of existing nuclear capacity.

Commenters stated that, to the extent that the EPA finalizes a rule that sets rate goals instead of mass goals, the EPA should set initial rates and calculate interim and final goals using a system

wide rate that accurately reflects a state's entire existing portfolio of g eneration resources, instead of ignoring nearly all of the existing nuclear fleet and all hydropower generation. Failing that, Commenters recommended the EPA should revisit the justification for considering only six percent of generation from a state's exi sting nuclear fleet, as the six

- percent approach is also flawed on its own terms. Commenters noted that the Proposed Rule reasons that, on average nationwide, six percent of the nation's nuclear facilities are at risk of premature retirement. Commenters st ated that, in reality, the percentage of nuclear capacity at risk of premature retirement varies dramatically from region to region; in some areas, such as Illinois, that percentage approaches half of existing nuclear capacity. Commenters recommended that the EPA's final rule should encourage states to take all necessary steps to protect existing nuclear plants from retiring early, or many states simply will not achieve emission reductions, even if those states can demonstrate on

- paper compliance with EPA's rate goals.

Commenters stated that, in the Proposed Rule, EPA calculates a state's initial emissions rate and target emissions rates based upon a formula that accounts for all of the state's existing renewable generation other than hydropower but only si x percent of its existing nuclear fleet. Commenters also noted that the EPA excludes existing hydropower entirely; it is not counted in a state's initial emissions rate or accounted for in its target emissions rates, even if the state has significant hydro power resources that may be facing premature retirement. Commenters stated that the EPA's methodology provides a state with a strong incentive to preserve all of its existing wind, solar, and geothermal generation, because a state's ability to meet its tar get will be affected by whether all of those renewable megawatts remain operational. For instance, closure of any wind power facility will require the state to find an equivalent amount of zero

- carbon generation just to keep its calculated emissions rate t he same. But Commenters stated that the EPA's goals provide a very weak incentive to preserve the existing nuclear fleet; even if all of a state's existing nuclear capacity were to retire, the state would be able to retain the same calculated emissions rat e by finding new zero

- carbon generation totaling just six percent of the retired nuclear generation. Commenters noted that the loss of the remaining 94 percent will be377 immaterial to the state; the state could still comply, even if it replaced the remaining 94 percent with generation from new NGCCs, thereby significantly increasing its total emissions. Commenters provided the example of a nuclear plant that generates 10 million MWh annually. Commenters stated the Proposed Rule would require a state to replac e that nuclear plant with only 0.6 million MWh of wind, and the remaining 9.4 million MWh of lost nuclear capacity could be replaced by new NGCCs, thus massively increasing carbon emissions, without undermining the state's ability to comply. Commenters not ed that the Proposed Rule's approach is even worse for hydropower: even if a state loses all of its hydropower capacity, there will be no effect on its calculated emissions rate; the state can, without consequence, replace retired hydropower with new fossi l

- fired generation. Commenters concluded, in short, the EPA creates insufficient incentives for states to prevent the premature retirement of carbon

- free generation (and may drive states to keep 111(b) units out of 111(d) calculations).

Commenters stated t hat there is no reason why only six percent of a state's nuclear capacity should be counted in the state's initial and target emissions rates, as though the remainder of the state's nuclear capacity does not exist; likewise, there is no reason to omit hydr opower. Commenters stated that all of a state's existing nuclear and hydropower capacity is available as

zero

- carbon resources and should be counted accordingly.

Commenters also stated that new and existing fossil fuel plants should not get more credit fo r CO2 reductions than zero

- carbon generation. Commenters stated for example, consider following this treatment to its logical conclusion in a true rate

- trading system. Suppose an illustrative state's emissions rate target were 1,286 lb/MWh. An NGCC with a CO2 emissions rate of 900 lb/MWh would be credited with 386 lb/MWh. Nuclear power emits no CO2 per MWh, which should mean it would receive a credit equal to the target, or 1,286 lb/MWh. Commenters said however, because only six percent of nuclear generatio n counts in the proposed formula, it is credited with only 77 lb/MWh. Nuclear would have to generate five times the MWh to receive the same CO2 credit as one MWh of natural gas. Commenters said if the credits have financial value, this creates a subsidy to natural gas at the expense of zero

- emitting nuclear generation.

Commenters stated whether it is generated by nuclear sources or other carbon

- free sources, the carbon abatement value of each kilowatt

- hour of electricity generated is generally the same. C ommenters said, in California, for example, EPA would include all of the electricity generated by California's Shiloh Wind Power Plant, which came online in 1989; six percent of the electricity generated by the Diablo Canyon Nuclear Power Plant, which came online in 1985

- 1986; and none of the electricity generated from the Stenner Canyon hydropower plant, which came online in 1985. Commenters said yet all three plants are approximately the same age and, when operating, all three plants provide carbon

- free e lectricity, displacing carbon emissions from affected sources. If anything, commenters remarked, nuclear generation is more important to reducing carbon, not less. Commenters stated that EPA acknowledges as much through the cost

effectiveness evaluation in the proposed rule. Commenters noted, there, EPA notes that the cost of keeping "at risk" nuclear plants operating is approximately $12

- $17 per metric ton of CO2 avoided (see 79 Fed. Reg. at 34,871), which is more cost

- effective than virtually any other378 ca rbon abatement strategy. Commenters said, for example, preventing the early retirement of nuclear plants is more cost

- effective than: adding renewable capacity ($10

- $40 per metric ton of CO2 abated). Id. at 34,858; increasing natural gas combined cycle pow er plant utilization rates to 70 percent ($30 per metric ton of CO2 abated). Id. at 34,865; implementing demand

- side management programs ($16

- $24 per metric ton of CO2 abated). Id. at 34,875. Commenters stated that these data demonstrate that ignoring the vast majority of nuclear generation in the Clean Power Plan is not justified, given the carbon abatement benefit it provides.

Comment 2: Treat nuclear power plants equally with other non

- emitting sources by excluding from them from the goal

- setting metho dology, but allow states to count new, uprated, and relicensed facilities to count towards compliance.

Response 2: EPA agrees with commenters that the final rule should not include nuclear generation in the goal

- setting methodology. The final rule allows s tates to count new and uprated factilities to count towards compliance. Relicensed facilities can only count towards compliance to the extent that there is an uprate in their capacity. Preamble sections V.A, VIII.K and VIII.L provide a discussion of how in cremental generation from new and uprated nuclear power is addressed in relation to other sources and as approvable actions to include in state plans, as well as how the final rule addresses interstate effects. Similar to other qualifying compliance

measu res, incremental nuclear may be claimed by sources in a state other than the state in which the qualifying incremental nuclear is located (subject to the conditions explained in section VIII of the preamble).

This final rule does not recognize re

- licensing of existing nuclear units as a qualifying emission reduction measure for compliance. The avoided emissions impact of such units is already implicitly captured in the 2012 baseline data that represent existing EGU performance before the application of the BSER. As a result, if the EPA were to allow compliance credit for generation from these existing nuclear units following a re

- licensing procedure, that credit would effectively double

- count the emissions impact of that generation and thus improperly relie ve existing EGUs of the intended emission reduction requirement incorporated in BSER.

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

Commenters stated that the EPA should treat under

- construction, relicensed, and uprated nu clear facilities the same as it treats RE facilities: it should exclude these facilities from the state goal

setting methodology, but allow states that build new facilities or uprate or relicense existing facilities to count the generation from those facil ities toward compliance. Commenters stated that just as the EPA has excluded states' full RPS commitments (as well as states' under

- construction RE capacity) from state goals, so too the EPA should exclude under

- construction nuclear energy from state goals ; and just as the EPA has ignored at risk hydro and RE in setting state goals, so too should the EPA exclude consideration of at risk nuclear generation in calculating state goals.

Commenters stated that the EPA's proposed treatment of under

- construction nuclear generation is arbitrarily more punitive than the EPA's treatment of other zero

- carbon generation. Commenters first stated that, although the EPA's proposed goal

- setting methodology assumes379 that every state that has committed to constructing new nuc lear capacity will do so, the agency is not assuming that states that have committed to ambitious RE policies (e.g., through a state RPS) will construct the amount of RE capacity that is called for by their own RPS policies. Commenters noted that Californi a's RPS requires the state to meet 33% of its retail load from renewable energy by 2020; Colorado and Minnesota's goals are 30% by 2020; yet the EPA's goal

- setting methodology only expects California and Colorado to meet 21% of their in

- state generation fr om renewable resources by 2030, while Minnesota must only reach 15%. Commenters further stated that this inconsistency is especially puzzling given RE commitments are enforceable through RPS regulatory programs, while commitments to build new nuclear
gener ation are not mandated through any state regulatory requirement. Commenters concluded that the EPA has no choice but to correct its BSER methodology by excluding under

construction nuclear capacity from its calculation of state goals, just as it excludes u nder

construction RE capacity from that calculation. Commenters also concluded that the EPA must allow states to count 100% of the MWh generated from under

- construction nuclear facilities toward state goals, as the agency has already proposed to do for oth er under

- construction zero

carbon generation (such as wind and solar facilities).

Commenters stated that nuclear is a proven technology for power generation, but nowhere has it been demonstrated that developing nuclear is a method for reducing unrelated f ossil fuel EGU including where nuclear power plants and affected fossil fuel

- fired EUGs are owned and operated by separated entities. Commenters said EPA notes in the proposed guidelines, Section 402(i) of the Energy Policy Act of 2005 (EPAct05) states: "N o technology, or level of emission reduction, solely by reason of the use of the technology, or the achievement of the emission reduction, by 1 or more facilities receiving assistance under this Act, shall be considered to be

- (1) adequately demonstrated for purposes of section 111 of the Clean Air Act..." 42 U.S.C. Section 15962(i). Commenters said that Congress crafted limitation broadly with respect to "facilities receiving assistance under this Act [i.e., the EPAct]." Commenters said that tax credits

a nd loan guarantees were provided for nuclear reactors under the EPAct.

Commenters stated that since nuclear energy is the largest source of carbon

- free electricity in America, by a substantial margin, it is clear that any program to reduce carbon emissions must preserve existing nuclear generating capacity, provide an incentive for new nuclear plant construction and certainly must not create a disincentive for new nuclear generating capacity. Commenters said, absent this, any program to reduce carbon emissi ons is simply not credible. Commenters said EPA is to be commended for having recognized the value of nuclear energy in its proposed rule. Commenters said that the key questions are whether the approach proposed by EPA is equitable and, based upon the rule making record, internally consistent, workable and likely to achieve the intended effect. Commenters asserted, unfortunately, by all four criteria, EPA's 111(d) proposal is deficient. Commenters remarked that two basic principles must govern the structure of any such program: Avoided emissions have the same compliance value as emission reductions, as discussed above, and All zero

- emission sources (nuclear, renewables, hydropower, energy efficiency) displace emissions from affected units and should receive

a ppropriate credit. Commenters stated that aspects of EPA's proposed rule under Section 111(d) clearly do not meet these fundamental criteria. Commenters said renewable energy, nuclear energy and hydro receive vastly different treatment under the proposed r ule, but nuclear energy does not receive appropriate credit. Commenters said existing renewables are included in the
rate

- setting formula; existing nuclear energy is not (save for six percent of existing nuclear380 generation considered at risk); existing hyd ro is ignored. Commenters stated that EPA's proposal does not explain why different generation sources are treated differently under the rule. Commenters noted that EPA is required to explain its rationale for this treatment of nuclear energy. (15 See, e.g ., Oklahoma Dep't of Envtl. Quality v. EPA, 740 F.3d 185, 192 (D.C. Cir. 2014) ("EPA has a preexisting duty to examine key assumptions as part of its affirmative burden of promulgating and explaining a non

- arbitrary, non

- capricious rule and therefore must justify that assumption." (internal quotation marks and ellipses omitted)); Horsehead Resource Dev. Co. v. Browner, 16 F.3d 1246, 1269 (EPA may not rely on "speculation" in setting rules, as "speculation is an inadequate replacement for the agency's duty t o undertake an examination of the relevant data and reasoned analysis").) Commenters stated that EPA's failure to provide such an explanation raises problems with respect to basic principles of administrative law. Commenters said an agency rule is arbitrar y and capricious where the agency "failed to consider an important aspect of the problem," or "offered an explanation for its decision that runs counter to the evidence before the agency." Motor Vehicle Mfrs.' Ass'n v. State Farm Mut. Auto. Ins. Co., 436 U .S. 29, 43 (1983). Commenters said a court "may not supply a reasoned basis for the agency's action that the agency itself has not given." Id. (quoting SEC v. Chenery Corp., 332 U.S. 194, 196 (1947)). Commenters concluded, stating that EPA must "explain [i ts] decisions with precision," and the Administrator must "cogently explain why [she] has exercised [her] discretion in a given manner." Am. Lung Ass'n v. EPA 134 F.3d 388, 392 (D.C. Cir. 1998) (second and third alteration in original).Commenters stated th at the EPA's proposal for reliance on renewables and energy efficiency functionally operates as a de facto national renewable and energy efficiency portfolio standard, albeit with a small carve

- out for "at

- risk" nuclear generation capacity, and that the EP A should not discriminate along low

- carbon generation sources in its proposed rule. Commenters stated that, alternatively, the EPA should provide a carve

- out for nuclear generation of 20 percent in Building Block #3.

Commenters stated that the EPA's appro ach of attempting to forecast capacity increases separately for low

- emission sources such as renewable, energy efficiently, at

- risk nuclear and new nuclear should be discarded in favor of adopting an aggregated total of low

- carbon generation, regardless of source. Commenters said this bank of low

- carbon emission capacity could then be allocated on a state

- by

- state basis as clean energy goals that the individual states can determine how best to achieve the needed capacity.

Commenters stated that it appears the EPA arbitrarily chose to use 6 percent when in reality over half of the U.S. nuclear operating fleet could be forced to retire over the next several decades, if the proper and appropriate incentives are not provided for. Commenters stated that, in cont rast, the EPA has included 100 percent of the existing renewable generation capacity in this building block. Commenters recommended that nuclear energy generation should be treated equivalently.

Commenters stated that existing wind and solar EGUs are prov ided a full 100% credit in the BSER baseline calculation under the proposed regulation, and BSER baseline determination formula should be amended to include 100% of each state's nuclear generation.

Commenters stated that, since the goal of the proposed ru le is to reduce carbon emissions, carbon

- free nuclear generation that comes online after the 2012 baseline of this rule should be treated the same as other new carbon

- free generation sources.38 1 Commenters noted that existing wind and solar EGUs retired befo re 2030 would require a "megawatt

- for

- megawatt" replacement with another non

- emitting technology. Commenters stated that nuclear power should be treated the same, by amending the BSER baseline rate determination formula to include 100 percent of each state 's nuclear generation.

Commenters stated that states only get credit for preserving 6 percent of its existing nuclear fleet against future emissions reduction targets, while the EPA allows 100 percent of a state's existing renewable fleet to count towards future goals. Commenters stated that all emissions

- free power should be treated equally under the rule and this arbitrary cap should be removed.

Commenters stated that the rule doesn't give even or balanced credit for existing clean sources, because nucl ear power is not given the same weight, in terms of carbon credit, that renewables are. Commenters stated that nuclear generation should not be replaced by sources like wind and solar for the sake of "progress," when the result actually will be destabiliza tion of the grid, and a likely increase in GHG emissions since renewable sources will in all likelihood be backed by natural gas combined

- cycle plants.

Commenters stated that the EPA should explicitly support a policy whereby all carbon

- free electric gene rating capacity is treated equally.

Commenters stated that the EPA has promoted the Proposal on the basis that it would help cut carbon emissions from the power sector by 30% from 2005 levels, however, none of the five under construction nuclear units wer e operating or under active construction in 2005. Commenters also stated that the EPA imposing a benchmark for these nuclear units that it does not apply to other actions EPA has designated as BSER. Commenters stated that individual energy efficiency proje cts and programs already planned are not identified by the EPA or captured in the rate

- setting calculation; neither are any renewable energy projects, even though there are specific renewable energy projects that are "under construction." Commenters stated that available data suggest there are over 12,000 MW of wind capacity currently under construction in the U.S. and over 2,820 MW of solar energy projects, and that the EPA has not explained why it chose such starkly different

- and completely arbitrary

- approaches for under construction solar/wind as compared to under construction nuclear.

Commenters stated that there are two important inconsistencies between how renewables and nuclear are treated. First, Commenters stated that the EPA's proposal assumes that nuclear generation must only count towards compliance for the state in which the resources is located, whereas the proposal suggests that renewable generation may count toward compliance in the state responsible for the development of the resource, i nstead of the state in which the resource is located. Commenters stated that in the preamble to its proposal, EPA notes that "a state could take into account all of the CO2 emission reductions from renewable energy measures implemented by the state, whethe r they occur in the state or in other states," but that the EPA's proposal contains no indication that increased nuclear generation in one state could count as credit in another's compliance demonstration. Commenters also asked additional guidance regardin g how renewable energy generated in one state could be credited to another state without "double counting," which the commenters agreed would be a difficult and important concern. Commenters stated that the second inconsistency is that the EPA's proposal w ould allow credit for increased generation from existing renewable resources, but the commenters states that the382 EPA's proposal indicates that increases in generation from existing nuclear units will not count towards compliance. Commenters requested that the EPA should either ensure all zero

- emitting generation is credited to the state in which the resource is located, or allow credit for all zero

emitting generation to cross state lines, regardless of whether it is renewable or nuclear.

Commenters stated that the rule as written reduces the importance of nuclear energy in meeting emissions goals, and if nuclear were accounted for as wind and solar are, emissions standards would be much more stringent and states would be more incentivized to build and main tain low carbon sources of power. Commenters also stated that, if nuclear were accounted for as wind and solar are, states which closed nuclear facilities would have to replace that zero carbon power, watt per watt, which would be incredibly difficult to d o with renewables alone. Commenters concluded that this is in stark contrast to wind and solar, in which 100% of existing wind and solar is credited in target setting.

Commenters recommended that nuclear plants should be treated equally with other non

- emi tting sources, by amending the BSER baseline rate formula to include 100 percent of each state's existing nuclear generation. Commenters also recommended that the EPA should "acknowledge and reward states with new nuclear plants under construction" by remo ving new nuclear plants under construction from the BSER formula and allow states to count the avoided emissions toward their compliance plans once they are operational.

Commenters believed the proposed rule contains two major flaws that, unless corrected, would render the rule at best ineffective and at worst counterproductive to the goal of reducing power plant carbon emissions. Commenters provided two recommendations that, if adopted, would rectify some of the rule's shortcomings and provide an important incentive for preservation of the existing fleet and the deployment of new nuclear generating capacity.

1. Treat existing nuclear plants equally with other non

- emitting energy sources

Under the proposed rule, the EPA seeks to set state

- specific carbon emission standards using a Best System of Emission Reduction (BSER) calculation. The BSER formula provides all states with nuclear energy facilities credit equal to 5.8% of their 2012 capa city toward achieving their carbon reduction goal. This percentage was derived from an Energy Information Administration (EIA) estimate that six plants, comprising 5.8% of the U.S. generation capacity, are "at

- risk" of closure before 2030. Unfortunately, t he at

- risk plants identified by the EIA are unique cases local to a few states. Other DOE scenarios envision retirement rates of as high as 33% by 2030. In order to understand the insufficiency of the proposed credit for at

- risk nuclear, consider the follo wing scenario: One of the six "at

- risk" plants closes in a particular state. Ten percent of the resulting loss in output is replaced by wind and solar generation; the remaining 90% is replaced by natural gas plants. Under the proposed rule, the state could claim a "reduction" in carbon emissions, even though its actual output of CO2 would increase substantially. Indeed, members of the University of Tennessee ANS Student Section analyzed a hypothetical scenario (submitted to this docket under separate cover) in which all U.S. nuclear plants were closed and replaced with combined cycle natural gas generation. They found that at least 15 states could claim a fictitious "reduction" in carbon emissions under the BSER formula. In contrast, existing wind and solar EGUs are provided a full 100% credit in the BSER baseline calculation under the proposed regulation. As such, any retirement of these units before 2030 would require a383 "megawatt

- for

- megawatt" replacement with another non

- emitting technology. Clearly, the 5 .8%
at

- risk nuclear credit, while perhaps well

- intentioned, would defeat the underlying purpose of the proposed regulation, promote greater use of fossil fuels, and encourage the premature shutdown of the current US nuclear fleet. ANS recommendation: amend the BSER baseline rate determination formula to include 100 percent of each state's existing nuclear generation

.
2. Acknowledge and reward states with new nuclear plants under construction

Currently, there are five new nuclear plants under construction in the U.S., Watts Bar 2 in Tennessee, Vogtle 3

- 4 in Georgia, and Summer 2

- 3 in South Carolina. The states in question have each made a deliberate policy decision to support the construction o f new nuclear generating capacity in order to meet its expected electricity demand and reduce its carbon emission in expectation of future binding federal regulations. Under the proposed rule, the EPA includes the carbon reduction benefits of these project s in its BSER determination as though they were in an operational status today. This is in stark contrast to its treatment of non

- emitting EGUs currently under construction using other advanced technologies such as carbon capture and storage (CCS), which a re not included in the baseline determination and can be applied in full to the host state's compliance plan. Whether intended or not, the EPA's treatment of under construction nuclear plants is punitive in nature, penalizing those "early adopter" states t hat have assumed significant financial risks in order to make substantial reductions in carbon emissions through the use of nuclear energy technology. As such, we strongly encourage the EPA to move under construction nuclear plants out of the BSER baseline and instead allow the affected states to count the emission reductions as part of their compliance strategies.

Commenters stated that the EPA's approach does not treat nuclear energy "on par with other

zero

- emission options such as wind and solar." Comme nters then suggested several alternatives that "...might better recognize the low carbon benefits of nuclear energy."

Commenters stated as proposed, despite attempts by EPA to recognize and reward existing at

risk nuclear units, the way existing nuclear pl ants are treated under the rule creates risks of shut downs and large increases in emissions. Commenters said the approach does not treat nuclear energy (both existing and new) on par with other zero

- emission generation options such as wind and solar.

Comm enters stated currently EPA allows 5.8 percent of at

- risk nuclear plants to count towards compliance; (This contrasts with EPA's proposal to recognize 100 percent of existing non

- hydro renewable energy.) however, because the 5.8 percent is applied on an eq ual basis to all nuclear generation, it does not offer sufficient incentive to the specific units in competitive power markets that are most at

- risk (and provides a subsidy to those not at risk). Commenters added the proposal assumes that existing nuclear generation will continue to operate past the 2030 compliance year; this may not be the case, as units start hitting the 60

- year threshold in 2029, after which relicensing will be needed. Commenters said to the extent that nuclear plants are not relicensed (and many smaller units may not be due to economic reasons), this would have a significant impact on emissions and compliance after 2030. Commenters said a concern was raised about not rewarding under

- construction nuclear plants for early action; instead, states are essentially penalized if the plants don't operate at 90 percent capacity. (In contrast, all new wind and solar generation under development would be allowed to earn credits towards compliance384 starting in 2020.) Commenters said several alternativ es were suggested that might better recognize the low carbon benefits of nuclear energy:

• Leave existing nuclear energy out of rate

- setting, but count losses. This way, the state goal is not lowered as a result of nuclear energy, but retirements would incre ase the actual lbs/MWh emission rate (by reducing generation or increasing emissions), making the state goal harder to meet and creating a strong incentive for states to incent at

- risk nuclear.

• Include 100 percent of existing nuclear energy in the rate set ting formula (the same as how non

- hydro renewable energy is treated) and count existing nuclear

ener gy towards compliance. This approach would drive down state intensi ty goals and creates a powerful incentive to keep operating the existing nuclear power pl ants. (This is because reductions in nuclear plant operation could create a substantial compliance gap for the host states and affected units in those states.)

• Remove existing nuclear from rate setting and compliance, but count new nuclear, including up

- ra tes, new plants and relicensing. This would have the effect of encouraging existing plants to remain on

- line and (eventually) extend operations through relicensing. To the extent that states rely on nuclear energy, this approach would also lead to higher ( less stringent) state emission rate goals.

• Allow existing nuclear energy to count in the rate setting formula and for credit to the extent that it operates above the national fleet

- wide average capacity factor of about 80 percent. This would encourage full utilization of existing nuclear energy capacity and appears more objective than determining which plants are most at

risk. However, this approach would advantage nuclear plants that are least at

- risk. This could be a solution for under constructionnuclear plants.

• If existing nuclear energy is included in the state goal, allow the state to adjust its goal in the event that the NRC rejects renewal and/or if a company decides not to renew its nuclear license or otherwise retires early. This would reduce the r isk to states of non

- compliance due to non

- renewal, but it would not incent relicensing. It may be desirable to protect states against nuclear retirements for safety reasons but not for retirements for purely economic reasons. Making use of this option

wou ld allow an increase in emissions."

Commenters stated it is very important to Nuclear to be included with Clean Energy.

Commenters provided comments and changes:

1. Treat existing plants equally by including 100% of their current output in the baseline CO2 calculation.

2. Allow states with new plants under construction to count their clean energy generation toward their EPA emissions target.385 Commenters stated that the EPA has proposed that states can use renewable energy generated from outside their boundaries in their compliance demonstrations under a rate

- based program, and advocated the same treatment for nuclear generation. Commenters stated the EPA should recognize that generation from new nuclear power plants will cross state boundaries and should allow t he importing state to factor the generation into its compliance demonstration. Commenters said the EPA is not proposing to allow equal treatment for nuclear generation, but it must.

Commenters stated Duke Energy operates in and serves customers in, among o ther states, North Carolina and South Carolina; Duke Energy has applied for a combined operating license for the Lee Nuclear Station, which if built, will be located in South Carolina. Commenters said the fact that it would be built in South Carolina, howe ver, does not mean that it will exclusively serve their South Carolina customers; the electricity that would be produced from the Lee Nuclear Station would serve customers in both states. Commenters said the North Carolina customers would pay the largest share of the cost of the facility; and while the generation that comes to North Carolina from the Lee Nuclear Station would help lower the CO2 emissions of the North Carolina operations, under the Proposed Guidelines, North Carolina would be prohibited fro m considering any of the generation from the Lee Nuclear Station in its compliance determination unless North Carolina and South Carolina develop a joint plan. Commenters said this does not make sense and believes that the EPA should allow a state such as North Carolina that is importing electricity from a new nuclear unit in another state to be able to factor that generation into its compliance demonstration, as long as it is not being double counted by the state hosting the nuclear facility. Commenters s aid this would simply treat generation from new nuclear units the same way the EPA is proposing to treat generation from renewable resources.

Commenters stated that the EPA allows all MWhs generated by renewables such as solar and wind to be included in co mpliance plans, regardless of the potential for retirement. Commenters said this favors wind and solar over nuclear, without any discernible justification or legal authorization.

Commenters stated EPA has also chosen to treat various zero emission generati on resources differently; EPA has included the "At Risk" designation for a portion of existing nuclear capacity, but allows all MWhs generated by renewables such as solar and wind to be included in the compliance plans, regardless of the potential for reti rement. Commenters said the EPA favors wind and solar over nuclear, without any discernible justification or legal authorization; as a practical matter, nuclear generation is base load and doesn't have the intermittency challenges of solar and wind and thu s does not require back

- up generation, which is fossil and carbon emitting. Commenters said nuclear should have been given preference over renewables, and should not have been penalized by the EPA; to do so is arbitrary and capricious and outside of the au thority granted to the EPA under the Clean Air Act.

Commenters stated if the CPP's goal is to regulate carbon emissions, then generation types must be valued based on emissions with no one type of generation being favored over another; therefore, clean nu clear generation must be credited the same as renewable clean energy sources at 100%.

Commenters were concerned the CPP does not encourage the use of nuclear power; specifically, the BSER provides a 5.8% credit to a generator's 2012 nuclear capacity in sta tes with nuclear386 generating facilities. Commenters recommended clean nuclear generation is credited the same as renewable clean energy sources at 100%.

Commenters continued in addition to the environmental impacts of nuclear power facilities shutting down, jobs will be lost and local economies will be hurt. Commenters said roughly 550 employees work at a nuclear facility performing routine maintenance and operations; approximately 3,500 construction workers are employed when a new facility is built.

Comment ers recommended nuclear energy be a part of the solution and considered on an equal playing field with other non

- emitting energy technologies such as solar and wind; generation types must be valued on emissions without favoring one over another.

Commenters stated states also should be able to include in their compliance plans, and thus receive emissions credit for, all output of new nuclear capacity (including uprates of existing plants and existing license extensions) that begins operating after the issuan ce date of the EPA's Proposed Rule. Commenters said the Proposed Rule allows this with new renewable generation, and this principle should be extended to include other forms of zero carbon generation, such as nuclear.

Commenters suggested that the EPA woul d consider allowing states to include power uprates and additional new reactors in their plans, credited at 100% of the additional capacity relative to the baseline year, even though power uprates and additional new reactors are not included in the goal.

Commenters

- stated that, for many years in advance of this proposed rule, electric providers in South Carolina took major steps to decrease their carbon emissions, and that electric providers and their customers have already invested billions of dollars i n order to be leaders in the clean energy movement by building two new nuclear generating facilities.

Commenters suggested that the proposed rule uses several arbitrary distinctions and baselines when seeking to capture under construction nuclear in the s tate goals. Commenters said that the proposed rule makes an arbitrary distinction between (a) states where nuclear units are currently under construction and (b) states where no such units are under construction. Commenters said that there is no sound, obj ective, and lawful basis to impose vastly different state goals on this distinction. Commenters said that in a recent article for the Brookings Institute explains that "EPA's approach of including under

- construction nuclear capacity in setting state goals would draw an arbitrary distinction between states that have already invested in new reactors and states considering but not yet building new reactors" Commenters said that GEPD has commented to EPA: "We see no reason that under

- construction nuclear should be treated any differently than yet

- to

- be planned nuclear.".

Commenters suggested that, EPA's apparent distinction between under construction nuclear and yet

- to

- be

- planned nuclear is similarly flawed. Commenters said that EPA seems to imply that, because it has in other rulemakings distinguished between affected sources that have "commenced construction" as of the date of a proposed rule and those that have not commenced construction, EPA can, for purposes of determining BSER, distinguish between under

con struction nuclear units and those that are not yet planned. Commenters said that neither new387 nor under construction nuclear units are "affected sources" under section 111. Commenters said that there is no precedent or legal rationale for EPA's proposed app roach.

Commenters suggested that the Proposed Rule makes an arbitrary distinction between (a) existing nuclear capacity and (b) under construction nuclear capacity. Commenters said that for existing nuclear capacity EPA reflects 6% of the total existing ge neration in the rate

- setting calculation. Commenters said that for under construction nuclear capacity, EPA reflects 100% of the anticipated generation from the new units. Commenters said that, if these units were operational before the Proposed Rule, EPA would account for just 6% of their generation in the
rate

- setting calculation, but because these projects remain under construction, EPA has proposed to reflect 100% of their generation in the calculation.

Commenters suggested that the Proposed Rule arbitr arily ignores its own use of 2005 as a relevant benchmark. Commenters said that the Administration has repeatedly stated that a primary environmental objective is to reduce GHG emissions in the United States "in the range of 17 percent below 2005 levels" b y 2020.56 Commenters said that EPA has also promoted the Proposed Rule on the basis that it would "help cut carbon emissions from the power sector by 30 percent from 2005 levels." Commenters said that EPA now proposes to treat these five nuclear units, whi ch were not operating or under active construction as of 2005, in a manner that essentially eliminates any positive credit their host states would receive as a result of these zero

emission power plants. Commenters said that this calls into question EPA's approach to under construction nuclear units.

Commenters suggested that EPA's treatment of under construction nuclear facilities is arbitrarily different from its treatment of renewable energy. Commenters gave an example that EPA does not include specific renewable energy projects that are "under construction" in the state goals calculation, even though renewable energy projects are also identifiable. Commenters said that available data suggest there are over 12,000 MW of wind capacity and over 2,820 MW of solar energy projects currently under construction in the United States. Commenters said that EPA has not explained why emission reductions from under construction nuclear facilities are included in state goals, but emission reductions from other zero

- carb on facilities are ignored.

Commenters stated that EPA arbitrarily distinguishes between existing and new zero

- emitting resources in the proposal. Commenters said the existing zero

- carbon sources are discounted, while not

- yet

- constructed sources are allowe d to be counted towards compliance with state goals. Commenters said this incorrect interpretation of Section 111, which requires standards of performance to be based on technology that has been adequately demonstrated for sources in the listed source cate gory. Commenters said if this approach were applied to a traditional pollution control device, sources that had already installed scrubbers prior to the proposal would not be able to rely on emission reductions resulting from operation of the scrubbers, si mply because they were built before the proposal, incentivizing them to dismantle their existing scrubbers and build new ones after the proposal date. Commenters said EPA's approach creates absurd incentives and ignores the significant costs that have alre ady been incurred by sources that support zero

- carbon generation.388 Commenters stated the costs, non

- air impacts and long

- term planning considerations render nuclear energy unsuitable for designation as BSER.

Commenters stated EPA's approach to utilizing s ources that do not emit carbon in the goal setting calculation and the role that these same sources can take in a state's compliance plan is inconsistent and arbitrary. Commenters said these inconsistencies mostly show up in how zero emissions sources can be included in a state's compliance plan. Commenters said new and incremental sources of zero emitting generation can be used in a state's compliance plan, but EPA limits the role of generation from existing zero emissions sources, including: nuclear

- sta tes can only use 5.8 percent of existing nuclear, hydropower

- states cannot use generation from any existing hydropower resource, including generation imported from other countries, and biomass

- states can use generation from new and existing biomass

- bas ed units, but this generation may not be deemed to be zero

- emissions.

Commenters stated in response to the Notice of Data Availability (NODA) where the EPA requested comment on alternative approaches that account for the displacement of fossil fuel
genera tion by Blocks 3 and 4 resources 12, the commenters stated that the EPA's proposed approaches differ from one another in determining which fossil fuel sources are displaced, and thereby the amounts to which emissions in the numerator of the formula would b e reduced: 1) New low

- /zero

- carbon resources displace existing fossil fuel generation proportionally, 2) New low

- /zero

- carbon resources displace existing fossil fuel generation in order of emissions intensity, and 3) New low

- /zero

- carbon resources displace a mix of existing and new fossil fuel generation. Commenters said any of these proposals would address a significant bias in the draft rule, which would both establish unrealistically lax emissions rate goals and incentivize preferences for relying on nat ural gas generation over non

- fossil fuel resources in states' implementation plans. Commenters said the result of including low

- /zero

- carbon resources as the EPA did in the draft rule, is that states could achieve compliance without actually reducing emiss ions substantially. Commenters said for instance, if the state's total electricity consumption were to grow substantially over the next fifteen years, but the state satisfied enough of that demand with block 3 and 4 resources, it would effectively "dilute" its existing level of actual carbon emissions in a greater quantity of electricity produced. Commenters said for example, Southern Company seems prepared to encourage Georgia along such a path, stating it intends to propose a yet another pair of new react ors, linking the proposal to implementation of the EPA rule. Commenters said while the deployment of so much low

- /zero

- carbon resources to achieve such an outcome would signal a significant change in the trajectory of state energy policies, it would not ad vance the ultimate objective of reducing the amount of CO2 added to the atmosphere by existing generation sources.

Commenters stated Building Block 3 must be adjusted to remove existing nuclear generation from the state goal

- setting calculation. Commente rs said existing nuclear generation should be treated like new nuclear generation, with all existing nuclear generation available for inclusion in state compliance plans. Commenters said this approach would provide incentive to maintain389 existing nuclear ge neration and would be consistent with the regulatory objective of reduced carbon emissions associated with electricity generation.

Commenters stated that several factors limit states' ability to govern the operation of these facilities

- particularly unde r the auspices of the Clean Air Act. Commenters said, first, as zero

emissions resources, these plants are not directly regulated under the Act. Commenters believed the EPA has no authority to compel these resources to operate, and further, particularly in states with deregulated electricity markets, states are also restricted from providing out

- of

- market incentives to these resources by FERC rules. Commenters continued, stating that as it pertains to nuclear assets, licensing and supervision of these plant s is the sole jurisdiction of the federal Nuclear Regulatory Commission (NRC), and states who have sought decision

- making authority with respect to nuclear plants within their borders have found themselves with few options to either incentivize the continu ed operation of, or advocate for the closure of, these units.

Commenters stated that including under

- construction new nuclear and at

- risk existing nuclear in goal

- setting is not authorized under Section 111(d).

Commenters stated that EPA's approach un fairly and severely penalizes States that are leading in the expansion of nuclear energy in America, and it is inconsistent with U.S. energy policy and the President's own statements in support of expanding nuclear energy. Commenters added that EPA's appro ach in Building Block 3 exceeds EPA's authority under Section 111(d) of the Clean Air Act because nuclear units are not part of the regulated source category.

Comment 3: Several commenters recommended that the five nuclear plants currently under
construc tion (Watts Bar 2 in Tennessee, Vogtle 3

- 4 in Georgia, and Summer 2

- 3 in South Carolina) should be removed from the BSER baseline formula, and that states should be allowed to count the avoided emissions toward their compliance plans once the plants are op erational.

Response 3 : EPA acknowledges the comments and has determined that the BSER for the final rule will not include the provisions we had proposed for under

- construction units in the setting of state goals, and will allow incremental generation from new nuclear units to be applied towards compliance. Please see section V.A of the preamble for further discussion of the treatment of new nuclear plants, and section VIII.K and VIII.L of the preamble for further discussion of provisions in state plans o f allowable actions that result in an adjusted CO2 emission rate of an affected EGU, the accounting approach for incremental generation, and how states can address interstate effects in their plans. We appreciate commenters’ concern regarding crediting iss ues. We believe that changes made in the final rule resolve these issues.

The following are summaries of the specific public comments under this comment:
Commenters recommended that the EPA should remove nuclear generating capacity under construction from the rate

- setting formula, and allow states to include "new" nuclear generating capacity, when it is operating, in their compliance calculations, thereby providing an incentive to390 expand carbon

- free nuclear generating capacity. Commenters further recommende d that "new" nuclear capacity should include :

1. New nuclear power plants (those currently under construction or others that might be built between now and 2030 and beyond);

2. Power uprates at existing nuclear plants (which increase the plant's capacity) init iated at the beginning of the 2012 baseline year or thereafter;

3. Nuclear plants relicensed to operate beyond 60 years (second license renewal), and any nuclear plants that had not received license extensions to operate beyond their original 40

- year license term as of the beginning of the 2012 baseline year.

Commenters stated that Georgia made the choice to invest significant state resources in nuclear power (1) in reliance on state policies in favor of nuclear power as a clean, carbon

- free source of
energy , and (2) in expectation of future federal regulations on carbon emissions. Commenters stated that the EPA's proposed treatment of under

- construction nuclear places a disproportionate burden on Georgia, as well as South Carolina and Tennessee, for taking e arly action

. Commenters stated that three states, Georgia, South Carolina and Tennessee

- are adversely impacted by EPA's inclusion of this under

- construction nuclear generation in building block 3; specifically, Georgia has an additional 17,345 GWh added into its building block 3 target, while South Carolina has 17,345 GWh added to its target, and Tennessee has 8,846 GWh added to its target. Commenters stated that the utilities constructing these five nuclear facilities likely intend to operate these units , but various issues beyond their control could affect licensing, start

- up, and operations. Commenters stated that the inclusion of under

- construction nuclear generation has such a large impact on a state goal that any shortfall in operations would be very difficult, if not impossible to overcome; for example, including Georgia's new nuclear generation in building block 3 lowers the state's 2030 final goal under Option 1 by 138 lbs/MWh, from 972 lbs/MWh to 834 lbs/MWh. Consequently, Commenters recommended t hat the EPA should not include under

construction nuclear generation in its goal setting methodology for building block 3

. Commenters stated that there is no logical basis to include output from nuclear plants under construction plants in the rate

- setting formula. Commenters cited two reasons. First, these plants are not complete and not operating: Their generating experience and their capacity to avoid emissions have yet to be established. Second, adding potential output from these plants to the denominato r in the rate

- setting formula reduces the state's intensity target significantly, thereby penalizing states that have supported new nuclear plant construction. Commenters stated that South Carolina's state target is 22 percent more stringent than it otherw ise would be because of EPA's treatment of Summer 2 and 3, and Georgia's and Tennessee's targets are 14 percent more stringent on this basis. Commenters stated that this is a substantial and unjustified penalty levied on just three states for no legitimate purpose related to the permissible goals of the Clean Air Act

. Commenters continued that, although the states would be able to receive credit for these new nuclear plants, by counting the output from them in their compliance calculations, that credit is effectively nullified by including that output in the rate

- setting formula. Commenters did not391 believe output from the nuclear units under construction should be part of the rate

- setting calculation

. Commenters opposed any efforts to, in the EPA's words, "include in the state goals an estimated amount of additional nuclear capacity whose construction is sufficiently likely to merit evaluation for potential inclusion in the goal

- setting computation.' Commenters stated that there is only one justifiable appr oach to new nuclear generating capacity that might be 'under construction' either currently or at some time in the future: Remove it entirely from the target

setting calculation but credit the output to compliance

.
Commenters noted that the EPA has solicit ed comments on "whether it is appropriate to reflect completion of these [under

- construction nuclear units] in the state goals and on alternative ways of considering these units when setting state goals." Commenters strongly opposed incorporating nuclear units under construction in the section 111(d) target

- setting calculation, and stated that the EPA's approach: (1) unfairly and severely penalizes states that are leading the expansion of nuclear energy in America; (2) is inconsistent with U.S. energy poli cy and the President's own statements in support of expanding nuclear energy and treatment of other under

construction BSER resources; and (3) exceeds EPA's authority under section 111(d) of the Clean Air Act

.
Commenters stated that the five nuclear units under construction are projected to supply over 5,600 MW of new, baseload, zero

- emission electric generation, and represent a combined investment of over $28 billion, approximately 11,500 total construction jobs and 2,500 permanent jobs, and that the five nuclear reactors will constitute the single largest new carbon

free source of generation in the United States. Commenters further stated that just one of these new reactors will produce approximately as much carbon

- free electricity as all of America's sol ar electric generating capacity. However, Commenters noted that in the proposed rule, the EPA decided to treat these units as part of BSER because, in the EPA's view, there is no 'incremental cost' associated with CO2 emission reductions from completion of these multi

- billion dollar nuclear units. Commenters stated that the EPA provided no legal or technical analysis in the proposed rule to support this conclusion

. Commenters stated that without expressing an opinion on the legal merits of EPA's proposed r ule as a whole, Commenters agreed with EPA's determination that 'under construction' nuclear units should be "part of the inventory that the state can count towards compliance with its state goal." However Commenters stated they believe it is completely un reasonable and unlawful for the EPA to penalize states where nuclear units are under construction by imposing, at the front

- end of the process, a substantially more stringent CO2 emission target in these states, as the EPA has proposed. Commenters noted th at, by taking into account nuclear units under construction in this manner, EPA has set CO2 emission targets for Georgia, South Carolina and Tennessee that are approximately 14

- 22 percent more stringent than these targets would otherwise be if EPA did not include these units in the target

- setting calculation. Commenters concluded that this is a substantial and unjustified penalty levied on just three states for no legitimate or lawful purpose

. Commenters also stated that they had performed a close review o f the EPA's calculations and supporting documents that showed how the EPA's approach seriously penalizes these states, and provided the following details :392 • If Vogtle 3

- 4 were not factored into EPA's target

- setting calculation, Georgia's 2030 goal would be i n the range of 970 lbs/MWh, which would be significantly less burdensome than EPA's current proposal of 834 lbs/MWh. As it stands in the proposed rule, Georgia's target is 14 percent more stringent than it would be if EPA did not include these units in the calculation.

• Similarly, if Summer 2

- 3 were not factored into EPA's target

- setting calculation, South Carolina's 2030 goal would be in the range of 990 lbs/MWh, which would be less burdensome than EPA's current proposal of 772 lbs/MWh. That is 22 percent more stringent than South Carolina's target would otherwise be.

• Tennessee is similarly harmed by EPA's approach. If Watts Bar 2 was not factored into EPA's target

- setting calculation, Tennessee's 2030 goal would be in the range of 1,352 lbs/MWh, which wou ld be less burdensome than EPA's current proposal of 1,163 lbs/MWh. This is 14 percent more stringent than Tennessee's target would otherwise be

. Commenters stated that, because each unit at Watts Bar 2, Vogtle 3

- 4, and Summer 2

- 3 will, when operational, be capable of producing over 8,000,000 MWh per year, inclusion of these units in the EPA's target

- setting formula results in a tremendous change in the targets for these states. Commenters placed these figures in context :

• For Tennessee, the amount of MWh generation from Watts Bar 2 far exceeds the total historic generation from all of Tennessee's existing natural gas combined

- cycle units (NGCC), which EPA has identified as approximately 6,548,000 MWh. The generation from this single new unit at Watts Bar 2 is roughly on par with the total amount of redispatched NGCC generation that EPA has identified for Tennessee (9,846,000 MWh), and it far exceeds even the aggressive renewable energy (RE) generation levels that EPA has assigned Tennessee for 2030 (4,305,0 00 MWh).

• For Georgia, the amount of MWh generation from Vogtle 3

- 4 approaches one

- half of the total historic generation from all of Georgia's existing NGCC units, which the EPA has identified as approximately 37,591,000 MWh. The generation from these two new units at Vogtle is also about one

- third of the total amount of redispatched NGCC generation that the EPA has identified for Georgia (51,372,000 MWh), and it far exceeds the RE generation levels that the EPA has assigned Georgia for 2029 (12,230,000 MWh ).

• For South Carolina, the amount of MWh generation from Summer 2

- 3 is over 150 percent more than the total historic generation from all of South Carolina's existing NGCC units, which the EPA has identified as approximately 11,209,000 MWh. The generation from these two new units at Summer is also roughly equal to the total amount of redispatched NGCC generation that EPA has identified for South Carolina (17,457,000 MWh), and it is roughly double the RE generation levels that EPA has assigned South Carolina for 2029 (9,675,000 MWh)

. Commenters stated that, as a result, including over 8 million MWh generated at Watts Bar 2 and over 16 million MWh generated each at Vogtle 3

- 4 and Summer 2

- 3 in the denominator of the EPA's target

- setting calculation has a drama tic impact on the final emission target for each of393 these states. Commenters stated that it appears that no other single assumption in the EPA's target

- setting calculation has such a sizeable impact on state targets as the EPA's treatment of these nuclear units that are under construction. Commenters stated that this presents a large future compliance risk to these states' affected units and a challenge to meet future electricity demand cost

- effectively. Commenters also stated that this also presents a chal lenge for the region given that these units are all located in three contiguous states in the Southeast

. Commenters concluded that, as part of an EPA proposal aimed at reducing GHG emissions from the power sector, each of these states, and effectively the region, would be seriously penalized for taking proactive steps to expand the use of the nation's most significant source of zero

emission electricity. Commenters stated that this penalty is particularly perverse in light of the EPA's recognition 'that th e planning for those units likely included consideration of the possibility of future regulation of CO2 emissions from EGUs.' Commenters asserted that, because these units will produce millions of MWh of clean generation, a larger input based on individual units in the EPA's equation than any other single factor, the impact on these states is disproportionate and simply unfair. Commenters expressed concern that the EPA proposal may discourage other states from taking proactive steps to expand nuclear power

. Commenters stated that the EPA's approach to the five nuclear units under construction is inconsistent with national energy policy. Commenters stated, "Promoting the next generation of commercial nuclear reactors is a key element of our nation's energy p olicy. EPA's approach to nuclear units under construction is directly contrary to that policy. In both the Energy Policy Act of 2005 (EPAct) and the Energy Independence and Security Act of 2007 (EISA), the last major pieces of energy policy legislation to be enacted into law, Congress sought to promote the expansion of nuclear energy through, among other things, investments in modern nuclear reactors and reforms to streamline the nuclear licensing process for new nuclear units ."

Commenters quoted President Obama as stating that to "meet our growing energy needs and prevent the worst consequences of climate change, we need to increase our supply of nuclear power," and that we should be "building a new generation of safe, clean nuclear power plants in this cou ntry." Commenters also noted that when the President unveiled his Climate Action Plan, he stated: "[T]hanks to the ingenuity of our businesses, we're starting to produce much more of our own energy. We're building the first nuclear power plants in more tha n three decades, in Georgia and South Carolina."

Commenters then stated that there is a significant disconnect between these expressions of national energy policy and EPA's proposed rule, which Commenters said would penalize those states that are expandin g their nuclear energy infrastructure. Commenters stated that the EPA should not penalize states at the front end of the process by imposing a more stringent standard relative to other states.

Commenters stated that the EPA's assumption of a 2020 start dat e for the nuclear units under construction was inconsistent with the EPA's general approach to setting the state

- specific emission rate. Commenters stated that, for all other actions and measures, the EPA used 2012 as the base year. Commenters concluded t hat, "If the state goals are based on historic 2012 data, it is arbitrary to use projected 2020 data for the nuclear portion of the goals for Georgia, South Carolina and Tennessee."394 Commenters then stated that Vogtle units 3 and 4 will displace up to 2,250 MW of net electrical output from fossil fuel generation (either existing or future growth). Commenters also noted that Tennessee and South Carolina also have new nuclear generating capacity under construction. Commenters concluded, "EPA's proposed treatme nt of under

- construction nuclear places a disproportionate burden on Georgia for moving forward with two of the first nuclear plants constructed in three decades by 1) including under

- construction nuclear in Georgia's state goal, and by 2) requiring renewa ble energy and energy efficiency targets for Georgia equivalent to those in states that are not investing in nuclear generating capacity."

Commenters referred to the EPA's statement regarding renewable energy requirements and nuclear power on page 34858 of the Proposal, which said in part: "More than half the states already have established some form of state

- level renewable energy requirements, with targets calling on average for almost 20 percent of 2020 generation to be supplied from renewable sources. T he EPA is unaware of analogous state policies to support development of new nuclear units ..." Commenters provided excerpts from Georgia's State Energy Strategy that explicitly list advanced nuclear reactors as an energy need for the state, including that the Georgia House and the Georgia Senate passed single

- chamber resolutions in the 2006 legislative session supporting the development of new nuclear capacity (HR 1365 and SR 865), and that in 2009, the Georgia Public Service Commission approved the constru ction of two new nuclear generation units at Plant Vogtle in Waynesboro, Georgia. Commenters stated that the estimated cost of Vogtle units 3 and 4 is $14 billion, and the project would not be moving forward without state policies that support the developm ent of new nuclear units. Commenters also stated that the significant likelihood of future greenhouse gas regulations was also considered in the Georgia utilities' decision to add nuclear generation.

Commenters stated that Georgia made the choice to invest significant state resources in nuclear power (1) in reliance on state policies in favor of nuclear power as a clean, carbon

- free source of energy, and (2) in expectation of future federal regulations of carbon emissions. Commenters then stated that the EP A's proposed treatment of under

- construction nuclear places a disproportionate burden on Georgia, as well as South Carolina and Tennessee, for taking early action.

Commenters quoted from page 34870 of the proposal, "...The EPA believes that since the decisions to construct these units [Watts Bar 2 in Tennessee, Vogtle 3

- 4 in Georgia, and Summer 2

- 3 in South Carolina] were made prior to this proposal, it is reasonable to view the incremental cost associated with the CO2 emission reductions available fro m completion of these units as zero for purposes of setting states' CO2 reduction goals (although the EPA acknowledges that the planning for those units likely included consideration of the possibility of future regulation of CO2 emissions from EGUs)." Com menters strongly disagreed with EPA's assertion that the capital costs and incremental costs associated with CO2 emission reductions as a result of Vogtle units 3 and 4 are zero, and noted that Georgia Power's ratepayers began paying for this investment in nuclear energy in 2011 with an increase in their base bill to pay for the financing of this project. Commenters stated that Georgia Power's Nuclear Construction Cost Recovery Schedule (NCCR) recovers the cost of financing associated with the construction of Vogtle units 3 and 4, and the NCCR rider is currently 9.3141%. Commenters stated that, once these plants are operational, the rate impact is projected to be 6

- 8% of the base bill, and that the other utilities investing in Plant Vogtle are similarly pass ing on these costs to their ratepayers. Commenters395 then stated that these actual costs undermine the EPA's basic reason for including under

construction nuclear in the baseline calculations, because these new units are not an inexpensive opportunity to red uce carbon emissions from existing fossil fuel units but are in fact quite costly. Commenters stated, by including under

- construction nuclear in Georgia's goal, but treating the significant investment in under

- construction nuclear as "sunk costs," the EPA' s proposal forces Georgia to expend funds in addition to the billions invested in under

- construction nuclear to meet the proposed goal. Commenters concluded that, for this reason alone, under

- construction nuclear should not be included in the calculation o f the state goal.

Commenters stated that the proposed rule's treatment of under

- construction nuclear eliminates state flexibility in achieving the goal and is not compatible with the other building blocks. Commenters noted that current estimated commercial operation dates for Vogtle units 3 and 4 are the fourth quarters of 2017 and 2018, respectively, and stated that additional construction delays and cost overruns are possible. Commenters stated that while it is certainly likely that Vogtle units 3 and 4 w ill ultimately start

- up and generate power at or near their rated capacity, the units would not be operational for several more years even in a best

- case scenario. Commenters also stated that the Vogtle units represent advanced nuclear technology, which

cr eates a certain degree of uncertainty regarding the time to ramp up to expected performance as well as on

- going reliable operation. Commenters concluded that reflecting the completion of Vogtle units 3 and 4 in a proposed state goal is simply not appropria te.
Commenters stated that the way nuclear generation ultimately impacts the goal and achievement of the goal is fundamentally different than the other building blocks. Commenters stated that, if any of the renewable energy, energy efficiency, or heat rate improvements efforts fall short, it is possible to compensate by overachieving in one of the other areas. In contrast, commenters stated that the under

- construction nuclear generation has such a significant impact on the goal that any shortfall in ultimat e performance would be virtually impossible to overcome. Commenters stated that the way under

- construction nuclear is treated in the proposed rule essentially eliminates any "headroom" Georgia has in meeting either the interim or the 2030 goals.

Commenters included a chart breaking down Georgia's 2030 goal computation (as proposed by EPA) percentage rate change from each of EPA's building blocks.

Commenters stated that the building blocks for heat rate improvement, natural gas dispatch, renewable energy an d energy efficiency were all derived from practices or policies already in place in other sectors or states. Commenters then stated that under

- construction nuclear only exists in three states, so there is no benchmark to reference or use as a basis for how to treat under

- construction nuclear. Commenters also noted that other building blocks are expressed as a percentage along a continuum (e.g. 9.8 % of sales from energy efficiency), whereas nuclear plants are not designed to be ramped up and down; nuclear c apacity is either there and fully utilized or not there at all (i.e. not built or shut down due to planned maintenance outages or other unplanned outages). Commenters noted that shortfall in generation during periods of outages could severely impact Georgi a's ability to meet the emissions goal. Therefore, the commenters stated that under

- construction nuclear is a unique entity within the building blocks and fundamentally different than the other components used to calculate the goal. Commenters396 recommended that it does not logically fit into the methodology for calculating state goals and should be deleted from this calculation.

Commenters stated in 40 CFR 60.5820, EPA proposes a definition for affected entity as ' ... Affected Entity shall mean any of the f ollowing: An affected EGU, or another entity with obligations under this subpart for the purpose of meeting the emissions performance goal requirements in these emission guidelines ... ' Commenters said assuming but not conceding that this definition is co nsistent with the Clean Air Act and the regulations promulgated pursuant thereto, EPA should allow states to include under

- construction nuclear and new nuclear, along with solar, wind and other zero

- carbon or low

- carbon generation, in the definition of aff ected entity for the purposes of demonstrating compliance in a state plan.

Commenters stated that Georgia has an ambitious reduction goal even without under

construction nuclear complications. Commenters stated even with removal of the under

construction n uclear from Georgia's goal computation, the state will be making significantly more reduction in carbon emissions than the six states without under

- construction nuclear investment.

Commenters stated that including under

- construction nuclear units in the B SER determination places a disproportionate burden on the citizens of Georgia. Commenters also stated that the regulation as proposed could disproportionately raise Georgia's electricity costs versus neighboring states, could hurt Georgia's competitive pos ition for future economic development.

Commenters stated that four states are already exceeding their renewable energy goals, and EPA has chosen not to adjust their goals. The comment contrasted this to the three states (Georgia, South Carolina and Tenness ee) moving forward with under

- construction nuclear; their renewable energy goals were adjusted. Commenters also stated, regarding the state of Georgia, that forcing additional renewable energy generation into the state, in addition to the under constructio n nuclear with this proposed regulation, will likely result in stranded assets of coal units with significant remaining useful lives. Commenters noted that coal units has invested in air pollution controls to comply with Georgia's Multipollutant Rule (SSS) , MATs, and CAIR/CSAPR, and that the accompanying reductions in SO2, NOx, and mercury have resulted in significant improvements in air quality for ozone, PM2.5, and regional haze. Commenters stated that the utilities have also invested in heat rate efficie ncy projects at the remaining coal units to make them as efficient as possible for their remaining useful life. Commenters stated that if the utilities have to retire more of these coal units early to achieve carbon emission goals, electrical rates will be adversely impacted as the capital cost recovery for these pollution control projects is incorporated into the rate structure in Georgia.

Commenters stated that removing under

- construction nuclear from EPA's BSER determination is consistent with the EPA's exclusion of Partial Carbon Capture in BSER. Commenters recommended that the proposed 111(d) rule should be revised to exclude the CO2 emissions reduction associated with the five under

- construction nuclear units from the state goals for Georgia, South Ca rolina, and Tennessee as it has excluded under

- construction coal

- fired CCS units in setting the state goals for Mississippi, Texas, and California.397 Commenters continued that thirty

- one (31%) percent of the 2012

- 2030 emissions rate reduction in Georgia's goal is associated with implementation of BSER Building Block 3a, under

construction nuclear; achievement of Georgia's emissions goal therefore requires completion of construction, startup, and successful operation of Vogtle Units 3 and 4 at their forecas t generation rates.

Commenters concluded that the inclusion of under

- construction nuclear in the State of Georgia's emissions performance goal eliminates flexibility in achieving the goal by means of other BSER building blocks. Commenters recommended that the EPA should remove under

- construction nuclear generation from the computation of BSER and state emissions goals, and that the EPA should retain under

- construction nuclear in the definition of affected entity for the purposes of demonstrating compliance in a state plan.

Commenters 23715 stated that the utilities constructing the five nuclear facilities surely intend to operate these units, but various issues beyond their control could affect licensing, start

- up and operations. Commenters stated that the inclusion of under

- construction nuclear generation has such a large impact on a state goal that any shortfall in operations would be very difficult, if not impossible, to overcome. Commenters recommended that, consequently, the EPA should not include them in its goal setting methodology for Building Block 3.

Commenters stated the EPA's methodology penalizes Georgia, South Carolina, and Tennessee for investing heavily in new zero

- carbon generating capacity, and that under

- construction nuclear should not be i ncluded in the calculation of the state goal. Commenters stated that including Georgia's new nuclear generation in Building Block 3 lowers the state's 2030 Final Goal under Option 1 by 138 lbs/MWh, from 972 lbs/MWh to 834 lbs/MWh, with similar effects for South Carolina and Tennessee.

Commenters stated that there is a lack of precision with regard to the 2012 nuclear fleet capacity within some states. Specifically Commenters stated that, of the 30 states EPA lists in Table 4.10

- Nuclear At

- Risk Generation in its GHG Abatement Measures TSD

- the 2012 nuclear fleet capacity reported in 16 states differed from the summer net capacities reported in EIA's 2012 Form

- 860. Commenters noted that San Onofre (CA), Crystal River 3 (FL), and Kewaunee (WI) have already b een retired, and Oyster Creek (NJ) is scheduled to be retired in 2019.

Commenters 22786 stated that the proposed rule's treatment of under

- construction nuclear energy is arbitrarily different from its treatment of other sources of emission

- free generation. Commenters stated in addition to being internally inconsistent in terms of its treatment of other forms of nuclear energy, EPA's proposal to include generation from under

- construction reactors in calculating state goals is also inconsistent with the Propo sed Rule's approach to other sources of emission

- free electricity in several way; these inconsistencies further emphasize the arbitrariness of EPA's approach to under

- construction nuclear reactors.

Commenters stated that the first inconsistency relates to the EPA's unequal assumptions about the achievability of state commitments to emission

- free electricity. Commenters noted stated that although the Proposed Rule effectively assumes that every state and utility that has committed to constructing one of the five under

- construction nuclear facilities will do so, the proposal does not398 apply this assumption to state and utility commitments to building additional renewable energy facilities.

Commenters continued that in many ways, states' commitments to building additional RE

- particularly those that are codified in renewable portfolio standards (RPS) or binding targets for particular utilities

- are more certain to lead to the required level of deployment than are states' and utilities' commitments to completing t he construction of the five under

- construction nuclear facilities. Commenters stated that although Georgia has supported the construction of Plant Vogtle's under

- construction reactors through state incentives and other measures, none of these

measures come s close to imposing a binding legal requirement to complete construction of any of these facilities on a particular schedule, or, indeed, at all. Commenters contrasted this to most RPS programs, which Commenters stated impose binding schedules for implemen ting RE deployment that are typically enforceable through the possibility of injunctions, penalties, or other sanctions. Commenters noted that these state programs are specifically designed to ensure that electric utilities develop a specific amount of new RE capacity in order to meet the RPS mandate.

Commenters stated that, in spite of their binding nature, the EPA has not calculated state goals based on the assumption that the RPS or utility

- specific RE targets that states have established will be achieve d. Commenters stated for example, unlike the three states where new nuclear facilities are currently under construction, the emission goals for California, Colorado, and Minnesota

- three states with aggressive RPS standards

- are not based on the full level of RE to which these states have committed:

• Although California's RPS requires the state to meet 33% of its load from RE by 2020, while Colorado's RPS imposes a 30% requirement, EPA's goal

- setting methodology only expects California and Colorado to obtain 21% of each state's in

- state generation from renewable resources by 2030.

• Similarly, although Minnesota's RPS program requires its utilities to obtain 30% of their retail sales from RE by 2020, EPA's goal

- setting approach only assumes that Minnesota will reach 15% RE deployment by 2030

- a proportion of sales that is even lower than the state's actual level for 2012.

Commenters stated that the EPA has not explained why it assumes that states whose utilities have committed to building under

- construction nuc lear capacity will construct and operate that capacity at 100% of the expected level, but does not assume that states that have adopted binding RPS programs will construct and operate 100% of their RE commitments. Commenters stated that this inconsistency is especially puzzling in light of the fact that many RE commitments are legally enforceable obligations, whereas commitments to build new nuclear generation are neither required nor enforceable through any state or federal regulatory requirement.

Commente rs stated that the Proposed Rule's approach to under

- construction nuclear reactors is also inconsistent with its treatment of other under

- construction emission

- free sources of electricity. Commenters stated that although the EPA has identified and included all five of the nuclear reactors that are currently under construction in state goals, the EPA has ignored the thousands of MW of renewable generation that are currently under construction throughout the399 country. Commenters stated that the EPA has also no t included generation from the over 500 MW of new hydroelectric capacity that was under construction in 2013 and 2014. Further still, Commenters noted that the EPA's state goal calculation omits projected emission reductions from large carbon

- capture and s equestration (CCS) generating facilities such as Mississippi Power's Kemper facility, which is now under construction and slated to come on

- line in 2016.

Commenters stated that, even more inexplicably, the EPA does not even incorporate 100% of the generat ion from RE facilities that are already online and operating into some states' goals. Commenters stated that the EPA's projected RE performance levels for Iowa, Maine, Minnesota, and South Dakota are lower than the levels that these states actually obtaine d from RE in 201; the EPA's proposed approach does not take into to account the full amount of either under

construction or actually

- operating RE generation when calculating these states' goals. Commenters concluded that the EPA's proposal would arbitraril y penalize states that have chosen to reduce emissions by building one form of emission

- free energy (nuclear energy) while adopting a less stringent approach to states and utilities that are moving forward with (or have already built) other sources of emis sion

- free energy such as RE, hydroelectricity, or CCS.

Commenters stated that the proposed rule's assumptions in quantifying the emission reductions and costs associated with under

- construction nuclear generation are arbitrary and capricious. Commenters st ated that, in addition to being arbitrarily different from the treatment of other nuclear and emission

- free sources of energy, the EPA's approach to quantifying the level of emission reductions that may be achievable from deploying under

- construction nucle ar facilities is based on several erroneous assumptions. Commenters stated that the incorrect assumptions include the following:

• the five under

- construction facilities will be completed and operational by 2020;

• these facilities will operate at an average 9 0% capacity factor throughout their lives; and

• the costs of reducing emissions by completing construction of these facilities is effectively zero.

Commenters concluded that each of these erroneous assumptions further weighs in favor of excluding nuclear generation from the goal computation methodology.

Commenters stated that the EPA's assumption that each of the under

- construction reactors will be operating by 2020 is unreasonable and contradicted by the projects' own construction history.

Commenters stat ed that nuclear power is far and away the most complex, technical, and highly regulated generation source on the planet, and every step in the construction, installation, and operation of a nuclear reactor is overseen by regulators and inspectors at the NR C. Commenters stated that the technical and regulatory complexity involved in constructing a new nuclear reactor and the significant regulatory hurdles involved in adjusting design or fabrication assumptions can lead to long delays and unexpected increases in costs. Commenters also noted that unforeseen events such as Three

- Mile Island, Chernobyl, and the more recent tsunami

induced meltdown at the Fukushima Daiichi reactor in Japan, could trigger new safety regulations, regulatory reviews, and major design changes that could significantly delay400 completion of under

- construction reactors. Commenters concluded that, although utilities in Georgia and elsewhere may now be committed to building the five reactors identified in the Proposed Rule, it is possible tha t changes in NRC regulations, the cost of reactor components, or the availability of financing could result in major delays and possibly even the abandonment of one or more of these projects.

Commenters stated that the Tennessee Valley Authority's (TVA) Wa tts Bar Unit 2

- which is one of the five "under

- construction" facilities the Proposed Rule assumes will be completed by 2020

- is perhaps the best example of the uncertainty inherent in predicting when new nuclear facilities will be operational. Commenters observed that the NRC issued the TVA a construction permit for Watts Bar Unit 2 more than 40 years ago, in 1973. Commenters noted that TVA began construction on Unit 2 shortly thereafter, but had only completed approximately 80% of construction by 1985, wh en construction was halted, only to be resumed in 2007. Commenters stated that Watts Bar Unit 2 is an important and highly relevant cautionary tale: although the reactor was expected to enter commercial operation within three years of receiving its license , it was mothballed a decade later, then construction was restarted more than 20 years later. Commenters stated that Watts Bar Unit 2 is still under construction today, more than four decades after it began construction.

Commenters stated that, although Wa tts Bar Unit 2's lengthy construction schedule may not be typical of every nuclear reactor, the fact remains that large nuclear projects such as Plant Vogtle Units 3 and 4 face numerous risks, long construction timelines, and a greater potential for multi

year delays and potential risks of abandonment than almost any other type of energy project. Commenters further noted that both the Vogtle project in Georgia and the V.C. Summer project in South Carolina have already experienced lengthy construction delays . Commenters concluded that the EPA's assumption that these units will complete construction according to schedule is highly suspect, and is not supported by the actual construction history of these and other nuclear
reactors.

Commenters stated that even i f the under

- construction reactors in Georgia and elsewhere are able to complete construction by 2020

- as the EPA's Proposed Rule assumes

- there are a number of reasons why these units may not operate at a 90% capacity factor throughout their lifetimes. Com menters stated that new facilities typically require lengthy testing and fine

- tuning periods before they are able to run at their designed capacity factor. Commenters concluded that the new Vogtle units may well operate at low capacity factors during the f irst few years they come on

line, which could create a significant compliance deficit for Georgia that would have to be made up by higher

- than

- 90% capacity factors in the future, or by the addition of other emission

- free energy or EE.

Commenters also state d that, despite the fact that the national average capacity factor for nuclear reactors has been approximately 90% for the last several years, there is no guarantee that the five individual facilities will operate at that level for their entire lives. Comm enters noted that occasional outages for refueling, turbine replacement, or safety issues are all but inevitable. Commenters stated that a typical reactor must refuel at least once every 18 months

- an event that requires a shutdown lasting six weeks or mor e, and unexpected shutdowns for maintenance or safety issues, meanwhile, can last six months or more. Commenters stated that the Nuclear Energy Institute, which compiles reports of outages for the nation's existing nuclear fleet401 indicates that, between 200 0 and 2014, indicated reactors experienced at least six planned outages lasting more than 100 days. Commenters also noted that the average duration of all planned outages during the same period was almost three months. Commenters stated that, according to the Energy Information Administration (EIA), the average lifetime capacity factor of the U.S. nuclear fleet is only 80.3%

- ten percent lower than EPA's proposed capacity factor assumption for nuclear generation. Finally, the commenters noted that in the la st three years, the lowest quartile of U.S. nuclear facilities operated at an average capacity factor of only 70.8%.

Commenters also noted that Southern California Edison's San Onofre Nuclear Generating Station (SONGS) Units 2 and 3 (2,150 MW total) near San Diego, California, have both been offline since January 2012 as a precaution after a steam generator tube leak led to the discovery of excessive wear in the plant's new steam generators. Commenters noted that the problems ultimately proved to be so sig nificant that both units were prematurely retired from service. Commenters further referred to extended outages at the Fort Calhoun reactor, Crystal River Unit 3, and other reactors. Commenters stated that, in light of these statistics, it would be arbitra ry and unreasonable for EPA to assume that each of the under

- construction reactors will run at an average capacity of 90% for their entire lives, or even for the entire span of a single compliance period.

Commenters stated that the EPA's assumptions about the cost of completing the five under

construction reactors are incorrect. Commenters continued that the Proposed Rule asserts that completing construction of the five under

- construction reactors would be associated with zero 'incremental' cost because 'th e decisions to construct these units were made prior to this proposal.' Commenters stated that this simplistic conclusion overlooks numerous incremental costs that are associated with constructing and operating these units. Commenters stated that completio n of the two Vogtle units is expected to cost approximately $14 billion, and that these construction costs are being paid for through a 9.3141% "Nuclear Construction Cost Recovery Schedule" rider on Georgia Power's customers' electric bills and similar rat e increases for the other utilities involved in the development of the new Vogtle units. Commenters also stated that once construction is complete, the operation of these units is expected to add 6

- 8% to ratepayers' bills for many years into the future. Fu rther, Commenters noted that other construction delays may occur, and that according to press reports, each day that construction is delayed at Vogtle could add $2 million to the costs of this complex project.

Commenters stated that the construction costs are incremental to the Proposed Rule because they would not necessarily continue to be incurred in the absence of the Proposed Rule. Commenters stated that in the Proposed Rule, EPA recognizes that "a host of factors

- increasing fixed operation and mainten ance costs, relatively low wholesale electricity prices, and additional capital investment associated with ensuring plant security and emergency preparedness

- have altered the outlook for the U.S. nuclear fleet in recent years." Commenters noted that the i mportance of these factors varies dramatically from reactor to reactor, but the same cost pressures that apply to some existing facilities apply to these under

- construction nuclear facilities. Commenters stated that, without the Proposed Rule, stakeholders in these projects would have the option of delaying or modifying the projects if costs reach unacceptable levels

- just as TVA decided to do in 1985 with Watts Bar Unit 2.402 Commenters concluded that the inclusion of under

- construction generation in state go als is not
cost

- less; rather, the additional policy constraint created by the Proposed Rule will cause the developers and operators of these units to incur additional costs above those that they would have incurred in the absence of the Proposed Rule. Comm enters stated that the EPA should reflect these real, incremental costs in its evaluation of this aspect of BSER, and the agency's failure to do so violates the requirements of EPA's own regulations as well as the plain language of section 111.

Commenters stated that the proposed rule's approach to under

- construction nuclear facilities is arbitrarily inconsistent with its approach to other sources of nuclear energy. Commenters also stated that, in addition to being illegal and unprecedented in EPA's over 40

- year history of implementing section 111, the Proposed Rule's approach to under

- construction nuclear facilities is arbitrarily inconsistent with the proposal's treatment of existing and planned nuclear reactors, as well as nuclear uprates. Commenters stat ed that, under the Proposed Rule, all future nuclear facilities other than the five deemed under

- construction

- including the 12 new nuclear reactors that are currently under Nuclear Regulatory Commission (NRC) review

- would be completely excluded from the state goal calculation, even though most of these facilities are currently projected to come on line during the Proposed Rule's interim compliance period. Commenters concluded that the EPA has not explained why it has chosen to include nearly all of the ex pected generation from the five reactors that began construction before the Proposed Rule, while completely excluding the projected generation from the 12 facilities whose applications are currently under review, and which could also begin generating elect ricity during the first compliance period.

Commenters stated that increased generation from uprates at existing nuclear facilities

- including uprates that were planned, approved, or under construction before the issuance of the Proposed Rule

- also would no t be included in the goal calculation. Commenters stated that a review of the NRC's licensing database reveals that the NRC approved 16 separate uprate projects between May 2012 and August 2014. Of these, eight were "extended" uprates, meaning that substan tial construction and equipment upgrades would be involved. Commenters noted that, like the five "under

- construction" reactors identified by EPA, each of these uprates either came online or will complete construction after the proposed 2012 baseline year ( meaning that generation from these uprates represents additional generation above the baseline). Commenters stated that some of these uprates were likely still under construction or about to commence construction when EPA issued the Proposed Rule. Commente rs stated that the expected MWh from these under

construction nuclear uprates

- some of which will add substantial capacity to existing facilities

also were not included in state goals, despite EPA's proposal that the MWh from these uprates would be eligib le for use as a compliance option. Commenters concluded that the EPA's proposal that all of the expected generation from the under

- construction nuclear reactors would be included in state goals, while generation from planned reactors and under

- construction nuclear uprates would be entirely excluded, defies explanation, and is clearly both arbitrary and capricious.

Commenters also stated that, in contrast to its treatment of all other sources of nuclear energy, the Proposed Rule would include 5.8% of a state 's existing nuclear capacity in the state goal calculation. Commenters stated that inclusion of this existing nuclear generation is both illegal and unreasonable, and is also arbitrarily different from EPA's approach to under

- construction403 facilities. Comme nters noted that the EPA states that the five under

- construction reactors have "long been known to grid operators for planning purposes." Similarly, Commenters stated that the EPA asserts that inclusion of these facilities as elements of BSER is effectivel y cost

- less, which means, effectively, that the EPA considers these under

- construction facilities to be functionally equivalent to existing facilities (incremental costs for which would also be zero). Commenters concluded that logically, the agency should apply the same assumptions to the five under

- construction facilities that it applies to other already

- built facilities. Commenters stated that assuming, for the sake of argument, that the EPA's stated rationale for including a share of existing nuclear ge neration in state goals (i.e., that this percentage of the nation's nuclear generation is "at risk" of retirement is reasonable, the logical extension of this argument would require inclusion of only 5.8% of the expected generation from under

- construction facilities as well. Commenters stated that presumably, if a generic 5.8% of the nation's nuclear capacity will be at risk of retirement during the Proposed Rule's compliance periods, the market forces that the EPA asserts may lead to retirement would also affect the under

- construction facilities that the EPA assumes will be operational during the same period. Commenters concluded that for reasons the EPA has not (and likely cannot) explain, the EPA has opted to include all of the expected generation from th e five under

- construction facilities while including only 5.8% of existing reactors' generation.

Commenters recommended that, rather than treating under

- construction nuclear facilities as if they are already built

- an approach that ignores the very real ri sk that one or more of these facilities will not be built or will cost significantly more than is projected

- the Proposed Rule should treat these un

- built facilities as new facilities, applying the same approach the proposal uses for under

- construction nuc lear uprates and new nuclear facilities that are currently in the planning and permitting stage. In other words, the commenters recommended that the EPA should calculate state goals without including a projection of future generation from under

constructio n reactors, while allowing generation from these emission

- free sources to be used for compliance if and when they are actually built. Commenters stated that any other treatment would be arbitrary and capricious.

Commenters recommended that output from unde r

- construction nuclear units should not be used to calculate state emissions rate goals. Commenters stated that the EPA's decision to include these units in setting the state

- specific goal rates unreasonably increases the stringency of the goals for the st ates and electric utilities that have made substantial investments in new zero

emitting generation resources.

Commenters recommended that units that are not complete and not operating should not be considered when setting state emission rate goals. Commen ters noted that the proposed guidelines state that "Building Block 3 is based on shifting generation from affected fossil units to new renewable energy generating capacity, which is added over time, and new or preserved nuclear capacity, all of which is ex pected to be in place by 2020." Commenters stated that development of a new nuclear plant is a long and complicated process that takes a minimum of nine years to complete, even if everything goes according to schedule, but new units are often subject to co nstruction and permitting delays.

Commenters further stated that assuming a 2020 start date for these units is inconsistent with EPA's general approach to setting the state

- specific emission rate goals for the states.404 Commenters noted that, for all other a ctions and measures, the EPA used 2012 as the base year. Commenters noted that the EPA "chose the historic data approach as it represented the most recent year for which complete data were available at the time of the analysis." Commenters stated that if t he state goals are based on historic 2012 data, it is arbitrary to use projected 2020 data for the nuclear portion of the goals for Georgia, South Carolina and Tennessee.

Commenters stated the EPA should remove nuclear generating capacity under constructio n from the rate

- setting formula, and allow states to include 100 percent of "new" nuclear generating capacity, when it is operating, in their compliance calculations, thereby providing an incentive to expand carbon

- free nuclear generating capacity.

Comment ers stated that the EPA repeatedly recites that the proposed rule with its four Building Blocks provides states flexibility to tailor their responses to the rule to their own specific energy profiles, needs, and policies, but this is largely a fiction. Bas ed on the commenter's understanding of the understanding of the states in which it has generation resources, the amount of emission reductions supposedly achievable in each state from each block provides little leeway to adjust the actions the EPA used to create the blocks or to rely on measures that differ from those in the blocks. Commenters stated that a good example of false flexibility is the proposed treatment of nuclear units under construction. Commenters stated than an important clean energy activi ty in which it is engaged is the addition of 1150 MWs of zero

- emitting baseload nuclear capacity at Watts Bar Nuclear Plant (WBN2), which will be on

- line in late 2015. Commenters noted that, rather than structuring Block 3 to allow Tennessee and TVA to

use this clean energy for compliance flexibility, the EPA embeds energy from WBN2 in the Block 3 denominator making Tennessee's emission guideline much more stringent and hamstringing whatever flexibility Tennessee may otherwise have.

Commenters stated that t hey and their customers have invested over $4 billion and continue to invest in Watts Bar Nuclear Unit 2, which accounts for nearly one

- third of Tennessee's emission rate reduction required by 2030. Commenters stated that they and other owners of nuclear u nder construction are leading the expansion of new nuclear energy in the 21st century, but are being penalized by EPA and given a lower emission guideline compared to other states.

Commenters stated that, in the proposed rule, the EPA solicited comments on 'whether it is appropriate to reflect [the five nuclear units under construction] in the state goals and on alternative ways of considering these units when setting state goals.' Commenters strongly opposed incorporating nuclear units under construction i n the section 111(d) calculation of state goals. Commenters stated that the EPA's proposal (1) unfairly and severely penalizes states that are in the vanguard of the effort to expand generation of nuclear energy in the United States; and (2) is inconsisten t with the U.S. energy policy and the commenter's Integrated Resources Plan. Commenters recommended that the output from these units under construction should count toward compliance in the same manner as any other new nuclear capacity whether achieved thr ough additional nuclear plant construction or power up

- rates. Commenters also recommended that plants that extend their licenses should receive credit in compliance calculations.

Commenters stated that no other single assumption in EPA's rate

- setting calc ulation has such a sizable impact on the state emission goals as EPA's treatment of nuclear units under construction. Commenters stated that this creates a huge compliance risk for Tennessee, Georgia, and South405 Carolina and will discourage other states fro m joining with these states in multi

- state plans; should a nuclear unit not start up and perform as planned, the compliance risk for all states in a multi

- state agreement would greatly increase.

Commenters stated that, contrary expressions of national ener gy policy by the President and Secretary of Energy, EPA's treatment of nuclear units under construction would penalize the very states that have been proactive in developing and investing in nuclear power. Commenters recommended that, rather than penalize these states, EPA should recognize their contributions by allowing the states the benefit of using the generation from these units to meet the state CO2 emission reduction targets. Commenters stated that, paradoxically, EPA's approach would extend this ben efit to states that propose development of nuclear power in future, but not to states that have been in the vanguard of promoting the national policy of developing nuclear power to provide carbon

- free electricity.

Commenters stated that the EPA's approach to nuclear units under construction does not constitute BSER and violates CAA section 111(d). Commenters first disagreed with the EPA's assertion that under construction nuclear units constitute the "application of the best system of emission reduction." C ommenters stated that the EPA has never before based emission guidelines on application of beyond

- the

- unit technologies, or asserted that reduced utilization at a regulated source qualifies as a legitimate "system of emission reduction." Second, Commenters asserted the EPA failed to properly "take into account the cost" when it proposed to treat nuclear under construction as BSER. Commenters stated that assuming "zero" cost for under construction "controls" is unprecedented in the section 111(d) context, an d by ignoring the total value of the commenter's investment merely because Commenters acted early in advancing the first new nuclear power plants in nearly 30 years, the EPA's determination is fundamentally flawed. Commenters stated that the EPA has never mandated such a large capital investment as BSER for affected units. Third, the commenters stated that section 111 requires the degree of emission limitation to be 'achievable,' and the EPA's approach to under construction nuclear units eliminates any mean ingful margin for compliance purposes, substantially hindering the opportunity for these states to achieve compliance. Commenters stated that the EPA's claim that the rule provides 'flexibility' is incorrect; in reality, Georgia, South Carolina, and Tennes see will face substantial Clean Air Act compliance risk, with no real flexibility, as a result of their more stringent state goals. Fourth, the commenters stated that the proposal violates section 111(d) by defining BSER differently for each state. Comment ers stated that EPA has effectively proposed BSER differently for Georgia, South Carolina, and Tennessee as compared to the other states, and EPA has determined that completion of 'under construction' nuclear units constitutes BSER for these few states whe re those projects happen to be under construction. Commenters stated that EPA lacks the authority to establish BSER on a state

- by

- state basis in the manner EPA has done with under construction nuclear. Fifth, the commenters stated that while nuclear power has been demonstrated to be a proven source of safe, affordable, reliable, and clean energy, the EPA has provided no support in the record for its conclusion that these under construction nuclear units are already 'adequately demonstrated' as that statutor y term is intended in the special context of section 111(d).

Commenters stated that the EPA's treatment of nuclear units under construction is different from its treatment of other zero

- carbon generation sources. Commenters stated that the EPA's calculati on for setting state emission goals does not account for solar or wind projects that are406 also currently under construction despite the fact that solar, wind and nuclear are all grouped in Building Block 3. In the same vein, Commenters stated that EPA's sta ndard

- setting does not incorporate the avoided generation from individual energy efficiency projects or energy efficiency programs that are already planned. Commenters stated that the EPA provides no explanation in the rulemaking record for this disparate treatment, nor does the EPA explain why it is treating nuclear under construction differently from hydropower. Commenters noted that the EPA excludes all hydropower generation from the rate

- setting formula, while recognizing that states can consider "incre mental hydropower generation from existing facilities (or later built facilities) as an option for compliance with state goals." Commenters recommended, similar to its treatment of hydropower capacity, the EPA should exclude generation from nuclear units

u nder construction from the rate

- setting calculation, but allow such generation to be used for compliance purposes.

Commenters recommended that the EPA should provide an off

- ramp in the event a nuclear unit retires or is offline for an extended period. Comm enters recommended that, should EPA choose to include nuclear units under construction in the goal setting calculation, States should be allowed to retain the right to adjust reduction goals in the event of the unexpected retirement or a lengthy outage for one of these units. Commenters stated that otherwise, compliance for these states would be impossible due to the large amount of zero

- emitting generation that would be lost.

Commenters stated that preserving 'at

- risk' nuclear and under

- construction nuclear and increasing renewables cannot be considered a part of BSER for existing power plants, because favoring a certain type(s) of generation is not an emission control. Comment ers stated that the EPA incorrectly assumes some portion of all existing nuclear units is at risk of retirement and unfairly penalizes three states, including Georgia, where utilities have taken steps to build new nuclear generation in preparation for a ca rbon

- constrained future. Commenters stated that the EPA's inclusion of under construction nuclear in its state goal calculations results in much more stringent targets for these states.

Commenters stated that the proposed rule evaluates the cost and impac t of Vogtle Units 3 and 4 as having no additional cost to Georgia's ratepayers. Commenters stated that the EPA fails to understand that construction is on

- going, continuation of the project is evaluated semi

- annually, and ratepayers have been paying for th is resource since 2011. Commenters stated that this evaluation, as with the original certification, incorporates carbon price scenarios and recognizes the new units as being carbon

- free. Commenters stated the EPA incorrectly assumes the Georgia PSC did not consider the cost of carbon when certifying the new nuclear units as a carbon

- free resource. However, the commenters stated that from the initial financial analysis for the Plant Vogtle project, cost scenarios include the possibility of a price for carbon at multiple levels. Commenters recommended that the potential to save ratepayers from the costs of CO2 emissions increases the value of Vogtle Units 3 and 4.26 Georgia's investment in carbon

- free energy should be given full credit toward compliance with t he proposed rules.

Commenters stated that, because the Agency has failed sufficiently to account for the costs associated with constructing, operating, and maintaining nuclear units, the EPA has failed to follow its statutory mandate under 111(d) to take into consideration costs in setting BSER.407 Commenters stated as part of Building Block 3, EPA also assumes that the five nuclear units under construction in Georgia, South Carolina, and Tennessee will come online as scheduled and immediately and continuousl y operate at a 90 percent capacity factor. Commenters said in Georgia, EPA focuses on the construction of Units 3 and 4 at Plant Vogtle; incorporation of Plant Vogtle Units 3 and 4 into Georgia's goals makes them significantly more stringent, taking the fi nal goal from 970 lb/MWh to 834 lb/MWh, an additional 14 percent reduction. Commenters said EPA's reliance on under construction nuclear contravenes the statutorily mandated factors under 111(d), fails to account for operating characteristics of nuclear un its, and is inconsistent with Congress' intent as evidenced in the Energy Policy Act of 2005.

Commenterss stated that in the proposal, EPA treats Plant Vogtle Units 3 and 4 as part of BSER because, in EPA's view, there is no "incremental cost" associated w ith CO2 emission reductions from completion of these multi

- billion dollar nuclear units. Commenters stated that the EPA must take into account costs when setting BSER under Section 111. Commenters concluded that the EPA's failure to consider the costs to c onstruct Plant Vogtle Units 3 and 4 in its determination as to whether these and other under construction nuclear units are BSER for fossil fuel

- fired EGUs is a clear error.

Commenters stated that neither EPA's proposal nor the multitude of TSDs include an y legal or technical analysis, beyond mere assertions, that supports or justifies EPA's decision to ignore the costs that have been incurred to construct these nuclear units and instead focus solely on "incremental costs," which EPA deems to be zero. Comme nters stated that the EPA has not explained how it defines "incremental cost" in this context or how incremental costs would be calculated and provides no precedent for this approach. Commenters stated that the Regulatory Impact Analysis ('RIA') makes a pa ssing reference to EPA's treatment of under construction nuclear units. Additionally, Commenters noted that GHG Abatement Measures TSD contains a lone paragraph that recites EPA's assertion about the 'incremental cost' of completing these projects, but doe s not otherwise explain the legal or technical basis for that assertion. Furthermore, the commenters stated that the EPA's legal memorandum accompanying the proposed rule merely asserts that these five units have "long been known to grid operators for plan ning purposes," but the legal memo does not otherwise explain or justify EPA's approach. Commenters observed that the EPA itself acknowledges that 'nuclear generating capacity is relatively expensive to build compared to other types of generating capacity. ' Commenters concluded that when OMB raised concerns about EPA's treatment of under construction nuclear units, EPA did not explain its rationale, choosing instead to simply tell OMB that "EPA is taking comment on whether we should include the new on the w ay nuclear in the state targets as BSER . . . ."

Commenters stated EPA has completely ignored the significant capital investment necessary to support under construction nuclear; as further support for its treatment of under construction nuclear, EPA sugges ts that because these units were not constructed to comply with future carbon regulation, the costs should not be included in this analysis. Commenters said specifically, EPA says that it is 'unaware of analogous state policies to support development of

ne w nuclear units . . . .' Commenters said EPA, however, completely ignores laws and policies in Georgia that, consistent with the national goals and priorities described above, have sought to support the development of new nuclear units in part because of t he likelihood of future carbon regulation. Commenters said as explained in comments submitted to EPA by the GEPD, the408 State of Georgia has a State Energy Strategy, first developed in 2006, that specifically supports 'advanced nuclear reactors.' Commenters said in addition, in 2009, Georgia enacted the 'Georgia Nuclear Energy Financing Act' to facilitate advanced cost recovery associated with new nuclear power projects; these policies confirm that Georgia planned ahead to ensure a diverse energy mix for its customers in anticipation of CO2 regulation. GEPD put it best:

• Georgia made the choice to invest significant state resources in nuclear power (1) in reliance on state policies in favor of nuclear power as a clean, carbon

- free source of energy, and (2) in e xpectation of future federal regulations of carbon emissions.

• As a result, there is no basis for EPA's conclusion that these units would have been built anyway absent carbon regulation. As such, EPA's approach to under construction nuclear units has not be en adequately justified and lacks support in the record. EPA should remove under construction nuclear from Georgia's state goals.

Commenters stated the EPAct05 and the Energy Independence and Security Act of 2007 ('EISA') sought to expand the commercial ut ilization of nuclear energy in the United States, while also reducing CO2 emissions and ensuring affordable, reliable, and clean domestic energy for Americans. Commenters stated that the EPA should align the mechanics of its regulations with our nation's e nergy and environmental policies by removing under construction nuclear from Georgia, Tennessee, and South Carolina's state goals and then allowing future generation from those units to be available for compliance.

Commenters recommended that the EPA shoul d adopt final GHG guidelines that:

• Will encourage States to preserve, life

- extend, and expand existing nuclear generation;

• [Allows States to] include in compliance plans and thus receive emissions credit related to all output of new nuclear capacity (incl uding uprates of existing plants) that begins operating after the issuance date of the proposed rule.

Commenters stated the proposed treatment of under

- construction nuclear power generation is arbitrary and capricious; unlike other generation sources in Bu ilding Block 3, the proposal treats even under

- construction nuclear generation as existing generation for the purpose of goal rate

setting. Commenters said the result of this treatment is to effectively penalize those electric utilities that have invested in under

- construction nuclear units (and their consumers), who will incur very significant costs to bring online this CO2

- free generation but will get no credit for that generation as a compliance option. Commenters said other under

- construction zero

- emiss ion generation sources in Building Block 3 are not treated in this manner; these other generation sources are excluded from the goal rate

- setting; thus, they receive credit for zero

- emission generation when they come online and ultimately contribute power to the grid. Commenters said this discriminatory treatment of under

- construction nuclear, when there is no identifiable difference between it and Building Block 3 renewables, is irrational; as a consequence, EPA's proposed Building Block 3 is arbitrary and capricious. EPA can remedy this by treating under

-409 construction nuclear units like it treats all others: as irrelevant for goal rate

- setting, but available for goal compliance once constructed."

Commenters stated that including under

- construction plants in the rate

- setting algorithm drives Georgia's 2030 intensity target for existing sources down to 834 lbs./ MWH, and South Carolina's to 772 lbs./ MWH. Commenters stated that this is well below the 1,100

- lb/ MWH New Source Performance Standard established in EPA's 111(b) rulemaking governing new fossil

- fired power plants. Commenters concluded that it is irrational and arbitrary to have an emission rate standard for existing power plants that is below the emission rate specified for new power plants. Commenter s recommended that the five reactors under construction

- Vogtle 3 and 4, Summer 2 and 3, and Watts Bar 2

- should be excluded from the rate

- setting formula. Commenters further recommended that their outputs should count toward compliance, as should any ot her new nuclear capacity once it is online. Commenters also recommended that plants that extend their licenses beyond 40 years or beyond 60 years should continue to receive credit in compliance calculations.

Commenters stated that the output from under

- con struction nuclear units should not be used to calculate state emissions rate goals. Inclusion of nuclear units under construction in the rate setting penalizes states that support new nuclear plant construction. Commenters also stated that the EPA proposes to include the "projected amounts of generation available by completing all nuclear units currently under construction..." (Watts Bar 2 in Tennessee, Vogtle 3

- 4 in Georgia, Summer 2

- 3 in South Carolina) by 2020 in the rate setting for three states, even t hough those units are still under construction and not yet operating. Commenters stated that the EPA has chosen an arbitrary projected start date of 2020, and an unrealistic capacity factor of 90 percent. Commenters stated that by taking this approach, the Agency has created unreasonable compliance risks, and significantly increased the stringency of the emission rate goals for Georgia, South Carolina and Tennessee by creating "phantom" zero

- emissions generation used to determine the state goals. Commenters continued that, as EPA itself notes, "reflecting completion of these units in the goals has a significant impact on the calculated goals for the states in which these units are located. If one or more of the units were not completed as projected, that cou ld have a significant impact on the state's ability to meet the goal." As a result, Commenters stated that the EPA's approach penalizes states that are building new nuclear capacity, and potentially consigns three states to a deficit in zero

- emissions gene ration needed to demonstrate compliance before the interim compliance period even begins.

Commenters stated that, as EPA notes, including these under construction units in the rate setting for Georgia, South Carolina and Tennessee could have a significant impact on the ability of those states to meet their goals, since they would have to replace any lost zero

- emissions MWh with other zero

- emissions MWh (by increasing reductions from both BSER and approvable non

BSER measures). Given the magnitude of the gen eration expected from these units, the commenters stated that it will be impossible to make up deficits in zero

- emissions MWh with other BSER or non

- BSER reductions. Therefore, Commenters stated that the output from under

construction nuclear units should not be used to calculate a state's emission rate goal.

Commenters recommended that the EPA should revise its assumptions regarding the incremental cost of the under construction units. Commenters stated that the EPA includes the five units under constructi on as part of BSER because it contends that there is no "incremental cost"410 associated with CO2 emission reductions from completion of these multibillion dollar nuclear units based on the belief that "since the decisions to construct these units were made p rior to this proposal, it is reasonable to view the incremental cost associated with the CO2 emissions reductions available from completion of these units as zero for purposes of setting states' CO2 reduction goals." Commenters stated that, in reality, app roximately $10 billion remains to be spent on these five reactors; therefore, the EPA's assertion that there is "no incremental cost" associated with completing these plants is incorrect. Commenters stated that these are real costs that are being incurred, and the EPA needs to revise this assumption regarding the incremental cost of the under construction units.

Commenters stated while under construction units should not be used in the rate

- setting process, states should be able to include these units in t heir compliance plans once they are operational, as they would be the functional equivalent of any other new nuclear capacity achieved (e.g., new plants or power uprates). Commenters said these units should be classified as new nuclear units, the generatio n from which could be used by a state to help meet its goal; allowing these and other as yet unplanned units to be utilized for compliance will not only aid states in meeting their goals, but also serve as an incentive for states to build new nuclear units

. Commenters stated EPA's treatment of Georgia's 'under construction' nuclear, Plant Vogtle Units 3&4, is inequitable and misguided and would almost certainly result in higher electricity rates for their members. Commenters also stated under

- construction nuclear generation should not be included in calculating state goals.

Commenters stated with regard to Vogtle Units 3&4, Georgia ratepayers who are paving the way in reducing carbon emissions should be allowed to take full credit for zero

- emitting carbon

e missions from nuclear generation in complying with any state or utility

- specific performance standards promulgated pursuant to this rule.

Commenters stated in calculating the state goals, EPA also included generation from new nuclear units that were under construction in 2012; as with the under construction NGCC units identified above, the decision to include under construction nuclear units in setting state goals unreasonably increases the stringency of the reduction targets for states that have made subst antial investments in non

- emitting nuclear generation. Commenters said the states within which these units are being constructed (Georgia, South Carolina and Tennessee) will need all of the generation from these new units in order to meet the calculated em ission rate targets. Commenters said if these units are not available for any reason in the future, these states would face significant compliance challenges. Commenters requested EPA remove under construction nuclear units from the calculation of the stat e goals.

Commenters stated that the EPA should not include under

- construction nuclear units in the state goal computations.

Commenters stated the EPA has proposed that the projected generation provided by five nuclear units currently under construction be factored into the state goals for the respective states where the under construction units are located. Commenters said the EPA is making this proposal because of its belief "that since the decisions to construct these units were made prior to this
propos al, it is reasonable to view the incremental cost associated with the CO2 emission411 reductions available from completion of these units as zero for purposes of setting states' CO2 reduction goals." Commenters opposed the EPA's proposal to incorporate the pr ojected generation from under construction nuclear units in state goal computations; in addition to exceeding the EPA's authority under section 111(d) of the CAA to include under construction nuclear in its BSER determination for fossil fuel

- fired EGUs, th e only thing the proposal achieves is to make the goals for South Carolina, Georgia, and Tennessee significantly more stringent. Commenters said penalizing these states for supporting the continued development and deployment of nuclear power, the single la rgest CO2 reduction option available within the power sector, in a rule intended to reduce CO2 emissions within the power sector, is misguided from a policy perspective. Commenters said including generation from the under construction nuclear units in the state goal computations also introduces a significant risk of noncompliance if the units are either not completed, or are completed but do not perform as the 90 percent capacity factor the EPA has assumed. Commenters said if the EPA proceeds with finaliz ing its Proposed Guidelines, it should do so without including in the goal computations for South Carolina, Georgia, and Tennessee any contribution from the under construction nuclear units. Commenters said the EPA should also make it clear that if the un its are completed, their output should be available to the states for compliance.

Commenters stated under

- construction nuclear should not be included in the calculation of state goals; EPA's inclusion of Vogtle 3 and 4 in setting Georgia's performance stan dard is inequitable and misguided. Commenters said rather than rewarding states and utilities that are the early movers in permitting and constructing this important type of non

- emitting generation, EPA's inclusion of under

- construction nuclear in calcu lating state goals serves instead as a penalty. Commenters said specifically, the electricity consumers of Georgia should not be penalized for stepping up and spending over $14 billion on Vogtle 3 and 4, which will provide the state with 2,200 megawatts o f power, with zero CO2 emissions. Commenters said it is blatantly unfair and sends precisely the wrong message to the business community.

Commenters stated EPA has offered no alternatives to this expensive climate change agenda action; it would require Geo rgia utilities to cut emissions by an additional 44 percent by 2030 at existing plants, and it expects this to be done by converting to alternative sources of energy and by energy conservation and efficiency. Commenters said the EPA won't credit Georgia's utilities for their work done in embracing carbon

- free energy by building the first nuclear unit since Three Mile Island.

Commenters stated in Georgia, the two new state

- of

- the

- art reactors will produce approximately 2,200 megawatts of reliable emissions

- f ree electricity around the clock, EPA's approach to new nuclear units like these in Georgia is unacceptable. Commenters said if EPA's objective is to reduce CO2 emissions, then EPA should not penalize the citizens of Georgia for investing billions in more nuclear power by not giving us full credit for this carbon

- free energy source.

Commenters stated initially, Georgia Power and others committed to be the first in the nation to construct new nuclear in almost 30 years. Commenters said while other utilities will benefit from the path paved by Vogtle's units 3 and 4, GA took this step with hopes of enhancing fuel diversity and addressing future CO2 requirements.412 Commenters said yet, rather than reward the expansion of zero

- carbon generation, EPA guid elines penalize Georgia for its early action; because of Vogtle's units 3 and 4, EPA requires more aggressive reductions from Georgia than any other similarly situated state.

Commenters said in fact, EPA admits that it ignores the investment they are makin g in Vogtle 3 and 4, yet it relies on the CO2 reduction in setting Georgia's limits. Commenters said as a result, EPA's proposal forces Georgians to take on a significant additional cost of further reduced CO2.

Commenters stated EPA has proposed building blocks to help states achieve lower emissions; however, many of these assumptions for these building blocks are not a good fit for South Carolina. Commenters said the most critical in terms of cost is the way the proposal treats new nuclear already under construction.

Commenters said the new nuclear project with South Carolina Electric and Gas will cost about $10 billion, and South Carolina electric consumers are already paying into the project. Commenters said by considering these under

- construction unit s as if they are already built, and in doing so setting the goal more restrictively, EPA is punishing South Carolina for being proactive in its CO2 reductions and investing early in this project. Commenters said EPA should not count under

- construction nucl ear as a part of the state target, but should allow it to be used for compliance with the revised target. Commenters said this approach would give South Carolina full credit for its efforts, and the customers would not bear the burden of paying for additi onal reductions.

Commenters stated two specific concerns: first, under construction, nuclear should not be included in the calculation of state goals. Commenters said EPA's inclusion of Vogtle 3 and 4, in setting Georgia's performance standard, is unfair and misguided; rather than rewarding states and utilities, like Georgia, that are the early movers in permitting and construction for this important type of zero

- carbon emission generation, EPA's inclusion of under

- construction nuclear in calculating state goals serves, instead, as a penalty. Commenters said Georgia utilities and the consumers should not be penalized for stepping up and spending over $14 billion on Vogtle 3 and 4, which will provide the state 2,200 megawatts of power with zero CO2 emissions ; this is blatantly unfair.

Commenters stated the current proposal does not allow us to consider the new V.C. Summer nuclear units coming online in 2018 and 2019 as part of the efforts to reduce the carbon emissions, and that plan is being built by South C arolina Electric and Gas

-- SCANA is the parent company

-- and by Santee Cooper, who is the power supplier.

Commenters stated the early action to build the V.C. Summer nuclear plants, and actually displace or eliminate some of the capacity with the nuclear stations, is not being included in these numbers at all, and it places a big burden on South Carolina, as far as money and reaching the target reductions is concerned.

Commenters stated another factor in the unfairness of Georgia is how the rule ignores the efforts in building two new emission

- free nuclear plants.

Commenters stated Plant Vogtle is undergoing the construction of two new nuclear reactors, units 3 and 4. Commenters said Georgia rate

- payers, including manufacturers, have been paying413 the fin ancing costs already for this construction, which is due now to come online in 2017 and 2018; and they will be responsible for the substantial end

- service cost once those units become operational.

Commenters said Vogtle 3 and 4 is a major investment in Ge orgia's future; and it will contribute to lower CO2 emissions; however, the rule penalizes Georgia for that decision by using the fact that Vogtle 3 and 4 will lower CO2 emissions to justify a higher emissions reduction target. Commenters said this essent ially gives Georgia no credit for the construction of Vogtle 3 and 4 when it comes to CO2 emissions.

Commenters also supported the preservation and upgrade of the existing nuclear fleet; this could offer significant zero carbon power if the investments ca n be justified. Commenters said EPA notes the potential of new nuclear but also notes the impact of schedule on state plans. Commenters noted that SCANA and Southern Company have announced multi

- year delays since the draft rule was published which will cle arly change the South Carolina and Georgia proposal by EPA and further shows the risks inherent in such planning.

Commenters stated also in Building Block 3 (Using an Expanded Amount of Less Carbon

Intensive Generating Capacity) the EPA has proposed that N uclear Under Construction is assumed to be already built and operating and is included in the state goals. Commenters said there are five nuclear units under construction in the country; two of these units (V.C. Summer 2 and 3) are located in South Carolin a and are 40 percent owned by Santee Cooper, the primary power supplier. Commenters said the proposed rule gives absolutely no credit for Santee Cooper's investment in the two 1100 MW Westinghouse nuclear units, with a combined expected price tag of over $ 10 Billion; instead of being credited for being at the vanguard of clean emissions investment, the State of South Carolina receives a penalty. Commenters said this single provision of the EPA rules results in South Carolina's target CO2 level decreasing fr om 990 lbs/MWh to 772 lbs/MWh, and will cost an estimated $8.7 Billion to the membership. Commenters said this cost is in addition to the billions of dollars which the membership will pay for the new non

- emitting nuclear units. Commenters said they are pay ing twice for the same carbon reduction. Commenters said the EPA made the decision to include these units within the BSER based on its unsubstantiated and undocumented conclusion that there is "no incremental cost" associated with CO2 emissions reductions available from the completion of units under construction. Commenters said the conclusion seems to rest solely upon the observation that the "decisions to construct these units were made prior to this proposal." Commenters said the true "incremental cost" to the customers paying for these Nuclear Under Construction investments is the additional cost of carbon reduction over and above the costs that will be incurred due to those commitments.

Commenters stated as a practical matter for those states which have nuclear under construction, the EPA assumption that the plants will be completed places an additional burden on those states over and above the huge price tag that must be paid for paying twice for carbon reduction. Commenters said the new nuclear units a t V.C. Summer when fully operational will produce approximately 16 million MWh of power annually; this amount is more than all of the proposed redispatched NGCC in 2029 and far greater than the amount of renewable generation that the EPA has targeted for S outh Carolina in 2029 (9,675,000 MWh). Commenters said this is a massive amount of clean, carbon free capacity and energy which the state is assumed to have414 available; any inability to build the units or keep them on line represents a huge, and almost insu rmountable, regulatory compliance risk to their members.

Commenters stated EPA's treatment of Nuclear Under Construction as completed is especially arbitrary when the treatment of other non

- hydro renewables is examined; all non

- hydro renewable MWhs generat ed during the plan period are allowed as compliance resources, regardless of in

- service dates. Commenters said the EPA offers no explanation for the disparate treatment of non

- carbon emitting resources. Commenters asserted the failure to treat Nuclear Unde r Construction in a similar manner to non

- hydro renewables is arbitrary and capricious and is beyond statutory authorization, and strongly encourages the EPA to alter its proposed rule to allow credit for Nuclear Under Construction.

Commenters stated EPA's treatment of Nuclear Under Construction is also arbitrarily inconsistent with U.S. energy policy. Commenters said expansion of nuclear energy was part of both of the last two major pieces of energy legislation (the Energy Policy Act of 2005 (EPAct) and th e Energy Independence and Security Act of 2007 (EISA)). Commenters said President Obama has repeatedly and very publicly expressed his support for new nuclear energy. Commenters said despite this clear expression by both Congress and the President, the pro posed rule punishes South Carolina for its actual expansion of nuclear capacity.

Commenters stated the proposed rule includes the output from yet

- to

- be

- completed nuclear units in the calculation of the state goal for "existing units, even though the units will not produce any power until years after the final rule is released. Commenters said this treatment of nuclear

under

- construction is particularly troublesome because of the extreme lead

- time needed to permit and construct these units; if the process of building these units had begun after the release of the proposed rule (when they would be treated totally differently), the very earliest to expect to receive power from those plants would be around 2025 ... 5 years after the beginning of the intermediate goal required by the proposed rule. Commenters said this inconsistent treatment has disproportionately increased the amount of CO2 emission reductions that South Carolina must achieve.

Commenters stated in contrast, states that have utilities which have begun but not finished wind and solar projects are rewarded by EPA because those sources and the future carbon emissions reductions they are expected to achieve are not "assumed" and therefore can be used to effectively meet a state's goal. Commenters said if investment in nuclear is not afforded the same net benefit as all other zero emitting generation towards meeting the State goal, then utilities in South Carolina will be forced to build additional alternative carbon

- free generation to offset carbon emi ssions from fossil fuel generation and consumers will be forced to pay twice for carbon reductions just because they invested early in one carbon

- free technology instead of another.

Commenters stated that the EPA Should Not Include Under Construction Nucle ar Units in State Goal Computations.

Commenters continued the EPA has proposed that the projected generation provided by five nuclear units currently under construction be factored into the state goals for the respective states where the under construction units are located. Commenters said the EPA is making this415 proposal because of its belief "that since the decisions to construct these units were made prior to this proposal, it is reasonable to view the incremental cost associated with the CO2 emission

re ductions available from completion of these units as zero for purposes of setting states' CO2 reduction goals." Commenters opposed the EPA's proposal to incorporate the projected generation from under construction nuclear units in state goal computations. Commenters said in addition to exceeding the EPA's authority under section 111(d) of the CAA to include under construction nuclear in its BSER determination for fossil fuel

- fired EGUs, the only thing the proposal achieves is to make the goals for South Ca rolina, Georgia, and Tennessee significantly more stringent. Commenters said penalizing these states for supporting the continued development and deployment of nuclear power, the single largest CO2 reduction option available within the power sector, in a r ule intended to reduce CO2 emissions within the power sector, is misguided from a policy perspective. Commenters said including generation from the under construction nuclear units in the state goal computations also introduces a significant risk of

nonco mpliance if the units are either not completed, or are completed but do not perform as the 90 percent capacity factor the EPA has assumed. Commenters said if the EPA proceeds with finalizing its Proposed Guidelines, it should do so without including in th e goal computations for South Carolina, Georgia, and Tennessee any contribution from the under construction nuclear units. Commenters said the EPA should also make it clear that if the units are completed, their output should be available to the states fo r compliance.

Commenters stated nuclear generation is undervalued in the marketplace; states need to join Georgia and South Carolina and recognize the importance of the nuclear fleet and adopt policies that will allow us to develop reactors like we're doi ng. Commenters said unfortunately, the rule doesn't go far enough; in fact, the new rule, most likely, will make us even more dependent on natural gas.

Commenters stated a simple calculation illustrated recently by FERC Commissioner Norris demonstrates th at the country's gas fired fleet already emits more CO2 than our 2050 national target. Commenters said it seems paramount that any rule must substantially incent new and existing nuclear power far more than this rule does. Commenters said the rule's evalua tion of the cost and impact of new requirements assume that Plant Vogtle's Units 3 and 4 add zero dollars to Georgia's CO2 reduction efforts. Commenters said this rule assumes that the Georgia PSC and Vogtle owners did not consider the cost of carbon at al l when they certified Plant Vogtle as a carbon free emitting resource; nothing could be further from the truth.

Commenters stated in fact, their ongoing monitoring of this plant continues to consider the cost of carbon every 6 months, but you can bet the cost is not zero dollars, as this rule assumes.

Commenters stated the Southeast is uniquely impacted by building block 3 in the treatment of nuclear units under construction. Commenters said generation fleets across the Southeast have been transitioning to supply electricity with lower carbon emissions. Commenters said for TVA, this has meant relying more on renewable energy resources, natural gas

- fired generation, and, importantly, nuclear energy.

Commenters said TVA is completing construction of a second unit at its Watts Bar Nuclear Plant in Tennessee; billions of dollars have been invested in this carbon

- free resource and when Watts416 Bar unit 2 comes online in late 2015, it will be the first new nuclear unit in the twenty

- first century and provide nearly 10,000 gigawatt hours of emission

- free generation per year.

Commenters said Watts Bar 2 is an integral component of TVA's goal to achieve a more balanced, cleaner portfolio of energy resources.

Commenters expected this investment to give TVA a good star t toward complying with the carbon emission regulations. Commenters said under EPA's rule, as proposed, that does not happen; rather, TVA and the utilities with nuclear units under construction are handicapped because the generation for these units is used to set more stringent limits on the affected fossil fleets in our states. Commenters said rather than gaining compliance margin under the proposed rule, Tennessee, TVA, and Tennessee's compliance risks are increased; that's not right, and that's poor envi ronmental policy.

Commenters stated EPA asserts that there's flexibilities for states to use some, none, or all of the building blocks in crafting the state plans; but in states where nuclear is under construction, they have no valid options to assuage the impact of this block due to its size. Commenters said any single source making this much contribution to a state's reduction provides a compliance risk to the region. Commenters said t he proposed rule effectively punishes this early action in investments by ratepayers by creating a big compliance risk.

Commenters stated utilities should not be penalized for investment already made in zero carbon emissions sources, such as nuclear. Commenters said PowerSouth has committed to participating in the expansion of the Southern Nuclear Vogtle Nuclear Plant near Augusta, Georgia through a Purchase Power Agreement with Municipal Electric Authority of Georgia and PowerSouth will receive approximately 125 MW of energy from the units for 20 years. Commenters said the C PP includes under construction nuclear units when calculating state's goals; rather than penalizing these voluntary investments in nuclear generation, EPA should reward these efforts and treat under construction nuclear like future nuclear units.

Commenters stated the draft rule cancels out the benefits of nuclear development. Commenters said the draft rule penalizes for advancements and ignores the significant investment by making Georgia's goal more stringent than otherwise comparable states to account for operation of these new units. Commenters said penalizing states for being proactive sends the wrong message to future commissions. Commenters said instead, Georgia should be credited for its foresight by treating Vogtle Units 3 and 4 the same a s other future nuclear units that are not yet under construction

- available for compliance with, but not incorporated into, the state goal.
Commenters stated EPA's approach to 'under

- construction' nuclear generation is flawed and should be revised.

Commen ters said EPA has proposed to include the expected zero

- carbon generation from five new nuclear reactors in the state goals for Georgia, South Carolina, and Tennessee. Commenters said EPA assumes that each of these reactors will be built before 2020, and w ill operate at an average 90 percent capacity factor during both the interim and final compliance periods; this approach is problematic for several reasons.417 Commenters said first, the sheer size of these units means that their contribution to the emission targets of their host states is extremely significant; the inclusion of the full expected megawatt

hours (MWh) of generation from these facilities in state goals thus creates a large compliance risk for these states. Commenters said construction delays, te mporary shutdowns, unexpected maintenance outages

- all of which are typical for nuclear reactors

- could mean that generation from these units could fall short of EPA's assumptions by many millions of MWh during some compliance periods (particularly the short three

- year compliance period EPA proposes for final state targets).

Commenters added due to the complexity of the technology and the potentially significant consequences of making an error, operators of nuclear reactors typically require months or years
t o bring a new facility fully online; therefore, it is far from certain that these facilities, if built, will operate at an average capacity factor of 90 percent during the interim compliance period. Commenters said although EPA is correct that the industry

- wide average capacity factor across the entire nation was approximately 90 percent in 2013, this snapshot hides significant differences in average capacity factors among reactors and over an individual reactor's lifetime. Commenters said for example, the average capacity factor of existing nuclear reactors over the last 30 years in the United States is only 78 percent; similarly, one quarter of U.S. nuclear facilities operated at an average capacity factor of only 70.8 percent over the last three years.

Co mmenters said because of the large size of the five under

- construction reactors, overly ambitious or mistaken assumptions about their future capacity factors could substantially and unreasonably increase the stringency of state goals. Commenters said EPA s hould reduce the assumed capacity factor for under

- construction facilities to account for the distinct possibility that they will operate at capacity factors of 70 percent or lower during some compliance periods. Commenters said in addition, EPA should all ow states with under

- construction nuclear facilities to recalculate their targets after promulgation of the final rule if these large projects are significantly delayed or shut down due to unforeseen circumstances that are beyond the state's control. Comme nters said such a "safety valve" would ensure that these states' proactive efforts
to construct zero

- carbon generators do not unintentionally become significant liabilities as a result of the Proposed Rule

.
Commenters said finally, regardless of what appro ach EPA takes, it should recalibrate the interim targets for states hosting under

- construction nuclear facilities to account for the possibility that these units may not be operating at full capacity in the early years of the interim compliance period. Com menters said by gradually phasing in expected generation from these units (as it proposes to do for RE and EE), EPA can help mitigate the risk that these massive clean energy projects will be delayed or unable to reach full capacity by the start of the fir st compliance period."

Commenters disagreed with EPA's proposal to include under

- construction nuclear units in the calculation of a state's goal. Commenters said EPA states that "since the decisions to construct these units were made prior to this proposa l, it is reasonable to view the incremental cost associated with the CO2 emissions reductions available from completion of these units as zero for the purposes of setting states' CO2 reduction goals." Commenters said while the decisions to initiate constru ction of these units did precede the Proposed Rule, the units are not anywhere418 near completion and their ultimate commercial operation dates are unknown. Commenters said furthermore, federal actions to limit the emissions of CO2 from the power sector were already under consideration when the decisions to initiate construction were made. Commenters said the owners and their regulators undertook the additional costs of nuclear generation in large part to be better positioned to comply with those anticipated f ederal actions; customers of the owners of the five under

- construction nuclear units are already paying, and will be paying for the life of the units, for the CO2 reductions due to their operation.

Commenters said the inclusion of the under

- construction nu clear units in the emission rate goal calculation for the affected states results in substantially more stringent goals; Georgia's target is 14% more stringent, South Carolina's is 22% more stringent, and Tennessee's is 14% more stringent than would otherw ise be the case, absent their under

- construction nuclear units. Commenters said furthermore, it is certain that at least some of the new nuclear units that EPA proposes to include in state CO2 goal computations will face additional hurdles during operation that will reduce their ability to generate MWh on the schedule and at the level that EPA assumes in setting state targets; for example, new facilities typically require lengthy testing and fine

tuning periods before they are able to run at their designed capacity factor. Commenters said in addition, individual facilities may not operate at the 90% capacity factor EPA uses in the calculation during extended periods because of the need to refuel or due to other planned and unplanned outages. Commenters said a typical reactor must refuel at least every 18 months: a shutdown usually lasting six weeks or more. Commenters said shutdowns for maintenance, uprates, or safety issues can last much longer: on the order of six months or more. Commenters said as construc tion continues, the risk remains that additional challenges in fabrication, assembly, delivery, and installation of structural modules, delays in the receipt of the remaining permits necessary for the operation of these units, or other issues could arise a nd might further impact project schedules and costs. Commenters said finally, events occurring far from the under

- construction units that affect nuclear generation (e.g., the tsunami

- induced meltdown at the Fukushima Daiichi reactor in Japan) could lead to mandatory design changes, additional regulations, and shutdowns that could significantly impact the timing and quantity of electricity produced by the under

- construction nuclear units.

Commenters said EPA's proposal to include generation from under

- constr uction nuclear units in the calculation of state goals is also unfair and arbitrary because it is markedly different from EPA's treatment of renewable energy, even though both generation technologies' ability to reduce emissions from the power sector is th e same.
Commenters said while EPA's proposed calculations for building block 3 assume that every state that has committed to constructing new nuclear capacity will do so, EPA does not similarly assume that states with commitments to ambitious renewable ene rgy policies (e.g., through a state Renewable Portfolio Standard (RPS)) will follow through with their own RPS policies. Commenters said unlike Georgia, South Carolina, and Tennessee (the states with under

construction nuclear units), EPA's building block 3 goals for states with RPSs are not based on the level of renewable energy to which these states have committed (in their own RPS schedules); for example, Minnesota's goal is 30% by 2020, yet EPA's goal

- setting methodology requires Minnesota to only reach 15% of its in

- state generation from renewable resources by 2030.419 Commenters said EPA has not explained why it has arbitrarily increased the stringency of the emission goals for states with under

- construction nuclear units by assuming they will fully compl ete the construction and have the units at full operation by 2020, while not also building into state goals states' commitments to build significant amounts of new renewable energy. Commenters said this inconsistency is further underscored by the fact that renewable energy commitments are enforceable through regulations associated with the RPS, while the commitments to build new nuclear is not mandated through any state regulatory requirement.

Commenters believed all under

- construction, non

- CO2

- emitting gen eration sources be excluded from a state's goal calculation in building block 3, while their output should be allowed to receive credit in compliance calculations, again in accordance with NARUC's resolution on this topic.

Commenters quoted the EPA: "We re quest comment on whether it is appropriate to reflect completion of the five identified nuclear EGUs currently under construction in the state goals and on alternative ways of considering these units when setting state goals."

Commenters responded:

• No, thi s is not appropriate.

• If EPA considers development of nuclear energy part of a BSER, you should simply calculate an expected growth rate in nuclear generation between now and 2030.

• That growth rate would likely be quite small, but it would be a much more f air method than a plant

- by

- plant approach.

• EPA should note that there are many ways to increase nuclear generation beyond construction of new plants. Many projects to increase the generation of existing plants ("uprates") have been pursued over the last 4 decades, and these uprates have resulted in increased nuclear generation equivalent to many new plants. Increases in capacity factor since 1980 have also caused increased yearly nuclear generation equivalent to many new plants.

• The current approach, identi fying particular plants, perpetuates the incorrect sentiment that the costs of nuclear power are uniquely high and problematic.

• The current approach also unfairly modifies the State Goals of 3 particular states."

Commenters quoted the EPA: "We invite comme nt on all aspects of the approach discussed for treatment of nuclear generation. In addition, we specifically request comment on whether we should include in the state goals an estimated amount of additional nuclear capacity whose construction is sufficien tly likely to merit evaluation for potential inclusion in the goal

- setting computation.

Commenters responded that:420 • No, this is not appropriate.

• Judgments of the likelihood of construction of particular plants cannot be fairly quantified.

• This approach, inv olving the identification and assessment of particular construction projects, would again represent the use of an unfair plant

- by

- plant approach that is not consistent with other building blocks of the BSER.

• This approach would again result in unfair modif ications to the State Goals of particular states. This approach would be even more unfair than the approach reflecting completion of the five nuclear EGUs above, since it would be inherently speculative.

• The intent of this approach could be satisfied by calculating an expected growth rate in nuclear generation between now and 2030, as suggested above.

Commenters stated three states have new nuclear plants under construction; these plants will not begin operation until after EPA is scheduled to issue the f inal rule; however, EPA has prematurely included this carbon

- free generation in establishing these state goals. Commenters said EPA's treatment of these new nuclear units has lowered the emission rate goals for each of these states, ignoring the practical difficulties associated with such projects; also, developing a new nuclear power plant could take about 15 years from inception to operation; hence, the 2030 deadline for compliance with the CO2 goal will not likely incentivize any additional nuclear units

. Commenters provided the following recommendations:

a. New nuclear generation should be excluded from building block 3 when determining state emission rate goals and instead should only be considered as an eligible action for compliance purposes.

b. New nuclear generation should remain an eligible action.

c. Given the long lead time for development and construction of a nuclear generation unit, EPA should consider new nuclear generation as an eligible action if construction has commenced prior to the end of the com pliance period. If a nuclear unit or uprate is under construction prior to 2030, the predicted CO 2 reduction or MWh benefits should be credited in 2030, as a way to further promote new nuclear generation.

Commenters stated in addition to the expanded use of renewables, EPA recognizes that increasing the amount of nuclear capacity that is available to operate is a technically viable approach to reducing CO2 emissions from affected fossil fuel

- fitted units; thus, new nuclear and nuclear up rates performed in the future will be creditable towards compliance. Commenters supported this approach to addressing new nuclear and nuclear unit up rates; however, EPA is proposing to include new nuclear generation under construction (assuming a 90% capacity factor) in th e denominator of a state goal, including Watts Bar in TN, Vogtle in GA, and Summer421 in SC. Commenters agreed with stakeholders who believe that owners of first

- mover new nuclear units currently under construction should not be effectively penalized by havin g the projected generation from these units included in the determination of the state emission goals.

Commenters cited the following from the preamble to the proposed rule:

"One way to increase the amount of available nuclear capacity is to build new

nuc lear EGUs. However, in addition to having low variable operating costs, nuclear generating capacity is also relatively expensive to build compared to other types of generating capacity, and little new nuclear capacity has been constructed in the U.S. in re cent years."

Commenters stated however, the EPA does not appear to have performed a meaningful analysis of the costs of new nuclear; instead, the Agency accepted the premise that new nuclear is too expensive to be competitive and focused on the five new re actors already in construction, but nevertheless determined the incremental cost of their inclusion in the rule to be zero because the states/utilities involved have already decided to build them, regardless of the rule. Commenters said the draft rule incl udes those five reactors in the calculation of the goals for the affected states (Georgia, South Carolina, and Tennessee).

Commenters said the EPA used the same methodology with NGCC units currently in construction, but its application to nuclear warrants a more substantive economic analysis because of its much greater costs; the Agency implicitly understood this, based on its assessment that the low levels of capacity additions are due to the excessive cost of new reactors. Commenters said what is more, al though the EPA did not conduct the requisite economic analysis to reach a properly informed conclusion as to the appropriateness of its approach, it does recognize that uncertainties remain regarding the ultimate completion of the reactors:

"[W]e are propo sing that the emission reductions achievable at affected sources based on the generation provided at the identified nuclear units currently under construction should be factored into the state goals for the respective states where these new units are locat ed. However, the EPA also realizes that reflecting completion of these units in the goals has a significant impact on the calculated goals for the states in which these units are located. If one or more of the units were not completed as projected, that co uld have a significant impact on the state's ability to meet the goal."

Commenters said without having calculated the incremental cost of bringing the reactors online, and by assuming it to be zero, the EPA lacks a credible rationale for this aspect of th e rule; the significance of this defect is considerable. Commenters said the draft rule would incentivize the states to ensure these reactors are completed by requiring them to achieve the same emissions rate reductions, regardless of the projects' total c osts nor those of the alternatives; the states would be under pressure to count the cost of including the reactors in their 111(d) compliance plans as $0. Commenters said if the costs of alternative to nuclear were greater than $0, they would appear to be less cost

- effective compliance options even if, in reality, they were less expensive than completing the reactors.422 Commenters said furthermore, because construction on most of the reactors is still at less than 50% complete, it would be possible to avoid a significant amount of the total cost should the states or utilities decide to cancel them. Commenters said it is essential that the EPA calculate the cost of completing the reactors so the states may accurately compare it to other available alternatives; such an analysis would be complicated due to its dependency on a number of variables, from the timing of the decision, the stage of completion of the reactor at that time, the escalation of costs that might influence such a decision, the "exit costs" of ca nceling contracts with vendors and contractors, stranded costs, etc. Commenters said EPA's failure to recognize the need for such rigor makes it appear that the decision to incorporate the five new reactors into Building Block 3 was arbitrary and capriciou s, and conclusion

- driven rather than a sound policy decision.

Commenters said based on the history of cancelled nuclear reactor projects, it is quite possible that one or more of the five reactors in construction could be cancelled; of fifty

- one reactors t hat were cancelled after commencing construction, nine were at an advanced stage of completion (50% or greater), including four which were more than 80% complete and one which was completed but never began commercial power operations. Commenters said utili ties had spent a total of over $25 billion on the projects, amounting to an inflation

- adjusted (2014) $58 billion.

Commenters said the owners of both the Vogtle and Summer projects have announced construction delays and cost overruns, and analysts predict that more can be expected; while the utilities and regulators have exhibited willingness to continue with the projects, it is quite possible they will reevaluate the projects before the reactors begin commercial operation, even if they have reached an adva nce stage of completion. Commenters said the Tennessee Valley Authority (TVA) all but cancelled the Watts Bar Unit 2 project, suspending construction for nearly 20 years after having reached an advanced stage of construction (~80%); in addition, TVA
must s till receive an operating license from the Nuclear Regulatory Commission, since the reactor is being licensed under the regulations that were in place when TVA commenced the project in 1973. Commenters said the exceptional level of uncertainty that plagues nuclear reactor construction warrants a thorough evaluation of these projects.

Commenters stated based on their exceptional cost and the possibility that they may never be completed, the EPA should remove reactors in construction from the BSER; doing so would result in higher goals for the three affected states (and therefore lower levels of emissions reductions), but the EPA has no rational basis for its decision to include them in the BSER. Commenters said however, using more realistic estimates of rene wable energy and efficiency additions, as recommended by IEER, would establish goals for these three states that are more economically and technically sound, and which would be comparable to or superior to those in the draft rule.

Commenters stated five nu clear EGUs at three plants are currently under construction. U.S.; EPA believes that since the decisions to construct these units were made prior to this proposal, it is reasonable to view the incremental cost associated with the CO2 emission reductions av ailable from completion of these units as zero for purposes of setting states' CO2 reduction goals (although they acknowledges that nuclear is very expensive and the planning for those units likely included consideration of the possibility of future regula tion of CO2 emissions from EGUs). Commenters said because U.S. EPA considers completion of these units at zero cost,423 they have determined addition of these units into the state goals can be done at a very reasonable cost; obviously a new nuclear plant woul d be quite expensive and it surely benefits U.S. EPA in the cost analysis of this rule to consider these units at zero cost. Commenters believed, at a minimum, U.S. EPA should consider the real costs of these units because absent this rule, these units wou ld not be required to be preserved and operate at U.S. EPA specified levels indefinitely.

Commenters stated U.S. EPA also realizes that reflecting completion of these units in the goals has a significant impact on the calculated goals for the affected stat es and if one or more of the units were not completed as projected, the affected state could struggle to meet the goal. Commenters said therefore, U.S. EPA is requesting comment on whether it is appropriate to reflect completion of these units in the state goals. Commenters asserted this is another example as to why there MUST be flexibility to adjust goals in the future when there are legitimate circumstances that warrant an adjustment.

Commenters stated under construction nuclear capacity should be treate d like "new" units for all purposes under the final rule. Commenters said the proposed rule includes under construction units in the state goal

- setting calculation. Commenters stated it is inappropriate to include nuclear generation in determining a state' s carbon emission target level; rather than count under construction units in the state goal

- setting calculation, EPA should permit states to use the entirety of the generation from such units in state compliance plans.

Commenters stated EPA's approach to setting state goals is arbitrary and capricious; EPA should adjust South Carolina's goal to reward rather than punish the state for making significant investments in zero

- carbon generation.

Block Three: EPA's Assumptions About Nuclear Generation Unfairly P enalize South Carolina for Taking the Lead on New Zero

- Carbon Generation.

Commenters stated EPA's inclusion of under

- construction and "at risk" nuclear generation in calculating state emission goals is both arbitrary and unnecessary for achieving EPA's des ired reduction in EGU emissions. Commenters said it is also opposed by the National Association of Regulatory Utility Commissioners (NARUC), which passed a resolution urging EPA not to base state goals on emission reductions from "at risk" or under

- constru ction nuclear generation. Commenters agreed with NARUC that EPA should not calculate state goals based on assumed emission reductions from "underconstruction" and "at risk" nuclear generation. Commenters said as with other forms of zero

- carbon compliance o ptions, new under

- construction nuclear generation, as well as uprated and relicensed nuclear generation should, however, be an eligible compliance pathway for state plans.

Commenters stated EPA's proposal to include expected generation from "under

- construc tion" nuclear facilities in calculating state goals has generated tremendous concerns among customers. Commenters said as of November 25, 2014, Santee Cooper has received for submission into the record over 36,000 comments from individual customers opposin g EPA's proposed treatment of under

- construction nuclear and urging EPA to provide South Carolina full credit for building new clean nuclear power. Commenters said this high (24%) response rate is just one measure of the importance that customers place on this issue. Commenters added numerous local424 governments have passed resolutions expressing concern about the inconsistent treatment of under

- construction nuclear.

Commenters stated EPA's approach to setting state goals is arbitrary and capricious; EPA sho uld adjust South Carolina's goal to reward rather than punish the state for making significant investments in zero

- carbon generation; EPA's assumptions about nuclear generation unfairly penalize South Carolina for taking the lead on new zero

- carbon generat ion.

Commenters continued stating Santee Cooper, along with eight other utilities in three states, submitted joint comments regarding EPA's treatment of under

- construction nuclear generation. Commenters said these comments provide information about the fi ve units under construction in South Carolina, Georgia and Tennessee, discuss EPA's proposed methodology for incorporating electric generation from these units in the rate

- setting calculation and how that approach severely penalizes South Carolina, Georgia and Tennessee, show how EPA's approach is inconsistent with key aspects of our nation's energy and environmental policies, and explain why EPA's approach is unsupported in the record, arbitrary, and unauthorized by section 111(d). Commenters said the join t comments request that EPA remove the under

- construction nuclear units from the rate

- setting calculation, and allow South Carolina, Georgia and Tennessee to receive compliance credit for emissions reductions enabled by these units when they become operati onal.

Commenters stated EPA's approach to setting state goals is arbitrary and capricious; EPA should adjust South Carolina's goal to reward rather than punish the state for making significant investments in zero

- carbon generation. Commenters said EPA's a ssumptions about nuclear generation unfairly penalize South Carolina for taking the lead on new zero

- carbon generation; inclusion of 'under

- construction' nuclear generation in states' emission goals is arbitrary and
unnecessary.

Commenters stated t he current proposal is both arbitrary and unnecessary; it is arbitrary because EPA is effectively penalizing states and utilities that have made substantial investments in nuclear power

- which is one form of zero

- carbon electricity

- while rewarding states th at have invested in other forms of zero

- carbon electricity (such as renewable energy). Commenters said it is unnecessary because states and utilities will already have strong incentives under the Proposed Rule to complete under

- construction nuclear facilit ies and preserve existing nuclear capacity. Commenters said in South Carolina's case, EPA's inclusion of under

- construction nuclear energy is responsible for a third of the state's ambitious emission reduction goal.

Commenters stated Santee Cooper's decisi on to invest in zero

- carbon nuclear generation rather than traditional, fossil

- fueled forms of power was motivated in large part by the recognition of the need to reduce the greenhouse gas intensity of Santee Cooper's generation fleet in light of expectati ons that EPA or Congress would soon impose limits on the amount of greenhouse gases that could be emitted by the power sector. Commenters said for example, Santee Cooper's resource planning decisions have for years been based on assessments that a federal carbon tax or similar policy could be implemented as early as 2010. Commenters said in addition, Santee Cooper's Board of Directors adopted a policy of 40% of electricity to be sourced from non

greenhouse gas emitting generation in 2007. Commenters said al though Santee Cooper also invests in other forms of low

- carbon energy and energy efficiency, the decision was made to425 invest in nuclear energy because this investment meets customers' needs for reliable, affordable energy while significantly reducing the g enerating fleet's GHG emissions.

Commenters stated EPA's proposal to include expected generation from these under

- construction nuclear reactors is arbitrary and unfair for several reasons. Commenters said first, EPA arbitrarily assumes that the cost of CO2 reductions from these units is zero and that they will run at a 90% average capacity factor during each compliance period; second, EPA's treatment of states' commitments to and investments in nuclear energy is arbitrarily different from (and more punitive than) its treatment of states' commitments and investments in renewable energy (RE).

Commenters stated EPA's approach to setting state goals is arbitrary and capricious; EPA should adjust South Carolina's goal to reward rather than punish the state for ma king significant investments in zero

- carbon generation. Commenters said EPA's assumptions about nuclear generation unfairly penalize South Carolina for taking the lead on new zero

- carbon generation. Commenters said EPA incorrectly assumes that under

- constr uction nuclear facilities will be constructed on time, provide CO2 reductions at zero cost, and that they will operate at a minimum 90% capacity factor.

Commenters continued EPA's unsupported assumption that each of the under

- construction nuclear facilitie s identified in the Proposed Rule will be constructed on time and as projected is clearly arbitrary and based on faulty assumptions. Commenters said construction of a new nuclear reactor is perhaps the most complex and highly regulated industrial activity any utility can undertake in the United States. Commenters said most of the essential components of each new reactor must be specially manufactured by precision manufacturers who must meet the highest standards of quality and accuracy. Commenters said each step in construction and operation is overseen by regulators at the Nuclear Regulatory Commission (NRC), and any changes to design or fabrication that may become necessary must also be submitted to and approved by the NRC; consequently, the complexity of building a nuclear reactor and the significant regulatory hurdles involved in adjusting design or fabrication assumptions can lead to significant delays and unexpected costs. Commenters said although Santee Cooper and its partners strive to construct and o perate their nuclear assets on budget and on time, such complex projects inevitably encounter unexpected setbacks and potential cost overruns that are outside of Santee Cooper's control; for example, the schedule for the two Summer units has been extended by approximately 27 months due to problems with fabrication and supply of high

- tech equipment for the facilities.

Commenters stated other reactors have experienced even more significant delays: the Tennessee Valley Authority's Watts Bar Unit 2

- which EPA ha s designated as one of the five 'under

construction' facilities the agency assumes will be completed by 2020

- has been under construction since the 1970s, and was nearly 80% complete when construction was halted indefinitely in 1985, only to be resumed more than twenty years later in 2007. Commenters said although Watts Bar Unit 2's lengthy construction schedule may not be typical of every nuclear reactor, the fact remains that large nuclear projects

- including those identified by EPA in the Proposed Rule

- fac e numerous risks, long timelines, and significant potential for multi

- year delays.426 Commenters stated in addition, unforeseen events, such as the tsunami

- induced meltdown at the Fukushima Daiichi reactor in Japan, could lead to additional shutdowns or unant icipated regulatory and design changes that could significantly extend the schedule and reduce the amount of nuclear energy that South Carolina will be able to produce from its under

- construction nuclear facilities. Commenters said thus, although Santee Co oper and others may now be committed to building the five reactors identified in the Proposed Rule, it is possible that changes in the cost of components, in the availability of financing, or in state or NRC regulations could result in one or more of these projects never being completed.

Commenters stated furthermore, even assuming that they are ultimately built, it is reasonably certain that at least some of the new nuclear facilities that EPA has proposed to include in state CO2 goal computations will fac e additional hurdles during operation that will reduce their ability to contribute to emission reductions on the schedule and at the level that EPA assumes in setting state targets. Commenters said for example, new facilities typically require lengthy test ing and fine

- tuning periods before they are able to run at their designed capacity factor. In addition, individual facilities may not operate at the national average during extended periods because of the need to refuel or due to both planned and unforesee n outages; for example, a typical reactor must refuel at least every 18 months

- an event that requires a shutdown lasting six weeks or more. Commenters said according to the Nuclear Energy Institute, between 2000 and 2014, there were at least six planned ou tages of nuclear facilities that lasted longer than 100 days, while the average duration of planned reactor outages during this period was almost three months. Commenters said unexpected shutdowns for maintenance or safety issues can last much longer

on th e order of six months or more.

Commenters stated consequently, EPA's proposal to include generation equal to a 90% capacity factor for under

- construction nuclear units in states' goal computations is speculative, arbitrary, and capricious; it is also contr adicted by actual data from the industry. Commenters said although the Energy Information Administration's (EIA) reported average capacity factor for the nuclear fleet as a whole during 2013 was in the range of 90%, the average lifetime capacity factor of the nuclear plants that are currently operating is only 80.3%. Commenters said furthermore, the 2013 fleet average capacity factor figure provided by EIA includes 21 plants with capacity factors above 100% due to the technique EIA used to calculate the ave rage; the inclusion of these outliers clearly skews EIA's results upward. Commenters added, over the past three years, fully one quarter of U.S. nuclear facilities operated at an average capacity factor of just 70.8%. Commenters said consequently, it would be arbitrary and unreasonable for EPA to assume that each of the under

- construction reactors will run at an average capacity of 90%

- particularly over the shorter, three

- year window that EPA proposes for the "final" compliance period.

Commenters stated EPA itself has acknowledged that including under

- construction nuclear units in a state's target puts the state on a tight

- rope for compliance with its target; nuclear capacity is added in much larger increments than other zero

- emitting resources and therefore each unit has a substantial impact on the calculation of a state's target. Commenters said a single under

construction nuclear unit operating significantly below a 90% capacity factor could make it impossible for a state to meet its emission rate target."427 Commenters stated EPA's Proposed Rule substantially understates the significant investments that Santee Cooper has made in low

- carbon generation; in particular, EPA's assertion that the 'incremental' cost of building these reactors is zero180 is erroneous for several reasons. Commenters said first, EPA fails to recognize the fact that Santee Cooper's decision to invest in nuclear power rather than other available technologies was driven in no small measure by the fact that nuclear power provides significan t baseload generation without the CO2 emissions that come with traditional baseload technologies such as coal and natural gas; in fact, constructing and operating the Summer units instead of equivalent amounts of natural gas generation could result in an i ncremental cost of $54/metric ton of CO2 avoided

- well above EPA's estimates for the other building blocks.

Commenters stated current estimates are that completing construction of the Summer units will cost $10 billion; in addition, it is possible that that complications during construction could increase these costs beyond current projections or require renegotiation of commercial contracts. Commenters said without the Proposed Rule, stakeholders in these projects would have the option of delaying, modifyin g, or abandoning the projects if costs reach unacceptable levels; however, the inclusion of expected generation from under

- construction reactors in state goals could force these stakeholders to continue expending their resources even if delays or cost

overruns would otherwise make construction of the units uneconomical. Commenters said therefore, if the Proposed Rule is finalized as is, it could be directly responsible for many of the costs that will be incurred in completing these units; EPA should at the very least reflect these real, incremental costs in its evaluation of this aspect of BSER.

Commenters stated moreover, preliminary modeling for South Carolina, using a 2% growth scenario, indicates that EPA's proposal to include under

- construction nuclear facilities in the calculation of South Carolina's goals could result in approximately an $8.7 billion increase in South Carolina's expected compliance cost, compared to the cost of compliance if EPA were to exclude under

- construction nuclear from the goal. Commenters said complying with the rule as proposed could cost South Carolina approximately $17.5 billion

- a figure that is almost double the cost of compliance without under

- construction nuclear. Commenters said the impacts of these additional costs on So uth Carolina consumers will be significant; even assuming modest (1%) load growth, the model estimates that inclusion of under

- construction nuclear in the baseline could raise costs for residential customers by $99 per customer per year. Commenters said co sts for commercial and industrial customers could be even higher: the average commercial customer in South Carolina could face a $461 increase in its annual electricity bill as a result of including under

- construction nuclear in the goal, while the average industrial customer could face an incremental increase of $47,815 per year as a result of EPA's approach to under

construction nuclear.

Commenters stated EPA's assumption that states can obtain CO2 emission reductions from the five under

- construction rea ctors identified in the rule at no cost is unreasonable and contrary to the factual record. Commenters said EPA's failure to consider the cost of this supposed "system of emission reduction" despite the agency's statutory and regulatory obligation to consi der costs is yet another reason why inclusion of under

- construction nuclear generation in state goal

- setting exceeds EPA's authority.428 Commenters stated for all of these reasons, it would be arbitrary, capricious, speculative, and unreasonable to include ge neration from unbuilt, under

- construction nuclear facilities in states' emission goal calculation

- particularly given EPA's assumption that these units will be in operation by 2020 and that they will operate at a 90% capacity factor in each of the complianc e periods.

Commenters stated EPA's treatment of under

- construction nuclear generation is also arbitrarily different from its treatment of other sources of nuclear energy.

Commenters continued under EPA's proposal, 5.8% of a state's existing nuclear capacit y would be included in the state goal calculation. Commenters said uprates at existing facilities

- even those that were planned, approved or under construction before issuance of the Proposed Rule

would not be included in the goal calculation at all, althou gh the MWh from these uprates would be eligible for use as a compliance option. Commenters said new nuclear generation (i.e., generation that had not commenced construction as of June 18, 2014) is not included in the state goal calculation either, but can be used for compliance.

Commenters stated it is unreasonable and arbitrary to treat emission reductions from the five "under

- construction" nuclear facilities differently from these other sources of nuclear energy; according to the NRC, sixteen separate upr ate projects have been approved between May 2012 and August 2014. Commenters said of these, eight were designated as "extended" uprates, which signifies that substantial construction and equipment upgrades would be involved. Commenters said like the "under

- construction" reactors identified by EPA, none of these uprates was fully operational during EPA's proposed 2012 baseline year, and some are likely still under construction; yet unlike for under

- construction nuclear, the expected MWh from these under

cons truction uprates

- some of which will add substantial capacity to existing facilities

- was not included in states' baselines.

Commenters stated furthermore, the NRC is currently reviewing applications to construct twelve new nuclear reactors

- most of which are currently projected to come on line during the Proposed Rule's interim compliance period. Commenters said generation and potential emission reductions from these units also was not included in states' baselines, despite the fact that a number of these
pro jects are in advanced stages and could begin construction in the next few years.

Commenters stated neither the under

- construction nuclear reactors identified in the Proposed Rule nor the under construction uprates and proposed new nuclear reactors was gene rating power during EPA's chosen baseline year, yet each of these sources of nuclear generation categories have, in EPA's words "long been known to grid operators for planning purposes." Commenters said consequently, EPA should not treat the five designate d under

- construction reactors differently from these other planned sources of zero

- carbon electricity. Commenters said as it has done for nuclear uprates and proposed new nuclear facilities, EPA should exclude any projection of future capacity from the fiv e under

- construction reactors from BSER and from the state goal computation; furthermore, if these five "under

- construction" units are ultimately constructed, they should be treated just like any other new, nuclear resource for purposes of compliance. Comm enters said that is, generation from these facilities should count toward compliance in the same way that generation from new uprates or reactors would be counted; to do otherwise would be both arbitrary and capricious.429 Commenters stated the inclusion of u nder

- construction at at

- risk nuclear generation in state goals is not necessary to encourage states to complete construction or preserve at

- risk reactors.

Commenters stated because EPA's emission goals will increase the cost of fossil

- fueled electricity re lative to zero

- carbon electricity, South Carolina and other states will have strong incentives to complete construction of the five under

- construction nuclear units identified in the Proposed Rule and to build more if the costs are justified; thus, states and utilities will already have a strong incentive to complete construction of the five under

- construction nuclear reactors. Commenters said moreover, excluding the five under construction units from state goals would have a negligible impact on the Propos ed Rule's contribution to emission reductions. Commenters said these units account for only 1.4% of the total 2030 generation that is accounted for in the Proposed Rule; were EPA to treat the five under

- construction reactors as new units (excluding them fr om the goal calculation, but allowing states to count MWh produced by these units toward compliance if they are built), the national emission rate target would be only 1.2% higher in 2030 than under the rule as proposed.

Commenters stated the inclusion of at risk nuclear generation in states' emission goals is also unnecessary to encourage states to preserve their existing capacity; as with under

- construction nuclear, the imposition of CO2 emission limits on the power sector will naturally incentivize
state s and affected entities to favor lower

- carbon power sources, including existing nuclear facilities. Commenters added, states that fail to preserve their nuclear capacity will be incentivized to replace that lost capacity with other low

- carbon generation or energy efficiency because replacement of lost zero

- carbon generation with fossil

- fueled generation would make it more difficult for the state to meet its emission target.

Commenters stated moreover, if EPA persists in including either under construction o r at risk nuclear generation in states' goals, it is possible that states and ratepayers would effectively pay twice for the loss of one of these nuclear facilities. Commenters said this is because the state would be unable to count the expected MWh from t he under construction or at risk nuclear facility toward compliance, and would also be required to replace the lost nuclear generation with fossil generation or costlier low

- carbon alternatives.

Commenters stated a major, proactive step taken by South Caro lina has been the investment in new zero carbon emitting nuclear power; significant incentives for nuclear power were included in the Energy Policy Act of 2005. Commenters said together with volatile fossil fuel prices and the possibility of greenhouse gas regulation, these federal incentives helped drive a renewed interest in nuclear energy, as was the case in South Carolina. Commenters said South Carolina Electric and Gas Company (SCE&G) and Santee Cooper signed a contract to build two new nuclear units a t the V.C. Summer Nuclear Station on May 23, 2008. Commenters said in testimony provided before the South Carolina Public Service Commission (PSC) on March 2009, SCE&G's President stated that adding these two units might allow his company to reduce its rel iance on an aging fleet of coal

- fired plants; included in the testimony were statements suggesting these new units could not only allow for the retirement of some of the less efficient plants but also insulate customers from future CO2 regulation and other environmental compliance costs associated with fossil fuels.430 Commenters stated the EPA's Clean Power Plan proposal invited comment on whether new nuclear capacity should be reflected in setting the state goals; the EPA further noted that reflecting the co mpletion of the new under construction units would have a significant impact on the calculated goals for the three states in which these units were located: Tennessee, Georgia and South Carolina. Commenters said the EPA states in the preamble, "The EPA bel ieves that since the decisions to construct these units were made prior to this proposal, it is reasonable to view the incremental cost associated with the CO2 emission reductions available from completion of these units as zero." Commenters said it is imp ortant for the EPA to understand that, to date, less than one half of the costs of the new nuclear units in South Carolina has been incurred, so a significant cost remains to support the completion of these units; further, only the financing costs are curr ently being paid and the principal will be paid off over the estimated 60 year lifetime of the new nuclear units. Commenters said there is clearly an incremental cost for these new units that will be added to customer bills to pay for the zero carbon emitt ing units once they come online.

Commenters stated the EPA's proposal specifically adds the under construction nuclear generation into the denominator of the goal equation which has the effect of increasing the stringency of the emission rate goals for sta tes with under construction nuclear units; although states can use the under construction nuclear units in their compliance demonstration, inclusion of it in setting the state goal removes appropriate credit, or in reality, becomes a wash. Commenters said in addition, these states with under construction nuclear units continue to have an equivalent amount of renewable energy and energy efficiency capacity included in their goal calculation; as a result of this, and as the EPA correctly noted in the proposal , the goals for Tennessee, Georgia and South Carolina are significantly more stringent. Commenters recommended a more appropriate application of under construction nuclear generation in the final rule that will treat this generation in a manner consistent with other states planned or under construction renewable fuel generation; specifically, the EPA does not add existing or under

construction renewable energy into a state's final goal calculation and allows it to fully count towards compliance.

Commenters stated if the EPA revises its approach for under

- construction nuclear generation in the final rule as requested above, it is important for the EPA to recognize that South Carolina will still have to find additional CO2 emission reductions to achieve its re vised goal. Commenters said additionally, South Carolina's revised goal would be 991 lbs CO2/MWh which would bring South Carolina's goal closer to the proposed emission rate required for new sources under Section 111(b); this would be more consistent with previous application of Section 111 which allowed less stringent standards for existing sources.

Commenters stated the President's remarks announcing the Climate Action Plan identified the importance of nuclear power in securing the country's energy future ; recognition was given to Georgia and South Carolina for leading the way in a renaissance of nuclear power. Commenters said the Climate Action Plan also identified the commitment to develop safe and secure use of nuclear power, including the management of nuclear wastes that are a byproduct of nuclear energy. Commenters said it is critical that these waste issues be adequately addressed including consideration of impacts to environmental justice communities. Commenters said as noted in a September 9, 2014 letter, to President Obama from 15 State Governors, including Governor Haley, support for both current, under

- construction and future planned nuclear plants must have431 a viable, long

- term solution for nuclear waste disposal; otherwise, this zero carbon emit ting resource cannot be considered a viable tool for reducing GHGs.

Commenters stated, "The EPA has appropriately recognized that available nuclear units will be dispatched before fossil fueled generation. This is due to their low variable operating costs. In South Carolina, the two UCN units represent 2200 MW of zero carbon electric generation that will displace or eliminate the need to construct a similar amount of electrical output from fossil fuel generation. Because the capacity factor of nuclear is am ong the highest of all sources of generation, this new capacity will have the effect of offsetting a significant amount of base load generation that would otherwise be provided by fossil fuels."

Commenters stated the EPA's treatment of UCN generation in t he proposed rule is a disincentive for the development of additional new nuclear generating capacity; in addition, it is inconsistent with the Administration's recognition of nuclear generation as a source of carbon free electric generation and the Preside nt's recognition of the leadership that South Carolina and Georgia have taken. Commenters said if the EPA's final rule does not provide meaningful credit for the actions taken by South Carolina and Georgia to develop additional nuclear generating capacity for the purpose of reducing GHG emissions, it potentially puts in jeopardy the future of all additional new nuclear units. Commenters said there are currently 23 new nuclear units that are under review by the US Nuclear Regulatory Commission that could add more than 23,000 MW of carbon free generation.

Commenters stated another major disincentive for the growth of nuclear energy applies to both existing and UCN energy; the EPA must consider in its Environmental Justice analysis the appropriate disposal of n uclear waste and potential impacts on communities. Commenters suggested that the EPA work with the Nuclear Regulatory Commission to seek a congressional solution to resolve the nuclear waste disposal issues confronting the country. Commenters said as noted in a September 9, 2014 letter to President Obama from 15 State Governors, including Governor Haley, support for both current, under

- construction and future planned nuclear plants must have a viable, long

- term solution for nuclear waste disposal; otherwise , this zero carbon emitting resource cannot be considered a serious tool in EPA's national toolbox for reducing GHGs.

Commenters stated the bulk of their concern with the proposed Clean Power Plan for existing units is the treatment of new nuclear units wh ich are currently under construction; as currently proposed, the Clean Power Plan treats these units as though they are already generating electricity during the 2012 baseline year even though they are only halfway complete and won't start generating elect ricity until the 2018

- 2020 timeframe. Commenters said this has the net effect of creating a more stringent goal for South Carolina that gives no compliance credit for the benefit these units will have on reducing the State's carbon intensity. Commenters sa id what's more, the proposed state goal creates an unmanageable situation should the startup of the new units be delayed or their subsequent maintenance require extended outages in the ensuing years.

Commenters agreed with the ideology behind the clean air proposal and understand the importance of decreasing CO2 emissions, but the way the rule is currently written requires that South Carolinians be responsible for a disproportionate share of the efforts to reduce carbon emissions nationwide. Commenters said the proposed state goal calls for a 51% reduction in432 carbon intensity or stated differently, a drop of 815 pounds of CO2 per megawatt hour; this is the largest reduction in the nation because of the disparate treatment of new nuclear and the resultant eff ect on the state goal.

Commenters stated statistically, South Carolina has already reduced CO2 emissions 31% from 2005 to 2012; now the proposed state goal is demanding another 51%. Commenters said in order to achieve that, customers will have to pay signi ficantly more beyond the forecasted rate increases that will finance the two new nuclear units. Commenters asserted that the 31% reduction that South Carolina has already achieved demonstrates support of the President's goal of reducing CO2 emissions and a re willing to do more. Commenters said the requirement for South Carolina to contribute an additional 51% reduction is unduly burdensome, inconsistent with other states' goals and can only be detrimental to the well

- being of South Carolinians; it is also a disincentive to states that have been proactively going about reducing their carbon emissions.

Commenters stated the Clean Power Plan for Existing Units is massive and it is complex; in order to correct the situation, the two new nuclear units should be r emoved from the calculation of the state goal but be given full credit towards compliance once they are operational. Commenters said with this change alone, the state goal for South Carolina still requires a 38% reduction in addition to the 31% already ach ieved since 2005; clearly, this is well beyond the 30% national goal.

Commenters anticipated the likelihood of new CO2 regulations when choosing between new base load generation options in 2008 and presented testimony on the benefits of building new nuclea r generation before the South Carolina Public Service Commission:

May 2008. " ... With the new nuclear load online, we would be able to reduce the amount of time we would be having to run our older coal

- fired units, which would also reduce the emissions fr om those units by about 21 percent and take us back to around 1996 or 1997 levels of emissions, which we think is an important opportunity for us to have as we look at carbon legislation that may come in the future

- giving us flexibility to respond to pot ential future environmental restrictions of requirements."

Commenters stated full credit for all new non

- carbon emitting generation including new nuclear is extremely important as they fully implement the carbon reduction strategy that was explained in the ir April 1, 2013 letter.

Commenters stated as a result, in 2018 when both new nuclear units are expected to be commercially available, all six of the older coal

- fired units would be fully retired, the percentage of non

- emitting electricity produced by SCE& G would be approximately 60 percent, and their carbon emissions should be below their previous 1995 carbon emissions. Commenters said therefore, full implementation of the plan in 2018 would not only be a significant achievement for SCE&G and customers but it also would support the current administration's objective of promoting energy growth and addressing climate change.433 Commenters recommended that the EPA remove under

- construction nuclear generation from the calculation of a state's emissions rate goal b ut provide emissions credit of all nuclear capacity that becomes operational after the issuance of the Proposed Rule.

Commenters stated the EPA's methodology set forth in the Proposed Rule requires South Carolina to reduce its emission rate from the EPA's 2012 estimated rate of 1,587 pounds ("lbs") of carbon dioxide ("CO2") per megawatt

- hour ("MWh") ("lbs CO2/MWh") to an interim goal of 840 lbs CO2/MWh and then to a final goal of 772 lbs CO2/MWh by 2030. Commenters said this methodology equates to a 51% red uction, which is the third largest percentage reduction from 2012 among all states; yet, the methodology embedded in the Proposed Rule fails to credit South Carolina for the under

- construction zero

- carbon emitting nuclear generation being made in this
stat e.
Commenters stated South Carolina is one of only three states where new nuclear power is presently being constructed; two new nuclear energy generating units totaling approximately 2,200 megawatts ("MW") are under construction in this state, and South Ca rolina power producers and their consumers are investing billions of dollars in these carbon

- free electric generating units. Commenters said the Units are among the first new nuclear generating units to be built in the United States in more than thirty yea rs. Commenters said construction is moving forward, but the Units are not complete and certainly are not yet operational. Commenters said current information projects substantial completion of the first unit in late 2018 or the first half of 2019 followed by the projected substantial completion of the second unit approximately twelve months after the first unit.

Commenters stated the EPA invited comment on whether under

- construction nuclear capacity should be reflected in the state goals. Commenters said th e EPA noted that reflecting the completion of the new nuclear units under construction in the goals has a significant impact on the calculated goals for the states in which these units are located. Commenters said clearly, this is true for South Carolina; including approximately 2,200 MW of generation from under

construction nuclear units as though operational results in a much lower mandatory goal for South Carolina. Commenters said the two Units will not begin operation until long after the EPA is schedul ed to issue its Final Rule, yet including this carbon

- free generation in Building Block 3 lowers South Carolina's goal to 772 lbs CO2/MWh.

Commenters stated the PSC approved the application to build the Units after a full evidentiary hearing that included a review of the costs of alternatives such as natural gas combined cycle units and new coal

- fired units with the potential for GHG regulations affecting their economic viability. Commenters said in part, the PSC was persuaded that nuclear generation, from an environmental standpoint, was the best alternative for meeting the energy needs of the regulated utility and its customers with the least impacts on the environment when comparing air and particulate emissions with coal or natural gas generation. Commen ters said while the PSC's decision to authorize the construction of the Units was made prior to the June 18, 2014, release date of the Proposed Rule, it is not reasonable to view the incremental cost associated with the CO2 emission reductions available fr om completion of the Units as zero cost.

Commenters stated in a state of almost four million citizens with a per capita income 15% below the national average, South Carolinians are and will pay heavily for the Units, and construction434 has already experience d delays. Commenters said the investment of $10 to $11 billion in the Units is significant; South Carolina should not be penalized for being pro

- active in choosing a form of base load generation that is non

- carbon emitting. Commenters said in approving the Units, the PSC found that "[n]uclear generation also insulates customers from future CO2 and other environmental compliance costs associated with fossil

- fuels, which are likely to be significant." Commenters said upon the Units being completed and beginni ng operations, South Carolina should receive credit for the new generation as an eligible action toward meeting the mandatory goal.

Commenters stated even though the Units are presently being constructed and several years away from completion, the Proposed Rule treats the Units as if they were already built and operating in 2012. Commenters said South Carolina is allowed no credit for these substantial investments and this state's pursuit of clean carbon

- free energy; rather than recognizing South Carolina's commitment to cleaner electric generation, the treatment under the Proposed Rule effectively penalizes South Carolina for its self

- imposed clean energy initiatives and discourages future commitments. Commenters said the disparity of the Proposed Rule's tr eatment of the under

construction nuclear units is readily apparent when compared to treatment provided under

construction solar or under

- construction wind projects. Commenters said under

- construction solar or wind projects are not included in determining the state's emission goal, yet under

construction nuclear projects are included in the state's goal. Commenters said the Proposed Rule should treat these carbon

- free under

- construction generation sources similarly. Commenters said as it currently stands, t he Proposed Rule treats zero

- emitting under

- construction nuclear generation resources differently than other under

- construction zero emitting generating resources thereby favoring one form of non

- CO2 generation over another. Commenters said such disparate treatment is discriminatory, is arbitrary and capricious, and should be changed in the Final Rule.

Commenters stated the current treatment of under

- construction nuclear places undue risk on South Carolina and the two other states with current new nuclear c onstruction; if the Units are not completed but abandoned, South Carolina ratepayers face the costs of achieving a lower, more stringent compliance goal in addition to the actual costs of abandonment.

Commenters requested that the EPA reconsider its positi on on the inclusion of under

construction nuclear generation and exclude such future generation from Building Block 3 when determining state emission rate goals. Commenters said under

- construction nuclear generation should not adversely affect a state's em ission rate goal but rather should be fully credited as an eligible action toward meeting the state's goal once the new nuclear generation becomes operational.

Commenters stated the CPP recognizes nuclear generation as a method for reducing greenhouse
gas emissions, characterizing it as carbon

- free generation with high construction costs and relatively low variable operating cost. Commenters said thus, EPA reasons that states can reduce their greenhouse gas emissions by increasing nuclear generation to disp lace fossil fuel

- fired generation.

Commenters stated a brief summary of how EPA treats nuclear is below; commenters notes that its treatment differs in some respects from that of other resources, both traditional fossil

- fuel sources and from renewable gene ration. Commenters said as a general matter, the commenters435 asserted that such disparate treatment is allowable, and even may be compelled by the material differences in the nature of the resources; for instance, unlike nuclear, under

- construction fossil

f uel fired sources fall under 111(d) in their own right, since they directly contribute to GHG emissions, and can follow load.

Commenters stated even between zero

- emitting resources like nuclear and renewables, differing treatment can be traced to inherent differences that bear consideration under a scheme like the CPP with its system

- wide approach; for instance, nuclear units differ from renewables due to the tremendous scale on which nuclear resources are deployed, their massive up

- front costs (often in th e billions of dollars), federal permitting oversight, and their extensive lead times (usually taking years, or even decades, to complete). Commenters said assessing RE's potentia1 to reduce CO2 emissions in a given state depends much more on that state's p articular technologic, geologic, geographic, and economic condition than it depends on the resource's construction status. Commenters said in contrast, the degree to which a state can fairly be expected to utilize nuclear generation to reduce its emissions depends far more on a project's construction status. Commenters said the Clean Air Act itself envisions taking into account factors other than strictly CO2 impacts when establishing BSER. Commenters said for nuclear, these factors would include environmen tal and human health risks associated with potential accidents and radioactive waste storage.

New Generation

Commenters stated as EPA correctly notes, while nuclear generation has GHG

- reduction benefits, building new nuclear generation costs far more than other types of generation both in terms of dollars and time. Commenters said EPA therefore concludes that requiring states to construct new nuclear generating units would not constitute BSER; however, EPA does propose to give existing nuclear and nuclear p rojects already under construction a role in setting BSER.

Existing Generation

Commenters stated for existing nuclear generation, EPA finds that states could reasonably and
cost

- effectively take steps to prevent cuts in their existing nuclear fleets; such steps would contribute to the CPP's goals because lost nuclear generation requires replacement generation from some source, likely a fossil

- fired plant. Commenters said as EPA notes, between 2012 and June 2014, utilities either closed or announced closure plans for six nuclear EGUs at five plants across the country. Commenters said EPA notes that the EIA forecasts an additional 5.6 GW of capacity cuts in the U.S. nuclear fleet; that forecast is used as a proxy to determine that six percent of the U.S. nucle ar fleet is at risk of retirement due to (1) increased fixed operation and maintenance costs, (2) relatively low wholesale electricity prices, and (3) additional capital investment associated with ensuring plant security and emergency preparedness.

Comment ers stated EPA posits that, under a CPP

- compliance approach, utilities and states can prevent that six percent loss without incurring unreasonable costs, and that preserving the six percent "at risk" nuclear generation could avoid 200 to 300 million metric tons of CO2 emissions
over a ten

- year phase in period, at a cost of $12 to $17 per metric ton. Commenters said EPA accordingly concludes that each state could take steps to "retain" the existing "at risk" nuclear generation and incorporates this retention into its BSER target

- setting calculus; notably, this six436 percent retention calculus reduces a state's target emissions rate even if a particular state has no existing nuclear generation at risk.

Commenters stated on the whole, while factoring "at risk" nu clear generation into a state's target serves to reduce that state's target, most states need not take any actual steps (or expend any additional dollars) to incorporate this "at risk" generation when calculating their emissions rates in a proposed complia nce plan; essentially, the "at risk" nuclear provision becomes a "one in, one out" book exercise with no real

- world burdens placed on the states.

Under

- Construction Generation

Commenters stated while EPA concludes that the CPP should not include entirely new nuclear construction as BSER, EPA does note that three states (South Carolina, Georgia, and Tennessee) currently have nuclear projects under construction; while docket proceedings continue, the proposed projects in both South Carolina and Georgia have received their Certificates of Public Convenience and Necessity. Commenters said the new unit in Tennessee is nearly complete; as a result, EPA concludes that those states could expect these new under

- construction nuclear units to reduce GHG emissions at n o additional compliance cost. Commenters said in other words, these units' multi

- billion dollar price tag would be ignored when considering relative CPP compliance costs, on the theory that the states were going to build the units regardless of whether the CPP goes into effect.

Commenters stated adding these under

- construction units' generation into the target

- setting formula substantially changes the result; for example, the CPP currently sets South Carolina's target emissions rate at 772 lbs/MWh, down fro m a starting point of 1,791 lbs/MWh. Commenters said if EPA did not include under

- construction nuclear generation in South Carolina's target but left all other Building Blocks the same, the CPP would set South Carolina's target at 990 lbs/MWh. Commenters s aid the Clean Power Plan currently sets Georgia's target emissions rate at 834 lbs/MWh, down from a starting point of 1,598 lbs/MWh. If EPA did not include under

- construction nuclear generation in Georgia's target but left all other Building Blocks the sam e, the Clean Power Plan would set Georgia's target at 972 lbs/MWh. Commenters said the CPP currently sets Tennessee's target emissions rate at 1,163 lbs/MWh, down from a starting point of 2,015 lbs/MWh. If EPA did not include under

- construction nuclear gen eration in Tennessee's target but left all other Building Blocks the same, the CPP would set Tennessee's target at 1,352 lbs/MWh.

Commenters stated as with "at risk" nuclear, EPA's proposal factors the under

- construction generation into the denominator whe n setting South Carolina, Georgia, and Tennessee's target emissions rate. Commenters said the CPP then proposes to allow those states to count 100 percent of the generation from these units when calculating the state emissions rates in a compliance plan; a gain, on paper, under construction nuclear amounts to little more than a "one in, one out" book exercise since that generation reduces the states' emissions rates in target setting but then also reduces the rate in calculating a compliance plan.

Alternativ es to the CPP's Treatment of Under

- Construction Nuclear

- Possible Alternative Treatments If EPA Determines That Under

- Construction Nuclear is BSER437 Commenters stated EPA's proposed target

- setting calculus assumes South Carolina will complete Summer Units 2 and 3, while the CPP further assumes that South Carolina can, and will, include the same amount of megawatt hours of generation from these units in demonstrating compliance with the proposed 772 lbs/MWh target. Commenters said it is possible, however, that cost overruns and delays could so adversely impact the economics that South Carolina would prefer to abandon the project. Commenters said if South Carolina abandoned the project, the proposed target would require the state to make up the additional rate r eduction in some other fashion, a challenging proposition given the size of the two units. Commenters said the proposed nuclear units will each generate 1,117 megawatts of electricity, which will in tum amount to an estimated 17.4 million megawatt hours pe r year. Commenters said if South Carolina cannot complete an entire nuclear unit, it cannot produce any electricity from that unit.

Commenters stated EPA's proposed target

- setting calculus assumes Georgia will complete Vogtle Units 3 and 4, while further assuming that Georgia can, and will, include the same amount of megawatt hours of generation from these units in demonstrating compliance with the proposed 834 lbs/MWh target; it is possible, however, that cost overruns and delays could so adversely impact the economics that Georgia would prefer to abandon the project. Commenters said if Georgia abandoned the project, the proposed target would require the state to make up the additional rate reduction in some other fashion, a challenging proposition given t he size of the two units. Commenters said the proposed nuclear units will generate 2,200 megawatts of electricity, which will in turn amount to an estimated 17.4 million megawatt hours per year; if Georgia cannot complete these units, it cannot produce any electricity from them.

Commenters stated EPA's proposed target

- setting calculus assumes Tennessee will complete Watts Bar Unit 2, while the CPP further assumes that Tennessee can, and will, include the same amount of megawatt hours of generation from the se units in demonstrating compliance with the proposed 1,163 lbs/MWh target; conceivably, that cost overruns and delays could so adversely impact the economics that TVA would decide to abandon or further prolong completion of the unit. Commenters said if T ennessee abandoned the project, the proposed target would require the state to make up the additional rate reduction in some other fashion, a challenging proposition given that the unit would supply approximately 1,100 MW of capacity. Commenters said if Te nnessee cannot complete the entire nuclear unit, it cannot produce any electricity from that unit.

Commenters stated unlike other zero

- emitting resources, like renewable energy and energy efficiency, which are typically deployed in much smaller portions, w here the utility can simply build fewer installations, new nuclear is a bulky, "all or nothing" resource. Commenters said if the state abandons the project, it will enjoy none of those zero

- carbon megawatt hours; in essence, EPA's approach presents a consi derable deterrent to states not completing these units and effectively encourages their completion by assuming they provide compliance "for free" compared to other compliance measures.

Commenters stated no new nuclear units have come online in the United S tates in nearly twenty years, largely due to cost overruns, controversy, and delays; these issues continue to threaten the current under

- construction nuclear projects, and, to varying extents, a certain possibility exists that South Carolina, Georgia, or T ennessee may still cancel its project. Commenters said such a decision would drastically change that state's expected energy mix and its ability to meet EPA's438 target emissions rate; as such, they ask EPA to clarify whether and how it could revise a state's target to reflect that new reality, should it occur. Commenters additionally requests EPA to consider whether, due to the fact that new nuclear units are massive, incredibly expensive, "all or nothing" undertakings with significant and continued risks, EP A could make the state target effectively contingent on the state maintaining its current course of action of allowing completion of the units despite the delays and escalating costs. Commenters said in South Carolina's case, that would mean that if the st ate abandons VC Summer Units 2 and 3, the emissions target would revert to 990 lbs/MWh instead of 772 lbs/MWh. Commenters said in Georgia's case, that would mean that if the state abandons Vogtle Units 3 and 4, the emissions target would revert to 972 lbs/ MWh instead of 834 lbs/MWh. Commenters said in Tennessee's case, that would mean that if the state abandons Watts Bar Unit 2, the emissions target would revert to 1,352 lbs/MWh instead of 1,163 lbs/MWh.

Commenters stated additionally, if EPA continues to t reat under

- construction nuclear generation as part of BSER, it might adjust the way it does so. Commenters asked EPA to consider whether to treat the resource like under

- construction natural gas, focusing on the extent to which the under

- construction nucle ar units will displace existing fossil

- fuel fired sources. Commenters said for under

- construction natural gas, EPA assumes that those units will operate at 55 percent capacity factor under a "business as usual" approach to meet demand growth. Commenters sa id EPA then assumes that utility operators could actually increase dispatch of those new natural gas units from 55 percent capacity factor to 70 percent capacity factor by applying Block 2. Commenters said according to EPA, then, states could use the incre ased 15 percent capacity factor to displace existing fossil

- fueled generation. Commenters said this assumption lowers the state's emissions rate target; constructing the new natural gas units and operating them above 55% capacity factor would be a means of compliance.

Commenters stated EPA should consider whether it could make a similar calculation for under

construction nuclear units. However, the commenters do not believe that the exact approach EPA took for under

- construction natural gas applies to under

- construction nuclear. Commenters said both types of generation likely will meet some demand growth and offset some portion of existing fossil

- fueled generation; but the CPP appropriately views under

- construction nuclear differently than it views under

- con struction natural gas because operators can scale natural gas dispatch depending upon load, whereas nuclear operators lack that flexibility. Commenters said therefore, while EPA would review data from South Carolina, Georgia, and Tennessee to estimate what percentage of the under

- construction nuclear generation could reasonably be said to be available to displace existing fossil

- fuel generation and what percentage to meet demand growth, it would have to find a different, reasonable basis for the displacemen t

- to

- demand

growth ratio.

Commenters stated in this process, when calculating those states' emissions targets, EPA would factor in that percentage of under

- construction nuclear expected to actually displace existing fossil

- fueled generation; total generati on in megawatt hours would remain constant, but the replacement of fossil

- fueled generation with zero

- carbon generation would reduce the total pounds of CO2 emitted; in other words, assuming the same amount of energy is produced, more of it would come from zero

- carbon sources, such that the state's total target emissions rate would go down. Commenters said this process would lower the state's target emissions rate by the amount that EPA estimated under

- construction nuclear would actually displace existing f ossil.439 Commenters said EPA would then allow states that complete their under

- construction nuclear units to add the same amount of that nuclear generation to the denominator when demonstrating compliance; that is, since EPA will use that displacement estima te in setting the target, those states could use the same displacement percentage when demonstrating compliance.

Possible Alternative Treatment If EPA Determines Under

- Construction Nuclear Is Not BSER

Commenters stated some parties in South Carolina, Georg ia, and Tennessee have objected to EPA's inclusion of under

- construction nuclear generation in setting their target emissions levels, but seek to count 100 percent of their under

- construction nuclear generation in demonstrating compliance. Commenters said EPA should understand that this approach could provide excessive credit for under

- construction nuclear projects beyond their ability to displace existing fossil generation.

Commenters stated calculating a CO2 emissions rate (lbs/MWh) requires estimating bo th the total pounds of CO2 emitted and the total megawatt hours of generation; although presented as a rate of CO2 emissions, EPA's proposal includes generation from certain sources that have no CO2 emissions. Commenters said as a result, the CPP's "target " CO2 emissions rates are not just the in

- state average of CO2

- emitting sources; the targets are actually the average of CO2

- emitting sources and a select few zero

- carbon sources that qualify as BSER. Commenters said mathematically, anything that increases the total generation (i.e., the denominator) lowers the emissions rate; this is especially true when zero

- carbon generation is added to the denominator, because such an addition adds no new pounds of CO2 to the numerator. Commenters said how EPA, or a sta te, includes zero

- carbon emitting sources radically changes the calculated result.

Commenters stated including 100 percent of under

- construction nuclear generation in compliance denominators would give the appearance of dramatically lower emissions rates, even if the under

- construction nuclear does not displace or reduce actual CO2 emissions from existing fossil

- fueled units. Commenters said one possible solution to this dilemma is to recognize that under

- construction nuclear units will reduce a state's emi ssions rate to the extent the under construction nuclear units actually displace existing fossil sources, as discussed above. Commenters said under this approach, EPA would remove under

- construction nuclear generation from the target setting and also prohi bit states from factoring that generation into their compliance formulas. Commenters said if and when those units come online, and to the extent they actually displace existing fossil units, those states' actual CO2 emissions rates will reflect that displa cement because their total fossil

- fueled generation in MWh will decrease (by way of reduced or shut down fossil

- fired plants), which will in tum lower the total pounds of CO2 emitted.; thus, EPA need not factor in the under

- construction nuclear units' mega watt hours of generation in either the target

- setting or the compliance phases because the CPP already allows credit for under

- construction nuclear to the extent that it has a real

- world impact on the state's emission rate.

Under

- Construction Nuclear

Comme nters stated EPA's proposed treatment of under

- construction nuclear in Georgia and two other states has been a source of controversy. Commenters said in comments to EPA dated September 16, 2014, the Georgia EPD urged EPA to remove under

- construction nuclea r440 generation from the state emission goals but to allow it to be used for compliance. Commenters said currently, the anticipated generation from the two units under construction at Plant Vogtle accounts for 30 percent of Georgia's target reduction; removin g those units from the target

setting would substantially relax Georgia's carbon reduction requirements. Commenters said at the same time, allowing the nuclear generation to be used for compliance (i.e., added to the denominator of EPA's rate

- setting equat ion, as EPD recommends) would mean that Georgia could achieve much of its target without lowering actual carbon problematic and offer the following comments to guide EPA's resolution of this issue.

Commenters stated that generation from nuclear facilities under construction in Georgia in 2012 is expected to be 17.4 million MWh; new nuclear capacity would decrease Georgia's emission rate by an increment of 225 lbs per MWh.

Commenters stated that nuclear power plants under construction might not be completed, and requested that the EPA provide clarification on how states with nuclear plants under construction would adjust their goals if that happened. Commenters provided alternatives to treatment of Watts Barr unit 2 if it is considered as BSER, and gave alter natives for treatment of under

construction reactors if they are not considered as BSER.

Commenters stated that it is inappropriate to reflect completion of under

- construction nuclear energy facilities as if they were currently operational. Commenters als o stated EPA fails to treat nuclear consistently with RE technologies in the same building block

- although under construction nuclear units were included in the goals of three states, under construction RE projects were not included within state goals as the 2012 starting point from which states are required to grow RE technology.

Commenters provided the following resolutions regarding the Clean Power Plan:

Resolution Concerning U.S. EPA's Proposed Greenhouse Gas Emission Guidelines for Existing Fossil

- Fueled Power Plants

Commenters stated another component of the proposed regulations that has serious implications for the Southern region is the EPA's treatment of under

- construction nuclear energy facilities. Commenters said in calculating state b enchmarks, the EPA credited under

- construction nuclear energy facilities as if they were currently operational; this disproportionally affects states in the southern region, as the only nuclear energy facilities currently being constructed are in the state s of Georgia, South Carolina, and Tennessee. Commenters said it is inappropriate to reflect the completion of these units in state goals, as the units are not currently completed; as a result, the affected states will have to make more drastic emissions re ductions in order to meet the proposed goals

Resolution Questioning Nuclear

- Specific Provisions of U.S. EPA's Proposed 111(d) Carbon Rule

Commenters stated whereas there is broad consensus throughout industry, academia, the United States government, and i nternational organizations that zero

- carbon nuclear energy is a necessary component of any meaningful strategy to reduce carbon in the electric generation sector, and nuclear energy presently generates nearly two

- thirds of all carbon

- free electricity in th e U.S.; and441 Commenters stated whereas, the existing 44 reactor nuclear fleet throughout the Southern States Energy Board region, and five new reactors now under construction to come on

- line in Tennessee, Georgia, and South Carolina by 2019, are key assets in the South's ongoing comprehensive, multi technology carbon reduction strategy; and commenters stated whereas, the U.S. Environmental Protection Agency (U.S. EPA) has recognized that maintaining the existing nuclear fleet is a cost

- effective carbon abat ement strategy, but the agency's proposed carbon rule considers only six percent of the carbon

- free electricity produced by a state's existing nuclear power plants and would not count the output of nuclear reactors now under construction in the U.S., all o f which are being built in the South; and

Commenters stated whereas, EPA's proposal counts all renewable electricity production regardless of when it was placed into service, but ignores 94 percent of existing nuclear plant electricity production and all hydroelectric plant production.

Commenters called on U.S. EPA to treat all sources of non

- carbon generation equally and recognize that nuclear energy is critical to any national carbon reduction strategy so that states have sufficient incentive to preserve existing nuclear capacity and b uild new reactors.

Commenters stated EPA's methodology lumps together low

- and zero

- emitting generation as a strategy to reduce carbon emissions at affected EGUs, but then applies the individual technologies within the block (nuclear and RE) arbitrarily a nd inconsistently as compared to one another. Commenters said the inclusion of under construction nuclear units for only three states produces inequitable results between states and across regions of the country. Commenters said the proposed guideline's di stinction between states with nuclear and those without nuclear is arbitrary and punishes three states in the Southeast for forward

- thinking investments in large

scale, zero

- emitting technology. Commenters said states that chose to invest heavily in RE
gen eration do not have the additional requirement to invest in and build a new nuclear unit, but the three states that chose to invest heavily in building new nuclear must not only complete those units with the guaranteed delivery of power at a high rate on a date certain, but also invest in and grow RE energy. Commenters said further EPA fails to treat nuclear consistently with RE technologies in the same building block

- although under construction nuclear units were included in the goals of three states, und er construction RE projects were not included within state goals as the 2012 starting point from which states are required to grow RE technology. Commenters said EPA's treatment of under construction nuclear in this building block is both arbitrary and
cap ricious.

Commenters stated, regarding the under

- construction nuclear unit in Tennessee, the significant amount of emission reduction represented by this one yet

- to

- be completed nuclear unit is an immoveable, inflexible mandatory requirement that Tennessee cannot replicate or meet through another other technology or strategy; therefore, the treatment of under

- construction nuclear generation within this block essentially eliminates all flexibility for Tennessee in designing a state plan to meet its goal. Comm enters said technology or strategy options within other building blocks in EPA's proposed BSER will not be able to compensate for reductions required by the nuclear portion of this building block in the circumstance that this unit is unable to perform as E PA is proposing.442 Commenters stated EPA includes nuclear generating capacity in this building block under the assumption that it can replace generation at fossil fuel

- fired EGUs, thereby reducing CO2 emissions. Commenters said EPA concludes that increasing nuclear capacity above the amount of nuclear capacity that 'would otherwise be available to operate' is a technically viable approach, citing low variable operating costs of nuclear and its priority in resource dispatching order before fossil fuel

- fired EG Us. Commenters said EPA proposes two strategies for increasing the amount of nuclear capacity available to displace fossil fuel

- fired EGUs: (1) building new nuclear facilities and (2) preserving nuclear at existing nuclear facilities that might otherwise b e retired. Commenters said EPA and these comments generally refer to the first as 'under

- construction' nuclear and the second as 'at risk' nuclear.

Commenters stated the nuclear portion of building block 3, as encompassed within proposed BSER and applied t o Tennessee, places a disproportionate burden on Tennessee and represents significant compliance risk for the state. Commenters said EPA's proposed approach forces the state to create a state plan requiring the finished construction and operation of a new nuclear unit that must come online and deliver power at a time certain and at a high utilization rate. Commenters said the significant amount of emission reduction represented by this one yet

- to

- be completed nuclear unit is an immoveable, inflexible mandat ory requirement that Tennessee cannot replicate or meet through another other technology or strategy; therefore, the treatment of under

- construction nuclear generation within this block essentially eliminates all flexibility for Tennessee in designing a st ate plan to meet its goal. Commenters said technology or strategy options within other building blocks in EPA's proposed BSER will not be able to compensate for reductions required by the nuclear portion of this building block in the circumstance that this unit is unable to perform as EPA is proposing; this is particularly true given the fact that Tennessee's existing nuclear units are and will continue to operate, but they are unlikely to displace generation from affected units as EPA assumes they will. Co mmenters said EPA has suggested that states have the flexibility to use options outside the proposed BSER for compliance, but has indicated that states can and will be able to meet their mandatory goals utilizing the technologies and strategies within the proposed BSER; for Tennessee, this assurance may very well not be
true.
Commenters stated, with regard to the under

- construction unit at Watts Bar, the EPA multiplied a 90 percent capacity factor with the MW capacity and operating hours assumed and then ap plied the resulting MWh figure into the denominator of the state goal calculation. Commenters said importantly for this massive amount of emission reduction, it appears EPA assumes the level of generation, and the associated emissions reductions, for Watt s Bar 2 will come online in 2020 and remain constant thereafter. Commenters said the value of emissions reductions from Watts Bar 2 dwarfs the reductions EPA assumes from 'at

- risk' nuclear, representing 36 percent of Tennessee's total target reduction rate . Commenters said EPA's inclusion of the under

construction nuclear units in the proposed BSER is arbitrary and capricious; these units are not complete and have not received all necessary approvals to operate and deliver power.

Commenters stated TVA owns and operates two nuclear facilities in the state, Sequoyah and Watts Bar; the three units at those facilities produce a significant amount of zero

- carbon electricity in the state and have a combined 3400 MW summer net dependable capacity. Commenters said i n addition to its existing Tennessee nuclear fleet, TVA is in the process of443 constructing an additional unit at Watts Bar; completion of that unit is planned for December 2015.

Commenters stated in the proposed guidelines, EPA recognizes that new nuclear g enerating capacity is expensive to build as compared to other types of generation and that "little new nuclear capacity has been constructed in the U.S. in recent years." Commenters said regardless, EPA indicates that five nuclear EGUs at three plants are currently under construction. Commenters said according to EPA, because the decisions to construct these plants were made prior to the proposed guidelines, the incremental cost associated with the CO2 emissions reductions available from their completion is zero and the reductions achievable from affected EGUs based on these units are factored into the state goals for Tennessee, Georgia and South Carolina. Commenters said EPA admits "that reflecting the completion of these units in the goal has a significant impact on the calculated goals for the states in which these units are located; if one or more of these units were not completed as projected, that could have a significant impact on the state's ability to meet the goal." Commenters said despite this admi ssion, EPA proposes to include TVA's under

- construction nuclear unit, Watts Bar 2, in Tennessee's goal.

Commenters stated EPA determined the total under construction nuclear capacity at Watts Bar 2 and then incorporated it, along with the 'at

- risk' capacit y, state goal as zero

- emitting generation. Commenters said with regard to the under

- construction unit at Watts Bar, EPA did this by multiplying a 90 percent capacity factor with the MW capacity and operating hours assumed and then applied the resulting MWh figure into the denominator of the state goal calculation. Commenters said EPA did not consider nuclear as a 'dispatchable' resource as it did with NGCC capacity. Commenters said importantly for this massive amount of emission reduction, it appears EPA as sumes the level of generation, and the associated emissions reductions, for Watts Bar 2 will come online in 2020 and remain constant thereafter. Commenters said the value of emissions reductions from Watts Bar 2 dwarfs the reductions EPA assumes from 'at

- r isk' nuclear, representing 36 percent of Tennessee's total target reduction rate.

Commenters stated EPA's inclusion of the under

- construction nuclear units in the proposed BSER is arbitrary and capricious. These units are not complete and have not received all necessary approvals to operate and deliver power; these units are not NGCC units in any way, shape or form and they should not be treated as such. Commenters said first, they are not affected units under Section 111 of the CAA; second, the amount of i nvestment, time, and owner/operator sophistication required to finance, construct, complete, receive approval and operate a nuclear unit is vastly different than an NGCC unit. Commenters said utilities investing in new nuclear units are unlikely to be spen ding large amounts to grow Regeneration resources or perhaps even energy efficiency; yet, the states that these units are within are now held to growing these other low

- carbon emitting resources based on quantified amounts derived from what EPA determined to be the best performing states; however, states without under construction nuclear units are not required to invest in this zero

- emitting technology, even if those states may have applications before the Nuclear Regulatory Commission or other planning ef

forts already underway. Commenters dstated they do not include this information to suggest that EPA require every state in the U.S. to invest in new nuclear units, but this information was included to point out that EPA's choice to apply the under

- construc tion nuclear unit in setting goals for Tennessee, Georgia and South Carolina is arbitrary and cannot stand.444 Commenters stated that EPA's inclusion of the under

- construction nuclear units in the proposed BSER is inconsistent when compared to how EPA deals w ith RE generation in the same building block. Commenters said EPA's proposed BSER included under

- construction nuclear units in three state goals, but it does not include under

- construction renewable projects in 2012, 2013 or 2014 for any state. Commenters recommended that EPA remove under construction nuclear from the proposed BSER and allow for the three states it impacts to use some or all of the value of this

zero

- emitting generation for compliance.

Commenters continued EPA's starting point for applyin g the quantified amount of RE generation growth included within the proposed BSER to states for computation of their goals is the current level of performance (i.e., the 2012 net renewable generation amount). Commenters said EPA utilizes EIA state level da ta for 2012 that is derived from EIA Form 923; the commenters reviewed EIA form 923 data used by EPA in setting the baseline renewable generation for states and it appears that RE energy projects that were under construction in 2012 and completed thereafte r are not reported on the EIA form; therefore, not included within the 2012 current level of performance. Commenters said for example, one project that does not appear to be included is the First Solar Imperial Solar Energy Center South in Imperial County, A. Commenters said EIA monthly generation data indicate that this solar photovoltaic project with a capacity of 130 MW has been producing since November 2013. Commenters said according to the project's website the project supplies San Diego Gas & Electric began construction in 2012 and was completed in 2013 . Commenters said additional projects that were under construction in 2012 include the Arlington Valley Solar Project II in Arlington, AZ (125 MW solar photovoltaic capacity. Commenters said website doc ument indicate that it was in the middle of construction in 2012, finishing up in March 2013, as well as the Centinela Solar Energy project (also in Imperial County, CA) with a capacity of 170 MW. Commenters said this project began development in 2012. Co mmenters said according to EIA, it began producing in July 2013.

Commenters concluded therefore, RE projects that were under construction during the 2012

- 2014 time frame that will deliver significant amounts of low

- carbon electricity over the compliance pe riod will be used as compliance margin for their home states. Commenters said Tennessee, Georgia and South Carolina, on the other hand, have little to no compliance margin given the massive value associated with the under construction nuclear units include d within their state goals. Commenters said EPA's arbitrary and inconsistent inclusion and application of technologies within building block 3 creates an overly burdensome result for three states and significantly increases the likelihood that these states will not be able to comply with their state goals. Commenters recommended that "EPA remove under construction nuclear from the proposed BSER and allow for the three states it impacts to use some or all of the value of this

zero

- emitting generation for com pliance."

Commenters stated that the EPA should give states credit for the emissions avoided by utilizing nuclear power plants, by excluding plants under construction from goal

- setting, but counting their generation capacity towards compliance.

Comment ers stated it is important that the contribution of new nuclear plants, those being deployed now as well as those under development in the next decade, be recognized for their positive impact on reducing greenhouse gas emissions. Commenters said in the EPA proposed rule, nuclear plants under construction in Georgia, South Carolina, and Tennessee are treated as445 though they are already operating at 90 percent capacity factor. Commenters said when calculating the intensity target, those states are effectively penalized for supporting this new nuclear plant construction; EPA needs to work closely with the nuclear industry through the Nuclear Energy Institute (NEI) to modify the rule to assure proper credit is achieved for these

zero

- emissions future electricity producing nuclear plants. Commenters said new nuclear production must be strongly encouraged and fairly rewarded. Commenters said as recommended by NEI, this added nuclear generating capacity should be excluded from goal

- setting in the EPA rule, but counte d toward compliance.

Commenters stated with regard to new nuclear capacity under construction, but not yet in operation, the EPA should not unfairly penalize Tennessee, Georgia and South Carolina by artificially lowering and making more severe their respec tive emission rate reduction targets.

Commenters stated that the inclusion of new nuclear generation capacity prior to its operation in just three states is arbitrary and represents a de facto penalty imposed on these states by lowering the emission reduct ion targets for those states.

Commenters stated that the EP treatment of Georgia's "under construction" nuclear, Vogtle units 3&4, is inequitable and misguided.

Commenters stated that final rule should provide South Carolina and Georgia the full benefit for proactive decisions to reduce GHG emissions, by removing under

- construction nuclear (UCN) generation from the goal calculation and allowing the carbon free generation of the UCN to be used in state compliance calculations.

Commenters stated that the E PA's treatment of UCN is a disincentive for the development of additional nuclear capacity, and is inconsistent with the Administration's recognition of nuclear generation as a source of carbon free electric generation and the President's recognition of th e leadership that South Carolina and Georgia have taken. Commenters also stated that, if the EPA's final rule does not properly credit additional nuclear capacity, it puts in jeopardy the future of the 23 new nuclear units that are under review by the US N uclear Regulatory Commission that could add more than 23,000 MW of carbon free generation.

Commenters stated that the two UCN units in South Carolina represent 2200 MW of zero carbon electric generation that will displace or eliminate the need to construc t a similar amount of electrical output from fossil fuel generation.

Commenters stated that the EPA should, at a minimum, remove under construction nuclear units from the rate

- setting calculation, and Georgia, South Carolina, and Tennessee (and any other state where new nuclear units are built) should be able to receive compliance credit for all the megawatt

- hours (MWh) produced by these units when they become operational.

Commenters stated that Georgia is being penalized by the plan for its significant e arly actions.

Commenters stated that nuclear plants under construction must be removed from the BSER and states must be allowed to count on avoided emissions toward their compliance plans once the nuclear plants are in operation.446 Commenters recommended t hat the EPA allow under

- construction nuclear in South Carolina to be used for compliance with a revised target to be calculated by the State of South Carolina. Commenters recommended that the EPA remove nuclear generation not yet on

- line from the state goa l formula. Commenters stated that the incorporates the generation capacity from TVA's Watts Bar 2 Nuclear Plant, which is under construction and slated for operations in December 2015, into the denominator for Tennessee's state goals. Commenters stated tha t this is arbitrary and capricious; there is no other similar action in the proposed rule for other sources of power generation currently under development.

Commenters stated that the Clean Power Plan should recognize the amount of time and money

necessa ry to develop and construct a new nuclear unit. Commenters further stated that, in essence, Georgia, South Carolina, and Tennessee would have been better off delaying construction until the target emission rates were set. Commenters did not purport to have a solution to this problem, but encouraged the EPA to explore options to adjust the Proposal to encourage new generation without effectively penalizing states that have taken early action.

Commenters stated that the EPA's treatment of Nuclear Under Const ruction as completed is especially arbitrary when the treatment of other non

- hydro renewables is examined. Commenters stated that all non

- hydro renewable MWhs generated during the plan period are allowed as compliance resources, regardless of in

- service da tes, and that the EPA offers no explanation for the disparate treatment of non

- carbon emitting resources.

Commenters stated that states that have utilities which have begun but not finished wind and solar projects are rewarded by the EPA because those sou rces and the future carbon emissions reductions they are expected to achieve are not "assumed" and therefore can be used to effectively meet a state's goal. Commenters stated that if investment in nuclear is not afforded the same benefit as other zero

- emit ting generation towards meeting the State goal, then utilities and customers in states with nuclear plants under construction will be forced to pay twice for carbon reductions because they invested early in one carbon

- free technology instead of another.

C ommenters stated that, under the proposed rule, the EPA includes the carbon reduction benefits of the five nuclear units under construction in its BSER determination as though they were in an operational status today. Commenters stated that this is in star k contrast to treatment of non

emitting EGUs currently under construction using other advanced technologies such as carbon capture and storage (CCS), which are not included in the baseline determination and can be applied in full to the host state's compli ance plan.

Commenters noted that the EPA requested comment on whether or not it is appropriate to reflect completion of [currently under construction nuclear units] in the state goals. Commenters stated that is not appropriate, and that any state should b e allowed to elect to count new nuclear (including under construction units that come on

- line) towards compliance in its state plan, and that the EPA should state affirmatively that such elections are approvable.

Commenters recommended that nuclear generation under construction in South Carolina should count toward the State's compliance with EPA's Clean Power Plan.447 Commenters stated that, although the EPA treats "nuclear under construction" as already built and o perating, substantial further spending is required, so the Proposal punishes consumers in South Carolina by approximately $8.7 billion.

Commenters stated that, if treatment of nuclear under construction remains unchanged from the EPA proposal, South Carol ina will be forced to compensate by building natural gas power plants, which will require new interstate natural gas infrastructure.

Commenters stated that the EPA's inclusion of nuclear generation being constructed in Georgia (Plant Vogtle 3 & 4) in sett ing Georgia's performance standard is inequitable and misguided, and penalizes electric consumers of Georgia for spending over fourteen billion dollars to provide the state with 2,200 megawatts of power with zero CO2 emissions.

Commenters urged the EPA to allow under

- construction nuclear to be used for compliance with a revised emission target.

Commenters stated that the EPA's assumption that the costs of the reactors under construction are "sunk costs" is factually wrong, since none of the reactors is co mplete and large expenditures remain to be incurred. Commenters also stated that it is not at all clear the reactors will be completed, and cited delays in the construction of the Watts Bar 2 reactor, which was started in 1973, with a projected start date of 1978. Commenters further stated that the EPA itself recognizes that under

- construction nuclear reactors may not be completed.

Commenters stated that the EPA's approach to "under

- construction" nuclear generation is flawed and should be revised. Commente rs stated that the inclusion of the full expected megawatt

- hours (MWh) of generation from these facilities in state goals creates a large compliance risk for these states. Commenters also recommended that the EPA reduce the assumed capacity factor for unde r

- construction facilities to account for the distinct possibility that they will operate at capacity factors of 70 percent or lower during some compliance periods. In addition, Commenters stated that the EPA should allow states with under

- construction nucl ear facilities to recalculate their targets after promulgation of the final rule if these large projects are significantly delayed or shut down due to unforeseen circumstances that are beyond the state's control. Commenters concluded that, regardless of wh at approach EPA takes, it should recalibrate the interim targets for states hosting under

- construction nuclear facilities to account for the possibility that these units may not be operating at full capacity in the early years of the interim compliance per iod.

Commenters stated that the power capacity under construction nuclear units should be available to states for calculation toward compliance with its carbon emissions goal (under Block 3) rather than arbitrarily categorized as existing capacity for pur poses of goal calculation. Commenters stated that any nuclear unit whose construction or uprating will start prior to the 2030 compliance deadline should be allow to apply that zero

- emissions energy toward Block 3 goals.

Commenters stated that, if the EPA finalizes the Proposal "as

- is," without necessary revision, its action would be arbitrary and capricious rulemaking, in derogation of Federal law. Commenters stated that the Proposal unfairly (and inexplicably) penalizes the three states that have448 proacti vely acted

- at great expense

- to reduce future CO2 emissions by undertaking to construct and operate the first new nuclear generation in thirty years.

Commenters stated that it is not appropriate to reflect completion of the five identified nuclear EGUs currently under construction in the state goals, and that the current approach unfairly modifies the State Goals of three particular states. Commenters also stated that the EPA should note that there are many ways there are many ways to increase nuclear g eneration beyond construction of new plants, such as "uprates" and increases in capacity factor.

Commenters stated that the rule should be altered to give plants under construction credit for carbon offset in the books of the states in which they're being built.

Commenters stated that, even without including under construction nuclear, Georgia's goal is still more stringent

- which means that more investment will be required

- than all of the other southeastern states that have not recently acted to add n ew nuclear capacity. Commenters stated this means that the EPA is requiring renewable energy and energy efficiency targets for Georgia equivalent to those for states that did not invest in new nuclear capacity. Commenters stated that the EPA's inclusion of under construction nuclear runs in state goals is directly contrary to the Obama Administration's policy on the importance of nuclear energy in addressing climate change. Commenters concluded by stating that under construction nuclear generation should no t be included in calculating state goals, and that States, their citizens and their utilities should be allowed to take full credit for non

- emitting nuclear generation in complying with any state or utility

- specific performance standards promulgated pursua nt to this rule.

Commenters stated that the future base load operations of "under construction nuclear units" are inappropriately included in the calculation of state goals. Commenters also stated that the EPA's Proposed Rule would preclude using this Vog tle Project generation resource to help show compliance in Alabama, where most of the commenter's generation fleet is located, just because the Vogtle project happens to be located in Georgia. Commenters continued that the EPA's conjecture that States may somehow work out regional plans to solve these issues is speculative at best, and that the unjustifiable, unfair, and untenable approach utilized by the EPA in the Proposed Rule underscores how trying to contort existing authorities under the CAA to furthe r global climate goals is indefensible and should be abandoned. Commenters concluded that if, however, the EPA continues with implementation of these provisions, these issues must be resolved such that utilities with interests in generation in multiple sta tes are afforded compliance advantages commensurate with their investment.

Commenters stated that nuclear generation currently under construction should not be included in calculating South Carolina's goal and should be allowed to contribute towards a Sou th Carolina's compliance with its assigned goal. Commenters stated that the EPA's CPP proposal treats nuclear generation under construction differently from other zero

- emitting carbon resources included in Building Block 3, because these other generation s ources units are excluded for the goal rate

- setting and thus receive credit for carbon

- free generation when they contribute power to the grid. Commenters stated that the state goal the EPA has assigned to South Carolina is 28 percent more stringent than it should be because of the EPA's treatment of V.C. Summer Units 2 and 3, and, at 772lbs CO2/MWh, this goal is well below the 1,100 lbs CO2/MWh New Source Performance Standard established in the EPA's 111(b) rulemaking449 governing new fossil

- fired power plants . Commenters stated that it is irrational and arbitrary to have an emission rate standard for existing power plants that is below the emission rate specified for new power plants.

Commenters opposed the inclusion of nuclear units under construction in the calculation of state goals. Commenters stated that by including the output of nuclear units that are assumed to be completed at some date in the future in the calculation of a State(s) existing carbon/MWh rate (the output of the units under construction i s imbedded in the denominator of the fraction), the EPA has artificially changed the rate and made compliance with the goal exponentially more difficult. Commenters also noted that this has been done despite these units having never produced any electricit y, or even having received an operating license to begin production. Commenters stated that no other energy source that does not currently exist is included in the Proposed Rule's calculation of the emission rate.

Commenters stated that the EPA's proposal as published punishes the ratepayers who through long

- term power contracts have been, and are, paying for the investment in Watts Bar Nuclear Unit 2 in their rates, and will continue to do so. Commenters stated that such environmental rules result in unfa irness and are bad public policy.

Commenters stated that the EPA includes plants under construction in their respective states baseline calculation, the requiring them to take additional measures to comply with the regulation beyond these carbon free inve stments that they are already made, and that the rule must count new nuclear construction projects towards the EPA emissions target. Commenters also stated that studies have shown that investments outside of nuclear do not significantly contribute to carbo n decline since most wind and solar plants must be co

- located with natural gas plants due to intermittency.

Commenters stated that by accounting for under construction and at risk nuclear in the state's emission rate equation, the EPA is essentially punis hing states that have already made an effort to reduce CO2 emissions by holding those states accountable by basing their CO2 emission rate goals on the future operation of these nuclear generation facilities. Regarding nuclear power and the CPP, commenters stated that EPA should not count electricity production from nuclear reactors under construction because nearly one

- half of all proposed nuclear reactors in the US have never started operation. Commenters cited several examples of nuclear reactors that we re under construction or where construction was planned but were cancelled. Commenters stated that with the significant hurdles to building new nuclear reactors, the EPA should not allow reactor projects under construction to be credited for CO2 reductions until a project is completed and operational. Commenters stated that the historic and recent challenges of bringing a nuclear reactor online, from concept to creating energy, is reason enough as to why this technology should not be included as a BSER.

Co mmenters stated that the EPA's approach contravenes important national energy and environmental policy objectives as well as state policies. Commenters cited the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007 as providing su bstantial support to expand the commercial utilization of nuclear energy in the United States and improving the nuclear regulatory process. Commenters also cited multiple state legislative actions in Georgia, South Carolina, and Tennessee that supported nu clear power, including the450 "Georgia Nuclear Financing Act," and South Carolina energy policy with specific support for nuclear power. Commenters stated that in the NPRM, the EPA is imposing a penalty on these states, which is unfair and directly contradict s the nation's established energy and environmental policies.

Commenters stated that at Plant Vogtle, located near Augusta, Georgia, Units 3 and 4 are currently under construction; commercial operation is slated in 2017 for Unit 3 and in 2018 for Unit 4. C ommenters noted that the units will be state

- of

- the

- art Westinghouse AP1000 reactors, each producing approximately 1,117 MW, at a projected capital investment of $14 billion, creating some 5,000 on

- site construction jobs and 800 new permanent jobs.

Comment ers stated that the owners of Vogtle 3

- 4 are GPC, the Corporation, MEAG and Dalton Utilities; SoNOPCo, a subsidiary of the Southern Company, is the licensee and operator of the Plant. Commenters remarked that early planning work began in 2005 and on March 28, 2008, SoNOPCo filed an application with the Nuclear Regulatory Commission ("NRC") for licenses for the two units. Commenters stated that the NRC issued the necessary licenses for Vogtle Units 3 & 4 on February 9, 2012, and in March 2013, the initial po uring of concrete for the reactor buildings began; construction has continued from that point forward.

Commenters stated that more specifically, in the Proposal, EPA determines that as part of BSER, building block 3 includes the projected amounts of genera tion available by completing all nuclear units currently under construction. Commenters stated that EPA proposes to include "under construction" nuclear generation in the denominator of its formula for calculating state CO2 emission rate goals:

CO2 rate28 = [(Coal gen. (coal ER)) + (OG gen. (OG ER)) + (NGCC gen. (NGCC ER)) + ("Other" emissions)] [Coal gen. + OG gen. + NGCC gen. + "Other" gen. + Nuclear gen. + RE gen. + EE gen.]

Commenters contended that the Proposal violates the CAA and betrays national ene rgy and environmental objectives and EPA's own policy goals, and if EPA finalizes the Proposal "as

- is," without necessary revision, its action would be arbitrary and capricious rulemaking, in derogation of Federal law. Commenters remarked that it unfairly (and inexplicably) penalizes the three states that have proactively acted

- at great expense

- to reduce future CO2 emissions by undertaking to construct and operate the first new nuclear generation in thirty years.

Commenters stated that the UCS supports the EPA's inclusion of new nuclear reactors that are under construction in setting state emission reduction targets and for compliance. Commenters recognized the potential for nuclear to reduce carbon emissions from existing fossil fuel power plants, and supports the EPA's proposal to include new nuclear reactors that are currently under construction in setting state emission reduction targets and for compliance. Commenters stated that this approach is consistent with the EPA's treatment of new natural gas combined cycle plants and UCS' recommendation for new renewables that are under construction; however, while these technologies are currently cost

- effective to deploy on a larger scale for the purposes of the BSER, new nuclear plants are not. Commenters s tated agreement with the EPA's approach for not including any additional new nuclear reactors beyond the ones that are under construction for setting state targets because of their current high costs and long lead times; however, states451 would have the flex ibility to include additional nuclear plants for compliance under the proposed rule. Commenters also suggested that the incremental generation from uprates, at existing plants that meet important safety standards, such as those described above, should be e ligible for compliance.

Commenters stated that for many years in advance of this proposed rule, electric providers in South Carolina took major steps to decrease their carbon emissions, noting that electric providers and their customers have already invest ed billions of dollars building two new nuclear generating facilities, and a significant share of the cost of these units are to be borne by our electric cooperatives through their wholesale agreements with Santee Cooper. Commenters continued, stating sinc e the goal of the proposed rule is to reduce carbon emissions, carbon

- free nuclear generation that comes online after the 2012 baseline of this rule should be treated the same as other new carbon

- free generating sources; however, this proposed rule does no t give South Carolina credit for making early investments in clean nuclear energy. Commenters believed that by including the output from yet

- to

- be

- completed nuclear units in the calculation of the state goal for "existing units", EPA has effectively handic apped their State and disproportionately increased the amount of CO2 emission reductions that South Carolina must achieve. In contrast, commenters remarked, states that have utilities which invested in wind and solar are rewarded by EPA because those sourc es and the future carbon emissions reductions they are expected to beget cannot be not "assumed" and therefore can be used to more effectively meet a state's goal. Commenters believed that if this investment in future carbon

- free electric generation is not afforded the same net benefit as all other zero

- emitting generation towards meeting the State goal, then utilities in South Carolina will be forced to build additional alternative carbon

- free generation to offset carbon emissions from fossil fuel generati on.
Commenters stated including under

- construction "at

- risk" existing nuclear in goal

- setting is outside section 111(d) authority.

Commenters stated EPA's attempt to justify its approach by creating a distinction between under

- construction nuclear and y et

- to

- be

- planned nuclear is similarly flawed. Commenters said EPA implies that because it historically has distinguished between affected sources that are under construction at the time of proposal and those that are not, that the Agency similarly can dist inguish between under

- construction nuclear units and those that are not yet planned as part of its BSER determination; however, neither new nor under

- construction nuclear units, nor existing nuclear units, are affected sources under Section 111. Commenters said there is no precedent or rationale for EPA's proposed approach, and it is instead simply based on EPA's policy goal to decrease the utilization of existing fossil generating units.

Commenters stated EPA must select reasonable benchmarks when setting standards under the Clean Air Act. Commenters stated, in this context, EPA has proposed to calculate emission targets for Georgia, South Carolina and Tennessee that reflect nuclear projects in those states that are not anticipated to be complete until the 2015

- 2020 timeframe. Commenters believed this approach: (a) is inconsistent with the Administration's own benchmarks for cutting CO2 emissions; (b) arbitrarily relies on a concept of "under construction" that does not appropriately fit this regulatory con text; (c) is inconsistent with other relevant legal standards for when nuclear units should be considered "under construction," and (d) is inconsistent with benchmarks EPA has selected for other "BSER" identified in the proposed rule. Commenters remarked t hat the452 Administration has repeatedly stated that a primary environmental objective is to reduce GHG emissions in the United States "in the range of 17 percent below 2005 levels" by 2020. (47 The President's Climate Action Plan, at p. 4 (June 2013), availa ble at http://www.whitehouse.gov/sites/default/files/image/president27sclimateactionplan.pdf (emphasis added).) Commenters said EPA has also repeatedly promoted the proposed rule on the basis that it would "help cut carbon emissions from the power sector b y 30 percent from 2005 levels." (48 EPA Fact Sheet: Clean Power Plan, available at http://www2.epa.gov/carbon

pollution

- standards/clean

- power

- plan

- proposed

- rule (emphasis added). With respect to EPA's overall estimate of 30% reduction by 2030, it appears t hat EPA has turned the Section 111(d) process on its head by, first, determining on its own the level of emission reductions EPA would prefer to achieve on a nationwide basis and, then, fashioning a program that fits that objective. This is contrary to the clear statutory directive in Section 111(d).) Commenters said such a statement is even in the preamble to the proposed rule itself. (49 79 Fed. Reg. at 34,832 ("Nationwide, by 2030, this rule would achieve CO2 emission reductions from the power sector of approximately 30 percent from CO2 emission levels in 2005.").) Commenters noted, inconsistent with these statements, EPA now proposes to treat these five nuclear units, which were not operating, or even under construction, as of 2005, and were not operatio nal at the time of this proposal, in a manner that essentially eliminates any positive credit their respective states should receive as a result of these zero

- emission power plants. Commenters stated that Watts Bar 2, Vogtle 3

- 4, and Summer 2

- 3 were not "u nder construction" in 2005 or operational at the time of the proposal and, consistent with longstanding Administration positions on emissions reductions, efforts to complete these zero

- emissions units

- whether after 2005, after 2012, or after the proposed or final rule

- should result in a positive result for these states, not a negative impact.

Commenters questioned EPA's decision to base this analysis on whether a particular nuclear unit was "under construction" at the time of the proposal. Commenters s tated that EPA provided no justification or explanation as to why it chose to employ the term "under construction" as opposed to "operational." Commenters said EPA simply stated, without supporting legal or technical analysis explaining why such a framewor k is relevant, that the "decisions to construct these units were made prior to this proposal." Commenters believed this framework, which defines BSER based on whether these units were "under construction" at the time of the proposal, is arbitrary and unrea sonable. Commenters said these are complex and expensive projects subject to a host of regulatory requirements and procedures. Commenters asserted that EPA is not qualified to make assumptions or assertions, for purposes of a BSER analysis, about the const ruction or completion of these nuclear projects. Commenters said, indeed, even if asked, the Nuclear Regulatory Commission could not presently assert that these units "will be" operational at a certain date. Commenters stated they anticipate completion and operation of these units in the timeframes identified by the owners/operators, but it is not within EPA's authority to establish regulatory standards on that basis. Commenters remarked that under relevant definitions of "under construction," Vogtle 3

- 4 an d Summer 2

- 3 were not under construction in 2012, let alone 2005. Commenters said, for example, in order to qualify for the production tax credit for advanced nuclear energy, the Internal Revenue Service (IRS) has stated that "construction begins when a pe rson who has applied for or been granted a combined license for an advanced nuclear facility initiates the pouring of safety

- related concrete for the reactor453 building." (50 Internal Revenue Bulletin No. 2006

- 18 (May 1, 2006), available at http://www.irs.go v/irb/2006

- 18_IRB/ar07.html.) Commenters stated, similarly, the Department of Energy has, in the context of standby support programs for advanced nuclear power plants, stated: "Commencement of construction means the point in time when a sponsor initiates t he pouring of safety

- related concrete for the reactor building." (51 71 Fed. Reg. 46306, 46326 (Aug. 11, 2006) (emphasis added).) Commenters noted, as the Congressional Research Service has recently recognized: "Pouring of the first 'safety related' concre te, which marks the start of reactor construction, was completed on March 11, 2013, for V.C. Summer Unit 2 and three days later for Vogtle Unit 3." (52 Congressional Research Service, Nuclear Energy Policy, at p. 3 (Sept. 2013).) Commenters said, in other words, from a legal perspective, construction had not begun for these units until 2013, well after the 2005 or 2012 baselines and benchmarks applied by EPA. Commenters asserted that it is, therefore, neither appropriate nor reasonable for EPA, when setting emissions targets, to consider these units as "under construction." Commenters closed, stating as part of its selection of BSER for purposes of this rule, EPA is imposing a benchmark for these nuclear units that it does not apply to other BSER (with the p ossible exception of NGCC plants, which also have similar concerns with EPA's approach to "under construction" units), and EPA does not specifically identify "energy efficiency" projects/programs that are in the process of being developed and deployed, nor does EPA identify specific renewable energy projects that are "under construction."

Commenters stated that as part of Building Block 3, EPA accounts for zero

- emission nuclear energy by assuming that no existing "at risk" nuclear capacity will be retired a nd that all new nuclear energy units under construction will be built. Commenters added specifically, with respect to existing nuclear facilities, EPA assumed that six percent of current nuclear capacity is at risk of retirement and applies a uniform credi t of six percent of each State's current nuclear capacity to electricity generation when computing each State's emission reduction target. Commenters believed this approach to avoided retirements is arbitrary and capricious because it does not account for key differences between States and between individual facilities. Commenters explained first, that EPA's approach assumes that all existing nuclear facilities can continue to operate in perpetuity and fails to include any safety valve to account for facili ties that reach the end of their licensed lives and notes that nuclear facilities must be permitted by the Nuclear Regulatory Commission (NRC), and a significant portion of the existing nuclear fleet has already obtained 20

- year extensions that are set to expire before, or shortly after, the final 2030 compliance deadline. Commenters added that 36,000 MW of nuclear generating capacity will reach the end of the 20

- year extension period between 2029 and 2035. (79 NEI, Subsequent License Renewal: Creating the Foundation for Nuclear Plant Operation Beyond 60 years (Feb. 2013), http://www.nei.org/CorporateSite/media/filefolder/NEI

- White

- Paper

- Subsequent

License

- Renewal.pdf.ext=.pdf) Commenters remarked that EPA does not to consider the possibility that for econom ic, reliability, or other operational reasons, the facility owners or the NRC determines that the facility has reached the end of its useful life and on that basis declines to seek or grant another extension and that such a decision would be beyond the aut hority of EPA or the States to control, and EPA must consider whether changes to its emission reduction targets would be required under such circumstances. Further, commenters remarked that EPA does not account for the potential that other, unforeseen even ts could require a facility to retire, citing the example, in 2013 the Crystal River 3 facility was retired as a result of unrepairable cracks in the containment building's outer concrete wall. (80 Press Release, Duke Energy, Crystal River Nuclear Plant to be retired; company evaluating sites for potential new gas

- fueled454 generation (Feb. 5, 2013), available at http://www.dukeenergy.com/news/releases/2013020501.asp) Commenters added that likewise, the San Onofre Nuclear Generating Station retired two units a s a result of leaks in steam generators. (81 Press Release, Southern California Edison, Southern California Edison Announces Plans to Retire San Onofre Nuclear Generating Station (June 7, 2013), available at http://www.songscommunity.com/news2013/news06071 3.asp) Commenters concluded that if EPA is to include avoided nuclear retirement in its BSER analysis, it must account for the possibility that similar equipment failures may occur in the future, and, moreover, EPA does not address what would happen if ret irements in a State exceed six percent of the State's nuclear capacity. Commenters’ second point supporting his position is that EPA's proposed 90% capacity factor for nuclear facilities, while perhaps reasonable for the entire U.S. nuclear fleet, is

unrea listic on a smaller, State

- level scale. Commenters explained that while nuclear facilities can provide reliable baseload energy, both planned and unplanned outages do occur and maintenance, repair, and upgrades can take a significant amount of time to comp lete, and as a result, a single long

- term outage could threaten a State's ability to achieve 90% capacity in a given compliance year. Further, commenters added, EPA's uniform application of a six percent "at risk" capacity factor to all States across the b oard ignores the binary nature of plant retirements, and while a uniform figure may be justifiable at a national level, many States have a small number of nuclear facilities and the retirement of even one unit would exceed six percent of the State's existi ng nuclear capacity. Commenters cited the example that Michigan has four operating nuclear power reactors, the smallest of which represents 20% of the State's nuclear generating capacity. Commenters said, under the circumstances, an "at risk" capacity fact or of less than 20% would be arbitrary and capricious because it assumes that only part of a facility is at risk of retirement, and thus, at a minimum, EPA must conduct a State

- by

- State analysis and adjust the "at risk" capacity in the event that the State 's smallest nuclear energy unit represents more than six percent of the State's total nuclear capacity. Commenters’ third point supporting their position is that by applying a uniform six percent "at risk" factor to all States, EPA implicitly assumes that all nuclear facilities are equally at risk of retirement. Commenters believed this assumption is unreasonable and cites factors such as facility age, permitting cycle, and location in a competitive market or vertically integrated State can all play a role in determining the likelihood of a specific plant's retirement. Commenters stated that given the relatively small universe of existing nuclear energy facilities and the significant impact of this rulemaking, it is arbitrary and capricious for EPA to rely o n aggregate national data to set State

specific emission reduction targets, and at a minimum, EPA must apply a more granular methodology that evaluates each State independently to determine the amount of existing nuclear capacity that is truly at risk of r etirement and then set State specific "at risk" capacity factors. Commenters’ fourth point supporting their position is that even apart from EPA's six percent "at risk" factor, EPA independently assumes that, for purposes of determining a State's emission reduction target, that all under construction nuclear plants will be completed. 79 Fed. Reg. at 34,870. (82 EPA is also effectively assuming that the NRC will license these plants. The NRC has refused to issue an operating license in the past, which led to the project being abandoned. http://www.nrc.gov/reading

- rm/doc

collections/nuregs/brochures/br0468/br0468.pdf.) Commenters noted that given the cancellations, delays, and budget overruns experienced by numerous nuclear plants, this assumption is unwarrant ed. (83 http://www.timesfreepress.com/news/2012/jun/04/delays

- mire

nuclear

- plant

- construction/; see also455 http://en.wikipedia.org/wiki/List_of_canceled_nuclear_plants_in_the_United_States (these projects have all "announced delays and budget overruns")), an d adds that as EPA concedes, if a project is abandoned, that would have a "significant impact on the state's ability to meet" the emission reduction target mandated for it by EPA. 79 Fed. Reg. at 34,870. Commenters stated that by making this assumption, EP A is arbitrarily penalizing "first

- mover" States. (84 notably, in EPA v. EME Homer City Generation, L.P., the EPA took the position that its construction of the Clean Air Act should be given deference, inter alia, because it accounted for the extent to whi ch States had previously invested in emission reductions. See Br. of Resp. EPA, at 49 (S. Ct. Nos. 12

- 1182, 12

- 1183)) Commenters remarked that a State that constructs a nuclear power plant the day after the proposed rule is finalized would be able to use t hat increased generating capacity to meet its emission reduction target. But commenters said Georgia, South Carolina, and Tennessee get no such benefit even though they sought to construct nuclear facilities before EPA published the proposed rule to curb c arbon emissions. Commenters concluded that, to the contrary, EPA has set emission reduction targets that will be required in addition to the reductions that would be achieved if the plants under construction were finished and became operational.

Commenters stated that, in summary, by treating nuclear units under construction as constituting BSER for purposes of Section 111(d), EPA's proposed rule severely penalizes the states of Georgia, South Carolina and Tennessee even though these states are leading the expansion of nuclear power

- the nation's most significant source of zero

- emission electric generation. Commenters said this is unjustified and counter

- productive to the agency's objective of reducing CO2 emissions, and EPA's approach clearly violates sect ion 111(d). Moreover, commenters asserted that EPA has failed to provide a sound legal and technical basis for its decision to treat these states in this manner. On these grounds, commenters would also strongly oppose any efforts to, in EPA's words, "inclu de in the state goals an estimated amount of additional nuclear capacity whose construction is sufficiently likely to merit evaluation for potential inclusion in the goal

- setting computation." (61 79 Fed. Reg. at 34,871) Commenters believed the states wher e these nuclear units are under construction should be able to use the generation from these units, when operational, for purposes of demonstrating compliance with applicable goals. In other words, commenters stated that any state should be allowed to elec t to count new nuclear (including under

- construction units and units that may be in a company's long

- term resource plan but not yet under construction) towards compliance in its state plan when those units come on

line, and EPA should state affirmatively t hat such elections are approvable.

Commenters stated that N. Georgia EPD and EPA do not have the authority to require construction or operation of new nuclear generating units. Commenters explained that the Vogtle 3 and 4 nuclear generating units are not a ffected sources under the Clean Air Act, or Section 111 in particular, and as a result, neither EPD nor EPA has the authority to require the construction or operation of these units or to enforce the decision to build Vogtle Units 3 and 4 (made by the co

o wners of the units, with oversight/approval by the Georgia Public Service Commission in the case of Georgia Power, and by Boards of Directors and/or municipal government authorities in the case of co

- operative and public power/municipal co

- owners, and the Nuclear Regulatory Commission). Commenters explained that the state of Georgia cannot reasonably meet the stringent goal that EPA has proposed without the construction and operation of these units and the EPD and EPA's lack of authority is highlighted by E PA's assumption that Vogtle Units 3 and 4 will operate at a 90% capacity factor once on

- line (which EPA then incorporates into its456 calculation of Georgia's state goal). Commenters argued that while Vogtle Units 3 and 4 are being built to operate at greater than 90% capacity factors, EPA has not accounted for planned maintenance outages that must occur, and for unplanned outages that may occur, that affect the units' ability to operate at these capacity factors at times. Yet, commenters remarked, neither EPD nor EPA has any authority to regulate the operation of these units by assuming or requiring that these units can always operate at such high capacity factors. Commenters believed this flawed assumption places Georgia at significant risk regarding the abil ity to comply with the goal during periods that even one of these units is offline, especially given EPA's proposal to require short

- term compliance with interim period check

- ins every two rolling calendar years and a three

- calendar

- year rolling average fo r final compliance.

Commenters stated that in the NPRM, EPA decided to treat Vogtle 3

- 4, Summer 2

- 3, and Watts Bar 2 as part of BSER because, in EPA's view, there is no "incremental cost" associated with CO2 emission reductions from completion of these mul ti

- billion dollar nuclear units. [79 FR 34,870] Commenters stated they searched the NPRM and related documents in the record and found no legal or technical analysis, beyond assertions, that supports or justifies EPA's approach in this instance. Commenters added, (verbatim) EPA has not explained how it defines "incremental cost" in this context or how incremental costs would be calculated. [45 EPA's failure to explain its interpretation of "incremental cost" in this context and to explain how those
costs ar e calculated contrasts with other examples of where EPA uses a similar analysis. See, e.g., 40 C.F.R. pt. 51, app. Y (explaining how to "calculate incremental costs" as part of EPA's Guidelines for BART Determinations Under the Regional Haze Rule).] Commen ters said the Regulatory Impact Analysis (RIA) makes just a passing reference to EPA's treatment of under construction nuclear units. [46 RIA, at 3

- 10] Commenters noted that the Greenhouse Gas Abatement Measures Technical Support Document (GGAMTSD) contain s a lone paragraph that recites EPA's assertion about the "incremental cost" of completing these projects, but does not otherwise explain the legal or technical basis for that assertion. [47 GGAMTSD, at 4

- 33] Furthermore, commenters noted that EPA's legal memorandum accompanying the NPRM merely asserts that these five units have "long been known to grid operators for planning purposes," [48 EPA Legal Memorandum for Proposed Carbon Pollution Emission Guidelines for Existing Electric Utility Generating Units, 69, available at http://www2.epa.gov/sites/production/files/2014

- 06/documents/20140602

- legalmemorandum.pdf] but the legal memo does not otherwise explain or justify EPA's approach. Commenters said nor has EPA explained its determination that, for purposes of the Section 111(d) analysis, these units are adequately demonstrated. [49 In addition, EPA has not evaluated whether section 402(i) of the EPAct of 2005 would dictate that Vogtle 3

- 4 and Summer 2

- 3, which have received, or will receive, assistance prov ided through the EPAct of 2005, should be treated as "adequately demonstrated" for these purposes.] Commenters stated, when OMB raised concerns about EPA's treatment of under construction nuclear units, EPA did not explain its rationale, choosing instead t o simply tell OMB that "EPA is taking comment on whether we should include the new on the way nuclear in the state targets as BSER." [50 See OMB Interagency Review Comments, supra note 26 at 9 (showing EPA's response to OMB comments).] As such, commenters believed EPA's approach to under construction nuclear units has not been adequately justified and lacks support in the record.

Commenters stated that the degree of emission limitation that EPA requires under Section 111(d) must be "achievable." Commenters noted, however, EPA's approach eliminates any meaningful457 margin for compliance purposes, substantially hindering the opportunity for these states to achieve compliance with EPA's standards. As a result, commenters believed the standard proposed for these s tates is, within the meaning of 111(d), unachievable. Commenters stated, although EPA references "flexibility" over 100 times in the proposed rule, in reality Georgia, South Carolina and Tennessee will likely face a substantial Clean Air Act compliance ris k, with no real flexibility, as a result of the substantially more stringent emission reduction requirements in the proposal. Commenters stated that there simply is no flexibility for achieving compliance with targets that are between 14

- 22 percent more st ringent than they otherwise would be. Commenters stated, by incorporating such a sizeable and significant factor as the construction of nuclear units projects that are still ongoing, require substantial additional expenditures, and remain subject to addit ional regulatory actions

- EPA has essentially created for these states a compliance target that is likely unachievable. Commenters noted that this concern was emphasized by the Office of Management and Budget (OMB) during the Interagency Review Process wh en OMB provided EPA with comments on this aspect of the proposal, stating: "EPA is proposing that the emission reductions achievable at fossil fuel

- fired sources due to the generation that would be provided by these nuclear units under construction be fact ored into the state emission performance goal through Building Block 3, effectively making them more stringent. Commenters said the inclusion of the five new nuclear units that EPA has identified account for an inordinate amount of the goals that EPA is pr oposing for those states." (57 57 Summary of Interagency Working Comments on Draft Language under EO12866: Interagency Review, at p. 9 of 28 (attachment to e

- mail dated May 15, 2014, from Robert Wayland, Leader, EPA Energy Strategies Group, to Cortney Higg ins, Policy Analyst, OMB/OIRA) (available in EPA's docket for this rulemaking) (hereinafter, "OMB Interagency Review Comments"). ) Commenters said, moreover, OMB stated that the "inclusion of all generation from these units in the state goal is problematic as any prolonged outage would almost guarantee that any state relying on carbon

- free nuclear generation to meet its annual carbon goal would fail to meet that goal." (58 58 Id. at 9.) Commenters believed OMB's concerns support the view that EPA's proposal for "under construction" nuclear generation imposes unachievable standards on the affected states.

Comment 4 : Commenters expressed concerns regarding the proposed 90 percent capacity factor and why this is not realistic in goal setting

. Response 4: EPA a cknowledges the comments and has determined that the BSER for the final rule will not include the provisions we had proposed for under

- construction units in the setting of state goals, and will allow incremental generation from new nuclear units to be appl ied towards compliance. Please see section V.A of the preamble for further discussion of the treatment of new nuclear plants, and section VIII.K of the preamble for further discussion of provisions in state plans of allowable actions that result in an ad justed CO2 emission rate of an affected EGU.

The following are summaries of the specific public comments under this comment :
Commenters stated that EPA also factored in the expected generation from the under construction nuclear units at an assumed 90 perc ent capacity factor in developing the interim and458 final state goals for these three states; however, it is not realistic to assume that these units will operate at such a high capacity factor from the date of first commercial operation. Commenters said alt hough a capacity factor of 90 percent is a realistic long

- term equilibrium value, these under construction units can be expected to experience a 'shake down' period once they commence operation when capacity factors could be significantly lower. Commenters said moreover, as of late October, 2014, on average the total U.S. nuclear plant capacity factor was slightly less that 85 percent.

Commenters stated for purposes of each state's goal computation, generation from 'at risk' nuclear capacity is based on an estimated 90 percent annual average capacity factor; EPA uses 90 percent because it indicates this utilization rate is consistent with long

- term average annual utilization rates observed across the national nuclear fleet. Commenters said EPA, however, does not provide a reference to justify the assumed utilization rate; furthermore, a long

- term average is not consistent with EPA's guidelines that require a process for reporting on plan implementation, progress toward achieving goals, and implementation of c orrective measures no less than every two calendar years during the interim compliance period and a three year average during the final compliance period. Commenters said in fact, the U.S. nuclear fleet recently operated below EPA's assumed 90 percent util ization rate. Commenters said in 2011 and 2012, the U.S. nuclear fleet operated at an 88.9 percent and 86.4 percent capacity factor respectively. Commenters said additionally, individual states may be considerably different than EPA's assumed utilization r ate; for example, Florida's most recent three

- year capacity factor for nuclear generation was 76.6 percent, and Mississippi's most recent three

- year capacity factor was 83.5 percent. Commenters said as a result, EPA's across

- the

- board assumption that each state's nuclear capacity has and will continue to operate at 90 percent capacity factor is not supported.

Commenters stated EPA's unjustified assumption that Plant Vogtle Units 3 and 4 will be online and operating at 90 percent capacity factor by 2020, and each year thereafter, creates a substantial risk that both routine and unexpected outages at these units will require Georgia to obtain additional, expensive emission reductions elsewhere. Commenters said shutdowns for refueling, maintenance, and safety i ssues could lead these units to operate at capacity factors below 90 percent for sustained periods. Commenters said likewise, it is possible that these new units will not operate at their full capacity during the first months or years of operation as plant operators test and fine

- tune the new units. Commenters said EPA's 90 percent capacity factor assumption, which is based on historical national average capacity factors for existing nuclear, is even more inappropriate for the nuclear units under constructi on because these units are first of their kind, new technology, which creates additional uncertainty regarding the time to ramp up to expected performance as well as on

- going operations.

Commenters stated neither GEPD nor EPA has the authority to force the operation of Plant Vogtle Units 3 and 4; as a result, if the capacity factors for these units fall below 90 percent, Georgia will be required by EPA's Section 111(d) program to make up for the potentially significant shortfall with more expensive renewabl e generation or energy efficiency, leading to large financial penalties for Georgia's early investments in zero

- carbon nuclear power. Commenters said as OMB explained to EPA during the Interagency Review process, the "inclusion of all generation from these units in the state goal is problematic as any prolonged outage would almost guarantee that any state relying on carbon

- free nuclear generation to meet its annual carbon goal would fail to meet that goal." Commenters said Congressional Research459 Service ("C RS") explained: "[i]f these anticipated units do not complete construction and enter service, these states would likely have more difficulty achieving their emission rate goals." Commenters said the GEPD was more direct in its comments, explaining that "un der

construction nuclear generation has such a significant impact on the goal that any shortfall in ultimate performance would be virtually impossible to overcome." Commenters said as a result, EPA should remove under construction nuclear from its goal cal culation for Georgia, and instead should treat Plant Vogtle Units 3 and 4 like any other future nuclear generation, not incorporated into the state goal, but available for compliance.

Commenters quoted NEI and EEI's evaluation of the true average lifetime capacity factor for the U.S. nuclear fleet, which determined that the average lifetime capacity factor of the 100 nuclear plants currently in operation is 81.6% (through 2013). Comment ers suggested that, even to the extent that the final rule does not fully account for all nuclear generation in state compliance plans, any generation from existing nuclear EGUs in excess of the average lifetime 81.6% capacity factor should be authorized f or inclusion by states in their compliance demonstrations. Commenters also suggested that the final rule should allow nuclear generation above the 81.6% lifetime capacity factor between the years 2012 and 2020 to be "banked" and applied toward post

- 2020 co mpliance.

Commenters stated that there are several deficiencies, inconsistencies and errors in EPA's methodology to include the 6% at

- risk nuclear capacity and 90% capacity factor of dispatch in the goal calculation. Commenters also pointed out several di fferences between the stated nuclear capacities for Ohio in the GHG Abatement Measures TSD with EIA reports. Commenters mentioned that EPA states in that document that 2,150 MW of nuclear capacity were operational in Ohio in 2012, however the 2012 EIA

- 860 report for the same year lists 2,236.8 MW of nameplate nuclear capacity. Commenters stated that the 2012 EIA

- 860 report gives a summer capacity of 2,134 MW.

Commenters stated that the EPA's unjustified assumption that each of the five nuclear units under construction will be online and operating at 90% capacity factor by 2020 and each year thereafter creates a substantial risk that both routine and unexpected outages at these facilities will require host states to obtain additional, expensive emission redu ctions elsewhere. Commenters further stated that shutdowns for refueling, maintenance, and safety issues could lead these units to operate at capacity factors below 90% for sustained periods, and that it is possible that these new units will not operate at their full capacity during the first months or years of operation as plant operators test and fine

- tune these new power plants. Commenters quoted Office of Management and Budget (OMB) during interagency review comments: "inclusion of all generation from t hese units in the state goal is problematic as any prolonged outage would almost guarantee that any state relying on carbon

- free nuclear generation to meet its annual carbon goal would fail to meet that goal." Commenters concluded that unlike Georgia, Sout h Carolina, and Tennessee, states that did not invest in large, zero

- carbon projects do not face such severe compliance risks under EPA's proposal, and that this disparity is manifestly unfair to the states that chose to invest in zero emission generation.

Commenters stated that, in the Proposal, the EPA seeks to impose operational requirements on nuclear units, such as Vogtle 3 and 4. Commenters stated that there is a fundamental problem with this portion of the Proposal

- the Vogtle 3 and 4 nuclear gener ating units (in fact, all U.S.460 nuclear generating units) are not affected sources under the CAA, including

- in particular

- section 111, the governing provisions for this rule. Commenters stated that therefore the EPA (and, either through Federal approval of its State programs or state authorizing legislation, the Georgia Environmental Protection Division ("EPD")) does not have the authority to require the construction or operation of Vogtle units 3 and 4 or to even enforce the decision to build them. Comm enters continued that this lack of authority is highlighted by the Proposal's assumption that Vogtle Units 3 and 4 will always operate at a 90% capacity factor once on

- line (a requirement then incorporated into the calculation of Georgia's state goals). Co mmenters stated that the 90% capacity factor assumption is without foundation, and that, according to the International Atomic Energy Agency, the average lifetime capacity factor of the 100 nuclear plants through 2013 is 80.3%, while the average nuclear pl ant capacity factor in 2012 was 86%. Commenters stated that, during the initial phase of nuclear operations, capacity factors could be significantly lower than 90 percent, and that the EPA should lower its capacity factor assumption to a level consistent w ith what units have historically been able to maintain.

Comment 5: EPA's assumption of 5.8 percent "at risk" in the standard

- setting calculation does not accurately represent nuclear units that are "at risk" of premature retirements.

Response 5: EPA ac knowledges the comments and has determined that the BSER for the final rule will not include the proposed provisions for existing nuclear units in the setting of state goals. Please see section V.A of the preamble for further discussion of the decision t o exclude existing nuclear power from BSER, and section VIII.K of the preamble for further discussion of provisions in state plans of allowable actions that result in an adjusted CO2 emission rate of an affected EGU.

The following are summaries of the spe cific public comments under this comment:
Several commenters stated that the EPA's assumption that 5.8% of the nuclear power in each of the 30 states with nuclear power was "at risk" was flawed.

Commenters stated that there is no logical or factual basis to assume that six percent of the nuclear generation in every state with nuclear generation is "at risk." Commenters stated that, although there are nuclear plants at risk, they are generally loca ted in states with competitive markets, not evenly distributed among all states with nuclear capacity. Therefore, commenters stated that the EPA's approach is thus arbitrary and indefensible analytically. Commenters noted that in some states (depending on the make

- up of the state's generation portfolio), the six percent 'at risk' factor may have perverse and unintended consequences, i.e., a state could lose its nuclear generation, replace only six percent of it with other zero

- carbon resources, still meet t he intensity target, but total carbon emissions would increase. Commenters concluded that, as a result, the six percent nuclear factor does not achieve the intended result: It provides no incentive for states to preserve nuclear capacity at risk.

Commente rs stated that the EPA's treatment of existing nuclear energy in the proposed rule is fundamentally flawed due to the 'at risk' framework applied only to nuclear generation. Commenters stated that the EPA underestimates the nuclear generation at risk of pr emature461 retirement in some states, and overstates the nuclear capacity at risk in others. Commenters stated that public data shows that the "at risk" plants are not evenly distributed among all states with nuclear capacity, and that much more than six perc ent of nuclear capacity is at risk in competitive markets. Commenters noted that Illinois, for example, Exelon Corp. has indicated publicly that five of its 11 nuclear reactors are at risk of premature shutdown, and that the 11 nuclear reactors in Illinois produce approximately 48 percent of the state's electricity.

Commenters concluded that in some states (depending on the make

- up of the state's generation portfolio), the six percent "at risk" factor may have perverse and unintended consequences, i.e., a state could lose its nuclear generation, replace only six percent of it with other zero

- carbon sources, still meet the intensity target, but total carbon emissions would increase. Commenters stated that such an outcome does not support the goal of the regu lation, reducing the effects of carbon emissions on global climate. Commenters concluded that the six percent nuclear factor does not achieve the intended result, and EPA's decision to ignore 94 percent of nuclear generation is not justified: It provides n o incentive for states to preserve nuclear capacity at risk.

Commenters also stated that if states are to achieve meaningful emission reductions, carbon

- free generation (including existing nuclear generation) must remain in operation or be replaced by

car bon

- free generation. Commenters noted that if a state has a single 1,000

- megawatt nuclear plant that shuts down prematurely, six percent of that capacity would be only 60 megawatts, and a state could replace that easily with, for example, a new wind farm. Commenters recommended that a state should not be indifferent to the loss of the remaining 940 megawatts of nuclear capacity, which would almost certainly be replaced by new gas

- fired combined cycle units that would increase the state's total carbon emissi ons. Commenters stated that, given the purposes of this rule, it would be arbitrary and capricious for EPA not to consider the possibility of this outcome, yet the proposed rule allows a state to be indifferent to the loss of 94 percent of its nuclear gene rating capacity, because it charges the state with the loss of only six percent of prematurely retired nuclear capacity.

Commenters also stated that retiring only six percent of a state's nuclear capacity is implausible, if not impossible. Commenters noted that the owner of a nuclear plant cannot retire six percent of the facility; the only choice is to retire it completely or keep it operating. Commenters further noted that number of states have only one nuclear facility, which means that any retirement wi ll necessarily be a retirement of 100 percent of the state's nuclear generating capacity. Commenters also noted that even in states with multiple nuclear units, virtually any single nuclear unit will generate more than six percent of in

- state nuclear gener ation. Commenters concluded that, if any nuclear facility is prematurely retired, it is nearly certain to represent more than six percent of a state's nuclear capacity. But Commenters stated that six percent is the most that is relevant under the proposed rule.

Commenters stated the EPA's rule could, paradoxically, increase the financial pressure on existing nuclear plants, because the rule expresses its targets in terms of a state

- by

- state emission rate rather than actual emissions. Commenters stated that by measuring only the rate, not the total emissions, states could be encouraged to (1) ignore zero

- emission resources like nuclear energy, and (2) focus instead on complying with the emission rate by artificially increasing the marginal cost of higher

- emit ting generators (like coal

- fired plants) while reducing the marginal cost of lower

- emitting generators (like gas

- fired combined cycle plants). Commenters provided462 the example that at a state might adopt an emissions credit regime that taxes higher

- emitting fossil fuel plants and subsidizes lower

- emitting fossil fuel plants. Commenters stated that, under such a program, a gas

- fired combined cycle plant would be able to sell electricity for less than its true marginal cost, thereby lowering the market price o f electricity for all generators, further undercutting the economic viability of existing nuclear plants.

Commenters also stated that there are practical reasons not to use a snapshot

- in

- time figure of nuclear capacity at risk as the basis for a rule that will govern for decades. Commenters observed that market conditions are dynamic, and a plant that is not at risk today may be at risk tomorrow, and vice versa.

Commenters stated that the 5.8 percent figure was computed based upon an AEO 2014 projection, w ithout evaluating specific nuclear capacity in each state. Commenters stated that this approach does not in any way reflect the actual state of existing nuclear capacity in any state, resulting in additional generation being included in the goal setting eq uation for some states, if not all. Commenters recommended that factors such as license renewal and expiration dates, expected capital improvements, profitability and other factors should be considered and an appropriate unit/state specific risk factor be applied.

Commenters recommended that, consistent with EPA's desire for flexibility in development of State Plans, states should be able to justify and utilize in their State Plans more state

- specific determinations of "at risk" nuclear generation within t heir state rather than being restricted to the numerical methodology set forth in the Proposed Rule. Commenters stated that RTOs with capacity markets have tools available to assist states in ranking the competitiveness of individual units under an "at ris k" showing. Commenters stated that while confidentiality provisions would limit the specifics of this information being spread on the public record, states and RTOs could develop state and regional formulae that would better allow for the identification of at risk nuclear plants in a given footprint with the EPA methodology than available solely as a default.

Commenters stated that the 6% credit for 'at

- risk' nuclear is insufficient incentive to keep these units in operation, and does not reflect conditions in Georgia, and recommended that EPA should not include the at

- risk nuclear in the goal computation. Commenters further stated that nuclear power plants/units are either fully operational or fully shutdown and their continued operation have been solely ba sed on their ability to be re

- licensed by the Nuclear Regulatory Commission (NRC).

Commenters asserted that states with existing nuclear capacity are penalized in the calculation of emission rate goals. Commenters stated that under the EPA's approach, sta tes with nuclear power are left with a more stringent emission rate goal relative to states that do not employ nuclear power because of EPA's inclusion of the 6% "at risk" generation factor in the calculation of state goals. Commenters recommended that thi s factor be dropped in the determination of states' CO2 compliance goals.

Commenters stated that the method EPA has employed to include nuclear capacity in its development of state goals penalizes those states in which there is both existing capacity and capacity under construction. Commenters stated that this penalty is in the form of additional nuclear generation being added into the denominator of the goal computation formula under463 Building Block 3, decreasing the overall calculated target rate (CO2 lbs /MWh) used to determine the state emission goals. Commenters asserted that a state without existing nuclear capacity will benefit from EPA's Building Block 3 relative to other states, in that its denominator will not include nuclear generation, resulting i n a higher state goal. The commenters concluded that states that have nuclear generating units with zero CO2 emissions or that are currently developing nuclear units are effectively penalized and lose any flexibility as to whether to complete or operate th ose units.

Commenters also stated the EPA's assumption that 5.8 percent of each state's 2012 nuclear capacity is "at risk" does not in any way reflect the actual state of existing nuclear capacity in any state, resulting in excessive generation being inclu ded in the goal setting equation for some states, if not all. Commenters recommended that if the EPA decides to include 'at

- risk' nuclear generation in state goals (even though doing so inappropriately penalizes states with existing nuclear capacity), the EPA should evaluate factors such as license renewal and expiration dates, expected capital improvements, profitability, and other factors in order to determine an accurate
state

- specific assessment of at

- risk capacity. Commenters concluded that the EPA's p roposed approach to existing nuclear generation, which it thinks is an incentive to keep 'at

- risk' nuclear capacity on

- line, is merely a penalty.

Commenters stated that nuclear energy and hydroelectric generation represent about 85 percent of current low

- or zero

- emitting resources, and all of the megawatts produced by nuclear and hydroelectric generation are zero

- emitting. Commenters further stated that, of the existing zero

emitting capacity (including nuclear, hydroelectric, solar, wind, and geothermal), 81.3 percent can be replaced (under the current formulation) with generation that emits at a rate equal to the state's goal rate, which will lead to CO2 emissions increases representing a huge step backwards from the starting CO2 emissions rate of zero fo r these technologies, and resulting from this rule.

Commenters concluded that while EPA's rates are reasonable in that they reflect an easily achievable target in this regard, they do not go far enough, and in fact may create incentives to increase CO2 emi ssions. To fix this problem, the commenters recommended that if the EPA is going to continue to rely on building block 3 as any part of the basis for its targets, the Agency will need to adjust the nuclear portion of its building block 3 assumptions to mor e accurately reflect current and expected future conditions in the industry.

Commenters stated that analysis by Justin Knowles and Remy Devoe , reveals that the current formulation of the building block 3 portion of the BSER target setting exercise actuall y rewards 15 states with lower apparent (calculated) target emissions rates if they shut down their nuclear power generation and replace it with natural gas generation, than the rates they would have if more realistic nuclear scenarios were used in the tar get setting exercise.

Commenters presented the example of Illinois, where the current target CO2 emission rate calculated by the EPA, based on including 5.8 percent of nuclear power in the baseline, is 1,271 lbs/MWh. Commenters stated that if Illinois wer e to take its nuclear capacity offline and replace it with natural gas generation, its resulting emissions rate as calculated by the EPA would be 1,130 lbs/MWh, despite the fact that the state's absolute CO2 emissions would have risen by 48.4 percent (cons idered on a mass basis, they would go from 163.7 million tons CO2 per year to464 242.9 million tons CO2 per year). Commenters concluded that Illinois can drastically increase its actual emissions, and yet still meet or exceed its EPA state target emission rat e.
Commenters asserted that a similar situation exists for 14 additional states, as illustrated by the Knowles and Devoe analysis. Commenters stated that in all states with nuclear generation, the importance of nuclear generation in maintaining and lowerin g CO2 emissions is undervalued by the current baseline calculation. Commenters stated that the existing methodology leaves absolute emission reductions highly vulnerable to the loss of nuclear power generation by omitting its contribution in the goal

- setti ng step. Therefore, commenters recommended that the EPA include 100 percent of existing nuclear generation in the building block 3 BSER baseline emission rate calculation

-- and in the other elements of the target setting methodology

-- removing the incent ive to retire existing nuclear generation and replace it with higher emitting generating resources.

Commenters recommended that the EPA eliminate the at

- risk nuclear provision from the goal

setting calculation. Commenters stated that the proposed rule's "a t

- risk" nuclear provision results in more stringent goals for states with existing nuclear capacity than for states with no nuclear generation, and that states in which nuclear plants increased their output prior to 2012 are penalized rather than rewarded for this investment.

Commenters stated the EPA should instead provide an incentive for nuclear units to continue to operate and increase their capacity factor and output, if possible. Commenters stated that the at

risk nuclear provision in the goal does no t incentivize nuclear plants to maintain operations; once constructed, nuclear plants are relatively cheap to operate. Commenters recommended excluding existing nuclear from the goal

- setting calculation, but allowing states with existing nuclear to take cr edit for a portion of their nuclear generation for compliance purposes would, in order to provide this incentive. Commenters stated that otherwise, states are penalized for having nuclear that shuts down, when oftentimes there may be little states can do t o keep nuclear generation operating. Commenters noted that states have little to no input on the decisions of nuclear plant operators to continue operations or shut down, and no input on the dispatch of nuclear units.

Commenters also recommended that the E PA should recognize the early action that utilities have taken to increase nuclear plant output, such as the 2011 extended power uprate of 160 MW at the Point Beach Nuclear Plant. Commenters stated that, rather than getting any credit for this additional, zero

- CO2 generation, the additional 160 MW only serves to increase the stringency of Wisconsin's goal by increasing the at

- risk nuclear factor in the goal

- setting calculation. Commenters recommended that, if the EPA retains the inclusion of at

- risk nuclear capacity in setting state goals, at least the capacity from recent (post

- 2005) uprates should be excluded from determining the amount of at

- risk nuclear generation.

Commenters concluded that if the EPA does retain a provision in the goal

- setting calculation to account for at

- risk nuclear capacity, the EPA should distinguish units that are truly at

- risk and recalculate the percentage of "at

- risk nuclear" used in setting state goals. Commenters suggested that a non

- regulated merchant plant could be considered at

- risk, whereas a utility

- owned plant in
a rate

- regulated state or a plant with a long

- term power purchase agreement, such as Point Beach, would not be "at

- risk."465 Commenters stated the EPA's approach to account for nuclear capacity at risk of r etirement is arbitrary and flawed. Commenters said the EPA identifies Texas as having 290 MW of nuclear capacity at risk of retirement; however, the smallest nuclear power plant unit in Texas is approximately 1200 MW. Commenters said the EPA should have co nsidered the actual sizes of the nuclear units in the states before arbitrarily applying the 5.8% to the states' nuclear power plant fleets. In reviewing the National Electric Energy Data System (NEEDS) data on nuclear units, the commenters have not found a single state with a nuclear unit small enough to correspond to the capacity which the EPA says is at risk of retirement for that state. Commenters said the EPA's arbitrary application of the 5.8% without consideration of other factors has resulted in a nonsensical adjustment to the state goal. Commenters said the EPA's adjustment has an adverse consequence for states that actually have nuclear units at risk of retirement because EPA's approach assumes that only 5.8% of their fleet is at risk when in real ity a higher percentage may actually be at risk of retirement.

Commenters stated in addition to violating the plain language of section 111, EPA's proposal to incorporate approximately 5.8% of each state's supposedly "at

- risk" nuclear capacity in calculat ing state goals is also arbitrary and capricious for the following reasons. Commenters said first, the study on which EPA relies does not project that 5.8% of Georgia's units are at risk of retirement; indeed, the assumption that Georgia may retire some of its existing nuclear capacity is unreasonable in light of the fact that the State's utilities are investing billions of dollars to build additional nuclear capacity in the State; moreover, the costs of both new and existing nuclear generation are already included in their utilities' rate base. Commenters said consequently, temporary electricity market fluctuations

- such as those that generators in competitive wholesale markets may experience

- will not put Georgia's existing units at risk of retirement. Com menters said finally, none of Georgia's four existing reactors will be required to seek a license extension until at least 2034; therefore, there is no reason to believe that any of these units are at risk of retirement in the near future. Commenters said EPA should not arbitrarily apply an assumption that was developed on a national scale for nuclear facilities in different market situations to Georgia's four existing reactors

- all of which are expected to continue providing power for the foreseeable futur e.
Commenters stated furthermore, the Proposed Rule's treatment of existing nuclear capacity is also arbitrarily inconsistent with the proposal's treatment of other large, existing sources of emission

- free electricity, such as hydroelectric dams or RE faci lities. Commenters said EPA asserts that the inclusion of 5.8% of existing nuclear capacity in calculating states' emission goals is reasonable because the EIA projects that this percentage of existing nuclear capacity will retire due to "continued economi c challenges; however, both hydroelectric facilities and RE facilities also face market and non

- market challenges that could lead to reduced capacity or shutdown in future years. Commenters said for example, a number of hydroelectric dams have been removed due to safety, economic, or environmental concerns, and others are at risk of removal or de

rating due to Endangered Species Act and other concerns.

Commenters stated renewable energy facilities in California and other markets could also face economic cha llenges as the supply of non

- dispatchable RE exceeds demand for lengthy periods or as their generation technology degrades over time. Commenters said the typical operating life of a solar facility is 30 years, whereas a typical wind facility is 20 years; t herefore, existing RE facilities that were installed before 2010 are likely to begin retiring in large numbers during the466 proposed interim and final compliance periods; on the other hand, nuclear facilities typically hold operating licenses that last 40 ye ars, with the opportunity to apply for an additional 20

- year license extension (as Georgia's Hatch Units 1 and 2 have done). Commenters said consequently, it is at least as likely that existing RE and hydroelectric resources will shut down or retire during the Proposed Rule's compliance period as it is that nuclear facilities will do so. Commenters said despite this reality, EPA has not proposed to penalize states that retire existing hydroelectric or RE capacity by incorporating an assumption about "at

- ris k" hydroelectric or RE generation into state goals; EPA's decision to include only some "at

- risk" emission free resources in state goals while excluding others is arbitrary and capricious.

Commenters stated another flaw in EPA's proposal to penalize Georgi a if utilities in the State fail to preserve their existing nuclear reactors is that Georgia has limited control over whether nuclear capacity in the State is preserved or retired. Commenters said the fact that all plants in the State are licensed until at least 2034, combined with the fact that nuclear generation costs are included in Georgia's customers' rate base, significantly reduces the likelihood that these power plants will need to retire, negative long

- term regional or national trends that are beyo nd Georgia's control could still require their utilities to shut down or reduce operation at one or more of their existing reactors. Commenters said furthermore, changes to federal regulations, such as those that followed the Fukushima disaster, could also impose additional requirements on existing reactors that would lead to early retirement; therefore, although it is highly unlikely and arbitrary for EPA to consider Georgia's four existing reactors at risk of retirement, the fact remains that Georgia cann ot itself guarantee that these units will continue to generate electricity in the future. Commenters said consequently, it would be arbitrary and capricious to consider the preservation of existing nuclear capacity to be an "adequately demonstrated" system of emission reduction for Georgia's power plants, because the State and its utilities have little control over whether these facilities will continue to operate in the future if economic or regulatory changes make continued operation impossible or unecono mic.

Commenters stated in the 2012 baseline year proposed by the EPA, approximately 30 percent of generation produced in the RGGI region was derived from nuclear resources; in fact, even as demand in the RGGI region decreased over time, nuclear generation increased its percentage share of the total in

- region generation by 3 percent between 2005 and 2012.

Commenters stated the overall experience of the RGGI states demonstrates that a mass

- based approach to emission reductions can incentivize economic and oth erwise viable nuclear resources to remain on

- line by increasing the competitiveness of legacy nuclear resources with fossil fuel

- fired EGUs (which should increasingly reflect a carbon price in their offerings). Commenters said however, experience in the RG GI region suggests that financial and other issues need to be taken into consideration when evaluating or forecasting the contribution of nuclear resources, particularly in light of the transformation of the natural gas market in recent years. Commenters s aid in the rate

- based goal

- setting methodology at issue here, the EPA proposal attempts to incentivize states to retain existing nuclear generation through the inclusion of an at

- risk assumption in the goal computation methodology.

Commenters stated while additional incentives may be necessary

- especially at the federal level, the EPA should remove the at

- risk assumption from the goal computation methodology since its design neglects to account for the full range of possible circumstances in which a nucle ar467 resource may be pressed into retirement. Commenters said if the EPA opts to retain its proposed approach, then the EPA should consider outlining an off

- ramp by which the nuclear generation component would be removed from a state's goal computation upon expiration of an existing license or following an accident that translates into cost

- prohibitive repairs.

Commenters continued EPA calculates the generation (in MWh) of electricity from 'at risk' nuclear plants and then adds this generation to the denomina tor of the goal, resulting in a more stringent 2030 emission rate for states with nuclear capacity. Commenters said EPA explains that the proposed rule counts only six percent of existing nuclear facilities because (according to EPA) six percent of nuclear capacity nationwide is "at risk" for premature retirement.

Commenters stated however, if states are to achieve meaningful emission reductions, it is important that all existing nuclear generation (as well as all existing zero

- emission sources) remain in o peration

- yet the proposed treatment of "at risk" nuclear generation inadequately promotes this goal. Commenters said for instance, if a state has a single 1000 MW nuclear plant that is retired, six percent of that capacity will be only 60 MW

- capacity that a state could easily replace with, e.g., a new wind farm. Commenters said a state should not be indifferent to the loss of the remaining 940 MW of nuclear capacity

- supply that will almost certainly be replaced in large part by new NGCCs that will increase the state's total carbon footprint. Commenters said yet such indifference is precisely what the proposed rule fosters by charging the state with the loss of only six percent of prematurely retired nuclear capacity and providing no incentive to keep the rem aining nuclear capacity in operation.

Commenters stated moreover, the proposed rule's rationale for counting only six percent of nuclear generation

- namely, that only six percent of nuclear capacity is "at risk"

- is too broadly applied. Commenters said first , the reality is that "at risk" nuclear facilities are concentrated in a small number of states with competitive markets, generally located in three regions of the country: the Northeast, the Midwest and the Great Lakes. Commenters said in those areas, the fraction of the merchant nuclear fleet that is at risk of early retirement is much greater than six percent. Commenters said in other regions, where nuclear plants are owned by regulated utilities, the fraction of the at

- risk fleet is much less than six p ercent and, in many of those states, effectively zero. Commenters said second, if any nuclear facility is prematurely retired, it is nearly certain to represent more than six percent of a state's nuclear capacity

- indeed, likely far more. Commenters said fo r example, a number of states have only one nuclear facility

- which means that any retirement will necessarily be a retirement of 100 percent of the state's nuclear fleet; yet six percent is the most that is relevant under the proposed guidelines. Commenter s said EPA's decision to count the six percent of nuclear generation "at risk" when setting state

- specific goal rates unreasonably increases the stringency of state goals where nuclear already exists while not providing an adequate incentive to maintain th e economic viability of any "at risk" nuclear plants.

Commenters stated finally, there are practical reasons not to use a snapshot

- in

- time figure of nuclear capacity at risk as the basis for a rule that will govern for decades; market conditions are dynami c, and a plant that is not at risk today may be at risk tomorrow.

Commenters stated if EPA is going to continue with its proposed interpretation of BSER, the Agency should remove the six percent "at risk" nuclear capacity from the goal calculation.468 Commen ters said a number of alternative approaches to the treatment of existing nuclear generation will be offered by stakeholders in individual comments. Commenters said one approach that EPA should consider, however, is for a state to demonstrate in its plan r easonable assurance that it will preserve its existing carbon

- free generating capacity, particularly nuclear generating capacity. Commenters said for operating nuclear generating units in regulated states, such assurance already exists because integrated u tilities have a reasonable opportunity to recover costs, plus a reasonable return. Commenters said in competitive states with nuclear generating units potentially at risk, this could involve a commitment to policy changes through legislation or regulation, or other market

- based mechanisms, or a combination that would create incentives for continued operation of these zero

- emitting generators.

Commenters recommended in the event of premature economic shutdown of a nuclear unit (most likely to occur in a comp etitive market if the unit is not recovering its costs), the lost nuclear kilowatt

- hours should be subtracted from the denominator of the state's compliance calculation. Commenters said this would provide states an unequivocal signal that existing nuclear generating capacity has irreplaceable carbon abatement value and must be preserved. Commenters said this compliance penalty would not apply in any situation or in any state where a nuclear unit shuts down for reasons beyond a state's control. Commenters sa id this compliance penalty would only be applied for the period between premature shutdown and the end of the unit's remaining useful life.

Commenters stated relying on a national projection from the EIA, the Agency has estimated that six percent of the na tion's nuclear capacity is at risk of premature retirement; however, public data shows that a much larger percentage of the merchant nuclear generating capacity in competitive markets is at risk, and that the "at risk" plants are not evenly distributed amo ng all of the states. Commenters said in some states, such as Illinois, significantly more than six percent of the merchant nuclear capacity is at risk. Commenters said there, for example, Exelon Corp. has indicated publicly that five of its 11 nuclear rea ctors in the state are at risk of premature shutdown. Commenters said the eleven nuclear reactors in Illinois produce approximately 48 percent of the state's electricity.

Commenters stated EPA's inclusion of 'at risk' nuclear capacity is arbitrary and serv es only to penalize states with existing nuclear capacity. Commenters said the Agency has made no attempt to evaluate whether any nuclear capacity is actually at risk of retirement in any state, instead extrapolating from generalized estimates of nationwid e nuclear retirements. Commenters said the result is that EPA overestimates the amount of nuclear capacity that is at risk (if any) in most, if not all, states. Commenters said even if some nuclear capacity is at risk in a state (whether at the level EPA e stimates or at some lower level), including this capacity in a state's goal does nothing to incentivize its preservation because states have no control over the primary factor threatening nuclear EGUs: federal license renewal. Commenters said thus, because states have little ability to promote nuclear capacity and can only be harmed by including under construction and 'at risk' capacity in the goals, EPA's approach is simply a penalty and not an incentive. Commenters said to the extent preserving and increa sing nuclear capacity needs to be incentivized, that needs to be done by the relevant federal agency (the Nuclear Regulatory Commission) to the extent Congress has given that agency that authority. It cannot be done, however, by EPA through the CAA.469 Commen ters recommended that existing nuclear should be removed from the state goal setting calculation because it does not represent the nuclear units "at

- risk, and that the inclusion of existing nuclear in the proposed rule only increases the compliance risk fo r those states that have existing nuclear capacity. Commenters stated that "the true 'at

- risk' units are plants that are not economically viable in capacity markets due to low natural gas prices and units that are not planning to seek re

- licensure through the Nuclear Regulatory Commission.

Commenters stated in 2012 nuclear

- powered generation comprised 48 percent of generation in Illinois, 47 percent in Connecticut, 36 percent in Maryland, and 30 percent in New York. Commenters noted that if some amount of a t

- risk nuclear generation is discontinued, as projected by the U.S. Energy Information Administration, then emissions or emission rates would be likely to increase unless the lost generation capacity was replaced entirely with non

- emitting resources

or avo ided through demand

- side energy efficiency.

Commenters stated EPA's assumption that 5.8% of each state's nuclear fleet is "at risk" for retirement is flawed. Commenters said for Texas, EPA assumed that 290 MW of nuclear capacity is "at risk" for retirement even though this does not equate to a full nuclear unit. Commenters said EPA should have considered the actual size of nuclear units that were actually at risk for retirement rather than applying an arbitrary percentage to all states. Commenters said EPA does not specify any type of monitoring or verification for at risk nuclear generation; nor is it clear how or whether actual net nuclear generation would be taken into account for complying with Rule 111(d). Commenters said while this assumption does not appear to have a meaningful impact on Texas's emissions rate, it further illustrates the arbitrary and unreasonable manner that EPA has used in promulgating Rule 111(d).

Commenters stated in 2007, the Commission approved the construction of two new advance d nuclear generating units at the Vogtle site which will produce approximately 2,200 MW of carbon

- free base

- load power. Commenters said the rule treats these new units, which are projected to be in service in 2017 and 2018, for Units 3 & 4, respectively, a s existing resources. Commenters said as such, the rule appears to be punitive to Georgia and its citizens. Commenters said if these exact same nuclear units were announced today, the full value of production would be available for environmental compliance ; penalizing states for being proactive sends the wrong signal to those responsible for making planning decisions to meet energy needs.

Commenters stated by reducing nuclear production to only 5.8% of current units and removing units currently under const ruction from the goal calculation, the proposal sends a negative signal to utilities to invest in nuclear generation. Commenters said the reduced figure is based on specific "at risk" units in other states which have no bearing on the longevity of the curr ent nuclear units in Georgia. Commenters said the Technical Support Document for Greenhouse Gas Abatement Measures show that 237 MW of nuclear capacity is at risk implying that a portion of a unit (or multiple) would shut down. Commenters said these units will either be in full operation or retired, there is no option for partial electricity production. Commenters said applying risks and the subsequent emissions reductions to units that are clearly not at risk of retirement is illogical and should be change d in the final rule. Commenters said the EPA should tailor the rule to each specific unit individually and not rely on blanket assumptions in the rulemaking process.470 Commenters questioned the methodology used by the EPA in calculating the contribution of nuclear plants to the state goal in Building Block 3. Commenters said EPA determined that 5.8 percent of the existing nuclear fleet is at

- risk, and in calculating the state goal assumed that the existing nuclear generation in each state would be reduced by that amount. Commenters said that
at

- risk generation was used in the calculation of the goal, but is then awarded to the state without conditions in calculating compliance with the goal. Commenters said at

- risk nuclear plants are in danger of a total shut

- down, not a curtailment in their generation; therefore, existing nuclear plants should not contribute to the state goal calculation, and only existing nuclear plants that are truly at

- risk should be counted for compliance purposes, provided the approach i s lawful under Section 111 (d) of the CAA. Commenters said in Pennsylvania, the nuclear portion of Building Block 3 accounts for 7.8 percent of the state goal.

Commenters stated EPA's assumption that six percent of existing nuclear capacity in the Southeas t is 'at

- risk' of retirement is improperly based on national data and averages. Commenters continued EPA has determined that preserving the operation of at

- risk nuclear capacity would likely help achieve CO2 reductions from affected EGUs at a reasonable co st. Commenters said EPA then concludes that approximately six percent of existing nuclear capacity across the nation is 'at risk' of closure due to current market conditions. Commenters said in discussing the preservation of the existing nuclear fleet, EPA notes several factors that have led to the retirement of six nuclear EGUs since 2012: increasing fixed operation and maintenance costs, relatively low wholesale electricity prices, and additional capital investment associated with ensuring plant security and emergency preparedness. Commenters said other factors include increased costs due to an inefficient regulatory process and defects in merchant market policies that do not value fully the various attributes of base load nuclear plants. Commenters said E PA relies on the EIA's Annual Energy Outlook 2014 to project that 5.7 GW of nuclear capacity is likely to retire. Commenters said EPA views this 5.7 GW, which comprises approximately six percent of existing U.S. nuclear capacity, as a reasonable proxy for the amount of nuclear capacity at risk of retirement. Commenters said EPA then factored in the zero emissions generation from operating these at

- risk units at a 90 percent capacity factor in developing the interim and final state goals for all states that have existing nuclear capacity.

Commenters stated EPA factors in the continued operation of six percent of nuclear generation into the goal for every state that has existing nuclear capacity, regardless of whether the Agency believes a specific unit in a s tate is an early closure risk; for example, EPA's BSER determination concludes that approximately six percent of the nuclear capacity in Alabama, Florida, Georgia, and Mississippi will retire by 2019 absent EPA's rulemaking. Commenters said all of the nucl ear capacity in Alabama, Florida, Georgia, and Mississippi is licensed to operate beyond 2019; in fact, only one license is currently scheduled to expire prior to 2030, and that unit already is in the relicensing process.

Commenters stated as a result, eve n based on EPA's flawed methodology, there is no basis to lower the state goals for Alabama, Florida, Georgia, or Mississippi to account for nuclear units that may be at risk of retirement; these units will continue to operate through 2030 regardless of th is rulemaking.471 Commenters stated further, to arrive at its conclusion that 5.7 GW of nuclear capacity is at risk of retiring, EPA references EIA's "most recent Annual Energy Outlook" and an April 2014 EIA

authored article, which states:

"[t]he AEO2014 Refe rence case assumes an additional 6 GW of generic nuclear retirements from 2012 to 2019, beyond the six reactor retirements already announced (a total that includes the Oyster Creek plant), as higher

- cost units face continued economic challenges."

Commenter s stated the results from EIA's AEO2014 Reference case provided online, however, only show 4.8 GW of nuclear retirement by 2020. Commenters said at the very least, EPA must explain this discrepancy or use the 4.8 GW capacity rather than 5.7 GW.

Commenters stated penalties associated with existing nuclear power should be eliminated, as they are contrary to the goals of the proposed plan. Commenters said the application of 5.8 percent at

- risk nuclear plants to every state with nuclear energy is not appropriat ely considering the actual nuclear power availability in the states with those plants. Commenters said such a generalization is not appropriate or accurate, since the risk of closure is almost certainly quite high for a minority of plants and quite low for many others. Commenters said states are in the best position to evaluate the real risk of closure of any particular plant.

Commenters stated Michigan currently has four operating nuclear reactors at three plants; three nuclear reactors (D.C. Cook 1 and 2, and Palisades) were recently relicensed by the Nuclear Regulatory Commission (NRC) to operate another 20 years, and one (Fermi II) is currently under review by the NRC for relicensing. Commenters said as such, while Michigan qualifies to claim the 5.8 per cent 'at risk' provision under Building Block 3, it is unclear as to whether the USEPA's proposal provides any incentive worth claiming for the carbon reductions attained through the use of nuclear generation, even though nuclear generation does not emit a ny of the pollutant actually being regulated, while natural gas generation does.

Commenters stated they generally understand the approach proposed by the USEPA to keep existing nuclear assets that are at risk of premature shut

- downs to continue operating; however fail to see how this treatment protects the ability of those existing nuclear assets to continue producing base

- load, zero

- carbon energy. Commenters recommended USEPA to consider adopting another methodology as a means to incentivize continued ope ration of existing nuclear assets. Commenters stated possible methodologies include:

1)Consider all or a substantial percentage of generation from existing nuclear units and assume a more reasonable capacity factor reflecting forced/unforced outages in set ting the standard; this would create a tangible incentive for states with nuclear to use for compliance purposes.

2)Remove nuclear generation from the existing rate

- setting formula, but allow states to reflect any retired nuclear units by removing lost gen eration from prematurely closed nuclear units from the denominator of the compliance rate formula.

Commenters stated they recommend the USEPA consider a 'safety valve' approach in the state compliance plan to address compliance risks in certain situations such as:

1. Retirement of a nuclear unit prior to its licensed life.472 2. Equipment failure or catastrophic event that renders the unit uneconomic to repair or replace.

3. Nuclear uprating projects and relicensing should be able to be credited towards compliance as well; the additional generation would be added into the denominator of the goals.

Commenters recommended that the 5.8 percent nuclear generation component should be removed from states' interim and final goals. Commenters said the current methodology of adding 5.8 percent of the state's 2012 nuclear capacity (operating at a 90 percent CF) into the
rate

- based goal denominator has the effect of needlessly lowering a state's final and interim goals. Commenters said the fact that most states with nuclear gene ration would receive this MWh 'credit' with virtually no change to the state's electric industry does not justify the inclusion of this element to the BSER; it does not reflect the full extent of a state's nuclear generation.

Commenters stated 'Forced and unforced' outages were experienced at all four of the nuclear plants in Michigan during 2011, 2012, and 2013. Commenters said nuclear units require periodic planned outages (unforced) for refueling the reactors, as well as performing routine maintenance wh ile the units are down for refueling. Commenters said beyond these planned outages, the nuclear units in Michigan also had 'unplanned' or forced outages due, in part, to equipment failure, water leaks, and safety

- related issues, which resulted in the units being down for considerable amounts of time. Commenters said as nuclear units typically operate 24 hours a day, seven days a week, 365 days per year due to their inherent design and operation, having units down for more than the unforced outages required utilities to obtain replacement energy from the MISO market to meet their customer demand during this period. Commenters said this replacement energy was comprised of a mix of generation fuel types, most of which was coal and gas; hence, the emission profi le for 2012 reflects a variance from what the emission profile would have been had the nuclear units been operational under their typical CFs.

Commenters stated the CF of Michigan's nuclear fleet in 2012 was 80.6 percent, which is less than the 90 percent CF assumed in the proposed rule. Commenters said outages in April and December at Fermi II were largely responsible for lowering this fleet wide CF. Commenters said plant outages may be unavoidable and the USEPA's proposed treatment of nuclear generation gives little accommodation to this operational reality. Commenters said the current methodology assuming a 90 percent CF creates a larger carbon reduction obligation than if the USEPA had used 2012 nuclear generation (in MWh and also multiplied by 5.8 perc ent). Commenters said a three

- year average (2011 to 2013) of the fleet wide CF would yield 86.4 percent, still less than the 90 percent CF assumed in the USEPA's calculation.

Commenters stated it is important to note, however, that due to increased natural gas generation and renewables across the United States, as well as RTO market structure issues, nuclear generation is facing economic pressures to compete on a more level playing field and remain viable into the future as part of the base

- load energy mix. Commenters said indeed, this issue bears individual attention by federal regulators (Federal Energy Regulatory Commission [FERC] and NRC) beyond the application of an 'at

- risk incentive' within the confines of USEPA Section 111(d) compliance.473 Commenters s tated Michigan should achieve, or come close to achieving the emission reductions set forth in Building Blocks 3 and 4 if it can also achieve reductions in CO2 emissions equivalent to those in Building Blocks 1 and 2.

Commenters stated Michigan should be able to count the proposed 5.8 percent 'incentive' for at

risk nuclear; however, commenters believe that nuclear generation should be eliminated from calculation of the rate

- based goals. Commenters recommended that USEPA consider adopting another methodolo gy as a means to incentivize continued operation of existing nuclear assets; possible methodologies include but are not limited to:

• Consider all or a substantial percentage of generation from existing nuclear units and assume a more reasonable capacity fa ctor reflecting forced/unforced outages in setting the standard; this would create a tangible incentive for states with nuclear to use for compliance purposes.

• Remove nuclear generation from the existing rate setting formula, but allow states to reflect a ny retired nuclear units by removing lost generation from prematurely closed nuclear units from the denominator of the compliance rate formula.

Commenters stated with reliability being the watchword in this entire rulemaking, it is essential that we facil itate those alternatives that we can truly count on for replacing any and all fossil burning plants that are retired. Commenters said renewable sources

- with all of the benefits and significant potential they offer for the long

- term future

- will still ha ve relatively limited capacity in the big picture over the next several decades. Commenters stated it takes an enormous amount of energy to meet our nation's power generation needs; if we are going to retire a large number of fossil plants, the replacement plan must be properly crafted to allow nuclear power to play a significantly larger role.

Commenters specifically recommended that the EPA, ensure greater reliance on nuclear energy in the plan by fully crediting existing nuclear power plant capacity and promoting additional means to assist states in expanding nuclear generation capacity.

Commenters stated in the Proposed Rule, the nuclear generation component is based on a percentage of existing nuclear capacity (6%), which EPA considers at risk of premat ure shutdown. Commenters said EPA based this on the Energy Information Administration's 2014 Annual Energy Outlook study that concluded about 6% of all U.S. nuclear units would be retired for various reasons in the near term. Commenters said EPA assumes 6% of a State's 2012 nuclear capacity runs at a 90% capacity factor and then adds those megawatt

- hours when calculating a State's intensity target. Commenters said states are then allowed to take credit for up to 6% of the generation from these units in thei r compliance calculations, which, in EPA's view, provides States an incentive to avoid premature nuclear shutdowns; however, 6% is not an incentive if it merely holds a utility or State whole

- that is, if 6% of "at risk" nuclear generation is used in calc ulating a State's goal, a 6% credit for compliance simply makes the economics of running the "at risk" units neutral at best. Commenters said this is not really much of an incentive to a utility, if any, to keep an "at risk" unit running. Commenters said i f EPA wishes to provide a true incentive, it should take the 6% out of a State's goal calculation, but allow States to take compliance credit for up to 6% of the generation from 'at risk" facilities."474 Commenters concluded if EPA insists on keeping the 6% i n the goal calculation, the Agency should allow a higher percentage of existing nuclear generation to be counted in meeting individual state goals

- for example, 20% instead of 6%. Commenters said while these existing nuclear units do not emit any CO2, the y do represent significant initial investments by their owners. Commenters said these units also require high levels of capital expenditures to maintain operations and to comply with ever

- evolving safety requirements. Commenters said increasing the percent age of nuclear generation counted towards the state goal to 20% would create meaningful incentives to keep operating these units as they approach the end of their lives and to build new CO2

- free nuclear units; however, increasing the nuclear contribution t oward meeting state goals to 20% should not result in any increase in setting individual state goals.

Commenters stated that the EPA explains that the goals in the Proposed Rule account for only six percent of existing nuclear generation because (according to EPA) six percent of nuclear capacity nationwide is "at risk" for premature retirement. Commenters stated that justification cannot support the decision to effectively discount nuclear generation by 94 percent. Commenters stated that if states are to ac hieve meaningful emission reductions, it is important that all existing nuclear generation remain in operation

- yet the proposed treatment of nuclear generation inadequately promotes this goal.

Commenters stated the Proposed Rule's rationale for counting only six percent of nuclear generation

- namely, that only six percent of nuclear capacity is "at risk"

- is neither logical nor defensible on its own terms. Commenters said first, whatever amount of capacity is "at risk" nationwide, the reality is that " at risk" nuclear facilities are concentrated in a small number of states; specifically, at

- risk nuclear plants are concentrated in states with competitive markets, generally located in the Midwest and Great Lakes regions. Commenters said in those areas, th e fraction of the fleet that is at risk of early retirement is much greater than six percent. Commenters said in other regions, where nuclear plants are owned by regulated utilities, a smaller fraction, and possibly none, of the fleet is at risk.

Commenter s stated second, even within the regions where at

- risk nuclear plants are concentrated, conditions vary significantly from state to state or even within the state. Commenters said Illinois, for example, generates more nuclear energy than any other state

- 47 percent of the state's electricity generation is provided by nuclear facilities; however, many nuclear plants in Illinois are facing significant economic pressure, not only because shale gas has driven down the prices of both natural gas and electricity , but also because wholesale electricity prices are suppressed by an increasing amount of subsidized wind generation in transmission

- constrained areas. Commenters said these economic pressures are particularly severe for nuclear plants located on the weste rn side of Illinois, where wind power imports have overloaded the local transmission system and significantly depressed power prices. Commenters said prices in the northwest corner of the state are now 25 to 30 percent less than at the Northern Illinois hu b; as a result of these dynamics, some of Exelon's plants in Illinois are losing money, as discussed above. Commenters said if a path to financial sustainability cannot be found, these units may be shut down to avoid long

- term losses; for example, in the l ast capacity auction held by PJM, price signals pointed toward the premature retirement of the Byron and Quad Cities stations in Illinois. Commenters said these units were unable to sell their capacity in the auction, as market prices were lower than these plants required to remain financially viable; likewise, market revenues have been too low to sustain the Clinton station, which is located in the MISO region.475 Commenters said each of these stations produces far more than six percent of Illinois's nuclear generation, and collectively, they generate a combined output of 43,300 GWh each year, which is approximately 45 percent of Illinois's nuclear generation and 21 percent of the state's total electricity generation. Commenters said these numbers demonstrate that EPA's use of a nationwide average fails to account for the many facilities that, in reality, are at imminent risk of shutting down.

Commenters stated third, a scenario in which only six percent of a state's nuclear generation is retired is implausible , if not impossible. Commenters said the owner of a nuclear unit cannot retire only six percent of the unit, thus, its only choices are to retire the unit completely or keep the unit operating. Commenters added that a number of states, meanwhile, have only one nuclear unit

- which means that any retirement will necessarily be a retirement of 100 percent of the state's nuclear fleet; and even in states that contain multiple nuclear units, virtually any single nuclear unit will generate more than six percent of nuclear generation. Commenters said the Ginna unit in New York is instructive; it is a small unit

- only 583 MW

- but still amounts to 11 percent of New York's nuclear generation; thus, if any nuclear unit is prematurely retired, it is nearly certain to represent more than six percent of a state's nuclear capacity

- indeed, likely far more; yet that six percent is the most for which the Proposed Rule's goals account.

Commenters stated fourth, it is illogical to use a snapshot

- in

- time figure of nuclear ca pacity at risk as the basis for a rule that will govern the power sector for decades. Commenters said market conditions are dynamic: just six years ago, before cheap natural gas and subsidized renewables began to drive nuclear wholesale prices down, nuclea r plants did not face the economic challenges that they face today; thus, a plant that is not at risk today may be at risk tomorrow. Commenters said indeed, by potentially spurring further subsidization of renewable and natural gas generation, the Clean Po wer Plan itself may well increase the economic vulnerability of nuclear plants. Commenters said EPA's own analysis demonstrates that the proposed guidelines have the potential, paradoxically, to increase the financial pressure on existing nuclear plants;
t his will occur if states in competitive markets choose to comply with EPA's emissions rate target by subsidizing natural gas or renewable generation in a manner that allows such generation to sell electricity for less than its true marginal cost, which wou ld have the effect of artificially lowering the market price of electricity for all generators and further undercutting the economic viability of existing nuclear plants.

Commenters stated finally, even if 94 percent of nuclear capacity truly is safe from early retirement, and will remain so throughout the foreseeable future, that still is not a reason to give states credit for only six percent. Commenters said even if nuclear capacity were not at risk, counting it in a state's initial and target emissions rate or in a state's compliance calculation could do no harm: although the state would be responsible for preserving the nuclear capacity, it would by definition be preserved without further action from the state. Commenters said treating nuclear generatio n as safe when it is actually vulnerable, on the other hand, would insufficiently incentivize a state to preserve it

- and, as described above, could result in the premature retirement of a critical carbon

- free resource, resulting in the expansion of a sta te's carbon footprint.476 Commenters stated that no nuclear generation in Arkansas was known to be "at risk," and that the 5.8% assessment regarding "at risk" nuclear that the proposed Rule assumes for each state should be removed from the Arkansas state goal computation.

Commenters stated they know of no nuclear generation in Arkansas that is considered or has been identified as 'at risk,' as all nuclear generation is currently operational and does not appear threatened; therefore, the 5.8% assessment regardi ng 'at risk' nuclear that the proposed Rule assumes for each state should be removed from the Arkansas state goal computation. Commenters said this incorrect assumption only serves to artificially lower Arkansas' target emission rate, which compounds the e ffort and money Arkansas will have to expend to achieve its already disproportionate 44% emissions reduction. Commenters said setting aside the question of whether a premise that 'at risk' nuclear generation could be used to reduce emissions from a fossil unit has any legal basis, 'at risk' nuclear should only be a factor for states that whose nuclear capacity is truly 'at risk.' Arkansas is not one of those states.

Commenters stated contrary to the proposed Rule's assumption, the nuclear units in Arkansas are currently not 'at risk' of shutting down; this inaccurate assumption artificially lowers Arkansas's target emission rate.

Commenters stated that the factor six percent of states' nuclear generation into states' emission rate goals penalizes states and companies that invested in nuclear generation, because existing plants will eventually retire and must be replaced by emission

- generating plants. Commenters recommended that the EPA should allow states to review and amend their emission rate goals based o n circumstances arising after finalization of the rule, such as when a nuclear license is not renewed.

Commenters stated that the EPA's assumption of 5.8 percent "at risk" in the standard

- setting calculation does not accurately represent nuclear units tha t are "at risk" of premature retirements due to market conditions, because some states are more impacted than others.

Commenters recommended that any megawatt hours from an individual nuclear unit that exceeds the national average capacity factor or that particular unit's lifetime capacity average should be available annually for compliance.

Commenters stated that keeping the 5.8 percent nuclear generation in the standard

- setting formula could have unintended effects on emissions if a nuclear unit shuts down for an extended period. Commenters stated given the various roles of nuclear generation in each state, including which plants are 'at

- risk', EPA should provide states several options to consider when including nuclear generation in its goal setting fo rmula; for example:

• EPA could remove existing nuclear from the rate

- setting formula, but require states to reflect any lost nuclear when calculating compliance (e.g., by subtracting the lost output from any prematurely closed existing nuclear units from th e denominator of the compliance rate formula); in this context, premature retirements would include those that occur before the end of the current licensing period, with an exception for catastrophic malfunctions where repair costs exceed the emissions ben efits.477 • States with existing nuclear generation could be authorized to determine how much should be included in goals (including determining their own levels of "at risk" in

- state nuclear generation), recalculate the goals, and then allow this existing zero

- emissions generation to be used for compliance."

Commenters continued if nuclear generation is included in a state's goal, Commenters recommends that EPA allow states to incorporate 'safety valves' into compliance plans to eliminate compliance risk in cer tain circumstances, such as:

• Retiring a nuclear unit at the end of its licensed life; and/or

• Equipment failures and/or damage to a plant so extensive that repair and restart are not justified.

Commenters stated states should determine the level of risk the y are willing to accept as it relates to the level of inclusion of nuclear units in their targets and compliance plans; nuclear uprates and license extensions should also be allowed in a state's compliance plan.

Commenters stated that the EPA's proposed tr eatment of existing nuclear capacity is inappropriate and must be changed. Commenters stated in the first instance that a standard of performance for fossil fuel

- fired EGUs cannot be based on actions taken beyond the source itself. Commenters said this wou ld include the consideration of any amount of nuclear generation as BSER. Commenters said while nuclear power is the single greatest CO2 mitigation option available in the power sector, that fact does not authorize the EPA to use it in the setting of CO2

e mission standards for fossil fuel

- fired EGUs. Commenters said with respect to setting emission standards for fossil fuel

- fired EGUs, it is irrelevant whether a state has or does not have nuclear capacity; it has nothing to do with controlling emissions fro m existing EGUs, nor should it. Commenters said there is no basis under the CAA for setting different emission standards for identical EGUs that just happen to be in two different states, one with nuclear capacity and the other without.

Commenters state d in the second instance, putting aside the fact that the inclusion of generation from existing nuclear units as a component of BSER for fossil fuel

- fired EGUs is not authorized by the CAA, the EPA's proposal to include 5.8 percent of existing nuclear capa city as BSER and reflect the associated amount of MWh generation in state goal calculations is without merit. Commenters said the EPA must not finalize any guidelines for fossil fuel

- fired EGUs that includes any amount of existing nuclear generation in it s BSER determination and calculation of state goals.

Commenters stated the notion that 5.8 percent of any existing nuclear plant is at risk of premature retirement is irrational. Commenters said the EIA's Annual Energy Outlook cited in the EPA proposal whi ch projected an additional 5.7 GW of unspecified nuclear capacity reductions to the nuclear fleet is not evidence that any amount of any existing nuclear unit is at risk of premature shutdown and therefore neither supports nor authorizes the EPA's proposal in this regard. Commenters said even if one were to assume for sake of argument that the EIA projection is reasonable, it is certainly not reasonable for the EPA to then take that information478 and assume that 5.8 percent of every existing nuclear unit in the country is at risk of premature retirement.

Commenters stated it is generally understood that those existing nuclear generating units potentially at risk of premature retirement are concentrated in a relatively small number of states where the units op erate in competitive electricity markets and are exposed to low wholesale electricity prices.

Commenters stated the majority of existing nuclear capacity is not exposed to those economic pressures and are not at risk of premature shutdown. Commenters said to be correct, the 5.8 percent factor should be higher in states with units "at risk" and zero elsewhere. Commenters said it appears the EPA simply took the 5.8 percent value as a convenient way to provide some incentive for continued operation of nuclea r power plants; ironically, most plants are not in need of such an incentive and the ones that are potentially "at risk" are not helped by the arbitrary 5.8 percent factor.

Commenters stated the EPA's GHG Abatement Measures Technical Support Document state s that [I]ncreasing the amount of nuclear capacity relative to the amount that would otherwise be available to operate is a technically viable and economically efficient approach for reducing CO2 emissions from affected fossil fuel

- fired EGUs. Commenters s aid this statement suggests that the EPA's proposed treatment of existing nuclear capacity would in fact avoid the premature retirement of existing nuclear capacity; there is, however, no basis for such an assertion. Commenters said in the first place, th e EPA has not identified any existing nuclear unit that it believes is at risk of premature shutdown; in the second place, the EPA can provide no evidence that its proposal, if implemented, would avoid the premature shutdown of a single MW of existing nucl ear capacity in the country; but even if the EPA were able to make such a demonstration, it would still not be authorized to include existing nuclear in its BSER determination for fossil fuel

- fired EGUs or factor any amount of existing nuclear capacity int o the state goal calculation. Commenters said section 111(d) of the CAA applies to existing fossil fuel

- fired EGUs.

Commenters stated Duke Energy owns and operates the largest fleet of regulated nuclear units in the country. Commenters said the 11 operatin g units are located in North Carolina and South Carolina and are the first units to dispatch because they are their lowest cost base load generation; these units are not currently at risk of premature retirement and it is inappropriate for the EPA to inclu de any portion of this nuclear capacity in the goal setting for North Carolina or South Carolina.

Commenters stated the only thing the EPA proposal achieves is to make the goals for North Carolina and South Carolina, and every other state with existing nuc lear, more stringent than they otherwise would be, and introduce in those states an additional compliance risk if an existing nuclear unit or units are not able to operate at the assumed 90 percent annual capacity factor. Commenters said there is also the issue of whether any existing nuclear units will be granted a license extension beyond the expiration of their current licenses. Commenters said nuclear power reactor license extension beyond sixty years has not been done in the United States, so there is uncertainty associated with the technical and economic feasibility of doing

so. Commenters said with the EPA proposal, if an existing nuclear unit's current license is not479 extended for whatever reason, the practical effect would be to make a state's goals more stringent because the state would lose a significant amount of non

- CO2 emitting generation that was factored into its goal computation. Commenters said if a license were not extended, the lost generation would have to be replaced with an equal amount of new non

- emitting generation, and/or other steps would have to be taken to offset the loss of the nuclear generation. Commenters said a similar situation would arise if an event occurred at an existing nuclear unit that could not be overcome and the u nit was forced to shut down. Commenters said the additional cost to consumers in states that would need to comply with essentially a more stringent goal could be significant. Commenters said factoring any amount of existing nuclear generation in a state's goal computations inappropriately builds compliance risk into the program when the units eventually shut down.

Commenters stated under the EPA's Proposed Guidelines (absent the contribution of "nuclear at risk" in Building Block 3), there is already an inc entive for states to keep nuclear power plants operating; absent the adjustment for nuclear at risk, the actual effect of a nuclear plant closure would be an increase in the numerator of the greenhouse gas emissions rate equation, if it resulted in more ge neration from affected coal and/or NGCC units to make up for the missing nuclear generation, resulting in a higher emissions rate. Commenters said therefore, there is no need to include the arbitrary 5.8 percent factor to the calculation to make shutting down nuclear more undesirable from a CO2 emissions perspective because it already is undesirable.

Commenters stated if the EPA finalizes its proposal and continues to include existing nuclear units in state goal computations, it must include safety valves that would allow for a state's goal to be recalculated without the existing unit if the unit continued to operate through the end of its current license period but its license was not extended for whatever reason, in the event of premature shutdown due to equipment failure and/or damage to the plant where repair cost is not justified, or where the cost of maintaining the plant in compliance with regulation is not economic given the unit's remaining useful life.

Commenters stated with respect to the assumpti on of a 90 percent capacity factor for nuclear power plants going forward, it is challenging but generally consistent with recent performance of nuclear power plants in the United States as a whole; however, there is no guarantee of maintaining that perfor mance in the future with an aging fleet of plants. Commenters said obviously a major equipment failure or regulatory shutdown at one or more units can adversely and significantly impact capacity factor; any final guidelines that include existing nuclear i n state goal calculations at a 90 percent capacity factor should make allowances in compliance in the event of unanticipated losses of nuclear generation. Commenters said for example, states should not be penalized for a nuclear unit's failure to operate a t 90 percent capacity factor unless the plant was intentionally shut down or operated at less than full power when more power could actually have been generated from the unit.

Commenters stated since EPA only give 6 percent to nuclear, that is a perverse i ncentive to say, okay, if we shut down a plant, we're only losing this like marginal percentage of its megawatt hours; and if we replace it with natural gas, then you're adding extra CO2, but you're adding more megawatt hours; and you could actually achiev e your goal more easily by doing so, which would, in effect, increase CO2 emissions.480 Commenters stated so this way you're looking at the carbon intensity could actually be used by states to meet their goals by shutting down clean power plants like nuclear and replacing it with natural gas.

Commenters stated that the use of 6 percent "at risk" value, given the math, will give utility companies an incentive to replace the nuclear plants with natural gas plants or other fossil

- fuel

burning plants, thus raising the carbon emission, but lowering their pounds of CO2 per megawatt, based on this equation.

Commenters stated for over 30 years, however, Alabama Power's two nuclear units at Plant Farley have operated safely, providing affordable carbon

- free electricity to customers. Commenters said recently, both units, along with other nuclear units in the state of Alabama, received 20

- year operating license renewals, which clear indicate they are not at

- risk nuclear units. Commenters said to generically include such an assumption in Alabama's emission rate goal calculation results in more stringent targets, thus limiting operational flexibility across the entire generation fleet.

Commenters stated as a practical matter, the EPA's approach is arbitrary and the proposed "at

risk" nuclear provision results in more stringent goals for states with existing nuclear capacity than for states without. Commenters said in addition, EPA's approach fails to recognize that even if a nuclear unit does not shutdown prematurely, it wil l still be required to shut down upon expiration of its operating license creating a need for replacement generation.

Commenters said excluding existing nuclear from the goal

- setting calculation, but allowing states to take credit for a portion of their n uclear generation for compliance purposes, would provide such an incentive. Commenters said if the at

- risk nuclear provision is retained in the final goal

- setting calculation, the EPA should allow states' goals to be adjusted upon expiration of nuclear pl ant operating licenses.

Commenters stated that EPA's treatment of nuclear generation in Arizona is arbitrary. Commenters further stated there is no evidence whatsoever that the Palo Verde Generating Station is at risk of closing prematurely, certainly not before the expiration of its extended operating licenses in 2047. Commenters said the effect of EPA's adjustment in the Proposed Carbon Rule is to lower Arizona's lbs. CO2/net MWH goal by 3 percent; EPA's assumption that the Palo Verde Nuclear Plant is at risk for purposes of goal calculation is arbitrary.

Commenters recommended a better way to incent the continued operation of existing nuclear plants is to allow states to include the output from existing nuclear plants above an established threshold as a compliance option in state compliance plans, thereby giving states with existing nuclear generation additional flexibility in developing their compliance plans. Commenters said one way to do this would be to establish a threshold capacity factor for existi ng nuclear plants. Commenters said to the extent the nuclear plant is able to operate above that capacity factor, the incremental generation would be included as a component of Building Block 3. Commenters said operation below the threshold capacity factor would have no impact on the state's compliance. Commenters stated they are aware that other parties may be suggesting an approach like this and may include specific recommendations with respect to the threshold to be used.481 Commenters stated based on an EI A report, EPA has concluded that approximately six percent of nuclear capacity is 'at

- risk' of shutdown due to continued economic challenges; therefore, EPA proposed to allow approximately six percent of the nuclear capacity within any state in which nucle ar plants are located to be counted towards achievement of the state emission rate goals.

Commenters continued however, EPA also used the 'at

- risk' nuclear to set the state's emission rate goals; therefore, nothing is really gained from use of this carbon

- free source of generation. Commenters said all existing nuclear power plants will eventually close. Commenters said when this occurs, states will have to find ways to replace a large amount of zero

- carbon generation with other zero

- carbon generation or be at risk of being in non

- compliance with meeting their 111(d) goals. Commenters said because there currently are no cost

- effective mechanisms to achieve this, the 'at

- risk' nuclear generation should not be included in states' carbon emission rate goals; the six percent of 'at

- risk' nuclear generation should be eliminated from the final rule, and for states with nuclear generation, the state goals should be adjusted upward by approximately six percent.

Commenters also stated EPA clearly recognizes the importance that nuclear generation has on reducing and avoiding carbon emissions; in the Proposal, EPA stated that "[i]ncreasing the nuclear capability relative to the amount that would otherwise be available to operate is therefore a technically viable ap proach to support reducing carbon emissions from affected fossil fuel

- fired EGUs. Commenters stated they are in full agreement and offer the following as a means of ensuring nuclear generation is incentivized to reduce carbon emission rates. Commenters sai d while EPA states in the Proposal that it estimated a 90 percent average utilization rate for U.S. nuclear units, APS has different information. Commenters said based on industry data, the average lifetime capacity factor of the 100 nuclear plants current ly operating is 81.6 percent. Commenters said of these, based on the three

- year average between 2011to 2013, the plants in the fourth quartile only operated at an average capacity factor of 70.8 percent.

Commenters concluded therefore, to encourage nuclear generation to operate at peak performance, EPA should allow the energy from any nuclear power plant in excess of the 80.3 percent average lifetime capacity factor for all current nuclear plants to be used for compliance with the states' carbon emission ra te goals. Commenters said but because this is meant to be an incentive for peak performance of the U.S. nuclear fleet, none of the nuclear generation should be used to calculate the states' goals. Commenters said this nuclear generation, like renewables, i s a zero carbon

- emitting generation resource; this approach adds flexibility to the program and assists the states that have nuclear capability in achieving their final carbon emission rate goals.

Commenters stated that this BSER block does not have the ef fect of reducing emissions, and is instead simply a method of avoiding potential increases in emissions. Therefore, it is not an emission reduction system, and should not be included. Commenters stated the EPA has designated 'At Risk' nuclear as a part of Building Block 3 and concluded that preserving that nuclear generation would help reduce CO2. Commenters said EPA has thus factored in the zero emissions from these at risk units to reach the final state goals. Commenters said in South Carolina, the costs of nuclear are already included in rates by Public Service Commission order and are not at risk, which is a primary reason for retirement; additionally, the CO2 emissions limit provides ample incentive not to retire nuclear plants as any retirement will re quire replacement with non

- carbon generation. Commenters said inclusion of the 5.8 percent 'At Risk'482 component into state plans will simply provide a penalty to states which do opt to retire nuclear generation. Commenters said unlike the other BSER blocks, this block does not have the effect of reducing emissions; it is simply a method of avoiding potential increases in emissions. Commenters said it is not an emission reduction system and should not be included.

Commenters stated EPA proposes to make states ' emission rate goals more stringent by factoring six percent of states' nuclear generation into states' emission rate goals. Commenters said this would penalize states and companies that invested in nuclear generation because existing nuclear plants will eventually retire and be replaced by emission

- generating plants. Commenters said States would be required to find a way to offset these unavoidable increases in emissions. Commenters said to eliminate this penalty, EPA should allow states to review and ame nd their emission rate goals based on circumstances arising after finalization of the rule, such as when a nuclear license is not renewed.

Commenters stated over the past decade, there has been a renewed interest in nuclear power as an alternative to fossi l fuels; yet despite greater acceptance of this emissions

- free energy resource, nuclear power faces a host of obstacles and uncertainties that could not only inhibit its expansion, but will accelerate retirements from the existing fleet. Commenters said EP A's modeling fails to adequately consider the challenges facing our existing nuclear fleet.

Commenters recommended that the EPA remove the "At

- Risk" nuclear generation from the goal setting methodology. Commenters stated however, experience in the RGGI reg ion also suggests that financial and other issues need to be taken into consideration when evaluating or forecasting the contribution of nuclear resources, particularly in light of the transformation of the natural gas market in recent years. Commenters sa id in the rate

- based goal

- setting methodology at issue here, EPA's proposal attempts to incentivize states to retain existing nuclear generation through the inclusion of an at

- risk assumption in the goal computation methodology.

Commenters concluded while additional incentives may be necessary (especially at the federal level) EPA should remove the at

- risk assumption from the goal computation methodology since its design neglects to account for the full range of possible circumstances

- including safety (e .g. safety upgrades such as those required in response to the Fukushima flooding and reactor meltdown) and environmental concerns (e.g. effluent limits and cooling water intake structure requirements under Clean Water Act Sections 316(a) and 316(b), respec tively)

- in which a nuclear resource may be pressed into retirement.

Commenters recommended that the EPA remove the "At

- Risk" nuclear generation from the goal setting methodology. Commenters continued if EPA, however, opts to retain its proposed approach, then EPA should consider providing an 'off

- ramp' by which the nuclear generation component would be removed from a state's goal computation upon expiration of an existing license or following an accident that translates into cost

- prohibitive repairs.

Comm enters recommended that the EPA remove "At

- Risk" nuclear generation from the goal setting methodology. Commenters stated although a significant portion of Connecticut's generation comes from nuclear generation, Connecticut objects to crediting existing or under

construction nuclear generation as an off

- set to existing fossil generation; such a proposal would significantly reduce the stringency of the CPP and is unnecessary.483 Commenters stated that the EPA assumes that 5.8 GW of existing nuclear capacity is ' at

- risk' and that it is reasonable to think states can cause that at

- risk capacity to continue to operate in 2029 and beyond; however, EPA does not identify the specific reactors, or even the states in which this at

- risk capacity resides. Commenters said i nstead they simply factor the 5.8 GW of capacity at a national level into each state's goal calculation by multiplying the state's existing nuclear generation by 6%. Commenters said this leads to the absurd result that the amount of 'at

- risk' nuclear capac ity in any state is much less than the smallest reactor in the state. Commenters said as with the RE and EE goals, EPA failure to do state

- specific analyses of its nuclear component results in illogical and inequitable results.

Commenters stated significa nt uncertainty remains as to whether existing nuclear units would be permitted to operate beyond their licensed 60 year lifetimes; permitting of nuclear reactors is under the authority of the NRC and is not under the control of the states.

Commenters state d that the Proposed Rule does not provide adequate incentives for states to support the continued operation of zero emission sources, in particular nuclear generation.

Commenters recommended changes to the rule, including:

• Remove the 6% "at risk" MWh cal culation from each applicable state's emission goal calculations, and instead create a meaningful goal

- setting incentive for states to support the continued operation of existing nuclear units; 2)

• Count all post

- 2012 new plants and uprates toward complianc e (for new plants or uprates with an in

- service date during or after the baseline year or period); in other words, grant compliance credit (add MWh of generation to the denominator of a state's compliance demonstration) for the unit's output once its licen se extension is effective;

• Treat all units relicensed during or after the baseline year or period as new units during their license renewal period; and

• Allow states to include all nuclear generation from existing units above a reasonable historic industry capacity factor, such as 81.6%, in the denominator of compliance calculations, so that high

- performing units gain compliance credit

Commenters stated the scientific consensus makes it clear that a ton of CO2 (or GHG emissions) avoided today is as importan t as the ton avoided tomorrow (either in 2020 or in 2030); as a consequence, the retention of zero

- CO2

- emitting power generation resources currently operating is as important as the introduction of new zero

- CO2

- emitting power generation resources in the fu ture. Commenters said conversely, the potential loss of nuclear zero

- CO2

- emitting power generation resources (through failure of EPA rulemakings such as this, or markets, to reflect the value of the zero emissions attribute) means that the addition of new zero

- CO2

- emitting supply serves only to offset or replace the lost nuclear zero

- CO2 generation rather than to help put the state on a pathway toward significantly lowering the overall carbon profile of its power supply.484 Commenters stated realistically, re placing one MW of nuclear capacity likely would require much more than a single MW of nameplate capacity from another zero

- carbon resource to provide equivalent energy and capacity to the system. Commenters said in light of the high capacity factor and bas eload character of existing nuclear plants and the intermittent character of wind and solar, to obtain the same amount of energy and capacity from wind and solar as the energy and capacity of a 1,000 MW nuclear plant would require approximately 1,700 MW of wind plus another 2,600 MW of solar. Commenters said this amount of replacement capacity would only offset the zero

- carbon power lost by a nuclear unit that were to retire, whether ahead of or concurrent with the end of its operating license. Commenters s aid to make actual progress toward reducing the overall GHG emissions from power generation would require more renewables beyond the amount identified above; therefore, the cost of reducing GHG emissions from the power sector will be mitigated to the exten t that safely

- operating nuclear plants remain in operation as long as possible under NRC regulation. Commenters said because one of the important axioms of climate change is that emissions of GHG are long

- lived in the atmosphere, the goal of protecting the continued existence of zero

- carbon supply today and avoiding its replacement with fossil

- fueled electricity in the near term will reduce the cumulative amount of emissions into (and concentrations of GHG in) the atmosphere from United States power plants. Commenters said to that end, it is essential that if the Proposed Rule incorporates zero

- emission source deployment as part of BSER, it also provides support for the retention of existing nuclear units throughout the country.

Commenters urged EPA to make the following changes in its treatment of nuclear power in the Proposed Rule, if Building Block 3 remains a part of the proposal:

• Remove the 6% "at risk" MWh calculation from each applicable state's emission goal calculations, and instead create a meaningf ul goal

- setting incentive for states to support the continued operation of existing nuclear units;

• Count all post

- 2012 new plants and uprates toward compliance (for new plants or uprates with an in

- service date during or after the baseline year or period); in other words, grant compliance credit (add MWh of generation to the denominator of a state's compliance demonstration) for the unit's output once its license extension is effective;

• Treat all units relicensed during or after the baseline year or period as new units during their license renewal period; and

• Allow states to include all nuclear generation from existing units above a reasonable historic industry capacity factor, such as 81.6%, in the denominator of compliance calculations, so that high

- perfo rming units gain compliance credit for their host states.

Commenters recommended if the EPA nonetheless does decide to retain credit for uneconomic nuclear capacity in Building Block 3, that EPA require states to include in their state plans a very high sh owing that the claimed nuclear capacity: (1) is actually 'at risk' of closing early, and (2) will be predominantly replaced by fossil

- fuel generation.485 Commenters continued first, many factors go into each nuclear plant's viability, including nuclear waste management and disposal costs, and regulatory requirements outside of Section 111(d). Commenters said electricity market dynamics are constantly changing. Commenters said EPA should require clear proof from states that specific nuclear capacity represente d by a specific nuclear power plant is truly "at risk" of closing early before allowing states to claim credit for saving that capacity. Commenters said the assessment of "at risk" should not include costs associated with managing, transporting and remedia ting nuclear waste or consider costs associated with nuclear plant decommissioning.

Commenters stated second, EPA assumes for the purposes of this rule that the 5.7 GW of projected capacity reductions at nuclear power plants would be replaced by "new" nat ural gas combined

- cycle capacity with an assumed emissions intensity of 800 lbs. of CO2/MWh, or by the national 'power system,' using a projected 2020 average U.S. power sector emissions intensity of 1127 lbs. of CO2/MWh. Commenters said these assumptions are inappropriate; the avoided emission rate should be determined based on the least

- cost generation alternative, not on general assumptions about natural gas combined

- cycle capacity or national average emission intensities. Commenters said for example, nu clear generation could likely be replaced more cheaply through renewable energy than by building new coal

- fired power plants or re

- dispatch of coal or gas

- fired power plants. Commenters said saved nuclear capacity should not be credited as though it would be replaced by carbon

- intensive generation if that is not actually the case.

Commenters stated if a state is permitted to earn credit for avoiding retirement of more than 5.8% of nuclear generating capacity based on EPA's determination that a higher level of generation is truly 'at risk,' the target for the state must be strengthened to reflect that higher level of nuclear generation being included in the adjusted baseline calculation; in other words, if BSER is expanded to include greater opportunities fo r compliance credit based on saving more nuclear capacity, states cannot avoid making the emission reductions that reflect the level achievable under the original BSER; states should reduce emissions based on the original BSER, as well as what is achievabl e by saving the extra nuclear capacity.

Commenters stated EPA should remove the preservation of nuclear capacity from Building Block 3. Commenters said EPA should not encourage states to prop up old and uneconomic nuclear plants, which produce highly radioactive waste material and catastrophic n uclear risk, as a means of meeting their Section 111(d) goals; instead, the EPA standards should encourage states to look toward the future and focus on renewable energy and energy efficiency development and implementation. Commenters said through increase d focus on RE and EE, states can meet their goals without relying on saving 'at risk' nuclear capacity. Commenters said if EPA nevertheless decides to allow states to save 'at risk' nuclear capacity, then the state should have to conclusively prove that th e capacity is truly 'at risk' of closing soon and being replaced by much higher carbon

- polluting fossil

- fuel generation.

Commenters stated it is generally understood that existing nuclear generating units at risk of premature retirement are concentrated in a relatively small number of states where the units operate in competitive electricity markets and are exposed to low wholesale electricity prices. Commenters said the majority of existing nuclear capacity is not exposed to those economic pressures and is not at risk of premature shutdown; in addition, EPA's proposal, if implemented, likely would not avoid the premature shutdown of an existing nuclear unit.486 Commenters stated EPA's assumptions regarding nuclear energy assets at risk appears to be based on t he prorated average of electric output of nuclear facilities in danger of ceasing operations. Commenters said EPA has incorporated at

- risk nuclear in the calculation of the mandatory state emission limiting goals; however, in the case of Florida, the propo sed closing of Crystal River Unit #3 is an established fact and therefore inclusion of a nuclear at

- risk variable in the Florida emission reduction goals is inappropriate.

Commenters stated that the EPA's treatment of existing nuclear capacity was inconsis tent with the agency's treatment of other large existing sources of zero

- carbon energy such as hydroelectric dams and RE facilities. Commenters recommended that the EPA should simply exclude all existing zero

- carbon facilities (including nuclear, hydroelec tric, and RE facilities) from its calculation of states' emission goals. Commenters also stated that preserving existing nuclear capacity will not allow existing EGUs to reduce their emissions; therefore, under the language of section 111, the preservation of existing nuclear generation cannot be considered a "system of emission reduction." Commenters concluded by recommending that, if the EPA does not remove the at

- risk component from state goals, the EPA should establish a mechanism to reduce the stringen cy of states' emission rate goals at the time of license expirations, or where an existing nuclear plant is forced off

- line for extended periods of time.

Commenters stated EPA's proposal to incorporate approximately 5.8% of each state's existing nuclear c apacity (which EPA calls 'at risk' capacity) in calculating the state's emission goal is inappropriate for a number of reasons. Commenters said EPA's treatment of existing nuclear capacity is inconsistent with the agency's treatment of other large, existin g sources of zero

carbon electricity such as hydroelectric dams and RE facilities. Commenters said both hydroelectric facilities and existing RE facilities also face market and non

- market challenges that could lead to reduced capacity or shutdown in future years. Commenters said despite this similarity, EPA has not proposed to penalize states that retire existing hydroelectric or RE capacity by incorporating an assumption about 'at risk' hydroelectric or RE generation into state goals. Commenters said as wi th under construction nuclear generation, EPA should not arbitrarily treat zero

- carbon generation from existing nuclear facilities differently from other

zero

- carbon generation; to fix this discrepancy, EPA should simply exclude all existing zero

carbon fa cilities (including nuclear, hydroelectric, and RE facilities) from its calculation of states' emission goals.

Commenters stated EPA's proposal to penalize states that fail to preserve their nuclear capacity is also flawed because many states have little o r no control over the decision as to whether nuclear capacity will continue to operate. Commenters said states have no control over whether the Nuclear Regulatory Commission (NRC) grants or denies an existing facility's application for a license extension. Commenters said the NRC is currently issuing 20

- year license extensions to facilities that have reached the end of their initial 40

- year license, but has yet to determine whether it may issue longer extensions under existing federal law.

Commenters stated furthermore, EPA's designation of 'at risk' nuclear generation as a component of BSER exceeds the agency's authority under the Act; even under EPA's reading of the statute, the preservation of existing nuclear capacity cannot even meet EPA's strained defi nition of the term. Commenters said simply put, preserving existing nuclear capacity will not allow existing EGUs to reduce their emissions; rather, the preservation of existing nuclear capacity will only487 allow existing EGUs to continue operating at the sa me levels as in the past; therefore, under the plain language of section 111, the 'preservation' of existing nuclear generation cannot be considered a 'system of emission reduction.'

Commenters stated finally, the inclusion of at

- risk nuclear generation in states' emission goals is unnecessary to encourage states to preserve their existing capacity; the imposition of CO2 emission limits on the power sector will naturally incentivize states and affected entities to favor lower

- carbon power sources, including existing nuclear facilities. Commenters said in addition, states that fail to preserve their nuclear capacity will be incentivized to replace that lost capacity with other low

- carbon generation or EE because replacement of lost zero

- carbon generation with fossil

- fueled generation would make it more difficult for the state to meet its emission target.

Commenters concluded that, for these reasons it is inappropriate to include 5.8% of existing nuclear capacity in the goal computation for each state and Comme nters urged this assumption to be removed from building block 3. Commenters said if EPA does not remove the at

- risk nuclear component from building block 3, EPA should establish a mechanism to reduce the stringency of states' emission rate goals at the tim e of license expirations; similarly, the same adjustment mechanism should be available to adjust the stringency of the states' emission targets in those cases where an existing nuclear plant is forced off

- line for extended periods of time.

Commenters stat ed keeping existing nuclear electricity generation operating and building new facilities is vital. Commenters said the units under construction should count toward future compliance. Commenters said the decision to recognize only 6% of the existing fleet a s "at risk" is too general and too conservative, and puts those utilities that own nuclear units at more risk of future compliance problems.

Commenters stated that the EPA's approach to quantifying emission reductions from "at

- risk" nuclear generation is p roblematic for several reasons. First, "although retirement of nuclear units in some states could lead to increased generation from existing or new fossil fossil

- fueled generation sources, the mere preservation of some existing nuclear capacity cannot redu ce emissions below the historic baseline emission levels." Commenters also stated that the EPA's approach of proportioning "at

- risk" nuclear generation equal across all states with nuclear reactors was problematic, because: 1) it does not match the economi c and regulatory reality in most, if not all states, and 2) nuclear facilities often serve customers and utilities in neighboring states, so that the decision to retire a nuclear facility may not be entirely under the control of the state in which it is lo cated. Commenters recommended that the EPA "abandon this component of the Proposed Rule, even if it retains its questionable 'beyond

- the

- unit' interpretation of BSER."

Commenters stated EPA's approach to quantifying emission reductions from preservation of 'at

risk' nuclear generation is problematic for several reasons; first the commenters fail to see how 'preserving' existing nuclear capacity can meet the statutory definition of a 'system of emission reduction.' Commenters said at best, the preservation of nuclear capacity at historic levels would allow affected units to maintain their own historic emission levels. Commenters said although the retirement of nuclear units in some states could lead to increased generation from existing or new fossil

- fueled generation sources, the mere preservation of some existing nuclear capacity cannot reduce emissions below the historic baseline emission levels. Commenters said EPA's inclusion of this component of BSER introduces additional legal risk for the proposal.488 C ommenters continued just as problematically, EPA's approach to 'at

- risk' nuclear generation would apportion the risk of nuclear retirement proportionally across all states with nuclear reactors, regardless of the actual risk that generation in that state w ould retire. Commenters said this approach is flawed for at least two reasons; first, due to wide differences in economic and regulatory conditions in different parts of the country, units in many states are not at any risk of retirement, while units in ot her states are more clearly at risk. Commenters said thus, EPA's proposed approach does not match the economic and regulatory reality in most, if not all, of the states with nuclear reactors. Commenters said second, nuclear facilities often serve customers and utilities in neighboring states; therefore, the decision to retire a nuclear facility for economic reasons may be entirely beyond the control of the state in which the facility is located. Commenters said thus, the interstate nature of electricity mar kets and the widespread inability of individual states to control whether a nuclear facility in their state will remain in operation make EPA's approach unfair and untenable. In light of these flaws, the commenters urged EPA to abandon this component of th e Proposed Rule, even if it retains its questionable 'beyond

- the

- unit' interpretation of BSER.

Commenters stated historically low natural gas prices coupled with energy policy that favors renewable energy have priced nuclear generation out of some markets. Commenters said the CPP is an example of energy policy clearly favoring renewable energy. Commenters said the EPA has calculated emission standards under the CPP using a Best System of Emission Reduction (BSER). Commenters said the BSER provides 5.8% cred it to a generator's 2012 nuclear capacity in states with nuclear generating facilities; a thorough analysis of this portion of the CPP conducted by the University of Tennessee found that the CPP incentivizes at least 15 states to close nuclear capacity and replace it with natural gas generation.

Commenters stated that the BSER "six percent factor" should be removed from the state goal calculation. Commenters stated that the Callaway and Wolf Creek nuclear units in Missouri and Kansas, respectively, were bot h expected to remain in service, and that the 6 percent factor is a detriment should either nuclear unit in any given year generate less energy than what EPA assumed in setting either state's emission rate target, requiring the state, more specifically the units in the state, to offset any shortfall.

Commenters recommended that nuclear power uprates between 2012 and 2020 should be treated similarly to renewable energy added in this period, and credited towards state goals. Commenters also recommended that t he EPA should encourage continued operation of all existing units by defining as 'new' nuclear capacity any nuclear plants that have been relicensed to operate beyond 60 years, and any plants that have not received license extensions to operate beyond thei r original 40

- year license term as of the date on which the proposed guidelines were issued, rather than assume that nuclear units will continue to run forever.

Commenters stated in developing BSER, EPA's view was that including a small percentage of nucle ar energy in the rate targets would provide states an incentive to avoid premature nuclear shutdowns; the approach, however, will not achieve the intended effect and is legally vulnerable. Commenters said EPA calculates the generation (in MWh) of electrici ty from 'at risk' nuclear plants and then adds this generation to the denominator of the goal, resulting in a lower 2030 emission rate. Commenters said EPA explains that the proposed rule counts only six percent of489 existing nuclear facilities because (acco rding to EPA) six percent of nuclear capacity nationwide is 'at risk' for premature retirement.

Commenters further stated if EPA is going to continue with its broad interpretation of BSER, the Agency should remove the "6 percent factor" from the goal calcu lation. Commenters said the EPA included 5.8% of Callaway and Wolf Creek nuclear units in Missouri and Kansas, respectively; since both units are expected to remain in service, EPA's treatment has little impact on either state's ability to meet its emissio n rate reduction targets; instead, the 6 percent factor is a detriment should either nuclear unit in any given year generate less energy than what EPA assumed in setting either state's emission rate target, requiring the state, more specifically the units in the state, to offset any shortfall. Commenters said EPA should consider a requirement for state plans to include a discussion of how states would preserve existing nuclear generating capacity, such as any necessary policy changes through legislation or regulation, or other market

based mechanisms, or a combination thereof; this would be a relatively straightforward showing for nuclear units in traditionally regulated states.

Commenters stated EPA also proposes that the emission reductions achievable by r etaining in operation approximately six percent of each state's historical nuclear capacity [i.e., "at risk" units] should be factored into the state goals for the respective states. Commenters said the proposed guidelines further notes that the nuclear ge nerating capacity reflected in building block 3 is already in operation or under construction. Commenters said based on EPA's assumption that the so

- called "at risk" units will continue to operate until 2030 and that the state reduction goals could be sust ained beyond 2030, it is reasonable to conclude that EPA assumes that the remainder of the existing nuclear fleet will continue to be available through 2030, as no state goal appears to reflect any assumption by EPA of existing units coming off line, other than those already committed to retire.

Commenters stated this assumption ignores the fact that, unlike fossil plants, nuclear plants are only licensed for an initial term of 40 years; and while many plants have obtained, or are in the process of obtainin g, a first license extension for an additional 20 years, the process for obtaining a subsequent license extension is still evolving. Commenters said the NRC has "begun a regulatory framework and technical justification review of the operating power reactor license renewal process to be prepared for anticipated subsequent license renewal applications that will request approval to renew a facility's operating license," but it has not yet decided on the terms under which it may grant second license renewal app lications. Commenters said even if NRC does grant additional license renewals, EPA has no valid basis to assume that every plant currently operating will continue to receive repeated license renewals into the indefinite future, as its current approach imp licitly does.

Commenters stated that no output from the Wolf Creek nuclear plant was "at risk," and the amount labeled as "at risk" should be removed from the denominator of the CPP's mathematical formula. Commenters also recommended that the EPA should re vise its formula so that existing nuclear generation would count towards compliance.

Commenters stated Kansas currently has one nuclear plant, Wolf Creek, with an output of 1,205 MW that is owned jointly by three Kansas utilities. Commenters said the EPA' s proposed plan490 does not recognize the significant zero

- carbon emissions from Wolf Creek that serve to lower Kansas's overall carbon footprint. Commenters said in fact, the CPP, as structured, penalizes states with nuclear generation by including "at risk " nuclear generation in the denominator of the CPP's mathematical formula. Commenters said the penalty resulting from inclusion of "at risk" nuclear generation in the formula is derived by the denominator's effect of lowering EPA's proposed emission rates . Commenters said the impact of the formula is created by the EPA's use of a basic ratio of:

Carbon emissions / megawatt hours of production.

Commenters stated the EPA's definition of the basic ratio above requires generation resources with zero emissions to increase only the denominator of the ratio; because there is no effect on the numerator, each megawatt hour of zero

- carbon generation added by EPA for "at risk" nuclear resources lowers the emission limit goal and thus requires greater carbon emission reductions. Commenters said this is counterintuitive and reflects either the EPA's lack of understanding of electric generation or is simply an attempt to derive a lower emission limit. Commenters said penalizing Kansas for zero

- carbon generation is incons istent with the EPA's espoused goal of lowering carbon emissions; a rule designed to reduce carbon emissions should reward, not penalize, the use of nuclear generation.

Commenters stated because Kansas has no nuclear generation under construction and no p art of their single nuclear plant, Wolf Creek, is 'at risk', this element is eliminated from their calculation.

Commenters stated that the EPA should revise its formula so that existing nuclear generation can count towards compliance.

Commenters stated t hat assuming 5.8% of nuclear generation in every state was at risk was unreasonable, because nuclear units in many states are incorporated into the rate base and are not at market risk, while nuclear units at risk of retirement are merchant generators loca ted in wholesale electricity markets. Commenters also stated that the EPA's treatment of nuclear capacity is arbitrary, because other existing sources of zero

- carbon electricity such as hydroelectric dams and renewable energy facilities, are not treated as "at risk," even though market and non

- market forces could lead to shut

- down or reduced utilization of those sources in future years. Commenters recommended that the EPA remove the "at

- risk" existing nuclear generator factor from its calculation of states' emission goals. Commenters also stated that the assumption of a 90% capacity factor was inappropriate, and recommended that, if the EPA does not remove the "at risk" generation from the goal calculation, that the capacity factor used should reflect actual capacity factor averages within a state.

Commenters 2 stated in calculating a state's emission goal, EPA's proposal incorporates 5.8% of the state's existing nuclear capacity (EPA refers to this capacity as 'at risk '). Commenters said including at

- risk nuclear capacity in a state's emission goal is unreasonable for a number of reasons; first, the assumption that all existing nuclear capacity is at risk of retirement is unreasonable because in many states these units are incorporated into the rate base an d are not at market risk. Commenters said the U.S. nuclear units at risk of retirement are for the most part merchant generators located in competitive wholesale electricity markets.491 Commenters stated EPA's treatment of existing nuclear capacity is also arbitrary because it is inconsistent with the agency's treatment of other large, existing sources of zero

- carbon electricity such as hydroelectric dams and renewable energy facilities. Commenters said all types of non

CO2

- emitting generation face market an d non

- market challenges that could lead to shut

- down or reduced utilization in future years. Commenters said EPA has not proposed to penalize states that retire other existing, non

- CO2

- emitting generation by incorporating an assumption about ’at risk' hydr oelectric or renewable energy generation into state goals. Commenters said EPA should not arbitrarily treat non

- CO2 generation from existing nuclear facilities differently from other non

CO2 generation; to remedy this discrepancy, EPA should remove the 'at

- risk' existing nuclear generator factor from its calculation of states' emission goals in accordance with the National Association of Regulatory Utility Commissioners' (NARUC) resolution on this topic.

Commenters stated EPA's proposal to penalize states t hat fail to preserve their nuclear capacity is also flawed because many states have little or no control over the decision as to whether nuclear capacity will continue to operate. Commenters said states have no control over whether the Nuclear Regulatory C ommission (NRC) grants or denies an existing facility's application for a license extension. Commenters said the NRC is currently issuing 20

- year license extensions to facilities that have reached the end of their initial 40

- year license, but has yet to de termine whether it may issue longer extensions under existing federal law. Commenters said for these reasons, if EPA does not remove the at

- risk nuclear component from building block 3, EPA should make states' emission rate goals less stringent at the time of license expirations for units that have already received a 20

- year license extension from the NRC.

Commenters did not believe that the use of a 90% capacity factor for the at

- risk nuclear capacity in calculating a state's goal is appropriate. Commenter s said EPA cites EIA's Annual Energy Outlook report on the 2013 nationwide nuclear fleet average as the basis for that number; however, there are issues with EIA's report: that average includes 21 plants with capacity factors over 100%, which skews the ave rage high. Commenters suggested that EPA examine EIA's methodology to correct for this error. Commenters said in addition, on a rolling average basis for 2011

- 2013, one quarter of the units had an average capacity factor of 70.8% and the lifetime
average c apacity factor for the nuclear units currently operating is 80.3%. Commenters said nuclear units typically refuel at least every 18 months: an outage that usually lasts at least six weeks. Commenters said outages for maintenance, uprates, or safety issues can last significantly longer; the use of a national average capacity number is not appropriate in the calculation of an individual state's goal. Commenters said the average number represents operations across a fleet of about 100 units; a single state wil l have a much lower number of units and outage schedules among that smaller number will result in much lower capacity factors during many compliance periods. Commenters said if EPA does not remove the at

- risk nuclear component from building block 3, EPA mu st also adjust the assumed capacity factor and, subsequently, the overall emissions goal, to reflect actual averages within the state.

Commenters disagreed with the Proposed Rule's treatment of 'at risk' nuclear generation. Commenters agreed that continuin g operation of existing nuclear capacity is a key component of U.S. climate policy; however, trying to implement this policy through punitive measures directed at states in which those plants are operating is inappropriate. Commenters said instead, EPA sho uld work with the Federal Energy Regulatory Commission (FERC), Regional Transmission Organization (RTOs), and the states to ensure that FERC's regulation of wholesale markets492 provides adequate cash flow to those nuclear units that are truly at risk of shut down for economic reasons, and should provide appropriate recognition to states that successfully keep units running rather than penalizing those states in which shut

- down may occur (usually because of factors beyond a state's control).

Commenters stated t hat Louisiana has two nuclear facilities in operation with a combined capacity of 2,134 MW (net summer capacity), and that the EPA included 984 GWh of generation from these facilities in its target emission rate calculation for Louisiana.

Commenters stat ed the EPA uses its Building Block 3(a) to include a factor for "preserved" nuclear generation that might otherwise be retired. Commenters said the EPA identifies a number of factors that could put nuclear EGU's at risk: facility age; increased fixed O&M c osts; low wholesale electricity prices; and additional capital investment associated with ensuring plant security and emergency preparedness. Commenters said using an estimate published in the EIA's Annual Energy Outlook for 2014, the EPA assumes that six percent of each state's nuclear generating capacity is "at

- risk." Commenters said Louisiana has two nuclear facilities in operation with a combined capacity of 2,134 MW (net summer capacity). Commenters said EPA included 985 GWh of generation from these fa cilities in its target emission rate calculation for Louisiana.

Commenters stated that neither of Louisiana's nuclear facilities are "at

- risk" and no new nuclear is under construction, so this component should not be included in the denominator of the stat e goal equation.

Commenters stated the EPA's proposal effectively penalizes states with operable nuclear facilities by adding nuclear generation to the denominator of its equation thereby lowering a state's emission rate. Commenters said the EPA's proposed formula is basically a ratio of carbon emissions

- to

- generation; thus adding to the equation a zero

- carbon emissions generation value increases the denominator while holding the numerator constant. Commenters said the result is a reduced target emission ra te, requiring greater carbon emission reductions; penalizing a state for

zero

- carbon generation seems contradictory to the EPA's goals. Commenters said the rule should be designed to reward a state for utilizing zero

- carbon emitting generation, not penaliz e it.

Commenters stated this issue is highlighted by NERC in its reliability assessment:

'The nuclear retirement assumptions add pressure to states that will need to retire nuclear units. For these states, more CO2 reductions from other measures than origi nally estimated by the EPA may be required.'

Commenters stated because neither of Louisiana's existing nuclear facilities are 'at

- risk' and no new nuclear is under construction, this component should not be included in the denominator of the equation.

Comm enters stated that the basis for EPA's 'at risk' nuclear capacity estimates is weak and not well supported. Commenters further stated that no nuclear units in Louisiana are considered to be vulnerable to the type of economically

- forced closure described by EPA in the proposed rule.493 Commenters stated the EPA based its assumption of 'at

- risk' nuclear capacity on an estimate published in the EIA's Annual Energy Outlook for 2014. Commenters said the EIA however, does not provide any detailed calculations, nor d oes it identify specific plants, timeline or rationale for this estimate other than 'continued economic challenges.' Commenters said the EIA simply states:

"Additionally, the AEO2014 nuclear projection assumes a decrease of 5.7 GW by 2020 in several region s where existing nuclear units appear at risk of early closure due to a combination of high operating costs and low electricity prices."

Commenters stated while the Companies do not know which units the EIA had in mind, the Companies do not consider any of their nuclear units in Louisiana to be vulnerable to the type of economically

- forced closure described by the EPA in this proposed rule.

Commenters stated the EPA also notes the lack of specific retirement assumptions, but yet determines that the 5.7 GW r etirement projection 'is a reasonable proxy' and applies it to all states with nuclear generation regardless of region or fleet characteristics (e.g., age of facility, historic capacity factor, economic dispatch, and regulatory environment).

Commenters st ated that the EPA's "at risk" nuclear proposals are ambiguous on how nuclear generation will be treated for compliance purposes. Commenters said for example, if the two units in Louisiana operated at below a 90 percent capacity factor for one year (as a re sult of refueling or an outage, Commenters stated that it was unclear if Louisiana would be able to claim "credit" for the entire 985 GWh used in calculating the state goal, or if some adjustment would be applied.

Commenters stated the EPA's "at

- risk" nucl ear component is not a compliance requirement and no specific monitoring or verification is required. Commenters said this portion of the EPA's BSER seems only to serve as a method for reducing a state's target emission rate; it is unclear how actual net g eneration values will be accounted. Commenters said for example, if the two units in Louisiana operate below a 90 percent capacity factor in one year (as a result of refueling or outage), it is unclear if Louisiana would still be able to claim 'credit' for the entire 985 GWh used in calculating the state goal, or if some adjustment would be applied.

Commenters stated that the EPA's at

- risk nuclear assumption is not expected to impose a cost on Louisiana customers at this time; however, if the costs of opera ting nuclear power exceeded the wholesale market rates, Louisiana could be compelled to assume "above

- market" cost in order remain compliant with CPP provisions.

Commenters stated the nuclear component of EPA's proposed rule is not expected to impose a

cos t to Louisiana ratepayers. Commenters said if the EPA allows a state to use the same 6 percent of nuclear generation for compliance of the target emissions rate, and nuclear generation remains constant, then it should impose no cost; this could change, how ever, over time, if the costs associated with operating nuclear power exceed wholesale market rates. Commenters said at that time, Louisiana could be compelled to assume an 'above

- market' cost in order to remain compliant with CPP provisions.494 Commenters s tated that the BSER used in calculations of state goals has a flaw in that the EPA has not justified the decision not to tally 100% of nuclear generation. Commenters also stated that the BSER calculation was flawed because hydroelectric generation was not included in any form in the BSER.

Commenters stated in addition, the Best System of Emission Reduction used in calculations of state goals has at least three major flaws, regardless of what assumptions are made regarding the evaluation of State Plans and ultimate compliance:

1. EPA has not justified the decision not to tally 100% of nuclear generation.

2. EPA does not include hydroelectric energy in any form in the BSER.

Commenters stated these technologies are the two largest generators of very

- low

- carbon elect ricity in the United States (making up over 82% of total very

- low

- carbon electricity in 2012). Commenters said omitting most or all of the electricity generated by the technologies that have already made the greatest contributions to accomplishing the stat ed goal of the Clean Power Plan requires justification. Commenters said although the EPA has quite reasonably explained why they do not expect any new hydroelectric capacity to be built in the foreseeable future, clear and compelling overall justification for omitting this generation from the state goal

- setting formula is not present in the proposed rule.

Commenters urged the EPA to ensure that electricity generation from nuclear power plants is counted fully and fairly in all parts of the final rule.

Comme nters stated that Building Block 3 includes 5.8% of the generation capacity for the Grand Gulf Power plant in Mississippi. Commenters stated that this facility is not at risk and the inclusion of output in this manner will have no effect on the future oper ation of the plant. Commenters recommended that the inclusion of "at risk" generation should be dropped from the goal setting.

Commenters stated building Block 3 includes 5.8% of the generation capacity for the Grand Gulf Power plant in Mississippi, which equals 631,874 MWh, to be included in the denominator of the goal calculations. Commenters said this is to account for at risk generation and to encourage continued utilization of the nuclear generation facilities. Commenters said this facility is not at

r isk and the inclusion of the output in this manner will have no effect on the future operation of the plant. Commenters said the inclusion of the 'at risk' nuclear generation should be dropped from the goal setting.

Commenters stated that states with existing nuclear generation have stricter goals, because a percentage of that nuclear generation is included in the denominator of the calculation of the state goal. Commenters stated that this adds pressure to states with nuclear generation that is not fe lt by states with nuclear generation, even though nuclear generation is carbon neutral and should be considered a beneficial prior investment.

Commenters stated EPA proposes that states encourage more carbon

- neutral generation, such as renewable and nuclea r generation, in Building Block 3; the commenters are concerned about the proposed rule's calculation of the renewable target and treatment of nuclear units.495 Commenters stated although EPA recognizes the value of nuclear generation, the proposed rule does not reward states that have invested in nuclear generation; rather, these states have stricter goals, because a percentage of existing nuclear generation is included in the denominator of the calculation of the state goal. Commenters said this adds pressur e to states with nuclear generation

- even though that generation is carbon neutral and should be considered a beneficial prior investment

- that is not felt by states without nuclear generation.

Commenters stated that the proposed rule penalizes prior in vestment in nuclear generation and does not incentivize new investment in nuclear power. Commenters also stated that the EPA fails to recognize that states often have little control over whether a nuclear plant remains operational. Commenters stated that t he Nuclear Regulatory Commission is responsible for licensing and, barring a safety or operational issue, the owners of nuclear plants largely exercise control over the decision to shut down the unit.

Commenters stated EPA fails to recognize that states of ten have little to no control over whether a nuclear unit remains operational. Commenters said the Nuclear Regulatory Commission is responsible for licensing, and barring a safety or operational issue, the owners of nuclear plants largely exercise control over the decision to shut down a unit. Commenters said although a state may very much want a nuclear plant to remain operational as a source of zero

- carbon electricity, the state may be limited in its ability to affect the market revenues that a nuclear un it receives in organized markets. Commenters said EPA's inclusion of any existing nuclear generation in the denominator merely serves to penalize states that already have this zero

- carbon, relatively climate

- resilient resource, and it is out

- of

- touch with any understanding of how nuclear units are planned and operated.

Commenters stated the proposed rule treats existing nuclear generation and new nuclear generation differently. Commenters said per the proposal, generation from new nuclear capacity can be c redited at 100% of its generation during the compliance period. Commenters supports this treatment for new nuclear generation.

Commenters stated that the proposed rule does not give net credit for nuclear generation because it includes 5.8% of the existing capacity both in the baseline when establishing goals and in counting nuclear generation toward compliance with the state goal. Commenters suggested two alternatives options for treatment of nuclear generation in the final rule: 1) Do not include "at risk " nuclear generation in the baseline when developing the state goal, but allow it to be used for compliance, and 2) Award compliance credit for "at risk" nuclear generation if investments are made to extend the life of existing nuclear generation.

Commente rs stated preserving existing nuclear's carbon

- free generation will help to keep total average CO2 emission rates down for the country's energy portfolio. Commenters said Missouri has one existing nuclear generating facility in the state, a 1,200 megawatt facility. Commenters said the proposed rule describes 'at risk' nuclear generating capacity as nuclear capacity that is at risk of retiring in the near future. Commenters said the proposed rule does not give net credit because it includes 5.8% of existing nuclear capacity both in the baseline when establishing the goals and in counting nuclear generation toward compliance with the state goal. Commenters said if an existing nuclear facility is retired, under EPA's proposed method, a state would have to devel op zero

- emitting generation to replace 5.8% of existing nuclear generation just to get back496 to the baseline level of the state's adjusted average CO2 rate. Commenters suggested two alternative options for the treatment of existing nuclear generation in the final rule:

Option 1: Do not include 'at risk' nuclear generation in the baseline when developing the state goal, but allow it to be used for compliance. Commenters said under this option, 'at risk' nuclear generation would not be included in the state go al calculation, but states would be allowed to take credit for their "at risk" nuclear generation. Commenters said this method would still provide incentive to invest in prolonging the life of existing nuclear capacity by giving a net credit to states with existing nuclear capacity. Commenters said it also would not penalize a state that retires existing nuclear capacity at the end of its useful life. Commenters said although the state would lose the compliance credit from the retired nuclear generation, th e state would be back at its starting point, as opposed to needing to develop new zero

- emitting generation just to get back to its baseline level.

Option 2: Award compliance credit for 'at risk' nuclear generation if investments are made to extend the life of existing nuclear generation. Commenters said under this option, 'at risk' nuclear generation would be included in the state goal calculation and the state would be allowed to take credit for the 'at risk' nuclear generation in the same manner that the proposed rule describes; however, if a utility were to make an investment to prolong the life of existing nuclear generation, such as replacing a reactor head, a credit would be granted beyond the 5.8% allowed for in the proposed rule. Commenters said the state would not only avoid the penalty of needing to replace 5.8% of their retired nuclear capacity, but it would also receive a credit for their investment to extend the life of their existing nuclear capacity. Commenters said this would increase the ince ntive to preserve existing nuclear capacity and would generally be consistent with EPA's proposed treatment of existing nuclear generation.

Commenters stated that Ameren (owner of the Callaway Energy Center) does not believe Callaway is "at risk" for closu re. Commenters also stated that Ameren estimates that if, under the proposed rule methodology, Callaway does not achieve a 90 percent capacity factor, Missouri will necessarily be required to meet its goals from other building blocks.

Commenters stated the EPA also notes that, '[n]uclear generating capacity facilitates CO2 emission reductions at fossil fuel

- fired EGUs by providing carbon

- free generation that can replace generation at those EGUs', yet no net credit is given for the remaining useful life of t he Callaway Energy Center (Callaway), presumably because 'the generation from [this] unit is currently helping to avoid CO2 emissions from fossil fuel

- fired EGUs. Commenters said in its comments, Ameren indicated it does not believe Callaway is 'at risk' f or closure. Commenters said the EPA should allow a percentage of nuclear generation to be used in meeting a state's goal for CO2 emission reduction. Commenters said Ameren estimates that if, under the proposed rule methodology, Callaway does not achieve a 90 percent capacity factor, Missouri will necessarily be required to meet its goals from other building blocks.

Commenters stated first, EPA's assumption that 'at risk' nuclear generation will continue to operate is unsupported. Commenters said this genera tion is obviously "at risk" for a reason, yet EPA does not examine why this generation is at risk or what impediments would have to be removed in order for this generation to keep operating; for example, Exelon, the largest owner of nuclear power in the Un ited States, has warned that the United States nuclear fleet is aging and497 faces severe challenges in avoiding large

- scale closures in the future. Commenters said Exelon is also taking the public position that nuclear power has become unprofitable in light of low natural gas prices and subsidized wind power and that three of its six Illinois nuclear plants are 'on the bubble' of closing. Commenters said EPA, however, simply assumes that these types of impediments can be removed without explaining why.

Commen ters continued EPRI explains the fallacy of EPA's approach.

Commenters stated indeed, EPA performs almost no analysis at all. Commenters said the extent of EPA's analysis is (a) an EIA estimate that 5.7 GW of existing nuclear capacity is likely to be lost, (b) an article by two EIA analysts that referred to this reduction in capacity as occurring because of 'continued economic challenges,' and (c) a February 2013 Credit Suisse report that nuclear units may be experiencing up to a $6 MWh shortfall in coverin g their operating costs. Commenters said EPA translates these speculations into the conclusion that at a $12

- $17 carbon price, a price EPA finds reasonable, this capacity would continue to be available. Commenters said to characterize this analysis as scan ty understates the point. Commenters said one quotation from one brief article by two EIA analysts plus a cherry

- picked quotation from a single 23

- page investment report hardly qualifies as 'substantial evidence' that all at risk nuclear generation can be preserved; indeed, even a cursory glance at the Credit Suisse article indicates that the nuclear industry faces issues that are more than merely monetary, including a large number of aging units experiencing very high levels of service outages.

Commenters stated that the assumption that 6 percent of every state's nuclear power is at risk is arbitrary, because specific nuclear units in specific states are at the risk of retirement or derating, while others are not. Commenters also stated that the six percen t assumption has the absurd result that the amount of nuclear generation to be 'saved' in meeting the state's rate goal is less than the smallest nuclear reactor in any state. Commenters said for example, Texas is assigned 290 MW of at

- risk capacity, while the smallest unit in the state is 1195 MW, four times as large. Commenters said to match its goal, Texas would need to determine somehow that 24 percent of the capacity of its smallest unit was 'at risk' and that it had taken some measures to retain it in operation.

Commenters stated second, having utilized EIA's figure of 5.7 GW of nationwide nuclear capacity that is likely to be lost, and having determined that this number represents about 6 percent of nationwide nuclear power, EPA then arbitrarily assum es that 6 percent of every state's nuclear power is at risk and can be saved. Commenters said EPA has no basis for making this assumption; specific nuclear units in specific states are at risk of retirement or derating; others are not. Commenters said as a n example, Arkansas Electric Cooperative Corporation reports that no nuclear generation is at risk in Arkansas, yet EPA's inclusion of that assumption in calculating Arkansas' goal artificially makes that goal more stringent. Commenters said there is thus absolutely no reason to assume that because one state has nuclear generation at risk, every other state that has nuclear generation has the same proportion of nuclear generation at risk; EPA's assumption that they do is the definition of arbitrary.

Comment ers stated nor does EPA have a rational basis to conclude that new nuclear generation will come on line as scheduled; indeed, witnesses for the staff of the Georgia Public Service498 Commission recently testified that the already

- delayed Plant Vogtle faces fu rther delays and indeed lacks an integrated project schedule beyond 2015.

Commenters stated under EPA's approach, states with nuclear power are left with a lower emission rate goal relative to states that do not employ nuclear power, thereby limiting stat es' options to demonstrate compliance. Commenters also stated EPA should reconsider this 6 percent 'penalty' for 'at risk' nuclear generation. Commenters said existing or new nuclear generation should not affect a State's emission rate goal, but rather som e portion should be acceptable as an eligible action toward meeting that goal. Commenters also recommended that a 100 MW uprate at the Seabrook Station in 2005 and 2006 should be credited, because it helped to avoid future fossil fired generation.

Commen ters stated second, the Seabrook Station nuclear plant completed an early 100 MW uprate in 2005 and 2006. Commenters said this uprate has helped to avoid future fossil fired generation and should be credited. Commenters said the proposed rule fails to prop erly promote or recognize the importance of base

- load nuclear generation for large

- scale reductions in CO2 emissions. Commenters said nuclear energy is the largest existing source of carbon free electricity generation in the United States, accounting for 1 9 percent of all electricity generation in 2012 and 63 percent of our nation's carbon free power, greater than all renewables combined. Commenters said some nuclear power plants are at economic risk of shut

- down, given the low cost of natural gas and the i ncrease in construction and operation of natural gas

- fueled generation. Commenters said while Building Block 3 is intended to encourage the continued operation of nuclear units, instead states with existing nuclear capacity are penalized in the calculation of emission rate goals. Commenters said under EPA's approach, states with nuclear power are left with a lower emission rate goal relative to states that do not employ nuclear power, thereby limiting states' options to demonstrate compliance. Commenters sa id EPA should reconsider this 6 percent "penalty" for "at risk" nuclear generation. Commenters said existing or new nuclear generation should not affect a State's emission rate goal, but rather some portion should be acceptable as an eligible action toward meeting that goal. Commenters stressed the importance of setting standards that preserve options (e.g., nuclear) for fuel diversity and maintain grid reliability.

Commenters recommended that: a) existing nuclear generation should not be considered in
sett ing a State's emission rate goal, but instead should only be considered as an eligible action for compliance purposes; and b) maintaining existing nuclear power should be an eligible action, which receives full credit for reducing the CO2 emissions intensi ty (lb/MWh) of a state. Commenters stated that the second recommendation is warranted under a plain reading of EPA's definition of 'affected entity' in proposed definitions at 40 CFR 60.5820.

Commenters stated t he proposed rule fails to properly promote, o r recognize the importance of, base load nuclear generation for large

- scale reductions in CO 2 emissions. Commenters said too little CO 2 emissions reduction credit is allowed for nuclear energy in the proposed rule. Commenters said it is appropriate to prov ide credit to maintain existing nuclear power, as well as for new nuclear power.

Commenters had the following recommendations:499 a) Existing nuclear generation should not be considered in setting a State's emission rate goal, but instead should only be consider ed as an eligible action for compliance purposes.

b) Maintaining existing nuclear power should be an eligible action, which receives full credit for reducing the CO2 emissions intensity (lb/MWh) of a state; this result is warranted under a plain reading of EP A's definition of "affected entity" in proposed definitions at 40 CFR 60.5820.

Commenters stated EPA's treatment of existing nuclear generation does not fully credit states that have supported the development of one of the most significant forms of carbon

- free electricity generation in the United States, nuclear power. Commenters said instead, states with existing nuclear capacity are penalized in the calculation of emission rate goals. Commenters said under EPA's approach, states with nuclear power are lef t with a more stringent emission rate goal relative to states that do not employ nuclear power, thereby limiting states option(s) to demonstrate compliance.

Commenters stated that reducing CO2 emissions goals in only those states with nuclear generation by assuming a uniform amount of 'at risk' nuclear generation that could be preserved, without any assessment of whether this is the case, is arbitrary and capricious and has unwarranted and inequitable impacts on state targets. Commenters said furthermore, t his approach fails to recognize that retention and retirement decisions rest largely with generation owners and the Nuclear Regulatory Commission, rather than the states. Commenters also stated this element of Building Block 3 will have no effect in the ma jority of states that do not have nuclear generation facilities. Commenters said in states that do, the EPA's assumption regarding preservation of 'at risk' nuclear will increase the burdens of the Clean Power Plan, effectively penalizing those states for their use of these non

- emitting resources. Commenters recommended that the EPA should not incorporate any 'at risk' nuclear generation into New York's target CO2 emissions rate.

Commenters stated Building Block 3 assumes the preservation of 5.8% of nuclear generation across the country that the EPA considers to be 'at risk' for retirement. Commenters said the EPA applies Building Block 3 by incorporating 5.8% of a state's nuclear capacity into its target CO 2 emissions rate. Commenters said the target rates in states that do not have any nuclear generators are not similarly adjusted; this adds 2,410,637 MWh of generation into the denominator of the formula for New York's target CO 2 emissions rate, having the effect of lowering it.

Commenters stated reducing CO 2 emissions goals in only those states with nuclear generation by assuming a uniform amount of 'at risk' nuclear generation that could be preserved, without any assessment of whether this is the case, is arbitrary and capricious and has unwarranted and i nequitable impacts on state targets. Commenters said furthermore, this approach fails to recognize that retention and retirement decisions rest largely with generation owners and the Nuclear Regulatory Commission, rather than the states.

Commenters stated this element of Building Block 3 will have no effect in the majority of states that do not have nuclear generation facilities. Commenters said in states that do, the EPA's assumption regarding preservation of "at risk" nuclear will increase the burdens of the Clean Power Plan, effectively penalizing those states for their use of these non

- emitting resources.500 Commenters stated when a nuclear unit ceases to operate, the affected state must replace the nuclear unit's output. Commenters said in the near term, t he needed replacement energy likely will come from existing units and an RSV may have to be triggered. Commenters said in the longer term, some portion of the replacement energy would have to come from non

- emitting resources in order to meet the state's Cl ean Power Plan target. Commenters said lowering state target rates in this manner penalizes states that currently operate non

- emitting nuclear facilities by requiring them to deploy additional renewable generation and energy efficiency in the event that th eir nuclear facilities are later decommissioned. Commenters said the EPA should not incorporate any 'at risk' nuclear generation into New York's target CO 2 emissions rate.

Commenters stated furthermore, while the State recommends removing the 'at risk' nuc lear provision, it is also important to note that many of EPA's apparent objectives regarding existing nuclear can still be realized within a mass

- based system. Commenters said in a mass

- based system such as RGGI, nuclear plants need not bear the cost of e mission allowances; therefore, they realize an economic advantage over fossil fuel

- fired plants. Commenters said in addition, in

a mass

- based system, any increase in CO2 emissions resulting from the retirement of nuclear plants is automatically accounted f or under the emissions cap; because all CO2 emissions from affected fossil fuel

- fired plants must be under the mass

- based cap, assuming the cap is federally enforceable, any increase in emissions resulting from nuclear retirements could not cause a state or region to exceed the cap. Commenters said instead, such increases in emissions would correspondingly increase pressure on the cap and thereby the cost of compliance. Commenters said in New York, for example, several existing nuclear plants may retire pr ior to 2030, due to NRC relicensing, economic considerations, or market forces. Commenters said if this occurs and the State is complying with the proposed rule through RGGI or another mass

- based program, then compliance costs could increase for regulated entities within the State, but emissions would have to remain below the cap.

Commenters recommended removing any provisions regarding existing nuclear generation from the final CPP rule. Commenters stated the final rule should altogether remove considerat ion of a state's existing nuclear capacity

- whether 'at risk' or otherwise

- from both the calculation of a state's target and from compliance. Commenters recommended this modification because the dispositive factors in whether a nuclear plant continues t o operate are generally the NRC licensing process and economic considerations, not state programs or policies.

Commenters recommended that EPA remove 'at risk' nuclear from the building block calculations. Commenters said in the proposal, EPA characterizes approximately six percent of existing nuclear capacity nationwide as 'at risk' of retirement; because EPA states that preserving such 'at risk' nuclear that might otherwise be retired would result in CO2 emission reductions from fossil fuel

- fired power p lants, the proposal incorporates the six percent of nuclear capacity in both the calculation of a state's target emission rate and in a state's compliance with the target. Commenters said the final rule should altogether remove consideration of a state's e xisting nuclear capacity

- whether 'at risk' or otherwise

- from both the calculation of a state's target and from compliance.

Commenters recommended this modification to the proposal primarily because the ultimate determination regarding whether an existi ng nuclear power plant continues to operate or retires is largely a business and/or Nuclear Regulatory Commission (NRC) licensing decision and beyond501 a state's control. Commenters said while EPA ostensibly included the 'at risk' nuclear provision

as a mean s of encouraging states to incentivize the preservation of existing nuclear capacity, the reality is that a state has limited ability to provide such incentives. Commenters said instead, under the Atomic Energy Act of 1954, the federal government, through the NRC, has primary responsibility for ensuring the safety of nuclear power plants and licensing their operation. Commenters said while there are a number of possible circumstances in which a nuclear plant may be forced to retire, these would generally in clude safety, radioactive leaks, or other issues associated with NRC relicensing, or economic conditions that make a plant too costly to continue to operate. Commenters said on the other hand, a state may regulate various aspects of operation of a nuclear power plant, including those that relate to compliance with environmental laws, mitigating environmental impact, and protecting water quality, but generally cannot dictate whether a plant continues to operate altogether.

Commenters concluded in other words , the dispositive factors in whether a nuclear plant continues to operate are generally the NRC licensing process and economic considerations, not state programs or policies. Commenters said even beyond the six percent of 'at risk' plants, a nuclear plant may end up retiring despite a state's best efforts to preserve the plant's operation. Commenters said given the dominant role of the federal government through NRC licensing, and of economic factors, EPA's proposal should not account for actions by states that may be impossible for states to implement; therefore, especially given the leadership role EPA envisions for states under the proposal, New York strongly supports the removal of the 'at risk' nuclear provision from the final rule.

Commenters supported EPA's proposal to credit 6% of existing nuclear generation to help avoid early retirements and to recognize the importance of nuclear power in meeting greenhouse gas emission reduction goals; however, Commenters did not believe that a higher percentage (u p to 100%) of nuclear generation should be used for determining the state emission targets. Commenters also did not recommend EPA requiring state compliance plans to include a discussion of how states would preserve existing nuclear generating capacity, su ch as any necessary policy changes through legislation or regulation, or other market

- based mechanisms, or a combination thereof.

Commenters stated existing nuclear generation should benefit significantly from the increased power prices resulting from the increased costs imposed on fossil fuel

- fired electric generation under this and other EPA rules such as the mercury and Air Toxics Standards Rule which coal

and oil

- fired EGUs must begin complying with in 2015. Commenters said increasing the percentage of existing nuclear generation in the state targets would drive less gas re

- dispatch and less demand for new nuclear or renewable capacity. Commenters said if states that have a significant amount of nuclear generation want to voluntarily take legislative, r egulatory or other action to preserve existing nuclear generating capacity, that is their prerogative; however, actions of this nature should be pursued outside the Clean Power Plan framework.

Commenters stated that North Carolina does not have nuclear uni ts that would be considered at

risk, yet 6% nuclear is added into North Carolina's denominator, thus making the state's emission rate target arbitrarily more stringent. Commenters said inclusion of the 6% penalizes North Carolina despite the state's signif icant investment in a zero carbon generation resource. Commenters requested that EPA not include the 6% at

- risk nuclear generation in its formula.502 Commenters stated the Proposed Rule counts 6% of a state's nuclear capacity as being 'at

- risk' and includes t he related zero

- carbon energy in the goal

- setting formula; this results in a lower (more stringent) emission rate target for states that host nuclear power plants. Commenters said including the 6% at

- risk nuclear generation is arbitrary and bears no relati on to the nuclear generation located in any state. Commenters said EPA justifies its inclusion of 6% nuclear generation to give states 'credit' for at

- risk nuclear units, however this one

- size fits all approach is inappropriate. Commenters said EPA's gener ic 6% calculation assumes that all nuclear plants located within the United States are deemed at

- risk of closure, which is erroneous. Commenters said consistent with this concern, the National Association of Regulatory Utility Commissioners ("NARUC") passe d a resolution at its annual meeting on November 19, 2014 urging EPA:

"to the extent it regulates carbon from existing power plants under Section 111(d) of the Clean Air Act, to adopt final GHG rules and regulations that: 1) will encourage States to preser ve, life

extend, and expand existing nuclear generation; and 2) remove the generic approximately 6 percent at

- risk nuclear and nuclear under construction from the calculation of State

- specific emissions targets ... [and] ... to the extent the EPA regulates carbon from existing power plants under Section 111(d) of the Clean Air Act, that States may include in compliance plans and thus receive emissions credit related to all output of new nuclear capacity (including uprates of existing plants) that begins ope rating after the issuance date of the proposed rule."

Commenters stated North Carolina does not have nuclear units that would be considered at

- risk, yet 6% nuclear is added into North Carolina's denominator, thus making the state's emission rate target arb itrarily more stringent. Commenters said inclusion of the 6% penalizes North Carolina despite the state's significant investment in a zero carbon generation resource. Commenters supported the resolution approved by NARUC and requested that EPA not include the 6% at

- risk nuclear generation in its formula.

Commenters stated North Carolina continues to greatly rely on nuclear generation; as nuclear generation has significantly higher up

- front capital costs than fossil generation, North Carolina's electric rate payers have already invested heavily in this carbon free generation source; as of calendar year 2012, North Carolina's nuclear profile.

Commenters stated that based on a compilation of data from EIA

- 906, EIA

- 920, and EIA

- 923, for calendar year 2012, the t otal net generation from IOU sources of capacity in North Carolina was 107,715,547 MWh. Commenters said of this total, 39,385,592 MWh was from in

- state nuclear capacity, representing 36.6% of all net generation. Commenters said North Carolina utilities mad e this significant investment in carbon

- free generation resources between 1975 and 1987. Commenters said EPA's regulations should recognize the substantial installed investment in existing zero carbon nuclear energy by ensuring that, in setting state emiss ions targets, a state's existing or planned nuclear generation is not incorporated in such a way as to result in a more stringent emissions requirement.

Commenters stated nuclear retirement is a binary outcome

- either a plant retires, or it does not; furt her, nuclear power plants are so large and distributed in such a manner than many states with aging nuclear power plants face the risk of a substantial fraction of their entire existing power supply disappearing, far beyond the 5.8% of nuclear capacity unr ealistically assumed by EPA. Commenters said EPA also assumes unrealistic and unfounded state capabilities

- a state may be503 unable to do anything under clean air policy or any other policy to prevent the retirement of a particular nuclear plant, simply bec ause the costs and risks facing aging nuclear plants can far exceed the ability or authority of a state to manage. Commenters said finally, while states cannot really prevent the loss of a nuclear plant, such a loss will unavoidably increase CO2 emissions from existing fossil plants in the host state and, potentially, many surrounding states. Commenters said thus EPA attributes emission reduction potential to something states can't do (preventing nuclear retirement), instead of giving them something they ne ed (compliance flexibility to deal with emissions increases states cannot prevent in the event a nuclear plant does retire or fail). Commenters said further, states may be unable to assure that new nuclear plants are completed. Commenters recommended the E PA to remove nuclear capacity from the BSER entirely.

Commenters stated that in addition to disregarding the EIA's clear characterization of the economic challenges facing merchant reactors, a further inaccuracy in the draft rule's evaluation of existing r eactors is that nuclear generating capacity does not come in gradated percentile increments. Commenters said the average generating capacity of nuclear reactors is relatively large compared to other sources; also, reactors are designed to operate as baselo ad generators, and even among those types of plants, they are the most inflexible. Commenters said reactors take hours to power up or down, and can take days to restart from cold shutdown; as a result, they must run at 100% of their rated capacity to opera te economically; for all practical purposes, they are either on or off, in discrete quantities of generation capacity. Commenters said the US's

one

- hundred (soon to be 99) operating reactors range in size from 476 MW to 1,478 MW; the average size is 1,003 MW, and the median is 1,048 MW. Commenters said by contrast, the rule shows the average size of the 1,266 coal

- fired units as 250 MW, and the median size between 150

- 250 MW.

Commenters stated t he EPA recognizes that the economic conditions for existing nuc lear have changed, and that some reactors are at risk of retirement due to financial pressures. Commenters said the Agency did not conduct a thorough analysis of the issue to understand the implications for the rule; instead, the Agency relied upon an esti mate by EIA that 6% of existing nuclear capacity is at risk of retirement for economic reasons (without identifying specific plants), and a Credit Suisse report estimating the average economic margin influencing closure decisions at $6/MWh. Commenters said the EPA then used the generic EIA and Credit Suisse figures as proxies for evaluating the feasibility of preserving existing nuclear capacity, concluding that the 6% of existing capacity could be preserved at a cost of $6/MWh, or a cost of $12

- 17 per metr ic ton of CO2. Commenters said on that basis, the draft rule the EPA recommends that 6% of each state's nuclear capacity be included in the goals.

Commenters referred to an EIA estimate that 6% of the nation's existing nuclear capacity is at risk of retire ment for economic reasons, and a Credit Suisse report estimating the average economic margin influencing closure decisions. Commenters stated it is not at all clear that EPA interpreted these two documents correctly. Commenters said the EIA report is very clear that the reactors at risk of retirement for economic reasons are in states in which utility restructuring resulted in their operating as merchant power plants. Commenters said the EPA had no reason to assume that the risk retirement of nuclear units for economic reasons would be distributed evenly throughout the country. Commenters said the Credit Suisse document is a slide presentation and includes no statement that the cost margin for reactors at risk of retirement is $6/MWh.504 Commenters said there i s a chart on page 11 of the presentation which shows free cash flow margins for a number of reactors at different market price levels, and the range of shortfalls generally ranges between $4 and $10/MWh in the PJMW market; there is also a statement that "L ayering in typical parent overhead of $5

- 7/MWH, unit economics look even worse." Commenters said the EPA is at pains to explain where it derived the $6/MWh figure.

Commenters stated because the rule offers states a high degree of latitude in developing th eir implementation programs, this shortcoming (referring to EPA's proxy of at

- risk nuclear is unrepresentative) of the rule actually provides a strong rationale for states to include measures in their implementation plans that go far beyond what the rule c ontemplates. Commenters said for example, Illinois could aver that it agrees wholeheartedly with the intent of rule, but 25% of its nuclear capacity is at direct risk of closure and all of the reactors have suffered economic losses for five years. Commente rs said the EPA may not give Illinois full credit toward meeting the mandated emissions goal, but the state could still divert substantial resources from renewables and efficiency under the rationale provided by the draft rule.

Commenters continued what i s more, the economic margin affecting the most at

- risk units is far greater than $6/MWh, so Illinois may propose incentives greater than that. Commenters said even if the EPA's insufficient $6 rate were applied to 100% of Illinois' nuclear capacity

- as th e state is now considering doing, and with the draft rule's provisions as one of the primary policy rationales 24

- it would cost ratepayers at least $548 million/year, while not preventing a single reactor from closing. Commenters said nationally, such a subsidy could total $4.6 billion/year, without producing any net benefit.

Commenters stated despite the availability of detailed information, the EPA opted not to consider which reactors were actually at risk of closure. Commenters said the factors placi ng reactors at risk are both plant

- specific and locationally specific; as a result, the draft rule's proxy for at

- risk nuclear is entirely unrepresentative of the nature and scope of the issue it purports to address. Commenters said even in Illinois, with more nuclear reactors than any other state, the smallest single reactor (Dresden 2, at 869 MW) is 7.5% of the total nuclear capacity in the state; but Dresden 2 is actually one of the reactors least at economic risk in Illinois. Commenters said those at gr eatest risk are Clinton (1,065 MW) and Quad Cities 1 and 2 (912 MW each), which add up to over 25% of the state's nuclear capacity. Commenters said the reactors' owner, Exelon, has also stated that its Byron 1 and 2 reactors could close, which, if true, wo uld raise the total to over 45% of Illinois' nuclear capacity. Commenters said in New York, as in Illinois, over 25% of nuclear generation is at risk of closure; in MA, it is 100%; in Ohio 42%, etc. Commenters said as a result, the rule as construed litera lly would not save a single at

- risk reactor, and therefore would not serve the intended purpose.

Commenters stated U.S. EPA cannot assume Ohio's, or any other states nuclear capacity can be maintained at any percentage level, indefinitely. Commenters note d that Ohio has two nuclear facilities that would be affected by this provision, Davis

- Besse and Perry. Commenters stated if these facilities are unable to maintain operational status, Ohio EPA will not be able to preserve 6% of their generation and would have to make up for that shortfall with other zero emitting generation. Commenters said Ohio would need to replace 993,077 MW

- hrs of generation; this is equivalent to doubling their wind generation (985,485 MW

- h), notwithstanding the fact other renewable s ources could never fully replace nuclear capacity due to their intermittent nature.505 Commenters said U.S. EPA is over stepping the bounds of Section 111(d) and this element of the proposal should be removed.

Commenters stated U.S. EPA states RE in 2012 repr esented 12% electricity generation nationally (including hydropower) which is up from 9% in 2005. Commenters said in addition, U.S. EPA found more than half of the states have established state

- level RE with an average of almost 20% of 2020 generation supp lied by renewables; however, in Ohio, 2012 RE represented only 2% of generation (including hydropower) and Ohio is expected to have 9% of 2020 generation from renewables.

Commenters continued as part of this proposal, U.S. EPA intends to force states to p reserve nuclear capacity that is 'at risk' even though U.S. EPA recognizes factors such as 'increasing fixed operation and maintenance costs, relatively low wholesale electricity prices, and additional capital investments associated with ensuring plant sec urity and emergency preparedness' have altered nuclear outlook. Commenters said U.S. EPA acknowledges increasing costs are associated with nuclear capacity and undoubtedly this is one of the reasons six nuclear EGUs at five plants have retired or been anno unced for retirement since 2012. Commenters said a nuclear lifespan is considered to be 40 years and they are licensed as such; recognizing a nuclear plant's design can allow for operation beyond the 40 years, the Nuclear Regulatory Commission will grant r enewal licenses for 20

- year periods. U.S. EPA acknowledges 'according to a recent report, nuclear units may be experiencing up to a $6/MW

- h shortfall in covering their operating costs with electricity sales.' Commenters said erroneously, U.S. EPA has deter mined it is cost

effective and appropriate to require their estimated 6% 'at risk' nuclear capacity to be maintained, indefinitely. Commenters disagreed, and had several concerns with the inclusion of nuclear capacity, 'at risk' or otherwise, as part of a BSER.

Commenters concluded U.S. EPA cannot assume Ohio's, or any other states nuclear capacity can be maintained at any percentage level, indefinitely. Commenters said Ohio has two nuclear facilities that would be affected by this provision, Davis

- Besse an d Perry; Davis

- Besse is currently attempting to obtain a license renewal while Perry's operating license expires in March of 2026, prior to when the final goals would have to be achieved. Commenters said the process of re

- licensing by the Nuclear Regulator y Commission is a multi

- year highly detailed process; if these facilities are unable to maintain operational status, Ohio EPA will not be able to preserve 6% of their generation and would have to make up for that shortfall with other zero emitting generati on. Commenters said Ohio would need to replace 993,077 MW

- hrs of generation; this is equivalent to doubling the wind generation (985,485 MW

- h), notwithstanding the fact other renewable sources could never fully replace nuclear capacity due to their intermi ttent nature. Commenters stated U.S. EPA is over stepping the bounds of Section 111(d) and this element of the proposal should be removed.

Commenters stated it is arbitrary and capricious to simply assume that each unit of nuclear capacity is equally likel y to be able to avoid retirement. Commenters also stated in particular, EPA fails to evaluate differences in the risk of retirement between competitive and non

competitive States. Commenters stated that EPA fails to include any safety valves to permit the retirement of nuclear capacity at the end of its licensed life. Commenters stated a significant506 portion of the nuclear fleet has already obtained 20

- year extensions from the NRC that will expire before or shortly after the 2030 compliance date. Commenters said EPA must at least consider how to change its analysis if FERC and/or the facility operators determine that those facilities have reached the end of their operating life and should be retired. Commenters also stated at a minimum, the 'at risk' capacity should be tied to the size of particular nuclear facilities as a percentage of a given state's total nuclear fleet.

Commenters stated :

a. EPA does not justify the feasibility of its assumptions regarding new nuclear capacity and avoided retirements in the administrative record.

b. EPA's assumptions regarding new nuclear generating capacity and avoided retirements are arbitrary, capricious, and unreasonable.

c. At risk nuclear facilities are not spread evenly throughout the nuclear fleet. It is arbitrary a nd capricious to simply assume that each unit of nuclear capacity is equally likely to be able to avoid retirement.

(i) In particular, EPA fails to evaluate differences in the risk of retirement between competitive and non

- competitive States.

d. EPA fails to include any safety valves to permit the retirement of nuclear capacity at the end of its licensed life; a significant portion of the nuclear fleet has already obtained 20

- year extensions from the NRC that will expire before or shortly after the 2030

com pliance date; EPA must at least consider how to change its analysis if FERC and/or the facility operators determine that those facilities have reached the end of their operating life and should be retired.

e. A 6% 'at risk' capacity is arbitrary and capric ious because it fails to address the binary nature of nuclear retirements; at a minimum, the 'at risk' capacity should be tied to the size of particular nuclear facilities as a percentage of a given state's total nuclear fleet.

Commenters stated in order t o comply with Section 111(d)'s mandate to set achievable standards based on BSER and to adequately incentivize the preservation of existing nuclear generation, EPA must remove existing nuclear generation from the state goal setting calculation and must all ow states to include all nuclear generation in the compliance demonstration component of their state compliance plans.

Commenters stated in the third building block of the Agency's BSER determination, EPA is proposing to include six percent of each state's historical nuclear capacity in setting the state goals. Commenters said six percent represents the percentage of nuclear generation that EPA has determined is currently 'at risk' for early retirement based on DOE's Energy Information Administration's ("EI A") projections. Commenters said at the same time, the CPP would not allow states to account for existing nuclear generation in demonstrating compliance with state targets. Commenters said in order to comply with Section 111(d)'s mandate to set achievable standards based on BSER and to adequately incentivize the preservation of existing nuclear507 generation, EPA must remove existing nuclear generation from the state goal setting calculation and must allow states to include all nuclear generation in the compli ance demonstration component of their state compliance plans.

Commenters stated EPA's own statements in this context clearly establish that, even if the six percent figure had some legitimacy on a national scale, its relevance to any individual source, or for that matter any individual state, is entirely unsupported.

Commenters stated EPA has not demonstrated that accounting for preservation of six percent of a state's existing nuclear generation capacity in setting the state goals is consistent with an
app ropriate determination of BSER under Section 111(d); instead, Section 111(d) requires EPA to set standards of performance that reflect the 'degree of emission limitation achievable through the application of the best system of emission reduction.' 42 U.S.C

. sections 7411(a) & (d). Commenters said in the CPP and supporting documents, EPA has failed to provide an adequate analysis that suggests that preservation of six percent of the existing nuclear generation capacity

- defined by EPA as 'at risk'

- is achi evable in each state.

Commenters continued in explaining the basis for its determination that preservation of six percent of existing nuclear capacity constitutes BSER, EPA itself notes the challenges inherent in quantifying the amount of "at risk" nuclear capacity. Commenters said EPA recognizes that "each [nuclear plant] retirement decision is based on the unique circumstances of that individual unit and that a host of factors

- increasing fixed operation and maintenance costs, relatively low wholesale el ectricity prices, and additional capital investment associated with ensuring plant security and emergency preparedness

- have altered the outlook for the U.S. nuclear fleet in recent years." Commenters said despite acknowledging the varied circumstances fa cing the nation's existing nuclear fleet, EPA relies on a single assessment from EIA as the basis for concluding that six percent represents the amount of nuclear generating capacity at risk for retirement that states will be able to preserve. Commenters s aid EPA's entire analysis is based on EIA's 2014 Annual Energy Outlook, in which EIA "projected an additional 5.7 GW of capacity reductions to the nuclear fleet"

- reductions which EIA described as "necessary to recognize the continued economic challenges faced by the higher

- cost nuclear units." Commenters said incredibly, EPA concludes its analysis by stating that without making any judgment about the likelihood that any individual EGU will retire, they view this 5.7 GW, which compromises an approximately six percent share of nuclear capacity, as a reasonable proxy for the amount of nuclear capacity at risk of retirement. Id. (emphasis added) Commenters said EPA's own statements in this context clearly establish that, even if the six percent figure had some legitimacy on a national scale, its relevance to any individual source, or for that matter any individual state, is entirely unsupported.

Commenters also stated in addition to providing no justification for its determination that six percent of the existi ng nuclear fleet is at risk for retirement, EPA has not shown that preservation of the identified six percent even would be 'achievable,' a finding which is expressly required by Section 111(d). Commenters said in fact, EPA's entire analysis is as follows: because Nuclear EGUs have low variable operating costs, Nuclear EGUs 'typically are dispatched before fossil

fuel fired EGUs,' Id. at 34780. Commenters said therefore, '[i]ncreasing the amount of nuclear capacity relative to the amount that would otherwis e be available to operate is a technically viable approach to support reducing CO2 emissions from affected fossil fuel

- fired EGU.' Id.508 Commenters said one 'way to increase the amount of available nuclear capacity is to preserve existing nuclear EGUs that m ight otherwise be retired.' Id. Commenters said this analysis completely fails to consider the achievability of preserving six percent of the existing nuclear fleet, as EPA simply assumes such preservation can be achieved.

Commenters concluded the inclusio n of existing nuclear generation in the state goal

- setting calculation is inconsistent with the concept of BSER because it would penalize states that have already made significant investments in reducing GHG emissions by prioritizing zero

- emitting nuclear generation. Commenters said Section 111(d) prohibits an approach to BSER that fails to differentiate the relative performance levels of the states in regards to limiting CO2 emissions; therefore, to the extent that inclusion of existing nuclear generation in the state goal setting calculation would penalize states that emit less CO2 because of the existing nuclear assets already contained within the states, such approach would violate Section 111(d). Commenters said in light of EPA's failure to demonstrate that preservation of six percent of existing nuclear capacity constitutes BSER, and the fact that inclusion of existing nuclear generation in state goal

- setting is inconsistent with Section 111(d)'s mandate to set performance standards based on BSER, EPA m ust set final state goals without consideration of this factor.

Commenters stated that Section 111(d) allows for, and the objectives of the rulemaking effort demand that, existing nuclear generation be applied towards state compliance demonstrations. Comme nters noted that the CPP authorizes states to include new nuclear generation as a component in state compliance plans, and states that it is inconsistent with Section 111(d) and the purpose of the CPP to distinguish new from existing nuclear generation in this context.

Commenters stated that both the language in Section 111(d) and EPA's repeated statements in the context of rulemaking development confirm that the final rule may not have the effect of requiring the states to implement all emission reduction techniques considered by EPA in determining BSER for the regulated source category; rather, Section 111(d) mandates that the Emission Guidelines developed by EPA preserve to states a range of alternative compliance methodologies for ensuring the applicatio n of BSER

- equivalent performance by the regulated sources. Commenters said therefore, regardless of the propriety of EPA's consideration of existing nuclear generation for purposes of setting the state goals, Section 111(d) allows for, and the objectives o f the rulemaking effort demand that, existing nuclear generation be applied towards state compliance demonstrations.

Commenters stated the CPP proposes to authorize states to include new nuclear generation as a component of state plans. Commenters supporte d this approach; however believed that it is inconsistent with Section 111(d) and the purpose of the CPP to distinguish new from existing nuclear generation in this context. Commenters said any future nuclear EGUs would be providing the same zero

- emissions generation capacity as existing EGUs; thus, there is no reason to allow future nuclear generation to count towards state compliance demonstrations, but then in the same vein disallow inclusion of existing nuclear technology that has been consistently empl oyed to reduce GHG emissions. Commenters said indeed, EPA does not even offer an explanation for the proposed rule's disparate treatment of existing nuclear generation.

Commenters stated failure to allow for existing nuclear generation in state compliance plans also would have the effect of penalizing states which have already achieved reduced carbon footprints509 through existing nuclear fleets; under the CPP, states with existing nuclear units would not be allowed to benefit from the zero

- emitting generation of these units, whereas states that construct new units would secure compliance benefits from the same technology. Commenters said this outcome is inconsistent with Section 111(d) and actually serves to disincentivize the continued operation of existing n uclear EGUs.

Commenters stated most importantly, the final rule must allow for existing nuclear generation as a component of state plans in order to continue promoting reliable and affordable electric generation with decreased GHG emissions; existing nucle ar generation accounts for roughly 20% of the United States' electric output. Commenters said in addition, existing nuclear generation is essential to the reliability of the electric grid and affordability of electricity to consumers. Commenters said nucle ar generation accomplishes all of this while contributing zero GHG emissions; the CPP, however, is contrary to Section 111(d) in failing to recognize that current implementation of this "emission reduction" technology must be deemed fully equivalent
to new nuclear generation relative to any BSER determinations for carbon emissions from electricity generation. Commenters said allowing states to account for all of their existing nuclear generation in their compliance demonstrations is consistent with the CPP as it will promote electric generation while decreasing GHG emissions.

Commenters stated that they do not support an option where the EPA could establish a process that, in the event of a nuclear unit's premature shutdown, the lost nuclear kilowatt

- hours w ould be removed from the state's compliance calculation.

Commenters stated full compliance credit should be given to existing nuclear generation because such generation avoids GHGs that may otherwise be emitted from fossil fuel

- fired units; at a minimum, the final rule must treat the following types of nuclear generation in a manner consistent with new nuclear generation for purposes of state compliance demonstrations. Commenters stated they do not support the option proposed by some in the industry

- wher e EPA could establish a process that, in the event of a nuclear unit's premature shutdown, the lost nuclear kilowatt

- hours would be removed from the state's compliance calculation.

Commenters stated that the CPP's nuclear capacity considerations reflect a n inherent bias toward new nuclear generation, and that the national six percent proxy for the amount of nuclear capacity at risk of retirement is inappropriate.

Commenters opposed the CPP's approach toward nuclear energy; as proposed, the CPP's nuclear

ca pacity considerations reflect an inherent bias towards building new nuclear capacity. Commenters said the CPP acknowledges that new nuclear capacity is extremely costly, which translates into a bias towards traditional, vertically

- integrated states that ut ilize rate of return regulation. Commenters said all five nuclear EGU's that are currently under construction are in traditionally regulated states; consequently, the superficial nuclear considerations penalize deregulated states such as Ohio which depend on market conditions to develop new generating units.

Commenters stated not only do the CPP's nuclear capacity considerations disadvantage deregulated states, the CPP again overgeneralizes by using a national six percent proxy for the amount of nuclear ca pacity at risk of retirement. Commenters said while the six percent figure is510 derived from the US EIA Annual Energy Outlook, it fails to reflect the fact that Ohio's nuclear generation fleet accounts for almost 12 percent of the state's electricity generat ion portfolio>

Commenters stated that states should not be penalized for existing nuclear generation that is not at risk.

Commenters stated Arizona Public Service (APS), the operator of PVNGS, developed a concept for how EPA could provide even more meani ngful credit to nuclear generation in its Proposed Rule that would not dramatically change Arizona's emissions rate goals, but would provide better recognition to Arizona for its nuclear resource. Commenters supported APS's proposed approach
as a more appr opriate methodology for incorporating nuclear generation into the CO2 goals; the proposal has two components:

1. Remove the 5.8% nuclear component from the denominator of the EPA's CO2 goal calculation.

2. When demonstrating compliance with the CO2 goals, allow states to take credit for a portion of annual nuclear generation in excess of the average historical performance of the fleet; the average capacity factor of a nuclear unit over its lifetime is approximately 80%; therefore, beginning in the first complianc e year associated with the rule (2020), and in each year thereafter, if a nuclear unit exceeds 80% capacity factor, allow any generation in excess of that 80% capacity factor threshold to be included in the denominator of the CO2 emission rate calculation, which would provide credit towards compliance with the state's CO2 goals.
Commenters urged EPA to consider adopting the methodology proposed by APS to credit Arizona's investment in PVNGS, and similar investments in other states. Commenters said this approach would ensure states with nuclear generation like Arizona are not unduly penalized, as well as provide those states with a meaningful incentive to keep nuclear EGUs online and operating.

Commenters stated instead of applying a generic 'at

- risk' fac tor to all existing nuclear generation, EPA should apply a site

- specific 'at

- risk' factor where nuclear generation is really at risk. Commenters said with the current approach, EPA is diluting impacts where nuclear generation is actually 'at risk' and crea ting issues where it is not at risk, such as in Arizona; EPA should remove the 'at

- risk' nuclear component from the goal calculation for Arizona."

Commenters stated EPA's proposal fails to fully recognize the large percentage of carbon

- free generation reso urces already present in Arizona; Arizona is home to the Palo Verde Nuclear Generation Station (PVNGS), the largest nuclear power generating station in the United States. Commenters added that SRP owns 17.49% of this facility and it is an important provide r of baseload generation in the company's resource portfolio.

Commenters stated for the purposes of goal

- setting, EPA claims that a certain percentage of the U.S. nuclear fleet is at risk of retiring for various reasons and that 'preserving the operation of at

risk nuclear capacity would likely be capable of achieving CO2 reductions from affected EGUs511 at a reasonable cost.' Commenters said EPA has therefore proposed to include an 'at

- risk' nuclear component in the CO2 goals for all states with nuclear gene ration; this 'at

- risk' nuclear component is calculated as 5.8% of the nuclear capacity in each state, assuming a 90% capacity factor.

Commenters stated EPA's incorporation of a percentage of PVNGS's 2012 generation into Arizona's goals based on a presumpt ion that 5.8% of U.S. nuclear capacity is at risk of retirement provides no substantive recognition of the fact that this facility comprises approximately one

third of the generation produced in Arizona and is not at risk of near

- term retirement. Commenter s said the U.S. Nuclear Regulatory Commission approved the extension of all three PVNGS units by an additional 20 years; Unit 1 is permitted to operate through 2045, Unit 2 through 2046, and Unit 3 through 2047.

Commenters stated instead of applying a gen eric "at

- risk" factor to all existing nuclear generation, EPA should apply a site

- specific "at

- risk" factor where nuclear generation is really at risk. Commenters said with the current approach, EPA is diluting impacts where nuclear generation is actually "at risk" and creating issues where it is not at risk, such as in Arizona; EPA should remove the "at

- risk" nuclear component from the goal calculation for Arizona.

Commenters stated for the purposes of compliance planning, EPA proposes that nuclear
genera tion would count towards compliance with a state goal only if this generation meets or exceeds a 90% capacity factor. Commenters said if the nuclear generation does not meet the 90% capacity factor threshold in a given compliance year, the state would have to implement more renewable generation or energy efficiency measures to offset the shortfall in nuclear generation. Commenters said this approach is problematic as it could be routine that the capacity factor of a nuclear plant falls below 90% in any give n year due to outages required for refueling, regular maintenance, or to address certain regulatory required modifications. Commenters said by relying on a 90% capacity factor, EPA is penalizing rather than rewarding states that have nuclear generation.

C ommenters stated that EPA's treatment of existing nuclear capacity is also arbitrary because it is inconsistent with the agency's treatment of other large, existing sources of zero

- carbon electricity such as hydroelectric dams and renewable energy faciliti es. Commenters said yet both hydroelectric facilities and renewable energy facilities also face market and non

- market challenges that could lead to reduced capacity or shutdown in future years. Commenters said despite this similarity, EPA has not proposed to penalize states that retire existing hydroelectric or RE capacity by incorporating an assumption about "at risk" hydroelectric or RE generation into state goals. Commenters said as with under

- construction nuclear generation, EPA should not arbitrarily treat zero

- carbon generation from existing nuclear facilities differently from other

zero

- carbon generation. Commenters said to fix this discrepancy, EPA should treat all existing

zero

- carbon facilities (including nuclear, hydroelectric, and RE facilities) identically in its calculation of states' emission goals.

Commenters stated that EPA's proposal to incorporate approximately 5.8% of each state's existing nuclear capacity (which EPA calls "at risk" capacity) in calculating the state's emission goal is al so arbitrary and capricious for a number of reasons; to begin with, the assumption that South Carolina may retire some of its existing nuclear capacity is unreasonable in light of the512 fact that the state's utilities, including Santee Cooper, have recently invested billions of dollars in building additional nuclear capacity in the state. Commenters said it is also unreasonable because the U.S. nuclear units that are at risk of retirement are largely located in competitive wholesale electricity markets. Comme nters said in South Carolina's case, the costs of past utility investments in nuclear are already included in customers' rates under terms approved by the Santee Cooper Board or, in the case of SCANA Corporation, the South Carolina Public Service Commissio n; therefore, future electricity market fluctuations

- such as those that generators in competitive wholesale markets may experience

- will not put South Carolina's units at risk of retirement.

Commenters recommended removing the 5.8% "at risk" adjustment in c alculating a state's emission goals. Commenters also recommended allowing South Carolina to include 100% of its actual on

- line generation towards compliance. Commenters stated that none of South Carolina's existing operational nuclear units were scheduled for retirement prior to 2030, and that none of the existing operational nuclear generation was "at risk."

Commenters stated over 6,500 MW of nuclear capacity is presently operational in South Carolina; this capacity is supported by South Carolina ratepayer s and represents sizeable investments by South Carolina electric utilities. Commenters said these electric utilities, with the approval of the state's regulators, made decisions years ago to make significant investments in reliable, non

- carbon emitting nuc lear generation, and South Carolina should receive the benefit of those decisions.

Commenters stated the Proposed Rule does not recognize South Carolina's commitment to non

carbon emitting generation that has resulted in a lower carbon footprint in South C arolina for over thirty years; instead, the Proposed Rule includes an adjustment based on 5.8% of a state's existing nuclear capacity. Commenters said the EPA states that this adjustment represents an amount of nuclear capacity at risk of retirement across the country. Commenters said the practical effect of this "at risk" factor drives down the emission rate goal of South Carolina and other states with existing nuclear generation thereby making compliance more expensive for

consumers.

Commenters stated Sou th Carolina has a proven historical (and future) commitment to non

- GHG emitting nuclear generation; none of South Carolina's existing operational nuclear units are scheduled for retirement before 2030; therefore, the 5.8% 'at risk' factor intended to prese rve existing nuclear generation clearly does not apply to South Carolina and should be removed from the goal calculation. Commenters said rather than penalize South Carolina by including this 5.8% 'at risk' factor, South Carolina should be allowed to inclu de 100% of its actual on

- line generation toward compliance with the state goal. Therefore, the commenters recommended the removal of the 5.8% penalty for 'at risk' nuclear generation in determining the state goal.

Commenters stated that the Grand Gulf Nucl ear Station represents almost 75% of the zero carbon generation used in the goal calculation for Mississippi in 2020 and almost 50% of the zero carbon generation in 2030. Commenters asked when a single source represents such a large percentage of the zero carbon generation used to calculate a state's goal, what is a state supposed to do in the event that source is unavailable for an extended period of time or has a catastrophic failure that results in the plant never being placed back into service?513 Comme nters stated also with building block 3, the EPA adds 631,874 MWh to the denominator of the Mississippi CO2 goal calculation for "at risk" nuclear generation. Commenters said the EPA derives this number by multiplying the nuclear capacity in the relevant s tate by 6%; adding these MWh to the CO2 emissions rate denominator further exacerbates the already extremely low emissions rate goal for the state. Commenters said there is no justification for this arbitrarily being added to the denominator of the CO2 goa l calculation, as there is no nuclear generation in Mississippi that is "at risk", and the EPA should eliminate it.

Commenters stated additionally, the EPA did not give adequate credit to states with nuclear generation nor take into account recent investme nts in these facilities; as an example, SMEPA invested $77.5 Million in the Extended Power Uprate project at the Grand Gulf Nuclear Station thereby achieving additional zero carbon generation. Commenters said the EPA's handling of nuclear generation has in effect penalized SMEPA for early action; further, this investment in zero carbon generation means that SMEPA has less capital to invest in other generation options.

Commenters stated they understand that the EPA assumed that the average annual nuclear pla nt generation availability of capacity factor is approximately 90% on a national basis; this does not reflect reality. Commenters said the national average lifetime capacity factor through 2013 for nuclear plants is 80.3%. Commenters said the Grand Gulf Nu clear Station located in Mississippi has outperformed the National Average with a lifetime Capacity factor of 86.6%; however, the difference between 86.6% and 90% represents an annual average of 377,066 MWh of zero carbon generation that the EPA assumes to be available and in operation in Mississippi and it simply is not.

Commenters stated additionally, Grand Gulf represents almost 75% of the zero carbon generation used in the goal calculation for 2020 and almost 50% of the zero carbon generation in 2030. ( This is viewing the MWh used for EE in the goal calculation as zero carbon generation.) Commenters said when a single source represents such a large percentage of the zero carbon generation used to calculate a state's goal, what is a state supposed to do i n the event that source is unavailable for an extended period of time or has a catastrophic failure that results in the plant never being placed back into service?

Commenters stated that at

- risk" nuclear generation should not be included as a component of BSER. Commenters stated unlike incremental generation from new nuclear facilities or uprated reactors, the preservation of existing nuclear generation does not appear to be a 'system of emission reduction,' because preservation of this capacity does not re duce CO2 emissions below historic levels; rather, preservation of existing nuclear generation will, at best, allow fossil fueled EGUs to continue emitting at the same level that they emitted in the past; therefore, from a legal perspective, it appears that inclusion of at

- risk nuclear generation fails to satisfy the statutory and regulatory requirements that state performance standards and the EPA guidelines must be based on application of the 'best system of emission reduction.'

Commenters had concerns ove r the EPA's proposed incorporation of a uniform 5.8% of expected generation from existing 'at

- risk' nuclear reactors in calculating state goals; unlike incremental generation from new nuclear facilities or uprated reactors, the preservation of existing nuc lear generation does not appear to be a 'system of emission reduction,' because preservation of this capacity does not reduce CO2 emissions below historic levels; rather,514 preservation of existing nuclear generation will, at best, allow fossil fueled EGUs t o continue emitting at the same level that they emitted in the past.

Commenters stated in addition, the EPA's assumption that 5.8% of each state's existing nuclear capacity is at risk of retirement is supported neither by the Energy Information Administra tion (EIA) study cited in the Proposed Rule nor by the actual reality of the electric system in many parts of the country, including the West. Commenters said although certain nuclear facilities

particularly those in competitive wholesale electricity marke ts

- are at risk of retirement for economic or other reasons, units in others states are likely to continue operating for many years. Commenters said for example, the Palo Verde Nuclear Generating Station in Arizona, in which SCPPA members own partial intere sts, recently had its license extended until 2042, and is highly unlikely to retire due to its importance in maintaining grid reliability in the West. Commenters said if the EPA decides to include at

- risk nuclear generation in the final rule, the agency sh ould review the status of nuclear facilities in each state or region, and only apply this assumption to states or regions where there is a real risk of retirement.

Commenters stated that, if the EPA decides to include at

- risk nuclear capacity in the goal

c alculation, up to 5.8% of a state's annual nuclear generation should count toward compliance, regardless of whether nuclear facilities in the state operated at the assumed 90% capacity factor or some other level. Commenters said if a state can increase uti lization of existing nuclear generation such that 5.8% of its generation exceeds the amount of MWh included in the goal calculation, it should be able to count the full 5.8% toward compliance. Commenters said similarly, if nuclear generation falls below th e levels assumed in the goal calculation, 5.8% of the actual MWh generated by the state's nuclear fleet should still count toward compliance.

Commenters stated that the four nuclear units in Virginia are expected to continue operated at above 90 percent ca pacity through 2030.

Commenters stated under building block 3, EPA applied the assumption that 6 percent of 'at

- risk' nuclear capacity would be retained and the units would operate at a 90 percent capacity factor; this resulted in the retention of 187 MW of nuclear generation in Virginia. Commenters said the four nuclear units in Virginia, which are all owned by Dominion, are expected to continue operating at above a 90 percent capacity factor through 2030. Commenters said the licenses on these four nuclea r units are not set to expire before 2030 (Surry 1 in 2032, Surry 2 in 2033, North Anna 1 in 2038, and North Anna 2 in 2040). Commenters said as such, Dominion already has plans to retain this 6 percent of nuclear generation.

Commenters stated applying the 6 percent assumption to Virginia's existing nuclear fleet in the same manner that EPA applied the assumption in its formula results in a reduction from 1,031 lbs/MWh to 998 lbs/MWh, a decrease of 33 lbs/MWh.

Commenters stated that Georgia's nuclear fleet is expected to be retained through 2030.

Commenters stated Georgia's existing nuclear fleet provided 28.7 million MWh of generation in 2012; EPA assumes that 5.8 percent of this generation will remain on

- line through 2030, and provides a credit for the amount of generation this would represent: 1 .8 million MWh. Commenters said this lowers Georgia's emission rate by 29 lbs/MWh or approximately 4 percent515 of the target reduction. Commenters said EPA's assumption is conservative in light of the utility's most recent resource plan, which shows it retai ning all of its current nuclear fleet through 2030.

Utility plans regarding under

- construction nuclear

Commenters stated Georgia Power is in the process of constructing two new nuclear units, totaling 2,200 MW, at its Plant Vogtle facility near Waynesboro , Georgia. Commenters said the two units have expected operation dates of December 2017 and December 2018, respectively. Commenters said assuming, as EPA does, a 90 percent capacity factor, these units would produce more than 17 million MWh of zero

- carbon generation annually.

Commenters stated that the assumption 5.8% at risk lowers North Carolina's target emission rate by 38 lbs/MWh.

Commenters stated with respect to at

- risk nuclear generation, Illinois urges USEPA to reconsider making Illinois' goals more stringent in comparison to states that have a lesser amount or no nuclear generation. Commenters said this presents an equitability issue wherein states with less nuclear generation than Illinois find themselves with a less stringent goal adjustment. Comm enters said if USEPA desires to incentivize the preservation of nuclear generation it must consider doing so in a manner that does not make a state's goals more stringent on the front

- end, but instead rewards states for preserving nuclear generation in the back

- end compliance demonstrations; for example, USEPA could allow states to credit an additional amount of generation and/or CO2 reductions in a back

- end compliance demonstration as a bonus for preserving nuclear generation. Commenters said USEPA should consider giving states the flexibility and option for determining the appropriate amount of nuclear credit available in compliance calculations.

Commenters stated that existing nuclear capacity is not "at

- risk" in Tennessee, recommended that the EPA remov e 'at

- risk' nuclear from BSER as this strategy has not been adequately demonstrated, the cost may very well not be reasonable, and EPA's regulation of carbon at affected EGUs will, in

- and

- of

- itself, provide incentive for states and utilities to preserve nu clear capacity if the cost is reasonable.

Commenters stated EPA believes that another way to increase the amount of available nuclear capacity is to preserve existing nuclear EGUs that might otherwise be retired. Commenters said EPA recognizes that nuclear unit retirement is determined by a number of factors. Commenters said despite that fact, EPA cites to recent announcements for retirements of some nuclear units as reasonable data from which to premise the need to include some amount of existing nuclear

w ithin BSER. Commenters said further, EPA indicates that EIA's Annual Energy Outlook projecting an additional 5.7 GW of capacity reductions in the nuclear fleet, not tied to projections of actual retirements, is a reasonable proxy for the amount of nuclear capacity at risk of retirement. Commenters said EPA also indicates the cost to retain this approximate 6 percent of capacity is reasonable, based on one report's indication that aging nuclear units may be experiencing up to a 6 dollar/MWh shortfall in cove ring their operating costs with electricity sales, which EPA translates into approximately 12 dollar to 17 dollar per metric ton of CO2. Commenters asserted EPA's assumption that "at

- risk" nuclear is adequately demonstrated as an516 appropriate strategy for B SER and that its cost is reasonable are unfounded; also, existing nuclear capacity is not "at

- risk" in Tennessee.

Commenters stated as with under

- construction nuclear, EPA's inclusion of "at

- risk" nuclear disproportionally impacts only certain states with existing nuclear units, although the relative size of the impact is much less than with under

- construction nuclear; more importantly, inherent in EPA's inclusion of "at

- risk" nuclear in BSER is the belief that by the addition of about 6 percent existing nu clear capacity in mandatory state goals, states and utilities will be incentivized to retain nuclear units that are otherwise not economically viable. Commenters said this assumes that the value of that capacity would spur further investment in or addition al operational capital to operate a nuclear unit that is not currently viable; however, to date, Commenters is unaware, and EPA has not provided evidence, of any state or utility that has actually retained nuclear capacity due to either (1) the projection of carbon regulation or (2) the additional stringency of other, relevant, EPA air regulations. Commenters asserted the regulatory environment already exists to incentivize investment in and preservation of nuclear capacity and believes it would have alread y occurred if the cost was reasonable. Commenters said EPA relies on a shortfall in covering operating costs as a proxy to determine the cost of including "'at

- risk" nuclear in BSER, but it may very likely be that other costs, including daunting capital in vestment costs are also impacting the decisions around certain nuclear units, among other factors. Commenters said given the little supporting documentation and thoughtful consideration EPA has provided for the inclusion of "at

- risk" nuclear within BSER an d its relative cost, the commenters asserted this particular strategy has not been adequately demonstrated, nor has EPA proven its cost is reasonable.

Commenters stated nuclear capacity is not "at

- risk" in Tennessee; none of the nuclear facilities in Tenne ssee are scheduled for retirement within the compliance period. Commenters said in fact, the retirement year for Tennessee's oldest unit (Sequoyah 1) is slated for 2041, nearly a decade after the proposed compliance period; to suggest that Tennessee's nucl ear units are "at risk" of retirement simply does not align with reality. Commenters said furthermore, it is inconsistent to assume that units are "at risk" of retirement in a state that is currently pursuing, and is heavily invested in, construction of a new nuclear unit. Commenters said to assume that nuclear units are at risk in a state that will be the first to bring on a new nuclear unit in a very long while is contradictory. Commenters recommended EPA remove "at

- risk" nuclear from BSER as this strateg y has not been adequately demonstrated, the cost may very well not be reasonable, and EPA's regulation of carbon at affected EGUs will, in

- and

- of

- itself, provide incentive for states and utilities to preserve nuclear capacity if the cost is reasonable.

C ommenters stated that although there are nuclear plants at risk, they are generally located in states with competitive markets, not evenly distributed among all states with nuclear capacity. Commenters said EPA's approach is thus arbitrary, indefensible an alytically, and provides no incentive for states to preserve nuclear capacity at risk. Commenters said EPA should work with NEI to properly account for existing nuclear capacity at risk of premature shutdown.

Commenters stated with 25 to 40 percent of the existing operating nuclear plants that are at risk of shutting down by 2040, there is no basis for EPA's assumed 6 percent 'at

- risk' assumption for existing nuclear plant capacity; moreover, since 100 percent of existing renewable generation517 capacity is re cognized in Building Block #3, the EPA should recognize 100 percent of the U.S. nuclear operating capacity.

Commenters recommended that nuclear power should be excluded from the rule entirely. Commenters stated that the 6 percent reduction in the state goa l is far too small to provide any meaningful incentive to keep them existing nuclear units operating. Commenters supported a proposal that nuclear generation should not be part of the goal calculation but could serve as a component of the state's complianc e with the goal if the plant's capacity factor exceeds an industry

- wide historical threshold.

Commenters believed nuclear power should be excluded from the rule entirely. Commenters said the EPA's purported objective for including nuclear energy in the sta te goal calculation is to provide an incentive for nuclear plants that are 'at risk' of being prematurely retired due to financial considerations.

Commenters stated unfortunately, the EPA's solution to this objective is fundamentally flawed; first, for sta tes that actually have 'at risk' nuclear power plants, a modest 6 percent reduction in the state goal is far too small to provide any meaningful incentive to keep them operating. Commenters said in fact, what the EPA has done by distributing the "at risk" component of the goal calculation across all states with nuclear generation is to dilute the incentive to the point of being meaningless for those "at risk" plants.

Commenters suggested the EPA to consider a pragmatic solution put forward by Arizona Public Service that states should be allowed to take credit for the portion of annual nuclear generation in excess of the average historical performance of the nuclear fleet.

Commenters supported a proposal being offered by Arizona Public Service Co., operator of Palo Verde. Commenters said APS has proposed that nuclear generation should not be part of the goal calculation but could serve as a component of the state's compliance with the goal if the plant's capacity factor exceeds an industry

- wide historical thr eshold. Commenters referred the EPA to the comments of APS for details relating to this proposal.

Commenters stated that the Palo Verde Nuclear Generating Station (Palo Verde) in Arizona is not by any means 'at risk' of early retirement. Commenters suppor ted a proposal that nuclear generation should not be part of the goal calculation but could serve as a component of the state's compliance with the goal if the plant's capacity factor exceeds an industry

- wide historical threshold.

Commenters stated the met hodology punishes states like Arizona that have made prudent investments in nuclear energy. Commenters said the Palo Verde Nuclear Generating Station (Palo Verde) in Arizona is not by any means "at risk" of early retirement. Commenters said it is fully lic ensed past 2040, and its output is essentially fully subscribed for decades. Commenters said the EPA's inclusion of a portion of the generation from Palo Verde in calculating the Arizona goal does nothing more than create unnecessary compliance risk for th e state; the owners of Palo Verde will not modify their operation of the unit based on the inclusion of a portion of its generation in the Arizona goal calculation, as any incentive to do so is dwarfed by existing economic considerations to operate at the highest reasonably possible capacity factor.518 Commenters supported a proposal that nuclear generation should not be part of the goal calculation but could serve as a component of the state's compliance with the goal if the plant's capacity factor exceeds an industry

- wide historical threshold.

Commenters stated that the EPA fails to consider the possibility that an economic or other operational circumstance might exist by which the unit owner or the NRC

- the federal body with regulatory authority over nuclea r units

- might determine that a facility has reached the end of its useful life.

Commenters stated in building block three, EPA assumes that no "at

- risk" nuclear energy power plants will be retired and that all units currently under construction will come online. Commenters said EPA assumes that six percent of the entire nuclear fleet is at

- risk and by keeping those units in operation, states can achieve additional emission reductions. Commenters said EPA fails to consider the possibility that an economic or other operational circumstance might exist by which the unit owner or the NRC

- the federal body with regulatory authority over nuclear units

- might determine that a facility has reached the end of its useful life. Commenters said the record is insuffi cient to support EPA's assumptions in building block three as it relates to nuclear units.

Commenters stated the Proposed Regulation fails to recognize Virginia's significant investment in and utilization of zero

- carbon nuclear generation and instead arbi trarily and capriciously penalizes Virginia by including "at risk" nuclear generation in the calculation of Virginia's Mandatory Goals.

Commenters stated more than 3,500 MW of nuclear capacity is located in Virginia and supported by Virginia ratepayers; th rough capacity uprates, approximately 150 MW of nuclear capacity has been added since 2010, at a cumulative initial capital cost of approximately $500 million dollars.

Commenters stated as a result of Virginia's historic and continuing investment in this nuclear fleet, a significant amount of the electric generation that provides reliable electric service in Virginia is zero

- carbon nuclear generation; for example, 40% of the electricity generated in Virginia was provided from nuclear facilities in the 2012 base year used by the Proposed Regulation to calculate Virginia's Mandatory Goals.

Commenters stated yet, the Proposed Regulation does not recognize this significant investment in the nuclear fleet or the substantial resulting zero

- carbon energy producti on in Virginia that has historically lowered Virginia's carbon footprint. Commenters said to the contrary, the Proposed Regulation illogically penalizes Virginia for its nuclear fleet by including "at risk" nuclear production in the denominator of its math ematical formula and basing the Mandatory Goals on 2012 generation levels. Commenters said including an "at risk" nuclear component in the formula for Virginia

- along with other unlawful components of the formula has the effect of driving the Proposed Reg ulation's emission rates for Virginia unreasonably and unlawfully low.

Commenters stated including higher than normal zero

- carbon energy production in EPA's formula drives down the emission rates that Virginia and other States must achieve, making complia nce more difficult to achieve; this is because the Mandatory Goals are calculated by adjusting a basic ratio of:519 Carbon emissions / megawatt hours of production

Commenters stated adding into this formula production from resources that have no carbon emiss ions only increases the denominator of the ratio, and has no effect on the numerator.

Commenters stated so each megawatt hour of zero

- carbon production added by EPA for "at risk" nuclear and renewable resources, as well as the energy efficiency added in by EPA, lowers the Mandatory Goals and requires deeper carbon emission reductions.

Commenters stated penalizing Virginia for its zero

- carbon generation in this way is flatly inconsistent with the Proposed Regulation's purported goal of reducing carbon emiss ions (much less doing so without compromising reliability or reasonable costs). Commenters said continued use of existing (in addition to new) nuclear generation capacity, which provide reliable base load generation that is carbon

- free, should be allowed t o count for compliance with the Proposed Regulation. Commenters said the 3,500 MW of zero

- carbon nuclear capacity in Virginia dispatches ahead of fossil

- fuel facilities, thereby massively reducing the carbon emissions associated with providing reliable ele ctric service. Commenters said a rule intended to reduce carbon emissions should reward

- not penalize

- Virginia customers for their significant investment in this carbon

- free nuclear generation.

Commenters stated EPA's calculation of each state's baseline emissions rate is skewed by the adjustments made for hydropower and at

- risk nuclear. Commenters asserted these adjustments provide more confusion than clarity for states and utilities.

Commenters stated EPA should give more support to hydropower a nd nuclear as valuable, carbon

- free resources in its Building Block 3. Commenters encouraged EPA to recognize that hydro and nuclear power provide added benefits to grid operations by providing load following and base load power, respectively.

Commenters s tated that it is unreasonable to assume that all at

- risk nuclear generation will not retire.

Commenters stated with respect to the nuclear assumptions, EPA assumes that five nuclear plants currently under construction will be completed and become fully ope rational. Commenters said EPA also assumes that the 5.8% of existing nuclear capacity considered "at

- risk" for closure will remain open. Commenters said EPA then takes this one step further and assumes that the new nuclear units and retention of 5.8% of it s at

- risk nuclear capacity will reduce CO2 emissions by operating at 90% capacity. Commenters said with respect to these assumptions, however, EPA performs almost no analysis; it is simply unreasonable to assume that all under

- construction nuclear faciliti es will come on

- line, let alone open on schedule. Commenters said it is also unreasonable to assume that all at

- risk nuclear generation will not retire. Commenters said West Virginia does not have any nuclear facilities, but it and the members of the WVCA will see a drop in demand for coal exports as states with nuclear facilities move to replace coal energy with nuclear.

Commenters stated that EPA's decision to count 5.8% of nuclear generation in each state as "at risk" and including it in that state's goa l is arbitrary and inappropriate.520 Commenters stated that the EPA's decision to count 5.8% of nuclear generation in each state as "at risk" and including it in the state's goal is arbitrary and inappropriate. Commenters stated Wisconsin currently only has o ne nuclear power plant that has two reactors, and if this plant were to shut down, it would do so unit

- by

- unit, meaning that 100%, 50% or 0% of its generation is at risk. Commenters said it would actually be impossible for the plant to lose 5.8% of its
cap acity; accordingly, requiring the state to preserve that 5.8% of 'at risk' generation is arbitrary.

Commenters stated that using 5.8% as the level of 'at risk' nuclear was derived based on national data; while this percentage may be meaningful at the natio nal level, it has no relevance at an individual state level. Commenters said Wisconsin currently only has one nuclear power plant that has two reactors, and if this plant were to shut down, it would do so unit

- by

- unit, meaning that 100%, 50% or 0% of its g eneration is at risk. Commenters said it would actually be impossible for the plant to lose 5.8% of its capacity; accordingly, requiring the state to preserve that 5.8% of 'at risk' generation is arbitrary.

Commenters stated generation from Wisconsin's Poi nt Beach Nuclear Plant should not be considered 'at risk' at all until its licenses expire, at which point EPA should recalculate the state's goal as discussed below. Commenters said this facility has long

- term power purchase agreements for its power and i t is in a rate

- regulated state, meaning that its generation should be considered secure until its scheduled retirement; in addition, its owner (NextEra Energy) recently invested in an extended power uprate to increase the capacity of the plant supported by a long

term power purchase agreement with WPPI Energy, making it even less likely that this plant will close prematurely. Commenters said accordingly, Wisconsin does not have any "at risk" nuclear generation and should not have a goal for this part of bui lding block 3.

Commenters stated that by assigning states with existing nuclear capacity more stringent goals, EPA's proposed 'at

- risk' nuclear provision penalizes Wisconsin.

Commenters stated by assigning states with existing nuclear capacity more string ent goals, EPA's proposed "at

- risk" nuclear provision penalizes Wisconsin.

Commenters stated that EPA's decision to allow a maximum of 5.8% of the at

- risk nuclear generation to be used in compliance calculation provides an insufficient incentive for units to continue operation. Commenters urged EPA to remove all existing nuclear from the goal calculation, while allowing states the flexibility to use 5.8% or more of this nuclear generation when meeting state CO2 targets. Commenters mentioned that this altern ative approach is entirely consistent with the NARUC Resolution passed on Nov. 19, 2014 compared to the original approach which incentivizes the continued use of existing nuclear that might bring unforeseen future circumstances that could force retirement of existing nuclear unit. Commenters suggested that if EPA insists on keeping the 5.8% in the goal calculation, then it should significantly increase the amount of existing nuclear generation available for use in complying with the state target rates.

Com menters recommended removing the 5.8% "at risk" nuclear component from goal setting, but allowing compliance credit for new nuclear and nuclear uprates. Commenters stated that the "at risk" percentage was arbitrary and not well supported. Commenters also s tated that521 presumably a state would be able to include generation from the "at risk" portion in its compliance demonstration after 2020, although the proposed rule did not make this explicit.

Commenters stated that the current language means individual st ates that close existing nuclear plants must replace only 5.8% of the energy generated with clean sources to maintain the same level of compliance, and that this was not good enough for our environment, our children, or our air.

Commenters stated that the most cost

- effective non

- emitting generation options for the Southeast are hydro and nuclear, and that in the Southeast region, as defined by the EPA, 7 of 8 states have nuclear capacity, corresponding to 29% of the nation's nuclear capacity in 2012. Comme nters stated that there are only certain regions of the country where new nuclear units are technically achievable (e.g., the Southeast) and only certain regions where existing nuclear units are at risk of premature retirement (e.g., generators bidding int o the capacity market).

Commenters suggested the EPA to consider the total generation from all nuclear energy sources in calculating carbon emission intensity, not only 5.8% of the existing installed base. Commenters stated that if the EPA consider nuclea r energy in its entirety, then every reactor in the nation must keep running or be replaced with other clean energy sources for a state to meet its goals, making currently operating nuclear units valuable to states since they do not produce carbon emission s.
Commenters pointed out that the EPA's plan elects to disregard the production from the other 94.2% of facilities and instead focuses solely on the preservation of the 5.8% of the current nuclear facilities that are currently at

- risk for closure. Commen ters criticized the application of 5.8% at

- risk nuclear generation as that will leave most generation unprotected from closure. Commenters stated that at

- risk power plants identified by the EIA are unique cases local to only a few states, and the applicati on of a uniformly distributed risk factor will not successfully preserve these individual plants. Commenters noted that for all states with nuclear power, 5.8% of total nuclear generation is less than the generation of one nuclear unit.

Commenters support ed the EPA's proposal to include only a small amount of states' at

- risk nuclear generation to establish state goals in order to limit downside risk if existing nuclear generation declines during the compliance period.

Commenters stated that existing nucle ar generating units at risk of premature retirement are concentrated in a relatively small number of states where the units operate in competitive electricity markets and are exposed to low wholesale electricity prices. Commenters stated that the majority of existing nuclear capacity is not exposed to those economic pressures and is not at risk of premature shutdown. Commenters mentioned that EPA's proposal, if implemented, likely would not avoid the premature shutdown of an existing nuclear unit.

Commente rs stated, regarding at risk nuclear, it is clear that the EIA had in mind only nuclear capacity that operates in merchant markets; hence the EIA's retirement analysis applies only to those markets and not to regulated markets (for instance in California, Arizona, and the Southeastern United States), where regulated utilities retain generation assets and therefore have a guaranteed income stream and rate of return on those assets (presuming prudent management).522 Commenters stated that the EPA took the phrase "continued economic challenges" out of context and applied a six percent factor to every reactor with nuclear generation in 2012, which is incorrect. Commenters stated that, if the EPA wants to include existing nuclear generation in its Clean Power Plan, it must first identify the reactors at risk of retirement and estimate the cost of keeping them online in the face of deteriorating economics. Commenters stated the EPA should then make a judgment about the relative economic merits of including at

- risk nuc lear generation in the rule.

Commenters recommended that the EPA either (a) eliminate altogether the inclusion of any nuclear capacity in the computation of the state standards and their achievement, or (b) allow an adjustment for nuclear capacity (which would be greater than 6 percent) only in those states which have at

- risk nuclear power plants (i.e. Illinois, Ohio, Michigan, Pennsylvania, New Jersey, New York, Connecticut, Massachusetts, New Hampshire, Vermont, Maryland and Texas).

Commenters noted tha t, in Illinois, upstate nuclear generators participate in the PJM market while the downstate generators participate in the MISO market. Commenters stated that, because the state must meet the goal, Illinois would need to enact pricing mechanisms across the entire state. Commenters recommended that nuclear should be taken out to the state goal entirely, and the PJM and MISO markets should be allowed to function as they should. Commenters stated that having "at risk" nuclear in the state goal creates an unnee ded compliance risk for all states that, if realized, can result in customers being required to subsidize the nuclear plants in the state. Commenters also recommended that nuclear power should be included as a compliance option for states. Commenters state d that the BSER formula was based on an EIA estimate that six plants, comprising 5.8% of the U.S. generation capacity, are "at

- risk" of closure before 2030, but that these are unique cases local to a few states. Commenters stated that other DOE scenarios

e nvision retirement rates of as high as 33% by 2030 and Commenters was aware of an impending decision to close an 816 MWe plant in NY which was not considered at

- risk. Commenters stated that, as such, the data the EPA are using are flawed.

Commenters state d that, in situations in cases where a state's target emission rate is greater than the emission rate of the generation source that would replace retired nuclear, the Proposal actually serves to encourage retirement. Commenters specifically related the cas e of Illinois, where Commenters stated that, because of the many coal

- fired units in the state, retiring a 1 GW nuclear unit and replacing that unit with natural gas would actually lower the state's emissions from 1,838 lbs CO2/MWh to 1,774lbs CO2/MWh. Com menters suggested that EPA explore the option of including 100 percent of existing nuclear generation, rather than 6 percent of nuclear generation, in the state's target rate calculation. Commenters stated that this would also make treatment of nuclear and non

- hydro renewable generation logically consistent.

Commenters requested that the rule incentivize more than 5.8% of nuclear generation to stay online. Commenters stated that using 100% of nuclear capacity in compliance is appropriate, but that if 100% is not a palatable proposal, Commenters suggested an allowance for up to 70% of existing nuclear for compliance.

Commenters stated that multiplying each state's existing nuclear capacity by 6 percent leads to the absurd result that the amount of "at risk" nuclear capacity in any state is much less than the smallest reactor in the state. Commenters stated that, as with the RE and EE goals, the EPA's523 failure to do state

- specific analyses of its nuclear component results in illogical and inequitable results.

Commenters stated that Texas is assigned 290 MW of at

- risk capacity, while the smallest unit in the state is 1195 MW, four times as large. Commenters stated that, to match its goal, Texas would need to determine that 24 percent of the capacity of its smal lest unit was "at risk" and that it had taken some measures to retain it in operation. Commenters continued that, on the other hand, if a state truly has an at

- risk unit, and does take steps to retain it, it would gain a compliance benefit that is much gre ater than the amount used in the goal calculation.

Commenters stated that the EPA creates a compliance obligation to protect at

- risk nuclear capacity in all 30 states that have nuclear capacity without any attempt to determine if those states' nuclear uni ts are at risk of retirement. Commenters then stated that, alternatively, if retention of at

- risk nuclear capacity is an action that could be taken in all 30 states, the level of the effect that EPA assigns to it (5.8 percent) is much too small; if only th e smallest unit in each of the 30 states is considered, the hypothetical amount of at

- risk capacity is 26 percent of the current nuclear fleet.

Commenters stated that the EPA does not attempt to seek a retention figure reflective of actual projected retir ements in each state, and that the default 5.7% retention figure deliberately and arbitrarily increases the state's overall performance goal. Commenters stated that one possible means to preserve operation of a higher

- cost nuclear plant that otherwise woul d retire due to market forces would be for the state to provide it with an out

- of

- market contract or other subsidy. Commenters stated that such a bailout would undermine the electricity market in competitive states, such as Illinois, where market participa nts depend on a level playing field and equal treatment in order to compete. Commenters stated that, as the owners of nuclear plants have demonstrated, direct government subsidies provided to renewable generation (e.g., the federal wind production tax cred it) are putting financial pressure on nuclear generation by paying renewable power to generate when uneconomic, and that providing nuclear plants a subsidy or other financial incentive in response would have the perverse effect of providing a second
govern ment subsidy to moot the effects of the first, and that the most straightforward solution is simply to eliminate all subsidies for generation.

Commenters stated that the EPA assumes that EPA assumes that six percent of the entire nuclear fleet is at

- risk and by keeping those units in operation, states can achieve additional emission reductions. Commenters stated that the EPA fails to consider the possibility that an economic or other operational circumstance might exist by which the unit owner or the Nucle ar Regulatory Commission might determine that a facility has reached the end of its useful life. Commenters stated that the record is insufficient to support EPA's assumptions that no "at

- risk" nuclear energy power plants will be retired and that all units currently under construction will come online.

Commenters stated that the limitation of the approach of assigning 5.7 GW (or roughly 6% of the nuclear fleet) as a proxy for risk of nuclear retirement is that it avoids the highly regionalized reliance on nuclear energy. Commenters stated that avoiding the retirement of one of Illinois' six nuclear plants requires a different market and policy intervention than retaining 6% of, for instance, Kansas' one nuclear facility. Commenters stated that, given the co ncentration of nuclear524 fleet, the flat inclusion of a 6% nuclear retention target within each state goal applies unequal burdens to states and does little to advance the stated goal of nuclear fleet preservation. Commenters recommended that the EPA might b etter be served creating a national mechanism for retaining nuclear capacity that could smooth over the most significant local market obstacles to preserving certain units.

Commenters stated the EPA's 6% at risk estimate is unrealistically conservative, and that the EPA should consider increasing its "at risk" percentage. Commenters stated that nuclear facilities are under increasing competitive pressure from gas

- fired and wi nd generation. Commenters stated that nuclear facilities have had difficulty in clearing the most recent PJM BRA that procures capacity on a three year forward basis. Commenters noted that, in the most recent PJM BRA, several Exelon units including Oyster Creek in New Jersey and the Byron and the Quad City units in Illinois failed to clear the auction, and that subsequently, industry spokesmen indicated that these factors may force premature retirement of nuclear facilities in the PJM region in advance of n ormal retirement dates. Commenters also recommended that the EPA should consider the implications of license expirations on its BB3 proposal, including increasing the percentage of nuclear plants "at risk" for retirement.

Commenters stated that the EPA ma kes no effort to independently verify the EIA's data regarding projected reductions in the nuclear fleet, and does not attempt to seek a retention figure reflective of actual projected retirements in each state as opposed to one serving as a mere represent ation of an economic downturn. Commenters stated that Illinois has the largest nuclear fleet in the nation, but the smallest nuclear plant makes up 7% of the nuclear capacity, so the "national average" is nonsensical, because no one shuts down a portion of a nuclear plant. Commenters stated that, when making important projections such as this, the EPA should at least use a factually based value for each state.

Commenters stated they do not support including the approximately six percent of "at

- risk" nuclea r to determine the state emission rate goals or compliance with such goals, and for states with nuclear generation, the state goals should adjusted upward by the approximately six percent. Commenters stated that all existing nuclear power plants will event ually close, and when this occurs, states will have to find ways to replace a large amount of zero

- carbon generation with other zero

- carbon generation or be at risk of being in non

- compliance with meeting their goals in the 111(d) Plan. Commenters stated t hat, since there currently are no cost effective mechanisms to achieve this, the "at risk" nuclear generation should not be included the states' carbon emission rate goals.

Commenters stated that the EPA should amend the building block 3 to account for at risk units specifically and not apply a blanket average to all states that have nuclear generation. Commenters stated that the Palo Verde nuclear generation station in Arizona is not viewed as at risk.

Commenters recommended that, rather than penalizing states in which nuclear plants shut down, the rule should provide an incentive for nuclear units to continue to operate, and, if possible, to increase their output and capacity factor, and that excluding existing nuclear from the goal

setting calculation, but allowing states to take credit for a portion of their nuclear generation for compliance purposes, would provide such an incentive. Commenters also recommended that the525 EPA recognize early action taken to increase nuclear plant output, such as the 2011 extended power uprate at the Point Beach Nuclear Plant. Commenters concluded that, at a minimum, if the
at

- risk nuclear provision is retained, it should be applied only to nuclear units that are truly at risk.

Commenters stated that nuclear plants which a re at risk are not equally dispersed throughout the country, so if the goal was to avoid closing these facilities, as building block 3 clearly states, then accounting for all nuclear generation would be the effective way to achieve this.

Commenters stated that only accounting for 5.8% of nuclear means that states with large amounts of nuclear do not have to do much to hit emissions targets. Commenters noted that certain states, Illinois being one of them, could close all of their nuclear facilities and rep lace them with natural gas plants, and their emissions rate would be less than the 2030 goal. Commenters stated that this would lead to higher emissions, but would be perfectly fine according to the rule.

Commenters stated that, as the Clean Power Plan is written, targets are made extremely easy for states with nuclear plants, such that in some states, nuclear plants can be shut down with little or no consequence, even though actual emissions will be much higher.

Commenters stated that nuclear power provi ded 35 percent of Pennsylvania's electricity in 2013, the second highest in the Nation, and that nuclear power may be at greater risk of closure in Pennsylvania, because of the Commonwealth's competitive (deregulated) market. Commenters stated that by givi ng Pennsylvania credit for only 6 percent of nuclear power (at

- risk nuclear), the EPA is not providing an incentive for the other 94 percent to remain in operation.

Commenters stated that the proposed guidelines fail to recognize the critical role of nucl ear in reducing CO2 emissions. Commenters stated that all zero

- emissions generation sources (e.g., nuclear, wind, solar, and hydropower) are equivalent for present purposes and EPA cannot achieve its carbon

- reduction goals without the existing nuclear flee t

- without the nuclear fleet, carbon emissions will be higher, as will the cost of electricity, of natural gas, and of carbon allowances under a carbon

- control regime. Commenters stated that nuclear plants also are critical to the reliability of the elect ric grid; yet, the proposed guidelines create no real incentive to maintain existing nuclear power plants. Commenters stated that although EPA notes that some existing nuclear facilities are at risk of premature retirement, the proposed guidelines greatly underestimate the quantity of nuclear generation that is actually at risk in some states, while overstating the amount at risk in other states. Commenters recommended that if EPA is going to continue with its broad interpretation of BSER, they should remov e the six percent at risk factor from the goal calculation and, instead, consider alternative approaches for incenting the continued operation of existing nuclear generation capacity as noted in EEI's comments.

Commenters stated that the EPA should consid er its approach to at

- risk nuclear facilities, because assuming that 5.8% of nuclear generation is "at risk" of shutdown and crediting states with 5.8% for their compliance plans has as neutralizing effect at best. Commenters urged the EPA to remove all ex isting nuclear from the goal calculation, while give states the flexibility to use some percentage

- at least 5.8% and possibly more

- of this nuclear generation when meeting state CO2 targets. Commenters also stated that if the EPA insists on keeping 5.8% of the existing526 generation in the goal calculation, then it should significantly increase the amount of existing nuclear generation available for use in complying with the state target rates; the larger percentage the EPA makes available for use in compliance the larger the incentive for the preservation of such generation.

Commenters stated that EPA provides no substantive discussion of how adding six percent of nuclear generation to tighten the target emissions rate for the year 2030 would work to keep nucl ear capacity operating. Commenters stated that nuclear power plants are all

- or

- nothing devices; one cannot keep six percent of a reactor open and if a nuclear reactor is uneconomical, it would be completely shut down and there would be zero electricity gen eration. Commenters stated that by including this six percent in its calculation of the target rate, the EPA has provided the nuclear industry in deregulated markets with a tool to extract financial concessions for 100 percent of the reactor. Commenters pr ovided an example involving Exelon and the state of Illinois to illustrate their point.

Commenters stated that in order to understand that the proposed credit is insufficient, consider the case whereby one of the six at

- risk plants closes in a particular state. Commenters contended that ten percent of the resulting loss in output is replaced by wind and solar generation and the remaining 90% is replaced by natural gas plants. Commenters stated that under the proposed rule, the state could claim a "reductio n" in carbon emissions, even though the actual output of carbon dioxide would increase substantially. Commenters cited a recent study showing that at least 15 states could claim a fictitious reduction in carbon emissions under the BSER formula should all n uclear reactors close.

Commenter s stated that the 800 MW Palisades Power Plant in Colvert, Michigan, due to a stretch of safety concerns, could be considered "at risk" for shutdown. However, the commenters stated the entire 800 MW reactor would shut down, not just 6% of the reactor, so that clearly the 6% blanket factor does not fit well within a state where specific nuclear units are at risk in their entirety.

Commenters noted the EPA's approach of using including 5.8 percent of a state's existing 2012

n uclear generation in the calculation of the state targets, and that the EPA also allows states to include 5. 8 percent of the total generation from its existing nuclear generation fleet in a given year for compliance purposes as an incentive for the contin ued operation of existing nuclear units. Commenters instead recommended each of the following:

1. Remove the "at risk" existing nuclear megawatt hours from the state emission target calculation; to the extent EPA retains an "at risk" adjustment it should onl y be applied in states where "at risk" nuclear generation has been identified rather than applying this adjustment universally across all states;

2. Provide appropriate flexibility and incentives to use incremental existing nuclear generation for state compl iance; EPA should consider a baseline capacity factor for nuclear units using either a national average lifetime capacity factor for all operating units, or each unit's historical average capacity factor; the incremental annual capacity factor for each uni t above the baseline period would be eligible for compliance in a state plan;527 3. Allow existing nuclear units that are relicensed by the NRC to operate beyond 60 years to be treated as new units and their full generation included in the state's compliance cal culation; and

4. Allow the recalculation of a state's emissions goal to account for nuclear safety outages, outages for failures of long lead time equipment, permanent retirements and economic constraints as mentioned previously in this section.

Commenters stated that the CPP, as currently proposed, would incent each state to preserve approximately 6% of its nuclear capacity at risk for retirement to help meet the state's CO2 emissions reduction target. Commenters stated that the incentive to preserve a stat e's nuclear generation capacity that might otherwise be retired is a simple, broad

- brush approach and raises numerous market issues that must be carefully considered.

Commenters remarked that it is unclear exactly what constitutes an "at

- risk" nuclear pla nt; rather than arbitrarily assuming that 6% of a state's nuclear capacity is at risk for retirement, each nuclear plant's operational and financial performance should be examined relative to a pro

- forma nuclear plant to ensure that the plant is not reward ed for poor performance.

Commenters noted that some owners of nuclear generation have stated that they do not need or want a subsidy; rather, they simply want credits or some other ability to monetize the unique characteristics of their nuclear plants. C ommenters stated that in the case of Illinois, because there is only one nuclear generation owner, any regulatory approach that would grant credits to nuclear generation needs to be carefully evaluated so as not to provide the state's sole nuclear generati on owner with unintended market power or other unilateral advantage.

Commenters suggested one possible means to preserve operation of a higher

- cost nuclear plant that otherwise would retire due to market forces would be for the state to provide it with a n out

of

- market contract or other subsidy. Commenters contended that such a bailout would undermine the electricity market in competitive states, such as Illinois, where market participants depend on a level playing field and equal treatment in order to co mpete.
Commenters stated that as the owners of nuclear plants have demonstrated, direct government subsidies provided to renewable generation (e.g., the federal wind production tax credit) are putting financial pressure on nuclear generation by paying ren ewable power to generate when uneconomic. Commenters contended that providing nuclear plants a subsidy or other financial incentive in response would have the perverse effect of providing a second government subsidy to moot the effects of the first, and th e most straightforward solution is simply to eliminate all subsidies for generation.

Lastly, commenters stated that EPA relies upon the EIA Annual Energy Outlook, which projected a 5.7% capacity reduction to the nuclear fleet. Commenters remarked that th is projected reduction is not tied to the projected retirement of any specific unit, but rather "to recognize the 'continued economic challenges' faced by the higher

- cost nuclear units." Commenters stated that EPA determines that retention of this 5.7% wou ld achieve CO2 reductions at a reasonable cost. EPA offers no explanation as to the regulatory path for extending the useful life of such "at

- risk" nuclear units. Commenters contended that EPA makes no effort528 to independently verify EIA's data, nor does it attempt to seek a retention figure reflective of actual projected retirements in each state as opposed to one serving as a mere representation of an economic downturn. In fact, Commenters contended, EPA failed to consult with the Nuclear Regulatory Commis sion regarding the validity of its assumptions or as a policy or safety matter, whether such "at risk" nuclear unit should continue to operate; moreover, the extension of the licensing life of a nuclear facility is highly contentious and uncertain, and EPA provides short shrift as how such "nuclear retention goals" can be achieved. Commenters stated that by including as a default this 5.7% retention rate, EPA has deliberately and arbitrarily increased the state's overall performance goal.

Commenters remark ed that EPA also does not prove that there is substantial evidence that its projected increases in zero emission sources are "feasible" and will "produce the improved performance necessary to achieve" the goal. Commenters stated that with respect to renewa ble sources, EPA relies on state RPSs as achieved, without regard to economic or market barriers to achieving portfolio targets and without regard to whether an RPS target is legally required to be achieved.

Commenters stated that Kansas currently has one nuclear plant (i.e., Wolf Creek) with an output of 1,205 MW that is owned jointly by three Kansas utilities. Commenters remarked that the EPA's proposed plan does not recognize the significant zero

- carbon emissions from Wolf Creek that serve to lower Kans as's overall carbon footprint.

Commenters stated that, in fact, as structured the CPP penalizes states with nuclear generation by including "at risk" nuclear generation in the denominator of the CPP's mathematical formula. Commenters contended that the penalty resulting from inclusion o f "at risk" nuclear generation in the formula is derived by the denominator's effect of lowering EPA's proposed emission rates, and the impact of the formula is created by the EPA's use of a basic ratio of:

(Carbon emissions / megawatt hours of production )

Commenters stated that the EPA's definition of the basic ratio above requires generation resources with zero emissions to increase only the denominator of the ratio. Commenters stated that because there is no effect on the numerator, each megawatt hour of zero

- carbon generation added by EPA for "at risk" nuclear resources lowers the emission limit goal and thus requires greater carbon emission reductions. Commenters contended that this is counterintuitive and reflects either the EPA's lack of understandi ng of electric generation or is simply an attempt to derive a lower emission limit. Commenters stated that penalizing Kansas for zero

- carbon generation is inconsistent with the EPA's espoused goal of lowering carbon emissions. Commenters remarked that a ru le designed to reduce carbon emissions should reward and not penalize the use of nuclear generation.

Commenters stated that because Kansas has no nuclear generation under construction and no part of their single nuclear plant (i.e., Wolf Creek) is "at ris k", this element is eliminated from their calculation. Commenters suggested that the EPA should revise its formula so that existing nuclear generation would count towards compliance.529 Commenters attached a 103 page Hatch, Ltd report dated October 9, 2014 t hat strongly makes the case that electric power generated by nuclear energy causes vastly lower amounts of greenhouse gases (GHGs) to be emitted into the atmosphere than scenarios that couple inherently intermittent sources of electrical power such as wind turbines with natural gas powered generation. Commenters stated that such a coupling is necessary for electrical grid stability. Commenters remarked that the Hatch, Ltd. report, which is based on 246 studies covering various power generation scenarios and constraints, concluded that nuclear power is superior to wind and natural gas for battling climate change. Commenters contended that the clean air contributions of nuclear power should be counted at 100% in the proposed regulation, not the pitiful 5.8% pr oposed.

Commenters recommended that the EPA exclude existing "at

- risk" nuclear generation from the formula for setting state emission reduction targets. Commenters stated that existing nuclear reactors have been facing economic pressures due primarily to l ow natural gas and wholesale electricity prices, and expensive age

- or safety

- related repairs, and gave examples of recent reactor closures. Commenters recommended excluding existing "at

- risk" nuclear generation from the state emission reduction target for mula, as the number of at

- risk reactors is limited, site specific, and will likely decline over time as natural gas and wholesale electricity prices rise.

Commenters contended that the EPA's methodology of applying EIA's estimate of at

- risk nuclear plants to the states is flawed. Commenters stated that the EPA's methodology for quantifying at

risk nuclear generation is based on EIA projections from its Annual Energy Outlook 2014 reference case. Commenters noted that the EIA's analysis assumed an additional 6 GW of generic retirements would occur between 2012 and 2019, and represented this by assuming a reduced capacity for all existing plants in vulnerable regions (primarily in restructured markets with merchant plants). Commenters contended that the EIA di d not assume retirements of specific plants, and it also did not assume plants are at

- risk of early retirement in every state that has existing nuclear plants, which the EPA does assume in its methodology. Commenters remarked that EIA also does not clearly explain how it came up with the additional 6 GW of retirements; however, EIA does indicate that they did not include any retirements after 2020 because natural gas prices in its reference case are projected to be high enough to "support the continued oper ation of the U.S. nuclear fleet and limit retirements from 2020 through 2040."

Commenters stated that additional fuel switching from coal to natural gas under the Clean Power Plan could increase natural gas prices above EIA's reference case projections bef ore 2020, which in turn would increase the profitability of existing nuclear plants and potentially offset EIA's assumed retirements. Commenters stated that, in fact, under the CPP, the EPA's IPM modeling projects a 10.2 percent to 14.3 percent increase in power sector natural gas use in 2020 that results in a 7.5 percent to 11.5 percent increase in delivered natural gas prices to the electric power sector by 2020. Commenters also remarked that the EPA's modeling also does not show any difference in nuclear generation or capacity in 2020, 2025, or 2030 under any of the CPP scenarios compared to their Base Case. Commenters concluded that the EPA's own modeling does not show that existing nuclear generation is at risk of early retirement, which is consistent

w ith EIA's projections after 2020.

Commenters stated that recent UCS modeling using a modified version of EIA's AEO 2013 National Energy Modeling System (NEMS) and NREL's 2014 version of the Regional Energy530 Deployment System (ReEDs) model also does not pro ject any near

- term or long

- term retirements of existing nuclear plants beyond the six reactors that recently closed or are projected to close in the next few years. Commenters remarked that this is not surprising as both the EPA and UCS modeling use EIA's natural gas price projections.

Commenters stated that the spikes in natural gas and wholesale electricity prices last winter due to extremely cold weather and the competition for natural gas for electricity generation and home heating are another example o f how natural gas prices have already exceeded EIA projections. Commenters also noted that existing nuclear plants made considerable profits between 2005 and 2008 when annual wholesale electricity prices ranged from $43

- 93/MWh (2013$) due to record high na tural gas prices, and this is illustrated in data from Exelon, which shows a strong correlation between their share price and natural gas prices over the past decade.

Commenters stated that because early retirements of nuclear plants appear to be a tempora ry issue, and would likely be limited to a few specific plants and locations, they do not believe the EPA should include "at

- risk" nuclear generation in the formula for setting state emission reduction targets. Commenters further stated that the emission r eductions from existing plants are already reflected in state's base emissions and generation mix, and for similar reasons, they are also recommending that existing renewables be excluded from the EPA's formula for setting state targets.

Commenters remarke d however, that if a limited number of existing nuclear plants are retired early and replaced with natural gas, it could result in net increase in a state's emissions, all other things being equal; although, it's also possible that existing plants could be replaced with a combination of new renewables and energy efficiency without increasing emissions. Commenters cited recent analyses by UCS, the National Renewable Energy Laboratory (NREL), and Rocky Mountain Institute that all show that the U.S. could grad ually phase out existing nuclear reactors by the time they reach 60

- years of operation and replace them primarily with renewables and energy efficiency, while saving consumers money, maintaining reliability, and significantly reducing carbon emissions and water use. Commenters concluded that they believe the determination of existing at

- risk nuclear plants should be addressed on a case by case basis in state compliance plans and supported by a comprehensive analysis of the costs and benefits of keeping exis ting plants open vs. retiring and replacing them with other low and zero carbon generation.

Commenters asserted that this approach would also help limit the potential for providing additional subsidies and windfall profits to existing nuclear plants that d o not need them to continue operating. Commenters cited a 2011 UCS report that shows that existing nuclear plants have already received generous subsidies that have cost taxpayers more than the market price of power they helped generate, and they continue to receive ongoing subsidies ranging from 1 to 6 cents/kWh. Commenters remarked that when nuclear power was an emerging technology, public support made sense, but more than 50 years (and two public bailouts) after the opening of the first U.S. commercial n uclear plant, nuclear power is a mature industry that should be expected to stand on its own. Commenters concluded that the best policy mechanism to value the low carbon benefits of nuclear power is to put a price on carbon. Commenters contended that this would remove a market price distortion by internalizing a cost currently not factored into the531 price of coal and natural gas that would benefit nuclear, renewables and other low carbon options equally.

Comment 6: Commenters urged the EPA to preserve exi sting nuclear capacity, provide credit for 'new' nuclear generation and remove the 6 percent 'at risk' nuclear capacity from the goal calculation.

Response 6: EPA acknowledges the comments and has determined that the BSER for the final rule will not inclu de the proposed provisions for existing and under construction nuclear units in the setting of state goals, and allows incremental generation from new and uprated units to be considered in state plans to comply with the rule. The provisions of the final C lean Power Plan provide incentives to maintain current levels of nuclear generation, and if a state or affected EGU chooses to do so, allow incremental nuclear capacity to apply towards compliance. Please see sections VIII.K and VIII.G of the preamble for further discussion of the flexibility states have in developing state plans to ensure compliance, as well as, the requirement that states consider system reliability in plan submittal.

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

Commenters stated, regarding the Clean Power Plan Rule that the proposal is designed to reduce carbon emissions by 30 percent from 2005 levels by 2030. Commenters said this goal cannot be achieved without preserving the 100 nuclear power reactors that provide approximately 20 percent of America's electricity, and almost two

- thirds of America's carbon

- free electricity. Commenters said EPA's proposal recognizes this fact, and attempts to provide states with an incentive to preserve existing nuclear g enerating capacity.

Commenters stated in its proposed rule, EPA estimates that the cost of keeping 'at risk' nuclear plants operating is $12

- $17 per metric ton of CO2 abated; this is lower than EPA's estimate that:

• Adding renewable capacity costs $10

- $40 per metric ton of CO2 abated;

• Increasing natural gas combined cycle power plant utilization rates to 70 percent costs $30 per metric ton of CO2 abated; and

• Implementing demand

- side management programs costs $16

- $24 per metric of CO2 abated.

Commenters c ontinued stating the U.S. nuclear energy industry commends EPA for recognizing the importance of nuclear energy to any credible program to reduce carbon emissions, but EPA's treatment of nuclear energy in the proposed rule is fundamentally flawed. Commente rs said despite the agency's intent, the proposed rule will not preserve nuclear power plants at risk of premature shutdown, and creates a significant penalty for those states that have taken steps to maintain a diversified portfolio of generating assets a nd reduce carbon emissions by building new nuclear power plants.532 Commenters recommended that the EPA's 111(d) Rule should send states an unequivocal signal to preserve existing nuclear capacity, and provide credit for 'new' nuclear generation. Commenters s tated if EPA continues with its proposed interpretation of Best System of Emission Reduction (BSER), the agency should remove the six percent 'at risk' nuclear capacity from the goal calculation. Commenters said various stakeholders will doubtless offer al ternative approaches to the treatment of existing nuclear generation in their comments. Commenters said one approach that EPA could consider, however, is for a state to demonstrate in its plan reasonable assurance that it will preserve its existing carbon

- free generating capacity, particularly nuclear generating capacity. Commenters said for operating nuclear generating units in regulated states, such assurance already exists because integrated utilities have a reasonable opportunity to recover costs, plus a reasonable return. Commenters said in competitive states with nuclear generating units potentially at risk, this assurance could involve a commitment to policy changes through legislation or regulation, or other market

- based mechanisms, or a combination that would create incentives for continued operation of these zero

- emitting generators.
Commenters concluded creating ways for states to capture limited compliance value for existing nuclear generating units would directly serve and support EPA's principal objective, ensuring continued operation of the nation's largest source of carbon

- free generating capacity.

Commenters stated the nation's nuclear generating capacity is licensed for an original 40

- year license term, with an option (under the Atomic Energy Act) for license renewal for additional 20

- year periods; approximately three

- quarters of the reactors operating today have received Nuclear Regulatory Commission (NRC) approval to operate to 60 years. Commenters said starting in approximately 2030, existi ng nuclear power plants reach the end of 60 years of operation; although the industry and the NRC are now developing the framework for an additional 20

- year license renewal (past 60 years), it is not certain that all of today's nuclear power plants will ta ke advantage of this option. Commenters said some of this capacity will likely seek a second license renewal to operate past 60 years, but some will not. (In fact, some of today's capacity may not reach 60 years.) Commenters said additional capital investm ent will almost certainly be required to operate past 60 years and, in some cases, market conditions or other factors may not justify that capital investment.

Commenters concluded this situation places a high premium on (1) preserving existing nuclear generating capacity by ensuring workable regulatory requirements for second license renewal (i.e., past 60 years), and (2) building new nuclear generating capacity to maintain, at a minimum, nuclear energy's current 20

- percent share of U.S. electricity sup ply.

Commenters concluded these challenges require an integrated, internally consistent energy and environmental policy, involving both federal and state governments. Commenters said the federal government could provide the leadership necessary to develop such an integrated policy, but energy policy and environmental policy remain balkanized, scattered among several Executive Branch agencies, each pursuing separate, and not necessarily consistent objectives. Commenters said EPA's proposed rule to reduce car bon emissions from existing power plants continues that pattern; if it is appropriate to reduce the electric power sector's carbon footprint,533 that objective should be part of a larger set of energy and environmental policy initiatives that provide the poli cy conditions necessary to achieve those carbon reductions.

Commenters stated that the Obama Administration has embraced an "all of the above" energy strategy and a commitment to reduce carbon emissions from the electric power sector, as evidenced by the proposed rule under Section 111(d). Commenters stated that 100 nuclear power plants provide approximately 20 percent of the nation's electricity, and approximately two

- thirds of the nation's carbon

- free electricity, and provide a uniquely valuable set of a ttributes. Commenters stated that the attributes included generating large quantities of electricity provided reliably around the clock, providing of price stability, "reactive power" essential to controlling voltage and frequency, portfolio value contribu ting to fuel and technology diversity, and compliance value through avoiding Clean Air Act "criteria" pollutants, hazardous air pollutants, and carbon dioxide. Commenters stated that other sources of electricity have some of these attributes, but none of t he other sources have them all.

Commenters stated that nuclear plants are also critical to the reliability of the electric grid because they operate continuously and generally independently of weather conditions; for example, during the 'Polar Vortex' even t, which occurred during the week of January 6, 2014, the nation's nuclear power plants operated at daily average capacity factors of 95 percent to approaching 98 percent. Commenters said no other source of electricity approached that level of reliability; in fact, approximately 25 percent of the generating capacity in the PJM Interconnection and 20 percent of the capacity dispatched by the Midcontinent System Operator (MISO) was forced out of service by the severe weather (generally because power plants co uld not obtain fuel or because fuel

- handling equipment froze). Commenters said nuclear energy's high reliability will become increasingly important as the nation's electricity system becomes less reliant on coal, and more reliant on gas

- fired generating ca pacity and on renewable technologies that are intermittent and weather

- dependent.

Commenters stated nuclear energy is America's largest source of low

- carbon electricity; in 2013, nuclear energy produced 19 percent of U.S. electricity supply (789 billion ki lowatt

- hours) and prevented 589 million metric tons of CO2 emissions.

Commenters stated nuclear energy accounted for 63 percent of America's carbon

- free electricity in 2013, three times more carbon

- free electricity than hydropower and nearly five times mor e than wind energy; for perspective, one gigawatt of nuclear generating capacity (out of the 100 GW operating) would avoid more carbon than all U.S. solar energy capacity in 2013 (4,500 megawatts at 17

- percent capacity factor). Commenters said the amount o f CO2 emissions avoided by nuclear energy facilities is equal to the CO2 emissions from 113 million passenger cars, more than all the passenger cars in the United States. Commenters said without nuclear power plants operating in 31 states, carbon emissions from the U.S. electric sector would be approximately 25 percent higher.

Commenters stated that a major expansion of nuclear generating capacity over the next 15

- 30 years is essential, and that absent such expansion, carbon emissions will be higher. Commen ters stated that closure of Units 2 and 3 at the San Onofre Generating Station in southern California had caused an increase in electricity costs of $350 million for the first year, equivalent to a 13

- percent increase in total generation costs for the stat e. Commenters also stated that closing the534 San Onofre units more than negates the carbon abatement impact of all the state's wind and solar resources, noting that in 2011 (the last full year of operation) San Onofre generated 18,709 GWh of carbon free elec tricity; in 2013, the state's wind and solar generating capacity produced 16,985 GWh.

Commenters stated that, according to NEI calculations using protocols developed by the Energy Information Administration, nuclear energy avoided generation of approximate ly one million tons of sulfur dioxide and half

- a

- million tons of nitrogen oxide emissions annually. Commenters stated that, to address future growth in energy demand, the U.S. must have a portfolio of electricity generating technologies, particularly low

- c arbon technologies. Commenters then stated that America's electricity generating technologies are unfortunately narrowing dramatically, stating that the consensus is that approximately 60,000 MW of the 300,000 MW of coal fired power will shut down by 2020, while natural gas

- fired generating capacity is growing dramatically. Commenters stated that renewables will play an increasing role, but cannot displace the need for baseload generating capacity, absent dramatic advances in energy storage. Commenters stat ed that, between 2029 and 2055, all 100 operating reactors in the U.S. will reach 60 years of life, and that extending the operating lives of these facilities, or replacing them with new ones will be a capital

- intensive, multi

- decade proposition.

Commenter s stated that four nuclear reactors shut down permanently in 2013, and that Entergy announced it would shut down Vermont Yankee in 2014. Commenters stated that large multi

unit nuclear power plant producing electricity in the low

- $30

- per

- megawatt

- hour rang e are at risk of shutdown in MISO and western PJM either because of actions by the Regional Transmission Organizations (RTOs) that suppress prices and inhibit appropriate price formation; state and/or federal policies that suppress power prices and enable low or negative pricing; and systemic weaknesses in market design, which do not sufficiently value baseload capacity that can be dispatched when needed, do not provide value for fuel and technology diversity, and do not provide additional value for the car bon

- free attributes of these plants. Commenters stated that natural gas prices are not likely to remain below $4 per million Btu for the next 20 years, and there is no rational economic reason or public policy rationale for shutting down nuclear power plan ts like Kewaunee and Vermont Yankee. Commenters said sooner or later, they must be replaced and, when they are, they will be replaced with generating capacity that will likely produce higher

- cost electricity, and will certainly emit more carbon.

Commenters reviewed two scenarios: (1) if all today's reactors operate to 60 years, then retire; and (2) if all today's reactors operate to 80 years. Commenters stated that reality, of course, will lie somewhere between these two extremes. Commenters said these calc ulations start with the projections in EIA's 2014 Annual Energy Outlook, which assumes 0.7

- percent annual growth in electricity demand. Commenters then made the following observations:

• Simply because of load growth, maintaining nuclear energy at 20 percent of U.S. electricity supply would require 13.2 gigawatts (GW) of new nuclear capacity by 2025 (in addition to the Watts Bar 2, Vogtle 3 and 4, and Summer 2 and 3 reactors already under construction).535 • If today's nuclear plants retire at 60 years of operati on, 22 GW of new nuclear generating capacity would be needed by 2030, and 55 GW by 2035, to maintain a 20 percent fuel share.

• If today's reactors operate to 80 years, 18 GW of new nuclear capacity would be needed by 2030, and 23 GW by 2035, to maintain a 20 percent share of U.S. electricity supply.

• Much larger amounts of new nuclear generating capacity would be needed to drive nuclear energy to 25 percent of U.S. electricity supply.

Commenters stated "unless the industry and the federal and state governme nts work cooperatively to put in place the policy initiatives necessary to replace the reactors that do not reach 60 years or retire at the end of 60 years of operation, and expand the size of the U.S. nuclear fleet beyond today's 100 GW of capacity, then nuclear energy's share of U.S. electricity supply could gradually decline. If that were to happen, then U.S. energy and environmental goals would be seriously compromised. A continuing, growing contribution from nuclear energy is essential to produce basel oad electricity at stable prices and to sustain reductions in emissions of carbon and other criteria pollutants."

Commenters stated there are practical reasons not to use a snapshot

- in

- time figure of nuclear capacity at risk as the basis for a rule that wi ll govern for decades; market conditions are dynamic, and a plant that is not at risk today may be at risk tomorrow, and vice versa.

Commenters stated that EPA must revise its proposal to ensure that states have a sufficient incentive to preserve the exis ting nuclear fleet and recommended that if the EPA continues with its proposed interpretation of BSER, they should remove the 6 percent at risk nuclear capacity from the goal calculation. Commenters stated that EPA could consider having states demonstrate in their plans reasonable assurances that they will preserve existing carbon

- free generating capacity, particularly nuclear generating capacity. Commenters stated that for operating nuclear units in regulated states, such assurance already exists because i ntegrated utilities have a reasonable opportunity to recover costs, plus a reasonable return; in competitive states with nuclear units potentially at risk, this assurance could involve a commitment to policy changes through legislation or regulation, or ot her market

- based mechanisms, or a combination that would create incentives for continued operation of these zero

- emitting generators.

Commenters recommended that EPA consider ways to provide at least some limited compliance value for existing nuclear gene rating capacity, as an additional incentive to the states to preserve that capacity. Commenters provided the following example stating that in all its calculations, EPA assumes a uniform 90

- percent capacity factor for all nuclear power plants and while it is true that the U.S. nuclear fleet, on average, has consistently achieved capacity factors in the 90

- percent range for the last 15 years, the average lifetime capacity factor of the 100 nuclear plants now operating is 81.6 percent through 2013. Commenters stated that given this:

1. States could be allowed to count megawatt

- hours produced by any nuclear plant above an 81.6

- percent capacity factor to be counted toward compliance; or536 2. Alternatively, the same model could be applied on a state

- by

- state basis: All nuclear megawatt

- hours above the lifetime capacity factor of a state's nuclear generating units could be counted toward compliance; or

3. A single

- year baseline may not be appropriate for nuclear power plants, which typically shut down only every 18

- 24 month s for refueling and maintenance outages. If the baseline year happens to be a refueling outage year, it may understate a nuclear generating unit's long

- term performance. For this reason, the industry typically uses three

- year rolling averages when evaluati ng nuclear plant performance. Given this, another option might be to allow a state to count toward compliance any nuclear megawatt

- hours produced above the industry's three

- year rolling average.

Commenters stated that in addition to new nuclear generating capacity, the 111(d) rule should also recognize two other means of increasing zero

- carbon nuclear generation: power uprates and license renewal

- both represent incremental generation, involve detailed planning and regulatory approvals, require substantia l capital investment

- and both should count towards compliance. Commenters recommended that power uprates and license renewals be considered new nuclear capacity and credited towards compliance. Commenters stated that the NRC defines three types of power uprates:

• Measurement Uncertainty Recapture (MUR), which uses advanced techniques to more accurately calculate reactor power, and typically achieve up to two percent additional output;

• Stretch Power Uprates (SPR), which usually involve changes to instrume ntation
set

- points but do not involve major plant modifications. These uprates typically yield up to 7 percent additional output; and

• Extended Power Uprates (EPU), which require significant investment in major plant equipment, like turbines, pumps, motors, main generators and transformers, and can yield as much as 20 percent additional output."

Commenters stated that as of April 2014, the NRC has approved 154 uprates that added generating capacity equivalent to about seven new reactors. Commenters stated t hat planning, conducting the engineering work and obtaining NRC approval for a power uprate takes several years. Commenters provided examples of time requirements and expenses for license renewals. Commenters stated that any nuclear reactors that receive N RC approval to renew their licenses during and after the 2012 baseline year in the 111(d) rule should be treated as new generating capacity, including any first license extensions issued during and after 2012 as well as all second license extensions (since none have yet been issued). Commenters stated that states should be able to credit this capacity toward compliance.

Commenters stated that like the process for power uprates, the NRC's license renewal review includes significant capital investment and sa fety reviews, which typically take about 30 months. Commenters stated that by 2029, several nuclear power reactors in the U.S. will have been generating electricity for 60 years with approximately 31,000 MW of nuclear generating capacity537 reaching the end o f their 60

- year licenses between 2029 and 2035, thus requiring plant shutdown unless NRC approves a second license extension. Commenters stated that by 2040, half of the nation's nuclear fleet will have turned 60; the electric power industry is approaching a period, the decade starting in 2020, when it must consider how to replace this nuclear generating capacity. Commenters stated that some of this capacity will likely seek a license renewal to operate past 60 years, but some will not; additional capital i nvestment will likely be required to operate past 60 years and, in some cases, market conditions or other factors may not justify that capital investment. Commenters stated that without further significant financial investments and licensing action by the licensee, these carbon

- free power generation sources are at risk of shutdown. Commenters stated that the impact of the loss of nuclear generation on carbon emissions in such a short period of time should be reason enough for the 111(d) rule to provide an i ncentive for continued operation of these units, provided they can meet the necessary safety requirements.

Commenters stated that the NRC and industry are both examining what will be required to operate a nuclear plant beyond 60 years. Commenters gave the example of the NRC licenses for Dominion Resources' existing nuclear stations that begin to expire in 2032. Commenters stated the scoping analysis shows costs in the range of $500 million to $1.5 billion, depending on the components that must be replaced to extend the operational performance required for a second 20

- year license extension. Commenters stated that nuclear power plant operation beyond 60 years cannot be treated as a foregone conclusion and EPA should not assume that nuclear units will be rel icensed in perpetuity or that existing nuclear plants will continue to run forever. Commenters recommended that the final rule should provide an incentive for the continued operation of all existing reactors by defining as new nuclear capacity that may be used for compliance purposes as: (1) any nuclear plants that have not received license extensions to operate beyond their original 40

- year license term at the beginning of the 2012 baseline year, and (2) any nuclear plants relicensed to operate beyond 60 y ears."

Comment 7: Commenters urged the EPA to remove all subsidies and support for nuclear power.

Response 7: EPA acknowledges the comments and has determined that the BSER for the final rule will not include either of the proposed provisions for existing and new nuclear units in the setting of state goals. While the rule allows incremental generation from new and uprated units to be considered in state plans to comply with the rule, the decisions to invest in nuclear generation over other types of power are made by corporations who weigh numerous factors in making a determination, along with extensive oversight of public safety by the Nuclear Regulatory Commission and in coordination with state regulators.

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

Commenters requested that the EPA, remove all subsidies and support for nucl ear power for reasons of health, security, and lack of storage. Commenters stated that encouraging new nuclear energy magnifies the health dangers posed by radiation, especially in the case of nuclear reactors located close to urban centers; increases the safety and national security issues from transporting538 radioactive materials, both before and after they are used to generate electricity; and leaves as unresolved the dangers of storing high

- level (and even low

- level) radioactive waste.

Commenters stated t hat by encouraging states to relicense existing nuclear reactors and complete the construction of new ones, the rule reduces those states' incentive to focus on renewable energy resources. Commenters stated that there are opportunity costs when governments choose to invest their finite resources in new energy resources; safe renewables risk being a lost opportunity when governments instead choose to focus their resources on expanding or keeping nuclear energy options despite the latter's regularly balloonin g costs. Commenters stated increasing costs, for example, were a primary reason why a few years ago the city of San Antonio decided against adding two nuclear reactors to the energy portfolio owned by its municipally

- owned utility, CPS Energy.

Commenters a lso stated the health impacts of emissions from such coal

- fired plants and the climate effects of their greenhouse gas emissions are problems that recent EPA regulations have meant to address. Commenters applauded those regulatory efforts just as strongly as the commenters applaud the slogan that encapsulates the desires of many central Texas residents: 'Solar Yes, Nuclear No.' Commenters criticized the misguided support for nuclear energy in the currently proposed Clean Power Plan Rule.

Commenters added th e proposed rule encourages the creation of state

- level cap

- and

- trade programs that could have the effect of allowing nuclear energy plants to sell their emissions credits to fossil fuel

- generators, thereby sustaining facilities that emit massive amounts of criteria pollutants of concern for areas in nonattainment with the Clean Air Act and greenhouse gases of worldwide concern. Commenters said that scenario is directly contrary to the purpose of a regulation named the 'Clean Power Plan Rule.' Fossil fuels a re not the only dirty energy source that this proposed rule, as written, indirectly sustains.

Commenters requested for nuclear power to not be included in this proposed rule's clean energy standards or in a cap

- and

- trade program; most importantly, nuclear reactors should not qualify for any subsidies under this rule.

Commenters stated that the EPA estimated costs of CO2 reductions achievable through this building block to be from $10 to $40 per metric ton. Commenters observed that Block 3 utilizes the same general concept as Block 2, as it shifts generation from an unfavored source (fossil

- fuel fired) to a favored source (renewables, nuclear, etc.). Commenters stated that the difference here is that the favored generators under Block 3 are not existing EGUs under the proposed rule, and to make Block 3 work, states would be required to establish renewable energy requirements, and/or ensure continued availability of nuclear generation. Commenters concluded stating that again, USEPA is relying on parties that a re not the targeted existing source.

Comment 8: Commenters stated concerns regarding the use of nuclear energy and its impact on public health and the environment.539 Response 8: EPA acknowledges the comments and has determined that the BSER for the final

r ule will not include either of the proposed provisions for existing and new nuclear units in the setting of state goals. While the rule allows incremental generation from new and uprated units to be considered in state plans to comply with the rule, the d ecisions to invest in nuclear generation over other types of power are made by corporations who weigh numerous factors in making a determination, along with extensive oversight of public safety by the Nuclear Regulatory Commission and in coordination with state regulators. Both State Plans and decisions by the Nuclear Regulatory Commission undergo a public process to consider potential impacts on citizens.

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

General Oppositio n
Commenters stated that EPA should not support nuclear energy in the Clean Power Plan. Commenters stated that nuclear energy is not a solution to climate but is part of the climate change problem. Commenters added that nuclear power is not a clean energy resource because of the unresolved nuclear waste and uranium mine pollution and remediation issues. Commenters stated that nuclear costs and environmental issues associated with nuclear power make it an unacceptable option for long

- term health and environ mental sustainability. Commenters stated that nuclear is not a sustainable or renewable form of energy as it relies on finite natural resources of uranium for fuel. Commenters stated that the EPA should assess the consequences of utilizing nuclear power in the context of environmental protection, and concluded that if the EPA does this, they will come to the conclusion that nuclear power is too great of a risk to consider as an option for power generation. Commenters asked if the EPA is willing to endanger the lives of millions of Americans, to be complicit in destroying the economic health and infrastructure of the nation, to make thousands of square miles of land and water uninhabitable, and to destroy thousands of species. Commenters objected to the use o f nuclear reactors to generate electricity primarily because of the link between the so

- called peaceful use of nuclear reactors and nuclear weapons. Commenters stated that there would be no effective medical response to a nuclear war, and the threat of a " limited" nuclear war between, for example, Pakistan and India, remains.

Thermal Impacts

Commenters stated that EPA did not consider the thermal impacts of nuclear energy production, including the impacts of nuclear waste heat. Commenters stated that nucl ear fission reactions continue burning hot for thousands of years, including both radioactively and thermally hot. Commenters stated that nuclear fission produces thermal pollution impacts on the earth's atmosphere, rivers, oceans and lakes, and exacerbate s the greenhouse gas effect. As an example, commenters stated that heated cooling water from the Indian Point power plant is dumped in the Hudson River, negatively impacting tens of millions of fish, including the short nose sturgeon

-- an endangered specie s. Commenters stated that the cooling water and steam released from nuclear generation contains radioactive tritium, which continuously warms the atmosphere and water sources and compounds over time. Commenters stated that the EPA did not consider the pote ntial impacts of tritium emissions, including tritium leaks to water sources and emissions to540 the atmosphere. Commenters added that neither the EPA nor the NRC require routine measurements of tritium in offsite private water wells that are used for drinkin g and irrigation.

Nuclear Energy is Not Carbon Free

Commenters stated that nuclear energy is not carbon

- free. Commenters stated that nuclear energy production results in emissions of CO2, methane, and carbon 14, and observed that carbon 14 is produced in the coolant at boiling water reactors (BWRs) and pressurized water reactors (PWRs) and is released in the form of CO2 at BWRs and methane at PWRs. Commenters referenced a 2010 technical report by the Electric Power Research Institute to support their argum ent that Carbon

- 14 is produced in the reactor coolant during power operation. Commenters stated that nuclear power produces electricity at an average rate of 66 grams of equivalent life

- cycle carbon dioxide emissions per kWh.

Impacts of the Full Nuclear Fu el Cycle

Commenters stated that the EPA did not consider carbon emissions from the full nuclear fuel cycle, including mining, milling, processing, conversion, enrichment, transportation, and storage. Commenters added that all states of the nuclear fuel cyc le must be considered along with their hazards and provided a description of each process: uranium recovery to extract uranium ore; concentrate (or mill) the ore to produce "yellowcake"; conversion of yellowcake into uranium hexafluoride (UF6); enrichment to increase the concentration of uranium

- 235 (U235) in UF6; deconversion to reduce the hazards associated with the depleted uranium hexafluoride (DUF6); fuel fabrication to convert enriched UF6 into fuel for nuclear reactors; use of the fuel in reactors; i nterim storage of spent nuclear fuel; reprocessing of high

- level waste (currently not done in the U.S.); and final disposal of high

- level waste.

Commenters stated that mining of nuclear fuels and other front

- end operations negatively impacts human health and water resources. Commenters stated that EPA failed to protect communities near uranium mines, especially Native American communities, and added that the EPA failed to list the thousands of contaminated uranium mining waste sites as superfund sites. Co mmenters listed hazards associated with uranium mining, including: risks to workers, such as exposure to dust and radioactive gas; the large volumes of contaminated water that are pumped from the mine and released to rivers and lakes; releases of radioacti ve dust and gas from mine vents, which can increase lung cancer risk to nearby residents; the piles of radioactive waste rock, which can threaten people and the environment after the mine is closed; and uranium mill tailings, which contain radioactive mate rials and can leach into the groundwater. Commenters added that lung cancer is the most serious health hazard associated with uranium mining. Commenters stated that two hundred million tons of uranium mill tailings need to be disposed of and over ten thous and abandoned uranium mines need to be remediated. Commenters suggested that EPA should consider the hazards associated with uranium conversion processes, and outlined specific incidents (including references) of leaks of uranium materials associated with such processes.

Commenters suggested that EPA should consider the hazards associated with uranium enrichment, deconversion and fuel fabrication and provided detailed information on these processes. Commenters stated that hazards from the uranium conversio n and enrichment541 processes come from the handling of uranium hexafluoride, which is toxic and radioactive, and reacts with moisture to release toxic hydrofluoric acid. Commenters stated that the health and environmental risks of blending and fuel fabricati on facilities are similar to those for uranium conversion and enrichment. Commenters stated that chemical exposure is the primary hazard at deconversion facilities.

Leaks of Radioactive Material

Commenters stated that radioactively contaminated gases, liquids, and solids are byproducts of nuclear power plant operation. Commenters opined that leaks of toxic radioactive materials occur at a large number of power plants across the country. Commenters provided a chart that lists ongoing and uncontrolled tox ic leaks at 45 of 63 US nuclear power plants. Commenters referenced a list that summarizes more than 400 leaks and spills reported for individual plants. Commenters stated that the NRC has repeatedly tolerated unmonitored and uncontrolled leaks of radioact ively contaminated water into the ground and nearby waterways, which negatively impacts human health. Commenters stated that radionuclides are leaking into groundwater and into the Hudson River from the Indian Point nuclear plant in New York. Commenters ad ded that the EPA should protect groundwater to prevent contamination from nuclear facility emissions. Commenters stated that trading plutonium and other radioactive waste nuclides for carbon is poor energy policy.

Health Risks and Radiation

Commenters s tated that nuclear poses a health risk and the EPA did not consider the health costs of nuclear emissions. Both commenters stated that the proposed rule does not consider the hazards of low level nuclear emissions, including cancer and genetic effects. Com menters referenced a 1990s National Academy of Sciences study ("BEIR VIII report") that found cancers at low radiation doses in cases of in utero exposure, an increase in occurrence of cancers as the level of radiation exposure increased, and evidence for the heritable genetic effects of radiation. Commenters added that nuclear emissions can also have a negative impact on reproductive health. Commenters stated the report confirmed that there is no safe radiation dose. Commenters stated that woman and childr en are most vulnerable to nuclear emissions. Commenters provided data to support their claim that there is an increased risk of cancer in children living near nuclear power plants, including a 2008 KiKK Study commissioned by the German government, which fo und a 1.6 increase in the relative risk of total cancers and a 2.2 fold increase in leukemias among children under 5 years of age living within 5 km of all 16 nuclear plants in Germany.

Commenters stated that the EPA's current rules do not provide radiat ion emission standards. Commenters further stated that different divisions within the EPA rely on inconsistent lists of carcinogenic chemicals and some of the EPA lists do not include radionuclides as carcinogens. Commenters stated that unless the current Radiation Protection Standards are strengthened, EPA will continue to have lower standards of protection from radioactivity than from other pollutants.

Water Demand

Commenters stated that the proposed rule does not take into account the large water demand required by nuclear reactors to cool hot radioactive elements. Commenters questioned EPA's542 support of nuclear considering that water resources are becoming increasin gly limited due to rising temperatures and droughts caused by climate change. Commenters stated that the EPA did not consider the vulnerability of nuclear reactors to extreme weather events, including severe storms, warm water temperatures, draughts, and c oolant water scarcity, and did not consider the likelihood that these events could cause nuclear reactors to be derated or even shut down. Commenters noted that shut downs during periods of hot weather will result in declines in power output during times o f high electricity demand.

Commenters mentioned concerns about handling and use of uranium, as well as nuclear waste disposal.

Commenters stated that the EPA should prioritize working with other federal agencies to develop long

- term nuclear waste disposa l options promptly.

Effect of Shut

- Downs/Inflexibility of Nuclear
Commenters stated that EPA did not consider the potential that reactors may experience prolonged or permanent shutdowns due to accidents or other external factors, and how shut downs coul d affect state's ability to meet CO2 reduction goals. Commenters recommended that the EPA consider the relative risks of various approaches to reducing power sector emissions.

Commenters stated that the EPA did not consider the inflexibility of nuclear p ower. Commenters stated that reactors must operate close to 100 percent output and it takes a long time to change the power level significantly or bring reactors back on line. For these reasons, both commenters stated that nuclear plants are a poor match f or variable power sources. Commenters added that nuclear power is not resilient and requires an external power source to operate, requires large amounts of water, and is vulnerable to severe weather events.

Cost

Commenters stated that nuclear power plan ts should not be supported because they are too expensive. Commenters opposed any Federal program to guarantee loans to finance nuclear reactors, as such a program would be unaffordable considering the limited available federal resources. Commenters added that tax payers should not be asked to subsidize nuclear reactors. Commenters stated that EPA should calculate the true cost of nuclear power using recent marginal and levelized costs rather than overnight costs, which would show that nuclear is not
cost

- e ffective. Commenters stated that nuclear plants would not be considered cost effective if the real costs of uninsured liabilities were paid, instead of being governmentally capped by the Price

- Anderson Act, and if the real costs of waste management and lon g term disposal and storage were included. Commenters disagreed with the EPA's assumption of zero cost for nuclear plants under construction. Commenters stated that the EPA did not consider the huge costs of constructing new plants and decommissioning old ones or the cost of treating and storing waste. Commenters stated that the EPA did not consider the added cost of spinning reserves by large reactors and associated CO2 emissions where those reserves are in the form of gas turbines.

Commenters stated tha t as the price of renewable energy decreases and capital and O&M costs of nuclear rises, it will be impossible for nuclear energy to survive. Commenters added that the543 Clean Power Plan does not address how states are supposed to maintain the viability of t heir existing nuclear reactors in the face of the economic reality of the phase

- out of nuclear power. Commenters further stated that the EPA does not indicate how it determined that nuclear power could achieve carbon reductions at a reasonable cost. Commen ters stated that it appears EPA's assumption of reasonable cost is based on their assumption that nuclear has no carbon emissions, which is erroneous.

Commenters referenced a Union of Concerned Scientist study, which reported that the estimated value of l egacy subsidies to nuclear power were at least 7.5 cents/kWh. Commenters opposed the artificial subsidization of nuclear. Commenters added that the existence of public subsidies for nuclear, which include capital formation, shifting of accident risks, and the costs of waste management, is evidence that nuclear is not based on efficient market

- based determinations for energy options. Commenters stated that the costs represented by nuclear subsidies for retaining nuclear generation have not been analyzed. Com menters added that subsidies result in huge costs to tax payers. Commenters stated that the Ginna nuclear reactor in Rochester, NY, which is threatening to close, could cost households $1,000 each if it is subsidized to remain operational.

Nuclear Waste Disposal/Storage

Commenters stated that the EPA has no clear disposal plan for spent fuel from nuclear reactors. Commenters stated that EPA should ensure long term/permanent containment of nuclear waste is established. Commenters stated that there is no s olution for radioactive waste disposal. Commenters opined that there are no guarantees that radioactive chemicals will not be released into the environment. Commenters stated that nuclear waste has been accumulating in unsafe and unsecured storage for over 70 years. Commenters added that spent fuel is stored on

- site or at temporary sites near metropolitan areas. Commenters stated that the solution to the nuclear waste problem is to stop generating it.

Commenters stated that EPA should consider the hazards of interim storage, reprocessing, and final disposal, and provided a list of references related to these hazards. Commenters expressed concern about the high radioactivity of spent fuel. Commenters listed various risks of nuclear waste storage, including: groundwater seeping into the repository, corrosion of waste containers, leaching of radionuclides, and migration of contaminated groundwater towards areas where it might be used as drinking water or for agriculture. Commenters stated that the NRC refused to require hardened dry cask storage requirements, which would be safer, because of the financial burden this would impose on the nuclear power industry. Commenters added that the NRC and Blue Ribbon Commission put off any solution to the problem of nuclea r waste to the distant future and recommended that the NRC and the EPA provide advice to the administration and to congress to chart a more aggressive path to proper handling and disposal of spent nuclear fuel and other radioactive wastes.

Disproportiona te EJ Impacts on EJ Communities

Commenters stated that the impacts from nuclear energy production result in disproportionate health and environmental costs to environmental justice communities, including Native Americans. Commenters stated that mining and milling operations in the U.S. disproportionately affect indigenous populations. Commenters added that the majority of workers in mines are544 Native Americans who are employed in low paying positions, and Native American populations have suffered disproport ionality from uranium related activities.

Renewable Energy and Energy Efficiency Over Nuclear

Commenters stated that states can increase their use of renewable energy and energy efficiency to meet their targets, and reliance on nuclear is unnecessary. C ommenters suggested that renewables can be used to meet carbon reduction targets faster and at a lower cost than nuclear. Commenters referenced an analysis from Sovacool, Ramana, Jacobson et al, which concluded that wind energy is 96 times more effective a t displacing carbon than nuclear power, and other renewable sources range from 20 times to twice as effective. Commenters stated that nuclear power produces electricity with a mean of 66 grams of equivalent life

- cycle CO2 emissions per kWh, compared to ren ewable generators, which produce 9.5 to 38 grams of CO2 per kWh. Commenters added that although nuclear power produces less carbon emissions than fossil fuels, renewable energy is 2 to 7 times more effective at fighting climate change. Commenters reference d and summarized studies that show that renewable energy, when interconnected with adequate transmission infrastructure, can replace conventional base

- load power. Commenters stated that the term base

- load, as viewed by utilities and power companies, is an outdated concept, and renewable energy and energy efficiency can meet energy and capacity demand needs. Commenters stated that it is technologically and economically feasible to phase out CO2 and nuclear power at the same time, and it can be done at a rea sonable cost by 2050. Commenters described investments that were made towards expensive nuclear power plants in Texas, and stated that the investment money could have been used for renewable energy and energy efficiency programs.

Commenters stated that th e EPA underestimated the potential of renewable energy in the proposed rule, and referenced a report from the Union of Concerned Scientists to support their conclusion. Commenters provided a chart showing increasing future energy consumption by renewable e nergy sources. Commenters recommended that the EPA include realistic (more stringent) renewable standards in the proposed rule to encourage states to prioritize renewables over nuclear.

Commenters stated that by including nuclear in renewable energy stand ards and cap

- and

- trade programs, the growth of renewables would be discouraged. Commenters recommended that the EPA should encourage the shut down and decommissioning of nuclear power plants to incentivize the installation of renewable power generating cap acity and energy efficiency. Commenters stated that EPA should conduct a comprehensive assessment among alternative electric generating options, and such assessments conducted by others have shown that renewables, including wind and solar, and energy effic iency programs are preferable. Commenters stated that while it may appear less expensive to replace nuclear generation with natural gas than to use renewables, the EPA's task is to curb greenhouse gas emissions, which means reshaping market rules where nec essary. Commenters added that, when setting targets for the Clean Power Plan, the EPA must look at cost and feasibility, and energy efficiency measures and renewables are generally cheaper than natural gas for that purpose.

Potential of a Nuclear Disaster545 Commenters stated that support for nuclear is unacceptable considering the potential of catastrophes. Both commenters stated that the EPA should not trade greenhouse gas pollution from fossil fuel sources for the high risk of disasters that can occur with nuclear.

Commenters stated that the EPA's proposal to credit nuclear power plants at risk of closure keeps older nuclear reactors online longer and increases the risk of an accident, Commenters stated that EPA cannot ignore the risks posed by prolonged o peration of nuclear reactors. Commenters stated that the EPA provides no substantive analysis of the implications of supporting an aging fleet of nuclear reactors with significant safety problems. Commenters stated that the uranium fuel in nuclear reactors melts quickly without cooling water, and containment structures surrounding the reactors were not designed to hold melted fuel, as safety regulators previously considered a meltdown impossible. Commenters stated that the Nuclear Regulatory Commission deci ded not to impose requirements on nuclear plants that would protect the public from radioactive releases, such as the placement of filters on reactors.

Commenters stated that off

- site releases of fission products comparable or worse than those estimated to have taken place at Chernobyl and Fukushima could occur at U.S. plants. Commenters provided Chernobyl and Fukushima as evidence that nuclear power is dangerous and dirty, and should be excluded from the clean power plan. Commenters provided detailed inf ormation on the large scope and magnitude of the Chernobyl and Fukushima nuclear disasters, including their health and environmental effects. Commenters asserted that Fukushima illustrated the weaknesses of the "defense in depth" design. Commenters provid ed a list of nuclear disasters with references and suggested that EPA should consider the hazards posed by nuclear reactors.

Commenters stated that U.S. nuclear plants are vulnerable to accidents caused by natural disasters such as earthquakes, flooding, and extreme storms. Commenters stated that nuclear power plants are vulnerable to terrorist attacks, and government plans to defend nuclear plants from such attacks would not be effective. Commenters listed the potential impacts of a terrorist attack on a nuclear facility if terrorists had decided to attack a nuclear plant on 9/11. Commenters stated that spent fuel facilities at nuclear sites are particularly vulnerable to terrorist attacks. Commenters opined that no remedial actions have been required to f ortify spent fuel storage facilities, and even those measure may not be adequate. Commenters provided references on the potential consequences of various modes of terrorist attacks on spent fuel facilities.

Commenters stated that the EPA failed to describ e the risks and consequences of nuclear failures. Commenters stated that the EPA should consider a report by the National Academy of Sciences (NAS) on Lessons Learned from Fukushima, and even the NAS understated the risks to human health and the environmen t of a nuclear disaster. Commenters referenced a detailed risk and consequence assessment that Commenters submitted to NRS in December, 2013, which uses Indian Point Nuclear Power Plant as an example case of the potential impacts of a nuclear disaster. Com menters submitted a list of deficiencies of the NRC Draft Generic Environmental Impact Statement (DGEIS) which also apply to the EPA.

Commenters stated that the EPA failed to acknowledge the consequences of a spent fuel fire or release, and the NRC failed to properly assess the magnitude of the consequences. Commenters stated that even a partial loss of cooling water or pool level could create a disastrous radioactive546 plume, and a zirconium fuel rod cladding oxidation fire could release far more radioactiv ity than exists in the reactor core. Commenters provided references and detailed information concerning the potential impacts of spent fuel releases. Commenters stated that the spent fuel pool inventories at Fukushima were far less than exist at almost all U.S. spent fuel pools. Commenters provided results of a RASCAL 4.3 modeling of a spent fuel pool release from Indian Point Unit 2. Commenters detailed the results and potential wide

- spread impacts of a nuclear spent fuel pool release based on the RASCAL m odel. Based on the analysis, the commenters concluded that the Chernobyl disaster was actually much smaller in impact contamination and land area than the possible impact from a single spent nuclear fuel pool release from any US nuclear power plant site. C ommenters stated that due to certain conservative aspects of the RASCAL model, the actual contamination levels and doses may be much larger than calculated.

Commenters recommended that the NRC and EPA correct their methods of risk assessment, particularl y to account for events with high consequence. Commenters stated that the NRC employed flawed methodology in its assessment of risk to on site spent nuclear fuel, which incorrectly concluded that risk was low. Commenters opined that the NRC assigns low
pro babilities of occurrence to events with high consequences. Commenters stated that the NRC acknowledged that the probability of a nuclear event is unquantifiable or is subject to extreme uncertainty, and concluded that the analysis should therefore should b e based solely on consequences. Commenters added that terrorist actions are virtually impossible to predict. Commenters further stated that the NRC did not include the full time span of exposure to risk that exists with nuclear, especially considering the issue of delays in managing nuclear wastes, and the NRC incorrectly applied an annual risk factor. Further, the commenters stated that population growth will continue to bring urban areas closer to nuclear power plants, and many nuclear plants are already located near metropolitan areas.

Comments Related to At

- Risk Nuclear Plant s
Commenters opposed the EPA's inclusion of six percent of at risk nuclear generation in the goal setting equation. Commenters stated that the six percent at risk factor is not a g ood estimate in states where specific nuclear units are at risk in their entirety, and a shut

- down would result in a much greater percentage of lost nuclear generation than six percent. Commenters stated that nuclear units are not a fossil EGU covered unde r the CAA. In addition, the commenters stated that utilities investing in nuclear are at a greater financial and regulatory risk due to the capital cost and permitting and construction timeline associated with nuclear. To solve these issues, the
commenters recommended that the EPA remove nuclear from the Clean Power Plan, which would make the goal setting and compliance processes much simpler, and would make compliance less risky for the EPA, states and utilities.

Commenters stated that at risk nuclear gene ration sources may fail, and they are not reliable enough for including in state target emission rates.

Advances in Nuclear Technologies

Commenters opposed EPA's support of new technologies and advances in nuclear power. Commenters stated that small modul ar reactor (SMR) technologies present unique safety problems, including inspection of manufacturing and foreign plants, access to below ground547 facilities, integrated systems, waste management, retrieval of materials with potentially higher levels of radiat ion, flooding of belowground facilities, and common designs that create potential product

- side failure. Commenters suggested that mass recall of these technologies is likely. Commenters stated that the EPA would be misguided to believe that SMR technologie s will be a viable alternative to coal

- fired production of electricity. Commenters further stated that a Generation III reactor design received approval from the NRC, but not without objection from the NRC commissioners and technical staff.

Studies/Monito ring
Commenters stated that the EPA cannot promote nuclear energy as emissions free when it does not engage in any meaningful or comprehensive monitoring of nuclear emissions, including greenhouse gases and radionuclides. Commenters stated that the BSER mu st include an analysis of the non

- air quality impacts of nuclear. Commenters stated that the EPA must conduct meaningful studies on the impacts of nuclear energy before supporting it in the proposed rule.

Miscellaneous

Commenters supported EPA's proposal to recycle heat with Combined Heat to Power (CHP), but recommends that EPA include CHP electricity production for the waste at every U.S. power plant, including nuclear plants, which produce a disproportionate amount of waste heat. Commenters stated that a bout 63 percent of the energy generated in the U.S. is wasted in conversion losses.

Commenters stated that nuclear operators should not be allowed to sell carbon offset credits, as these credits could then be sold to utilities operating coal facilities, wh ich would defeat the purpose of the proposed rule.

Commenters stated that the EPA assumed that new reactors will be licensed and old ones relicensed; however, some plants may not receive licenses or extensions for technical and economic reasons.

Commenter s stated that nuclear generation should not be an acceptable control measure for purposes of state compliance with a BSER standard. Commenters stated that nuclear generation is a control measure that will generally fail to meet EPA's criteria for a state p lan to be approvable, and if EPA finds that nuclear generation is not practically enforceable, and thus ineligible for inclusion in a state compliance plan, then it should not be included in the building blocks. Additionally, the commenters stated that the costs associated with nuclear energy generation as a control technology under the BSER building block framework are unreasonable and far exceed costs of other technologies included in the BSER. Commenters recommended that EPA remove nuclear generation as a compliance option under BSER.

Commenters stated that campaign contributions and political favors are the reason that the EPA supports nuclear.548 Comment 9: Commenters recommended removing all existing non

- fossil fuel generation from the BSER in a manner that treats low

- and zero

- emitting sources similarly.

Response 9: EPA acknowledges the comments and has decided to treat all low

- and zero

emitting sources similarly in the final rule. As such, the BSER for the final rule will not include either of the p roposed provisions for existing and under construction nuclear units in the setting of state goals. Please see section V.A of the preamble for further discussion of the decision to exclude nuclear power from BSER. Also see sections VIII.K and VIII.G of t he preamble for further discussion of the flexibility states have in developing state plans to utilize nuclear generation and ensure compliance.

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

Commenters recommended removing all existing non

- fossil generation from the BSER formula and starting with a fossil intensity standard that is adjusted by the new resources and changes delivered by the 4 building blocks. Commenters said this has the effect of removing both exist ing

non

- hydro renewables and the partial inclusion of nuclear and allows all non

- fossil resources to be treated the same. While Commenters stated they understand the concern of increased CO2 emissions if existing nuclear plants retire, and they asserted ea ch plant should be evaluated by state and federal regulators individually. Commenters said public safety is the institution's foremost concern regarding nuclear power. Commenters said many NRDC members live within the emergency planning zones (i.e., within a ten mile radius) of nuclear power plants. Commenters said existing nuclear plants need to implement the full set of post

- Fukushima accident safety upgrades and complete the intensified flood and seismic risk reviews required on a rolling basis since the Fukushima accident

- as well as any subsequent plant safety modifications. Commenters were concerned about heavy reliance on nuclear energy, given its consistently poor economics and the longstanding, unsolved problems for nuclear energy: reactor safety, r adioactive waste, and nuclear weapons proliferation.

Commenters recommended that states and regions can choose to adopt policy approaches that assist older non

- fossil resources to remain economic, taking into account public safety impacts.

Commenters suppo rted the inclusion of under

- construction nuclear plants in target setting.

Comment 10 : Commenters recommended the EPA remove support for nuclear energy in the Clean Power Plan.

Response 10 : EPA acknowledges the comments and has determined that the BSER fo r the final rule will not include either of the proposed provisions for existing and new nuclear units in the setting of state goals.

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

Commenters opposed the use of nuclear energy due to nuclear costs, extensive legacy subsidies, and future environmental issues.549 Commenters provided general opposition to nuclear energy due to its cost, risk of usage, and potential waste storage and cleanu p concerns.
Commenters opposed the use of nuclear energy as a part of the answer for carbon pollution due to concerns of radiation and waste storage.

Commenters suggested the EPA to exclude nuclear energy as alternatives to be encouraged, because of the concerns of nuclear waste storage, pollution from uranium and immense water
usage.
Commenters opposed nuclear energy as an option for CO2 emission reduction due to nuclear energy's risks to human health and communities.

Commenters opposed the use of nucl ear reactors as a dangerous source of energy because of the concerns for unsafe and improper storage of radioactive material and waste.

Commenters disagreed that nuclear power is a solution to reduce carbon emissions. Commenters believed that nuclear powe r production could be replaced by renewables and conservation/efficiency efforts. Commenters suggested the EPA to consider broader environmental harms caused by the nuclear industry, and also periodically reassess generators for the Clean Power Plan.

Comm enters stated that nuclear power should not be continuously supported since it is the most expensive, the most delayed, and dangerous power. Commenters mentioned the concerns in uranium mining and processing, nuclear plant building, transportation of urani um and used radioactive wastes.

Comment 11: Commenters stated power purchase agreements should be included as a compliance option when power is purchased outside of a given state’s boundaries.

Response 11: EPA acknowledges the comments and provides a det ailed discussion of provisions for the treatment of interstate effects in state plans in section VIII.L of the preamble.

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

Commenters recommended that power purchase agreements b e allowed as a compliance option. Commenters said in addition to RE in Building Block 3, zero

- emitting nuclear energy is a compliance option afforded to states; however, in

- state nuclear energy remains unavailable in several states due to bans on nuclear e lectricity generation. Commenters said in Kentucky, KRS 278.600

- 610 states that a nuclear power reactor cannot be certified by the state Public Service Commission (PSC) unless a disposal site for the high

- level nuclear waste is available by the time the pl ant needs disposal capacity. Commenters said the PSC also could not certify the project unless it finds that the cost of high

- level nuclear waste disposal 'is known with reasonable certainty.'550 Commenters concluded Kentucky's only viable option for nuclear energy to reduce CO2 emissions from the electricity sector is the utilization of imported nuclear capacity. Commenters said until such time that nuclear generating capacity is an in

- state option, the commenters recommend that EPA allow states to utilize po wer purchase agreements (PPAs) from zero/low emitting sources such as nuclear as a compliance option. Commenters said this same recommendation applies to PPAs for imported renewables; this approach appropriately provides credit for GHG reductions at the po int of consumption. Commenters stated EPA should include allowing nuclear PPAs to be considered toward the investing utility's compliance determination; this approach supports efficient compliance and recognizes that customers' utility rates funded these r esources. Commenters said specifically, Alliant Energy's subsidiary IPL currently has a nuclear PPA through February 2025 for energy from the DAEC. Commenters said allowing IPL to include the DAEC PPA as a compliance measure would incent possible continued operation of DAEC and future extension of this PPA contract.

Commenters stated JEA, in anticipation of future environmental regulations, secured a 20

- year PPA for 200 MW of capacity and energy from the two under construction units at Vogtle Nuclear Plant in Augusta, Georgia, expected to be available in 2017

- 18. Commenters said JEA has also purchased an option for up to 440 MW of nuclear capacity and energy from a plant under consideration in South Carolina. Commenters said under the proposed Clean Power Plan, JEA would not see the CO2 benefits of either of these, as the zero

- carbon credits would stay in the states where they are generated (Georgia and South Carolina). Commenters said this aspect of the regulation greatly reduces the value of any clean e nergy source not located within Florida.

Commenters continued JEA remains involved in discussions with other Florida utilities regarding siting and constructing new nuclear plants in Florida; with the current lead

- time for nuclear construction, no new asse ts can be expected in the state before the mid

- to

- late 2020s, too late to support the CPP required ramp down beginning in 2020.

Commenters stated while the initial capital cost for a nuclear plant is high, it compares favorably to other generation on a Lev elized Cost of Energy (LCOE) basis, due to the low and steady price of fuel. Commenters said municipal utilities such as JEA cannot however make a commitment to an alternative energy supply, such as nuclear, until there is a clear and final regulatory

man date, because any additional costs directly impacts their customers. Commenters said with a final approved state plan conceivably no earlier than June 2018 (assuming applicable extensions), there is not enough time to implement any plan before the mid

- 2020 s for a conventional energy source (NGCC), and 2030 if nuclear is a component of the solution.

Commenters stated EPA should clarify the expected accounting for interstate transfer of energy and CO2 emissions and provide multiple options to states for deali ng with those interstate energy transfers. Commenters said EPA should also work for streamlined approval of new nuclear units to demonstrate support for zero carbon baseload generation.

Commenters stated that the rule offers no "credit" or recognition of nuclear power plants' zero

emissions generation to owning partners outside of the states in which these plants are located. Commenters stated that the rule does not appropriately recognize nuclear assets as a whole or to its owner and their customers who p ay for these zero

- emitting generation units. Commenters stated that their customers pay for the investment in nuclear, and they deserve the zero

- emissions551 credit for this commitment. Commenters stated that the final rules should ensure that the states
esta blish credit for compliance purposes by allowing the MWh obtained from nuclear power, as delivered based on ownership, to those corresponding states; such an approach would directly serve and support EPA's principal objective

- ensuring continued operation of the nation's largest source of carbon

- free generating capacity.

Commenters stated that states that own and import generation from a nuclear facility that is located in another state should get credit as if the nuclear generation is located within the state receiving the import. Commenters remarked that utilities and customers in the importing state have made significant financial investments in these nuclear units and should receive appropriate credit for developing nuclear generation. Commenters conte nded that this treatment of nuclear units, located outside the state such units serve, also ensures that the customers who are actually using the generation will receive benefits associated with nuclear generation under the Proposed Rule. Commenters conten ded that this is a fair methodology that would credit those states that made an investment in carbon

- free nuclear generation without harming exporting states.

Comment 12: Commenters stated EPA should consider the relicensing process for existing nuclear units when setting the final goal in 2030.

Response 12: EPA acknowledges the comments and has determined that the final rule will not include nuclear generation in the goal

- setting methodology. Relicensed units are part of the fleet of existing power gene ration and relicensing at the current generation level will not result in any decrease in fossil

- fuel fired generation. However, the final rule allows relicensed facilities to count towards compliance if there is an associated uprate in their capacity. Pr eamble sections V.A and VIII.K provide a discussion of how incremental generation from new and uprated nuclear power is addressed as approvable actions to include in state plans.

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

Commenters recommended that license extensions should not be assumed to be automatic, particularly for nuclear plants beyond 60

- year license limits.

Commenters recommended that the EPA consider the lifetime of existing nuclear units where many units w ill reach their 60

- year license limit by 2029. Commenters said three units with licenses scheduled to expire prior to 2030 are already in their extended period of operation and would need to obtain additional license extension to extend their operating liv es to 80 years (known as subsequent license renewal). Commenters said though it is expected that many reactors will apply for and receive license extensions out to 80 years, there is no level of certainty at this time.

Commenters stated there is significan t uncertainty as to whether the Nuclear Regulatory Commission (NRC) will extend the operating licenses for each nuclear unit as assumed. Commenters stated license renewal is a long and multifaceted process which is based on submittals of complex studies to the NRC and its detailed review. Commenters encouraged EPA5 52 to consider evaluating a lower bound case and develop a sensitivity analysis on the potential future of nuclear power generation capacity.

Commenters stated the current U.S. fleet of operating nuc lear reactors stands at 100 units; these reactors were originally licensed for 40 years. Commenters said license extension (for an additional 20 years) has been applied for and granted in many cases, although a number of plants have shut down prior to the end of their licensed lifetime.

Commenters stated there are 28 units that have licenses scheduled to expire before 2030; of these, 18 units have pending applications submitted to extend their license from 40 to 60 years.

Commenters stated due to on

- going economic pressures and the need for many plants to obtain license extensions, there is significant uncertainty as to the number of reactors that will be operating in 2030; several nuclear plants have already shut down prio r to their license end date. Looking beyond 2030, an additional 50 units have licenses expiring between 2030 and 2040.

Commenters stated there also is uncertainty that either companies will decide not to seek license extensions due to economic considerati ons, or that the Nuclear Regulatory Commission may not approve further extending the lifetimes of these units. Commenters said as a consequence, the estimate EPA developed of available non

- emitting nuclear power may be an overestimate. Commenters recommend ed that EPA consider a lower bound case and a sensitivity analysis on the potential nuclear power capacity.

Commenters stated given the important role nuclear generation plays in providing zero

emissions power, the final guidelines should help incent the continued operation of all existing units by defining as "new" nuclear capacity any nuclear plants that have been relicensed to operate beyond 60 years

- and any plants that have not received license extensions to operate beyond their original 40

- year licens e term before 2012

- and allowing their full generation to be included in the state's compliance calculation, rather than assume that every nuclear unit will operate through at least 2030.

Commenters stated over two

- thirds of the nuclear fleet will reach the end of their first license extension period soon after the 2030 compliance deadline for this program; currently, seventy

four of the 100 operating nuclear units have already received NRC approval to operate after 40 years, with the remaining 26 units eith er under NRC review or expected to file for review. Commenters said approximately 31 GW of nuclear generating capacity will reach the end of their 60

- year licenses between 2029 and 2035

- thus requiring plant shutdown unless NRC approves a second license ext ension. Commenters said without further significant financial investments and licensing action by the licensee, these units represent a power generation source with carbon

- free emissions that are truly "at risk" of shutdown. Commenters said as states are legally obligated to demonstrate continued compliance with the final state goals, sustaining these emission reduction targets will rely heavily on the continued operation of the existing nuclear facilities. Commenters said recognizing these relicensed unit s as new units will not delay or dilute a state's 2030 emission reduction targets, but it will contribute to ensuring that the state goals can be maintained; the impact on U.S. CO2 emissions of losing so much nuclear553 generation in such a short period of ti me should be reason enough to incent the continued operation of these units provided they can meet the necessary requirements.

Commenters stated much like the process for power uprates, NRC's license renewal review is a detailed process that includes signi ficant capital investment and safety reviews, and typically takes about 30 months. Commenters said according to the NRC's 1995 license renewal rule, extensions of up to 20 years can be granted, provided the company demonstrates to NRC that it will manage a ging issues effectively during the renewal term. Commenters said the review also addresses the potential environmental impacts of continued plant operation. Commenters said in order to continue to run beyond their initial 40

- year license, nuclear plants mu st operate as if they were new plants, subject to the same safety and operational requirements. Commenters said it is also likely that over the course of their 60

- or 80

- year lives, nuclear plants will have had most if not all of their operating components and systems replaced, effectively rendering them

new.
Commenters stated the NRC Commissioners recently endorsed the use of existing, well understood 10 CFR 54 regulations to establish a basis for nuclear units to apply for a subsequent license extension t o operate beyond 60 years; these existing regulations will be supported with enhancements to existing license renewal tools and guidance documents, adding additional aging

- related system reviews and associated upgrades.

Commenters stated as a specific exa mple, the NRC licenses for Dominion's existing nuclear stations begin to expire in 2032; Dominion has initiated an evaluation of the life of critical components, necessary equipment upgrades to preserve unit efficiencies and other modifications needed to e nsure the safe and reliable long

- term operation of these facilities beyond the current license period. Commenters said the preliminary cost estimate for Dominion's Surry nuclear power station provides early evidence of the lead time and equipment upgrades needed to secure NRC relicensing to operate beyond the current 60

- year period. Commenters said while costs will vary for each type of reactor design and location, Dominion's projections for the Surry station, a typical pressurized water reactor, are compar able to the costs of constructing a new combined cycle natural gas unit.
Commenters stated the scoping analysis shows costs in range of $0.5 billion to $1.5 billion, dependent upon the actual components needing to be replaced to extend the operational perf ormance required for a subsequent twenty

- year license extension; it is reasonable to expect that such items may include (1) major components, such as steam generators and heat exchangers; (2) aging systems, such as analog control systems and ventilation sy stems; (3) high voltage power cables; and (4) aging structures.

Commenters stated EPA's plan recognizes the contribution of new nuclear units to help achieve the reductions in carbon dioxide in the power sector by allowing states to use generation from the se facilities in their 111(d) compliance plans; the identical policy justifications are applicable to nuclear units relicensed to operate past 60 years.

Commenters stated the continued operation of these zero

- emitting resources require significant financi al investments that are comparable to building new combined cycle gas units, yet without the associated carbon emissions that would be associated with the gas units. Commenters said554 Dominion has under construction two 1,300

- megawatt natural gas combined cy cle units; those facilities cost an estimated $1.2 billion, required less than two years to obtain the necessary permits, and will be constructed within three years.

Commenters stated the NRC relicensing time horizon requires that utilities begin planning today to determine if a subsequent license renewal is a viable option; without an appropriate incentive to proceed with the NRC process, the lowest cost option for new or replacement base load generation, without regard to carbon emissions, is a new natura l gas combined cycle unit. Commenters said as such, these relicensed nuclear units deserve to be eligible for compliance in 111(d) plans because of their zero carbon profile and their significant contribution to maintaining the stability of the electric gr id.

Commenters stated that the EPA should be cautious about taking the new, under

- construction nuclear power for granted. Commenters also stated that it may be impossible to solicit subsequent license renewal for the old facilities out to 80 years for comp liance.

Commenters suggested that EPA should assume that no existing nuclear unit will operate beyond 60 years, and consider any generation from an existing nuclear unit that in fact does receive a license extension beyond 60 years as new nuclear and allo w the states to include 100 percent of that generation in compliance demonstrations. Commenters stated that while adopting this approach will not guarantee that existing nuclear units can or will be able to continue operation beyond 60 years, it would prov ide a significant economic incentive to do so.

Commenters supported re

- licensing efforts at operating nuclear plants that will allow them to operate beyond 60 years, and stated that the productive lifetime of nuclear plants must be maximized.

Commenters stated that significant uncertainty remains to whether existing nuclear units would be permitted to operate beyond their licensed 60

- year lifetimes, and that permitting of nuclear reactors is under the authority of the NRC and is not under the control of t he states.

Commenters stated that the EPA assumes that the states can cause about 6 GW of "at risk" nuclear plants to continue to operate in 2029 and beyond. Commenters stated that an analysis of existing nuclear power plants shows that 28 units have lice nses which will expire before 2030, and only the NRC has authority to approve license extensions, so keeping those 28 plants running is something that a state cannot control. Commenters stated that these 28 units represent considerably more than 5.8 percen t of the nuclear fleet, and recommends that the EPA should at least consider a case in which a large amount of existing nuclear capacity is forced to retire before assuming that base

- load coal capacity can be eliminated.

Commenters stated that in the deve lopment of the state goals through application of BSER, the EPA assumed the license renewal of all existing nuclear units up to a final life span of 60 years; however, EPA cannot and should not presume a licensing outcome that is presently unknown. Comment ers stated that the EPA's final 111(d) rule should exclude nuclear units whose license expires prior to 2030 from its calculation of BSER; further, consistent with the EPA's treatment of new nuclear plants, any unit whose license expires prior to 2030, and receives a license555 renewal approval after 2012 should be considered a "new" nuclear unit for the purpose of compliance.

Commenters stated that the EPA has made a huge, though implicit, assumption about future licensing actions of the Nuclear Regulatory C ommission (NRC) in relation to existing nuclear power plants, by assuming that essentially all existing nuclear plants whose licenses expire before 2030 will have their licenses extended. Commenters stated that, in reality, reactors representing about 30 p ercent of nuclear generation capacity, are not currently licensed to operate in the year 2030 or beyond. Commenters stated that the EPA is basically making assumptions about nuclear safety and spent fuel generation in an area that is reserved by law for th e NRC

- without any discussion of its rationale. Commenters also stated that the costs of spent fuel storage over 300 years, including repackaging of the nuclear waste are estimated to be about $180 billion, and that the EPA is obliged to consider the cost s of indefinite storage of nuclear wastes in its consideration of whether existing nuclear plants should be included in the best system of emission reduction. Commenters concluded that to be technology neutral and to respect the separation of functions of the EPA and the NRC, the EPA should assume in its electricity generation analysis for the purpose of the Clean Power Plan that licenses of existing plants would expire as presently scheduled. Commenters also stated that the EPA should drop existing nuclear power plants from its method of computing target rates of CO2 emissions for future dates.

Commenters stated that the EPA should refuse to accept reactors whose licenses have not been extended beyond 2029 in state implementation plans, because states can no more presume to second guess NRC license extension decisions than can the EPA. Commenters stated that this should be explicit in the final rule. Commenters also stated that states that use existing nuclear units whose licenses expire after 2030 will be faced with the possibility of sudden increases in CO2 emissions at that time, and that the EPA should put states on notice that they will be expected to maintain compliance immediately in the postreactor shutdown period. Commenters recommended that the EPA include the following guidelines to states that include reactors whose licenses are due to expire after 2030: "

- States will be expected to plan in advance and implement measures to maintain the target emission rates after the shutdown of nuclear power re actors. For instance, states could do this by implementing renewable portfolio standards and efficiency measures beyond those used to calculate the target rates."

Commenters stated that the age of the nuclear fleet is a key factor in the operating cost an d maintenance issues contributing to retirement decisions, but EPA cannot assume that every aging nuclear plant will be granted additional licenses by the NRC to operate past sixty years. Commenters stated that because the second license renewal is beyond the control of any given operator or state, it would be unfair to build such an assumption into state goals. Commenters stated that it may also be useful for EPA to include in its nuclear preservation compliance all units granted license renewals to operat e beyond forty years; as of June 2, 2014, 73 of 100 operating units had received such NRC approval and 27 units were under review or expected to file.

Commenters stated that under building block three, the EPA cannot implement the nuclear provisions becau se the NRC has authority over the permitting, re

- permitting, commissioning and decommissioning of nuclear power plants; nor does EPA have authority to extend the permitting556 life of a nuclear power plant, and further it is equally misguided to assume that a ll existing nuclear power plants will ultimately be relicensed. Commenters stated the opposite is true as demonstrated in, the recent decommissioning of the Vermont Yankee nuclear power plant, growing public concern of the safety of nuclear power plants af ter the Fukushima Daiichi nuclear disaster in Japan and the relative age of their nuclear power plants. Commenters stated that the average age of U.S. commercial reactors is approximately 33 years and commercial nuclear reactors are licensed to operate for 40 years by NRC; New York has one of two of the oldest operating reactors in the United States, Nine Mile Point 1, which entered commercial service on December 1, 1969.

Commenters stated that according to EIA, the nuclear power industry is considering su bmitting applications to extend the operating licenses of existing plants for an additional 20 years that would allow them to continue operating beyond 60 years. Commenters observed that to date, no reactor has applied for or received a license extension f rom the Nuclear Regulatory Commission (NRC) beyond 60 years, as most U.S. reactors will not reach this point until after 2030. Commenters stated that extending reactor licenses beyond 60 years raises important safety issues that will need to be carefully c onsidered by the NRC, and are outside of the EPA's jurisdiction in this venue. Commenters concluded that if any existing reactors do receive an additional license extension, they do not believe these should be counted as new generation for the purposes of compliance.

Comment 13: Commenters expressed general support for nuclear power.

Response 13: EPA acknowledges the comments and has determined that the BSER for the final rule will not include the provisions we had proposed for nuclear units in the settin g of state goals, and will allow incremental generation from new nuclear units and uprated units to be applied towards compliance. Please see section V.A of the preamble for further discussion of the decision to exclude nuclear generation from BSER. Also see sections VIII.K and VIII.G of the preamble for further discussion of the flexibility states have in developing state plans to incentivize nuclear generation and ensure compliance, as well as, the requirement that states consider system reliability in plan submittal, and a discussion of a Reliability Safety Valve.

The following are summaries of the specific public comments under this comment:
Commenters expressed general support for nuclear power as a contributor towards decarbonization. Commenters stat ed that the continued use of existing nuclear power plants, as well as the completion of those under construction, will provide significant quantities of zero

carbon generation, displacing fossil fuel generation and reducing emissions. Commenters also
stat ed that nuclear power is a critical zero

- carbon generation source that provides baseload electricity. Commenters stated that nearly 115 GW of nuclear capacity in the U.S. avoids carbon emissions of around 245 million metric tons per year, so closing just o ne third of these nuclear plants would cause CO2 emissions to rise by 8 percent.

Commenters stated that the impact of nuclear plant closures can have significant emission repercussions. For example, commenters noted that the San Onofre nuclear facility in California557 generated an average of 16,000 GWh per year of zero

- carbon electricity , representing 8 percent of electricity generation in California. Last year, the facility's two generators were shut down, and the commenters stated it would require nearly 7,200 MW of zero

- carbon generation to replace San Onofre. Commenters stated that, i n the near term, the mix of resources covering for the plant is adding 6 million metric tons of carbon emissions per year.

Commenters stated that the proposed Clean Power Plan recognizes the critical contribution that existing nuclear facilities make to l owering CO2 emissions from what they would otherwise be without this source of zero

- emission generation. Commenters stated allowing states to take credit for keeping in place the 5.8 percent of the country's nuclear fleet that the Energy Information Agency (EIA) has deemed to be "at risk" made possible by also including 5.8 percent of a state's nuclear generation as part of that state's target, the Proposed Rule creates an important incentive for states to find ways to keep existing nuclear facilities opera tional.

While commenters took no position on the particularities of the proposed approach, the commenters applauded the Clean Power Plan's inclusion of nuclear power as a significant factor in the decarbonization equation and to provide states an incentiv e to develop policies that allow facilities that otherwise might close to safely stay open as an emission prevention measure.

Comment 14: Commenters asked the EPA to consider providing some limited compliance value for existing nuclear generating capacit y as an incentive.

Response 14: EPA acknowledges the comments and has determined that the BSER for the final rule will not include either of the proposed provisions for nuclear units in the setting of state goals, and allows incremental generation resulting from uprated power and new nuclear generation to count towards compliance. Please see section V.A of the preamble for further discussion of the decision to exclude nuclear generation from BSER and section VIII.K for consideration of nuclear uni ts in state plans.

The following are summaries of the specific public comments under this comment:
Commenters proposed ways that the EPA could provide additional compliance value by altering the assumption of a 90 percent capacity factor for nuclear power plants. Commenters recommended that the EPA should consider ways to provide at least some limited compliance value for existing nuclear generating capacity, as an additional incentive to the states to preserve that capacity. Commenters noted that its calcu lations, EPA assumes a uniform 90 percent capacity factor for all nuclear power plants, existing and new. Commenters stated that, while the U.S. nuclear fleet, on average, has consistently achieved capacity factors in the 90 percent range for the last 15 y ears, the average lifetime capacity factor of the 100 nuclear plants now operating is 81.6 percent through 2013. Given this, Commenters recommended that the EPA consider as an option allowing states to determine an appropriate baseline level of existing nu clear generation against which they could provide limited compliance value, such as:558 • Counting toward compliance MWh produced by any nuclear plant above an 81.6 percent capacity factor; or

• Allowing nuclear MWh above the lifetime capacity factor of a state's nuclear generating units to be counted toward compliance; or

• Allowing a state to count toward compliance any nuclear MWh produced above the industry's three

- year rolling average. Commenters noted that a single

- year baseline may not be appropriate for nucl ear power plants, which typically shut down only every 18

- 24 months for refueling and maintenance outages; if the baseline year happens to be a refueling outage year, it may understate a nuclear generating unit's long

- term performance. For this reason, the commenters stated the industry typically uses three

- year rolling averages when evaluating nuclear plant performance.

Commenters concluded that creating ways for states to capture limited compliance value for existing nuclear generating units would directl y serve and support EPA's principal objective

--- ensuring continued operation of the nation's largest source of carbon

- free generating capacity.

Commenters believed that EPA must revise its proposal in order to value nuclear power appropriately, and to ensu re that states have a sufficient incentive to preserve the existing nuclear fleet and to build the new nuclear energy capacity that will be required to achieve meaningful reductions in CO2 emissions. Commenters recognized that it is a challenge to recogniz e and incorporate existing nuclear generating capacity into the structure of the 111(d) rule as proposed. Commenters said nuclear power plants are unique and uniquely valuable among carbon

- free sources of electricity because they typically produce very lar ge quantities of carbon

- free electricity compared to other carbon

- free sources. For this reason, commenters said incorporating the output from operating nuclear power plants into any carbon control program based on emission rates would create potential com pliance challenges. Commenters believed these issues warrant further consideration and discussion among EPA and stakeholders as EPA develops the final rule, and commenters looked forward to working with the Agency.

Comment 15: Commenters stated that nucle ar facilities are critical to the reliability of the electric grid.

Response 15: EPA acknowledges the comments and has determined that the BSER for the final rule will not include either of the proposed provisions for existing and under construction nuclea r units in the setting of state goals. Please see sections VIII.K and VIII.G of the preamble for further discussion of the flexibility states have in developing state plans to incentivize nuclear generation and ensure compliance, as well as, the requiremen t that states consider system reliability in plan submittal.

The following are summaries of the specific public comments under this comment:559 Commenters stated that nuclear power is the largest source of zero

- carbon electricity and is vital to grid reliabil ity. Commenters also stated that nuclear power produces about 20 percent of U.S. electricity, and according to the EIA, it made up more than 60 percent of zero

- carbon electricity sources in 2013. Commenters stated that without nuclear power plants operatin g in 31 states, carbon emissions from the U.S. electric sector would be approximately 25 percent higher. Commenters stated that nuclear facilities are critical to the reliability of the electric grid because they operate continuously and are available unde r a wide range of weather conditions. Commenters cited one example: the deep freeze brought on by the polar vortex in January 2014 resulted in more than 35,000 megawatts of outages, and during this time nuclear units accounted for only three percent of f orced outages despite making up 12 percent of total capacity that operated at 90 percent capacity through the polar vortex event.

Commenters stated that the EPA has correctly acknowledged that nuclear facilities across the country are at risk of premature retirement. Commenters concluded that a key reason for this risk is the absence of a carbon policy that would value the carbon

- free electricity that nuclear plants produce, thereby avoiding emissions from fossil

- fired plants.

Comment 16: Nuclear power is the largest zero

- carbon electricity source and is vital to grid reliability.

Response 16: EPA acknowledges the comments and has determined that the BSER for the final rule will not include either of the proposed provisions for existing and under constr uction nuclear units in the setting of state goals. Please see sections VIII.K and VIII.G of the preamble for further discussion of the flexibility states have in developing state plans to incentivize nuclear generation and ensure compliance, as well as, t he requirement that states consider system reliability in plan submittal.

The following are summaries of the specific public comments under this comment:
Commenters stated that the proposed guidelines fail to recognize the role of nuclear in reducing CO2 e missions and to the reliability of the electric grid. Commenters stated that EPA's goals cannot be achieved without existing nuclear fleet, yet the proposed guidelines do not create real incentive to maintain existing nuclear plants. Commenters mentioned t hat the proposed guidelines greatly underestimate the quantity of nuclear generation that is actually at risk in some states, while overstating the amount at risk in other states. Commenters suggested EPA to remove the 6% at

- risk factor from goal calculati on based on its interpretation of BSER. Commenters also suggested EPA to consider EEI's comments regarding alternative approaches for incenting the continued operation of existing nuclear generation capacity.

Commenters supported that nuclear energy, as A merica's largest source of low

- carbon electricity, must be part of the solution for reducing carbon emissions. Commenters also suggested that the final rule must give states flexibility to utilize existing and new nuclear units in an effective
manner to co mply with carbon emission reduction.

Commenters mentioned that EPA did not include grid reliability measures that could reduce operating reserve requirements in the BSER, which would directly reduce CO2 emissions.560 Commenters also suggested that incorporat ion of storage technologies, such as super

- capacitors, compressed air, and battery storage, all of which have rapid ramp time characteristics, could reduce the need for spinning reserves, improve fossil fuel efficiency, and reduce CO2 emissions.

Commenters stated that nuclear energy is America's largest source of low

- carbon electricity. Commenters stated that today, nuclear energy accounts for approximately 63 percent of America's carbon

- free electricity

- three times more carbon

- free electricity than hydropower, nearly five times wind energy and about 85 times that contributed by solar generated electricity.

Commenters stated that by 2040, U.S. nuclear generation could decline by over 40 percent as nuclear units reach the end of their operating l icenses and are retired. Commenters stated that such a major reduction in low

- carbon generation would make it exceedingly difficult to meeting the nation's climate goals. Commenters also stated that the CPP as proposed only marginally recognizes the import ance of maintaining the existing nuclear generation capacity and fails to strongly encourage the expanded use of the nation's largest source of low

- carbon electricity generation.

Commenters stated that nuclear energy has numerous attributes including roun d

- the

- clock production of large amounts of electricity to help stabilize the electric grid; clean

- air compliance; forward electricity price stability; fuel and technology diversity; and high

- paying jobs at facilities that can withstand extreme natural and man

- made events.

Commenters stated that the EPA fails to recognize the significance of all zero carbon emitting generation sources including existing nuclear and hydroelectric generation in the proposed rule, and as a result, many states that have histori cally invested in zero or low carbon emitting generation sources have to meet goals that are lower than those for states that have not made these investments. Commenters stated that South Carolina, the only U.S. state that generated the majority of the ele ctricity used within its borders from nuclear power, has to meet the third largest percent reduction in CO2 emissions (51 percent).

Commenters stated that the EPA plan should continue to have generation from existing nuclear as a component of the low emis sion building block as nuclear generation has essentially zero CO2 emissions. Commenters stated that nuclear generation also provides important fuel diversity and electric system reliability benefits and are an important part of the state's portfolio, in t erms of maintaining lower overall CO2 intensity of the generation fleet.

Comment 17: Commenters stated preservation of existing "at

- risk" nuclear capacity is not a valid system of emission reduction.

Response 17: EPA acknowledges the comments and has dete rmined that the BSER for the final rule will not include the proposed provisions for existing nuclear units in the setting of state goals. Please see section V.A of the preamble for further discussion of the decision to exclude nuclear generation from BS ER.
The following are summaries of the specific public comments under this comment:561 Commenters stated that the preservation of existing "at

- risk" nuclear capacity is not a valid system of emission reduction. Commenters stated EPA may not determine the stri ngency of state guidelines based on the application of beyond

- the

- unit systems of emission reduction, such as increased generation from nuclear generators and other non

- stationary sources. Commenters said consequently, neither generation from under

- constru ction nor generation from existing nuclear reactors may be used to determine the stringency of state goals; however, even assuming that EPA is not prohibited from basing the stringency of state guidelines on beyond

- the

- unit measures, EPA's proposal to incl ude 'at

- risk' nuclear generation in the state goal calculation would violate the plain language of section 111.

Commenters continued stating as EPA admits in its rate

- to

- mass goal conversion technical support document, 'the continuing operation of existing resources under building block three (RE and at risk nuclear) is not assumed to affect historical generation levels.' Commenters said in other words, preserving existing nuclear capacity that was operating in 2012 does not enable existing EGUs that were operating in 2012 to reduce their emissions below the baseline; rather, at best, the preservation of existing nuclear capacity only allows existing EGUs to continue operating at the same levels as in the past. Commenters said therefore, 'preservation' or c ontinued operation of existing nuclear reactors cannot be considered a 'system of emission reduction' for existing EGUs, as defined under the CAA; consequently, EPA's proposal to incorporate supposed emission reductions from preserving existing nuclear cap acity into state emission guidelines violates the plain language of the Act and should be withdrawn.

Commenters stated that the EPA's designation of "at risk" nuclear generation as a component of BSER exceeds the agency's authority under the CAA. Although the commenters disagreed with the EPA's approach to determining BSER, they stated that under EPA's reading of the statute, the addition of new nuclear generation could be thought of as a "system of emission reduction" because it could allow existing fossil

- fueled EGUs to reduce their CO2 emissions relative to their historic emissions, but the preservation of existing nuclear capacity cannot even meet the EPA's strained definition of the term. Commenters stated that, as the EPA admits in its rate

- to

- mass gui dance document, "the continuing operation of existing resources under building block three (RE and at risk nuclear) is not assumed to affect historical generation levels." In other words, the commenters stated, preserving existing nuclear capacity will not allow existing EGUs to reduce their emissions; the preservation of existing nuclear capacity will only allow existing EGUs to continue operating at the same levels as in the past. Commenters concluded that, under the plain language of section 111, the "pr eservation" of existing nuclear generation cannot be considered a "system of emission reduction."

Commenters stated that the EPA's state goal setting methodology based on retaining at

- risk nuclear capacity is flawed and inappropriate. Commenters stated th at the EPA is double counting the benefits from retaining at

- risk nuclear capacity, 1) by including 2012 nuclear generation to calculate states' 2012 baseline emission rates; and 2) the EPA reduces states' emission rate requirements based on the assumption of retaining 6% nuclear power that is currently considered
as at

- risk. Commenters pointed out that retention of 6% of that power will not reduce the state's emission rate, but instead will just prevent the emission rate from increasing relative to 2012 le vels.562 Commenters stated that nuclear generation should not be included in the CPP rule. Commenters mentioned that EPA's consideration of at

- risk and under

- construction nuclear generation would result in dramatic reduction in the emission rate goals for st ates which threatens the completion of the nuclear reactors. Commenters also mentioned that including at

- risk and under

- construction nuclear generation also introduces unmanageable compliance risk, since for nuclear plants with operational issues, the stat e nor the owner have virtually no opportunity to comply. Commenters stated that inclusion of at risk or under

- construction nuclear generation does not reduce CO2 emissions.

Commenters pointed out that the EPA's inclusion of at

- risk nuclear component based on its conclusion that preserving nuclear will help reduce CO2 is not an emission reduction standard because it only avoids potential increases in emissions while failing to account for the inclusion of nuclear costs. Commenters mentioned that the EPA arb itrarily and capriciously favors wind and solar over nuclear by including at

- risk nuclear component but no other types of zero

- emitting

sources.

Commenters stated that, due to cost

- effectiveness considerations, preservation of at

- risk nuclear capacity sho uld be disqualified as a component of the BSER. Commenters suggested that the EPA should provide a more accurate analysis to assist states in evaluating the economic feasibility of subsidizing uncompetitive reactors. Commenters suggested that if states wer e to extend subsidies to reactors other than those truly at risk of closure, they would be providing subsidies to reactors that don't need them.

Commenters stated that the nuclear generation deemed to be at

- risk is within the range of the wind capacity be ing developed in U.S. within 1

- 2 years, and at much lower cost than the construction of new nuclear units. Therefore, the commenters suggested to replace the at

- risk nuclear generation within the compliance period or before it begins through increased depl oyment of sustainable resources.

Commenters stated that the Clean Power Plan's treatment of nuclear generation is not well

founded technically or economically, and the EPA's rationales for the treatment are weak and inconsistent. Commenters disagreed with the EPA's 6% at

- risk assumption because the value is zero for the states that have no nuclear generation. Also, the commenters asserted that existing units do not increase available nuclear capacity, since keeping them open just maintains existing generat ion, while on the other hand, if units are retired, that decreases the available nuclear capacity.

Commenters stated that the CPP's inclusion and exclusion of 2012 non

- fossil fuel generation sources has nothing to do with actual emission reductions, and E PA's rationales for its treatment of these sources are weak and inconsistent. Commenters stated that the EPA includes about 6 percent of the existing nuclear generation in 2012 in each state to calculate the 2030 target rate of CO2 emissions; for the state s that have no nuclear generation, this value is zero. Commenters stated that they do not agree with the EPA's logic for the simple reason that existing units do not increase the amount of available nuclear capacity; keeping them open just maintains existi ng generation and if units are retired, available nuclear capacity decreases.563 Commenters stated that based on the description in the Goal Computation Technical Support Document, EPA is double counting the benefits from retaining at

- risk nuclear capacity; accordingly, reducing a state's goal based on retaining at risk nuclear capacity is not appropriate.

Commenters stated that the at

- risk nuclear component is not an emission reduction standard because it only avoids potential increases in emissions. Commen ters stated that it also fails to account for the inclusion of nuclear costs in the current rate base in South Carolina. Commenters stated that by including at risk nuclear, but not other types of non

- emitting sources, the EPA arbitrarily and capriciously favors wind and solar over nuclear, despite the fact that nuclear is base

- load and does not require back

- up generation.

Comment 18: Commenters said the EPA should allow states to adjust their state

- wide emissions goals to reflect the next best resource option that the state is able to develop to replace any nuclear plant that may close.

Response 18: EPA acknowledges the comments and has determined that the BSER for the final rule will not include the proposed provisions for nuclear units in the setting o f state goals.

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

Commenters stated that the EPA must permit states to adjust their state

- wide emission goals to reflect the next best option that the state is able to develop to replace any nuclear plant that may close. Commenters stated in those States that are heavily dependent on nuclear generation to comply with the existing power plant rule, there is an inherent risk that these units will fail to produce electricity. Comment ers said in that event, there will be no way for those States to comply with the proposal's emission rate targets without the construction of back

- up zero

emission technology. Commenters said many States will and can use gas

- generated electricity in combin ed cycle combustion turbines as a failsafe method to guarantee compliance with state goals well into the future; however, those States that are heavily dependent on zero

- emission generation such as nuclear generation and additionally have federally mandate d state emission goals below the known emission level of combined

- cycle combustion turbines must have back

up generation of additional zero

- emission technology to ensure meeting both FERC n+1 standards of redundancy and the proposed EPA rule. Commenters sa id if under

- construction and
at

- risk nuclear units are considered in the proposed state emission limits, these States may be forced to have available back

- up zero

- emission technology that may be both high cost and non

dispatchable.

Commenters stated this is clearly not a feasible approach; not only would it cost consumers an unconscionable sum to invest in gigawatts of unneeded renewable capacity simply to provide back

- up in case they should lose a nuclear resource, but no realistic amount of intermittent renewable resource could provide the same consistent and reliable energy as a nuclear generator. Commenters said moreover, that very investment would ensure that the nuclear generators would close, as that investment in renewable resources would flood the energy and capacity markets, driving prices down to the level that nuclear plant operators could never recover enough money to justify keeping the power plants open.564 Commenters stated states simply cannot control whether nuclear plants shut down and cannot contract in advance to fully insulate themselves from the environmental impacts of such shut downs; that is why EPA must permit States to adjust their state

- wide emissions goals to reflect the next best resource option that the State is able to develop to replace any nuclear plant that may close.

Commenters stated that, if the EPA retains the at

- risk provision in the goal

- setting calculation, the EPA should allow state goals to be adjusted upon the expiration of nuclear plant operating licenses to remove the at

- risk nuclear generation from the deno minator of the goal

- setting calculation. Commenters stated that any other result would penalize a state that currently has nuclear generation over a state that has no nuclear generation.

Commenters stated that there was not sufficient natural gas infrastr ucture in Wisconsin to replace lost nuclear generation due to license expiration after 2030, so the EPA should allow states to offset lost nuclear generation with existing capacity, including existing coal

- fired plants.

Commenters stated that the EPA shou ld allow state goals to be recalculated when nuclear power plants reach the end of their planned lifetime, excluding this building block from the new calculation and allowing some portion of fossil generation to replace the retiring nuclear.

Commenters st ated that even if a nuclear unit is prevented from shutting down prematurely, it will still be required to shut down upon expiration of its operating license, and the state in which the unit is located will have to add additional carbon

- free generation or implement other emission reduction measures in order to maintain emissions relative to the state's goal. Commenters recommended that: if the at

- risk nuclear provision is retained in the final goal

setting calculation, the EPA should allow states' goals to be adjusted upon expiration of nuclear plant operating licenses; and, to encourage the continued operation of existing nuclear plants, EPA should allow states to claim compliance credit for nuclear plants that have their licenses renewed beyond 60 years.

Comment 19: Commenters asserted the definition of new nuclear should be expanded.

Response 19: EPA acknowledges the comments and has determined that the BSER for the final rule will not include the provisions we had proposed for nuclear units in the settin g of state goals, and will allow incremental generation from new and uprated nuclear units to be applied towards compliance. Please see section V.A of the preamble for further discussion of the decision to exclude nuclear generation from BSER. Please see section V.A of the preamble for further discussion of the treatment of new and uprated nuclear plants, and section VIII.K of the preamble for further discussion of provisions in state plans of allowable actions that result in an adjusted CO 2 emission rate of an affected EGU.

The following are summaries of the specific public comments under this comment:
Commenters stated that the definition of new nuclear should be expanded to include all plants now under construction or constructed in the future, power up rates at existing plants, and plants relicensed to operate beyond 40 years. Commenters stated as EPA proposes, the final guidelines565 should allow states to include generation from 'new' nuclear generating capacity in state compliance plans. Commenters said however, the final guidelines should include an expanded definition of 'new' nuclear that would encompass:

• New nuclear power plants (those currently under construction or others that might be built between now and 2030 and beyond); and

• Power uprates at exi sting nuclear plants, including those undertaken during or after 2012 or a modified baseline period; and

• Nuclear plants relicensed to operate past their initial license terms (i.e., beyond 40 years) that have not received their renewed licenses from NRC be fore the baseline year or period, and nuclear plants relicensed to operate beyond 60 years (subsequent license renewal).

Commenters stated the proposed guidelines should also recognize major capital investments undertaken between 2012 and 2020 to uprate nu clear units; these uprates provide additional zero emission generation and should be treated similar to renewable generation built during the same timeframe by allowing states to include this additional generation in its state plan to meet the final goals.

Commenters stated according to NRC, utilities have used power uprates since the 1970s as a way to generate more electricity from their nuclear plants, and as of April 2014, NRC had approved 154 uprates that added generation capacity equivalent to about s even new reactors. Commenters said undertaking a power uprate is a complex and time consuming process. Commenters said some uprates may involve major plant modifications, such as the replacement of the main turbines, or the modification or replacement of v arious components in order to accommodate a higher power level. Commenters said the licensee must then submit a license amendment request for the uprate to NRC. Commenters said NRC's technical and legal staffs review these complex technical analyses before approving an uprate request. See id. Commenters said the final guidelines should allow states to include any such uprates in their compliance plans.

Comment 20 : Commenters stated the EPA should credit nuclear generation for the lifetime of operation.

Re sponse 20 : EPA acknowledges the comments and has determined that the BSER for the final rule will not include the proposed provisions for nuclear units in the setting of state goals. Please see section V.A of the preamble for further discussion of the de cision to exclude nuclear generation from BSER. Please see section V.A of the preamble for further discussion of the treatment of new and uprated nuclear plants, and section VIII.K of the preamble for further discussion of provisions in state plans of allo wable actions that result in an adjusted CO2 emission rate of an affected EGU.

The following are summaries of the specific public comments under this comment:566 Commenters suggested that the EPA provide full credit for nuclear generation that has its licensi ng renewed to an overall 80

- year facility life.

Commenters stated that extension of a nuclear power plant's lifetime or operation at greater than assumed capacity should count as a credit towards at a state's goal.

Comment 21: Commenters suggested that new nuclear not be included in the BSER.

Response 21: EPA acknowledges the comments and has determined that the BSER for the final rule will not include the proposed provisions for nuclear units in the setting of state goals. Please see section V.A of th e preamble for further discussion of the decision to exclude nuclear generation from BSER.

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

Commenters stated that future new nuclear should not be included in the BSER determin ation and goal

- setting calculation. Commenters stated EPA was correct in not including future new nuclear in the BSER determination and goal setting calculation, but solicits comments on whether these hypothetical future nuclear units should be included. C ommenters said excluding future new nuclear units is appropriate. Commenters said predictions about new nuclear units involve substantial uncertainty; historical projections of future nuclear construction in the US have proven to be inaccurate, with many f ewer units currently under construction than what was projected only five years ago. Commenters said building new nuclear plants requires financial and organizational capacity that realistically is limited to larger utilities. Commenters said adding to thi s uncertainty is the opposition of advocacy groups to nuclear generation; many of the same advocacy groups that are supporting EPA's Clean Power Plan in this rulemaking forum actively oppose nuclear generation in the permitting and licensing forum.

Commen t 22: Commenters asserted that future new nuclear, as well as nuclear under construction, should not be included in the BSER determination and goal

- setting calculation.

Response 22: EPA acknowledges the comments and has determined that the BSER for the final rule will not include the proposed provisions for nuclear units in the setting of state goals. Please see section V.A of the preamble for further discussion of the decision to exclude nuclear generation from BSER.

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

Commenters supported the EPA's proposal to allow both new nuclear units and uprating of existing units to be counted towards state compliance. Commenters recommended an end of base year be used for the purpose of recognizing additional nuclear capacity and uprating of existing nuclear units. Commenters opposed the EPA's inclusion of any amount of additional nuclear capacity in the state goals, because it is not possible today to make any determination regarding what additional nuclear capacity might be brought on line in the future, putting aside the fact that567 the EPA is not authorized by the CAA to use any nuclear generation in its BSER determination for fossil fuel

- fired EGUs. Commenters pointed out that doing so inappropriately penalizes states where new nuclear is being considered, and would cripple the state's ability to meet its goal.

Commenters stated that a third nuclear generation unit at North Anna Power Station in Virginia was being studied, but that given enormous costs and hurdles to constructing and operating nuclear units under today's regulatory and economic conditions, it is far too early to factor such a prospect into Virginia's 111 (d) plan. Commenters also stated that the time horizon for
comp letion and operation of such a unit may extend past the 2030 date for compliance with EPA's final performance goal.

Comment 23: Commenters stated nuclear energy should be excluded from state goal calculations, but remain an option for states to consider i n developing their state plans to meet the proposed goals.

Response 23: EPA acknowledges the comments and has determined that the BSER for the final rule will not include the proposed provisions for nuclear units in the setting of state goals, and allows i ncremental generation resulting from uprated power and new nuclear generation to count towards compliance. Please see section V.A of the preamble for further discussion of the decision to exclude nuclear generation from BSER. Please see section V.A of th e preamble for further discussion of the treatment of new and uprated nuclear plants, and section VIII.K of the preamble for further discussion of provisions in state plans of allowable actions that result in an adjusted CO2 emission rate of an affected EG U.

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

Commenters stated nuclear energy should be excluded from the state goal calculations, but should remain an option for states to consider in developing their state plans to meet the proposed goals. Commenters said consideration of at

- risk and new nuclear generation unnecessarily introduces uncertainty into the goal setting methodology and compliance planning due to concerns regarding the short

- and long

- term viability of EPA' s assumptions regarding the continued operation of the existing nuclear fleet and with respect to if/when the under construction nuclear capacity actually is commissioned. Commenters said the implementation section identifies additional concerns for develo ping compliance requirements for nuclear capacity within state plans that further warrant excluding nuclear energy from the goal calculation.

Commenters supported allowing nuclear generation to count towards compliance while not including nuclear in the ta rget setting process. Specifically, the commenters stated that the EPA should allow MWhrs in excess of an 81% capacity factor (the historical capacity factor of the existing nuclear fleet) to count toward compliance in the rate

- based approach. Commenters a lso mentioned that output of plants that are relicensed after the 2012 baseline year or to operate in excess of 60 years should count towards compliance.

Commenters stated that, in the first full compliance year of 2030, the youngest nuclear plants in the current fleet will be 50 years old, and any effort to extend the lives of these units could not568 persist for more than a few decades. Commenters recommended that the EPA should therefore remove existing nuclear units from the equation altogether. Commenter s also recommended that any new nuclear (units that have not commenced operation prior to the proposal date) should be counted as zero

- emitting sources in the compliance calculus.

Commenters stated that the EPA's proposed treatment of existing nuclear cap acity, including the 6% at

- risk factor and the estimated the 90% average utilization rate for U.S. nuclear units, is inappropriate. Commenters stated that EPA should not include any amount of existing nuclear generating capacity in the state goal setting c omputation.

Commenters stated that nuclear generation should be eligible as a compliance option since it has essentially zero CO2 emissions; and the commenters suggested that the EPA's plan should continue to have existing nuclear generation as a componen t of the low emission building block.

Commenters supported that nuclear generation should be included in state goal

- setting computation. Commenters stated that for new construction consideration should be given to the newest and safest technologies, such as MIT/Transatomic's molten salt reactor, which produces energy at half the cost per megawatt than their standard reactors, at least on paper.

Commenters stated that the draft rule could interfere with the EPA's ability to structure state

level implementa tion toward cost

- effective and environmentally sound practices because the rule's evaluations of different resources are inconsistent and inaccurate. Commenters supported the flexibility of implementation set forth in the draft rule, but stated that the un equal treatment granted to nuclear compared to other energy sources, and the EPA's failure to fully consider the environmental impacts of the energy source, goes beyond providing the flexibility necessary to ensure effective implementation of the rule and achievement of its goals. Commenters pointed out that by encouraging states to view nuclear as an acceptable clean energy resource, preserve existing capacity and complete capacity in construction, without accurately assessing its costs nor properly evalua ting its environmental impacts and risks, the draft rule creates opportunities for states to implement it in manners that could be counterproductive.

Commenters supported the EPA's proposal that generation from new and uprated nuclear plants count towards compliance with state goals.

Commenters expressed concerns with the treatment of nuclear energy in Building Block 3, as it establishes a disincentive to nuclear development and appears inconsistent with the approach used with other energy generating sour ces. Commenters stated that the under

- construction nuclear units should be available to states for goal calculation toward compliance rather than categorized as existing capacity. Commenters stated that the EPA's rationale for inclusion of these under

- cons truction facilities in goal setting, "the decisions to construct these units were made prior to this proposal", is arbitrary in a proposed rule whose timelines for establishing and reaching goals are tentative and debatable. Commenters mentioned that a str onger incentive for nuclear investment would be signaled by allowing the applicable states to apply, upon start up, the zero

- emissions energy toward Building Block 3 goals. Commenters suggested this principle be further applied to any nuclear unit whose co nstruction or uprating will be started prior to the 2030 compliance deadline, albeit with the obligation on the state to ensure compliance whether or not such new units come online as scheduled. Commenters also suggested the EPA to569 additionally consider en couraging states to establish policies analogous to existing renewable energy portfolio standards to support the development of new nuclear generating units. Commenters recommended that nuclear generation should be granted some measure of policy parity, an d must be more explicitly encouraged as part of a reliable emission reduction strategy.

Commenters stated that the EPA should exclude existing nuclear from the goal

- setting calculation, but allow states to take credit for a portion of their nuclear genera tion for compliance purposes. Commenters also stated that the EPA should recognize early action taken to increase nuclear plant output, such as the 2011 extended power uprate at Point Beach. Finally, commenters recommended that, regarding the inclusion of estimated new nuclear in the goal setting computation, only units that were in service at the end of the goal setting baseline years should be included, and that a multi

- year period is desirable for setting state goals. Commenters stated that if the EPA us es the single (and due to abnormally low natural gas prices, unrepresentative) year of 2012 to set state goals, then the state goals should include only units that were in service as of the end of the 2012, and should exclude any units that were not in

ser vice as of the end of 2012.

Commenters stated that the Proposed Regulation illogically penalizes Virginia for its nuclear fleet by including "at risk" nuclear production in the denominator. Commenters recommended that continued use of existing (in additio n to new) nuclear generation capacity, which provide reliable base load generation that is carbon

- free, should be allowed to count for compliance with the Proposed Regulation.

Commenters stated that EPA fails to demonstrate that its projected increases in renewable energy are truly feasible. Commenters stated that many states have adopted renewable energy standards that contain rate caps to control the cost of such programs; the CPP ignores the decisions made by the states to balance renewable energy objec tives against consumer cost considerations. Commenters stated that EPA also incorrectly includes 6 percent of at risk nuclear in the target setting process in an effort to incent states to keep at risk nuclear units in operation. Commenters recommended tha t EPA eliminate nuclear MWhrs from the target setting process because this approach does not properly incent the desired outcome and creates unnecessary compliance risk. Commenters stated that while it is inappropriate to include nuclear in the target sett ing process, it is appropriate to allow nuclear generation to count towards compliance. Commenters stated that to incent optimal performance of this zero

- emitting resource, EPA should allow MWhrs in excess of an 81 percent capacity factor to count toward c ompliance in the rate

- based approach. Commenters stated 81 percent represents the historical capacity factor of the existing nuclear fleet and operation above that level should be incented to help reduce emissions from fossil

- fired plants. Commenters state d that output of plants that are relicensed after the baseline year (2012) should count towards compliance, as well the output of plants licensed to operate in excess of 60
years.
Commenters stated that the proposed regulation does not recognize the signi ficant investment in the nuclear fleet or the substantial resulting zero

- carbon energy production in Virginia that has historically lowered Virginia's carbon footprint. Commenters stated the proposed regulation illogically penalizes Virginia for its nuclea r fleet by including at risk nuclear production in the denominator of its formula and basing the Mandatory Goals on 2012 generation levels. Commenters stated that including an at risk nuclear component in the formula for Virginia

-570 along with other unlawfu l components of the formula

- has the effect of driving the proposed regulation's emission rates for Virginia unreasonably and unlawfully low. Commenters stated that including higher than normal zero

- carbon energy production in EPA's formula drives down th e emission rates that Virginia and other states must achieve; this is because the Mandatory Goals are calculated by adjusting a basic ratio of carbon emissions/megawatt hours of production. Commenters stated that adding into this formula production from re sources that have no carbon emissions only increases the denominator of the ratio, and has no effect on the numerator; so each megawatt hour of zero

- carbon production added by EPA for at risk nuclear and renewable resources, as well as the energy efficienc y added in by EPA, lowers the Mandatory Goals and requires deeper carbon emission reductions. Commenters stated that penalizing Virginia for its zero

- carbon generation in this way is flatly inconsistent with the proposed regulation's purported goal of redu cing carbon emissions (much less doing so without compromising reliability or reasonable costs). Commenters stated that continued use of existing (in addition to new) nuclear generation capacity, which provide reliable base load generation that is carbon

- f ree, should be allowed to count for compliance with the proposed regulation.

Comment 24: Commenters stated the proposal does not provide enough information regarding regulatory authority, enforcement responsibility and compliance demonstrations requireme nts for state plans with regard to nuclear units.

Response 24: EPA acknowledges the comments and has provided all the necessary provisions for requirements in state plan in section VIII of the preamble.

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

Commenters stated that the consideration of nuclear units in the implementation plan raises issues regarding regulatory authority, enforcement responsibility, and compliance demonstrations if the EPA intends the capacity facto r assumptions used in calculating state goals to become an enforceable requirement in order to claim a 'credit' in the state's compliance demonstration. Commenters stated that these issues are inadequately addressed in the proposal.

Comment 25 : Commenters stated that credit should be given toward environmental compliance.

Response 25 : EPA acknowledges the comments and has determined that the BSER for the final rule will not include the proposed provisions for nuclear units in the setting of state goals. Please see section V.A of the preamble for further discussion of the decision to exclude nuclear generation from BSER. Please see section V.A of the preamble for further discussion of the treatment of new and uprated nuclear plants, and section VIII.K of the preamble for further discussion of provisions in state plans of allowable actions that result in an adjusted CO2 emission rate of an affected EGU.

The following are summaries of the specific public comments under this comment:571 Commenters noted that nuc lear units built in the 1970s and 1980s will require ongoing investment to maintain power production into the middle of the century. Commenters stated that if credit is not given toward environmental compliance, one of the benefits of a potential large

car bon

- free investment is removed. Commenters recommended that rules should encourage investments into zero

- emission, carbon

- free resources.

Comment 26: Commenters asserted that the EPA has underestimated of the quantity of nuclear generation at risk of prem ature retirement.

Response 26: EPA acknowledges the comments and has determined that the BSER for the final rule will not include the proposed provisions for nuclear units in the setting of state goals. Please see sections VIII.K and VIII.G of the preamb le for further discussion of the flexibility states have in developing state plans to incentivize nuclear generation and ensure compliance, as well as, the requirement that states consider system reliability in plan submittal.

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

Commenters stated that nuclear facilities are the largest and most reliable source of carbon free electricity, but nuclear facilities are a risk of premature retirement. Commenters also stated that the pro xy used by EPA to estimate the quantity of nuclear generation that is at risk of premature retirement is a significant underestimate.

Commenters stated that nuclear plants generate large amounts of clean energy and play vital role in grid reliability, but nuclear facilities across the country are at risk for premature retirement

- the commenters stated that Terry Boston, President and Chief Executive Officer of PJM, described this prospect as "unthinkable." Commenters noted that approximately half of the

n ation's existing nuclear units are merchant generators in states with competitive electricity markets, in which wholesale prices are set by generators' bids. Commenters stated that nuclear plants have largely fixed costs and cannot vary their output in res ponse to market signals; nor can they even affect the market price for generation

- because nuclear facilities must run all of the time, they must accept the lowest market

- clearing price offered by other generators. Commenters stated that unless wholesale electricity prices (and capacity prices in RTOs that have capacity markets) are high enough to allow the nuclear plants to cover their costs, they will retire.

Commenters also stated that nuclear units' market

- based revenues have recently been insufficien t for a number of reasons, threatening the economic viability of a significant fraction of the nation's nuclear fleet. Commenters noted that the EPA recognized this threat in the Proposed Rule, stating that "a host of factors

- increasing fixed operation a nd maintenance costs, relatively low wholesale electricity prices, and additional capital investment associated with ensuring plant security and emergency preparedness

- have altered the outlook for the U.S. nuclear fleet in recent years." Commenters speci fically noted, as the EPA also noted, that lower natural gas prices have reduced wholesale electricity prices and thereby made it more difficult for nuclear plant owners to recover their fixed costs or to make new capital investments, such as those needed to meet new safety requirements adopted after the 2011 accident at Fukushima Daiichi Nuclear Plant in Japan.572 Commenters stated that the economic pressure on nuclear units has been exacerbated by subsidized wind power, which has placed further downward pre ssure on wholesale electricity prices. Commenters stated that subsidies allow wind generators to remain profitable even when they pay to put their electricity onto the grid; these units can therefore bid a negative price into the electricity markets yet st ill make money. Commenters noted that, on breezy nights, the market

- clearing price of electricity has become negative in locations where there is insufficient transmission to relieve the local area of excess electricity production. Commenters stated that

n uclear plants in those areas cannot cycle down their output during such times, and therefore have no choice but to run and incur substantial losses during those hours; thus, subsidies to encourage wind end up displacing nuclear generation, to no carbon ben efit. Commenters concluded that, in other words, policies intended to support renewable resources that are carbon

free have had unintended and deleterious consequences for nuclear power, by far the largest carbon

- free resource.

Commenters stated that in p art because of these factors, the U.S. has recently lost two viable nuclear plants: the Kewaunee power station in Wisconsin, and the Vermont Yankee nuclear unit in Vermont, which is set to close at the end of 2014. Commenters observed that when Dominion

an nounced in October 2012 that it would be closing the Kewaunee plant, it stated that the decision was "based purely on economics." Likewise, Commenters noted, Entergy's August 2013 announcement regarding the closure of Vermont Yankee cited "sustained low po wer prices, high cost structure and wholesale electricity market design flaws" that result in "artificially low energy and capacity prices" that "do not provide adequate compensation to merchant nuclear plants for the fuel diversity benefits they provide."

Commenters noted Exelon is currently evaluating the continued economic viability of four nuclear stations

- Byron, Quad Cities, and Clinton in Illinois; and Ginna in New York. Commenters noted Byron and Quad Cities are located in the PJM region, but were not selected in the last PJM capacity auction, and Clinton is located in the Midcontinent ISO ("MISO"), which has no forward capacity market. With respect to Ginna, the commenters stated that Exelon has certified to the New York Public Service Commission that it expects that revenues from the sale of energy and capacity in the New York ISO will not be sufficient to cover the costs of continued operation. Commenters stated that if any of these stations were to retire, it would be for purely economic reasons , because the current operating licenses for these plants do not expire until 2024 for Byron at the earliest, and as late as 2032 for Quad Cities. Commenters noted that collectively, these plants generate 48,295 gigawatt

- hours ("GWh") and avoid 30.7 millio n metric tons of CO2 emissions annually.

Commenters noted Exelon had previously announced the retirement of Oyster Creek in New Jersey, effective in 2019. Commenters stated that Exelon made that decision for economic reasons as well

- the plant's operating license does not expire until 2029, but wholesale electricity prices did not support the construction of new cooling towers that the State of New Jersey required for Clean Water Act compliance. Commenters noted that as a result, New Jersey will lose 5,102 GWh of carbon

- free generation

- eight percent of the state's total annual electricity generation.

Commenters noted that the EPA relied on national projections from the Energy Information Administration ("EIA"), and estimated that six percent of the natio n's nuclear capacity is at risk573 of premature retirement. However, the commenters stated that Exelon has used industry analyst data and its own modeling to examine the economics of the nation's 27 nuclear plants operating in competitive markets. Commenters provided a chart that indicated Exelon has determined that no fewer than 13 of the 27 nuclear plants in competitive markets are expected to have revenue shortfalls in 2015. Therefore, the commenters concluded that all of these plants are thus at risk of

re tirement. Commenters further stated that if revenues continue to fall due to low gas prices or an expansion of subsidized wind generation, an even greater number of nuclear plants may be endangered.

Commenters stated that the Proposed Rule has a potential , paradoxically, to increase the financial pressure on existing nuclear plants. Commenters noted that currently, NGCCs have higher variable costs than coal units, nuclear units, or renewables. Therefore, the commenters stated, electricity prices tend to re flect the marginal costs faced by NGCCs, whose bids in competitive markets set the price paid to all generators. Commenters noted that the Proposed Rule envisions that states will achieve EPA's emissions goals partly by shifting dispatch from existing coal plants to NGCCs. Commenters noted that a rate

- based state that does not adopt Smart System Dispatch could seek to encourage this sort of redispatch by artificially increasing the marginal cost of higher

- emitting generators (like coal plants) while reducin g the marginal cost of lower

- emitting generators (like NGCCs). For instance, the commenters noted that the
rate

- based state might adopt an emissions credit or rate

- trading program that taxes higher

emitting fossil fuel plants and subsidizes lower

- emitting fossil fuel plants. As a result of such a subsidy, the commenters stated, an NGCC would be able to sell electricity for less than its true marginal cost, similar to subsidized wind today. Commenters stated that such a subsidy could have the effect of lower ing the market price of electricity for all generators

- further undercutting the economic viability of existing nuclear plants in the near term and muting the market signals to invest in clean generation. However, the commenters stated that in the long ru n, the premature retirement of nuclear plants will result in increased electricity prices, as nuclear plants are replaced with higher

- cost generation, such as NGCCs.

Commenters stated that preventing early retirement of existing nuclear generation is esse ntial in reducing carbon emissions from the power sector. Commenters strongly supported the EPA's inclusion of nuclear power as part of the BSER set forth in the Proposed Rule. Commenters stated that the EPA was correct when it recognized, "[n]uclear gener ating capacity facilitates CO2 emission reductions at fossil fuel

- fired EGUs by providing carbon

- free generation that can replace generation at those EGUs." Commenters also strongly supported the EPA's recognition that one "way to increase the amount of av ailable nuclear capacity is to preserve existing nuclear EGUs that might otherwise be retired."

Commenters stated that maintaining the existing nuclear fleet is in fact an essential precondition to reducing carbon emissions from the power generation secto r. Commenters stated that FERC Commissioners, state public service and environmental commissioners, scientists, and others have all called upon environmental and energy policymakers to develop solutions to preserve nuclear energy's unique role among the na tion's clean energy resources. Commenters noted that former FERC Commissioner John Norris similarly observed that "[w]e need to maintain our nuclear fleet, as it is a valuable base load and carbon free resource."574 Commenters noted that in November 2013, fou r of the world's most respected climate and energy scientists

- Dr. Ken Caldeira of Carnegie Mellon, Dr. Kerry Emanuel of MIT, Dr. James Hansen of Columbia University, and Dr. Tom Wigley of the National Center of Atmospheric Research

- acknowledged the cri tical importance of nuclear energy to addressing climate change. Commenters noted that the scientists released a letter calling on world leaders to support nuclear energy, concluding that "in the real world there is no credible path to climate stabilizatio n that does not include a substantial role for nuclear power." Commenters also noted that the Center for Climate and Energy Solutions released a study identifying the challenges facing nuclear units and noting that retirements of nuclear units will have se rious climate change implications. Finally, the commenters noted that the National Association of Regulatory Utility Commissioners ("NARUC") passed a resolution recognizing that "[n]uclear energy has played a substantial role in the achievement of existing [greenhouse gas] State or regional emissions reduction goals to date, and continued operation of nuclear power plants is vital to States' ability to economically meet new federal regulation, and provides an essential tool to manage risks associated with p otential [greenhouse gas] emissions reduction requirements." Commenters stated that NARUC urged EPA to adopt rules encouraging states to "preserve, life

- extend, and expand existing nuclear generation."

Commenters stated that the premature retirement of a n uclear facility leaves an enormous hole to be filled: each nuclear facility dependably generates so much electricity that, with current technology, it simply cannot feasibly be replaced by alternative zero

- emissions generation resources with much lower cap acity factors, such as wind or solar. For example, the commenters noted that to produce the same 1,000 megawatts of electricity generated by a single nuclear unit, a solar farm operating at a 26 percent capacity factor would need to be spread across 30 squ are miles, more than the size of Manhattan, and a wind farm operating at 30 percent capacity would need to be spread across 300 to 400 square miles. Commenters stated that, although California is the nation's leader in renewable generation production, the closure of the San Onofre nuclear plant in early 2012 resulted in the loss of more zero

- emissions electricity than the combined production of all wind, solar, and biomass in the state. Commenters concluded that the loss of a just a single nuclear plant can have a devastating impact on a state's ability to reduce CO2 emissions.

Commenters stated that, even if it were feasible to replace a nuclear plant with an equal number of megawatts of wind or solar power, there would still be an adverse impact on the gr id's reliability unless carbon

- emitting plants (NGCCs or simple

- cycle combustion turbines ("CTs")) are added to "firm up" the renewable generation sources, that is, to back them up to ensure electricity can be generated at night and in all weather conditio ns. Commenters noted that, according to EIA data, so far in 2014, nuclear facilities have had a capacity factor of approximately 90 percent; by comparison, wind facilities have a capacity factor of approximately 30 percent, and utility

- scale photovoltaic s olar generation had a capacity factor of 33 percent. Thus, the commenters stated that wind and solar power cannot come close to replicating nuclear power's ability to generate electricity 24 hours per day, independent of weather conditions.

Commenters sta ted that, because of a nuclear facility's large size and unparalleled reliability, a retiring nuclear plant is most likely to be replaced by natural gas

- fired plants; new NGCCs have the lowest entry costs to provide baseload power. Commenters noted that NG CCs obviously emit carbon, so replacement of nuclear plants with NGCCs increases carbon emissions. Commenters575 stated, for example, California's annual CO2 emissions increased by 35 percent after the San Onofre nuclear reactors were shut down in early 2012. Similarly, the commenters noted that when the Kewaunee nuclear plant in Wisconsin closed in 2013, the fossil fuel generation that took its place emitted an additional 3.6 million metric tons of carbon dioxide annually.

Commenters stated that the dramatic increase in greenhouse gas emissions that occurred in Japan following the closure of reactors in response to the 2011 Fukushima Daiichi accident further demonstrates the critical importance of nuclear reactors to reduction of greenhouse gas emissions. Comm enters noted that the CO2 intensity of the power sector in Japan in 2012 was 39 percent higher as compared to when the country's reactors were operating. Commenters stated that CO2 emissions from electricity generation increased 29 percent to 486 million m etric tons of CO2 in 2012 from 377 million metric tons in 2010.

Commenters concluded that these examples demonstrate that every premature nuclear retirement moves the nation in the wrong direction when it comes to CO2 emissions. Commenters noted, as the P roposed Rule recognizes, retaining even the small portion of existing nuclear capacity that EPA deems at risk of premature retirement "could support avoiding 200 to 300 million metric tons of CO2 over an initial compliance phase

- in period of ten years." Co mmenters stated that preventing premature nuclear retirements is essential to prevent CO2 emissions increases, let alone to achieve emissions reductions.

Commenters also stated that preventing the early retirement of nuclear facilities does not just avoid carbon dioxide emissions: as EPA has recognized, it is one of the most cost

- effective ways to do so. Commenters stated that EPA determined in the Proposed Rule that, "based on available information regarding the cost and performance of the nuclear fleet, preserving the operation of
at

- risk nuclear capacity would likely be capable of achieving CO2 reductions from affected EGUs at a reasonable cost." Specifically, the commenters stated that the EPA estimated that the cost of keeping "at risk" nuclear plants operating is approximately $12 to $17 per metric ton of CO2 avoided

- which is more cost

- effective than virtually any other carbon abatement strategy. Commenters stated that the EPA estimated that preventing the early retirement of "at risk" nuclear plants is more cost

- effective than:

• Adding renewable capacity ($10 to $40 per metric ton of CO2 abated).

• Increasing natural gas combined cycle power plant utilization rates to 70 percent state by state ($33 per metric ton of CO2 abated).

• Implementing demand

- side management programs ($16 to $24 per metric ton of CO2 abated).

Commenters noted, according to EPA's estimates, only improving the heat rate of coal plants would be more cost

- effective than preventing the premature retirement of nuclear faciliti es. Commenters stated that while these heat

- rate improvements are important, they alone cannot achieve the total carbon emission reductions necessary. Indeed, the commenters stated that if implemented alone, heat

- rate improvements could result in increased carbon dioxide emissions due to a "rebound" effect resulting from lower marginal costs for coal

- fired plants that would result in those plants being dispatched more frequently. Moreover, the commenters stated, the576 premature retirement of the existing nucl ear fleet would also dramatically increase the cost of EPA's proposal in the long run.

Comment 27: Commenters stated that nuclear power does not reflect the BSER.

Response 27: EPA acknowledges the comments and has determined that the BSER for the final rule will not include the proposed provisions for nuclear units in the setting of state goals. Please see section V.A of the preamble for further discussion of the decision to exclude nuclear generation from BSER.

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

Commenters stated that the EPA should not accept nuclear generation as an emission reduction measure for purposes of compliance with a BSER standard because: a) Nuclear energy is extremely water

- intensive; b) Nuclear energy produces highly radioactive, long

- lived nuclear waste; c) Nuclear energy is heavily subsidized resulting in significant hidden costs; d) Nuclear energy poses nuclear proliferation and national security risks; e) Nuclear power plant accidents

can cau se catastrophic consequences; f) Nuclear power plants produce and release harmful radiation; and g) The Uranium fuel chain is incredibly damaging to the public health and the environment.

Commenters stated that nuclear energy is not the "best" energy syst em from any standpoint, including costs, reliability, non

- air

- related impact, or compatibility with other

- low carbon energy

sources.
Commenters stated that the reactors under construction or any new nuclear reactors do not meet the criteria for inclusion in the best system of emission reduction due to their costs and non

- air impacts. Commenters suggested that if the EPA wants to include nuclear in such a system, it must produce a technically and economically valid analysis that takes these facts into accou nt and puts them in the perspective of the needs of CO2 reduction until its target year of 2030. Commenters stated that the EPA needs to address such issues substantively before including under

- construction or new nuclear reactors in the BSER. Commenters r ecommended that the EPA should explicitly indicate that reactors that are not currently certified by the Nuclear Regulatory Commission would not be considered as viable parts of state compliance plans.

Commenters stated that, by endorsing nuclear power as a BSER technology, the EPA would provide implicit support to efforts by the nuclear industry to persuade states to include nuclear energy in their renewable energy portfolios. Commenters stated that nuclear energy undermines the growth of the renewable en ergy sector.
Commenters stated that retaining nuclear power as a BSER undermines the express purpose of the EPA's Carbon Rule, because nuclear utilities are already using the EPA Carbon Rule to subsidize unprofitable nuclear reactors, diminish if not thwa rt the expansion of renewable energy, and maintain a "status quo" energy system. Commenters remarked that none of these goals will have the effect of lowering carbon intensity of power generation.577 Commenters stated that low

- or zero

- carbon resources shoul d be included in BSER with modifications in the composition of Building Block 3 and in the formula for computing states' emission goals, and nuclear should be removed from BSER. Commenters also stated that in the BSER formula, the way in which renewables a nd efficiency are included in the draft rule is flawed, since increased deployment of Building Blocks 3 and 4 resources were added to the total generation supply (denominator), but were not assumed to reduce emissions from fossil fuel sources (numerator) a s coal and natural gas generation sources fall back in the dispatch order or are phased out. Commenters remarked that this approach did not take into account the true emissions

- reducing potential of increased deployment of low

- /zero

- carbon resources, resul ting in the calculation of artificially high emissions rate goals.

Commenters stated that the rule's inclusion of nuclear power in Building Block 3 would be problematic in that it could enable the diversion of economic resources from measures that would b e more effective in reducing emissions of CO2 and other air pollutants. Commenters suggested that the draft rule's evaluation that nuclear power should be taken into account in the state goals, in terms of both new and existing reactors, would set a preced ent by codifying it as environmentally beneficial in the most significant piece of U.S. climate policy to date, however it does so by disregarding the significant environmental impacts of nuclear without conducting an analysis to support such a conclusion. Commenters stated that the draft rule also fails to conduct any meaningful analysis of the costs of nuclear generation resources of any type (existing reactors, new reactors, and reactor power uprates), and thereby fails to recognize that nuclear should b e disqualified from the BSER as economically infeasible. Commenters also mentioned that the EPA's recommendation that states provide incentives to promote the preservation of existing nuclear reactors is inconsistent with the treatment afforded other low

- or

zero

- carbon energy resources.

Commenters disagreed with EPA's conclusion that construction of new nuclear reactors would have a positive impact in encouraging technological innovation. Commenters pointed out that the degree of innovation as a result of increased deployment is extremely limited, and the reactors currently under construction utilize effectively the same technology with very little improvement in thermal efficiency and no apparent economic improvement, suffering from the same problems with cost escalation and construction delays. Commenters stated that a serious analysis of the opportunities for technological innovation in nuclear power would reveal the facts, but the lack of rigor in the EPA's analysis results in inaccurate conclusions tha t favor nuclear and its unwarranted inclusion in the BSER.

Commenters stated that nuclear generation should be excluded from the BSER based on its economic and technical feasibility and its non

- air quality impacts.

Commenters stated that the draft rule s ignificantly underestimates the cost of including nuclear resources in BSER. Commenters remarked that a more accurate estimation of that cost would lead to a different conclusion about the appropriateness of subsidizing the preservation of nuclear
energy.
Commenters recommended that the EPA remove preserved nuclear capacity from Building Block 3, as preserving uneconomic nuclear power plant capacity does not represent BSER because it does nothing to drive investment and innovation in new clean, renewable e nergy578 technologies that will permanently displace emissions from fossil

- fuel generation. Commenters also mentioned that, in the short term, existing nuclear capacity will likely become more competitive as fossil

- fired generators absorb the cost of complian ce with Section 111(d), removing any need for states to further subsidize nuclear power plants. Commenters stated that states can accomplish the proposed emission reduction goals at a reasonable cost without getting credit from saving nuclear capacity, and this is true even if the targets are not adjusted upwards to account for removal of the 5.8% preserved nuclear capacity from the adjusted baseline, because states can make up the difference through greater emphasis on renewable energy and energy efficienc y. Commenters remarked that overreliance on aging nuclear power plants will hamper investment in new and evolving cleaner energy technologies that do not have the safety, environmental, and security risks of today's nuclear power plant technology, and woul d also undermine the proposed rule's stated goal of driving technological advances and innovation in emissions control and clean energy technologies.

Commenters stated that the costs of cancelled nuclear units should be attributed to the cost of carbon re ductions from completed reactors, which would further increase the disparity between the cost of using efficiency, onshore wind and utility solar energy to reduce CO2 emissions on the one hand and using nuclear power on the other. Commenters stated that in view of these realities, history, and absolute and relative costs, the assumption that nuclear reactors are part of a best system of emission reduction is untenable. Commenters stated that to these considerations one must add the EPA's own acknowledgement that costs and non

- air

- impacts need to be taken into account in designing a best system of emission reduction. Commenters stated that the CPP has no meaningful analysis of the relevant issues in regard to nuclear plants under construction and if the EPA w ants to include nuclear in such a system, it must produce a technically and economically valid analysis that takes these facts into account and puts them in the perspective of the needs of CO2 reduction until its target year of 2030. Commenters stated that the many

non

- air

- quality considerations such as the plutonium and tons of spent fuel that the five reactors would generate each year, the vast amounts of water they would use, and other impacts should be added to the list of considerations. Commenters sta ted that nuclear reactors are very inflexible and a poor complement for variable solar and wind generation. Commenters concluded that the reactors under construction, or indeed, any new nuclear reactors, do not meet the criteria for inclusion in the best s ystem of emission reduction. Commenters stated that the putative economics of small modular reactors are entirely dependent on a supply chain in which major components would be mass manufactured and that this is highly unlikely in the United States without massive government subsidies or government orders or both. Commenters stated that the EPA needs to address such issues substantively before including nuclear reactors under construction or new nuclear reactors in the BSER; the EPA should explicitly indica te that reactors that are not currently certified by the NRC would not be considered as viable parts of state compliance plans. Commenters stated that the EPA has not justified the inclusion of existing or new nuclear generation as part of the BSER. Commen ters continued that, even if the EPA removes nuclear power from the BSER, it is possible that the states may include it in their implementation plans. Commenters stated that the EPA is required to satisfy the BSER criteria in setting its targets

- and it i s clear that nuclear power does not meet those criteria. Commenters stated that for inclusion of existing and under

- construction nuclear setting emission rate targets, the EPA did not evaluate the economic aspects correctly and also did not address a numbe r of

non

- air quality impacts, which the Clean Air Act requires it to consider. Commenters stated that the EPA did not consider a number of other important issues that preclude the consideration of579 nuclear generation as BSER, including the following: 1) The EPA's approach relies on the continuation of a heavily centralized electricity grid; and 2) The EPA Clean Power Plan does not consider the economic impact on low income households of the increasing use of natural gas for power generation.

Commenters stat ed EPA failed to properly "tak[e] into account the cost" when it proposed to treat under construction nuclear units as BSER. Commenters said the EPA's assertion related to "incremental costs" is inconsistent with the plain language of the statute, which re quires EPA to consider the "cost." Commenters stated assuming "zero" cost for under construction "controls" is unprecedented in the section 111(d) context, and by ignoring the total value of their investment merely because they acted early in advancing the first new nuclear power plants in nearly 30 years, the EPA's determination is fundamentally flawed. Commenters said the EPA has never mandated such a large capital investment as BSER for affected units.

Commenters stated that nuclear power should not be c onsidered as a BSER because the nuclear power industry has been unable to control construction costs after decades of significant subsidies while the federal government has not been able to license a long

- term geologic repository for high level nuclear was tes; nor does the federal government know when a repository will be complete or how much it will cost, which represents more than trivial problems for nuclear energy.

Commenters expressed concerns about the EPA's cost of CO2 emissions from nuclear generat ion; in general, there's not enough clarity on the costs of operating a nuclear reactor in deregulated versus regulated markets. Commenters stated that the EPA anticipates approximately 6 percent of existing nuclear capacity will be decommissioned; they ci te a report that estimates $6/MWh shortfall in covering a threatened nuclear reactor from covering operating costs with electricity sales; and they estimates offsetting the revenue loss of "at

- risk" nuclear reactors as approximately $12 to $17 per metric t on of CO2. Commenters stated that they are concerned as to what EPA considers economically reasonable for keeping at

- risk nuclear reactors operating. Commenters stated that they wanted to know if there is a cost the EPA thinks is unreasonable. Commenters s tated that they agree with IEER comments on this issue. Commenters stated that CPP should not subsidize aging and unprofitable nuclear reactors. Commenters stated that EPA allows for state flexibility to use carbon reduction techniques that are not identif ied as BSER in the CPP; natural gas and nuclear can be used by states if they choose while not being considered a BSER by the EPA.

Commenters stated that the EPA's reliance on under

- construction nuclear as part of its BSER determination for setting the pe rformance standard is not based on a system of emissions reduction, has not accounted for the costs associated with such construction and has not been adequately demonstrated to reduce emissions from fossil fuel

- fired EGUs.

Commenters stated that the cons truction of nuclear generation has never been used by EPA (and, in the statute, was never viewed by Congress) as a system or method of emission reduction for other, unrelated EGUs. Commenters stated that Congress never envisioned EPA would graft such a swe eping interpretation on to the term "system of emission reduction" in section 111, and EPA's attempt to do so is arbitrary and capricious. Commenters stated that EPA has never required any type of replacement generation as a system or method of emission re duction in a580 section 111 performance standard setting process as there is no authority under the CAA to require the development or operation of replacement generation as part of a BSER determination. Commenters stated that EPA's attempt to justify its appr oach by creating some distinction between under

- construction nuclear and new (yet

- to

- be

- planned) nuclear is equally unjustified, arbitrary and without precedent or statutory authority. Commenters stated that EPA implies that because it historically has dis tinguished between affected sources that are under construction at the time of proposal and those that are not, that it can similarly distinguish between under

construction nuclear and new nuclear as part of its BSER determination for fossil fuel

- fired EGU s. Commenters remarked that a gaping flaw to that approach is that neither new nor under

construction (nor, for that matter existing) nuclear units are part of the affected facility under Section 111. and, thus, there is no legal rationale for EPA's approa ch. Commenters contended that while the desire to include under construction nuclear may be fueled by the overriding policy goal of decreasing the utilization of existing fossil generating units by any means necessary, that goal cannot outweigh the limitin g parameters of EPA's authority

- here bound by the CAA

- to regulate under construction nuclear capacity within the confines of a performance standard setting process for several categories of fossil fuel

- fired EGUs.

Commenters stated that it cannot be s aid that the Vogtle units are an "adequately demonstrated" system for purposes of section 111 as an adequately demonstrated system is one shown to be reasonably reliable, reasonably efficient and reasonably able (and reasonably expected) to serve the inter ests of pollution control without becoming exorbitantly costly in an economic or environmental way. Commenters stated that nuclear units cannot be viewed as a mechanism for pollution control at another power plant; nor are they inexpensive, or within the c ost level normally viewed as appropriate for purposes of establishing a section 111 performance standard. Commenters stated that whether the nuclear fission process that will be used at Plant Vogtle is a proven technology is irrelevant to EPA's use of it i n the proposal and as part of its BSER determination. Commenters stated that EPA has not shown that development of a nuclear power plant is a method of reducing emissions from one or more unrelated fossil fuel

- fired EGUs, regardless of whether the new nucl ear plant and the affected [under section 111] fossil fuel

- fired EGUs are owned and operated by the same or separate entities. Commenters contended that absent the required technical basis, the BSER determination must fail. Commenters stated that, further, as EPA notes in the proposed guidelines, Section 402(i) of the Energy Policy Act of 2005 [EPAct05] states: "No technology, or level of emission reduction, solely by reason of the use of the technology, or the achievement of the emission reduction, by 1 or more facilities receiving assistance under this Act, shall be considered to be adequately demonstrated for purposes of [section 111 of the Clean Air Act]'". Commenters stated that Congress crafted this limitation broadly; namely, with respect to "faciliti es receiving assistance under this Act [i.e., the EPAct]." Commenters stated that the EPAct provided various forms of assistance for new nuclear reactors, including tax credits and loan guarantees; the co

- owners of Vogtle 3 and 4 have received, or will rec eive, assistance provided through that legislation, and as such, these units should not, as a legal matter in this context, be deemed "adequately demonstrated."

Commenters stated that any discussion of the reasons nuclear power should not be part of BSER must include the impacts of the front end of the nuclear fuel cycle, i.e., the mining and processing uranium for fuel. Commenters excerpted sections from a report by Fettus and McKinzie that describe the environmental impacts of uranium mining and processi ng and from a report that describe the health effects of uranium mining and processing. Commenters stated that581 there are other "nonair quality health and environmental impact[s]" as envisioned by section 111(d). Commenters stated that the radioactive waste from spent nuclear fuel is a dangerous problem for which there is no good solution and there is also the danger to human health from leaks of radioactive tritium from nuclear power plants. Commenters listed several examples of tritium leaks at several rea ctors. Commenters stated that based on the foregoing problems, it is clear that nuclear power is not a valid consideration in a best system of emission reduction for greenhouse gases.

Commenters stated that the EPA has not justified its reliance on nuclear power as an appropriate aspect of a best system of emission reduction. Commenters stated that the EPA's assertions to the contrary, nuclear power is not carbonfree and does not provid e an alternative to coal at a reasonable cost. Commenters stated that EPA has minimized the impact of the radioactive waste from nuclear power as well as the economic challenges that nuclear power faces. Commenters stated that EPA has touted new designs in nuclear reactors without any discussion of those designs and their inherent flaws and has totally ignored the impacts of the front end of the nuclear fuel cycle, uranium mining and processing. Commenters remarked that EPA has not given a fair analysis to renewable energy and energy efficiency. Commenters stated that by failing to address all of these considerations, the Clean Power Plan is subject to being set aside pursuant to the Administrative Procedure Act.

Commenters stated that nuclear power in any form, including existing "at risk" reactors, should not be considered as a BSER technology: it is neither a renewable generation resource, relying on a finite fuel source (uranium), nor does it pass any rational cost

- effective test that will be employed fo r purposes of determining BSER alternatives. Commenters stated that nuclear power is the most expensive currently available generation resource in the nation and its overall, levelized costs, including still

- unsolvable waste management and unknown disposal technologies, are incalculable. Commenters stated that the draft rule may actually encourage states where reactors are at some stage of construction to continue massive investments when far less expensive alternatives

- notably renewable energy and energy efficiency

- are available. Commenters stated that if the rule assumes there is no cost of completing any of the reactors regardless of massive cost overruns and delays, then nuclear would irrationally be viewed as competitive as a resource as solar or wi nd; nor should the rule suggest or assume that decommissioned reactors must be replaced with thermal, GHG

- emitting resources. Commenters stated that they see no justification to provide states with operating or planned nuclear reactors a credit toward targ et compliance in exchange for further massive investments in reactors, as has been suggested; regardless of whether the rule considers nuclear to be a BSER, it should be disqualified as a resource to help meet emission reduction targets.

Commenters presen ted evidence of extensive radioactive contamination from the Chernobyl Nuclear Disaster, including the forced permanent evacuation of over 116,000 people from homes and business and widespread contamination from Cesium

- 137. Commenters stated that even the remote possibility of such widespread and enduring damage is reason enough to be a valid reason to exclude nuclear from any truthfully Clean Power Plan.

Commenters stated that over 60 epidemiological studies worldwide have examined the incidence of childhood cancer near nuclear power plants, and most of them have indicated leukemia increases. Commenters stated that nuclear power is dirty and a danger to our children.582 Comment 28: Commenters stated that nuclear power is expensive.

Response 28: EPA ac knowledges the comments and has determined that the BSER for the final rule will not include the proposed provisions for nuclear units in the setting of state goals. Please see section V.A of the preamble for further discussion of the decision to exclude n uclear generation from BSER.

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

Commenters opposed the EPA's inclusion of nuclear power under Building Block 3 since it is unpredictable. Also, commenters remarked that nuclear e nergy has become very expensive to matter according to a recent report produced by the Massachusetts Institute of Technology.

Commenters reviewed two current efforts of preserving at

- risk nuclear reactors [Davis

- Besse and Ginna] to illustrate that the EPA 's estimate of the cost of preserving at

- risk nuclear generation is too low.

Commenters stated that the issue of continued operation of existing nuclear facilities needs a much deeper evaluation. Commenters stated that in unregulated generation service ar eas where low cost generation is key it seems highly unlikely that owners would continue to maintain high cost existing nuclear facilities.

Commenters stated that the EPA's approach is not technology neutral; rather it sets the stage for the nuclear indust ry to extract concessions and subsidies from states. Commenters stated that EPA's use of a formula for calculating allowable emission rates with existing nuclear (at 6 percent of each nuclear power reactor) and all five reactors under construction puts pre ssure on states to subsidize the plants to keep them open and in the case of the ones under construction to complete them at substantial risk and expense. Commenters stated that a technology neutral rule is important because it allows the consideration of the merits of each technology that is used to reduce emissions based on its attributes in relation to the criteria for a best system of emission reduction. Commenters stated that in contrast, the CPP's a priori decision that at

- risk nuclear plants should b e kept on

- line led to a mis

- estimation of costs and an ignoring of a host of non

- air quality impacts.

Commenters stated that the CPP assumes that the CO2 reductions due to the deployment of the reactors under construction in Georgia, South Carolina, and Te nnessee would have zero cost for the CO2 reductions since the decisions to construct these units were made prior to this proposal. Commenters stated that this assumption is not correct and noted the following:

• The reactors themselves are very expensive; th e cumulative cost of these five reactors, as currently estimated, stands at about $31 billion.

• Significant expenditures remain to be incurred on these units.583 • Demand for electricity is growing far more slowly today than anticipated at the time the decision to build them was made.

• Costs have risen and schedules for all these reactors have slipped.

Commenters summarized the objections from the Environmental Protection Division of the State of Georgia (Georgia EPD) to the EPA's assumption of zero cost and its i nclusion of nuclear generation in the EPA's rate calculation to tighten its allowed rate of emissions. Commenters referred to the objections expressed by the Georgia EPD, and stated that the actual costs undermine EPA's basic reason for including under

- con struction nuclear in the baseline calculations and that these units are not an inexpensive opportunity to reduce carbon emissions from existing fossil units but are in fact quite costly.

Commenters stated that the EPA itself noted that nuclear generating c apacity is also relatively expensive to build compared to other types of generating capacity, and little new nuclear capacity has been constructed in the U.S. in recent years. Commenters stated that under

construction nuclear reactors do not meet the cost criteria for a BSER as they are an expensive way to reduce CO2 emissions, as even the State of Georgia, which is encouraging nuclear development, has acknowledged; and as the EPA itself has commented, there is little reactor development taking place becaus e of the high cost of building nuclear power plants.

Commenters stated that in order to include nuclear power in a BSER, the EPA must show that the cost per metric ton of CO2 emissions reduced or avoided is comparable to or less than other potential compon ents of such a system or that there is a good, statutorily authorized reason to accept higher costs; nuclear does not meet either test. Commenters cited a 2014 analysis by Lazard that concluded that it was much cheaper to use utility scale solar photovolta ic electricity than nuclear electricity to reduce CO2 emissions: $7 vs. $28, respectively, to displace coal generation at the lower end of the estimated levelized costs of the two technologies. Commenters stated that wind energy, being cheaper than coal ge neration, has negative costs of reducing CO2 emissions

- that is using wind generated electricity to displace coal results in money savings even before the costs of CO2 emission abatement are taken into account; energy efficiency is the cheapest way to red uce CO2 emissions. Commenters stated that even natural gas combined cycle plants are a cheaper way to reduce CO2 emissions compared to nuclear, if one does not take methane leaks into account or conclude, as the EPA has done, that methane leaks would not a dd to the CO2eq emissions by the year 2030. Commenters included table of levelized cost of various technologies and corresponding costs to reduce CO2 when used to displace new coal generation. Commenters stated that new nuclear is a far more expensive way to reduce CO2 emissions than four major resources (efficiency, onshore wind, utility solar, and NGCC plants) in the EPA's framework and three in ours (onshore wind, utility solar, and efficiency). Commenters stated that the rapid decrease in cost of distr ibuted solar systems will also very likely further increase their competiveness in comparison to new nuclear plants. Commenters noted that Georgia Power recently revealed that they selected utility

- scale solar bid at a levelized price below $65 per MWh, fa r lower than the lowest estimated cost of new nuclear in Lazard 2014 at $90 per MWh. Commenters stated that Lazard estimates energy efficiency costs to be in the range of $0 to $50 per megawatt

- hour compared to a range of $90 to $134 per megawatt

- hour for nuclear; the average nuclear cost estimate is $112 per megawatt

- hour compared to the average estimate of $25 for efficiency. Commenters stated that investments in efficiency would, on584 average, be preferred to nuclear even if the four reactors were three

- fo urths complete. Commenters stated that the states of Georgia and South Carolina are far behind the rest of the country in efficiency investments, being ranked 35th and 42nd among the states in this area by the American Council on an Energy

- Efficient Econom y and that same group estimates the average cost of energy efficiency measures to be $54 per megawatt

- hour, including utility and participant expenditures. Commenters remarked that, the value of $54 per megawatt

- hour is an unweighted average of the total c ost of efficiency programs; the cost, weighted by generation in each state, which is more representative of the overall efficiency effort, is $49 per megawatt

- hour and either number is far lower than the average cost of new nuclear.

Commenters stated that the CPP has also underestimated the potential cost of keeping at risk reactors open. Commenters remarked that the actual cost of keeping a specific unit operational that is losing money will be much higher than estimated costs in CPP. Commenters provided

e xamples to illustrate their point. Commenters stated that, if Davis

- Besse gets a price of $65 per MWh in the purchased power agreement (PPA) it seeks, the subsidy would be about $26 per MWh or about $180 million per year, and the subsidy for the smaller Gi nna reactor, which is also at risk, at about $20 per MWh would cost over $90 million per year. Commenters stated that, UBS Securities, a Wall Street firm, has estimated that the purchased power agreement for the Ginna plant is $26 per megawatt

- hour above m arket prices.

Commenters stated that EPA completely ignores cost when including under

- construction nuclear into its BSER determination and disagrees with the assumption of zero cost for under

construction nuclear. Commenters stated that EPA ignores the pla in language of the statute, requiring that costs be considered; assuming zero cost for under

- construction "controls" at nuclear units is unreasonable and arbitrary. Commenters stated that there are no NSPS

- based controls at Vogtle Units 3 and 4 because the re are no regulated emissions at those units. Commenters stated that EPA provides no support for this zero

- cost determination in the administrative record and has not explained how "incremental cost" should be defined in this context, or how such costs sho uld be calculated; EPA's entire justification is contained in a one paragraph discussion in the preamble regarding the lack of any "incremental cost" of completing these projects. Commenters stated that the Agency completely ignores the $14 billion being

s pent to construct and begin the operation of these units, and commenters do not think any discretion a Court may extend EPA in the BSER determination extends to the complete disregard of such substantial expenses. Commenters stated that EPA's analysis is u njustified under the requirements of the statute and is not part of reasoned decision

- making or the legitimate result of any discretion afforded the Agency in this regard; EPA should correct this serious flaw in its BSER determination and as part of its em ission control guidelines. Commenters stated that, in sum, at $20 to $26 per megawatt

- hour, the total subsidies required to keep 5.7 gigawatts of at

risk nuclear power on line would be between about $900 million and $1.2 billion per year (rounded); over a typical 15

- year period of purchased power agreements, the cumulative
cost would be between approximately $13.5 billion and $17.5 billion, using an average capacity factor of 90 percent.

Commenters stated that nuclear power generation is zero

- carbon but is too expensive for development by a municipality like the City of Lakeland and while additional nuclear capacity within the state could help with achieving the reduction goal, to the extent that the state eventually mandates reductions by individual utiliti es, this is not a feasible option for the City.585 Commenters stated that there are serious errors in the EPA's analysis of the cost of nuclear generation that is important to correct as nuclear power is exorbitantly expensive and requires large subsidies, wi th consumers paying those subsidies through their electricity bills. Commenters stated that the proposal encourages the preservation of nuclear generators that are likely to be taken offline because they are not cost

- effective, but the very reason these un its are likely to be retired is that they would require large subsidies to maintain in operation. Commenters stated that the agency states that a host of factors have altered the outlook for the U.S. nuclear fleet in recent years; but the common element am ong all of the factors is economic viability, including increasing fixed operation and maintenance costs, relatively low wholesale electricity prices, and additional capital investment associated with ensuring plant security and emergency preparedness.

Com menters stated that the agency is not justified in arbitrarily omitting the costs of building these plants merely because their construction is based on existing state policy. Commenters stated that the proposal relies on existing policies in myriad ways, and in no other instance does the agency omit the costs of a particular policy merely because it is in place already; in all cases, including the construction of new nuclear generating units, the policymakers could change course, or they might decide to st ay the course as part of a compliance plan for this rule.

Commenters stated that the proposal dismisses the costs from radioactive waste that would result from preserving or increasing the deployment of nuclear generation, which creates significant additio nal costs from potential environmental contamination events and the ongoing difficulty of developing and managing interim and long

- term waste storage. Commenters remarked that the failure by the U.S. to site a permanent waste repository has resulted in nea rly 80 lawsuits by utilities seeking to recover costs of waste storage; these settlements and judgments paid from the taxpayer

- funded Judgment Fund, have ballooned to $2 billion and could reach more than $20 billion if DOE begins accepting waste by 2020 an d, if it does not, then the cost are projected to rise by hundreds of millions of dollars annually.

Commenters stated that the agency also ignores the potential economic and health costs from radiological accidents, which are massive; as of late 2012, Toky o Electric Power Co. estimated that the cleanup from the Fukushima nuclear disaster in Japan might cost $137 billion and estimates of the total economic impact range from $250 billion to $500 billion. Commenters stated that the proposal also fails to consi der the impact of nuclear generation's intensive water requirements on water resources. Commenters stated that the agency's partial and inaccurate treatment of nuclear generation costs is deeply problematic because a full and accurate accounting of the cos ts would lead to vastly different conclusions about the propriety of including nuclear generation in the state targets, almost certainly leading to the omission of nuclear generation entirely. Commenters stated that subsidizing uneconomical nuclear generat ion burdens ratepayers with unnecessary costs and unwisely depresses the expansion of safer, cheaper, and more sustainable renewable resources.

Commenters stated that nuclear power does not come within the definition of best system of emission reduction; n uclear power is dirty, dangerous and expensive. Commenters stated that nuclear power is not viable without significant ratepayer and taxpayer subsidies. Commenters stated that Exelon Corporation estimated that it would require $580 million in government

su pport to try to keep Exelon's fleet of nuclear reactors operating and that this would raise the586 price of energy by as much as eight percent; but even then, Exelon would not commit to keeping all of its Illinois reactors open. Commenters stated that the Nuc lear Energy Institute reports that costs to maintain nuclear reactors are rising faster than the rate of inflation; in 2012, the average cost was $44.17/MWh, more than 11 percent higher than in 2010, an increase that continues a previous trend in which, be tween 2007 and 2011 costs rose by one

- third to $43/MWh.

Commenters stated that further evidence of the economic challenges for nuclear power was described in Mark Cooper, The Economics of Nuclear Reactors: Renaissance or Relapse. Commenters excerpted sections from this report describing the costs and the environmental impact associated with electricity from nuclear reactors. Commenters stated that this report identifies three major factors that impact the economic analysis of nuclear power, and thus th e point that nuclear power is not part of the best system of emission reduction; these factors are risk, externalities, and subsidies. Commenters cited excerpts from the report discussing the risk and externalities factors associated with nuclear power. Co mmenters stated that with regard to externalities, Mr. Cooper noted that the external costs and impacts of nuclear power are ignored or minimized in analyses of energy alternatives; these externalities include the excessive cost of nuclear power in attempt ing to reduce carbon emissions; the actual carbon footprint of nuclear energy, primarily from the mining, processing and transportation of nuclear fuel; safety and security concerns; and the impacts of radioactive waste. Commenters excerpted sections from the Cooper report that evaluated the demand for nuclear power subsidies for building additional reactors. Commenters stated that Mr. Cooper also discussed why currently operating reactors are at risk.

Commenters stated that regarding construction of new nu clear reactors, the CPP recognizes that nuclear reactors are expensive to build, but omits or glosses over, however, the overall economic factors working against nuclear power. Commenters stated that first, it takes many years for the regulatory and constr uction process to be completed before a new nuclear reactor comes on line; second, the expense of building nuclear reactors has continued to increase over the past 40 years and there is no indication that this trend will not continue.

Commenters stated tha t the CPP touts the technological and design advances in nuclear reactors, although it is not clear what technological advances are being referenced or how such advances factor into building block 3; in any event, the advances are overstated. Commenters st ated that if the reference is to small modular reactors (SMRs), reliance on that technology is misplaced. Commenters remarked that there are currently four SMR designs being considered; these are all pressurized light water reactors, relying on the same un derlying concept as the large commercial reactors currently in use. Commenters stated that SMR technology will suffer disproportionately from material cost increases because they use more material per MW of capacity; the untested design and the aggressive deployment strategy for SMR technology raise important safety questions and concerns; and cost estimates that assume quick design approval and deployment are certain to prove to be optimistic. Commenters stated that SMRs are not economical as nuclear react ors are strongly sensitive to economics of scale: the cost per unit of capacity goes up as the size goes down. Commenters remarked that the nuclear industry already acknowledges that non

- fuel operating and maintenance costs are expected to be higher than p resent reactors and uranium resource and enrichment requirements are likely to also be higher; in fact, two of the leading U.S. developers have announced that they are slowing down the development of SMR technology because they cannot find customers (Westi nghouse) or major investors (i.e., Babcock587 & Wilcox). Commenters stated that even nuclear industry executives and regulators believe the SMR technology will have costs substantially higher than the current reactor technology on a per unit of output basis w ith the higher costs resulting from lost economies of scale on containment structures, dedicated systems for control, management and emergency response, and the cost of licensing and security; operating costs between one

- fifth and one

- fourth higher; and de commissioning costs between two and three times as high.

Commenters stated that in evaluating whether nuclear generation is a cost

- effective option in the BSER framework for reducing carbon emissions, EPA failed to consider the full range of costs of nucle ar generation as a control technology. Commenters noted that EPA has generally underestimated the general construction and operation costs to build nuclear generation, as demonstrated by the trend of cost overruns at projects under construction. Commenters remarked that the costs to provide backup generation when a nuclear reactor goes offline along with the costs of securing standby control measures for reducing carbon emissions in a state plan are far higher than the costs to backup other BSER control tec hnologies like solar and wind generation, and the costs to mitigate water and other resource use, clean up any environmental harm, and address public health harm caused by nuclear generation are significant. Commenters stated that even if EPA views nuclear generation as practically enforceable, these incremental costs of nuclear generation to utility customers and to society in general are, cumulatively, far greater than any incremental costs associated with cleaner and safer alternatives. Commenters stated that nuclear energy generation is an expensive, water

- intensive and risky energy choice when compared to other low carbon

- emitting options within Building Block 3 and, by including it in Building Block 3, EPA is diverting resources away from the most cost

- effective technologies for reducing carbon emissions and towards an unsafe energy resource. Commenters stated that nuclear reactors produce toxic, extremely long

- lived, highly radioactive waste for which no safe storage or management yet exists, require m assive amounts of water to operate and can have catastrophic human, environmental and economic consequences s hould a severe accident occur.

Commenters stated that if EPA includes nuclear energy as a compliance option, states that rely significantly on nucl ear energy for compliance will face serious challenges in meeting carbon emission reduction goals as nuclear reactors go offline or scale back power for various reasons, many of which are outside of a state's control. Commenters stated that droughts or sum mer heat waves can affect the water supply on which a reactor relies to provide adequate cooling water and ensure safe operation of the plant; not enough water may be available, water supplies may be already too hot for reactor use, or the water being disc harged by the plant may violate thermal discharge limits.

Commenters stated that states have no authority to direct operational decisions made by the NRC as the primary regulator of nuclear reactors. Commenters stated that nuclear accidents or safety

conce rns can have fleet

- wide implications that are outside of state regulatory control; it is reasonably foreseeable that regulatory decisions made by the NRC regarding safety issues could prevent compliance with the CPP if nuclear energy is included in a state 's compliance plan.

Commenters stated that present

- day examples confirm that nuclear generation is expensive. Commenters remarked that currently all five reactors under construction in the U.S. have experienced significant cost increases and scheduling de lays; these alone provide ample evidence of why nuclear energy generation cannot be viewed as a reasonable cost carbon reduction option.588 Commenters stated that proposed reactors, not yet under construction, have also experienced serious and costly delays i ncluding suspensions and cancelations; for example, Florida utilities have proposed up to four new nuclear reactors, all using the Toshiba

- Westinghouse AP1000 design, located at two sites: Duke Energy Florida's (DEF) Levy County project (2 units) and FPL's Turkey Point 6 & 7 reactors (2 units). Commenters stated that both of these projects are

sev erely over budget and delayed.

Commenters stated that families, business and those on fixed budgets have been negatively impacted due in part to state legislation that allows utilities to charge customers in advance for costs associated with development of new reactors. Commenters stated that in the case of the capacity expansion at DEF's Crystal River 3 reactor (which presumably could have counted towards Florida's state compliance plan), customers will not receive refunds for the canceled project. Commenters stated that the costs associated with these projects in Florida have shown that new nuclear energy it is not a cost

- effective option for utility customers.

Com menters stated that at the scale of a nuclear generation plant, EPA must require that state compliance plans include immediate requirements for corrective measures upon a failure to achieve the required level of emission performance. Commenters stated that such a large inventory of ready

- to

- go contingency measures must be continuously maintained (e.g., if some measures are no longer feasible, or are not implemented, then new measures must be added). Commenters stated that due to the potential that these con tingency measures were not selected for inclusion in the plan, and should not have lengthy development timelines so as to be available for immediate implementation, they would be more expensive than any measure in the plan that might be more methodically d eveloped; the probability that such costs will be incurred should be considered as a component of the cost of nuclear power.

Commenters stated that along with the high costs to develop new nuclear energy, the five under construction nuclear reactors will c ontinue to require significant expenditures on the road to completion. Commenters stated that EPA's assessment of new nuclear energy generation as a "reasonable cost" or "zero cost" option to reduce carbon emissions is not supported by the facts and could inadvertently push states towards restarting canceled and uneconomic nuclear reactor proposals. Commenters stated that all five of the under construction nuclear reactors are located in the Southeast and demonstrate that the cost of new nuclear generation is not reasonable or

zero.
Commenters stated that the two proposed Toshiba

- Westinghouse AP1000 reactors now under construction at Plant Vogtle have experienced significant cost increases and schedule delays; revised scheduling estimates of when they will c ome online represent a 21

- month delay. Commenters stated that Georgia Public Service Commission Public Interest Advocacy Staff filed testimony that the 21

- month delay scenario is an underestimate and that the Vogtle reactors will not come online at the end of 2017 and 2018.

Commenters stated that while the schedule has slipped significantly, the costs have increased substantially as well. The commented stated that the average Total Project and Production Cost impact caused by a delay increases to approxima tely $2.0 million per day. Commenters stated that the initial certified cost for Georgia Power's share of the project was approximately $6.1 billion; with a 21

- month delay, the Company's cost estimate has increased to approximately $6.8589 billion. Commenters stated that Georgia Power has spent $2.8 billion in cumulative construction and capital costs as of June 30, 2014, which means that Georgia Power has spent a little more than a third of the estimated project costs, leaving significant risk that costs will increase further. Commenters stated that Georgia Power is 45.7 percent owner in the project, with the majority owned by three public utilities, Oglethorpe Power, MEAG and the City of Dalton. Commenters stated that apportioning Georgia Power's reported cos ts to the full ownership indicates that the original $14.1 billion Vogtle project now costs at least $15.5 billion.

Commenters stated that federal taxpayers and utility ratepayers bear most of the risk from schedule delays and cost overruns. Commenters st ated that in February 2010, $8.3 billion in federal conditional nuclear loan guarantees were offered to the Vogtle project; Georgia Power and Oglethorpe finalized $6.3 billion in loan guarantees in February 2014; MEAG has yet to finalize the remaining $1.8 billion. Commenters stated that the 2009 Georgia Nuclear Financing Act requires Georgia Power ratepayers to pay in advance for the financing costs associated with the new reactors. Commenters stated that between January 2011 and September 2014, $1.0 billi on has been collected from customers through the Nuclear Construction Cost Recovery rider (NCCR); the NCCR rider is currently over 9.3 percent of a typical customer's bill and the longer the project takes, the more ratepayers are paying for financing costs

- placing the burden on Georgia ratepayers rather than the utilities. Commenters stated that the substantial costs associated with the Vogtle project are acknowledged in Georgia Environmental Protection Division's (EPD) September 16, 2014 comments to the EPA.

Commenters stated that SCANA's subsidiary SCE&G has also demonstrated cost overruns and scheduling delays in the construction of two new AP1000 reactors at the V.C. Summer nuclear plant. Commenters provided details of the increasing and substantial co st overruns, the substantial unknown expenditures that remain and the continued schedule delays. Commenters stated that SCE&G customers are paying for financing charges for the project in advance under the 2007 Baseload Review Act (BLRA). Commenters stated that through October 2014, customers have faced an average 2.3 percent annual increase for the nuclear project since it was approved in February 2009 and approximately 13 percent of their monthly bill is now for the nuclear costs.

Commenters stated that T VA's efforts to complete a second reactor at their Watts Bar nuclear plant in Spring City, Tennessee is unique in terms of under construction nuclear generation and illustrates the troubled history of the nuclear energy industry. Commenters stated that Wat ts Bar 2 has been under construction since 1973; construction stopped in the 1980s due to fleet

- wide safety and management concerns at TVA and construction did not resume until 2007 with operation originally expected in 2012. Commenters stated that operati on has been further delayed until December 2015 and may be delayed even further, and unlike the Vogtle and V.C. Summer reactors under construction, Watts Bar 2 does not have an Operating License (OL) from the NRC. Commenters stated that in addition to expe riencing an extremely extended construction and licensing schedule, Watts Bar 2 has encountered cost overruns. Commenters stated that one reason for the schedule delays and cost overruns is the need to address safety concerns exposed after the devastating nuclear accident at the Fukushima Dai

- ichi nuclear plant in March 2011; a full response for Watts Bar 2 has yet to be resolved. Commenters stated that the NRC's Fukushima Near

- Term Task Force report included a recommendation in the set of "near

- term action s, that advises the NRC to order the licensees to reevaluate the seismic and flooding590 hazards at their sites against current NRC requirements and guidance, and, if necessary, update the design basis and structures, systems and components important to safet y to protect against the updated hazards. Commenters stated that the Task Force also recommended that these issues be resolved for Watts Bar 2 in the course of the operating license (OL) review: For the two plants with reactivated construction permits (Wat ts Bar Unit 2 and Bellefonte Unit 1), the Task Force recommends that those operating license reviews and the licensing itself include all of the near

term actions and any of the recommended rule changes that have been completed at the time of licensing. Co mmenters concluded that any additional rule changes would be imposed on the plants in the same manner as for other operating reactors.

Commenters stated that responsible safety regulation by the NRC could prevent compliance with the CPP if nuclear energy remains an eligible compliance measure. Commenters stated that at no point should a short

- term CAA compliance requirement justify relaxed nuclear safety standards, but neither should EPA permit compliance plans that unreasonably presume that nuclear plant construction will proceed on schedule, at projected costs, and without delays due to responsible safety regulation.

Commenters provided a list of citations to support their comments.

Commenters stated that windpower, industrial cogeneration, and other low

- or no

- emission resources are available at costs below nuclear operating costs, and referred to Bloomberg New Energy Finance's estimated unsubsidized windpower cost of $37/MWh. Commenters stated that the conclusion that the EPA's analytic treatment of pre serving at

- risk nuclear units is unsound does not depend only on the empirical costs of nuclear operation vs. efficiency, but also on the market prices of at least two supply

- side alternatives. Commenters stated that these three non

nuclear options togethe r received more than $600 billion of global investment in 2013 alone, dwarfing all nuclear investment.

Commenters stated the EPA vastly under understated the achievable and cost

- effective energy efficiency potential in Building Block 4 and the renewable po tential in Building Block 3. Commenters contended that this underestimates the additional carbon and money that can be saved by improving the EPA's analysis and further encouraging states to buy more efficiency and renewables, rather than paying the often higher operating costs of their existing nuclear plants, let alone making customers or ratepayers bail out uneconomic nuclear operations. Commenters stated that new

- build nuclear plants' discouraging and worsening competitive landscape was described nine y ears ago in his Nuclear Engineering International article, and in 2011 in Reinventing Fire.

Commenter s stated that the EPA's building

- block methodology would allow states to count in their compliance plan the carbon savings from continued operation of nuc lear units at risk of premature closure making some states feel advised or even obliged to bail out money

- losing nuclear plants as operators have requested, for example, in Illinois. Commenters stated that this would burden customers, leaving them less mon ey to invest in more cost

- and carbon

- effective efficiency and renewable alternatives. Commenters recommended a least

- cost approach by the states, saving the most carbon per dollar, is what the EPA rule should encourage, enabling the new energy system, not protecting the old one.591 Commenters described as odd that, as shown in Table 4.10 of the GHG Abatement TSD, the EPA pro rates the at

- risk facilities across all states' nuclear capacity, rather than just to the states with units actually at risk. Commenter s stated that the EPA's analysis further assumes that the output from at

- risk nuclear plants is required and that if closed, they must be replaced with other EGUs. Commenters stated that these issues should be clarified, lest states interpret them in ways that yield perverse results, including lower carbon savings and higher costs. Commenters stated that the EPA's nuclear

- power analysis has deeper flaws, which, if corrected, could abate substantially more carbon emissions at lower cost than the mix of propo sed abatement measures.

Commenter s stated that EPA's assumption that increasing nuclear capacity as a means of reducing CO2 emissions is not desirable from an economic or policy view for the following

reasons:

• Inflexible operation. Commenters stated that o peration of nuclear units is inflexible due to load

- following constraints in range and ramp

- rate, scheduling requirements (e.g. for refueling and major maintenance), thermal

- fatigue and neutronic issues, and must

- run regulatory designations; thus, dispatch of nuclear units are generally not considered economical.

• Economic unviablility in today's wholesale power market. Commenters stated that nuclear units are often exposed to negative wholesale market prices. Commenters contended that relieving local transm ission bottlenecks may abate negative market clearing prices but the general result of grid and dispatch improvements will be to increase nuclear plants' exposure to even stiffer price competition, promptly from Midwestern windpower and increasingly from o n peak photovoltaics.

• Long

- run avoided costs can exceed short

- run avoided costs, and must be counted. Commenters stated that where economic dispatch occurs, it is typically based on short

- run variable costs; however, if the operator decides to close a nucl ear unit, then a range of longer

- run variable costs can be avoided, increasing over time depending on schedules; those avoidable operating costs can include periodic variable costs, fixed operating and maintenance costs and, ultimately, net capital additio ns. Commenters stated that the nuclear industry treats net capital additions as operating costs in this context. Commenters remarked that the Electric Utility Cost Group data show that the busbar costs avoidable by retiring a nuclear unit averaged $44.2/MW h in 2012

- seven times larger than the proposed less than or equal to $6/MWh typical shortfall between nuclear operating costs and competing wholesale power prices. Commenters contended that the statement, "Assuming that such a revenue shortfall is repres entative of the incentive to retire at

- risk nuclear capacity, one can estimate the value of offsetting the revenue loss at these
at

- risk nuclear units to be approximately $12 to $17 per metric ton of CO2,"would appear to be wrong by greater than or equal t o 7 times against fully counted average operating cost, or by greater than or equal to 15 times against the higher operating cost to customers of the specific units actually most at risk of being closed as too costly to run. Commenters concluded that cont inuing to run such nuclear units misallocates customers' (and ultimately shareholders') capital from

more

- to less

- effective carbon

- abating investments. Commenters further592 concluded that, all the real operating costs, over all timescales, including their

e xpected real escalation, are avoidable if a nuclear unit is shut down.

Commenter s stated that average nuclear operating costs mask wide differences between units. Commenters stated that, for example, during 2010

- 12, NEI's EUCG data show that the costliest

to

- run quartile of plants averaged $62.4/MWh to run (2012 $)

- 41percent above the $44.2/MWh average for all nuclear units, and 2.2 times the cheapest

- to

- run quartile; the EPA's analysis doesn't appear to count these large variations. Commenters stated th at a paper they prepared comparing nuclear operating costs by quartile against the general national range of wholesale power prices shows how even the $43/MWh average nuclear operating cost nearly reached the upper end of typical U.S. wholesale electricity prices, while most of the 25 units in the high

- cost quartile were generally uneconomic to operate..

Commenters stated that nuclear real operating costs are trending upwards and presented a supporting graph using data from the Electric Utility Cost Group. Commenters stated that with nuclear operating costs trending upwards while the wholesale power costs reported by FERC are generally trending downwards, the number of nuclear units already at risk of economic closure would appear many times larger than EPA' s assumed 5.7 GW or 5.8 percent of nuclear capacity, and likely to rise further in the future. Commenters stated that EIA has found the same thing in a very plausible variant case, as have independent analysts such as Prof. Mark Cooper and major financial houses. Commenters stated that operators' shutdown cost

- benefit calculus should count all these avoidable costs specific to their region or grid, taking account of the risk of future escalation and of possible breakdowns as units age, vs. returns from ofte n

- below

- market and sometimes negative

- price electricity sales plus the opportunity cost of other (and more carbon

effective) uses to which the saved costs could be applied. Commenters stated that the EPA's methodology should recognize such an approach to o perators' run

- or

- close decisions.

Commenter s stated that nuclear generation is not needed to replace EGUs because other, lower

cost, rapidly deployable, zero

- emissions options are available. Commenters stated that the EPA's central thesis that preserving the operation of at

- risk nuclear capacity would likely be capable of achieving CO2 reductions from affected EGUs at a reasonable cost, is incorrect. Commenters stated that the EPA assumption that continued nuclear operation would displace new combined

cycl e gas or existing grid

- average generator (hence coal

- heavy) operation is unsound, because other investments with lower cost and zero carbon emissions are also available, proven, and rapidly deployable. Commenters stated that comparing how fast a block of G W

- y could be brought online isn't the right metric; a slower but cheaper or more reliable or more durable option could save more carbon, integrated over time, than one available immediately but at higher cost and/or lower assurance of sustained long

- term p ersistence.

Commenters stated that total avoidable operating cost for the average U.S. nuclear plant probably exceeds $45/MWh (2012 $) and possibly now nearly $50; per MWh delivered to the customer, grid losses make these costs about7 percent or a few doll ars higher. Commenters stated that utilities charge the grid's capital and operating costs to any offsite generation they deliver to customers. Commenters stated that EIA's AEO analyses state that today's levelized cost of delivering a busbar kWh to retail meters averages around $43; thus roughly $90 per delivered MWh is a reasonable and perhaps low estimate of today's average nuclear operating cost. Commenters stated that the costliest nuclear units to run, of course, have considerably593 higher operating cos ts, which the industry data suggest probably average >$100 per delivered MWh for the top cost quartile

- and within that quartile, even more for the units most at risk.
Commenters stated that nuclear operating costs around $90

- 100+ per delivered MWh far e xceed the delivered costs of important alternatives; for example, ACEEE and E Source data show that U.S. utilities actually pay average costs about 3

- 7 times less than this for efficiency; the National Academy of Sciences found about 3 times; and Reinventi ng Fire found that nearly 4 times as much electricity as all U.S. nuclear plants produce could be saved at a technical cost an order of magnitude lower than the average delivered cost of operating a U.S. reactor

- or an even greater advantage compared to t he least competitive

- to

- run units. Commenters stated that this several fold higher delivered cost of nuclear operation than of equivalent efficiency means that closing a nuclear unit and investing its avoided operating costs into electric end

- use efficienc y

- both carbon

- free resources

- will save several times more carbon than continuing to operate the nuclear unit. Commenters stated that based on their data, this is also clearly true for the average nuclear unit, and with judicious choices of efficiency i nvestments (not the costliest kinds), it should also be true for the entire nuclear sector. Commenters stated that an optimal climate policy would encourage such smart investment shifts, which could be implemented by state utility commissions or by other s ubnational or national means. Commenters stated that the EPA's assumption that closing a nuclear unit means generating more fossil

- fueled electricity, so preserving at

- risk units' operation is a cost

- effective and desirable contribution to states' portfoli o of carbon

- saving measures, is thus incorrect. Commenters concluded that it misallocates capital and diverts effort from the most carbon

- effective investments.

Commenters stated that the economic pressure due to low natural gas and wholesale electricity
p rices is not unique to nuclear power. Commenters further stated that the economic competitiveness of coal and oil

- fired power plants, renewable energy facilities, and even energy efficiency investments are also affected by low market prices. Commenters rem arked that like nuclear, many older coal plants have needed to make expensive capital investments to replace aging equipment, improve plant efficiency, and install pollution control and other equipment to reduce air pollution and water use, and were forced to retire; however, unlike existing nuclear plants, which have been experiencing increasing costs over the past 10 years, the costs of renewable energy technologies like wind and solar have been falling rapidly. Commenters contended that this has allowed renewables to remain competitive with new natural gas plants in states with high quality resources.

Commenters cited, as an example, a recent DOE report shows that the cost of new wind projects dropped by over 60 percent between 2009 and 2013, allowing the m to remain competitive with declining wholesale electricity prices in some parts of the country; however, this varies greatly by region, with weighted average wind power purchase agreement (PPA) prices between 2011 and 2013 within the range of average ann ual wholesale electricity prices in 2013 in the interior region of the country (i.e., Plains states), and slightly higher than average wholesale prices in the Northeast, Great Lakes and Western regions.

Commenters stated that determining whether an existin g plant is "at risk" is very plant specific. Commenters cited a discussion that was included in a 2013 paper by Amory Lovins, determining whether an existing nuclear plant is at

- risk economically "depends on complex and shifting set of both market and plan t

- specific considerations, so no comparison of average conditions in a594 specific year can support conclusions about any individual plant." Commenters stated that these considerations include the location, size, age, condition, and ownership of the plant. Co mmenters stated that wholesale prices vary widely across the country and over time, and they also reflect the existing generation mix, which could shift over time. Commenters remarked that nuclear plants located in states with below average market prices, excess capacity, high quality wind and solar resources, or strong energy efficiency programs tend to be more vulnerable, and merchant plants located in restructured markets tend to be more vulnerable than plants owned by regulated utilities. Commenters con tended that smaller, single unit plants tend to be more expensive to operate than larger multi

- unit plants, which are better able to spread out the costs of capital investments. Commenters stated that the age and condition of the plant also makes a big dif ference, as older reactors tend to have higher operating costs and face more costly repairs to replace aging and damaged equipment.

Commenters stated that the nuclear industry operating cost data, that divides the 104 operating U.S. reactors into quartiles , shows that at least three

- quarters of U.S. reactors have 3

- year average total generating costs that are within the lower to middle end of the range of 2013 wholesale electricity prices. Commenters also stated that while the average costs of the remaining 25 percent have been higher than wholesale prices since 2009, they are in the middle of the range of wholesale prices between 2005 and 2008 when natural gas prices were higher.

Comment 29: Commenters expressed miscellaneous comments.

Response 29: EPA ac knowledges the comments and has determined that the BSER for the final rule will not include the proposed provisions for nuclear units in the setting of state goals. Please see section V.A of the preamble for further discussion of the decision to exclude nuclear generation from BSER. Please see section V.A of the preamble for further discussion of the treatment of new and uprated nuclear plants, and VIII.K of the preamble for further discussion of provisions in state plans of allowable actions that result in an adjusted CO2 emission rate of an affected EGU.

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

Commenters stated that existing and new nuclear generated electricity would come under the EPA's regulatory umbrella alth ough there is no emission.

Commenters expressed support for solar, wind and geothermal power over nuclear.

Commenters stated that outside the fence line actions are detailed under building blocks two through four and necessary for states to comply with t he proposal, and each of those building blocks is built on questionable assumptions. Commenters remarked Building Block 3's assumptions that no units in the entire fleet of nuclear plants will retire regardless of market conditions is questionable as well.

Commenters stated that the proposal is unfair, unjustified and completely arbitrary, especially Building Block 3 relates to under

- construction nuclear and significant expansion of intermittent, renewable energy generation.595 Commenters mentioned that nucl ear power requires more water than coal, and carbon capture and sequestration almost doubles coal's water requirement.

Commenters stated that the EPA should allow North Carolina to receive credit for any out

- of

state nuclear construction that would be use d to supply electricity to North Carolina because a significant portion of those construction costs would be allocated to North Carolina customers.

Commenters stated that the effect natural gas and market electricity prices are suppressed, as the draft ru le suggested, would be marginal. Commenters recommended that the EPA regard plans based on claims that new nuclear capacity will lower natural gas and electricity market prices skeptically, and conduct a thorough analysis of the deployment cost and market projections.

Commenters stated that the EPA did not include an analysis of uprates in the draft rule, but did exclude additional new reactors from the BSER due to the cost of construction. Commenters remarked that it is presumed that EPA refers to extende d power uprates among the three categories of power uprates authorized by NRC, but in fact, extended uprates may actually be counterproductive to the economics of existing nuclear. Commenters remarked that half of the
at

- risk reactors implemented extended uprates several years ago, and in addition to the high capital cost of implementing a power uprate, the increased material stress on reactor components may either increase maintenance costs on an ongoing basis, or shorten the mechanical life of the
reactor . Given these, the commenters suggested EPA should only consider uprates on a case

specific basis, and with thorough scrutiny of the calculated economic costs and benefits.

Commenters stated that Wisconsin Point Beach Nuclear Plant significantly increased its generation via an extended power uprate in 2011, and this increase in carbon

- free base

- load power should be acknowledged.

Commenters stated that nuclear and hydro plants are typically non

- dispatchable energy generating facilities these plants are not the ones that will be shut down as the system requires fewer peaking plants as load factor improves; dispatchable units are always fossil fuel emitting units. Commenters stated that as these dispatchable units are no longer needed for peaking power, the a verage emissions rate per MWH of generation is decreased.

Commenters stated that using EPA's "at risk" value in Tennessee results in a reduction from 1645 lbs/MWh to 1580 lbs/MWh, a decrease of 65 lbs/MWh, and that using EPA's proposed method for under co nstruction nuclear lowers the formula from 1577 lbs/MWh to 1293 lbs/MWh, a decrease of 287 lbs/MWh.

Commenters stated that generation from nuclear under construction Georgia in 2012 is expected to be 17.4 million MWh, and that new nuclear capacity would d ecrease Georgia's emission rate by an increment of 225 lbs per MWh.

Commenters examined EPA's Building Block 3 component closely and identified several defects with regard to its application to Pennsylvania.

Commenters recommended that, if the EPA finds that nuclear generation can be a practically enforceable measure in state compliance plans, there should be at least three specific requirements for states that choose to include nuclear generation in their state compliance plans:596 (1) the EPA should requir e states to identify the responsible party when action (or inaction) by the NRC results in a failure to reduce emissions as planned; (2) the EPA should require the state compliance plan to identify how that responsible party will implement timely emission reductions to compensate for any failure to reduce emissions as originally described in the plan, and the EPA may also wish to set a maximum percentage of the compliance plan (e.g., three percent) that may be at risk to a single project failure as part of this requirement; (3) for purposes of determining the impact of these plants on the state's adjusted emission rate, the EPA should treat under

- construction nuclear in the same fashion as it treats under

- construction natural gas combined cycle (NGCC) plants as laid out in the draft rule; that is, the assigning a percentage of under construction nuclear generation capacity to the "other" category and recognizing that this capacity was built to serve "other system needs." Likewise, commenters stated EPA should credit a certain percentage of under construction nuclear generation capacity as displacing coal generation and allow the states with these under construction nuclear reactors to include these in their compliance plans.

Commenters stated that EPA should consider encouraging states to establish policies analogous to existing renewable energy portfolio standards (such as Clean Energy Standards inclusive of nuclear) to support the development of new nuclear generating units. Commenters stated that the
propos ed rule creates/incorporates market interventions

- it establishes a clear incentive for the addition of natural gas power generation, and it relies on existing renewable energy standards to drive zero carbon generating capacity as part of Block 3. Comment ers recommended that, given the market risk of natural gas prices on one hand and the capacity limitations of alternative renewable energy sources on the other, nuclear generation must be more explicitly encouraged as part of a reliable emission reduction strategy.
Commenters stated that the EPA's approach penalizes the significant effort that states and companies have made over the past decade or more to reduce GHG emissions. Commenters stated that the EPA's approach will impose greater costs on customers who already are paying for early reductions

-- since their states already have harvested some of the lower

- cost reduction opportunities

-- while asking less of states where such opportunities still exist.

Commenters stated that Louisiana's two nuclear pow er plants are Riverbend Station, unit 1 and Waterford, unit 3, and that their permits are set to expire in 2024 and 2025, respectively. Commenters contended that Entergy will successfully extend the operating permits of these two power plants. Commenters c ontended that emission reduction planning should model Louisiana's emission targets assuming both plants extend their permits successfully.

Commenters stated that the extended timeline of nuclear plant construction, including the licensing and permitting process, should be acknowledged in the Clean Power Plan. Commenters noted that according to recent history, the full process to construct a new nuclear power plant takes about ten years. Commenters cited a recently issued a report by the Center for Strate gic & International Studies that cites 8

- 9 years for the combined design and construction of a new nuclear power plant. Commenters stated that since state plans will not be approved until 2017 at the very earliest and the Clean Power Plan runs until 2030, a new nuclear plant being considered as part of a state's compliance strategy would only have a few years of operation, at most, before the certainty of the plan expires. Commenters contended that without assurance of post

- 2030 targets, a nuclear developer may find the Clean Power Plan too uncertain to make an investment597 decision in the early years of the Plan's operation. Commenters suggested that a nuclear energy developer considering a new plant after 2020 would not be assured of any benefits from the Cl ean Power Plan's 2030 targets.

Commenters suggested that, to account for this, EPA explore a couple of options: (1) EPA could set a timeline for releasing post

- 2030 target emission rates. Ideally, this timeline and the post

2030 targets would be released as soon as feasible to enable nuclear developers and other relevant stakeholders an ample amount of time to plan for new generation. (2) EPA could allow borrowing of credit from nuclear generation that occurs after 2030 in cases where construction is well underway prior to 2030. Commenters stated that this would ensure that nuclear generation developers can benefit from helping states meet their 2030 target emission rate even if construction is not yet complete, and any credit nuclear plant owners claim thr ough this approach would be debited from post

- 2030 generation to ensure each megawatt

- hour of nuclear generation is only counted once.

Commenters stated that if the Proposal's treatment of at

- risk nuclear is maintained in the final rule, it is unclear to u s how at

- risk nuclear generation will be factored into a state's calculated emission rate. Commenters stated that, more specifically, it is not entirely clear whether the 6 percent at

- risk figure is an average, such that a state will always include 6 perce nt of its existing nuclear generation into the denominator of its emission rate, or if it is marginal, such that all loss of existing nuclear generation, up to 6 percent, is to be removed from a state's emission rate denominator. Commenters requested addit ional clarity on this point.

Commenters stated that the EPA targets for renewable energy and nuclear generation are modest, and appear to significantly underestimate the potential for cost

- effective RE. Commenters submitted in support of this statement, a nd with regard to nuclear generation, that all five of Pennsylvania's nuclear generating stations are currently licensed until after the 2030 compliance period. Commenters also stated that in addition, the Peach Bottom Atomic Power Station's license was re cently amended to authorize a 12.5 percent increase in the thermal power level from units 2 and 3; this is an increase of 437 thermal megawatts each.

Commenters stated that EPA's proposal supports nuclear power as a key part of the carbon dioxide emissions reduction strategy. Commenters remarked that since renewables cannot replace the baseload generation attributes of retiring coal plants, maintaining existing reactors and building new units is essential for many states to reach their assigned reduction ta rgets; however, at least nine states (i.e., California, Connecticut, Illinois, Kentucky, Maine, New Jersey, Oregon, West Virginia, and Wisconsin ) have bans on new nuclear builds, which will remain in effect until the federal government, at least to some d egree, resolves the waste disposal issue. Commenters then stated a series of questions:

(a) Given your Administration's opposition to make use of the Yucca Mountain repository, will EPA bring forward a viable, long

- term solution for disposal that would win public support and the necessary votes in Congress? And if so, when?

(b) If not, does your Administration expect the states with bans on new nuclear facilities to revise their laws, despite the federal government's failure to adequately address the
waste issue?598 Commenters cited the CPP and stated that the EPA recognizes that nuclear energy and renewable energy displace fossil fuel generation and thereby reduce CO2 emissions: "nuclear generating capacity facilitates CO2 emission reductions at fossil fuel

- f ired EGUs [Electric Generating Units] by providing carbon

- free generation that can replace generation at those EGUs. Commenters stated that because of their relatively low variable operating costs, nuclear EGUs that are available to operate, typically are dispatched before fossil fuel

- fired EGUs." Commenters also cited the explanation in the Appendix, and commented that the arithmetic of the way the CPP emission targets are developed does not recognize this reality. Commenters stated that there were five nu clear power reactors under construction at the time of the publication of the draft CPP in June 2014: two in Georgia, two in South Carolina, and one in Tennessee. Commenters further noted that the EPA handled the reactors under construction by adding the e xpected electricity generation from these reactors to fossil and renewable generation, without assuming that nuclear would displace fossil fuel generation. Commenters concluded that the CPP's calculation method undervalues new nuclear in terms of the exten t to which emission rates would actually go down.

Commenters stated that they recognize removing nuclear power from the calculation of target rates by itself would weaken the emission targets for the states

- moderately so for states with existing nuclear power plants and much more for the three states with nuclear reactors under construction. Commenters state that they did not advocate a weakening of the target emission rates; rather, the commenters advocated using higher targets for efficiency and renewa ble energies in the best system of emission reduction in amounts that would make the target emission rates more stringent than those on the Clean Power Plan and reduce the mass of greenhouse gas emissions significantly more than about 30 percent reduction relative to 2005 estimated by the EPA for its plan. Commenters also stated that they recognize deriving rates in the way that the commenters propose (i.e., omitting reactors whose licenses are due to expire) opens up the possibility of the states with such reactors using them in their implementation plans. Commenters noted in that case, the requirement for renewable energy and efficiency would be reduced for those states; however, the EPA should discourage such compliance plans for a number of reasons.

Co mmenters stated that the CAA Section 111 language appears to give EPA broad interpretative and expansive authority to determine which system of emission reduction best serves the CAA statutory goals. Commenters recommended that EPA continue to work with Nu clear Regulatory Commission to monitor nuclear plants, particularly after refueling. Commenters asserted this will help to minimize the health risks that are associated with radioactive gas plumes and which primarily affect children and vulnerable populati ons.
Commenters urged EPA to adopt these two changes which will better reflect the advances North Carolina has already made in incorporating renewables and energy efficiency programs into the state's energy portfolio and will properly account for the sign ificant investment North Carolina's citizens have already undertaken to develop nuclear power to meet the state's energy needs.

Commenters stated and awareness that many utilities have submitted technical comments proposing ways of building additional nuc lear capacity into the baseline computation, as well as ideas for credit provided for regulatory decisions, such as Nuclear Regulatory Commission re

-599 licensing, that will lead inexorably to more zero

- emitting generation. Commenters asked that EPA consider t hese proposals.

Commenters stated that unlike EE and RE measures, nuclear generation is subject to the authority of the Nuclear Regulatory Commission (NRC). Commenters noted that EPA is seeking comment whether the state plan must include additional measur es that would apply if any of the other portfolio of measures in the plan are not fully implemented, or if they are, but the plan fails to achieve the required level of emission performance (Rule 40 Fed. Reg 34909; June 2, 2014).

Commenters contended that in the event of noncompliance, EPA should find that it would be impractical to take enforcement action against some responsible parties and, based on the history of nuclear power, it is likely that nuclear projects are subject to substantial cost risk, num erous and extensive schedule delays, and unavoidable and lengthy outages due to operational limitations and safety concerns. Commenters stated that each of these circumstances is likely to lead to a failure to achieve the required level of emission perform ance.
Commenters further stated that in its evaluation, EPA should evaluate the unique character of the responsible parties with the authority to expedite, delay or cancel nuclear projects. Commenters noted that the NRC has statutory responsibilities to en sure the safe operation of nuclear power plants, and EPA should evaluate whether the NRC could be compelled to grant or extend an operating license to a nuclear reactor in order to implement the measures of a state compliance plan. Commenters contended tha t if the NRC refuses over the objection of other responsible parties, EPA should determine what obligation those other responsible parties would have to implement additional measures to achieve the required level of emission performance.

Commenters suggest ed that given the singular magnitude of emissions reduction associated with a single nuclear unit (as compared to a single wind turbine, for instance), it is implausible to expect that a state plan could practically maintain a sufficient inventory of cost effective measures that could be triggered in a timely manner to effectively address the failure of a nuclear reactor to achieve the required level of emission performance. Commenters stated that EPA has asked several questions regarding the steps that sho uld be taken "if reporting shows that the plan is not achieving the projected level of emission performance."

Commenters noted that EPA has previously recognized that emission control strategies that rely on voluntary actions of individuals and other parti es (e.g., the NRC) may be considered "innovative methods in achieving emission reductions" and, for such methods, EPA approval obligates the state to assure that the emission reductions occur.

Commenters further noted that in the case of the Voluntary Emis sion Reduction Program (VMEP), EPA recognized that the state's obligation to remedy any shortfalls from forecasted emission reductions in a timely manner created a necessity to limit the contribution of such methods to a maximum of three percent of the tot al reductions needed to meet any requirements. Commenters suggested that almost any individual nuclear generation project is likely to exceed a "three percent" benchmark, and EPA should not allow a single project (i.e., if subject to the authority of the N RC or any other party not subject to enforcement action pursuant to the Clean Air Act) to make up more than three percent of a state compliance plan.600 Commenters maintained that in the event that such a large project failed to achieve the required emission reductions, the delay in implementing an alternative could make it difficult for the state to ever catch up at a reasonable cost. Commenters provided the example that, if EPA were to allow a state to then adopt new plan measures and resubmit the plan to th e EPA for review and approval, years of excessive emissions would accrue. Commenters stated that it would further compound this shortfall if the process were not triggered until "the end of a multi

- year plan performance period if emission performance is no t met." Commenters noted that for smaller emissions reduction measures, such as the failure of a single energy efficiency program, or renewable energy project, a report

- and

- correct process could be timely enough due to the smaller scale; but if EPA views t hree percent as a threshold for accepting responsible parties beyond the reach of enforcement under the Clean Air Act, then at the scale of a nuclear generation plant, EPA should certainly appreciate the need for immediate implementation of corrective meas ures upon a failure to achieve the required level of emission performance. Commenters concluded that such contingencies could also have excessive costs.

Commenters noted that EPA requested comment on whether to include an estimated amount of additional nuc lear capacity whose construction is sufficiently likely to merit evaluation for potential inclusion in the goal

- setting computation in the state goals (Proposed Rule 40 Fed. Reg. 34871; June 18, 2014). Commenters remarked that increasing the generation cap acity at existing nuclear plants, also known as "uprates," that occur after 2012 should not qualify as "new nuclear generation," and that uprates are not a new, innovative technology but are fairl y commonplace in the industry.

Commenters stated that by inc luding uprates in the CPP, EPA may cause States to consider restarting cancelled and uneconomic nuclear energy projects as a compliance method. Commenters offered as example that Duke Energy Florida's now

- closed Crystal River Unit 3 reactor was shut down i n September 2009 in order to perform necessary upgrades to allow for an uprate of the plant. Commenters stated that Duke ultimately decided that the project was so severely botched that it could not be salvaged, and consequently, Duke decided to close the reactor in February 2013. Commenters also noted that before closure of Crystal River Unit 3, approximately $1.3 billion was spent and Duke customers are on the hook for years to come.

Commenters contended that if uprates are included as a compliance tool, the State of Florida might consider resurrecting this failed project, assuming that some amount of MWs could be available for compliance (original reactor was 860 MWe with an additional 130MWe expected from the now

- failed uprate. Commenters concluded that expanding the jurisdiction of the Clean Air Act to incentivize nuclear energy projects could put pressure on the NRC to relax safety standards. Commenters recommended that EPA should carefully scrutinize the consequences of its decision to ensure that it d oes not unintentionally contest the NRC's regulatory authority.

Commenters stated that EPA's BSER analysis does not provide meaningful credit for existing nuclear generation and excludes existing hydropower generation entirely. Commenters remarked that th is lack of appropriate credit will have significant impact on States such as Arizona that generate a large percentage of their power from these zero

- emission sources.

Commenters stated that Alabamians are deeply troubled by the prospect that the EPA's pro posal will further erode the primary role of the states in managing electricity generation and601 determining the mix of energy sources that work best for them in their specific circumstances. Commenters submitted that in Alabama, electricity is generated fro m a range of sources, including nuclear, coal, natural gas, hydropower and renewables. Those decisions should not be dictated by EPA officials in Washington, D.C. Commenters further remarked that perhaps ironically, the EPA's chosen formula for establishin g CO2 emission reduction targets disadvantages states with nuclear power, which is the nation's most significant source of emission

- free electric generation.

Commenters stated that nuclear power is expected to play a significant role in the future because it's a carbon

- free fuel source. However, the commenters contended that there are many challenges in the licensing, siting, constructing and managing the risks of nuclear development. Commenters also stated that legislative support and federal oversight w ill be required to help overcome these development risks and increase the generation mix of this carbon

- free source of electricity.

Commenters stated that to replace the lost coal generation, EPA makes a series of unrealistic assumptions about the availab ility of replacement resources. Commenters remarked that all "at risk" nuclear would keep operating without any defined plan as to how that is to happen, and all under

- construction new nuclear would be presumed to come on

- line on time despite the long hist ory of delays in nuclear construction.

Commenters remarked that EPA modeled compliance with its proposal on the projection that "at

risk" nuclear facilities will not shut down. Yet, commenters stated, EPA does not say whether it considered the Department of Energy's permit for the Yucca Mountain nuclear Waste Repository facility as approved or denied, and EPA must provide more information on the effect the Yucca Mountain permit may have on EPA's model.

Commenters stated that the plan predicts principal re liance on fossil fuels in 2030 with 30% coal & oil generators and 30% natural gas generators, while building a few new nuclear reactors and retaining existing nuclear reactors that are at the end of their useful lives, with unaddressed safety vulnerabiliti es identified post Fukushima.

Commenters stated, in reference to expanding existing and under

- construction nuclear, that in Step 1 EPA assumed that 6 percent of "at

- risk" existing nuclear capacity would be retained and that all nuclear units currently under construction would be comple ted. Commenters remarked that EPA first assumed that all "at

- risk" units would operate at a 90 percent capacity factor, and then it assumed that 6 percent of this "at

- risk" generation would be retained. Commenters stated that EPA also assumed that the nucl ear unit currently under construction at the Watts Bar facility would be completed and factored generation from that unit into the emission rate calculation, and EPA assumed that the unit would operate at a 90 percent capacity factor and added that generat ion into the denominator of the emission rate calculation. Commenters estimated that applying these assumptions results in a decrease from 1,798 lbs/MWh to 1,433 lbs/MWh, a reduction of 365 lbs/MWh.

Commenters asserted that the cuts in heat

- trapping emiss ions that the U.S. and the rest of the world need to make to limit the worst consequences of global warming are so large, and the need to take action is so urgent, that we need to consider all potential options for reducing emissions,602 as described in their 2007 Nuclear Power in a Warming World report. Commenters contended that nuclear power does not produce carbon emissions during operation, and has relatively low lifecycle carbon emissions that are comparable to many renewable technologies; however, these benefits need to be weighed against the safety and security risks, the waste disposal challenges, and the water requirements of nuclear power. Commenters stated that the high cost and long lead time required for large

- scale deployment of new nuclear plants must also be considered. Commenters suggested that other low

- and zero

- carbon technologies like energy efficiency and renewable energy have fewer risks, are already cost

- effective in many places, and can be deployed more quickly at a large scale.

Comment ers is particularly concerned about the potential impacts of the rule's treatment of nuclear power on the safety and security of both operating nuclear plants and the five reactors currently under construction. While the commenters stated they understand t hat nuclear safety is not within the EPA's jurisdiction, the agency cannot ignore the potential indirect effects of the rule in providing incentives to keep "at risk" plants operating. Commenters remarked that an operating nuclear plant's "at risk" status depends on many factors, but one of them is the extent to which a plant's bottom line is affected by evolving safety and security requirements. Commenters stated that, for instance, the NRC increased security requirements after the 9/11 attacks, but it is well known that the industry lobbied heavily to keep them to a minimum because of their cost; similarly, in the wake of the 2011 Fukushima accident, the industry has pushed back on certain proposed additional safety requirements such as filtered venting sy stems for boiling

- water reactors. Commenters contended that the NRC has also waived certain post

Fukushima safety requirements for the AP1000 reactors now under construction based on a faulty assumption that those plants will be safer than current plants. Commenters suggested that the EPA needs some mechanism

- perhaps through a memorandum of understanding with the NRC

- to help ensure that in mitigating the risk of climate change it does not increase the risk of a catastrophic nuclear accident or terrorist attack.

Commenters argued that the rule as proposed will be costly and difficult to implement and does little to preserve and capitalize on nuclear energy's carbon free qualities, because under Building Block #3, nuclear energy contributes about 90 millio n MWh, and this emission free generation contribution remains fixed throughout the compliance period. Commenters noted that, in contrast, the EPA assumes contribution from renewables and energy efficiency that increase every year throughout the compliance period. Commenters stated that overall, by 2030, renewables are credited with 525 million MWh of low carbon generation and energy efficiency about 425 million MWh equivalent low

- carbon generation, as based on EPA's Technical Support Goal Computation Docume nt. Commenters remarked that all

- in

- all, along with the nuclear energy contribution, the EPA calculates that these carbon

- free sources taken together provide over 1 billion MWh, however, nuclear energy contribution amounts to no more than 8.6 percent.

Com menters stated that a key portion of their transition plan to low

- carbon energy production was extending the operating license of the Callaway Nuclear Energy Center.

Comment 30: Commenters expressed their general support for nuclear power.603 Response 30: E PA acknowledges the comments and details the provisions for nuclear generation in section V.A of the preamble which discusses the decision to exclude nuclear generation from BSER, section V.A of the preamble which discusses the treatment of new and uprated nuclear plants, and section VIII.K of the preamble which discusses the flexibility states have in developing state plans to address nuclear generation.

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

Commenters stated that the EPA has no leverage to reverse the planned closings of the at

- risk nuclear generations. Commenters suggested that any realistic plan for carbon reduction needs to include more new generation from nuclear power.

Commenters supported the use of nuclear power.
Commenters supported nuclear energy to play a major role in future carbon emission reduction plans. Commenters stated that according to the analyses of the Energy Information Administration, Intergovernmental Panel on Climate Change, International Energy Agency and even EPA itself, meaningful carbon emission reductions cannot be achieved without preservation of existing nuclear assets and large

- scale construction of new nuclear plants.

Commenters provided general support to nuclear energy as an op tion for carbon emission reductions.

Commenters stated that the Clean Power Plan should include nuclear energy as an integral and vigorous part of the overall clean energy portfolio that is to be relied on to achieve emission reduction rate goals, and tha t this proposed rule clearly falls short in this respect.

Commenters stated that the EPA should revise its Proposed Clean Power Plan to provide stronger incentives fostering both existing and new nuclear plants.

Commenters recommended that the final rule create the appropriate incentives to continue the operation of existing nuclear units.

Commenters stated that the EPA needs to consider that nuclear energy delivers large amounts of reliable, economically competitive electricity with no carbon emissions d uring reactor operations, and has among the lowest life

- cycle carbon emissions of any energy source. Commenters also stated that nuclear energy is the only energy technology with a proven capability of delivering large amounts of clean base

- load electricit y essential for the sustainability of modern industrial societies. Commenters asserted that any rule that is developed concerning limits of carbon emissions should be performance

- based, technology neutral, and should not mandate a particular mix of energy sources or arbitrarily favor one source over another. Commenters recognized, however, that such legislation is not in the offing and that the EPA has set forth the proposed regulations to accomplish the goal of lowering greenhouse gas emissions in its abse nce. Commenters agrees with the position of the ANS that the proposed rule contains two major flaws that, unless corrected, would render the rule at best ineffective and at worst counterproductive to the goal of reducing power plant carbon emissions. Likew ise, commenters also agreed with the two ANS recommendations that, if adopted, would rectify604 some of the rule's shortcomings and provide an important incentive for preservation of the existing fleet of nuclear power reactors and the deployment of new nucle ar generating capacity.

Commenters agreed that Building Block 3 pertains to sources that are an important part of an overall strategy to reduce CO2, and that nuclear generation is a carbon free source like renewables. Commenters further stated that the ru le should provide incentives for at least 70% existing nuclear generation as well as for nuclear generation that is under construction and recognize it as a compliance strategy for reaching state goals. Commenters asserted that early action investment in a ll low to no carbon sources, such as renewables and nuclear, should receive credit under this rule.

Commenters stated that Idaho has long recognized that nuclear energy must be part of the solution for reducing carbon emissions, and that nuclear energy is America's largest source of low

- carbon electricity. Commenters cited a study reporting that, in 2013, nuclear energy produced 19 percent of the U.S. electricity supply (789 billion kilowatt

- hours) and prevented 589 million metric tons of CO2 emissions. Co mmenters cited another reference, which stated that nuclear energy accounted for 63 percent of America's carbon

- free electricity in 2013; three times more carbon

- free electricity than hydropower and nearly five times more than wind energy. Another study ci ted by the commenters reported that without nuclear power plants operating in 31 states, carbon emissions from the U.S. electric sector would be about 25 percent higher. Commenters further stated that analyses by mainstream, independent organizations, in t he United States and around the world, show that reducing carbon emissions will require that nuclear energy must be part of the portfolio, and that major expansion of nuclear generating capacity over the next 15

- 30 years is advantageous. Commenters stated that, importantly, nuclear energy is a carbon

- free electricity generating source that supplies stable, reliable and affordable electricity around the clock as needed, and that carbon emissions and electricity costs will increase unless nuclear generating c apacity expands. Therefore, commenters asserted the Final Rule must give states flexibility to utilize existing and new nuclear units in an effective manner which includes granting all nuclear generation full credit towards compliance in carbon emissions r eduction.

Comment 31: Tribal and Territorial

- Commenters expressed concerns regarding nuclear waste.

Response 31: The EPA outlines in the Community and Environmental Justice Considerations section of the preamble, the actions that the agency is taking in this final rulemaking to help ensure that vulnerable communities are not disproportionately impacted by this rulema king. Please see section IX and section XII.J for the agency’s response to this comment.
The following are summaries of the specific public comments under this comment:

Commenters pointed out that EPA does not list nuclear energy as a renewable energy sou rce at its State and Local Climate and Energy Program webpage, although it proposes the use of nuclear energy as a source having zero

- carbon generation that can substitute energy from EGUs. Commenters expressed concerns with nuclear energy's continued use, specifically in light of the close proximity of FCPC tribal lands in northeastern Wisconsin to the Wolf River Batholith, one605 of the two sites considered for storage of spent nuclear waste. Commenters mentioned that the Indian Tribes were concerned about t ransporting nuclear waste across and near their lands, and storing the nuclear waste at Yucca Mountain. Commenters recommended that EPA engage in a government

- to

- government consultation with Tribes and to include other federal agencies such as DOE, to disc uss and address the prospective issues of transporting and/or storing nuclear waste across or near Tribal lands, and legacy waste.

Commenters stated concerns related to transportation of nuclear waste across and near Indian Tribe lands, and storage of was te near or in those lands.

Commenters stated that the NTAA strongly supports the use of renewable energy as a way to reduce carbon emissions. Commenters stated that EPA proposes the use of nuclear energy as a source having zero

- carbon generation that can substitute energy from EGUs (Proposed Rule at 34870). Commenters observed that the Proposed Rule indicates that five nuclear power plants are under construction and six others are near retirement which could realistically continue to operate (Proposed Rule at 34870). Commenters remarked that the NTAA does not have specific position on the use of nuclear energy as a renewable energy source; however, the commenters pointed out that EPA does not list nuclear energy as a renewable energy source at http://www.ep a.gov/statelocalclimate/ local/topics/renewable.html

. Commenters stated that their organization takes this opportunity to identify concerns with nuclear energy's continued use. Commenters noted that a few years back, the U.S. Department of Energy (DOE) con vened a Transportation External Coordination (TEC) Working Group whose purpose was to "improve coordination with external groups interested in DOE transportation activities," largely related to the transportation of nuclear waste to a long

- term nuclear was te storage site. Commenters stated that Indian Tribes were concerned about transporting nuclear waste across and near their lands, and storing the nuclear waste at Yucca Mountain, land culturally important to the Western Shoshone and Southern Paiute people s. Commenters remarked that on more than one occasion, DOE representatives mentioned during TEC Working Group meetings that there were at least 56 lawsuits pending against the federal government, filed by the owners and/or operators of nuclear energy facil ities who had been promised their nuclear waste would be stored in a long

- term storage site. Commenters contended that Congress cancelled federal government plans to use Yucca Mountain as a long

- term nuclear waste storage site; however, a location for such storage remains necessary and will eventually occur.

Comment 32: Commenters offered suggestions related to nuclear power plant shutdowns.

Response 32: EPA acknowledges the comments and has determined that the BSER for the final rule will not include the proposed provisions for nuclear units in the setting of state goals. Please see section V.A of the preamble for further discussion of the decision to exclude nuclear generation from BSER. Please see section V.A of the preamble for further discussion of the treatment of new and uprated nuclear plants, and section VIII.K of the preamble for further discussion of provisions in state plans of allowable actions that result in an adjusted CO2 emission rate of an affected EGU.606 The following are summaries of the specific public comments under this comment:
Commenters stated that the way existing at

- risk nuclear plants are treated under the current rule does not encourage such plants to continue operating. Commenters pointed out that if these units shut down, this would result in significant increases in emissions as fossil units ramp up to make up for the lost generation. Commenters also mentioned that, to the extent that nuclear plants are not relicensed in the future, this would also have a significant impact on emissions and compliance. Commenters suggested to evaluate alternative approaches to treat nuclear generation. Commenters specifically suggested the EPA to consider allowing some portion of relicensed nuclear generation to meet compliance in addition to n ew nuclear power and nuclear uprates. Commenters also suggested that states should not be penalized for nuclear capacity that shuts down due to safety reasons.

Commenters recommended that if a state chooses to include nuclear generation as an eligible
act ion in compliance determination, the state's plan should address any anticipated shutdown of nuclear generation. Commenters stated that in case a state has a nuclear plant which closes unexpectedly, the state should be allowed to adjust its plan to account for the closure.

Commenters stated that another flawed assumption undergirding EPA's analysis is that, if a reactor closes, it will necessarily be replaced by fossil

- fuel generation. Commenters stated that EPA does not assume the same about the retiremen t of renewable energy resources during the compliance period, which could also be substantial, and this leads the Agency to ignore the total cost of offering incentives to preserve nuclear. Commenters suggested that a more sensible solution would be to rec ommend that states plan to replace retired Building Block 3 and 4 resources with similar resources. Commenters stated that there will continue to be instances

- like the San Onofre and Crystal River nuclear plants

- where the cost of repairing reactors is far above what is reasonable for ratepayers to absorb or for merchant operators to invest, and states might have a hard time meeting the goals if they have planned on keeping old nuclear plants around forever and not begun preparing to accommodate renewabl es and demand

- side management. Commenters suggested that a better investment of ratepayer dollars to prepare for such contingencies would be to begin investing in infrastructure to support renewables and distributed generation, such as transmission lines, smart

- grid, electric vehicle charging stations and vehicle

- to

- grid connections. Commenters mentioned that the amount of nuclear capacity estimated to be at risk could easily be replaced by other low

- carbon resources, such as wind, so there is no need to ma ke a special case of preserving existing nuclear. Commenters stated that recommending that states collect a fee to plan for reactor closures and invest in renewable energy deployment, efficiency, and transmission system upgrades would be a more prudent hed ge against the possibility of unannounced reactor closures. Commenters pointed out that such a provision need not apply only to nuclear; the rule should simply recognize the reality that low

- /zero

- carbon resources will face retirements, along with nuclear and fossil fuel generation

sources.
Commenters quoted data from the Nuclear Energy Institute's report, and stated that the phase

- out of some base

- load capacity, without loss of reliability, is entirely feasible in many areas with low market prices, and wo uld result in prices moderating upward to a level that would reduce economic pressure on the remaining plants. Commenters stated that such a dynamic could even607 incentivize further growth in wind, efficiency, and other low

- carbon resources that can compete effectively in a low

- price environment.

Commenters recommended that the EPA eliminate the 5.8% at

- risk provision from state goals, but in the event that the EPA retains the 5.8% at

- risk provision, the EPA should recognize the effects of the retirement of a nuclear unit at the end of its operational license on a state's goals.

Commenters recommended that, if the at the at

- risk nuclear provision is retained in the final goal

- setting calculation, the EPA should allow states' goals to be adjusted upon expirat ion of nuclear plant operating licenses. To encourage the continued operation of existing nuclear plants, that commenters recommended that the EPA should allow states to claim compliance credit for nuclear plants that have their licenses renewed beyond 60 years.
Commenters stated that in the first full compliance year of 2030, the youngest nuclear plants in the current fleet will be 50 years old. Commenters remarked that EPA requires state plans to include measures that are permanent and enforceable but ke eping existing nuclear units fails both of those tests. Commenters contended that any effort to extend the lives of these units could not persist for more than a few decades. Commenters further stated that to the extent that states are penalized in any com pliance period that sees less than 90% capacity factor from these nuclear units, they would have to be replaced by some other zero

- emitting source. Commenters asserted this would provide a back

- door for EPA to require additional renewable energy in the fut ure and increase the stringency of the standard far beyond the extent claim to be adequately demonstrated.

Commenters stated, in reference to the treatment of nuclear shutdowns, that continued operation of a nuclear plant is contingent on many factors that go well beyond economic consideration. Commenters noted that these include safety and local environmental considerations.

Commenters recommended that if a state chooses to include nuclear generation as an eligible action in compliance determination, the s tate's plan should address any anticipated shutdown of nuclear generation. Commenters further recommends that in the event that a state has a nuclear plant that closes unexpectedly, the state should be allowed to adjust its plan to account for the closure. Commenters asserted that these recommendations would provide incentive for maintaining and developing nuclear power.

Comment 33: Commenters stated the rule should consider shut

- downs or failure to come on

- line circumstances that could affect the assumpti on of the number of nuclear units covered by the rule.

Response 33: EPA acknowledges the comments and has determined that the BSER for the final rule will not include either of the proposed provisions for existing and new nuclear units in the setting of st ate goals. Please see section V.A of the Preamble for further discussion of the decision to exclude existing and new nuclear power from BSER. Please see sections VIII.K.1 and VIII.G.2 of the preamble for further discussion of the flexibility states have in developing state plans to ensure compliance, as well as, the requirement that states consider system608 reliability in plan submittal. The final rule is not premised on any assumption regarding nuclear unit operation.

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

Commenters stated that, in building block three, the EPA assumes that no "at

- risk" nuclear energy power plants will be retired and that all units currently under construction will come online. Commenters stated th at the EPA fails to consider the possibility that an economic or other operational circumstance might exist by which the unit owner or the NRC

- the federal body with regulatory authority over nuclear units

- might determine that a facility has reached the end of its useful life. Commenters concluded that the record is insufficient to support EPA's assumptions in building block three as it relates to nuclear units.

Comment 34: Commenters enumerated reasons to exclude nuclear power from the Clean Power Plan.

Response 34: EPA acknowledges the comments and has determined that the BSER for the final rule will not include the proposed provisions for nuclear units in the setting of state goals. Please see section V.A of the preamble for further discussion o f the decision to exclude nuclear generation from BSER.

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

Commenters stated Building blocks two to four, as proposed by the Agency are outside the fence line and the Agency does not have the expansive statutory authority to recognize them as BSER.

Commenters also stated that Building Block 3 assumes that there will be no additional retirements of existing nuclear reactors, regardless of market conditions that may make it

uneconom ic for some nuclear units to run.

Commenters stated in the rules, EPA states that nuclear power provides carbon

- free generation. Commenters added that certainly, compared to coal, there are less CO2 emissions at the plant itself; but the mining, extensive processing, transportation of the fuel before it ever gets to the reactor is not emission

- free by a long shot. Commenters said nuclear power emits 10 to 20 times more CO2 than, say, wind; further, climate disruption will keep nuclear plants from operating , as already witnessed in the TVA system. Commenters said when the water gets too warm in the summer, nuclear plants must shut down, and that has happened at Brown's Ferry.

Commenters stated the plan states also that EPA doesn't want to count construction emissions for Watts Bar 2 in Tennessee, Vogtle 2 through 4 in Georgia, and Summer 2 and 3 in South Carolina, since they got permission to construct prior to this proposal; but they are not completed yet, and thus they will be contributing to carbon emissi ons when these rules go into effect.

Commenters generally supported the proposed rule, however recommended changes to specific aspects of the rule: the proposed inclusion of new and preserved nuclear capacity is a substitute609 for carbon intensive generating capacity does not adequately reflect the future life cycle greenhouse gas emissions of nuclear facilities.

Commenters stated while wind generation has a consistently small greenhouse gas profile, the impact of nuclear facilities is dependent upon the ura nium mining technologies used, the quality of the uranium ore, the enrichment method and the carbon intensity of the electricity used for enrichment. Commenters said the future quality of uranium ore in particular may degrade as higher quality mines are de pleted, resulting in a greater processing and a higher emissions in the future from nuclear generation. Commenters said additionally, the cost of disposing of nuclear waste, as well as the cost associated with the potential of a nuclear accident needs to b e taken into account when estimating the cost of reducing carbon emissions through increasing nuclear capacity.

Commenters had great concern about nuclear plants; in Fukushima, there is a disaster ongoing; over 300 tons of nuclear radioactive water is bein g spilled in Pacific Ocean, and the nuclear

contaminated radiated water has now reached and has long now reached the California shore.

Commenters stated the folks near the Fukushima Daiichi plant would certainly have a cautionary tale about increasing our reliance on nuclear energy; particularly given that a number of America's nuclear reactors are built on earthquake fault lines.

Comme nters stated the plan indicates the desire to increase the amount of available nuclear capacity by preserving existing nuclear EGU's that might otherwise be retired; the risk for accidents in nuclear plants increases as age increases. Commenters said these nuclear plants are all ready for retirement; no matter how much money it saves or how much finagling of how we count the CO2 emissions, saving old nuclear plants is not worth the risk.

Commenters stated nuclear is not clean energy, but in the proposed rul e, EPA acknowledges the worst issue with nuclear, and according to the history of nuclear, there are potential health hazards that, as an environmental health scientist, should be considered, so that we take precaution. Commenters said there is evidence th at this may cause harm, and the precautionary principle says when you have evidence; you take precautionary measures, even if you can't prove it.

Commenters stated EPA's proposed rule for reducing carbon dioxide emissions from existing electrical generatin g units is an important and historic step toward addressing climate change; however, EPA's support of nuclear power and under playing of the importance of renewables and efficiency is of serious concern.

Commenters stated the EPA Clean Power Plan Propose d Rule supports building new nuclear reactors and maintaining existing reactors as an alternative to burning fossil fuels.

Commenters stated the proposed rule encourages states to prevent even the most uncompetitive nuclear reactors from closing.

Commenter s stated the rule underestimates the advantage of renewable energy and energy efficiency as the best alternatives for reducing carbon emissions. Commenters said the rule should acknowledge that renewables and efficiency can produce the power we need withou t the610 use of fossil fuels or nuclear power, and they can remove more carbon per dollar spent in a shorter time.

Commenters stated numerous studies have shown that this transition needs only the political will to make it happen; new nuclear reactors cost bi llions of dollars and take many years to bring online. Commenters said renewable energy, and especially efficiency are much cheaper and their development is already underway.

Commenters stated EPA incorrectly claims that nuclear power is reliable; this ignores the many times nuclear reactors have had to shut down for years due to warm water temperatures, flooding and extreme weather events, all of which will worsen as the climate warms.

Commenters stated nuclear power is far from carbon free; fossil fue ls are used for uranium mining, milling, processing, conversion enrichment, transportation and construction of reactors. Commenters said huge amounts of energy will be needed to isolate nuclear waste for millennia, a task which science so far has not been able to address.

Commenters stated large amounts of water are also used to operate and cool the reactors; this water use can compete with other water needs in an era of increasing freshwater scarcity.

Commenters stated EPA seriously minimizes the proble m of radioactive waste; in fact, EPA erroneously contends that radioactive waste avoids the problem of waste from coal fired generation. Commenters said waste from coal is a serious problem, but radioactive waste is extremely dangerous and remains so for m illions of years.

Commenters stated EPA also ignores the routine radioactive releases at all reactors, and the several U.S. close calls to nuclear meltdown.

Commenters stated that the first step toward dealing with nuclear waste and radioactive pollution i s to stop generating it.

Commenters stated they hope that EPA will not, by default, look at nuclear power or fracking as the mainstay of America's energy future.

Commenters stated currently, EPA has out an advance notice for comments on environmental radia tion protection standards for nuclear power operations. Commenters said unless the current radiation protection standards are strengthened, EPA will continue to have lower standards for protection from radioactivity than it has standards for protection fro m other pollutants.

Commenters stated EPA's acceptable cancer risk is one in a million to one in ten thousand for other pollutants. The allowable limit for radioactive exposure is 25 milligrams per year. Commenters said if a person's life span is 70 year s, that risk translates to one cancer per 500 persons, which is as many 2000 more allowable cancers.

Commenters stated don't want the EPA to lower those, certainly, they should raise those standards, and strongly approve of reducing carbon dioxide, but th inks inclusion of reactors as a solution is a mistake.611 Commenters stated electricity is not some sort of elective utility service, but a human

- an essential human rights service; have got to ensure that standards with universal service are prioritized, pa rticularly for very low

- income consumers.

Commenters stated energy efficiency standards should be cost effective and demonstrate specific and verifiable energy savings. Commenters said rooftop solar requirements should be equitable; and the 6 percent cred it for existing nuclear power plants should not be allowed to qualify for the state implementation plans because of the severe environmental and risks associated with nuclear
power.
Commenters stated nuclear energy also brings with it significant problems, not least is that there is no known way to safely dispose of spent fuel rods

- not in Germany, not in Japan, not anywhere. Commenters said these highly radioactive rods will present major problems for future generations and would also prefer that we move away from the mining of uranium.

Commenters stated, the proposed regulations have indicated that in certain instances or states nuclear power can be relied upon as a substitute for fossil fuel in order to restrict the release of greenhouse gases. Comment ers opposed the use of nuclear reactors as a dangerous source of energy. Commenters said in western New York, as in many other parts of the United States, citizens are subject to unsafe and improper storage of radioactive material and waste; the mining

or uranium itself subjects residents of all communities to the effects of radiation.

Commenters stated remove nuclear power from the list of options; nuclear power is not renewable. Commenters said it produces carcinogenic wastes that can be spilled or relea sed into the environment as we witnessed at Fukushima and at Chernobyl and at Three Mile Island; and those wastes remain lethal to human beings essentially forever.

Commenters did not support nuclear energy as an option to reduce carbon dioxide emissions. Commenters stated the risks to human health, to communities, including the harmful extraction and abandoned uranium mines create negative impacts. Commenters said the inability to permanently disclose of high level radioactive waste creates harmful sacrifi ce areas.
Commenters stated, the nation could most effectively cut our carbon dioxide emissions, and that is nuclear power.

Commenters supported for research of thorium power. Commenters said right we use uranium as the main fuel and we have to dig far fo r it; it's about as rare as platinum and thorium is like something like 100 or a thousand times more abundant in the earth's crust; but there's nothing done in the United States about this technology.

Commenters supported rules that make it more favorable for nuclear because they asserted it is truly the most green, sustainable, reliable, and carbon free resource we currently have.

Commenters stated, third building block speaks to zero carbon fuel sources, which includes renewable energies and nuclear gener ation, yet it completely ignores the original emission free production of low cost hydroelectricity and hydroelectric generation. Commenters said with many nuclear reactors facing relicense, combined with the low price of natural gas, choosing to612 close the se emission free fuel sources would only increase our reliance on fuel force and also fossil fuel based generation.

Commenters stated, with respect to nuclear energy, DES stresses the importance of setting standards that preserve nuclear and other options for fuel diversity and maintain grid reliability; however, they are unclear as to what actions their state might be expected to undertake in response to the proposed six percent allowance for nuclear plants considered to be at risk nationally. Commenters a dded, even the nuclear plants that remain operating, preserve fuel diversity and maintain grid reliability and are not emitting.

Commenters stated the economic, ecological, and health costs of nuclear energy from cradle to grave are too costly; one aspect not addressed in the plan relates to the extraction of nuclear fuels. Commenters said some tribal nations have paid a great price.

Commenters stated unfortunately, the draft rule also declares for the first time that nuclear power is a core element of the nation's climate policy; it pushes states to preserve old nuclear power plants, expand existing plants and subsidize nuclear power. Commenters said these pro

- nuclear provisions could undermine the growth of renewable energy in these states and help keep op en old polluting coal

- fired power plants.

Commenters stated the nuclear industry is looking to gain carbon credits; these carbon credits are undeserved. Commenters said but in any case, the industry is asking for carbon credits for nuclear power; these ver y credits will allow the industry to burn more coal.

Commenters stated that nuclear power in general should be excluded as a means of complying with the Clean Power Plan.

Commenters expressed support for increasing the efficiency of all forms of energy use , and reducing fossil fuel consumption by replacing it with "clean sustainable energy sources." Commenters then advocating excluding nuclear energy as an alternative to be encouraged, due to the problems of "nuclear waste storage, the pollution from uraniu m mining, and the immense water usage of nuclear plants."

Commenters added the nuclear industry's inability to operate without government subsidies has been a continuing issue. Commenters said fossil fuels are finite and renewable energy is infinite; in f act, the International Energy Agency tells us that two

- thirds of proven fossil fuel reserves must be kept in the ground to prevent potential catastrophic consequences.

Commenters stated that Building Block 3 has questionable assumptions: Building block th ree assumes that no units in the entire fleet of nuclear plants will retire regardless of market conditions; as for renewables, EPA assumes their rapid growth despite their intermittency making it progressively hard to balance load and run base load plants effectively.

Commenters stated that the EPA's Clean Power Plan pressures states to ensure that reactors now being built are completed, no matter what the cost, and by encouraging the states to subsidize existing reactors to prevent uncompetitive ones fro m closing. Commenters stated that EPA must abandon subsidies and incentives for nuclear power, and should instead require reactors that613 close are replaced with sustainable energy resources including renewables, efficiency, and energy storage.

Commenters s tated, as proposed, the rule includes unnecessary and counterproductive support for nuclear power for existing, aging, uneconomical reactors, as well as for construction of new reactors, which they oppose.

Commenters could not support development of more nuclear power plants due to the problem of nuclear wastes.

Commenters stated that nuclear power may be low in carbon emissions, but it is not clean due to radiation and water consumption. Commenters recommended that the EPA abandon incentives and subsidie s for nuclear power and focus on renewable energy.

Commenters stated that reduction targets should net be met through increased dependency on natural gas or "other dangerous and costly sources like nuclear power." Commenters recommended that the EPA shoul d increase "its efficiency targets and renewable projections and urge states to prioritize these compliance methods."

Commenters requested that support for nuclear energy be deleted from the Clean Power Plan because the comment stated that nuclear power i s uneconomic and that sufficient power is available through sunshine and wind. Commenters also stated that the life cycle for both carbon emissions and other toxic and radioactive substances were significant. Commenters concluded by recommending that urani um should stay underground.

Commenters recommended that the EPA should not use nuclear energy as a strategy for reducing use of fossil fuels.

Commenters recommended that nuclear power incentives should be cut. Commenters stated that the rule pushes to preserve, expand and subsidize nuclear reactors, but there are safety risks with aging reactors. Commenters recommended that nuclear reactors should be phased out and replaced with renewable energy.

Commenters stated that Fukushima showed the risks of n uclear generation facilities. Commenters also cited aging of nuclear facilities and long

- term nuclear waste storage problems as arguments against encouraging nuclear facilities as backups for coal

- powered electrical generation.

Commenters stated that the EPA considered nuclear power to be an acceptable alternative to fossil

- fueled electrical generation, but the commenters disagreed. Commenters stated that the EPA has not done a proper risk assessment in making the decision to promote nuclear power in imple mentation plans.

Commenters recommended removing all support for nuclear power from the final version of the Clean Power Plan. Commenters stated that nuclear power is not clean, safe, or inexpensive. Commenters stated that significant amounts of radioact ive waste were generated from uranium mining, routine operations, and 80,000 tons of radioactive waste that that no one knows how to614 safely store for the thousands of years it will remain dangerous to human health and the environment.

Commenters stated tha t reactors were most dangerous at the beginning and end of their life cycles, which concerned people within the 10

- and 15

- mile radius of these sites. Commenters also expressed concern about cooling water for reactors.

Commenters stated that support for nuclear power undermines the growth of the renewable energy sector, including solar and wind energy. Commenters also stated that, if nuclear is a part of state cap

- and

- trade programs, then being able to sort of trade credits from nuclear power with coal

- fi red plants would also undermine the imminent closure of coal

- fired plants.

Commenters expressed concern about the effects of heat discharged from reactors warming nearby waters, particularly the effect of Plant Vogtle on the Savannah River.

Comment 35: Public commenters opposed inclusion of nuclear power in the Clean Power Plan.

Response 35: EPA acknowledges the comments and has determined that the BSER for the final rule will not include the proposed provisions for nuclear units in the setting of state goals. Please see section V.A of the preamble for further discussion of the decision to exclude nuclear generation from BSER.

The following are summaries of the specific public comments under this comment:
Commenters suggested to remove nuclear power fr om consideration due to its environmental impacts and risks. Commenters recommended the EPA to consider the impacts of preservation of old reactors, which were not addressed in the draft rule. Commenters also stated that incentivizing the preservation of a generic 5.8% of current U.S. nuclear capacity will result in a windfall profit for reactors not currently at risk for retirement.

Commenters opposed include nuclear energy in the energy plan, since it is expensive, dangerous and not clean. Commenters als o mentioned that we do not have appropriate plans for evacuation of cities in the event of a serious accident.

Commenters opposed the use of nuclear energy, and also mentioned concerns about treatment of nuclear wastes.

Commenters opposed the use of nuclear energy due to its risks.

Commenters opposed the use of nuclear energy due to the problems of disposing nuclear materials.

Commenters opposed nuclear power due to safety and cost considerations.615 Commenters opposed th e use of nuclear power based on the past experiences and incidents in foreign countries like Germany and Japan. Commenters suggested to invest in solar, wind and other genuinely clean energy sources.

Commenters opposed the use of nuclear energy as it is o ne of the most uneconomical energy

sources.
Commenters stated that, according to the draft rule, if the states follow the EPA's lead in dealing with nuclear compared to other non

- carbon resources, they would unnecessarily raise the cost of carbon abatemen t. Commenters suggested that the EPA should correct these mistakes in promulgating the final rule, which would help the states avoid those same mistakes. Commenters stated that states can and should implement least cost carbon reduction programs based on a more rigorous analysis of the evolving economics of low carbon resources and the emerging 21st century electricity system. Commenters also stated that the EPA can and should advance the Clean Power Rule toward this goal by making several changes in its an alysis of the proposed standard, including correcting its analysis to render it internally consistent and reflective of current costs and cost trends, taking a technology neutral approach and expunging all reference to subsidization of nuclear power.

Comm enters stated to avoid premature retirement of nuclear EGUs.

Commenters stated, in a discussion of environmental impact and sustainability that once one moves into the broader realm of non

- economic goals of the electricity system nuclear power fares very poorly. Commenters remarked that nuclear power has significant disadvantages in terms of security, proliferation risks] and continues to suffer from unique environmental problems.

Commenters contended that based on a non

- commodity, local source of power, renewables have a large advantage in macroeconomic impacts. Commenters stated that as a result, in multi

attribute rankings and evaluations, the main renewables (wind, solar, hydro) and efficiency are much more highly rated and have consistently been so fo r decades. Commenters provided the results of evaluations of energy resources that were plotted graphically as compared to coal.

One graph showed the average ranking of resources based on studies that generally took place before the focus on climate change became prominent, a second graph plotted those earlier results against a recent ranking, plus a plot of energy efficiency also using rankings from those earlier studies.

Commenters stated that the summary of several evaluations of energy resources showed a sharp and readily apparent break, with strong statistic correlation (r = 0.86), between ranking for efficiency and renewables (as attractive resources) and conventional (i.e., fossil fuels and nuclear) energy sources in both sets of rankings.

Commenters observed that evaluation of each technology was based on the application of four primary criteria:

• Financial (FC): financial value of the technology and return on investment.616 • Technical (TC): characteristics of the technology as a power source and its
pro duction capabilities.

• Environmental (EN): impact of power plant on local and regional environment, as well as human health.

• Social/Economic/Political (SEP): impact on local economy and communities, as well as congruence with over all national policies.

C ommenters stated that the results indicate that wind, solar, hydropower and geothermal provide significantly more overall benefits than the rest even when the weights of the primary criteria clusters are adjusted during sensitivity analysis. Commenters obs erved that the only non

renewable sources that appear in three of the 20 top rank positions are gas and oil, while the rest are populated with renewable energy technologies. Commenters remarked that these results have implications for policy development a nd for decision makers in the public and private sectors. Commenters stated that one conclusion is that financial incentives for solar, wind, hydropower and geothermal are sound and should be expanded. Conversely, commenters stated subsidies for

non

- renewa ble sources could be diminished.

Commenters observed that an analysis of New England, in the examination of risk discussed above, showed that the resources mix was similar in the analysis of the base case and the zero carbon case. Commenters stated this d iscussion of factors other than the levelized cost suggests that on every dimension

- risk related characteristics, non

- energy, economic impacts, and non

carbon environmental impacts

- efficiency and renewable energy technologies are the preferred option.. Commenters added efficiency, wind and solar are the most attractive options by far relative to environmental and health impacts, and that fossil fuels become less attractive. Commenters also added nuclear power is barely competitive with fossil fuels with carbon capture and storage. Commenters stated that, in addition, the same point is made by showing the correlation between resources costs and external costs, and including all of the non

- carbon externalities associated with these resources strongly reinf orces the case for building a low carbon sector on the basis of efficiency and renewable energy technologies.

Commenters stated that the analysis externalities has not only expanded in recent years to the broader issue of sustainability, but it has also b egun to look at important interactions between climate change and non

- carbon externalities, like heat waves and water use.

Commenters stated that the analysis of integrating much higher levels of wind and solar has progressed to utility sponsored detailed studies of the impact and necessary changes in the grid. Commenters referenced a study conducted for PJM members, which included only one of the many measures identified above to improve grid management

- i.e. geographic diversity of renewables, which is a natural occurrence if high levels of renewables are pursued, since the resource is generally dispersed

- found that 30% penetration of renewables is easily manageable.

Commenters stated that the analysis of the potential transformation has progressed to modeling how to build a sector that captures the synergies of utilization of geographically diverse and widespread renewables, combined with key infrastructure components of transmission and the tradeoff with storage and demand response to lower cost and meet demand. Commenters stated617 further that, in fact, some have argued that the benefits of stimulating innovation are so large that they can even offset the apparent "cost" of phasing out nuclear power altogether.

Commenters stated that their analysis r esults show that phasing out nuclear power would stimulate investment in R&D and deployment of infant technologies with large learning potentials. Commenters contended that this could bring about economic benefits, given the under provision of innovation d ue to market failures related to both inter

- temporal and international externalities.

Commenters remarked that the evolution of the renewables costs in the coming years will not be independent of the future of nuclear power, as well as of energy and clima te policies. Commenters stated that in this context of uncertainty, policymakers need to understand the economic consequences of nuclear power scenarios when accounting for its interplay with innovation and cost reduction in renewables.

Commenters stated that it is of utmost importance at this moment that the legitimate challenges of building these institutions are not exacerbated by the opposition of powerful incumbents. Commenters remarked that the institutional changes are direct challenges to the struc ture on which nuclear power and other incumbents depend, and open resources acquisition, economic dispatch and net metering dramatically reduce the rents available to fund nuclear construction and sustain its high capital costs. Commenters stated that the two

- way, information intensive system that allows integration and management of supply

- side and demand side resources involves an entirely different set of skills and assets that are irrelevant, even, antithetical, to nuclear resources. Commenters conclude d that, indeed, they replace central station generation.

Commenters stated further that the baseload dominated electricity system was created by policy support and subsidies for physical and institutional infrastructure that favored a specific type of
tec hnology. Commenters contended that the dominant incumbents will seek to slow or stop the spread of alternatives to defend what amounts to trillions of dollars of investment and assets sunk into fossil fuels.

Commenters stated that their diffusion can be s lowed by effects of path dependence and lock

- in of earlier technology systems' high carbon technologies and supporting institutional rule systems have co

- evolved, leading to the current state of "carbon lock

- in". Commenters also stated that, for example, r eductions in cost and the spread of infra

- structure supporting coal

- and gas

- fired electricity generation enabled the diffusion of electricity

- using devices and the creation of institutions, such as cost

- plus regulation, which encouraged further investmen t in high carbon generation and networks. Commenters contended that this created systemic barriers to investment in low carbon energy technologies ... the proposition that industries or technologies whose ascendancy is threatened by new competition tend to respond, carries some weight; and further it also suggests that actors, such as large energy companies, with substantial investments in the current system and its technologies, and relatively strong political influence, are likely to act to frustrate the implementation of institutional changes that would support the implementation of low carbon technologies.

Commenters contended that the conflict between nuclear technologies and the alternatives is inevitable and crucially important to determining the fut ure path of the electricity sector.618 Commenters stated that there are fundamental economic, technological, and institutional incompatibilities between the two approaches, which have given rise to a frontal assault by nuclear advocates on the alternative res ources and institutions that will support them.

Commenters stated that nuclear power is the least attractive asset, followed by the fossil fuels. Commenters also stated that to defend itself from the growth of superior alternatives, nuclear utilities and advocates have launched an all

- out attack on policies that create opportunities for the alternatives.

Commenters stated that UBS put it succinctly, "Large

- scale power generation, however, will be the dinosaur of the future energy system: Too big, too inflexible, not even relevant for backup power in the long run." Lovins elaborates: "All of the above" scenarios are "undesirable for several reasons"

1. Central thermal plants are too inflexible to play well with variable renewables, and their market prices and profits drop as renewables gain market share.

2. If resources can compete fairly at all scales, some and perhaps much, of the transmission built for a centralized vision of the future grid could quickly become superfluous.

3. Big, slow, lumpy costly investme nts can erode utilities' and other provider's financial stability, while small, fast granular investments can enhance it. Competition between those two kinds of investments can turn people trying to recover the former investments into foes of the latter

- and threaten big

- plant owners' financial stability.

4. Renewable, and especially distributed renewable, futures require very different regulatory structures and business models.

5. Supply costs aren't independent of the scale of deployment, so PV systems install ed in Germany in 2010 cost about 56

- 67% less than comparable U.S. systems, despite access to the same modules and other technologies at the same global prices.

Commenters remarked that there is thus a fundamental choice to be made about the structure of th e electricity sector in the 21st century. Commenters stated that given the economic plight of nuclear power, the push to adopt policies that will force it into the low carbon resource portfolio is essentially an effort to resist the underlying economics an d jerry

- rig the outcome in favor of nuclear by negating or slowing the evolution toward more decentralized resources. Commenters contended that it is no longer a question of just subsidizing nuclear, although huge subsidies would be necessary to preserve i t. Commenters stated that nuclear advocates have launched a frontal attack on the alternatives to slow or prevent the installation of a new utility model.

Commenters stated that the potential contribution of the non

- nuclear low carbon alternatives, which are less costly and more environmentally benign, has only begun to be exploited and the prospects are quite good. Commenters contended that the prudent approach to resource acquisition is to build the institutional and physical infrastructure that achieves the maximum contribution from the more attractive resources available in the near and mid

- term.619 Commenters stated that dealing with a potentially fundamental change requires a broader perspective on potential benefits, as well as challenges. Commenters s uggested that the replacement of the incumbent fossil

- fuel based regime with the distributed approach constitutes a major change that challenges the incrementalist, marginal analysis of traditional cost

- benefit analysis. Commenters concluded that a wide ra nge of opportunities is opened that can change the game primarily by eliminating the wall between supply and demand behind which the 20th century baseload model was built including

- the interrelationship of battery powered vehicles and the electricity gri d, the smart grid, the Internet of things, and multiple roles for solar power.

Commenters stated that over the past 5 years their analysis has shown that even with massive new subsidies in the first decade of the 21st century, "nuclear renaissance" techno logy was an abysmal failure, unable to compete with the available alternatives. Commenters remarked that it is too big to properly meet demand, too expensive to compete on cost, takes so long to build, it creates significant marketplace risk, and requires so much sunk capital that it causes severe financial risk. Commenters stated that, recognizing that the "renaissance" technology is uneconomic, over 90% of the projects that were contemplated using the "nuclear renaissance" technology in the U.S. were canc elled or mothballed. Commenters observed that the projects that have moved forward are behind schedule and over budget.

Commenters stated that over the past 5 years their analysis has shown that even with massive new subsidies in the first decade of the 2 1st century "nuclear renaissance" technology was an abysmal failure, unable to compete with the available alternatives. Commenters remarked that it is too big to properly meet demand, too expensive to compete on cost, takes so long to build it creates sign ificant marketplace risk, and requires so much sunk capital that it causes severe financial risk. Commenters observed that recognizing that the "renaissance" technology is uneconomic, over 90% of the projects that were contemplated using the "nuclear renai ssance" technology in the U.S. were cancelled or mothballed. Commenters stated that the projects that have moved forward are behind schedule and over budget.

Commenters remarked that faced with utter failure, the nuclear industry shifted its hope and hype to small modular reactor (SMR) technologies, but we have shown that this technology does not solve the fundamental economic problems of nuclear power. Commenters stated that SNR technologies remain much more costly than the alternatives and, while they ar e more attractive than large nuclear reactors on some of the other important economic characteristics, SNRs do not come close to being more attractive than the other alternatives available.

Commenters suggested that the rapid and stunning reversal of fort une suffered by SMR technology before it even got off of the drawing board is emblematic of the 50 year history of commercial nuclear power in the U.S. and underscores the folly of relying on nuclear power as one of the pillar on which the decarbonization of the electricity sector stands. Commenters stated that historical experience and contemporary economics strongly support the conclusion that nuclear power will fail to deliver on its promises leaving a costly hole in the decarbonization undertaking.

Com menters stated that Babcock & Wilcox (B&W), one of the firms that had received a federal subsidy for SMR development, stepped back from the development of SMR technology because of the failure "to secure significant additional investors or customer enginee ring, procurement,620 and construction contracts to provide the financial support necessary to develop and deploy mPower reactors," and the company declared that it "still expects to license mPower reactor by the mid

- 2020s."

Commenters stated that the issue, B&W insists, is that the market for small reactors is likely to be about three to five years further out than B&W anticipated when it started the program in 2009.

Commenters stated that is because... the growth in demand for electricity remains weak, and may even flatten out over the next few years ...combine that fact with the low cost of natural gas plants in the current market, and he estimates the market for mPower has been pushed back three to five years. Commenters concluded that makes it hard to ju stify significant investment now.

Commenters observed that now the company is looking at slowing investment and waiting until the market catches up with the technology.

Commenters stated that Westinghouse, another of the leading U.S. developers of small modular technology and the vendor supplying the design for the large nuclear projects under construction in the U.S., also announced it was stepping back from development of small modular nuclear technology. Commenters stated the reason for the decision: W estinghouse could find no customers. Commenters observed that instead of pushing ahead to build SMRs, Westinghouse said it would focus on decommissioning of existing reactors. Commenters stated that the retreat came even though its utility partner, Ameren had convinced the state of Missouri to spend $40 million supporting the technology.

Commenters noted that Westinghouse used language that is similar to the Babcock and Wilcox explanation, not only in blaming cheap gas, but also in declaring that it did no t want "to get ahead of the market." Commenters remarked that in the case of Westinghouse, their caution was tied to the failure to find orders for its AP600, a medium sized reactor that had been licensed fifteen years earlier and its claim that it needed a large book of orders, 30

- 50 reactors (7 to 10 GW given its design). Commenters observed that Westinghouse had spent close to a decade propounding a theory of economic competitiveness that had become gospel among nuclear advocates, yet, in stepping back i t was clear that they "had no way to calculate the cost" and much larger subsidies would be necessary to move the technology forward.

Commenters stated that the declarations of confidence in the technology could not hide the fact that in less than a decad e its development was

- grinding to a halt. Commenters noted that the collapse of the SMR hype is extremely important in the policy context. Commenters contended that the failure of SMR technology makes it impossible to ignore the huge scale that nuclear
p ower demands to succeed, and shifting that need up in the supply chain to a manufacturing facility does not eliminate its importance. Commenters observed that the problem that utilities have in swinging the financing and development of large reactors is re placed by the even bigger problem that vendors have, but it is essentially the same problem. Commenters stated that Westinghouse and B&W are big names in the nuclear space, had thrown a great deal of weight and money into advancing SMRs as the next big thi ng and the savior of the nuclear industry, but they failed.621 Commenters stated that the market recognizes what the nuclear advocates and the EPA continue to ignore, and that is blaming cheap gas and a temporary slump in demand ignores the fundamental chang es in the electricity sector. Commenters contended that a comprehensive view that includes all of the emerging alternatives and the history of nuclear technology and cost escalation explains why nuclear technology, large or small, cannot find either custom ers or investors today and suggests that the market will not "catch up" any time soon. Commenters concluded that the failure to find customers and investors is the ultimate rejection in a capitalist economy, and the only way to save the failed technology i s to blame the market.

Commenters stated that ignoring the cost of constructing new reactors (because the decision to build has been made), as suggested by the EPA is incorrect because the costs have not yet been sunk, and the incremental or "to go" cost are substantial. Commenters suggested that the "to go" costs of those nuclear reactors can be avoided; and moreover, all of the reactors under construction are well behind schedule and over budget. Commenters also stated that further slippage and cost over runs are a distinct possibility.

Commenters stated that sound economic analysis and prudent resource acquisition require the responsible authorities to continuously evaluate ongoing projects. Commenters noted that in a competitive market economy, decisio ns to invest must be constantly revisited. Commenters also remarked that if the cost of the project rises or costs for alternative projects fall sufficiently to make continuing on the chosen path uneconomic, the project should be abandoned.

Commenters sta ted that in South Carolina, their analysis showed that continuing to build the summer reactors would cost ratepayers $10 billion more than terminating the project, and in that analysis, the comparison was with natural gas because that was the referent that the utility had, incorrectly, selected. Commenters remarked that if the full range alternatives were considered in making the decision to continue construction, the waste of resources would be even greater.

Commenters stated that, In fact, the initial de cision to commence construction of the reactors was fundamentally flawed because it did not consider the full range of alternatives. Commenters suggested that the EPA should not be rewarding such economically flawed analysis and decision making. Commenters stated that under the principle of allowing the states flexibility, it is their prerogative to impose uneconomic costs on their ratepayers, but the EPA should not be encouraging such behavior. Commenters suggested that, if anything, the EPA should state a strong preference for least cost solutions under the proposition that the lower the cost of carbon abatement, the greater the reduction is likely to be.

Commenters stated that given the high and uncertain cost of nuclear reactor construction, nuclear adv ocates who could not project what it would actually cost to build "renaissance" reactors, put forward "break even analyses; that is, they calculated how much nuclear reactors would have to cost to beat natural gas. Commenters stated, they have shown that t hose initial analyses were riddled with analytic flaws and erroneous assumptions, and the utility calculations continue to be plagues by flaws, as they showed in demonstrating that the "to go" costs in South Carolina are far higher than cancelling the reac tor would be. Commenters stated that two recent studies of nuclear construction reaffirm that finding.622 Commenters cited the results of a generic study of U.S. nuclear costs compared to natural gas, prepared in 2013 by Hogue, that presents seven cases wher e he selects high and low values for the key variables from an underlying analysis of a wide range of possibilities. Commenters stated these involve the author's judgment about which scenarios are plausible from within a much wider array of possible outcom es, and involved a range of assumptions on construction costs, fuel costs and CO2 costs. Commenters also cited other outcomes for three other variables that Hogue analyzed

- load factor, plant life and the cost of capital, but did not specify high and low cases. Commenters stated that gas is lower in cost in just under 90% of the scenarios, and its costs advantage in those scenarios is just over $38/MWH. Commenters noted that in contrast, nuclear is less costly in just over 10% of the scenarios and its cost advantage is less than half that

- just over $16/MWH. Commenters observed that natural gas is a much more attractive option. Commenters concluded that since efficiency, wind and solar with the cost trend have an advantage over gas that is larger than $16/ MWH, it is safe to conclude that nuclear is never less costly.

Commenters stated that the results of an even more recent "break even" analysis support this conclusion, and the study used eight cost factors and two scenarios, one that was more favorable
to nuclear (optimistic) and one that was less favorable (pessimistic) to create cost comparisons. Commenters stated that compared to Lazard's estimate, nuclear is never preferred. Commenters explained that the study also uses Lazard costs to identify the brea k even against a portfolio made up of efficiency, wind and solar; and against that low carbon, non

- fossil fuel portfolio, nuclear is two to three times as costly. Commenters concluded that with such a severe cost disadvantage, one can argue that new nuclea r reactors do not belong in a Best System of Emission Reductions.

Commenters stated that over the course of the past decade, as the "nuclear renaissance" was collapsing, aging nuclear reactors also began to encounter serious economic problems. Commenters remarked that operating costs were increasing with age, while the construction and operating costs of the alternatives were declining rapidly. Commenters suggested that the abandonment of five aging nuclear reactors signaled another turning point in the in dustry. Commenters concluded that wherever market forces are allowed to set the price of electricity, small, aging reactors cannot compete. Commenters further stated that these reactors are losing money and their owners are contemplating shutting them down before their licenses expire.

Commenters, in text referred to as a discussion of unjustified and misguided subsidies, stated that nuclear power is the only technology that the EPA explicitly identifies as being in need of a subsidy and puts forward a conc rete proposal. Commenters stated that the EPA argues that a $6/MWH subsidy would keep aging nuclear reactors, which are not covering their costs, online as low carbon resources; however, the analysis is incorrect at a number of levels:

1. The operating costs of aging reactors are substantial and growing rapidly. The shortfall is dependent on market conditions, which are moving in a direction that suggests the shortfall will continue to increase. If one compares the full cost of keeping aging reactors online t o the full cost of the alternatives, it is not at all clear that subsidizing nuclear is cost effective.623 2. Even if subsidizing ageing reactors was a sound economic recommendation, which it is not, the EPA's analysis makes no sense. Its proposal is based on th e assumption that the risk of closure is randomly distributed throughout the nuclear fleet. It is not; the risk is concentrated in specific types of reactors (small, single units) in specific markets (pure wholesale markets). As a result the vast majority of the subsidy (94%) suggested by EPA is targeted at reactors that are not at risk.

3. The fact that EPA has singled out aging nuclear reactors as a potential target of additional subsidies not only violates the principle of technological neutrality, it also violates the principle of least cost in in several respects.

Commenters stated that the resource cost estimates for efficiency, wind and in the mid

- term solar, suggest that these alternatives are lower in cost than operating reactors. Commenters further s tated that, moreover, there is no doubt that the potential contribution of these resources could easily offset the loss of low carbon output that might be lost as a result of the retirement of vulnerable aging reactors. Commenters contended that taking all costs into account, on a megawatt hour basis, the cost of keeping the at

- risk reactors online is much higher than $6/MWH. Commenters also suggested that the burden of the subsidy would fall on the individual states where the reactors are located and would be much heavier than suggested by EPA. Commenters remarked that the social rate of return to subsidies has been much higher for renewables than for nuclear power both in terms of price, as shown above, and in terms of innovation. Commenters concluded that if subsidies are necessary to improve prospects for carbon reduction, the last place they should go is to nuclear power.

Commenters stated that the EPA relied on the statement in the EIA annual outlook that reactors with 5.7 GW of capacity are at risk of closing, which happens to equal 6% of current capacity. Commenters contended that the EIA was clearly referring to specific reactors, but the EIA assumed 6% of capacity is at risk in every state, which makes no sense. Commenters remarked that a part of a reactor cannot be at risk, and the risk factors attach to specific reactors in specific market conditions; the commenters provided a table showing retirement risk factors of the nuclear fleet. Commenters further stated that the reactors identified by utili ties as at risk are listed in the table but there are about two dozen more.

Commenters noted that, in fact, EIA has an accelerated retirement scenario in which it not only assumes the 5.7 GW of at risk capacity is retired, but another 38GW of nuclear capa city is retired by 2040. Commenters stated that the list of reactors compiled by the commenters covered just over 50GW of nuclear capacity that is vulnerable to early retirement based primarily on economic grounds, compared to the EIA total of 44GW by 2040 . Commenters stated three factors that clearly establish the vulnerability to closure

- merchant state (38GW), old (25GW) and standalone (24GW), and the reactors on the list with two or more of these characteristics have 34GW of capacity.

Commenters state d that if the electricity sector "lost" 34 GW of existing nuclear capacity and the reactors under construction were abandoned, as they should be on economic grounds, the reduction in low carbon resources would be easily replaced by efficiency and renewable energy sources at a much lower cost.624 Commenters remarked that in the analysis of the potential impact of reduced nuclear output on carbon emissions modeled, it was assumed that all of the at

- risk reactor were retired and half of the additional capacity t hat was retired in the accelerated nuclear strategy, which ran until 2040, was retired by 2030. Commenters concluded that there is four times as much potential carbon reduction from efficiency and renewable energy sources that is left on the table by the E PA standard than would be lost if this generation capacity were lost.

Commenters stated that the decision to begin the process of decarbonizing the electricity sector does not change the abysmal economics of aging nuclear power one iota. Commenters stated that nuclear power cannot compete with a bevy of low carbon alternatives, especially in the time frame in which the Clean Power Rule will be in effect. Commenters remarked that the internalization of the social cost of carbon improves the prospect of all l ow cost alternatives as much as it helps nuclear power. Commenters contended that EPA's mishandling of the nuclear analysis goes even farther. Commenters stated that even if EPA could show that a subsidy for aging nuclear power is necessary to achieve the carbon reduction goal, it has bungled the analysis of how big the subsidy should be and how it should be distributed.

Therefore, the commenters concluded, EPA's suggestion that nuclear power be singled out for a subsidy is fundamentally incorrect. Comment ers stated that policies to accelerate the deployment of lower cost alternatives would be economically superior, and only if EPA concluded that the abandonment of nuclear power would be so pervasive that the alternatives could not meet the goals set by EPA might there be a justification for a nuclear subsidy. Commenters contended that in fact, EPA has made no such showing and as they have shown in an analysis of efficiency and renewable energies, there is not one shred of evidence presented to suggest that it could.

Commenters stated that rather than try to repair the subsidy approach, the EPA should get out of the business of favoring specific technologies and be technology neutral, and if the EPA wants to get into the business of recommending subsidies fo r specific technologies, it should look at real world experience.

Commenters stated that with a clear path of more attractive resources, we do not have to engage in the hundred year debate today, although there is growing evidence that prospects for high penetration renewable scenarios for the long terms are quite good. Commenters remarked that the available and emerging alternatives can certainly carry the effort to meet the demand for electricity with low carbon resources a long way down the road, well b eyond the time frame of the EPA Clean Power Rule and certainly long enough that the terrain of technologies available may be much broader before we have to settle for inferior options like nuclear power.

Commenters stated that based on the history of perf ormance of the nuclear and the alternative industries, there are good reasons to expect the alternatives will overcome their challenges more quickly and efficiently than nuclear technology. Commenters noted that in addition to the ongoing conceptual and de sign work, the nature of the renewable technologies involved affords the opportunity for a great deal of real world development and demonstration work before it is deployed on a wide scale. Commenters described this as the antithesis of past nuclear develo pment and the program that SMR advocates have proposed. Commenters stated that the alternatives are moving rapidly along their learning curves. Commenters remarked that the ability to move down the learning curves exhibited by renewables and alternative te chnologies625 can be explained by the fact that these technologies actually possess the characteristics that allow for the capture of economies of mass production and stimulate innovation. Commenters stated that they involve the production of large numbers of units under conditions of competition. Commenters suggested that nuclear power, even SMR technology, involves an extremely small number of units from a very small number of firms, with the monopoly model offered as the best approach. Commenters stated tha t, in short, the underlying conditions and recent decades of experience suggest that the dramatic reversal of fortune nuclear advocates technology are hoping for is not likely, to say the least, while the continued, dramatic decline in the cost of renewabl es, is quite likely and the prospects for the development of the building blocks of the 21st century electricity system are much better.

Commenters stated that the rule places too much emphasis on burning natural gas, and "renewable" sources of electricit y and too little emphasis on nuclear power, which is a far better mitigation to world

- wide CO2 pollution. Commenters pointed out that the proposed rule says that state plans can include measures and policies (e.g., demand

- side energy efficiency programs

an d renewable portfolio standards) for which the state itself is responsible. Commenters asked why is there is no mention of nuclear power when it has one of the lowest life

- cycle CO2 emissions of any power source? Commenters also asked why account for CO2 r eduction from "renewable electricity" (RE) as being 100% when substantial amounts of CO2 (and other pollutants) are released into the atmosphere in their manufacture? Commenters stated that in these cases, the energy out is nearly carbon

- free, but the life

- cycle emissions of carbon, which is significant in terms of global climate, favors nuclear by a large factor (>10). Commenters further stated that only about half of the CO2 savings ascribed to RE is applicable with respect to climate. Commenters remarked that nuclear reactors have an Energy Return on Energy Invested (EROI) ratio on the order of 50, and thus much less CO2 is released per unit energy than for RE, and most of the carbon is generated during construction. Commenters stated that increasing the amount of nuclear capacity relative to the amount that would otherwise be available to operate is therefore a technically viable approach to support reducing CO2 emissions from affected fossil fuel

- fired EGUs. Commenters concluded that the rule should then strongly favor nuclear power plants over renewable, carbon

- capture and storage (CSS), or other technologies that begin with low EROI (e.g. PV) or that lower EROI (CSS). Commenters stated that this is particularly true of a national policy and should give preference to the construction of new nuclear facilities.

Commenters stated that another way to increase the amount of available nuclear capacity is to preserve existing nuclear EGUs that might otherwise be retired. Commenters remarked that more significa ntly, existing nuclear power plants should receive policy preference to keep in operation for as long as the NRC deems safe, and since most of the carbon intensity of nuclear power comes at its construction the existing nuclear plants are the lowest carbon footprint of any electrical generating source. Commenters proposed the following recommended changes to the proposed rule:

1. CO2 saved should be calculated on life cycle emissions, taking into account the carbon intensity of the country of manufacture.

2. Nuclear power should be credited with greater life

- cycle savings of CO2 than RE and savings should be accounted for when the plant produces electricity (and losses accounted for when the plant closes).626 3. Existing nuclear power plants which have already spent the vast majority of their CO2 emissions should be strongly favored by policy to remain producing as long as the NRC deems safe.

4. Low

- carbon energy sources must be sustainable (hundreds of years) providing large energy return on energy invested and large c arbon savings compared to carbon emitted during manufacture. This favors nuclear over natural gas.

Commenters also stated that the EPA needs to seriously consider the total lifecycle energy and pollution costs of the various technologies, particularly with respect to CO2 which is a global problem as it spreads through the atmosphere irrespective of national or regional boundaries. Commenters concluded that the EPA needs to recognize nuclear power as the best path to a low

carbon energy economy, providing th e benefits of reduced PM2.5, NOX, SO2, and other pollutants.

Commenters advocated for avoiding premature retirement of nuclear EGUs and not building more. Commenters stated that a long data source

- linked article, a tirade against the wasteful use of money and environment for nuclear energy, focused around Tritium, and radioactive water contamination. Commenters remarked that the current EPA Proposed Rule for existing power plants covers 30 nuclear facilities in the US, and 5 under construction. Commenters suggested that the economics don't pan out, the cost benefits to society are a burden of deceit and sickness. Commenters remarked don't let nuclear generation of electricity win over solar and wind! Commenters also stated that this is the final opportunity to affect change under the EPA Clean Power Plan, and that the final decision awaits; all three rulemaking documents are cross

- linked and related. Commenters contended that solar and wind have not been considered on their own merits.

Commenters stated tha t reducing emissions from affected EGUs, in the amount that results from substituting generation at those EGUs with expanded low

- or zero

- carbon generation, right now spells n

- u

- c

- l

- e

- a

- r and natural gas. Commenters further stated that expanding Nuclear Po wer Plant EGU's capacity for contamination IS NOT cost

- effective, and using nuclear EGUs breeds contamination.
Commenters requested that the EPA reconsider its decision to include nuclear energy and natural gas as alternatives to be encouraged. Commenters remarked that the problems of nuclear waste storage, the pollution from uranium mining and the immense water usage of nuclear plants are all reasons to exclude it and focus on developing energy efficiency measures on expanding wind, solar and geothermal el ectricity generation and storage.

Commenters stated that while natural gas may burn cleaner than other fossil fuels, the problem with methane leakage during fracking as well as pollution of air and water make it highly problematic. Commenters stated that w e should be focusing investment dollars on long term sustainability, that is, efficiency first, then solar, wind and geothermal power.

Comment 36: Commenters stated that uprates (and relicensing) should be counted as new generation.627 Response 36: EPA acknowledges the comments and has determined that the BSER for the final rule will not include the proposed provisions for nuclear units i n the setting of state goals. Please see section V.A of the preamble for further discussion of the decision to exclud e nuclear generation from BSER. Please see section V.A of the preamble for further discussion of the treatment of new and uprated nuclear plants.

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

Commenters recommended that nu clear generation that has had its licensing renewed for extension to an 80 year life should receive full CPP credit as new nuclear generation under the CPP compliance provisions.

Commenters stated that the Proposed Rule does not provide adequate incentive s for states to support the continued operation of existing zero emission resources, in particular nuclear generation. Commenters stated that the proposal should be modified to provide these incentives through provisions that tighten standards if existing nuclear units close for certain (primarily economic) reasons, provide additional credit to states in compliance demonstrations for nuclear unit performance, treat nuclear power uprates and license renewals as new generation, or all of the above.

Commenter s stated that the Grand Gulf Nuclear Station in Mississippi was uprated to get an additional 178 megawatts of electricity out of the plant, at a cost $250 million. Commenters stated that, under the present rules, this additional electricity and investment are not credited.

Commenters stated that the EPA should allow 100% credit for uprates that have occurred at nuclear plants in a state, including those uprates that commenced prior to 2012. Commenters stated that the date of an uprate should be irrelevant , and all uprates should be considered eligible action, with compliance credit allowed for these significant CO 2 emission reductions.

Commenters also stated that utilities have used power uprates as a way to generate more electricity from their nuclear pla nts; prior to April 2014, the US Nuclear Regulatory Commission approved 154 power uprates. Commenters said owners of these units completed all but 8 of these uprates prior to the end of 2012; these approved uprates resulted in a gain of approximately 7,035 MWe or about the equivalent of seven new reactors.

Commenters recommended that an allowance for nuclear uprates should be available for use in a state's compliance plan. Commenters supported full crediting of post

- proposal uprates in a state's compliance plan, but urged that the final rule must allow for full crediting of nuclear uprates regardless of the timing of such uprates. Commenters also urged that, in lieu of full crediting of uprates towards compliance demonstrations, EPA should allow for the dist ribution of 'credits' to states/companies that undertook uprates as an early action program for addressing GHG emissions prior to 2014.

Commenters recommended that life extensions on existing units beyond the original Nuclear Regulatory Commission ('NRC') license of 40 years be treated like 'new' units (i.e., given full credit in a state's compliance plan). Commenters recommended that the credit for these units should be applied each year after the initial 40

- year period (i.e., 41st year and beyond).628 Comme nters noted that relicensing typically requires significant capital investment, and stated that application of compliance credit for those units in operation beyond the 40

- year period provides the proper incentives for companies and states to continue to i nvest in their nuclear fleets.

Commenters stated that the EPA could provide incentive to states to continue running their existing nuclear reactors by allowing states to count generation from relicensed nuclear reactors toward compliance. Commenters state d that, without such an incentive, the high cost of the relicensing process could lead some marginal plants to shut down; however, if operators could receive compliance credit for the MWh produced by relicensed reactors under a state plan, the owners and o perators of those reactors would have a stronger incentive to pursue relicensing.

Commenters noted that the decision to relicense an existing facility is uncertain and can be expensive, but can also reduce the need for additional fossil generation, thus lo wering emissions. Therefore, Commenters stated that it would be inappropriate to include assumptions about relicensed nuclear facilities in calculating state goals, but that the EPA should treat facilities that are able to successfully extend their license s as if they were 'new' facilities, by making new generation from those facilities eligible for use in complying with a state emission goal.

Commenters stated that, for the purposes of state implementation and compliance plans, nuclear power plant uprate p rojects and nuclear plant license renewals should be treated as new nuclear capacity under Building Block #3.

Comment 37: Commenters stated that uprates should be credited at 100%, regardless of the date of the uprate.

Response 37: EPA acknowledges the comments and has determined that the BSER for the final rule will not include the proposed provisions for nuclear units in the setting of state goals. Please see section V.A of the preamble for further discussion of the decision to exclude nuclear genera tion from BSER. Please see section V.A of the preamble for further discussion of the treatment of new and uprated nuclear plants, and section VIII.K of the preamble for further discussion of provisions in state plans of allowable actions that result in an adjusted CO 2 emission rate of an affected EGU.

The avoided emissions impact of existing nuclear capacity (inclusive of uprates prior to 2012) is already implicitly captured in the 2012 baseline data that represent existing EGU performance before the appl ication of the BSER. As a result, if the EPA were to allow compliance credit for generation from uprates performed prior to 2012, that credit would effectively double

- count the emissions impact of that generation and thus improperly relieve existing EGUs of the intended emission reduction requirement incorporated in BSER.

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

Commenters recommended that EPA should allow 100% credit for uprates that have occurred at nuclear plants i n a state, including those uprates that commenced prior to 2012. Commenters629 suggested that the date of an uprate should be irrelevant, and all uprates should be considered eligible action, with compliance credit allowed for these significant CO2 emission r eductions.

Comment 38: Commenters asserted states do not have the power to preserve nuclear plant operation.

Response 38: EPA acknowledges the comments and has determined that the BSER for the final rule will not include the proposed provisions for nucl ear units in the setting of state goals. Please see section V.A of the preamble for further discussion of the decision to exclude nuclear generation from BSER.

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

Commenters stated that, by assuming no at

- risk nuclear power plants will be retired and all units currently under construction will come online, and by assuming 6% of the entire nuclear fleet is
at

- risk and states can achieve additional emission reductions by keeping those units in operation, EPA fails to consider the possibility that an economic or other operational circumstance might exist by which the unit owner or the NRC might determine that a facility has reached the end of its useful life. Commenters pointed out that the record related to nuclear units is insufficient to support EPA's assumptions in Building Block 3.

Commenters stated that the dispatch of nuclear generation in one state is the dispatch of nuclear generation in one state is often part ly or totally dependent on the decisions of neighboring states. Commenters stated that in South Carolina, for example, the Robinson and Oconee nuclear facilities serve Duke Energy's customers in North Carolina almost exclusively. Commenters stated that Sou th Carolina cannot control whether Duke decides to retire those units in favor of other generating units that may be more economical, nor can South Carolina guarantee that the load that is currently being served by these units will continue to demand power at levels that would justify keeping these units online. Commenters stated that, although South Carolina will be penalized under the Proposed Rule if Duke decides (or is required) to retire one or more of these large nuclear units, South Carolina has no l egal authority or mechanism for ensuring that the units are preserved. Commenters concluded that even assuming that the EPA's novel interpretation of the term "system of emission reduction" is correct, the ability to preserve existing nuclear capacity cann ot be considered an "adequately demonstrated" method of reducing emissions in situations where the states in which nuclear facilities are operating have no control over whether the facilities continue to operate.

Commenters stated that another flaw in EPA 's proposal to penalize states that fail to "preserve" their nuclear capacity is that many states, including South Carolina, have little control over whether nuclear capacity must be used or preserved. Commenters provided as an example, that states have no control over whether the NRC grants or denies an aging facility's application for a license extension. Commenters stated that the NRC is currently issuing 20

- year license extensions to facilities that have reached the end of their initial 40

- year license, but has yet to determine whether it may issue longer extensions under existing federal law. Commenters remarked that, moreover, the current impasse over how and where to permanently dispose of630 spent reactor fuel has led to significant uncertainty over whe ther the NRC will be able to continue issuing and extending licenses under the Atomic Energy Act.

Comment 39: Commenters stated that credit should be allowed for carbon

- free nuclear investments.

Response 39: EPA acknowledges the comments and has determined that the BSER for the final rule will not include the proposed provisions for nuclear units in the setting of state goals. Please see section V.A of the preamble for further discussion of the treatment of new and uprated nuclear plants provisions for nuclear power.

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

Commenters contended that the proposal does not give enough credit for carbon

- free nuclear investments that have already been made.

Comment 40: Commenters asserted that nuclear power should not be included in state goal calculations.

Response 40: EPA acknowledges the comments and has determined that the BSER for the final rule will not include the proposed provisio ns for nuclear units in the setting of state goals.

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

Commenters contended that final approval for commercial operation of several nuclear power plants are out of the states' control and therefore should not be included in the state goal calculation. Commenters contended that expansion of nuclear energy is being penalized by EPA and given a lower emission guideline, resulting in additional compliance risk.

Comment 41: The pro posed CO2 emisson target methodology for incorporating under construction nuclear plants is unfair to states where plants are under construction.

Response 41: EPA acknowledges the comments and has determined that the BSER for the final rule will not includ e the proposed provisions for nuclear units in the setting of state goals. Please see section V.A of the preamble for further discussion of the decision to exclude nuclear generation from BSER. Please see section V.A of the preamble for further discussio n of the treatment of new and uprated nuclear plants, and section VIII.K of the preamble for further discussion of provisions in state plans of allowable actions that result in an adjusted CO2 emission rate of an affected EGU.

The following are summaries o f the specific public comments under this comment:631 Commenters contended that EPAs methodology for incorporating under construction nuclear plants into the rate

- setting calculation significantly increases the stringency of the CO2 emission targets for Georg ia, South Carolina, and Tennessee

- the only states where nuclear units are currently under construction. Commenters contended that this would constitute a substantial and unjustified inequity on these 3 states, and would contravene other overriding national energy policy objectives. Commenters added that including under construction nuclear assumes that future units will be constructed and always operate at 90 percent capacity factor no matter what actually occurs. Commenters stated that unforeseen circumsta nces could delay the completion of units under construction, and could cause extended outages that preclude achieving 90 percent capacity factor each and every year. Commenters concluded that CPP should remove the nuclear generation from setting the state goals but allow both new nuclear generating units and uprating of existing nuclear generating units to be included as components of state plans and be factored into state compliance.

Commenters specifically noted the proposal was inequitable to customers in those states who are already paying for nuclear units under construction. Commenters contended that the customers would also need to pay to comply with the CPP. Commenters estimated that the CPP could add as much as 20 percent to customer bills in 2030.

Comment 42: Commenters raised miscellaneous issues related to state plans that involve nuclear generation and the methodology for determining that a state is achieving its goal.

Response 42: EPA acknowledges the comments and has determined that the BSER for the final rule will not include the provisions we had proposed for under

- construction units in the setting of state goals, and will allow incremental generation from new nuclear units to be applied towards compliance. Please see section V.A of the pr eamble for further discussion of the treatment of new nuclear plants, and section VIII.K of the preamble for further discussion of provisions in state plans of allowable actions that result in an adjusted CO2 emission rate of an affected EGU. Also, sectio n VIII of the preamble for the final rule identifies state plan designs that require projections for evaluating plan performance prior to plan approval.

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

Commenters stated tha t the EPA did not consider how nuclear preservation incentives would be allocated. Commenters mentioned that if states would have to decide which reactors should receive subsidies and at what levels if they are to actually prevent closures, the industry co uld use such dynamics as additional leverage for programs covering the operating cost margin for all of a state's nuclear capacity, which the EPA would have to accept if the states show it is prudent for meeting the goals.

Commenters suggested that, in ord er to ensure that states have the information necessary to accurately evaluate proposals to include nuclear generation in their implementation plans, the EPA must include a thorough analysis of the economic and technical feasibility of various nuclear gene ration resources. Specifically, the commenters suggested the EPA to provide632 credible and technically sound analyses of the following: a. Completion of reactors in construction, with reference both to (1) current cost projections and project delays and (2) the historical record of reactor project delays and cancellations. b. The economic and technical feasibility of new reactor projects, including cost overrun trends, projected vs. actual completion times, and project cancellations (will overlap substantiall y with the above). c. The economics of existing reactors, including operating and maintenance cost trends, plant characteristics, and merchant power market dynamics. d. The economic and technical feasibility of reactor power uprates, and the effect of exte nded power uprates on overall plant economics and maintenance
costs.
Commenters stated that the EPA should clarify that that any state choosing to include construction of new nuclear projects in its state compliance plan should reasonably demonstrate the e xtent to which such nuclear generation would displace existing fossil

- fired generation.

Commenters stated that the formula for setting goals only includes 5.8% of nuclear and no hydroelectricity, and the formula for setting compliance is not clearly state d. Commenters speculated that compliance might go in one of a few ways:

1. The EPA uses the same formula as they did for setting state targets (this would exclude all new hydroelectric, which goes against the implication that additional hydroelectric can be u sed to meet state goals),

2. The EPA calculates compliance emissions rates in a way that includes all generation (in which their original goals don't make much sense, since some states would already be in compliance), or

3. The EPA calculates compliance emissi ons rates with a new, yet

- to

- be

- determined formula that may or may not include the low carbon generation from nuclear facilities.

3.3.9 CHP/cogeneration

This section discusses issues related to combined heat and power (CHP) production

, sometimes referred to as cogeneration

, as related to Cleaner Generation Sources (Building Block 3)

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

.

Comment 1: Comments regarding CHP units633 Response 1: See section V.A of the final rule preamble of the CPP for EPA’s response to this
comment
The following are summaries of the specific public comments under this comment:

Commenters discussed the benefits of CHP. Commenters stated CHP is the simultaneous generation of electricity and useful thermal energy. Commenters stated these efficient systems make use of heat that normally would be wasted and save the fuel that would otherwise be used to produ ce heat or steam in a separate unit. Commenters stated that as a result, CHP units are capable of reaching overall efficiencies of 60

- 80 percent and therefore of generating electricity at significantly lower emission rates than conventional electricity gen erating units. Commenters stated CHP technologies offer improved environmental quality, reduced energy consumption, and improved grid reliability. Commenters stated CHP reduces pollution by using the energy potential of fuel inputs twice or three times, yi elding half to a third of the emissions that would result from separate applications.

Commenters stated that already harnessed by many utility, industrial, commercial, and institutional facilities, CHP is a proven and effective energy resource that can be immediately deployed to help address current and future global energy needs while reducing environmental impacts. Commenters stated there is approximately 82 GW of CHP installed in the United States, accounting for 12 percent of U.S. electricity generation . Commenters stated each year, this installed capacity decreases energy use by almost 1.9 quadrillion Btu, and avoids the release of over 248 million metric tons of CO2 into the atmosphere. Commenters stated industry estimates indicate that existing sites could add another 132 GW of CHP. Commenters stated that installing just 40 GW of additional CHP would save energy users $10 billion a year, 1 quadrillion Btu, and 150 million metric tons of CO2e annually. Commenters stated this is why President Obama has

c alled for 40 GW of new, cost effective CHP by 2020.

Commenters stated that CHP is adequately demonstrated and that today there are more than 4,000 CHP installations throughout the United States. (Figure 5 U.S. CHP Installations) Commenters stated CHP capa city outside the United States is even greater, as the U.S. is ranked only thirteenth in the world for the share CHP has of total power production. Likewise, commenters stated that WHP capacity in Asia far exceeds U.S. capacity, and that CHP supplies less than 9 percent of U.S. electric capacity, well below the levels in other industrialized economies like Germany (13%), Russia (31%) or Denmark (53%). Commenters stated that CHP is "adequately demonstrated," but deployment needs to be expanded with favorable policies. Commenters said that State compliance plans under 111 (d) can stimulate further investment in the United States. Commenters continued stating that EPA has repeatedly recognized the value of CHP as a proven cost

- effective technology to reduce gre enhouse gas emissions. Commenters also stated EPA has incorporated CHP in its greenhouse gas best available control technology (BACT) guidance and issued awards to various CHP Energy Star projects in recognition of their emissions reductions. Commenters st ated that many states have likewise recognized the emission benefits of CHP and WHP and presented that 18 states recognize WHP as a renewable or efficiency resource in their state portfolio standards because WHP produces electricity with no incremental com bustion or emissions. (see Appendix

- "State WHP Catalogue")634 Comment 2 : C ommenters stated the EPA should clarify that CHP that combusts renewable fuels is considered renewable energy.
Response 2 : See section VIII.K of the final rule preamble of the CPP for EPA’s response to this
comment. The following are summaries of the specific public comments under this comment:

Commenters stated that not all CHP facilities use fossil fuels to generate heat and electricity. Commenters stated many use renewable fuel s ources such as solar, geothermal, or biopower (including wood waste, crop residue, energy crops, landfill gas, and manure and wastewater biogas). Commenters stated the Clean Power Plan establishes applicability criteria such that a facility would generally not be considered an affected EGU if it burns primarily (over 90 percent) non

- fossil fuels. Commenters stated these renewable CHP facilities should, therefore, not be considered affected EGUs, regardless of size or electricity sales to the grid. Commenter s stated that like the non

- affected CHP units, generation from new or expanded renewable CHP units displaces demand for generation from affected EGUs and, therefore, emissions from affected EGUs. Commenters stated EPA should make clear that it will approve state plans that account for new and expanded renewable CHP as a compliance tool in the same way that generation from other new and expanded non

- affected CHP units can serve as a compliance tool.

Commenters stated , however, renewable CHP units necessaril y utilize renewable fuel resources and generation from these units should be considered renewable energy generation. Commenters stated unlike for other compliance tools, the Clean Power Plan allows a state to incorporate generation during the compliance pe riod from existing renewable facilities

- that is, generation from facilities constructed before publication of the Proposed Rule

- when demonstrating compliance with that state's goal. Commenters stated that consistent with this approach, it urged EPA to clar ify that generation from non

- affected CHP units constructed before June 2014 that primarily utilize renewable fuels qualify as renewable energy generation and may, therefore, be considered an approvable compliance tool in state plans.

Commenters asserted t hat EPA has already established a broad set of criteria for including Combined Heat Power (CHP) biomass units as renewable by using U.S. EIA state level data and therefore should complete the Accounting Framework for Biogenic CO2 Emissions from Stationary Sources. Commenters stated , for example, Kentucky has three facilities that are considered to be CHP facilities which were included in the 2012 baseline renewable data; two of those are biomass waste CHP facilities with the third being a CHP involving off

- site steam utilization.

Commenters noted that EPA has permitted limited biomass resources for use in a large 31 MW California biomass CHP plant in recent regulatory rulings which reinforces the fact that there are some biomass resources that can contribute to GHG reduction goals when wisely used for biopower. Commenters urged EPA to incorporate biomass

- fueled CHP in its IPM modeling.

Comment 3: C ommenter s addressed encouraging CHP as a component of State Clean Power Plans.635 Response 3: See sections VIII.I and VIII.K of the final rule preamble of the CPP for the EPA’s response to this comment.
The following are summaries of the specific public comments under this comment:

Commenters stated that depending on the current status and specific structure of the St ate's portfolio standards, modification of an existing RPS or implementation of a new RPS can be a useful vehicle for encouraging CHP as a component of a State Clean Power Plan. Commenters stated that EPA should make clear to the States that it would appro ve State compliance plans that encourage implementation of CHP through portfolio standards or other policies.

3.3.10 Hydropower

This section addresses c omments on CPP provisions related to h ydropower.

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

Comment 1: Commenters stated that h ydropower should be treated equally with other RE sources in the proposed rul e

. Response 1: The EPA generally agrees. In response to additional analysis and many comments,
t he 111(d) final rule differs from the proposal

– generation from incremental hydro power added after 2012 is considered, with other low

- and zero

- emitting sources, to displace existing fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the compliance period from sources added since 2012 is eligible. See sections V.A, V.E, and VIII.K of the preamble of the final CPP. Regarding data year issues for hydrologic variability , see section VI.D of the preamble to the final CPP for EPA’s respo n se to this comment.
The following are summaries of the specific public comments under this comment:

C ommenters stated that the proposed rule should treat all RE sources, including hydropower, equally. Commenter s stated that the EPA must ensure that all non

- emitting energy resources, including new hydroelectric generation, are treated equally as compliance options under the Clean Power Plan. Commenters explained that, although states have discretion to count both new hydropower installations and incremental capacity increases at existing dams, the rule does not ensure that states must treat this new hydropo wer the same as other RE resources, such as wind and solar, regardless of the size of the facility or incremental increase. Commenters added that treating hydropower differently places it at a considerable competitive disadvantage with other RE resources a nd ignores the significant carbon emissions savings that this resource has generated, and will continue to generate, over time, and that hydropower, as an RE resource is especially important because, unlike intermittent resources such as wind and solar, hy dro is636 capable of providing base load power and ancillary services which are essential to the stable operation of the grid.

Commenters stated that, in order to maximize the amount of greenhouse gas emission reductions, the EPA will need to treat hydropowe r equitably under the proposed rule, particularly in comparison to the treatment of other renewable and clean energy resources. Commenters also remarked that the Agency should amend the proposal to adopt hydropower

- specific considerations and provisions to better account for and accommodate hydropower resources, such as: allowing states to utilize generation from hydropower assets as a compliance option, even if that generation is not used in establishing state goals; utilizing an averaging of years to
set the baseline (as opposed to the single year of 2012); as well as a rolling compliance average or water availability compliance "safety valve."

Commenters stated that, in the proposed rule, there is disparate treatment of hydropower and biomass between the standard

- setting methodology for a state and what counts toward compliance with that standard, and that the final rule should resolve this mismatch.

Comment 2: Commenters stated that e xisting hydropower should count towards compliance

. Response 2: The EPA disagrees. In response to additional analysis and many comments, the 111(d) final rule differs from the proposal

– generation from incremental hydropower added after 2012 is considered, with other low

- and zero

- emitting sources, to displace existin g fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the compliance period from sources added since 2012 is eligible. Generation from existing hydropower, consistent with the treatment of gene ration from other low

- and zero

emitting sources, does not displace existing fossil emissions

. Existing hydropower is not considered in the setting of a CO2 emission performance standard. See sections V.A, V.E, and VIII.K of the preamble of the final CPP. Regarding data year issues for hydrologic variability

, see section VI.D of the preamble to the final CPP for EPA’s response to this comment.
The following are summaries of the specific public comments under this comment:

Several commenters stated that exi sting hydropower generation should be considered as a compliance option. Commenters stated that all types of hydropower should be recognized as compliance options, including conventional, incremental hydropower, retrofits, capacity additions, efficiency upgrades, pumped storage, marine and hydrokinetics, conduits, and new development. Co mmenters stated that a huge source of our emission

- free electricity available to cooperatives, the Federal Hydro Power, is ignored by the CPP. Commenters also noted that hydropower currently accounts for 20 percent of the power supply for the commenters ’

c ooperative. Commenters stated that, if hydropower is not considered as a compliance option, it is not clear how states with significant hydropower will benefit from it. Commenters stated that, in its most basic definition, renewable energy is energy that c omes from resources that are naturally replenished, and hydropower is just that; therefore, states should be afforded compliance credit for existing hydropower facilities, independent of incremental additions, to meet the renewable standards or achieve com pliance with the emission rate goals set by the CPP.63 7 Commenters stated that it is critical that credit is awarded for all renewable and energy efficiency investments under state plans in Building Blocks #3 and #4. Commenters explained that the
commenters ’ organization has undertaken responsible portfolio options in the past and should receive credit for those past good deeds, such as credit for early action before 2012 and clear benefit for resources that come on

- line between 2012 and 2017. Commenters also noted that hydropower investments, as well as those in wind, solar, and landfill gas, were made knowing the likelihood of future carbon regulations and, as such, they should not be denied credit under any state plans simply because they are pre

- existing p rojects.

Commenters stated that the EPA's treatment of hydropower in the proposed rule fails to properly acknowledge the benefits of this resource, and places hydropower at a disadvantage with respect to other RE resources for purposes of counting towards states' compliance obligations. Commenters added that the EPA erred in not recognizing the full environmental benefits of hydroelectric generation in the Proposed Rule, and should explicitly allow for the use of hydropower resources for compliance purpose s.

Commenters stated that, in order to account for the full potential of emissions reductions from clean energy sources, hydropower must be treated equitably compared to other forms of renewable energy and denoted as a compliance option for states. Commen ters stated that, currently, hydropower is not included in Building Block 3, and it is not clear whether states can use hydropower as a compliance option. Commenters noted that hydropower is the largest source of renewable electricity in the U.S., and hydr opower (and pumped storage) plays an important role in ensuring grid reliability. Commenters stated that, as a flexible base load source of power, hydropower generation is a critical integrator of intermittent renewable energy generation and also allows as set owners to utilize fossil fuel generation resources more efficiently, reducing emissions even further. Commenters stated that meeting EPA's targets will be significantly challenged without hydropower's current and future contributions to a clean energy future. Commenters stated that, for the CPP to be successful, ensuring the protection and preservation of generation from the nation's existing hydropower facilities, as well as promoting new development, is critical. Commenters stated that the proposed ru le appears to undervalue hydropower's clean air benefits and future growth potential. Commenters noted that the DOE has identified significant opportunities for development in the hydropower sector, referencing an April 2012 study, which estimated 12 GW of hydropower potential at non

- powered dams across the U.S., and an April 2014 study, which estimated over 65 GW of potential new stream

- reach hydropower development. Commenters stated that, in response to these results, the DOE has launched a Hydropower Vis ion initiative to create a roadmap for realizing this growth. Commenters stated that, as the EPA moves forward on the rule, it should provide clear guidance and direction to the states on the value of hydropower to meeting the goals of the CPP. Commenters stated the EPA must also ensure that hydropower is treated equitably under the final rule and included as an eligible compliance option in state plans.

Commenters remarked that the use of hydro as a low carbon generation source has for decades helped coope ratives meet member loads in a cost effective and environmentally responsible manner, and utilities purchasing hydropower from the federal government should be allowed to use the low carbon generation for calculating compliance in a state or federal plan. Commenters added that the CPP should not justify limiting the use of existing hydro to show compliance638 simply because it was not included in the modeled rate and doing so is inconsistent and arbitrary with other compliance options used by the CPP to establ ish state rates and compliance options.

Commenters stated that existing hydroelectric generation should receive full CPP credit as a renewable energy resource so that hydro generation has equivalent standing to other renewable energy resources for CPP com pliance.

Commenters stated that the only rational method for setting a state RE target is to take into consideration existing capacity of all RE sources within the state and RE potential specifically in each state for each resource, and that includes hydr opower. Commenters also pointed out the EPA's rationale for excluding hydropower, that it could distort regional targets that are later applied to states lacking that existing hydropower capacity, is not valid because the EPA did not apply the same rationa le to other types of RE, such as wind, where there may be a lack of capacity and/or potential.

Commenters disagreed with the EPA's reasoning for not including existing hydroelectric generation in the demonstration of compliance with the proposed targets. Commenters stated that all but two states have hydroelectric generation and should be able to include this non

- emitting generation in compliance demonstrations; however, under the proposed CPP, only new hydroelectric generation can be included in complianc e demonstrations. Commenters recommended that hydroelectric generation and all other non

- emitting sources should be treated in the same manner; that is, exclude them from the goal calculation, but allow them in the demonstration of compliance at the discre tion of the affected source.

Commenters stated that the EPA should credit hydropower as a compliance option and thereby provide meaningful recognition of hydroelectric generation to encourage those states to continue to use this low

- cost renewable resource.

Commenters supported inclusion of ex isting hydropower as a compliance option and stated that it is reasonably clear that, for the most part, optimizing hydropower output and energy efficiency investments are the least

- cost alternatives in the electric sector and should receive priority in de veloping the methodology for implementing the 111(d) rule.

Commenters stated that, despite the vast potential of water power at existing impoundments, and clear congressional policies favoring development of that potential, the EPA's proposed rule largely ignores hydro and places hydro at a disadvantage compared to other carbon abatement options under the proposed rule. Commenters described the RC Thomas Project in southeastern Texas, which project takes advantage of one of the most promising untapped sour ces of renewable power potential in the nation by utilizing the head and flow of an existing non

powered dam at the largest water impoundment in Texas that is currently devoted exclusively to water supply. Commenters stated that the RC Thomas hydroelectric project is precisely the type of renewable energy development that Congress and the Executive Branch repeatedly have sought to promote over the past decade, beginning with the Energy Policy Act of 2005. Commenters concluded by stating that, besides exclud ing existing hydropower generation from the calculations, the proposed rule, and the EPA's underlying modeling, presumes zero future growth in hydropower generation and that, by excluding hydropower entirely from its modeling,639 the EPA unfairly and unwisely ignores hydroelectricity's current and future contributions to reducing the energy sector's carbon footprint.

Commenters stated that hydropower should not be "invisible" as states make compliance choices. Commenters stated that if a state deems hydropower generation either "essential" or "at risk" because it is nearing the end of its design life, facing potential limits on operational flexibility, or scheduled for relicensing before 2030, the EPA should allow that state to add t hat hydro generation in units of estimated MWh into the denominator of its goal/target compliance calculation in the place of other RE/EE measures. Commenters stated , where this is done, states should be able to adjust their hydro contribution yearly based on updated weather information. At a minimum, c ommenters suggested, the rule should do more to ensure that these hydropower resources are maintained and enhanced in order to continue their contribution to a lower CO2 emission future. Commenters stated a b ad result would be for the proposed rule to lead to a low

cost, CO2 emission

- free resource going offline due to being replaced by, or being bumped by, higher

- cost CO2 emission

- free resources or natural gas due to the incentive structures associated with th e BSER. Commenters also stated that, in cases where a state RPS includes hydropower, it should be allowed to displace additional renewable requirements, as calculated under Building Block 3. Commenters stated that, for example, the 15 percent goal for rene wable energy in South Dakota was based on its total 2012 generation of 12,034,206 MWh, which includes 5,980,965 MWh of hydropower, nearly half of the total state generation. Commenters stated because existing hydropower is used in making the calculation of renewable energy targets, it should also be allowed in state plans as an eligible form of renewable energy under Building Block 3. Commenters stated that the EPA should expressly allow state plans to designate all forms of new and incremental hydro for co mpliance, whether owned or contracted for. Commenters stated this should include clearly establishing both domestic and out

- of

- nation hydro (such as Canadian hydro) as eligible renewable resources.

Commenters stated that the provision to allow existing ren ewable energy should be extended to include existing hydroelectric power.

Commenters stated that the EPA's decision to exclude existing hydropower facilities is directly contrary to policies in the Northeast, where existing hydropower is a major component of RPS compliance. Commenters added that failing to account for the role of hydropower in the RPS requirements that form the EPA's regional renewable generation targets results in a substantial overestimation of the amount of renewable resources that can be added in the Northeast, and particularly in New York.

Commenters remarked that excluding existing hydropower is inconsistent because hydroelectric generating resources produce zero

- carbon electricity, and that the EPA should count hydro generation as p art of the RE resources.

Commenters stated that including existing hydropower would result in a balanced treatment of all RE generation that would reflect how these resources contribute to the CO2 emissions from covered plants.

Commenters stated that exc luding nuclear and existing hydropower is a major flaw because these technologies are the two largest generators of very

- low

- carbon electricity in the U.S., and640 omitting most or all of the electricity generated by the technologies that have already made th e greatest contributions to accomplishing the stated goal of the CPP requires justification. Commenters added that, although the EPA has quite reasonably explained why they do not expect any new hydroelectric capacity to be built in the foreseeable future, clear and compelling overall justification for omitting this generation from the state goal

- setting formula is not present in the proposed rule.

Commenters stated that excluding hydroelectricity as a renewable resource is counter

- intuitive; Commenters no ted that hydroelectric power does not result in carbon emissions, utilizes a replenished natural resource (water), and can provide reliable and planned production of electricity.

Commenters stated that Arizona was built on hydropower and should get some c redit for its hydroelectric investments, which have provided carbon

- free energy reliably for many years.

Commenters stated that the EPA's decision to discount the value of domestic hydropower is completely puzzling because hydropower is a renewable, effici ent, and reliable source of energy that does not directly emit greenhouse gases or other air pollutants, and that can be scheduled to produce power as needed, depending on water availability. Commenters added that, if the EPA does not want energy costs to rise substantially, the EPA needs to rethink the discount of domestic hydropower. Commenters also pointed out that hydropower is essential to new "intermittent" renewables such as wind and solar in that hydro output can be quickly and easily turned up or d own to keep the electrical grid in balance.

Commenters stated that it is unreasonable and discriminatory to exclude existing hydro because it is a non

- carbon emitting resource and has been part of power supply for the North Iowa Municipal Electric Coopera tive Association members, as well as others, for decades, and excluding existing hydro penalizes members for choosing this non

- carbon emitting power supply resource over others. Commenters added that the exclusion of the hydroelectric resources further

exa cerbates the stranded cost problem, as additional non

- carbon emitting resources will need to be added to lower carbon emissions from other sources.

Commenters stated that the proposed rule fails to adequately recognize the actual carbon intensity of states, utilities and, most importantly, customers, using this carbon

- free source of electricity, and in fact, the EPA's methodology appears to penalize states with existing hydropower by increasing renewable energy targets and has the potential to perversely create excess generation for a utility and therefore unnecessary higher costs for customers. Commenters provided a graph that compared the EPA's calculated base line carbon intensity for Montana, the EPA's interim and final goal and the carbon intensity of the electricity supply before and after hydro was purchased by the commenter's organization; c ommenters noted that the graph illustrates actual customer impacts resulting from ignoring existing hydropower in the proposed Clean Power Pan methodology of calculating and reducing carbon intensity. Commenters explained that asking customers to acquire other forms of renewables or additional energy efficiency that is n ot cost effective to further decrease the already low carbon intensity of their energy supply will result in additional rate increases and will likely increase the overall mass of carbon dioxide associated with our portfolio. Commenters concluded by reques ting that the EPA recognize the importance of existing hydropower by supporting policies that recognize the many641 benefits of hydropower and promote its continued use, enhancement and expansion; encouraging the relicensing of existing hydro facilities by al lowing the carbon

- free emissions from relicensed hydro plants to be used for compliance; allowing states to use existing hydropower for compliance; and, not penalizing states by using existing hydropower to increase renewable energy targets.

Commenters st ated that the CO2 reductions from hydropower production benefit Minnesotans regardless of whether the generation is sourced from existing or new generation resources or whether these resources are located within Minnesota or elsewhere. Commenters requested that the EPA count all hydropower serving Minnesota retail customers towards state CPP compliance goals.

Commenters stated that utilities and their ratepayers that have existing hydropower in their renewable energy portfolio should be given credit for ha ving a renewable, non

- emitting resource that displaces fossil

- fuel generation. Commenters explained that, for at least 10 states, hydropower makes up nearly half or more of the generation capacity and that these states have a legacy of clean, renewable and non

- emitting energy, which has displaced CO2 emitting resources, and put them among some of the lowest CO2 emitting states in the nation, and that without this hydropower, energy would have to be replaced likely by natural gas, which would increase CO2 ou tput of these traditionally clean states. Commenters added that it would be consistent with the methodology that the EPA employs in its calculation of renewable energy under Building Block 3 to include existing hydropower.

Commenters stated that, as a cri tical non

- emitting resource that has other positive attributes for grid reliability, hydropower should not be disadvantaged in any rules setting or implementing carbon reduction goals.

Commenters requested the EPA credit existing hydropower, including any upgrades taken at those existing resources and new technology deployment (e.g. run of the river technology, wave or tidal technology), in the same manner as wind and solar technologies. Commenters stated that the proposed rule should be improved by correct ly accounting for present hydropower generation and hydropower generation's projected growth. Commenters added that hydropower supplies reliable, carbon

- free electricity and states and markets must be encouraged to keep optimized hydropower capacity on

- lin e into the future.

Commenters stated that the city of Fremont, Nebraska purchases hydropower from the Department of Energy Western Area Power Administration, but would not be able to offset any carbon emissions from coal with this power source.

Commenter s stated that hydropower generation from both federal and non

- federal hydropower resources should receive emission credits towards the state's compliance obligations under the proposed rule.

Commenters stated that, because the EPA unreasonably refuses to acknowledge existing hydropower as RE in the goal calculations, the proposed rule would effectively displace Idaho hydroelectric generation instead of mitigating or reducing emission levels from affected unit fossil generation plants.642 Commenters stated th at the EPA's treatment of hydropower is a disadvantage for regions of the country that rely on zero

- emission hydropower resources as a significant proportion of their renewable generation. Commenters stated that the EPA should recognize the importance of t he continued contribution of hydropower to the nation's renewable energy resources, and the EPA should revise its approach to allow states to count existing hydropower generation toward their renewable energy goals. Commenters stated that, for the purposes of calculating a baseline level of renewable generation in each state, the EPA included only non

- hydropower renewable energy in the target

- setting calculations and in the renewable generation levels used to inform the state goals. Commenters stated that t he EPA also assumed that state RPS policies often exclude existing hydroelectric facilities from RPS accounting, but, recognizing that there is potential for the development of new hydropower resources, the EPA proposed that a state may choose to include g eneration from new hydro facilities as a method of compliance with a state's goal. Commenters stated that, in this approach to goal rate

- setting and compliance, the EPA has failed to recognize the details, limitations, and variations in state RPS statutes. For example, Commenters stated , North Dakota only counts new hydropower generation for compliance with its RPS, but North Dakota recognizes the importance of existing hydropower in how it calculates the amount of electricity necessary to meet the RPS. Com menters stated that a utility may deduct the proportion of electricity obtained from hydroelectric facilities from its baseline of total retail sales, lessening the burden. Commenters stated the National Hydropower Association supported a similar approach when Congress was discussing a national renewable standard, and other states, such as Kansas, include existing hydropower in their definition of renewable energy resources for compliance purposes under their RPS.

Comment 3: Commenters stated that h ydropower capacity built after 1995 should count towards compliance

. Response 3: The EPA disagrees. In response to additional analysis and many comments, the 111(d) final rule differs from the proposal

– generation from incremental hydropower added after 2012 is considered, with other low

- and zero

- emitting sources, to displace existing fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the compliance period from sources added since 2012 is el igible. Generation from existing hydropower, added before 2012, consistent with the treatment of generation from other low

- and zero

- emitting sources, does not displace existing fossil emissions . See sections V.A, V.E, and VIII.K of the preamble of the fi nal CPP. Regarding data year issues for hydrologic variability , see section VI.D of the preamble to the final CPP for EPA’s response to this comment.

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

Commenters stated that h ydroelectric power plants brought online since 1995 should be included as compliance options. Commenters stated that existing hydropower plants qualify as compliance opportunities because hydropower resources represent an important source of emissions

- free power and can play a pivotal role in reducing the carbon

- intensity of the power sector. Commenters explained that the current proposal properly excludes the vast majority of pre

existing hydropower generation from the baseline of the target

- setting framew ork; however,643 additional hydropower projects built after 1995 were determined to be cost

- effective due in part to the climate change benefits of hydropower in many states, including Oregon, and hydropower resources brought on

- line beginning in 1995 should be eligible for compliance.

Comment 4: C ommenters stated that large

- scale hydropower plants should be considered as a compliance option

. Response 4: The EPA generally disagrees. In response to additional analysis and many comments, the 111(d) final rule differs from the proposal

– generation from incremental hydropower added after 2012 is considered, with other low

- and zero

- emitting sources, to displace exi sting fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the compliance period from sources added since 2012 is eligible. Generation from existing hydropower, consistent with the treatment of generation from other low

- and zero

- emitting sources, does not displace existing fossil emissions . See sections V.A, V.E, and VIII.K of the preamble of the final CPP.
The following are summaries of the specific public comments under this comment:

Commenters stated that large hydropower should be considered by the Federal government as an emission

- free generating resource that is already in place, but is not incorporated into the proposed plan. Commenters explained that the limit on large hydropower is artificial and only in place to increase market share for other renewables, and, at the very least, the Federal hydro system should get credit for the generation under this plan.

Commenters remarked that Ger many moved to renewable energy large

- scale hydro as a part of their energy transition, but, in the U.S., the only hydro that counts is small

- scale hydro. Commenters explained that Germany and many in the environmental community understand that no matter th e size of the dam, any electricity production is hydropower.

Commenters stated that excluding existing large hydropower is significant for several reasons, including: it is capable of producing large amounts of electricity, it is capable of operating in a baseload capacity, some existing capacity is at risk of retirement (mostly because of ecosystem restoration efforts), there is very low feasibility for capacity increases in the compliance period, and it has significant non

- air quality impacts. Commenters added that hydro can also operate as a dispatchable resource, filling the same role as NGCC plants in following load and providing reserve and peaking capacity; and thus, the preservation of hydro capacity would directly displace reliance on fossil fuel r esources that may otherwise be called upon. Commenters remarked that the EPA's reasons for not including large hydro resources in the BSER are sound, but inclusion of nuclear is no more sensible than inclusion of hydro would be, especially considering the unwarranted value placed on the at

- risk nuclear capacity.

Comment 5: Commenters stated that s mall hydropower plants with capacity less than 10 MW should be included in the state goal calculation

.644 Response 5:

. The EPA agrees that incremental hydropower tha t may come on

- line after 2012 may be used to establish a CO2 emission performance rate. In response to additional analysis and many comments, the 111(d) final rule differs from the proposal

– generation from incremental hydropower added after 2012 is consi dered, with other low

- and zero

- emitting sources, to displace existing fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the compliance period from sources added since 2012 is eligible. Gener ation from existing hydropower, consistent with the treatment of generation from other low

- and zero

- emitting sources, does not displace existing fossil emissions . See sections V.A, V.E, and VIII.K of the preamble of the final CPP.

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

C ommenters stated that small existing with capacity less than 10 MW should be included in the state goal calculation. Commenters did not provide an explanation for their request.

Comment 6 : Commenters expressed s upport for low

- impact hydropower and commented on the potential negative impacts of hydroelectric dams

. Response 6 : The EPA agrees that increment al hydropower can be considered. In response to additional analysis and many comments, th e 111(d) final rule differs from the proposal

– generation from incremental hydropower added after 2012 is considered, with other low

- and

zero

- emitting sources, to displace existing fossil emissions and may be used by states to reduce a
rate. For the purp ose of adjusting a rate generation during the compliance period from sources added since 2012 is eligible. Generation from existing hydropower, consistent with the treatment of generation from other low

- and zero

- emitting sources, does not displace existing fossil emissions , ev en if certified by a third part y for other impact See sections V.A, V.E, and VIII.K of the preamble of the final CPP. Impact of hydropower not related to the Clean Air Act are beyond the scope of the CPP.
The following are summaries of the specific public comments under this comment:

Commenters expressed support for low

- impact hydropower , and that independent 3rd party certification of hydroelectric projects by the Low Impact Hydroelectric Institute (LIHI) should be required for any hydroelectric project to qualify for state or national renewable energy certificates or to qualify in renew able portfolio standards. Commenters added that, where minimal environmental or recreational impact is to occur, the EPA should also consider giving credit for upgrading existing turbine generating capacity and the powering of existing non

hydroelectric da ms and water conduits. Commenters explained that hydroelectric dams can create relatively pollution

- free energy, but can also cause significant adverse impacts on fish and wildlife, water quality and quantity, recreation, and other resources and noted that multiple dams within the same watershed can have both individual and cumulative impacts. Commenters stated that, therefore, it is important to have a more comprehensive basin

- wide review and permitting approach, regardless of the fact that multiple land o wners may be involved. Commenters added that, if existing LIHI hydro facilities are included, the EPA should re

- evaluate the renewable goals for each state and adjust them to ensure that growth of new renewable energy sources are prioritized and facilitate d under Building Block 3.645 Comment 7: C ommenters stated that uprates at existing hydro plants should count as RE.
Response 7: The EPA generally agrees. In response to additional analysis and many comments, the 111(d) final rule differs from the proposal

– generation from incremental hydropower added after 2012 is considered, with other low

- and zero

- emitting sources, to displace existi ng fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the compliance period from sources added since 2012 is eligible. See sections V.A, V.E, and VIII.K of the preamble of the final CPP. Regar ding data year issues for hydrologic variability , see section VI.D of the preamble to the final CPP for EPA’s response to this comment.

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

Commenters stated that power uprates a t existing hydropower plants, including those undertaken since 2012, should be allowed as part of a state's compliance plan. Commenters stated that some of the 60 GW of potential new hydro would come from modernizing and uprating existing hydro facilities. Commenters stated that undertaking these or other changes could allow existing hydro facilities to be uprated to a higher capacity and to produce more energy. Commenters provided additional information on the benefits of hydropower uprates and suggested t hat the final guidelines recognize the value of hydropower uprates by allowing their use by states as a compliance tool.

Commenters encouraged the EPA to allow Michigan to include new hydropower plants or efficiency uprates at existing hydropower plants, including efficiency upgrades to the turbines at the Ludington pumped storage facility to be counted towards compliance in Michigan's 111(d) compliance plan.

Comment 8: Commenters stated that h ydroelectric facilities under construction and hydroelectric u prates that occurred after the baseline year(s), but prior to the proposal, should count toward compliance

. Response 8: The E PA generally agrees. In response to additional analysis and many comments, the 111(d) final rule differs from the proposal

– generation from incremental hydropower added after 2012 is considered, with other low

- and zero

- emitting sources, to displace existi ng fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the compliance period from sources added since 2012 is eligible. See sections V.A, V.E, and VIII.K of the preamble of the final CPP. Regar ding data year issues for hydrologic variability , see section VI.D of the preamble to the final CPP for EPA’s response to this comment.
The following are summaries of the specific public comments under this comment:

Commenters stated that the EPA should c larify that hydroelectric facilities under construction and hydroelectric uprates that occurred after the baseline year(s), but prior to the proposal, count646 toward compliance. Commenters stated that the proposed rule could be interpreted to prohibit
states from counting this hydroelectric generation toward compliance. Commenters stated that the section of the preamble to the proposed rule that explains that RE, regardless of its construction date, can count toward compliance expressly excludes hydropower, a nd the preamble later states that emissions reductions achieved after the date of the proposal pursuant to existing state programs can count towards future compliance. Commenters stated that that section excludes RE from this limitation (the "RE exception" ) such that all RE pursuant to an existing state program can count towards future compliance. Commenters stated the justification for the exception is that existing RE was included in the BSER calculation as part of Building Block 3, but the EPA did not consider hydropower in the BSER calculation. Commenters stated this could be interpreted to mean that, since noth ing expressly says that hydropower between 2012 and the date of the proposal can count towards compliance and the proposed rule is "forward looking" generally, hydropower generation that occurred between 2012 and the date of the proposal cannot count towar d compliance. Commenters stated , however, this hydropower should be counted toward compliance to eliminate the disparate treatment of states that invested in hydroelectric power. Commenters stated that the EPA must clarify its treatment of hydropower gener ation and allow it to count towards compliance.

Comment 9: Commenters stated that n ew contracts for existing hydropower plants should count towards compliance

. Response 9: The EPA disagrees. Generation from existing hydropower, consistent with the treatment of generation from other low

- and zero

- emitting sources, does not dis place existing fossil emissions . New contracts with existing generation do not displace overall existing generation, and relicense d facilities are considered to be existing faci lities. See sections V.A, V.E, and VIII.K of the preamble of the final CPP. Regarding data year issues for hydrologic variability , see section VI.D of the preamble to the final CPP for EPA’s response to this
comment.
The following are summaries of the sp ecific public comments under this comment:

Commenters stated that the EPA should make it unequivocally clear that states can include new contracts for existing hydroelectricity as eligible renewable resources available for compliance. Commenters explained that hydropower is non

- emitting and provides consistent, base load power and including existing hydro is also consistent with the formula by which renewable energy goals are established by the EPA, which includes all energy generated in a state, including hydropower. Commenters explained that, while existing hydro admittedly does not add new resources to the nation's fleet, its wide use eliminates the need to rely on fossil fuels for base load needs. Commenters added that, if existing hydroelectri c dams are not relicensed or are otherwise required to be decommissioned, it will create new demand for base load resources which most likely will be provided by natural gas and will increase CO2 emissions. Commenters also stated that, hydro facilities not only provide renewable energy, but also provide much

needed system reliability, voltage regulation, frequency response, spinning reserves, and other essential ancillary services (services that wind and solar cannot provide) that make it among the most imp ortant of renewables to meet the nation's greenhouse gas policies.647 Comment 10: Commenters stated that t he EPA should allow credit for existing hydropower with

a baseline production rate to limit the amount of existing capacity that will count towards
comp liance

. Response 10: The EPA disagrees . In response to additional analysis and many comments, the 111(d) final rule differs from the proposal. Generation from existing hydropower, consistent with the treatment of generation from other low

- and zero

- emitti ng sources, does not displace existing fossil emissions . See sections V.A, V.E, and VIII.K o f the preamble of the final CPP. Regarding data year issues for hydrologic variability, see section VI.D of the preamble to the final CPP for EPA’s response to this comment.
The following are summaries of the specific public comments under this comment:

C ommenters suggested that the EPA allow credit for existing hydropower, but develop a baseline, similar to the baseline developed for the PSD Program, to account fo r the variability in hydropower generation. Commenters explained that the baseline could be based on production over the previous 10 years. Commenters stated that the EPA should not penalize states with hydropower by not allowing it to be used for compliance. Commenters noted that the 24

- month average hydropower production selected by South Dakota for the last 10 years occurred in 2007 and 2008 and resul ts in a baseline of 2,995,195 megawatt

- hours. Commenters added that any hydropower electric production above the baseline should be eligible for demonstrating compliance with the state's goal, and if hydropower production is below the baseline, it should

n ot count against a state; there would just be no credit for hydropower production during a drought year.

Comment 11: Several commenters stated that existing hydropower should not be used in the calculation of any state's renewable generation requirement.
Response 11: The EPA generally agrees

. In response to additional analysis and many comments, the 111(d) final rule differs from the proposal. Generation from existing hydropower, consistent with the treatment of generation from other low

- and zero

- emitting sources, does not displace existing fossil emissions , but incremental uprates to existing facilities may be used to establish a CO2 emission performance rate. See sections V.A, V.E, and VIII.K of the preamble of the final CPP. Regarding data year issues for hydrologic variability , see section VI.D of the preamble to the final CPP for EPA’s response to this comment.
The following are summaries of the specific public comments under this comment:

Commenters recommended that the EPA exclude hydropower in state RE goal

- setting methodology due to its high variability and dependency on precipitation and runoff, factors outside of the control of the state. Commenters pointed out that, if existing hydropower were excluded from Tennessee's RE target generation under the Alternative RE approach, RE target generation required would decline significantly

.648 Commenters stated that hydropower is highly variable, as it depends significantly on seasonal and annual precipita tion, as well as usage allocations, and that the ongoing drought due to climate change puts reliance on hydropower at risk in many states, including New Mexico.

Commenters stated that inclusion of hydropower in the goal calculation assumes that hydropower is kept constant and therefore, does not impact calculation of the state goal. Commenters added that existing hydro will impact achieving the goal if hydroelectric generation drops below the 2012 baseline value due to weather conditions. Commenters stated that keeping existing hydropower out of the state goal calculation does not penalize states in the event of an extreme weather event.

Commenters commented that existing hydropower should not be included in Building Block 3 and factored into state goal ca lculations because there is little that can be done to expand electricity production from hydroelectric sources, and, as the EPA observes, existing hydropower facilities are geographically limited. Commenters added that the inclusion of existing hydropower in state goal calculations would introduce additional compliance risk for states with hydropower because the amount of generation from hydropower facilities is subject to year

- to

year variability based on, among other things, the amount of precipitation a watershed receives. Commenters explained that drought can limit the amount of generation a hydropower facility can produce, which would make compliance more difficult if existing hydropower were included in state goal calculations, and, as a practical ma tter, the ability to comply with a section 111(d) standard of performance should not be influenced by the amount of rain that falls. Commenters added that there are also regulatory requirements placed on hydropower facilities as part of a FERC license that can reduce the amount of electricity hydropower facilities can generate.

Commenters supported the omission of existing hydropower resources from the 2012 renewable energy baseline due to the distortions that it would cause in the Northwest region's renew able energy baseline. Commenters added that, as neither Washington nor Oregon allow most existing hydropower to be counted towards compliance with the state's RPS, it would be somewhat contradictory for the EPA to include hydropower in those states' renewa ble energy baselines; also, omitting hydropower from the baseline avoids creating further incentive for these states to retain unnecessary and ecologically disruptive dams.

Comment 12: Commenters stated that t he EPA incorrectly assumes that existing capac ities of hydropower will always be available in the future

. Response 12: The EPA disagrees . In response to additional analysis and many comments, the 111(d) final rule differs from the proposal

– the approach to setting a CO2 emission performance rate is different. Generation from existing hydropower, consistent with the treatment of generation from other low

- and zero

- emitting sources, does not displace existing fossil emissions , but uprates t o existing capacity may be used in establishing a CO2 emission performance rate . Generation from incremental hydropower added after 2012 is considered, with other low

- and zero

- emitting sources, to displace existing fossil emissions and may be used by
stat es to reduce a rate. For the purpose of adjusting a rate generation during the compliance period from sources added since 2012 is eligible. The 111(d) final rule requires that states649 develop plans that establish emission standards for affected EGUs. We are providing states with substantial flexibility as to how they structure those plans to achieve the 111(d) requirements. The flexibility includes, for example, the choice of approaches, trading, time to develop plans, additional time before the start of the interim compliance period, and the ability to shift emission rate achievement between compliance periods. See sections V.A, V.E, and VIII.K of the preamble of the final CPP. Regarding data year issues for hydrologic variability , see section VI.D of the p reamble to the final CPP for EPA’s response to this comment.

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

Commenters stated the EPA does not include hydropower in calculating state goals, but it arbitrarily assumes that existing capacities of hydropower will always be available in future
years. Commenters stated that many regions of the country rely heavily on this generation, but the proposal fails to account for natural circumstances that lead to reduced capacity on a yearly and sometimes multi

- year basis. For example, c ommenters stated that the proposal fails to address how to supplement, or who will be responsible for supplementing, existing hydro when the presumed generation levels are diminished based on drought, re duced capacity due to new environmental mandates, or reductions based on other competing interests, such as drinking water reserves or even beach creation. Commenters stated that, under the proposal, the state's overarching goal would remain unchanged, pos ing additional burdens on other resources to make up the difference due the reduced hydropower availability. Commenters stated , for example, that in North Dakota, thermal generation supplements power from dams in low water years, but in high water years su ch as 2012, state emissions are lower. Commenters explained that the Pacific Northwest is heavily dependent on hydropower and would encounter the same problem as North Dakota when hydropower generation power is curtailed. Commenters stated many states will and can use natural gas EGUs to make up for the lost hydropower generation. However, c ommenters stated , due to the stringency of state goals and the proposal's heavy reliance on this gas generation for meeting the state goals, there may not be available n atural gas generation to replace the lost hydropower; moreover, the required natural gas use may cause the state to exceed its SIP due to unanticipated usage. Commenters stated by 2030, the application of these risk factors will likely lead to permanent re ductions in the nation's hydropower generation. Commenters stated the EPA capriciously ignores the impacts of this likely reality, and as a result, many states will be forced to rely on additional natural gas generation not accounted for by the EPA in the state goal calculation. Commenters stated that this additional CO2

- based natural gas generation could well make it impossible for many states to achieve the proposal's goals. Commenters included a table that summarized the at

- risk hydropower capacity nationwide.

Comment 13 : Several commenters stated that the EPA should recognize new and incremental hydro as compliance options.
Response 13: The EPA generally agrees . In response to additional analysis and many comments, the 111(d) final rule differs f rom the proposal

– generation from incremental hydropower added after 2012 is considered, with other low

- and zero

- emitting sources, to displace existing fossil emissions and may be used by states to reduce a rate. For the purpose of650 adjusting a rate gener ation during the compliance period from sources added since 2012 is eligible. Generation from existing hydropower, consistent with the treatment of generation from other low

- and zero

- emitting sources, does not displace existing fossil emissions. See secti ons V.A, V.E, and VIII.K of the preamble of the final CPP.
The following are summaries of the specific public comments under this comment:

Commenters stated support for the EPA allowing incremental hydroelectric power projects to provide compliance credit, as these types of upgrades extend the hydroelectric power system and provide for real emission reductions. Commenters stated that the estimates and accounting for this technology can vary widely among operators; the EPA should, therefore, consider best practices in the states when it develops the methodology for these calculations. Additionally,

c ommenters stated that incremental hydropower is an effi ciency improvement, and the EPA should consider providing states guidance on the appropriate measure life for such an upgrade.

Commenters stated agreement with excluding existing hydropower from establishing a state's existing RE capacity and fully supported the use of incremental hydropower from existing facilities or new facilities as a compliance option.

Commenters stated that the EPA s hould clarify in the final rule that new or incremental hydro is eligible for inclusion in a state's 111(d) plan, even if large hydro is not defined as an eligible energy resource in the state's RPS. Commenters added that a state need not be asked to alter what is eligible for RPS compliance; any measure that reduces emissions from the affected EGUs should be eligible in 111(d) plans, regardless of whether or not it is eligible for RPS compliance. Commenters clarified that the EPA should credit such measure s after 2005, or at minimum after the 2012 base year, rather than after the date of the proposal. Commenters also requested that the EPA clarify in the final rule that any qualifying hydro measure (incremental or new capacity) is eligible for compliance cr edit, whether the dam in question is in or outside the United States.

Commenters stated that, regardless of whether the baseline methodology is revised to include hydro, the final rule should provide more definitive and clear direction and guidance to the states that the EPA supports new hydropower generation as a compliance option. Commenters stated that the states should be given not only an "option," but at least a rebuttable directive that any new or incremental hydropower deployed at existing dams sha ll be credited toward the state (or region) interim and long

- term compliance targets in the event a rate

- based methodology is imposed. Commenters added that, in this regard, clarification is also needed as to the deployment time frame in which new capacity will be given compliance credit, particularly for new and incremental hydropower generation brought online prior to 2020. Commenters stated that the final rule should make clear that projects deployed after the baseline year of 2012 will count fully towar ds the interim and long

- term emissions goals.

Commenters stated that hydropower is one of the best tools available in achieving greenhouse gas reductions and urged the EPA to value it as such in the rule wherever possible. C ommenters added that, while it is understandable that the EPA excluded hydropower from the existing 2012 generation for the purposes of setting state goals, they appreciated that the EPA has identified incremental hydropower and hydropower efficiencies as compliance options with state g oals and strongly urged the EPA to clearly maintain that distinction.651 Commenters stated that the proposed rule, at a minimum, should continue to recognize new and incremental hydroelectric power as a compliance tool in meeting greenhouse gas emission redu ction goals. Commenters noted that hydroelectric power is a significant part of a low

- cost, reliable and non

- emitting resource mix and urged the EPA to consider additional ways to recognize the value of hydropower as an invaluable tool to reducing greenhou se gas emissions.

Commenters expressed strong support for the EPA's position that incremental hydropower and hydropower from facilities built or uprated after December 31, 2012 (including small hydroelectric facilities) be allowed to be counted toward comp liance in state plans, and noted that incremental hydropower from turbine additions or replacements at existing dams, as well as new hydropower from small dams and in

- river hydroelectric facilities would displace fossil

- fuel generation in the same way as o ther forms of zero

- carbon generation, and that the proposed rule should treat all such incremental, zero

- carbon resources equally.

Commenters said that states should be allowed to consider incremental improvements in nuclear and hydropower generation from existing facilities as an option for compliance with state goals. Commenters stated that new hydroelectric power should be allowed to be included for compliance crediting in a state's plan. Commenters stated that Minnesota utilities have entered into agre ements to deliver Canadian hydroelectric power as a significant part of their resource mix, and they expected that the EPA's final rule will allow states to include expanded hydroelectric power in the compliance calculations. Commenters stated that expande d power could be achieved with additional capacity obtained through the development of new power at existing power facilities, or the purchase of previously unused Canadian power. Commenters agreed with the EPA that hydroelectric power generation should be available for use in compliance determinations as a zero emissions energy source. Commenters stated that hydro is also able to quickly respond to changing wind and solar generation, and is a reliable source of
power. Commenters stated that the DOE is sugg esting that the U.S. could increase hydroelectric power capacity by 15 percent by retrofitting existing dams with power generation; by allowing "new" hydroelectric power

- that is, the expanded use of hydroelectric power in a state's compliance plan, the E PA will also provide incentives for developing these small hydro generation projects. Commenters stated that, according to the 2012 Oak Ridge National Laboratory study conducted for the DOE, Minnesota has the potential of 186 MW of generation at existing d ams that are currently without power.

Commenters stated that it is important that the EPA clarifies that Building Block 3 requires that new hydroelectricity resources qualify as RE under any state plan. Commenters stated that the EPA should make it unequivocally clear that states are required to include as eligible resources new hydroelectricity that has been constructed after the publication of the proposal or becomes commercially available after the publication date wit hout regard to the size of the facility, date of installation, or increase in capacity. Commenters added that, because the construction and commercial operation of these new resources cannot be precisely timed to coincide with the beginning of the complian ce obligations, new hydro should be allowed to bank credits for generation produced from its commercial operation up to the date the compliance obligation goes into effect.

Commenters agreed with the decision and rationale for excluding existing hydro and agreed with allowing incremental hydro to count towards compliance with state goals.652 Commenters stated that, while agreeing with the EPA's decision not to include existing hydropower in Building Block 3, since opportunities for increased generation from t his resource are very limited in comparison to other renewable technologies, they supported including new or incremental hydropower. Commenters stated that there are promising opportunities to increase electricity generation at existing facilities, unpower ed dams, and run

- of

- river projects.

Commenters stated that existing hydroelectric capacity should remain excluded from the goal

setting calculation, but any incremental hydropower capacity at an existing facility or a new facility should be included in th e compliance calculation. Commenters stated that clarification is needed in regards to the EPA's treatment of hydropower.

Commenters stated that new and incremental hydropower should be considered as building blocks in meeting state GHG reduction targets. Commenters explained that hydropower makes up over half of the portfolio of Northwest generation resources, and is a major piece of the Northwest's low

- cost, reliable and non

- emitting resource mix. Commenters added that many public and investor

- owned util ities in the Northwest have invested in additional renewable resources and will continue to achieve even higher renewable electricity production from wind and solar because of the firming support provided by the Northwest hydropower system.

Comment 14: Se veral commenters commented about the allocation of hydropower among
states.
Response 14 : The EPA generally agrees that RE potential is regional . In response to additional analysis and many comments, the 111(d) final rule differs from the proposal

– a regional approach is used to establish CO2 emission performance rates. G eneration from incremental hydropower added after 2012 is considered, with other low

- and zero

- emitting sources, to displace existing fossil emissions and may be used by states to red uce a rate. For the purpose of adjusting a rate generation during the compliance period from sources added since 2012 is eligible. Generation from existing hydropower, consistent with the treatment of generation from other low

- and zero

- emitting sources, d oes not displace existing fossil emissions

. Incremental generation from another state may, if eligible , be used to adjust a CO2 emissions rate

. See sections V.A, V.E, and VIII.K of the preamble of the final CPP.
The following are summaries of the specifi c public comments under this comment:

Commenters asked the EPA for clarification on which state can claim credit for the renewable energy if a hydro generator contracts to sell power generated, as a result of increased production at an existing facility, t o a distribution entity in a state other than the one where the power is generated. Commenters also asked how a state could prevent the loss of this type of compliance mechanism. Commenters also asked if it is correct in interpreting that, under the propos ed rule, "existing" hydropower generation (i.e., the generation that occurred at the 2012 baseline level) does not benefit the state in its future obligations to meet the requirements of 111(d). Commenters questioned if a distribution entity in another sta te could purchase that "existing" electricity and help the other state meet its compliance obligation.653 Commenters stated that the proposed rule states that renewable energy credits (RECs) and renewables purchased from out

- of

- state can be used in a state's compliance plan, but provides little guidance as to how states can account for and use out

- of

- state RECs and renewable energy. Commenters added that the rule needs clarification on how out

- of

- state resources will be used in the implementation of the rule.

Commenters expressed concern that the proposed rule does not include provisions to allow for the interstate use of renewable energy for compliance with the CO2 reduction requirements, and that the non

- emitting benefits of the Red Rock Hydroelectric Proje ct which is under construction in Iowa may be limited to the state of Iowa only.

Commenters stated that the hydropower output generated from facilities which straddle more than one state should be allocated based upon the state in which a contract right h older to the hydropower generation is located. Commenters noted that this approach would properly allocate the resource for the EPA's purposes regardless of whether a state

- by

- state or regional approach is used to consider allocating renewable energy targe t levels.

Comment 15: Commenters stated that t he EPA should expand the definition of new hydropower units and allow new hydropower to count towards compliance

. Response 15: The EPA agrees . In response to additional analysis and many comments, the 111(d) final rule differs from the proposal

– generation from incremental hydropower added after 2012 is considered, with other low

- and zero

- emitting sources, to displace existing fossil emission s and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the compliance period from sources added since 2012 is eligible. Generation from existing hydropower, consistent with the treatment of generation from other low

- and zero

emitting sources, does not displace existing fossil emissions . See sections V.A, V.E, and VIII.K of the preamble of the final CPP

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

Commenters stated that the f inal guidelines should expand the definition of new hydropower units and allow states to include generation from "new" hydropower generating capacity in a state's compliance plan. Commenters referenced two studies, noting that the U.S. has the potential to add 60 GW of new hydro capacity by 2025, with estimates that there are more than 84 GW of total technical potential hydropower in the U.S. Commenters stated that tapping this potential will require the use of a number of different technologies, including pumped storage, small hydro, converting non

- powered dams, and modernizing existing sites. Commenters stated the final guidelines should incent the development of these new hydropower resources by allowing states to include them in their compliance plans. C ommenters stated that the final guidelines also should define "new" hydropower broadly to include: new hydropower plants that become operational after 2012; power uprates at existing hydropower plants, including those undertaken during or after 2012 or a modified baseline period; and any hydropower facilities that are relicensed during or after 2012 or a modified baseline period.654 Comment 16: C ommenters stated that relicensed hydro facilities should count towards compliance goals.
Response 16: The E PA disagrees. In response to additional analysis and many comments, the 111(d) final rule differs from the proposal

– generation from incremental hydropower added after 2012 is considered, with other low

- and zero

- emitting sources, to displace existing fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the compliance period from sources added since 2012 is eligible. Generation from existing hydropower, consistent with the treatment of generation from other low

- and zero

emitting sources, does not displace existing fossil emissions . Consistent with the treatment of relicensing nuclear units, a relicensed hydro facility is not considered a new facility. However, any generation from capacity uprates conducted at the time of relicensing may be eligible to offset an emission rate. See sections V.E, and VIII.K of the preamble of the final CPP.

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

Commenters stated that relicensed hydropower facilities should be treated as new units, and should be allowed as part of a state's compliance plan. Commenters stated that, in accordance with the FPA, FERC issues hydropower licenses for a pe riod between 30 and 50 years, and when a license expires, the applicant may apply to FERC for a new long

- term operating license. Commenters stated that, although the hydropower relicensing process is a lengthy and resource

intensive commitment for electric utilities, hydro relicensing does present opportunities to retain or expand zero

- emissions generation. Commenters provided additional information on the re

licensing of hydropower, noting that approximately 7,420 MW of hydropower came up for licensing in 2007, and the top five states for expiring licenses are California, New York, Oregon, Washington, and North Carolina, though re

- license opportunities exist in many other states as well. Commenters also stated that projects undergoing relicensing (and not n ew projects) make up the majority of the proposals being evaluated by the hydropower licensing staff of FERC's Office of Energy Projects.

Commenters stated that the final guidelines should recognize the considerable commitment associated with the FERC reli censing process and the significant contribution existing hydropower facilities make toward reducing total U.S. carbon emissions. Commenters stated that, as currently proposed, the guidelines may negatively affect an electric utility's decision on whether or not to embark on the complicated, lengthy and resource

- intensive commitment required to relicense an existing hydro plant. Commenters added that the final guidelines should recognize the value of hydropower relicensing by allowing generation from relice nsed facilities to be used by states as a compliance tool.

Commenters stated that the final rule should incentivize keeping, as well as growing, hydro generation by crediting, as new hydro, all hydro generation that was relicensed subsequent to 2005, the starting point for carbon emissions reductions for the proposed rule. Commenters stated that hydro relicensing is an expensive and time

- consuming process, but one that reconciles future operations with the wide range of laws and regulations currently in pl ace. Commenters suggested that the final guidelines recognize the value of hydropower relicensing by allowing655 generation from relicensed facilities to be used by states as a compliance tool. Commenters added that this is particularly important if the EPA d ecides to retain the inclusion of hydroelectric generation in its calculation of RE potential.

Comment 17: Several commenters commented on the timeframe for new hydropower that can be credited towards compliance with state goals.
Response 17: The EPA generally agrees. In response to additional analysis and many comments, the 111(d) final rule differs from the proposal

– generation from incremental hydropower added after 2012 is considered, with other low

- and zero

- emitting sources, to displace existin g fossil emissions and may be used by states to reduce a rate. Specif ic ally

, g eneration during the compliance period from a source added after 2012 is eligible to adjust a CO2 emission rate. See sections V.A, V.E, and VIII.K of the preamble of the final CP P.

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

Commenters stated new hydropower coming on

- line between 2012 and 2017 needs to be recognized for compliance. Commenters stated that AMP has new run

- of

- the

- river hydropower assets under construction on the Ohio River in Kentucky and West Virginia, which will come online over the next few years and will provide approximately 300 MW of new clean energy and capacity to participating AMP members in multiple states. Commenters st ated that it is absolutely essential that the financial investment that AMP and its participating members have made to develop these carbon

- free generating assets is recognized by both the U.S. and the EPA and that states have the opportunity provide with appropriate credit under state plans in Building Block 3. Commenters added that these assets were developed with recognition of the contribution that they could make to a carbon

- free energy portfolio, and this foresight should not be discounted in this reg ard.

Commenters stated that the EPA's approach to allowing new hydroelectric energy generation after 2017 to be included in a state's compliance demonstration creates a disincentive for utilities to proactively invest in and develop non

- carbon emitting en ergy sources. Commenters stated that the EPA should allow any hydroelectric energy generation after 2012 to be included in the compliance calculation to avoid any disincentives.

Commenters stated that, if the EPA decided to limit hydropower used for compl iance to generation from incremental or later

- built facilities, an early eligibility date should be chosen so as to not adversely impact existing transmission investments and power planning efforts at the state and regional level.

Commenters stated that t he proposed approach suggests that if a utility adds incremental capacity to an existing dam, builds a new dam, or signs a new Power Purchase Agreement (PPA) for generation from a dam built after June 2014, those MWh could be included in the denominator of the state's compliance demonstration. Commenters suggested that the EPA credit such measures after 2005, or at minimum after the 2012 base year, rather than after the date of the proposal. Commenters expressed support for the alternative in which any such measure656 undertaken after the base year of 2012, or after 2005, should be eligible, and the emissions impacts of any such measure could be counted and banked prior to 2020, e.g., beginning in 2017.

Commenters stated that, while the proposal allows states to count incremental hydropower generation towards meeting a state's emission rate goal, the proposal does not specify the date on which new or incremental hydroelectric generation must have been built or upgraded to count toward compliance. Commenters exp lained that, as a result, it is unclear whether generation from new or additional hydropower capacity built or uprated after 2012, 2014, 2017, or some other date would count. Commenters stated that to avoid penalizing early actions, the most reasonable
app roach would be to allow states to receive and claim emission credit for generation from any uprate initiated after the rule's baseline year (i.e., after 2012, if EPA retains the 2012 as the baseline year, or perhaps some earlier year, if EPA elects to use an earlier baseline year). Commenters added that such an approach would ensure that any uprate was in fact a reflection of new, additional generation that was not included in the baseline used for setting state targets.

Commenters stated that the EPA shou ld clarify that hydroelectric facilities under construction and hydroelectric uprates that occurred after the baseline period can count toward compliance. Commenters explained that the proposed rule could be interpreted to prohibit states from counting thi s hydroelectric generation toward compliance since nothing expressly says that hydropower generation investments that were made between the baseline and the date of the proposal can count towards compliance. Commenters added that this hydropower generation should be counted toward compliance to eliminate the disparate treatment of states and companies that invested in hydroelectric power.

Comment 18: Commenters stated that the potential for new hydropower is site specific

. Response 18 : The EPA agrees that the potential for new hydropower is site specific . In response to additional analysis and many comments, the 111(d) final rule differs from the proposal, and different data sets were used to set CO2 emission performance rates. See section V.E of the
pream ble of the final CPP.

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

C ommenters stated that the potential for new hydropower development is very site specific. Commenters suggested that the EPA use updated supply curves f or new hydropower from NREL's ReEDs model that reflect site specific costs and resource potential.

Comment 19: Several commenters stated that hydropower imported from Canada should receive full credit as a source of RE.
Response 19: The EPA agrees that generation from incremental capacity from Canada may be used to adjust a rate , In response to additional analysis and many comments, the 111(d) final rule differs from the proposal

– generation from incremental hydropower added after 2012 is considered, wi th other low

- and zero

- emitting sources, to displace existing fossil emissions and657 may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the compliance period from sources added since 2012 is eligible. Generation fro m existing hydropower, consistent with the treatment of generation from other low

- and zero

- emitting sources, does not displace existing fossil emissions . Generation from outside of the U.S. may be eligible to adjust a CO2 emission rate if the capacity was added after 2012. Generation from existing capacity is not eligible. See sections V.A, V.E, and VIII.K of the preamble of the final CPP.

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

Commenters stated that imported Canad ian hydroelectricity should be fully credited towards achieving CPP compliance when it can be demonstrated that the environmental attributes of the hydroelectricity is not being double

- counted. Commenters referenced a letter from the Canadian Ambassador to the EPA Administrator indicating that seven ongoing transmission development projects were being planned to establish infrastructure for transferring electricity generated from Canada to the U.S., with timing that would help support state compliance with the EPA's CPP proposed 2030 targets.

Commenters requested that the EPA clarify in the final rule that any qualifying hydro measure (incremental or new capacity) is eligible for compliance credit, whether the dam in question is in or outside the U.S. Comme nters referenced a plan to contract with Manitoba Hydro to reduce emissions from affected EGUs in the U.S., and that, provided there is no double

- counting, hydro from Canada should be eligible for compliance.

Commenters stated that both new and existing hydropower, including Canadian hydropower, can assist U.S. states and regions in cost

- effectively meeting their carbon reduction targets, but states and utilities need certainty that this resource can be used for complian ce in state and regional implementation plans. Commenters explained that existing and new hydropower from Canada continues to contribute real emission reductions to the U.S. grid, and that many current state policies seeking to reduce emissions in the powe r sector recognize the benefits of both existing and new hydropower. Commenters commented that, although there is no language that explicitly excludes Canadian hydropower as a compliance option under the CPP, some confusion remains as to whether states can use this resource. Commenters added that, given the short timelines for states to develop SIPs, a clear statement that Canadian renewables can be used for compliance is
necessary. Commenters concluded by stating that the CPP should recognize the important role that Canada's current and future hydropower resources can play in providing cost

- competitive, clean and renewable electricity and energy storage, enabling the increased development of wind and solar generation in the U.S., and contributing to the sta bility, reliability and flexibility of North America's electricity system. Commenters added that failure to allow states the flexibility to use Canadian hydropower imports could undermine the EPA's objective of cost

- effectively achieving CO2 emissions redu ctions in the power sector. Commenters also stated that excluding Canadian hydropower would penalize U.S. regions and utilities that have arranged for purchases of Canadian hydropower and made significant transmission investments as part of their strategie s to pursue cost

- effective emission reductions.

Commenters stated that there are significant transmission interfaces between the RGGI region and Canada, and the number of such connections is likely to increase in the future. Commenters658 explained that elec trical imports are typically power purchase agreements that are based on surplus hydropower in Canada, and, inasmuch as such power transfers can be key components of reliability in New York State, the proposed rule should not restrict the continued use of these important emission

- free generation resources.

Commenters stated that the proposed guidelines fail to recognize the value of new and imported hydropower in providing affordable, zero

- emissions power and do not incent their continued operation and deve lopment. Commenters stated that the EPA has failed to recognize the value of new and imported hydropower, both interstate imports and international imports and particularly hydropower imported from Canada, in providing affordable, zero

- emissions power in c ertain regions of the country. Commenters stated that the EPA does not propose to allow states to include existing hydropower in state compliance plans. Commenters stated that if the EPA does determine to allow states to include existing hydropower for com pliance, states should also be able to use imported hydropower. Commenters stated that the EPA registers legitimate concerns about the annual variability of hydropower generation, and that using existing hydropower to set state emission rate goals would create significant compliance risks for many states by making goals very str ingent. However, c ommenters stated , that if the final guidelines allow states to use existing hydropower, states should be allowed to use both interstate and internationally imported hydropower. Commenters noted that many states already recognize the value of imported hydropower in helping meet their energy demand and clean energy goals. Commenters stated

, for example, that Connecticut passed a law in June of 2013 that would allow for large

- scale hydropower from outside the region to count toward the state' s RPS requirement in certain circumstances. Commenters also stated that a 2008 agreement between Manitoba Hydro and the Wisconsin Public Service Corporation allows the latter to import 500 MW of power from two Nelson River projects. Commenters also stated that NU Transmission Ventures Inc. is developing a $1.4 billion Northern Pass transmission line project that would allow for the transmission of 1,200 MW of hydroelectricity from Hydro

- Quebec into New England's energy system. Commenters stated that these e xample clearly, demonstrate that states see a value in imported hydropower. Commenters also stated that allowing the use of imported hydropower could help states expand their use of other forms of renewable generation, helping to meet the EPA's goals of bo th reducing CO2 emissions and increasing the use of renewable energy and other zero

- emitting sources. Commenters stated that, in some circumstances, hydropower can play the same role as natural gas

- based units by providing backup for variable RE generation

. Commenters stated that the benefits of such an approach are exemplified in the partnership between Minnesota Power and Manitoba Hydro under which, beginning in 2020, Minnesota Power will use 250 MW of electricity supplied by Manitoba Hydro's Keeyask hydr o plant to help balance a wind farm in North Dakota. Commenters also stated that, if states are permitted to include international hydropower in compliance plans, the EPA should address concerns about potential double

- counting of generation or emissions re ductions from this resource. Commenters stated , for example, that states could be required to demonstrate that the emission benefits of the hydropower are not being used by other entities, either in the U.S. or in Canada.

Commenters stated that the trade in electricity across the U.S. and Canada border is longstanding and significant, and the U.S. and Canada effectively share a single North American grid totaling 200,000 miles of high

- voltage transmission lines; in 2012, the total amount of electricity tha t flowed across the border from Canada to the U.S. and vice versa exceeded 70,000,000 MWh. Commenters stated that, as a result, millions of Americans and Canadians depend on the reliable659 operation of this integrated grid every second of every day. Commente rs also noted that several states have acted to diversify their energy portfolios through the recognition of Canadian hydropower, and, in the process, have been able to reduce their carbon emissions and also have planned to further increase the role of Can adian hydropower in their future energy mix to achieve additional emissions reductions, enhanced grid reliability, and support intermittent renewable generation, such as wind and solar. Commenters explained that that imports of Canadian hydropower often di splace forms of electricity generation with higher greenhouse gas emissions and can, therefore, play a significant role in lowering carbon emissions from other sources of energy in the U.S. Commenters also stated that Canadian hydropower is highly responsi ve, meaning that power from Canadian hydroelectric reservoirs can be "saved" for when other, intermittent sources of energy, such as wind and solar are online, and used later when these sources are unavailable, thus ensuring that power is available when it is needed. Commenters explained that Canada has significant potential hydropower resources that could be developed in the future, and by allowing Canadian hydropower to be credited in state plans, more of this available capacity may be tapped in the futur e, replacing carbon

- intensive generation as increasing amounts of hydropower come online.

Commenters stated that, while the provisions of the final rule remain uncertain, they asserted that the EPA's original proposal is reasonable and achievable for Minn esota, provided the EPA ensures that new, imported hydroelectric power can be fully counted for compliance purposes. Commenters stated that, within the compliance period of this rule, Minnesota will also begin the planning process for replacing up to 900 M W of nuclear generation, and therefore, it is important to allow states to consider expanded contracts of hydroelectric power from Canada as a means of replacing one zero

- emitting generation technology with another. Commenters stated that, if the EPA adopt s its proposed alternative approach for renewable energy targets as described in the proposed rule, Minnesota will have even more zero

- emitting generation to secure. Commenters recommended that the EPA affirmatively state that hydroelectric power installed nationally and internationally post

- 2012 may be included in a state's plan.

Commenters stated that the proposed rule is unclear whether the credit for new/incremental hydro applies regardless of whether the dam is in or outside of the U.S. Commenters rem arked that any incremental or new capacity should be eligible for compliance credit, even if the dam in question is in or outside the United States, as long as the hydro MWh are not counted in another state's 111(d) plan.

Comment 20: Commenters stated that h ydropower imported from outside the US should count towards compliance

. Response 20: See the response to Comment 19

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

Commenters stated that the CCP should give credit fo r hydropower that is imported from Canada. Commenters explained that North America's hydropower resources provide multiple benefits at a time when the need for reliable, clean and economically competitive resources is critical, and, for these benefits to c ontinue, it is important that policies not create any artificial660 barriers to electricity trade and that they facilitate access to all clean energy resources. Commenters remarked that not allowing states the flexibility to use Manitoba Hydro's hydropower ex ports could undermine the EPA's objective of cost

- effectively reducing CO2 emissions from the power sector and penalize U.S. regions and utilities that have arranged for purchases of Canadian hydropower and made significant transmission investments as part of their strategies to pursue cost

- effective emission management. Commenters noted that the 2013 MISO 'Manitoba Hydro Wind Synergy Study' concluded that wind synergy benefits from the expanded use of hydro generators in Manitoba produced a weighted averag e load cost savings in the U.S. Midwest of $430 million annually. Commenters added that failure to recognize Canadian hydropower under the CPP could also result in perverse incentives for U.S. utilities that would undermine the Agency's goals. In conclusio n, c ommenters stated that, in order to build upon this ongoing relationship between Manitoba Hydro and its U.S. customers, the final rule should clearly specify that Canadian hydropower can serve as a compliance option under state implementation plans and that the definition of "later

- built" facilities not adversely impact existing transmission investments and power planning efforts at the state level. Commenters also specifically requested that the EPA clarify if states can use incremental hydropower from Canada as a compliance option under the CPP. Commenters noted that, given the short timelines for states to develop SIPs, it is important for the EPA to provide a clear statement indicating that Canadian renewables will be eligible compliance options for s tates, enabling their role as cost

effective, low

- carbon resources.

Comment 21: C ommenters asked for clarification regarding the eligibility of new and incremental hydropower.
Response 21: The EP A agrees with need to clarify the date after which incremental capacity may be added and its generation during the compliance period be eligible to adjust a rate. In response to additional analysis and many comments, the 111(d) final rule differs from the proposal

– generation from incremental hydropower a dded after 2012 is considered, with other low

- and zero

- emitting sources, to displace existing fossil emissions and may be used by states to reduce a rate. Incremental hydro includes generation from outside of the U.S. Generation from existing hydropower, consistent with the treatment of generation from other low

- and zero

emitting sources, does not displace existing fossil emissions

. For the purpose of adjusting a rate
g eneration during the compliance period from sources added since 2012 is eligible. See s ections V.A, V.E, and VIII.K of the preamble of the final CPP.
The following are summaries of the specific public comments under this comment:

Commenters stated that the proposed rule is unclear whether the provision to give credit for new or incremental hydro applies regardless whether the new/incremental hydro is in or outside of the U.S.

Commenters stated that the proposed rule is vague regarding the earliest date an incremental dam upgrade project that increases the electricity generating capacity of a dam could be completed and still have the incremental capacity portion of the dam considered a renewable electricity facility eligible to be used for compliance with the 111(d) targets. Commenters added that the EPA should be clear that incremental namep late capacity increases at existing hydroelectric661 dams completed after December 31, 2012 are eligible to be used for compliance with 111(d) targets.

Commenters requested that the EPA clarify the line between new and existing resources and suggested that a ny hydropower assets coming on line after the 2012 baseline year in the proposal should be defined as new and be available to receive credit for use by states in their compliance plans. Commenters referred to new hydropower assets that will be coming online in 2015 to 2016 that should be available for state compliance planning and explained that these zero

emission projects involve a long development time for initial design, permitting and construct ion and substantial upfront costs. Commenters added that, in addition to the long development time, these projects have a long lifespan and are financed for 35 years with an expected operational period of greater than 60 years and should receive appropriat e accounting within the Section 111(d) structure.

Commenters stated that clear guidance on the definition of eligible hydropower is needed, explaining that both existing and new hydropower from Canada continue to contribute real emission reductions to the U.S. grid. Commenters added that, if only new and incremental hydropower is allowed as a compliance option, then the earliest possible eligibility date should be considered.

Comment 22: Commenters stated that t he proposed rule should support hydropower an d could have adverse impacts on its use and development

. Response 22: The EPA agrees to clarify the treatment of hydropower . In response to additional analysis and many comments, the 111(d) final rule differs from the proposal

– generation from incrementa l hydropower added after 2012 is considered, with other low

- and zero

- emitting sources, to displace existing fossil emissions and may be used by states to reduce a rate. The approach to establishing CO 2 emission performance rates has changed, and hydropowe r is treated consistently with other low

- and zero

- emitting sources. For the purpose of adjusting a rate generation during the compliance period from sources added since 2012 is eligible. See sections V.A, V.E, and VIII.K of the preamble of the final CPP. Regarding data year and use of 2012, see section VI.D of the preamble to the final CPP for EPA’s response to this comment.

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

Several commenters commented on the general treat ment of hydropower in the proposed rule and potential adverse effects on the future of hydropower. Commenters expressed concern that the proposed rule could have adverse impacts on the use and development of hydropower

resources. Commenters stated that hydropower, as a resource, could be put at a disadvantage if it is treated differently from other non

- emitting renewable resources due to its exclusion from the denominator of the BSER calculation. Commenters explained that the discriminatory treatme nt of hydropower could lead to less hydropower production and the lack of incentives to maximize utility investment in least

- cost energy efficiency measures. Commenters also stated that hydropower's absence may lead to hydropower being largely "invisible" as states make compliance choices, which, c ommenters stated would be particularly disturbing in the event proposals are made to degrade hydropower capability or even retire hydropower units.662 Commenters stated that there is no good public policy interest se rved by creating a policy environment that may create a preference for other generating resources over hydropower. Commenters stated that the EPA should clarify that states can and should use hydropower as a compliance option, and it would be unfortunate i f a carbon reduction rule inadvertently resulted in the premier renewable non

- GHG emission resource being sub

- optimized or replaced with higher

- cost resources (that may even emit GHGs) due to the potential incentive structures derived from the BSER calcul ation. Commenters concluded by stating that hydropower should not be forgotten as an important part of the solution, particularly in the Northwest, where states are starting their emission

- reduction journey from a position of GHG

- emissions strength that sh ould not be discounted.

Commenters stated that the EPA must provide more definitive and clear direction and guidance to the states that the Agency supports existing, incremental and new hydropower generation as a compliance option under the rule and that states should be encouraged to examine ways to incorporate new hydropower generation into their planning.

Commenters stated that hydropower is the nation's largest source of renewable electricity, and the EPA should support policies that recognize the man y benefits of hydropower and promote hydropower's continued use, enhancement and expansion. Commenters provided an extensive list of the benefits of hydropower. Commenters stated that, by ignoring the contribution from hydropower in reducing the nation's c arbon intensity, the EPA falsely inflates the U.S. contribution to global carbon emissions.

Commenters stated that the EPA must alter its negative stance toward hydropower, as evidenced by comments in its TSD, which presumes there will be no development o f new hydro. Commenters remarked that, in President Obama' climate speeches in both 2013 and 2014, he spoke about the vast untapped potential that exists at non

- powered federal dams, and encouraged the electric industry to take advantage of this clean, non

- emitting and renewable resource.

Comment 23: Commenters stated that t he final rule should stimulate re

- investment in the federal hydropower system

. Response 23: The EPA agrees that incremental hydropower can be used to adjust a rate

. In response to additional analysis and many comments, the 111(d) final rule differs from the proposal

– generation from incremental hydropower added after 2012 is considered, with other low

- and zero

- emitting sources, to displace existing fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the compliance period from sources added since 2012 is eligible. Generation from existing hydropower, consistent with the treatment of generation from other low

- and zero

- emitting sources, does not displace existing fossil emissions . See sections V.A, V.E, and VIII.K of the preamble of the final CPP. Regarding data year issues for hydrologic variability , see section VI.D of the preamble to the final CPP for EP A’s response to this comment.

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

Commenters stated the final rule should stimulate a re

- investment in the federal hydropower system, noting that, for many years, billions of do llars of general hydropower operations and maintenance work, as well as additional upgrades at these federal facilities have not been663 budgeted or appropriated, particularly in this time of fiscal constraint. Commenters stated that the final rule should cre dit cooperatives and other federal power customers for any incremental hydro capacity and energy added to federal projects after 2012. Commenters added that the EPA should factor into its interim and long

- term compliance targets the role that existing fede ral hydropower generation plays in reducing the baseline CO2 emissions. Commenters concluded by stating that the uncertain treatment of existing hydropower generally under the rule begs the question of how hydroelectric generation from the existing federal system will be recognized and accounted for, and whether and/or how this generation is treated could have significant impacts on both state goals and compliance plans.

Comment 24: Commenters expressed s upport for the alternative approach and stated that the EPA should clarify the role of hydropower in the alternative approach

. Response 24: The EPA agrees to clarify the treatment of hydropower

. In response to additional analysis and many comments, the 111(d) final rule differs from the pro posal

– generation from incremental hydropower added after 2012 is considered, with other low

- and zero

- emitting sources, to displace existing fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generation durin g the compliance period from sources added since 2012 is eligible. Generation from existing hydropower, consistent with the treatment of generation from other low

- and zero

- emitting sources, does not displac e existing fossil emissions . See sections V.A, V .E, and VIII.K of the preamble of the final CPP. Regarding data year issues for hydrologic variability , see section VI.D of the preamble to the final CPP for EPA’s response to this comment.

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

C ommenters expressed support for the alternative approach to quantifying renewable generation based on a state

- by

- state assessment of RE technical and market potential and commented on the relationship between the approach used and the inc lusion of hydropower. Commenters stated that, in adopting the alternative approach, it is important that the role of hydroelectric generation and nuclear be made clear, as well as, leveraged. Commenters added that the impact of including hydroelectric reso urces as part of the target

- setting methodology creates a differential between Northeast states' existing renewable generation and their derived 2030 proposed renewable energy targets that is unrivaled in its stringency and may not be technically achievabl e without the inclusion of existing hydroelectric resources as a compliance option.

Commenters stated that the alternative approach is more appropriate, as it uses a more precise analysis of the technical and economic potential for the development of addi tional renewable generation in each state. Commenters stated that, if the regional RPS

- based estimates method is adopted instead, then the EPA must acknowledge the fact that New York's RPS recognizes existing hydropower resources.

Comment 25: Commenters did not agree with the alternative approach

.664 Response 25: The EPA agrees to clarify the approach to hydropower

. In response to additional analysis and many comments, the 111(d) final rule differs from the proposal

– The approach to establishing CO 2 emiss ion performance rates has changed, and hydropower is treated consistently with other low

- and zero

- emitting sources. Generation from existing hydropower, consistent with the treatment of generation from other low

- and zero

- emitting sources, does not displa ce existing fossil emissions , while generation from new or uprated capacity does. For the purpose of adjusting a rate generation during the compliance period from sources added since 2012 is eligible. See sections V.A, V.E, and VIII.K of the preamble of th e final CPP. Regarding data year and use of 2012 data, see section VI.D of the preamble to the final CPP for EPA’s response to this comment.

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

C ommenters did not agree with t he alternative approach to quantifying renewable generation. Commenters stated that the EPA's alternative approach begins with a state's 2012 hydropower production percentage then adds in the renewable goal percentage. Commenters explained that the alterna tive approach presumes a state's hydropower production remains constant at 2012 levels, which is not a realistic presumption.

Comment 26: Commenters stated that the EPA should clarify why hydropower is excluded from the proposed approach

. Response 26: The EPA agrees to clarify the treatment of hydropower

. In response to additional analysis and many comments, the 111(d) final rule differs from the proposal

– generation from incremental hydropower added after 2012 is considered, with other low

- and zero

- e mitting sources, to displace existing fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the compliance period from sources added since 2012 is eligible. Generation from existing hydropower, c onsistent with the treatment of generation from other low

- and zero

- emitting sources, does not displace existing fossil emissions . See sections V.A, V.E, and VIII.K of the preamble of the final CPP.

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

Commenters asked the EPA to discuss in more detail the reasons for excluding hydropower from the proposed approach, including barriers to hydropower expansion (environmental and navigation effects of dams). Commenters also asked th e EPA to discuss why the proposed Building Block 3 approach excludes hydropower, but the alternate renewables approach (as described in the "Alternate RE Approach" TSD) seems to favor inclusion of hydropower, although numbers are given for a scenario where hydropower is excluded

.

Comment 27: Several commenters commented on the inclusion of hydropower in state RPS goals and how that should be handled.665 Response 27: The EPA agrees to clarify the approach to hydropower

. In response to additional analysis and many comments, the 111(d) final rule differs from the proposal

– generation from incremental hydropower added after 2012 is considered, with other low

- and zero

- emitting sources, to displace existing fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the compliance period from sources added since 2012 is eligible. Generation from existing hydropower, consistent with the treatment of generation from other l ow

- and zero

- emitting sources, does not displac e existing fossil emissions , but potential uprates to existing hydropower facilities may be included in the establishment of CO2 emission performance standard

. See sections V.A, V.E, and VIII.K of the preamble of the final CPP.

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

Commenters questioned how the EPA accounted for the fact that many of these state RPS goals include existing hydropower and credit for energy efficiency me asures, yet existing hydropower does not appear to count toward compliance with state goals, and energy efficiency is already accounted for in Building Block 4.

Commenters stated that some state RPS include hydro as an allowable resource, and therefore,
t he historic renewable energy in those states that the EPA used to determine RE requirements in Building Block 4 are artificially high.

Commenters stated that the EPA should remove hydroelectric power from the goal computation methodology both from the sta te baseline of existing renewable generation and the portion of a state's RPS that is expected to be met from existing hydropower. Commenters added that, if the EPA is unable to calculate the amount of existing hydro included in individual state RPS, state s with RPS requirements that are clearly distorted by inclusion of existing hydro be removed from the Northeast average. Commenters provided a figure showing the 2012 distribution of RE in the Northeast states. Commenters stated that, alternatively, the EP A could adopt a uniform 20 percent target for the nation because regional targets bear no relationship to the techno

- economic ability of states to meet the regional targets and therefore are arbitrary. Commenters explained that a uniform 20 percent target, however, is consistent with the BSER by requiring all regions to meet the standards set by the leading states/regions.

Commenters stated that existing RPS

- eligible hydropower should count towards compliance with state goals, in order to maintain consistency with the goal

- setting process and state RPS
programs. Commenters explained that the EPA's proposed RE approach to establishing Building Block 3 targets is based on an average of the RPS goals of the states within a region that have RPS goals, and, although state RPS goals vary, they were established for the most part with the inclusion of certain hydropower resources as RPS

- eligib le resources. Commenters added that California entities' procurement decisions and compliance planning are long

- term processes that include contracting with projects under long

- term power purchase agreements based on current state law. Commenters further explained that California's RPS allows certain types of hydroelectric resources (mostly small hydroelectric generation), and hence, the Building Block 3 target is partially set based upon existing RPS

- eligible hydroelectric resources. Commenters
st ated that, therefore, any existing RPS

- eligible hydroelectric generation should count towards compliance.666 Commenters also expressed opposition to including hydropower when setting state targets. Commenters acknowledged the zero

- carbon emissions from hydro generation, but do not believe that compliance targets should be decremented by subtracting that generation, which would relieve Idaho from its obligation to reduce its portion of coal plant emissions. Commenters added that most hydropower is generally no t considered a "renewable" energy resource in calculations for utility compliance with state renewable portfolio standards.

Commenters stated the EPA must adjust regional RE goals to reflect the fact that generation from domestic and international existing hydropower resources may not be used for compliance. Commenters stated that hydropower generation is an essential zero

- carbon emitting resource and reduces the overall mass emissions of the U.S. energy sector. Commenters noted that, in 2012, 6.8 percent o f electricity generation came from hydropower, making it the largest RE resource. Commenters also stated that nearly every state allows generation from certain existing hydropower facilities, including in

- state, out

- of

- state, and international facilities, to be used for RPS compliance, and hydropower generation is used to satisfy a large portion of many state RPS requirements. Commenters noted that, when determining the regional RE targets, however, the EPA does not appear to have adjusted state RPS targets to exclude existing hydropower. Commenters stated this approach is inconsistent with the EPA's stated approach to hydropower in setting state goals. Commenters stated, moreover, that the proposed guidelines do not allow the use of these resources for comp liance with the proposed state

- specific goals. Commenters stated that, if the EPA restricts the resources available for compliance, despite their role in states' existing RPS programs, the Agency must also reduce the state RE goals to account for this limi tation. Commenters stated it is arbitrary for the EPA to use state RPS mandates that explicitly contemplate the use of certain hydropower resources to set regional or state RE goals for 111(d) purposes, but not allow these resources to be used for complian ce, as it increases state goal stringency while simultaneously depriving states of an important compliance tool. Commenters stated that the same issue arises when considering pumped hydro storage facilities; the EPA's proposed formula penalizes states that have prudently constructed pumped hydro facilities because the emissions and MWh from plants used to charge the storage system are included in the RE goal setting equation, yet the megawatt hours discharged from the storage resources to provide emissions

- free electricity are not. Commenters added that, consequently, states with large pumped hydro facilities, such as Michigan, have more stringent emissions reduction goals than is warranted. Commenters concluded by stating that the EPA's assumptions and meth odology for calculating RE goals should be consistent with state RPS rules and include all RPS

- eligible generation in states' compliance calculation, including RPS

- eligible hydropower and pumped storage. Commenters stated if the EPA is not going to allow e xisting hydropower as a compliance tool, the state goals cannot be based on RPS requirements that include hydropower or in

- state deployment of hydropower to date.

Commenters pointed out that certain hydroelectric power can be used by an electric power
sup plier to comply with the requirements of the RPS and stated that, for example, an IOU can use small scale hydroelectric power (<10MW) to comply with its RPS requirements. Commenters added that North Carolina RPS imposes no limit to the amount that can be u sed for compliance, and theoretically, an IOU could satisfy its entire requirement by purchasing small scale hydroelectric power. Commenters provided a table that shows the estimated amount of small scale hydro used by IOUs for compliance with the RPS base d on historical data used for compliance to date. Commenters also stated that, for EMCs and municipalities, 30 percent of667 their total RPS requirement can be fulfilled with certain hydroelectric purchases, which include allocation from SEPA comprised of 23 water projects operated by the U.S. Army Corps of Engineers. Commenters stated that North Carolina's RPS imposes no requirement that a SEPA allocation originate from electricity generated in the state and, if sufficient hydro generation is not available to satisfy annual SEPA allocations, SEPA may utilize replacement power from any available source of generation, including non

- renewable generation. Commenters provided a table that shows the estimated amount of hydro used by EMCs and municipalities for compl iance with the RPS, based on historical data used for compliance to date, and noted that the estimate is very conservative in that it projects that the EMCs and municipalities will only comply with 9.5 percent of their obligation through hydro, even though they are authorized to use up to 30 percent.

Commenters stated that the Agency should resolve the inconsistency between including existing hydroelectric generation in developing the target for New York and the other states in the Northeast region and dis allowing the use of existing hydropower in complying with that target. Commenters explained that, in order to take into account the varied availability of different renewable resources across regions of the U.S., the EPA used the state

- level effective rene wable energy levels derived from RPS requirements to quantify regional targets consistent with states' reasonable level of RPS development. Commenters stated that, in doing this for the Northeast region, the EPA inadvertently included existing hydroelectri c generating facilities when establishing the region's RPS goals, because those resources are included as available resources in each state's RPS target, but for other states with relatively large amounts of existing hydroelectric generation, the EPA based the states' target on RPS levels that do not include hydroelectricity. As an example, c ommenters stated that the EPA used 15 percent as the RPS for the state of Washington, but if existing hydropower was included in Washington's RPS, the renewable target for Washington would be in excess of 75 percent. Commenters concluded by stating that, since existing hydroelectric generating sources are not eligible for compliance purposes, the calculation of the renewable energy portion of Building Block 3 for the Nor theast is technically incorrect. Commenters explained that the EPA can correct this by reducing each state's effective renewable energy target level to subtract out the amount of existing hydro that is accounted for in each state's RPS goal. Commenters add ed that the appropriate RE level for each state in the Northeast region would then be 22 percent for Connecticut, 18 percent for Maine, 19 percent for Massachusetts, 23 percent for New Hampshire, 10.7 percent for New York, and 13 percent for Rhode Island. Commenters added that, if the EPA makes these adjustments, the renewable target for the states in the Northeast region would decrease from 25 percent to 18 percent, and New York's renewable energy building block target would decrease from 24,262 GWh to 17, 043 GWh. As an alternative, c ommenters stated that the EPA could also correct its apparent error by allowing existing hydroelectric resources to be used for compliance purposes, rather than removing such resources from a state's goal computation. Commenters explained that, for states that have RPS programs that were used to set state targets, any non

- emitting renewable energy eligible to comply with the relevant RPS regulations could be counted toward compliance, including generation from currently

- eligible existing hydroelectric generation, and this would be consistent with the concept that state RPS targets are reflective of state expectations for future generation from technologies included in the programs.

Commenters stated that renewable techno logies considered in the computation of state goals in Building Block 3 should also be available to states as a compliance option. Commenters668 explained that if a state's RPS included hydroelectric power and the renewable generation potential applied to eac h region is based on the RPS of states within that region, then the qualifying hydroelectric power should be considered as a compliance mechanism. Commenters suggested that the EPA provide more clarification on qualifying renewable energy in the final rule and ensure that renewable generation used in the calculation of targets can also be used in the determination of compliance.

Commenters stated that nearly every state RPS allows generation from existing hydropower facilities to be used for compliance and accounts for a large portion of many state RPS requirements. Commenters noted that the EPA states in the Abatement Measures TSD at 4

- 5 that the EPA adopted a broad interpretation of RE generation to include any non

- fossil renewable fuel type, with the exc eption of generation from existing hydroelectric power facilities when calculating baseline levels. Commenters added that, when determining the regional renewable targets based on the RPS requirements, the EPA does not appear to have adjusted the targets t o exclude existing hydro. Commenters stated that this is inconsistent, and if the EPA restricts hydropower as a resource for compliance, the EPA must also reduce the state goal to account for that treatment. Commenters stated that it clearly recognizes the value of hydropower in a clean energy portfolio, providing additional information on TVA, and noting that TVA maintains 29 conventional hydroelectric dams throughout the Tennessee River system and one pumped

storage facility for the production of electric ity. Commenters stated that the variability of hydroelectric generation is due to the weather

- related variance in rainfall and runoff from year to year, along with other commitments listed previously. Commenters stated that this makes it challenging to set firm target levels for hydroelectric generation because the amount of rainfall and runoff is out of its control, and including some average amount of hydroelectric generation would only increase the compliance risk for the states that are served by TVA.

Commenters stated that there is inconsistency in the inclusion of existing hydroelectric generation in the "total generation" for a state and in developing the goals, but disallowing existing hydroelectric generation when determining compliance. Commenters stated that to correct this inconsistency, the EPA should exclude existing hydroelectric generation from any determination of North Dakota's "total generation."

Comment 28: Commenters commented on the implications of a regionalized approach for reallocat ing hydropower across states.
Response 28: The EPA agrees. In response to additional analysis and many comments, the 111(d) final rule differs from the proposal

– the approach to establishing CO 2 emission performance rates has changed. See sections V.A a nd V.E of the preamble of the final CPP.

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

Commenters commented on the implications of a regionalized approach for reallocating hydropower across states. Commenters stated that the Agency's request for comment on a regionalized approach for hydropower allocation is a tacit recognition that existing hydropower is a significant resource, but it is unclear what effect this change would have on specific state goals since the EP A provides no specific information on the recalculation of the RE building669 block under this approach. Commenters remarked that it seems likely that this approach has the potential to create dramatic shifts, and some states with vast hydro resources are adj acent to many states with few hydro resources. Commenters added that this has the potential to cause such significant shifts in state goals that it would require a wholesale revision of the manner in which the state goal targets are calculated.

Comment 29 : Several commenters discussed the need for consistency in the goal computation process and compliance options, specifically for hydropower.
Response 29: The EPA agrees . In response to additional analysis and many comments, the 111(d) final rule differs f rom the proposal

– the approach to establishing CO 2 emission performance rates has changed, and hydropower is treated consistently with other low

- and zero

emitting sources. See sections V.A, and V.E, of the preamble of the final CPP

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

Commenters noted that this consistency between renewable technologies used in the goal computation process and available to states as compliance options is especially critical should the EPA choose not to adopt their recommendation offered with respect to the alternative methodology for Building Block 3. Commenters stated , specifically, if the EPA chooses to maintain the current methodology, it must address the issue created for early actor states t hat include hydroelectric power as a qualifying resource in their RPS portfolios. Commenters recommended that the EPA either: (1) include hydroelectric resources in the goal computation procedure, and permit all existing and future hydroelectric resources to qualify for compliance purposes; or, (2) remove hydroelectric power from the goal computation methodology and permit only new or incremental hydroelectric renewable resources to qualify as compliance

measures. Commenters stated that it respectfully emph asizes that a decision by the EPA to retain the current Building Block 3 methodology, coupled with a decision not to adopt one of the above proposals with respect to hydroelectric resources, would artificially distort the objective of certain early actors' existing RPS state policies. Commenters stated that state RPS targets are reflective of state expectations for future generation from technologies included in the RPS portfolio, and the RPS targets set by the Northeast regional states are dependent to var ying degrees on the inclusion of hydroelectric resources for RPS compliance purposes. Commenters provided a graph showing the impact of including hydroelectric resources as part of the target

setting methodology creates a differential between the Northeast states' existing renewable generation and their derived 2030 proposed renewable energy targets that is unrivaled in its stringency and may not be technically achievable without the inclusion of existing hydroelectric resources as a compliance option.

Com menters stated that, if the EPA were to finalize the proposed RPS

- based approach to the renewable energy component of Building Block 3, the Agency should review its methodology to ensure that the measures used to develop the state targets are consistent with the measures allowed for compliance. Commenters stated that some existing hydropower resources, which the EPA proposes to exclude from its assessment of 2012 renewable generation and from use in compliance plans, are eligible for compliance with renewable stan dards. Commenters stated that,670 if the EPA retains its treatment of existing hydropower, the EPA should adjust the RPS levels to exclude the associated generation from hydropower.

Commenters stated that, when determining the regional RE targets, the EPA do es not appear to have adjusted state RES targets to exclude existing hydropower, which is inconsistent with the EPA's stated approach to hydropower in setting state goals. Commenters added that the proposed guidelines do not allow the use of these resource s for compliance with the proposed state

specific goals. Commenters stated that, if the EPA restricts the resources available for compliance, despite their role in states' existing RES programs, the Agency must also reduce the state RE goals to account for this limitation. Commenters added that it is arbitrary for the EPA to use state RES mandates that explicitly contemplate the use of certain hydropower resources to set regional or state RE goals for 111(d) purposes, but not allow these resources to be use d for compliance as it increases state goal stringency while simultaneously depriving states of an important compliance tool. Commenters stated that the same issue arises when considering pumped hydro storage facilities in that the EPA's proposed formula p enalizes states that have prudently constructed pumped hydro facilities because the emissions and MWh from plants used to charge the storage system are included in the RE goal setting equation, yet the megawatt hours discharged from the storage resources t o provide emissions

- free electricity are not. Commenters stated that, as a result, states with large pumped hydro facilities, such as Michigan, have more stringent emissions reduction goals than is warranted.

Commenters stated that there are inconsistenci es in how the Agency has considered existing hydropower in state goal determinations, and these inconsistencies result in quantifiable repercussions that lead to inaccuracies in the stated results of the EPA's proposed plan. Commenters explained that the i naccuracies are the consequences of the CPP's disregard for 25.8 percent of domestic production, specifically the subset that is responsible for 80.5 percent of carbon

- free generation as stated above. Commenters stated that, as a result of the exclusion of hydroelectric and nuclear power contributions, any claims of carbon intensity are inaccurate and these generation inconsistencies must be addressed as they significantly alter the stated results of enacting the CPP. Commenters stated that, in the case of hydroelectric power production, the EIA confirms that non

- hydroelectric based electrical production routinely out

- produces hydroelectric generation and non

- hydroelectric power is anticipated to permanently outpace hydroelectric production in the coming yea rs. Commenters stated that, while hydroelectric power currently represents 52 percent of the domestic renewable portfolio, wind

- based production accounts for 32 percent, and the EPA's depiction of hydroelectric production dwarfing less developed sources of renewable energy is inaccurate.

Commenters stated that excluding existing hydropower in state goal calculations yields strange results for states that rely heavily on hydropower. As an example, c ommenters explained that conventional hydropower constitute d about 70 percent of Idaho's total generation in 2012 and Idaho's actual CO2 emission rate in 2012 was only 94 lb/MWh,, but by excluding hydropower, the EPA came up with a target rate of 228 lb/MWh for the year 2030, which is 140 percent larger than Idaho 's 2012 CO2 emission rate. Commenters stated that the proper way to calculate CO2 emission rates is to include all CO2 emissions from affected generation units and divide that by all generation in a particular state in any year, and doing this consistently for each year going forward can create a technology neutral rule that is consistently based on a well

- defined best671 system of emission reduction, which must include technical feasibility, economics, and non

- air quality considerations.

Commenters questione d why the EPA used all generation, including existing hydropower, to calculate the renewable energy cap, while, at the same time, excluding existing hydropower from the 2012 existing renewable baseline amount. Commenters also noted that, according to the
p roposal, the production of electricity from hydro generation was not considered in calculating the baseline and thus, was not projected out in calculating state goals, and that incremental generation from existing or later built facilities could be used fo r compliance. Commenters continued with the following questions to the EPA: a. How is "incremental hydropower generation from existing facilities" calculated? i. Is it the total amount of hydro generation actually produced over the 2012 baseline? ii. Is it the increase in capacity resulting from upgrades to facilities that could potentially boost production depending on demand and dispatching decisions? "

Comment 30: Commenters discussed a c alculation error in the alternate RE approach

. Response 30 : The E PA acknowledges the comment. Please see V.E.6 for a discussion of the quantification of renewable energy generation potential.
The following are summaries of the specific public comments under this comment:

Commenters stated that there is an error in the calculations for the Alternate RE Approach, Option 1, in the spreadsheet accompanying the technical support document. Commenters explained that hydropower potential used for the calculation was intended to use the grea ter of the feasibility determination or 2012 generation, but the spreadsheet used the full technical potential. Commenters concluded by stating that the alternative approach should not be finalized, but in the event that it is, this error should be address ed.

Comment 31: Commenters stated that the EPA should clarify that states need not alter their definitions of RPS

- eligible resources in order for new or incremental hydro to be eligible for inclusion in a state's 111(d) plan.
Response 31: The EPA agrees t o clarify the treatment of hydropower . In response to additional analysis and many comments, the 111(d) final rule differs from the proposal

– the approach to establishing CO 2 emission performance rates has changed, and hydropower is treated consistently with other low

- and zero

- emitting sources. Generation from incremental hydropower added after 2012 is considered, with other low

- and zero

- emitting sources, to displace existi ng fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the compliance period from sources added since 2012 is eligible. Generation from existing hydropower, consistent with the treatment of gen eration from other low

- and zero

emitting sources, does not displace existing fossil emissions , regardless of its location. See sections V.A, V.E, and VIII.K of the preamble of the final CPP.672 The following are summaries of the specific public comments u nder this comment:

Commenters stated that the EPA should clarify in the final rule that states need not alter their definitions of RPS

- eligible resources in order for new or incremental hydro to be eligible for inclusion in a state's 111(d) plan. Commenter s pointed out that some states' RPS rules do not consider large hydro to be a qualifying resource, and the c ommenters gave examples, explaining that hydro larger than 100 MW is excluded from Minnesota's RPS, and hydro larger than 60 MW is excluded in from Wisconsin's RPS. Commenters pointed out that facilities in Canada, many of which exceed the thresholds above, would nonetheless reduce emissions from affected EGUs in the United States, and any measure that reduces emissions from affected EGUs should be el igible in 111(d) plans.

Comment 32: Commenters stated that the EPA cannot impose limits on which hydropower resources should be available for compliance

. Response 32: The EPA agrees to clarify the treatment of hydropower. In response to additional analysis and many comments, the 111(d) final rule differs from the proposal

– generation from incremental hydropower added after 2012 is considered, with other low

- and zero

- emitting sources, to displace existing fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the compliance period from sources added since 2012 is eligible. Generation from existing hydropower, consistent with the treatment of generation from other low

- and zero

- emitting sources, does not displace existing fossil emissions . See sections V.A, V.E, and VIII.K of the preamble of the final CPP.

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

Commenters stated that it is not within the scope of the proposed rule for the EPA to impose limits on which hydropower resources should be available for compliance, other than excluding existing hydropower as it has proposed.

Comment 33: C ommenters stated that the rule should treat at risk hydro in the same way that at risk nuclear power is handled.
Response 33: The EPA agrees to the extent that nuclear and hydro are treated similarly . In response to additional analysis and many comments, the 111(d) final rule differs from the
propo sal

– generation from existing hydropower, consistent with the treatment of generation from other low

- and zero

- emitting sources, including nuclear, does not displace existing fossil emissions . Generation from incremental hydropower added after 2012 is con sidered, with other low

- and zero

- emitting sources, to displace existing fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the compliance period from sources added since 2012 is eligible. See sections V.A, V.E, and VIII.K of the preamble of the final CPP.
The following are summaries of the specific public comments under this comment:673 Commenters stated that the BSER includes some "at

- risk" nuclear generation but not "at

- risk" hydropower genera tion, even though some hydropower generation may be nearing the end of its design life, facing potential limits on operational flexibility, or scheduled for relicensing before 2030. Commenters stated the "at risk" hydropower should also be included.

Comme nters noted that the EPA provided incentives for preserving existing nuclear generation and stated that similar incentives would be appropriate for preserving existing hydroelectric generation. Commenters added that like nuclear, hydropower is a non

- emitti ng resource with great reliability.

Comment 34: C ommenters provided suggestions on how to handle the year

- to

- year variability of hydropower.
Response 34: The EPA agrees with the need to address the year

- to

- year variability . In response to additional analysis and many comments, the 111(d) final rule differs from the proposal

– generation from incremental hydropower added after 2012 is considered, with other low

- and

zero

- emitting sources, to displace existing fossil emission s and may be used by states to reduce a
rate. For the purpose of adjusting a rate generation during the compliance period from sources added since 2012 is eligible. Regarding data year issues for hydrologic variability, see section VI.D of the preamble to the final CPP for EPA’s response to this comment. See sections V.A, V.E, and VIII.K of the preamble of the final CPP.
The following are summaries of the specific public comments under this comment:

Commenters stated that, regarding year

- to

- year variab ility in hydropower generation, the CPP should recognize the variable nature of hydropower and allow state plans to designate a mean hydropower production figure for use in energy mix assumptions contained in the state plan.

Commenters stated that, if hyd ro is factored into the baseline, the EPA should use an average production level over a minimum of 5 years, rather than a snapshot using only 2012 generation. Commenters explained that there can be a significant year

- to

- year variability in the amount of hy dropower generation due to the availability and timing of water based on precipitation levels and other hydrological factors. Commenters noted that 2012 was a high hydropower year in many regions of the country and concluded by stating that using a 5

- year average would smooth out the individual year distortions on the baseline calculations.

Commenters stated that the conservative capacity factor listed for hydro

- electric power production is the limiting factor and could be used to determine the floor to ac count for year

- to

year variability.

Commenters stated that, to address year

- to

- year variability, the EPA should allow SIP provisions that would permit the states to compensate for weather

- related compliance shortfalls in a particular year with excess comp liance in earlier and later years. Commenters added that the 3

- year averaging allowed by the rule would address this concern to some extent, but may be inadequate under drought conditions.674 Commenters stated that, as Western states and companies make plans to meet future demand for electricity, they are dealing with substantial variation in the availability of hydropower, including variability caused by changes in snowpack, shifts in rain fall, changes in the timing of peak river flows, and ongoing drought. Commenters stated that this variation also presents a variety of challenges for states when it comes to 111(d) because it impacts both the EPA's baseline assumptions and the future generation mix that will determine compliance in 2020 and beyond.

Comment 35: Commenters expressed s upport for hydropower at the Glen Canyon Dam
Response 35: The EPA disagrees . In response to additional analysis and many comments, the 111(d) final rule differs from the proposal

– generation from incremental hydropower added after 2012 is considered, with other low

- and zero

- emitting sources, to displace existing fossil emissio ns and may be used by states to reduce a rate. Generation from existing hydropower, consistent with the treatment of generation from other low

- and zero

- emitting sources, does not displace existing fossil emissions . See sections V.A, V.E, and VIII.K of the preamble of the final CPP. The reference to the endangered humpback chub and the activity of other agencies is out of the scope the final CPP and no response to this portion of the comment is provided.

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

C ommenters stated that the Bureau of Reclamation (BOR) and National Park Service (NPS) are conducting an Environmental Impact Study (EIS) using data from the Long

- Term Experimental and Management Plan (LTEMP) for the Glen Canyo n Dam and Hydroelectric Operation. Commenters stated that many utilities believe that these agencies are developing operating alternatives that will significantly impact the endangered Humpback Chub and reduce the hydroelectric output. Commenters stated th at these agencies appear to ignore the science and not value the benefits of this renewable resource. Commenters stated that reducing the renewable hydroelectric production will increase greenhouse gas emissions by replacing the electrical generation with a natural gas source, which is in conflict with CPP. Commenters stated that these experimental operating restrictions should be re

- evaluated, and the hydroelectric resource should be restored to the pre

- 1996 operating standards, which will result in the on going protection of the endangered species, an increase in hydroelectric production, and a reduction of greenhouse gas emissions. Commenters requested that the EPA and these other federal agencies resolve these environmental conflicts and seek a balanced a pproach for the renewable hydrogenation from Glen Canyon Dam.

Comment 36: Commenters commented on the RE calculations for South Dakota related to hydropower.
Response 36: The EPA agrees to clarify the treatment of hydropower

. In response to additional analysis and many comments, the 111(d) final rule differs from the proposal

– the approach to establishing CO 2 emission performance rates has changed, and hydropower is treated consistently with other low

- and zero

- emitting sourc es. Generation from incremental hydropower added after 2012 is considered, with other low

- and zero

- emitting sources, to displace existing675 fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during th e compliance period from sources added since 2012 is eligible. Generation from existing hydropower, consistent with the treatment of generation from other low

- and zero

emitting sources, does not displace existing fossil emissions . See sections V.A, V.E, a nd VIII.K of the preamble of the final CPP. Reg arding data year issues for hydrologic variability, see section VI.D of the preamble to the final CPP for EPA’s response to this comment.

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

C ommenters commented on the RE calculations for South Dakota related to hydropower. Commenters stated that the EPA considered hydropower in calculating South Dakota's goal of 741 pounds of CO2 per MWh, and explained that the 15 percent goal for RE in 2030 was based on South Dakota's total generation in 2012 of 12,034,206 MWh, which includes 5,980,965 MWh of hydropower. Commenters stated that, if the EPA had excluded hydropower production in 2012, South Dakota's goal would increase from 741 to 877 pounds of CO2 per MWh. Commenters added that the energy efficiency goal is based on retail sales, which, for South Dakota, also includes hydrop ower, and, if the EPA excluded hydropower, South Dakota's energy efficiency goal for Building Block 4 would be lowered from 1,029,169 to 617,502 MWh, which would increase South Dakota's goal from 741 to 917 pounds of CO2 per MWh. Commenters stated that, if EPA elects to not include existing hydropower in demonstrating compliance with state goals, it should not include hydropower in its calculations that establish the state's goals. Commenters also stated that the EPA based the 15 percent RE requirement in B uilding Block 3 on the RPS for five out of the nine states in the North Central Region, and the hydropower generation in these five states account for no more than 2 percent of their total electrical generation. Commenters stated that including hydropower in determining state goals and yet disallowing use of existing hydropower to demonstrate compliance, when hydropower represents approximately 50 percent of South Dakota's production and 40 percent of its state sales, is not rational. Regarding the alternat ive approach, the c ommenters stated that the EPA took South Dakota's percentage of hydropower production in 2012 (i.e., 50 percent) and added it to the 15 percent renewable goal, which established South Dakota's renewable goal at 65 percent. Commenters sta ted that the EPA's alternative goal assumes South Dakota's hydropower can produce 2012 levels every year, and this is not consistently achievable. Commenters provided a figure that shows that annual hydropower production in South Dakota is dependent on the annual Missouri River runoff above Sioux City, Iowa. Commenters concluded by stating that the EPA's alternative approach in using hydropower to set a state's goal is not realistic or workable

.

Comment 37: Commenters commented on Arkansas ’ hydropower goal s

. Response 37: The EPA agrees to clarify the treatment to hydropower . In response to additional analysis and many comments, the 111(d) final rule differs from the proposal

– generation from incremental hydropower added after 2012 is considered, with other low

- and zero

- emitting sources, to displace existing fossil emission s and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the compliance period from sources added since 2012 is eligible. See sections V.A, V.E, and VIII.K of the preamble of the final CPP.676 The following are sum maries of the specific public comments under this comment:

C ommenters commented on the goals for hydropower in Arkansas. Commenters stated that a 2014 study by DOE found that Arkansas has 1,108 MW and 5,964 GWh of additional potential capacity along stream reaches that do not currently have dams or other infrastructure, and a 2012 study by NREL found adding generation to currently non

- powered dams could produce 1,136 MW in Arkansas. Commenters stated that, assuming capacity factors similar to those in the D OE study, these plants would produce about 6,000 GWh. Commenters explained that the capacity at the existing dams could be developed more quickly and would have less environmental impacts than the capacity that would require impoundments. Commenters stated that the renewable

energy targets used in the EPA's determination of Arkansas's goals could be met with about 6 percent of the potential at existing dams in 2020 and 80 percent in 2029.

Comment 38: Commenters commented on West Virginia ’s hydropower goals

. Response 38: The EPA agrees to clarify the treatment of hydropower . In response to additional analysis and many comments, the 111(d) final rule differs from the proposal

– the approach to establishing CO2 emission performance rates has changed, and hydro power is treated consistently with other low

- and zero

- emitting sources. G eneration from incremental hydropower added after 2012 is considered, with other low

- and zero

- emitting sources, to displace existing fossil emissions and may be used by states to re duce a rate. For the purpose of adjusting a rate generation during the compliance period from sources added since 2012 is eligible. The Building Blocks are not prescriptive. States have flexibility to develop plans that consider local circumstances. See se ctions V.A, V.E, VIII.A and VIII.K of the preamble of the final CPP.
The following are summaries of the specific public comments under this comment:

Commenters stated that historically, hydropower has been West Virginia's primary renewable resource for electricity generation. Commenters stated that West Virginia has utilized hydropower to generate electricity since the early 1900s and that wind and hydro account for

nea rly 4 percent of West Virginia's total electricity production. Commenters stated that West Virginia has hydroelectric generation capacity of 286.7 MW, located at 11 dams ranging in capacity from 1.9 MW on the Potomac to 102 MW on the New River. Commenters provided additional information on West Virginia's hydro capacity and discussed hydro permit applications under review by FERC. Commenters stated that, while several hydro applications have been under review for years, the circumstances support a predictio n that the additional available hydro potential is only 125.6 MW; this equates, at a capacity factor of 40 percent, to roughly 4.3 percent of the EPA's RE goal for West Virginia. Commenters stated that the EPA determined that it is feasible for West Virgin ia to produce 4,408,000 MWh of electric generation from hydropower by 2025. Commenters stated this figure should be compared to 2012, when West Virginia only produced 1,431,440 MWh of electric generation from hydropower. Commenters stated that assuming the CPP would take effect in 2017, West Virginia would have only 10 years from now to more than triple its hydropower capacity, and the development time allotted is unrealistic. Commenters stated that, in view of t he prediction that only 125.6 MWh of addition al hydropower is available in West Virginia, the EPA's estimate of untapped hydro resources is wholly without merit.677 Comment 39: Commenters commented on the feasibility of expanding hydropower in Florida.
Response 39: The EPA agrees to clarify the treatm ent of hydropower . In response to additional analysis and many comments, the 111(d) final rule differs from the proposal

– the approach to establishing CO 2 emission performance rates has changed, and hydropower is treated consistently with other low

- and zero

- emitting sources. G eneration from incremental hydropower added after 2012 is considered, with other low

- and zero

- emitting sources, to displace existin g fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the compliance period from sources added since 2012 is eligible. The Building Blocks are not prescriptive. States have flexibility to devel op plans that consider local circumstances. See sections V.A, V.E, VIII.A and VIII.K of the preamble of the final CPP.

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

Commenters commented on the feasibility of expanding hyd ropower in Florida. Commenters stated that the EPA's assumed growth projections under Building Block 3 for the increase in RE generation within Florida may not be technically feasible. Commenters explained that RE accounts for only 2 percent of the state's total generation mix and noted that the City of Tallahassee has direct experience in this regard, as it operates one of only two hydroelectric power facilities in the state. Commenters explained that, historically, hydroelectric facilities in Florida oper ate at a low capacity factor, citing data from 2012 that indicates capacity factors between zero to less than 40 percent. Commenters stated that, although hydroelectric power plants do have definite benefits with respect to air quality, there is very limit ed ability to expand the use of hydroelectric facilities in Florida. Commenters also stated that the C. H. Corn Hydroelectric Facility operated by the City of Tallahassee is a run

- of

- river facility, and the power generation opportunities from this facility are limited. Commenters noted that, during the last 10 years, the facility has averaged 0.58 percent of the Tallahassee's load requirement.

Comment 40: Commenters stated that there is an inconsistent treatment of existing hydroelectricity in the proposed approach to set Maine’s renewable energy goals and then disallow the same hydroelectricity for compliance.

Response 40: The EPA generally agrees . In response to a dditional analysis and many comments, the 111(d) final rule differs from the proposal

– the approach to setting CO2 emission performance rates has changed, and hydropower is treated consistently with other low

- and zero

emitting sources. Generation from in cremental hydropower added after 2012 is considered, with other low

- and zero

- emitting sources, to displace existing fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the compliance period fr om sources added since 2012 is eligible. Generation from existing hydropower, consistent with the treatment of generation from other low

- and zero

- emitting sources, does not displace existing fossil emissions, See sections V.A, V.E, and VIII.K of the pream ble of the final CPP.

The following are summaries of the specific public comments under this comment:678 Commenters stated that there is an inconsistent treatment of existing hydroelectricity in the proposed approach to set Maine's state renewable energy goals and then disallow the very same hydroelectricity for compliance with the goal. Commenters stated that, when it established the renewable generation goals for each state, the EPA considered all forms of renewable energy addressed by any state RPS. Commenters stated that, for Maine, the EPA attributed the total RPS standard of 40 percent, which includes existing hyd ro generation as well as wind, biomass, and all other renewables, as defined in Maine statutes. Commenters stated the EPA has not, however, carried the same inclusive approach through to compliance with the target emissions rate, as calculated. Commenters stated specifically that, although existing biomass and hydropower resources are included in establishing the regional RPS, average against which each state will be measured, the states may not count the MWh generated from existing hydropower in the compli ance determination, nor all biomass. Commenters stated that the EPA appears to be allowing a portion of biomass used to generate electricity to qualify, consistent with electricity derived from waste biomass and sustainably harvested biomass. Commenters st ated , nonetheless, that Maine allows electricity generated from non

- waste and other biomass to qualify, and thus, this presents another mismatch to a lesser degree than hydro

- generated electricity. Commenters stated the only Maine biomass

- generated electri city that appears to qualify is that generated from waste biomass or sustainably harvested biomass, whereas Maine's full RPS compliant biomass generation is used to set Maine's Building Block 3 goal, creating a similar, though less exacerbated, inconsisten cy for biomass. Commenters stated that this disparate treatment of existing hydropower and biomass plainly results in a mismatch between the state goal

- setting methodology and what is allowed for compliance. Commenters remarked that states, such as Maine w ith an RPS based on investments in significant biomass and hydropower resources, should be allowed to use all state RPS

- compliant resources to avoid this mismatch. Commenters recommended that the EPA correct this error by including existing hydropower and biomass in countable state compliance generation, or by eliminating existing hydropower (and non

qualifying biomass) from states' RPS standards when establishing the regional average under Building Block 3. Commenters stated that eliminating existing hydro power from Maine's RPS standard would reduce Maine's RPS percentage from 40 percent to approximately 18 percent, likewise eliminating biomass from Maine's RPS would reduce Maine's RPS percentage from 40 percent to approximately 29 percent, and eliminating both biomass and hydropower, as was used to comply with Maine's RPS in 2012, would reduce Maine's RPS goal from 40 percent to approximately 7 percent. Commenters stated that, since Maine's RPS is one of the highest in the U.S. and plainly pulls up the Nort heastern RPS average calculated by EPA (along with New York's RPS, which also uses a majority of hydropower), the entire regional average estimate for renewables is set too high to allow for compliance without existing hydropower and biomass

resources reco gnized in the Maine RPS. Commenters stated that, with either correction, the RPS

based approach to standard

- setting would provide a more accurate indicator of the ability of states to develop renewable energy as a means of reducing CO2 emissions during the compliance period. Commenters recommended that this RPS

- regional average approach be corrected as the preferable technical methodology for setting a representative renewable goal for Building Block 3 purposes because it recognizes the regional nature of t he electricity grid serving New England and New York. In the alternative, the c ommenters supported the NODA approach to regionalizing the NREL renewable potential calculations. Commenters stated that it is essential that the EPA regionalize the renewable g oals in Building Block 3 in order to maintain the technical legitimacy of the Building Block 3 renewable component. Commenters explained that679 electricity is generated, consumed, and transmitted on a regional basis and not within state borders. Moreover, c o mmenters stated , the renewable energy credit markets are regional markets within the Northeast (New England and New York). Commenters stated both the RPS approach and the NODA regionalization approach recognize this fundamental attribute of electricity
gen eration that usage and transmission within regions satisfies various state RPS laws.

Comment 41: Commenters provided a detailed description of the Federal Columbia River Power system and how efficiency upgrades are handled.
Response 41: The EPA agrees to clarify the treatment of hydropower . In response to additional analysis and many comments, the 111(d) final rule differs from the proposal

– the approach to setting CO2 emission performance rates has changed, and hydropower is treated consistently with o ther low

- and zero

- emitting sources. Generation from incremental hydropower added after 2012 is considered, with other low

- and zero

- emitting sources, to displace existing fossil emissions and may be used by states to reduce a rate. For the purpose of adju sting a rate generation during the compliance period from sources added since 2012 is eligible. Generation from existing hydropower, consistent with the treatment of generation from other low

- and zero

emitting sources, does not displace existing fossil em issions . See sections V.A, V.E, and VIII.K of the preamble of the final CPP. The p reamble addresses potential m ultistate plans in section VIII.C

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

C ommenters provided a detaile d description of the Federal Columbia River Power System and how efficiency upgrades are handled. Commenters explained that the Columbia River Basin drains 219,000 square miles in seven western states: Washington, Oregon, Idaho, Montana, Wyoming, Nevada, a nd Utah. Commenters stated that the system of federal dams on this basin is known as the Federal Columbia River Power System (FCRPS), and the dams of the FCRPS are owned and operated by either the U.S. Army Corps of Engineers (the Corps) or the U.S. Bureau of Reclamation (Reclamati on). Commenters stated that these dams, along with one nuclear plant and Bonneville Power Administration's (BPA's) acquisition of power produced by some nonfederal resources, are coordinated and operated as a system from which BPA meets its power sales obl igations to its various customers throughout the Pacific Northwest. Commenters stated that, operationally, the dams cannot be run independently of each other for the purpose of conducting individualized sales from particular projects, and BPA does not mark et power from any individual dam to any single state. Commenters stated that the FCRPS is operated collaboratively by BPA, the Corps, and Reclamation, and the dams are multi

- purpose projects, meaning the three agencies operate the dams in a way that promot es multiple objectives including flood control, meeting Endangered Species Act and other environmental requirements for fish and wildlife, providing irrigation and navigation, and generating power. Commenters explained that, of these purposes, flood contro l is paramount because of public health and safety concerns, but, since 1995, fish and wildlife objectives have also become primary considerations for system planning and river operations due to threatened and endangered salmon and the need to comply with the Endangered Species Act. Commenters explained that meeting these multiple and often conflicting objectives is extraordinarily complex and requires the FCRPS be operated680 as a coordinated system. Commenters stated that maintenance and upgrades are priorit ized for the FCRPS as a whole; the state that the projects are located within is not a factor. Commenters explained that, in accordance with BPA's long

- term power sales contracts, BPA transfers the Renewable Energy Credits (RECs) associated with efficiency upgrades to the FCRPS on a pro rata basis to BPA's customers, and currently, RECs associated with efficiency upgrades at federal dams are not common. Commenters stated that Oregon and Montana are the only two states in BPA's service territory that current ly count efficiency upgrades at existing federal hydroelectric projects as an eligible renewable resource for purposes of state RPS. Commenters stated that, under Oregon's RPS, if an efficiency upgrade is made to a FCRPS hydropower project, a utility
may o nly use that portion of the electricity generation attributable to "Oregon's share" of the project to comply with the RPS. Commenters explained that, while not binding on BPA, the Oregon Department of Energy implemented rules that apply to utilities that o perate in the State of Oregon to define Oregon's share of eligible generation attributed to upgrades at federal hydropower facilities. Commenters added that each project requires its own application and is subject to review and approval from the Oregon Dep artment of Energy. BPA transfers the RECs associated with "Oregon's share" of this incremental generation to all of its preference and investor

- owned utility customers (whether in Oregon or not); however, only those RECs going to customers with Oregon load are eligible for Oregon's RPS. Commenters stated that the RECs are transferred by BPA to its customers through an annual process defined in the power sales contract between BPA and its customers. Commenters explained that, generally speaking, BPA allocate s these RECs to preference customers on a pro rata basis commensurate with the amount of power they purchase from BPA, and to investor

- owned utility customers based on statutory benefits that they receive from the FCRPS. Commenters stated that future effic iency upgrades on the FCRPS will likewise be eligible for RECs under Oregon's RPS.

Comment 42: Commenters stated that pumped storage should count as RE.
Response 42: The EPA disagrees. Pumped storage provides ancillary services, but does not reduce emissions from existing generation. EPA agrees that storage may facilitate increased integration of incremental RE, and any generation from incremental RE may be eligible to reduce a CO2 emis sion rate. See sections V.A, V.E, and VIII.K of the preamble of the final CPP.

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

C ommenters stated that pumped storage should count as RE. Commenters stated that pumped storag e produces 2.5 percent of U.S. electricity and should eligible for consideration as an RE

source.

Commenters stated that Michigan relies often on the Ludington Pumped Storage (LPS) facility due to the flexibility of operating the system and, in particular , its ability to ramp up quickly. Commenters stated that, in addition to being a backstop to RE sources such as wind, LPS is also used during peak demand periods as an economic hedge to running more expensive generation (coal and gas units) or procuring sp ot market energy at a premium. In that instance, c ommenters stated , LPS acts as an energy storage system. Commenters also stated that it is important to note that the LPS facility is currently undergoing a 6

- year life extension and uprating project, which,681 when completed in 2019, will result in an additional 420 MW of capacity. Commenters stated that the additional capacity should count toward Michigan's target.

Comment 43: C ommenters submitted comments on new or emerging hydropower technologies

. Response 43: The EPA generally agrees . In response to additional analysis and many comments, the 111(d) final rule differs from the proposal

– generation from incremental hydropower added after 2012 is considered, with other low

- and zero

- emitting sources, to displ ace existing fossil emissions and may be used by states to reduce a rate. For the purpose of adjusting a rate generation during the compliance period from sources added since 2012 is eligible. See sections V.A, V.E, and VIII.K of the preamble of the final CPP.

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

Commenters described their company's micro hydropower system, explaining that the system is portable, not harmful to nature, also does not require any construction by th e river. Commenters added that the system "has no changes around flow" and requires workers, so it helps employment. Commenters requested that the EPA consider such designs that generate clean energy and employment for more people. Commenters included an a ttachment that provides more details on the system design.

Commenters stated that the proposed rule does not address the development, availability, and use of innovative state

- of

- the

- art hydroelectric generation technologies within state plans. As an

exam ple, Commenters explained that micro

- hydroelectric generation technology has matured to the point where Portland, Oregon is installing in

- pipe turbines capable of producing 1,100 megawatt hours of electricity a year

- enough to power up to 150 homes. Comme nters stated that the proposed rule provides no incentive for the development of this environmentally safe, effective, and efficient technology which could be deployed within every municipality in the U.S. that operates a water utility. Commenters added th at, by creating this type of incentive, a deployment of this type of technology on a large scale would create significant economic initiatives, while upgrading water supply systems and providing incentives for academia and industry R&D efforts to develop e ven more efficient and effective micro

- hydroelectric generation systems.

3.3.11 Other

This subsection addresses comments related to Cleaner Generation Sources (Building Block 3) that do not readily fit into the other subsections of section 3.3 of this doc ument.
Commenters raised a number of issues related to this subsection which are organized by topics (comments) below. Responses are provided for these topics.682 Comment 1 : Commenters spoke on the constraints of wind energy as a renewable energy

resource.
Response 1 : The EPA addresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD. The EPA provides guidance to states o n the interstate effects of incremental RE in section VIII .J of the preamble.

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

Commenters stated there are numerous local constraints on wind development that were ignored in EP A's building block 3 assumptions. Commenters stated there are feasibility limitations to locating wind to utilize optimal wind currents and there are also often local limitations on wind generation. Commenters provided the example that according to the Bir mingham News, on August 20, 2014, a wind farm developer dropped plans for two Alabama wind farms after the state passed a wind energy bill that limited the noise that wind farms can produce. Commenters stated the state law also requires wind projects to ha ve a larger setback from nearby properties.

Commenters raised concerns over the development of interstate wind energy. They stated that one of the greatest opportunities for wind energy expansion is supporting the development of multi

- state or regional tra nsmission p l anning though such mechanisms as FERC Order 1000. The best results of these complex processes

- access to new power markets and expanded wind generation

- should be recognized in potential state 111(d) plans. Commenters also stated that EPA sho uld provide significant guidance and assistance to states in how to best utilize and account for multi

- state cooperation on long

- term transmission planning as a compliance option under a final 111(d) rule.

Commenters noted that wind resources in the west and upper

- Midwest are located largely on federal lands, which creates regulatory and permitting obstacles. Commenters stated that the American Wind Association reported that only 1.4% of the United State s ' wind energy capacity had been installed on public land through 2012. Commenters noted that the US Forest Service is responsible for the management of 193 million acres of National Forests and Grasslands, commonly found throughout Wyoming and the commente rs ’ service territory, yet only 30 MW of wind has been approved for development on USFS managed land. Commenters added that the Bureau of Land Management has also proposed a competitive bidding process for wind development on land they manage, which has th e potential to increase the cost of wind development on public lands.

Commenters stated that EPA did not account for the fact that integrating large amounts of renewable resources into the bulk power system requires significant changes to power planning

an d operations to maintain an adequate level of system reliability, or the need for operational

reserves. Commenters stated that in the absence of developing resources to exclusively provide synchronous inertia, large legacy units would have to be maintained online, potentially at minimum output, to provide sufficient inertia to the system which would preserve the need for many units operating at their least efficient, highest emitting level of production. Commenters stated that wind resources produce their g reatest amounts of energy when the energy is needed the least. Commenters stated that during times of high wind production and low load, concerns683 regarding frequency response can be heightened because of less synchronously rotating mass online. Commenters also noted that with the volatility of wind, there are times when the wind generation either increase or decreases dramatically in a very short period of time.

Commenters requested that the EPA not adopt the "alternative approach" for determining renewabl e energy, as this approach overstates wind development potential. Commenters stated that the alternative approach increases disparity among states and heightens burdens on states with renewable energy potential. Commenters also note d that some states are c reating pushback against the implementation of wind power, and Oklahoma has considered a ban on new wind in half the state.

Comment 2 : Commenters supported wind energy as an appropriate compliance option under the Proposed Rule and urged EPA to support st ates' actions to expand the use of wind energy and to accelerate access to new wind energy resources.
Response 2 : The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, which is described in section V. E of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenters stated t he Clean Power Plan correctly concludes that wind energy is an appropriate outside of the fence line compliance option that satisfies the best system of emission reduction requirements and should be factored into determining state emission targets. Comment ers stated as the Clean Power Plan recognizes, wind energy is an achievable and adequately demonstrated source of carbon reductions under a system

- based approach. Commenters refer red EPA to AWEA's U.S. Wind Industry Annual Market Report for the Year Ending 2013, which provides a comprehensive look at the U.S. wind energy industry, including a large body of data that demonstrate that wind energy is an achievable, adequately demonstrated, and affordable technology. Commenters also stated that additional data can be found in the U.S. Department of Energy's 2013 Wind Technologies Market Report (DOE Market Report).

Commenters stated that as recognized in the Clean Power Plan, wind energy is an outside of the fence line compliance option that satisfies the BSER a nd, therefore, is available to states in achieving the emission guidelines set by EPA in the Clean Power Plan. Commenters stated the language of Section 111(d), which directs EPA to identify the system of emission reduction best able to secure rigorous car bon emission reductions while considering cost and impacts on energy use and other environmental considerations, requires that a system

- based approach be permitted to satisfy the statutory requirements of the Act. Commenters stated failure to incorporate s ystem

based emission reductions, including wind energy, would not be the most cost

- effective and therefore not the best system of emissions reductions. Given this, c ommenters stated EPA's standard of performance in the Clean Power Plan correctly takes wind energy into account in setting performance standards for states; indeed, the Clean Power Plan would fall far short of delivering the maximum emission reductions existing plants can achieve at a reasonable cost, as required by the statute, if it did not in clude wind energy in that calculation.684 Commenters provided additional information that EPA acted consistently with the statutory requirements of Section 111(d) by factoring wind energy into setting targets and allowing it to be used as a cost

- effective com pliance option.

Comment 3 : Commenters stated wind energy is an achievable and adequately demonstrated means to comply with emissions standards under a system

- based approach.
Response 3 : The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, which is described in section V.E. of the preamble and in the GHG Mitigation Measures TSD.
The following are summaries of the specific public co mments under this comment:

Commenters provided data that demonstrate how wind energy has proven to be an achievable and adequately demonstrated option to reliably and verifiably reduce carbon emissions at a reasonable cost and in an environmentally friendl y way, consistent with the requirements laid out in the definition of a standard of performance in the CAA. Commenters stated these attributes of wind energy will likely lead many stakeholders to use it as a compliance method for meeting carbon pollution s tandards under Section 111(d), just as EPA, in the Clean Power Plan, accounted for achievable emission reductions from wind energy programs in setting the stringency of its emission guidelines for existing power plants.

Commenters stated wind energy is ad equately demonstrated because it is currently a significant source of electric energy capacity and is growing rapidly. Commenters provided detailed information on wind energy capacity and power purchase contracts in the U.S. Commenters stated wind energy t echnology is rapidly improving, mostly through taller towers that allow access to higher wind speeds and longer blades that make lower wind speed sites more economic, and as a result, wind companies are now showing interest in developing projects in
states where wind energy was not previously viable, such as much of the Southeast. Commenters stated wind energy is one of the most geographically dispersed energy sources available and discussed the economic impact of the industry, including current and estimat ed employment numbers associated with the industry.

Commenters also stated wind energy is adequately demonstrated because affected entities have already directly invested in wind energy, and there is even a greater potential for them to do so to meet emiss ion target levels for purposes of Section 111(d) compliance. Commenters stated affected entities have already directly invested in wind energy, and there is even a greater potential to do so to meet emission target levels for purposes of Section 111(d) com pliance. Commenters provided detailed information on long

- term power purchase agreements for wind capacity and listed numerous investor

- owned utilities that currently own or purchase wind
power. Commenters also provided information on municipal utilities, rural cooperatives, joint action agencies, political subdivisions, and federal power marketing agencies.

Commenters also stated wind energy is adequately demonstrated because its emission reductions are quantifiable and verifiable. Commenters stated all u tility

- scale wind projects have revenue

grade metering equipment that measures the amount of wind energy production. Commenters685 also stated that among other reasons, such equipment and verification is necessary to ensure compliance with power purchase cont ract requirements and for purposes of claiming the federal production tax credit (PTC), which is based on electricity generated. Commenters stated in addition, rigorous accounting mechanisms for Renewable Energy Credits (RECs) are used for RPS compliance i n 29 states and the District of Columbia, and accounting mechanisms are in place nationwide for verifying renewable energy production to satisfy voluntary REC purchases.

Commenters stated wind energy is achievable because it is a cost

- effective means to re duce carbon emissions. Commenters stated wind energy directly offsets fossil fuel use and emissions at other power plants on a 1:1 basis. Commenters stated because power plants are interconnected on an electrical grid that operates based on market principl es, electricity produced by wind yields an equivalent decrease in electricity production at the most expensive power plant operating at the time, which is typically the least efficient operating fossil

- fired power plant for the fuel type that is on the mar gin. Commenters provided additional discussion on the cost effectiveness of wind energy, including results from EPA's AVERT modeling, DOE estimates of the net present value of wind's carbon emission reductions, the results of a PJM study on renewable integ ration, and international experience in the increased use of wind energy. Commenters also provided information on the affordability of wind energy, referenced analysis quantifying the production cost and consumer benefits provided by wind energy in certain areas, and discussed wind energy impacts on electricity prices.

Commenters also stated wind energy is an adequately demonstrated resource, and large deployments are achievable because large quantities of wind energy can be reliably integrated. Commenters provided additional information on wind energy capacity in the U.S. and provided further information regarding the reliability of the technology.

Comment 4 : Commenters urged that EPA strongly encourage or, preferably, require States, either individually or as part of a multi

- state plan, to set aside specific targets for distributed generation and distributed wind where appropriate.
Response 4 : The EPA disagrees with thi s comment. While recognizing the value of distributed generation resources, the EPA does not include these resources in building block 3; consequently, it would be inappropriate to require a target related to a non

- BSER measure. Distributed technologies, as a demand

- side resource, present unique data and technical challenges (such as the role of evaluation, measurement and verification (EM&V) procedures in verifying their production, the diverse economic incentives of different parties involved in their de ployment, and the variety of grid integration policies and conditions across potential deployment sites) that complicate identifying a technically feasible and cost

- effective level of generation. Consequently, the EPA is, at this time, choosing not to incl ude distributed technologies as part of the BSER (although, as explained in section VIII.K of the preamble, distributed RE technologies that meets eligibility criteria may be used for compliance).
The following are summaries of the specific public comments under this comment:

Commenters noted that distributed wind ("DW") is not yet recognized as fully as it should be as a "go to" renewable energy source, despite its vast benefits and potential. Commenters stated that686 it is clear that that without proper enc ouragement or specific requirements set in State laws that DW will not grow as rapidly as possible, and provide zero carbon electricity both on and off the grid, in the timeframe that would be optimal based on EPA's emissions reductions goals. Commenters n oted that the current energy infrastructure, and tendencies of many utilities, is too often promote central load fossil fuels, energy efficiency and very large renewable projects rather than DG and DW.

Commenters additionally noted that DG and DW help aid in emissions reductions with little to no impacts on grid reliability because this technology is often placed "behind the meter." Commenters stated that it is easy to integrate single or a handful of wind turbines in rural and suburban areas alike, at low cost to the customer and/or local utility.

Comment 5 : Commenters stated the resource potential for offshore wind in the United States is vast, and adjacent to many metropolitan areas with high electricity demand.
Response 5 : The final methodology for b uilding block 3 is premised on historical deployment of RE technologies. Therefore, any RE technology that has not been deployed in the United States, including demonstrated RE technologies for which there is clear evidence of technical feasibility and co st

- effectiveness (e.g., offshore wind), contributes no generation to building block 3. These RE technologies are consequently reserved for compliance, which offers affected EGUs additional flexibility and will reduce their need to rely on other emission re duction measures or building blocks.
The following are summaries of the specific public comments under this comment:

Commenters stated that according to the Bureau of Ocean Energy Management, over 1,000 GWs are available in 0

- 30 foot depth waters, 628 GW in 30

- 60 feet, and over 2,400 GW over 60 feet deep. Commenters stated that as a less mature technology and industry, offshore win d is at a higher cost point on the development and deployment curve; however, if it follows the historical trajectories of onshore wind and solar power, increasingly higher deployment levels will likely bring substantial cost and performance improvements. Commenters stated these gains come about from a number of factors, including economy of scale; learning by doing; development of needed supply chains; development of transportation infrastructure; streamlining of permitting, financing, and other soft costs ; and continued research, development, and innovation. Commenters stated several studies suggest costs could even fall more quickly than they did for onshore wind energy. Commenters provided information on current commercial scale projects in advanced deve lopment. Commenters stated the potential to capture the nation's large off

- shore wind resources is further evidence of the conservative nature of EPA's assessment of renewable energy potential. Commenters stated that regardless of whether this resource is considered in assessing state emission reduction potential in the current proposal, EPA should revise its best system of emission reduction analysis and state targets as the availability of such resources is demonstrated.

Comment 6 : Omit wind generation f rom model687 Response 6 : The EPA disagrees with this comment. Building block 3 is based on generation levels form utility

- scale resource, the measurement of which is standard to the power sector.

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

Commenters noted that the production, transmission, and final use of wind generation is often difficult to track and measure by state and the Clean Power Plan omitted hydropower from its modeling due to the same complexities. Commenters t herefore recommended that the Clean Power Plan should omit wind generation from its model to establish emission rates based on the lack of granular analysis to the state specific generation and usage of renewable wind generation.

Comment 7 : Commenters stated that distributed PV is a unique resource which may be difficult to represent in a wholesale power model such as IPM, and instead it is more accurate to rely on separate modeling that fully accounts for market dynamics at the customer level.
Respon se 7 : Distributed technologies, as a demand

- side resource, present unique data and technical challenges (such as the role of evaluation, measurement and verification (EM&V) procedures in verifying their production, the diverse economic incentives of differ ent parties involved in their deployment, and the variety of grid integration policies and conditions across potential deployment sites) that complicate identifying a technically feasible and cost

- effective level of generation. Consequently, the EPA is, at this time, choosing not to include distributed technologies as part of the BSER (although, as explained in section VIII.K of the preamble, distributed RE technologies that meets eligibility criteria may be used for compliance).

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

Commenters noted that NREL has developed the Solar Deployment System model (solarDS), a modeling complement to ReEDS which projects distributed PV installations by state based on system prices, retail sa les, and consumer economics. Commenters noted that NRDC utilized the DOE Sunshot distributed solar projections from their

- 62.5% price scenario for input into the SolarDS model in their Clean Power Plan analysis and that the output of their solarDS model

w as hard

- wired into IPM to ensure that the effects on the grid and other generation options are captured.

Comment 8 : Commenters urged that geothermal, or ground source heat pumps (GSHPs), be allowed as solutions under Building Blocks 3 and 4 of the Propos ed Rule.
Response 8 : See section V.E of the final rule preamble of the CPP for the RE technologies included in building block 3 and section VIII.J for a description of non

- BSER measures that may be used to achieve the standards of performance.

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

Commenters noted that geothermal or GHSPs are widely available and are proven efficient in all 50 states for commercial, institutional, industrial, and residential buildings. Comme nters stated688 that because GSHPs can move energy in larger quantities than the input energy to the device or system (coefficient of performance, or COP, greater than 1) they can reduce power consumption and efficiently be used to recover normally unused or waste energy. Commenters also stated that a GSHP harvests various renewable energy resources and turns them into useable energy and

can displace a significant amount of electricity by improving cooling efficiency (and heating efficiency, vs. electric resistance) as wel l as recovering waste heat. Commenters then noted that GSHPs recover heat energy that would otherwise be wasted and use it to displace conventional heating and in any of these cases, this energy saved, recovered, or gathered can be quantified in BTUs, watt s, or other standard measurement of energy and classified as avoided generation or site generation. Commenters referenced an Oak Ridge National Laboratory Report to DOE on GHSPs to further their point. Commenters noted that the combination of Waste Energy Recovery (WER), ultra

- high

- efficiency equipment, and efficient system configuration lead to GHSPs operating at much higher efficiencies than conventional heating and cooling systems and that the WER process may involve recovery of renewable and sustainable resources. Commenters also noted that adding a geothermal closed loop heat exchanger (GLHE) to a fluid loops in WER with heat pump systems can enable energy to be stored and used at a later time and therefore can permit load shifting which further reduces the load on the generating infrastructure.

Commenters included potential sources of Geothermal energy, and notes locations where it is the most cost effective renewable resource. Commenters referenced Alaska, Hawaii, The U.S. Virgin islands, Guam, and the Northern Mariana Islands as places where geothermal energy would be a cost

- effective renewable resource. Commenters also stated that EPA should support the implementation of geothermal energy in these states/territories.

Comment 9 : Commenters stated tha t the EPA should fully integrate distributed solar into Building Block 3 of the Clean Power Plan.
Response 9 : Distributed technologies, as a demand

- side resource, present unique data and technical challenges (such as the role of evaluation, measurement and verification (EM&V) procedures in verifying their production, the diverse economic incentives of different parties involved in their deployment, and the variety of grid integration policies and conditions across potential deployment sites) that complicate identifying a technically feasible and cost

- effective level of generation. Consequently, the EPA is, at this time, choosing not to include distributed technologies as part of the BSER (although, as explained in section VIII.K of the preamble, distributed RE technologies that meets eligibility criteria may be used for compliance).

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

Commenters stated that distributed PV is one of the largest and fastest growing segments of the

ren ewable energy market, and is currently procured by entities that own and operate affected EGUs; therefore "under EPA's system wide approach, distributed PV is necessarily part of the BSER and failure to include it in EPA's final rule would be arbitrary and capricious." Commenters stated that distributed PV can provide wholesale ancillary services in the same fashion as utility

- scale assets and can also provide local ancillary services beyond what utility

scale assets are capable of providing. Commenters not ed that these services include but are not limited to frequency regulation, frequency response, spinning and non

- spinning reserves, voltage689 and reactive power support. Commenters stated that "distributed PV can also provide incremental ancillary services o n the local or distribution level. Local voltage support is critical to operating the distribution system within system constraints, and distribution system operators rely on a distributed set of voltage regulating equipment to provide that support. Distri buted PV can augment and sometimes replace this equipment, providing real and reactive power support as identified by the distribution operator."

Commenters provided a chart which depicted distributed PV growing rapidly year over year, which c ommenters us ed to justify that distributed PV is technically feasible. Commenters noted that the usage of distributed PV can be divided into residential and non

- residential sectors. Commenters noted that the energy produced by homeowners in the residential sector is often used to offset the need for generation from affected EGUs or is counted towards clean energy requirements such as renewable portfolio standards. Commenters also noted that sol ar energy from non

- residential units also reduced the need for generation from affected EGUs and is often counted towards clean energy requirements or used to make green claims by the companies that invest in the systems. Commenters stated that most of the most well

- run and efficient companies (e.g. Wal

- Mart, Costco, Kohl's, Apple, IKEA, and Macy's) are turning to solar energy to reduce their carbon footprint and hedge against risks associated with energy prices and climate change. Commenters also pointed o ut that at least 40% or more of the total installed solar each year comes from the distributed PV sector. Commenters additionally urged EPA to encourage states to use off

- grid distributed PV systems for compliance, and not as a component of the BSER, as th ese technologies avoid the need for electricity from the grid.

Commenters stated distributed solar is a system of emissions reduction that is technically feasible, is implemented at reasonable cost, is driving solar innovation, and does not negatively imp act the electric system. Further, c ommenters stated , distributed solar energy is adequately demonstrated to reduce emissions from covered sources. Commenters stated utilities are already either directly owning distributed solar or purchasing the renewable energy credits from distributed solar systems. Commenters also stated there are a number of ways to verify emissions reductions from distributed solar as well; once the MWh of distributed solar generation are known, either through direct metering and renew able energy credits or the use of a performance estimate tool, the fossil fuel energy that is being displaced by the solar energy can be determined by using either capacity factor emission rates or system average emission rates. Commenters stated for compl iance planning, in addition to utility

- scale solar PV and Concentrated Solar Power (CSP), the EPA should allow for distributed solar technologies, along with solar heating and cooling, to count as measures a state can include within a state compliance plan

. Commenters also stated EPA should also recognize the ability of solar heating and cooling measures to displace the electricity that covered sources may use for heating and cooling.

Commenters noted that distributed solar and other forms of distributed ge neration are unique in their ownership, operation, siting, and relationship to the existing grid and that these systems provide quantifiable benefits, including grid support, lower transmission losses, and reduced need for additional capacity, as well as l ess monetized benefits such as hedging against fuel prices. Commenters stated that solar PV costs have declined rapidly in the past several years, and as PV module costs continue to drop, rooftop solar is becoming and will continue to become an economic op tion for an increasing number of residential and commercial customers. Commenters stated that omitting distributed PV from the BSER "paints an unrealistic picture of690 the current and future RE generation mix." Commenters additionally noted that while there are methods in which distributed PV can be implemented into IPM as a resource available to utilities, it may be more accurate to rely on separate modeling that fully accounts for market dynamics at the customer level.

Commenters additionally stated that E PA should clarify that load

- serving utilities should not receive credit for all DG interconnected with its system, but rather must have in place a policy that incentivizes DG, such as rebates or a favorable tariff structure, to take credit for that DG. Com menters also suggested that EPA offer guidance on how DG can meet the requirements of an emission standard by being quantifiable, verifiable, non

- duplicative, and enforceable.

Comment 10 : Commenters stated that the EPA should explicitly list fuel cells a s a compliance option under the proposed rule.
Response 10 : The EPA agrees with this comment and fuel cells are explicitly included as a non

BSER measure available for compliance.
The following are summaries of the specific public comments under this comment:

Commenters stated that as a carbon reduction technology, fuel cells provide low

- or no

- carbon baseload generation from natural gas or biogas through an efficiency non

- combustion process. Commenters stated fuel cells typically reach fuel

- to

- electri city efficiency of 60 percent; nearly double that of today's electric grid. Commenters also stated fuel cells not only allow for reduced carbon emissions, they also virtually eliminate criteria air pollutants. Commenters stated furthermore, since fuel cell s typically operate near the point of use, they bypass transmission systems, reducing or eliminating transmission losses, which currently average 6 percent in the US. Commenters stated that as the EPA recognizes, some fuel cells also generate excess heat, which, if captured, can increase overall energy efficiency to more than 80 percent. Commenters stated should the EPA list fuel cells as a compliance option it would follow the precedent set by the California Air Resources Board (CARB) in 2007, which quali fied fuel cells as an ultra

- clean technology under their existing standard. Commenters stated it would also follow guidelines set by the New York Public Service Commission, which qualified fuel cells as a compliance option under the state's Renewable Portf olio Standard. Commenters stated currently, twenty

- two states, two territories, and the District of Columbia have recognized the role fuel cells can play in creating a more sustainable energy infrastructure. Therefore, c ommenters stated the final EPA rule should explicitly highlight all fuel cells as a compliance option as a way to 1) reduce GHG emissions and other pollutants, 2) improve resiliency, and 3) utilize domestic energy supplies.

Comment 11 : Commenters stated that utility scale PV should be inclu ded in Building Block 3 of the Clean Power Plan because it is technically feasible.
Response 11 : Utility

- scale solar PV continues to be a technology that directly contributes to building block 3 generation levels.691 The following are summaries of the specific public comments under this comment:

Commenters noted that the defining features of utility

- scale PV is that it is constructed as a centralized power plant, it is larger in size than distributed PV (generally larger than 10 MW), it is not generally located near the source of consumption, and the electricity generated by utility

scale PV is usually sold to wholesale utility buyers rather than retail consumers. Commenters stated that there are a number of characteristics unique to large

- scale installa tions that make them attractive to utilities, including advanced operational characteristics, low cost, and long

- term fixed pricing. Commenters noted that utility

- scale PV can also provide a variety of ancillary services associated with traditional fossil sources including frequency regulation, dynamic voltage and power factor regulation, and ramp rate controls; thus, when included as part of a balanced energy portfolio, utility

- scale PV contributes to the stability and reliability of the grid. Commenters f urther stated that utility scale PV reduces carbon emissions from fossil units by reducing the amount of conventional generation that must be dispatched to meet electricity demand.

Comment 12 : Commenters stated that Concentrating Solar Power (CSP) should be included as a compliance option in Building Block 3.
Response 12 : CSP continues to be a technology that directly contributes to building block 3 generation levels.
The following are summaries of the specific public comments under this comment:

Commen ters urged EPA to include CSP in Building Block 3 of the Clean Power Plan because it technically feasible and is being installed throughout the country today. Commenters explained that CSP uses mirrors to concentrate the sun's thermal energy to produce ste am and drive a conventional steam turbine to produce electricity and that this solar generated electricity is then sold to wholesale utility buyers. Commenters noted that CSP can be integrated with thermal energy storage, which allows energy to be stored f or later use and, in this way, CSP with thermal energy storage provides flexibility to grid operators, offering power that can be dispatched as needed, day or night. Commenters reasoned that these large

- scale installations are attractive to utilities becau se they include advanced operational characteristics, delivering large quantities of solar power at a low cost and long

- term fixed pricing that provides a hedge against fuel volatility. Commenters noted that at low penetrations of solar power to the grid, solar correlates well with daily peak demands and even as increasing penetration shifts peak demand to evening hours, CSP with storage allows for shifting energy into periods of highest demand or value. Commenters further stated that CSP plants utilize con ventional steam turbine generators, like those of conventional plants, but use the sun as the source of heat instead of fossil fuels which allows CSP plants to provide the ancillary services historically offered by conventional plants such as frequency res ponse, load following, spinning and non

- spinning reserves as well as ramping. Commenters noted that CSP reduces carbon emissions from affected EGUs by reducing the amount of conventional generation that must be dispatched to meet electricity demand and pro vide the aforementioned ancillary services.692 Commenters additionally stated that technologies used for CSP also promote technological development. Commenters noted that the first commercial utility

- scale CSP projects in the U.S., built in the late 1980s an d totaling 354 MWs, are still in operation today. Commenters stated that the technology used in these first projects, parabolic trough technology, has continued to improve since the 1980s and have substantially increased receiver efficiency, reduced cost a nd weight of the reflector structures, and updated control. Commenters noted that CSP has often incorporated thermal energy storage in commercial operations; for example, the Solana 250 MW solar trough plant in Arizona can incorporate 6 hours of thermal en ergy storage which allows the utility dispatch solar power to meet peak system loads and reliability needs in the summer and winter.

Commenters noted that CSP with thermal energy storage can offer all the services provided by fossil fuel plants without ca rbon emissions, can provide operational attributes and other good services that can assist utilities and grid operators in maintaining grid reliability, and can be combined with conventional power plants to form hybrid plants with a lower CO2 output. Comme nters also noted that CSP can also diversify the energy mix and hedge against the volatility of natural gas and that this technology is available today.

Commenters noted that the proposed 30 percent reduction in GHG emissions cannot stop climate change and proposed that a 90 percent reduction would be required to do so, which they stated is impossible with existing renewable technology. Commenters stated that they h ave patented a cheaper way to use CSP that would produce twice as much mirror power and increase the precision of focusing sunlight. Commenters described their system as follows: "Sunlight is focused with mirrors on a receiver on a tower, but instead of be ing attached to stationary heliostats, the mirrors move on concentric tracks around the tower synchronized with the sun's movement across the sky to keep the mirrors on the opposite side of the tower from the sun. Each morning, the mirrors face the rising sun in the East, and by sunset they are facing west, having rotated 180 degrees about a vertical axis, using the radar of the tracks for leverage. Because of this extreme leverage, the focusing is precise. As the sun's altitude changes, the mirrors must ti lt and yaw to keep sunlight focused on the receiver. The formulas for tilting and yawing reveal that this can be done collectively to eliminate most of the motors and gearboxes required on heliostats. Guidelines stabilize the mirrors against wind and also tilt and yaw the mirrors collectively. The details of this are explained in our US patent 7380549."

Comment 13 : Commenters urged EPA to consider their algae technology as a solution under Building Block 3.
Response 13 : Refer to section VIII discussion o f non

- BSER measures.

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

Commenters stated that they are currently capturing emissions from power plants, as they work with three different utility companies, using their 3

- dimensi onal algae growth tank or "AGTS" that enables them to control all variables including replicating ideal sunlight. Commenters noted that they are able to produce a highly desirable oil at below petroleum prices (Less than $1/refined gallon of diesel) today as a result of this system. Commenters also noted that their693 algae produces a 50/50 oil to biomass ratio and is 15

- 20 times bigger than anyone else's in the world with an oil profile of 85% C

- 16 and C18 (45% of oil is oleic acid

- highly desirable in the

c hemical industry). Commenters further stated that this system and costs of goods sold only work if they are near a "host" power plant as they get free CO2, and utilize the flue gas to raise and lower their ballast tank and grate system that mixes the CO2 and nutrients (growth enhancer)

. Commenters noted that with LED's covering the entire 3

- dimensional AGTS (25'

- 50' deep) the algae can grow and not use energy working to get light, nutrients or moving which utilizes the benefits of a closed

- loop system that provides "the most optimal c onditions for the algae to exceed far beyond what anyone else is able to do in the world."

Comment 14 : Commenters noted that energy storage allows for fuel and resource diversity and enhances the integration of renewable resources by supporting renewable energy during periods when variable resources like wind and solar are not available and urged that EPA explicitly authorize states to include energy storage technologies in their compliance plans.
Response 14 : Refer to section VIII discussion of non

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

Commenters stated that while generating resources can only inject power into the grid, energy storage provides the ability to either inject or absorb power, allowing variable resources to be used more efficiently and effectively. Commenters added that energy storage technologies are

resource

- neutral, taking a charge from any resource on the grid and releasing the charge to off

set the units with less efficiency, provid ing double the nameplate capacity as traditional grid resources as they can absorb and release power. Commenters noted that in "Compensating for Wind Variability Using Co

- Located Natural Gas Generation and Energy Storage", Hittinger, Whitacre and Apt find that "the use of energy storage to smooth the sharpest fluctuations, allowing a gas turbine to provide the remaining fill

- in energy, is a cost

- effective application" and that a separate report by DOE and EPRI from 2013 supported the concept of using storag e to balance fluctuations in RE generation output.

Commenters stated that the exclusion of clean energy storage is contrary to EPA's goals given that the Clean Power Plan desires to increase the utilization of NGCC units as baseload, and to continue to exp and renewable energy generation. Commenters noted that energy storage helped smooth out the intermittent nature of renewable energy sources while allowing those resources to be used at peak times, providing higher reliability. Commenters also noted that en ergy storage provides valuable margin, ramping, and load following resources that that historically have been provided by natural gas units operating as peak to intermediate load units.

Commenters noted a specific company, Solar Grid Storage, which develop s battery energy storage systems co

- located with PV systems that eliminates the need for PV developers to purchase a solar inverter, reducing installation costs and offering new benefits to the host.

Commenters stated that pumped storage should be included in the Clean Power Plan. The FERC has issued a preliminary permit to study a pumped storage project along the Missouri River, which would provide the necessary control to support a significant amount of intermittent wind694 generation in the region. Commente rs stated that a s written, the Clean Power Plan does not make clear that pumped storage projects are included in the list of energy storage technologies eligible for inclusion in state plan. Commenters requested that states be allowed to meet their respect ive state goals by relying on any technology that has the potential to enhance emission performance by reducing the need for generation from fossil

- fueled EGUs.

Comment 15 : Commenters urged the EPA to clearly state in the final rule which renewable energy projects and technologies will be eligible as compliance measures. Commenters provided a multi

- point argument in support of incorporating solar energy measures as part of the BSER because they represent a system for reducing emissions from affected EGUs that is: (1) technically feasible, (2) done at a reasonable cost, (3) promoting technological development, and (4) not negatively impacting the electric system.
Response 15 : The EPA provides det ailed guidance on the RE technologies available for compliance in the final rule, including solar technologies. Refer to section VIII of the preamble for a description of how RE technologies may be used to adjust the CO 2 emission rate of affected EGUs.

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

Commenters specifically encouraged EPA to state that energy generated from distributed PV, CSP, utility PV, and SHC projects be specifically named as eligible technologies. Comme nters stated that a variety of solar technologies have been successfully deployed in the U.S. and around the world, with rapidly

- increasing growth since the 1980s. Commenters provided a multi

- point argument in support of incorporating solar energy measures as part of the BSER because they represent a system for reducing emissions from affected EGUs that is: (1) technically feasible, (2) done at a reasonable cost, (3) promoting technological development, and (4) not negatively impacting the electric system.

(1) Technical feasibility: Commenters noted that solar energy systems in the U.S. are expected
to generate more than 20,000 gigawatt hours (GWh) in 2014 and with one GWh of solar generation eliminating 690 metric tons of CO2 emissions, solar generation can be expected to avoid 13.8 million metric tons of CO2 emissions in 2014. Commenters stated that in 2013 alone, the solar industry grew 53 percent over 2012, installing 5.2 GW of solar generating capacity with solar energy accounting for 29 percent of new e lectric generation capacity installed. Commenters stated that solar can potentially replace polluting sources on a 1:1 basis, depending on the combination of solar and other technologies deployed on the complex grid but noted that when solar is placed on t he grid, it generally displaces electricity production from a source that emits carbon pollution

-- often at a high rate

-- such as a simple

- cycle natural gas generator. Commenters pointed to three studies which they felt demonstrated the benefit and feasibili ty of utilizing solar capacity: the Western Wind and Solar Integration Study performed by NREL which evaluated the impacts of operating the Western Interconnect with high penetrations of wind and solar, the PJM study analyzing a high penetration of renewab le generation on the PJM grid, and the U.S. DOE's SunShot Vision Study which examined the potential for and barriers to solar PV and CSP in the US while attempting to reduce costs. Commenters noted that the Western Wind and Solar695 Integration study found th at CO2 emissions could be reduced by 29

- 34 percent when the Western Interconnect obtains 33 percent of electricity from wind and solar. Commenters then noted that the PJM study considered renewable penetration of up to 30 percent and found no significant o perating issues while reducing CO2 emissions by 28 percent in the "High Solar Best Onshore" scenario compared to a BAU target in the year 2026. Commenters also noted the results of the SunShot Vision Study which estimated a CO2 reduction of 8 percent (181 MMT) by 2030 and 28 percent (760 MMT) by 2050 compared to the reference scenario.

Commenters noted that the SunShot Vision Study shows that solar energy can meet roughly 14 percent of U.S. electricity demand by 2030 based on anticipated cost reductions wi th a projected installation of 302 GW of PV and 28 GW of concentrated solar power (CSP) by 2030. Commenters noted that the SunShot study's predictions are more than 7,000 percent more than what EPA has estimated for solar, even when the study found no adve rse effects on grid reliability with the projected amount of solar generation on the grid in 2030. Commenters also cited the RE Futures study by NREL which showed a modelling scenario with renewables achieving between 30

- 90 percent of generation levels in 2030 and that the cost assumptions used to arrive at these levels are higher than current industry projections ( http://www.nrel.gov/analysis/re_futures/).

(2) Reasonable cost: Commenters stated that EPA's findings that renewables cost $10

- $40/ton under th e RPS approach and $30/MWh under the Alternative RE approach are a reasonable cost under both approaches. Commenters noted that EPA should recognize that solar costs are even lower than projected by the EPA and distributed PV must be included in Building B lock 3 because it is a reasonable cost emission reduction technology. Commenters also provided data showing solar costs falling in relation to other sources of energy, reinforcing EPA's position that solar energy measures are reasonable cost.

(3) Promotion of technological development: Commenters noted that new solar technologies and efficiencies of solar panels are continually being developed, and that technological advances that reduce the costs of renewable energy generation will be important enablers of adoption. Commenters stated that during the past two decades, the efficiency of solar panels (solar energy converted into electricity) has risen to 15 percent, and have achieved as much as 44 percent in laboratory tests. Commenters also stated that the cost of solar cells has already dropped from $8 per watt of capacity in 1990 to less than 80 cents today. Commenters noted that further advances are underway, such as thin films (made from compounds like cadmium telluride, copper indiu m gallium arsenide, or amorphous silicon) for PV use which reduce the amount of material used in creating solar cells and can be "printed" on flexible surfaces. Commenters also noted that researchers are working with nanomaterials to create polymer films l ess than 100 nm thick that can replace bulky silicon cells and nanomaterial

- based coatings which repel water and prevent dust and debris from settling onto the solar panels.

(4) Impacts on electric system: Commenters noted that utilities and policymakers a re already addressing the changes to grid operations presented by increased renewable penetration, but stated that this can be done economically, if supported through appropriate policies, pricing options, and program offerings. Commenters recommended EPA review the paper 'Teaching the Duck to Fly' published by the Regulatory Assistance Project for a discussion of strategies to address the changes to grid operations presented by renewables. Commenters also noted that696 some stakeholders have expressed concern s that solar and wind energy can increase costs and energy system emissions due to an increased need to cycle conventional power plants in response to variable renewable output but that such claims have been proven to be overstated, and could largely be av oided through a balanced portfolio of complementary solar, wind and other clean
energy resources. Commenters stated that the SunShot Vision Study, the Renewable Energy Futures Study, the Western Wind and Solar Integration Study, the forthcoming Wind Vision Study (all NREL), the Minnesota Renewable Energy Integration and Transmission Study, and the PJM Renewable Integration Study (GE) show that renewables, including solar, can be integrated at high levels without significant issue. Commenters additionally no ted that targeted deployment of solar generation in congested areas can provide relief to transmission and distribution systems, defer costly transmission upgrades, and help maintain grid reliability since solar installed on

- site does not experience transm ission and distribution system losses, which can be as high as 7 percent on a utility distribution system and up to 20 percent at the time of system peak.

Comment 16 : Commenters noted that solar energy has many merits and should be included as a complianc e option in Building Block 3.
Response 16 : See sections V.A and V.E of the final rule preamble of the CPP for the EPA’s response to this comment.

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

Commenters noted that solar e nergy systems in the U.S. are expected to generate more than 20,000 gigawatt hours (GWh) in 2014 and with one GWh of solar generation eliminating 690 metric tons of CO2 emissions, solar generation can be expected to avoid 13.8 million metric tons of CO2 em issions in 2014. Commenters noted that these emission reductions from solar deployment are expected to grow as evidenced in 6.8 GW of new solar capacity coming online in 2014.

Commenters noted that after 30 years of energy technology innovation in the PV components sector the price has gone down 99 percent and more recently, solar PV systems went down by almost 15% just from 2012 to 2013. Commenters stated that these price drops in solar components have led to a dramatic growth in the sector.

Commenters noted that solar energy can provide benefits to states by creating jobs, increasing the state's economic output, increasing the state's tax revenues, improving environmental benefits, and saving millions of gallons of water.

Commenters stated that solar en ergy emits zero pounds of greenhouse gas (GHG) emissions while generating affordable and reliable energy, avoids a number of costs associated with fossil fuel resources, and enjoys widespread bi

- partisan support from policymakers and the general public thr oughout the United States.

Commenters stated that solar energy costs are getting to the point where potentially by the end of this decade solar PV could be competitive with gas

- fired generation on a total present value of697 revenue requirements basis at thei r facility and that adding a moderate quantity of large

- scale solar PV generation to their system in the near future is likely going to be a viable and cost

effective resource option that also contributes to lower state

- wide emissions.

Commenters noted tha t solar, when installed on rooftops, has no land use impacts and reduces water consumption from the electricity generation is displaces.

Commenters stated that eligible programs should include local and municipal programs to incentivize the generation and use of clean energy, such as solar.

Commenters stated that Solar power has grown very quickly in recent years, and solar capacity will continue to increase in coming years. Commenters also noted that even though solar does not replace fossil

- fuel generatio n at a 1:1 ratio, it does strongly contribute to a decrease in use of fossil

- fuels. Commenters asserted that solar measures promote technological development, as new solar technologies and efficiencies of solar panels are being continually developed. C omme nters explained photovoltaic devices and how they generate electricity directly from sunlight. Commenters also described their application, distribution, and utility of photovoltaic technology.

Comment 17 : Commenters noted multiple constraints to impleme nting solar energy as a renewable energy resource.
Response 17 : See section s V.A and V.E of the final rule preamble of the CPP for the EPA’s response to this comment.

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

Commenters noted that solar power has two inherent, uncontrollable attributes: variability in output and uncertainty regarding the magnitude and timing of output. Commenters argued that as a result of this variability and uncertainty, solar cannot provide a continuous level of output on demand, it cannot be depended upon as firm capacity for the purposes of resource adequacy assessments, providing operating reserves and responding to local and regional contingency events and therefore will still require bac k up capacity at the power plant level. Commenters noted that demand for electricity does not always coincide with times when the sun is shining and that solar generation will be far off its peak production during peak demand in instances of thunderstorms during summer and winter months.

Commenters also noted that demand for generation will become highly variable and unpredictable when solar generation becomes such a large component of the total mix. Commenters stated that the power demand will have wild f luctuations, adding giant stress to the electrical grid, and requiring rapid response from conventional generators as solar PV power can swing by up to 50% in as little as 30 seconds, and up to 70% in 2 minutes, continuously throughout a day. Commenters co ncluded that solar power may be beneficial on a small, residential scale, but widespread reliance on solar generation will have unintended consequences. Commenters noted that EPA did not model this result from wide

- scale reliance on solar generation, and m ust take into account the efficiency penalties, and large increase in emissions698 resulting from frequent load swings as well as the large increase in maintenance expenses of conventional plants to operate in such an unintended, high degrading state.

Commen t 18 : Commenters agreed with the EPA that solar energy measures are part of the BSER, but stated concern that Building Block 3 as it is currently calculated is incomplete because it does not contain current solar market data on cost and penetration rates.
Response 18 : See section V.E of the final rule preamble of the CPP for the EPA’s response to this comment.

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

Commenters noted that EPA's analysis also does not include distributed PV, which represents about 50% of the total U.S. solar market and therefore, as it is currently written, EPA's proposal does not accurately reflect the emissions reductions achievable through app lication of the BSER.

Commenters noted that current solar capacity today is already far exceeding the estimates that EPA has used for 2030 state projections and encouraged EPA to recognize this tremendous growth in solar and to use an updated baseline year relative to when the final rule will be released.

Comment 19 : Commenters urged the EPA to consider the full potential of the wide variety of renewable resources including and especially offshore wind and distributed solar.
Response 19 : See sections V.A a nd V.E of the final rule preamble of the CPP for the EPA’s response to this comment.
The following are summaries of the specific public comments under this comment:

Commenters stated that utilizing solar, wind, and geothermal generation would outweigh the potential of fossil coal, oil, and natural gas without resorting to polluting forms of power such as biomass or nuclear.

Commenters provided examples of wind and solar resources in Hawaii and Utah being successfully integrated into the grid to state that t hese resources can improve grid reliability and provide benefits to the existing system. Commenters noted that transmission infrastructure has been built over the years across the U.S. to move coal power to demand centers, and that if coal usage declines d ue to economics and the Clean Power Plan in such regions, this existing transmission capacity would be expected to become available for clean power resources.

Comment 20 : Commenters stated that EPA should clearly indicate that RE projects completed by org anizations other than electric utilities should be able to qualify towards the requirements of699 the CPP to encourage the creation of incentive programs and accelerate the installation of these technologies as long as the reductions from such projects are ve rifiable and measurable.
Response 20 : See section V.E of the final rule preamble of the CPP for the EPA’s response to this comment.

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

Commenters noted that the water sector has a growing portfolio of RE options available to it (e.g. solar, wind, and micro

- hydro) and that wastewater utilities have multiple methods of recapturing the embedded energy in wastewater. Commenters stated that the biosolid s and biogas produced through the wastewater treatment process can be used as renewable substitutes for fossil fuels and converted to electricity, and the heat from wastewater and the treatment processes may also be used to reduce dependence on fossil fuel s. Commenters also stated that

new methods of capturing the energy in wastewater continue to be explored and developed, including use of wastewater fuel cells to capture electricity created when microbes convert compounds of carbon and nitrogen.

Comment 21 : Commenters noted that Idaho's land mass is 63% controlled by U.S. federal agencies and that the federal government has been very difficult to support projects such as wind and solar on federally controlled lands as RE power generating efforts have been proposed. Commenters asked the EPA to work closely with federal partners to support opportunities for such project development on properties that have been proven compatible and strategically located.
Response 21 : The final building block 3 methodology does not rely on state

- specific deployment estimates, but rather cost

- effective RE at an interconnection level. The EPA addresses considerations related to the technical feasibility and associated grid integration co sts of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.

Comment 22 : Commenters noted that the EPA's Building Block 3 did not analyze the impacts the Waters of the U.S. ("WOTUS") rule could have on deployment a nd cost of renewable technologies.
Response 22 : The EPA addresses considerations related to the technical feasibility of significant RE penetration, including making appropriate land exclusion determinations, in both the preamble (section V.E) and GHG Mit igation Measures TSD.

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

Commenters stated that one of their subsidiaries conducted a siting evaluation for a new renewable energy facility that revealed significant impacts from the proposed WOTUS rule on the areas that would be considered jurisdictional due to the sweeping "neighboring" definition. Commenters noted that "the site contains 14 wetlands, seven of which were determined700 jurisdictional under existing regulations by the U.S. Army Corps of Engineers ("USACE"). USACE asserted jurisdiction over those seven "adjacent" wetlands because they are hydrologically connected to relatively permanent water downstream of the site. The remaining wetlands were not jurisdictional because they were classified as isolated, with no hydrologic connection or significant nexus to relatively permanent water or traditional navigable waters." Commenters noted that if the proposed WOTUS rule was applied to the project site, all of the wetland areas would be jurisdictional and that if all 14 wetland areas were deemed jurisdictional, the site would not be a viable option for a new facility due to the significant challenges of obtaining a permit, site layout constraints, the costs of preparing a permit application, and mitigation costs. Commenters urged EPA to evaluate the impact of its other proposed and final regulatory actions on the deployment and cost of siting renewable technologies.

Comment 23 : Commenters stated that the EPA's rule should better evaluate the issues associated with managing the increased volume of waste generated from the increased use of renewable
energy sources.
Response 23 : The EPA disagrees with this comment. It is not appropriate for the EPA to issue guidance on waste management issues for any technology as part of the final CPP.

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

Commenters provided a detailed discussion of such wastes which included silicon, PVC, and cadmium telluride toxicity risks in disposing of solar PV panels.

Commenters noted that the Proposal relies heavily on increasing renewable sources of energy in lieu of fossil fuel

- based sources, but fails to recognize the associated solid and hazardous waste management implications. Commenters noted that the Proposal contains some evaluations of these issues, but contains no analyses of the economic or legal implications of dis posal issues associated with increased generation from renewable energy sources. Commenters stated that the Proposal fails to account for the costs to utilities specifically, and to society generally, of managing the increased volume of waste attributable to renewables as a result of this rule. Commenters stated that the Proposal fails to provide the right signals to the market that will encourage the mitigation of disposal issues associated with increased renewable resource use and that these failures thre aten to induce a repeat of the experience the electronics industry faced with respect to the global e

- waste disposal crisis.

Commenters stated that EPA, at a minimum, should provide guidance to states on these future waste management issues, as well as to utilities and others, who in their efforts to meet the Proposal's carbon reduction requirements, will be entering into long

- term contracts for the purchase and/or use of renewables and should make clear that the Proposal's assumption that compliance with the proposed goals can be met through implementation of beyond

- the

- fenceline measures does not render utilities liable for waste disposal issue s associated with such measures.701 Comment 24 : Commenters stated that the EPA did not consider difficulties states and utilities may face during the permitting process of renewable resources in the Proposed Rule.
Response 24 : The EPA addresses consideratio ns related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenters stated that EPA has ignored the time needed to bring renewable energy facilities online and cited several hurdles that must be overcome such as: finding and negotiating the purchase of a suitable site, determining what if any transmission interc onnection upgrades must be made, performing due diligence for environmental factors (e.g., wetlands, threatened or endangered species, and archaeological and cultural resources), and obtaining all required environmental and construction permits. Commenters noted wind and solar resources necessitate an additional comprehensive energy resource analysis which requires separate permitting of meteorological towers and a solar resource assessment or wind resource study to ensure that a viable energy resource exis ts. Commenters noted that such an analysis often requires years of wind and solar data and analyses to ensure proper valuation and seasonal differences will not affect contractual obligations, and that once established, land purchases and/or leases with su rrounding landowners must be completed prior to the first wind turbine or solar array being constructed. Commenters stated that this timeline conflicts with EPA's claim that states can seamlessly escalate renewable generation only one and a half years afte r EPA finalizes its guidelines and likely prior to EPA's approval of state plans.

Commenters stated that RE project development is not automatic and noted that they previously had local zoning issues when attempting to build a landfill methane to energy pr oject which prevented them from building under their received air permit. Commenters noted that when they attempted to modify their air permit due to design changes required by local zoning, new air regulations triggered a lengthy modification process. Com menters stated that the increased time and costs on this project led to its cancellation three years later. Commenters noted that renewables are heavily dependent on resource location and that restricting the ability to develop renewable projects through z oning and environmental studies in areas with high wind force or sun hours significantly limits the overall amount of available RE and forces projects to areas which may not have the same resources. Commenters stated that placing the same capital into

area s with fewer resources raises the average cost per MWh and overall cost of compliance with the CPP. Additionally, Commenters noted that any new renewable projects will not be able to move forward until interconnection approval occurs. Commenters stated that under a five year interconnection window, existing rules and regulations can change significantly which places additional uncertainty in the development process for renewables.

Comment 25 : Commenters stated that the EPA's use of renewable energy in Building Block 3 is highly problematic because renewable energy is not a dispatchable resource.702 Response 25 : The EPA addresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.

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

Commenters further stated that renewable generation cannot be substituted for traditional dispatchable resources on a MW for MW basis and EPA's renewable generation in Building Block 3 effectively substitutes nondispatchable renewable resources for baseload coal units.

Commenters stated that EPA is requiring states to significantly alter their respective generation mi xes by incorporating substantial non

- dispatchable resources, which creates significant concerns regarding the reliability of the electrical system. Commenters noted that EPA's faulty assumption that different generation resources can be substituted for eac h other will have perverse effects on states. Commenters noted that EPA's estimates for Texas would exceed Texas' total demand for electricity in the early morning in the spring and fall. Commenters noted that during these periods, the weather is cool and therefore electric load is low but wind generation is high which would force Texas to face the choice of shutting off new wind generators that were built to comply with EPA's proposal, which would be inefficient and uneconomic, or curtailing nuclear genera tion. Commenters noted that nuclear units were not designed to be curtailed and once shut down, can take 12 hours to ramp back up. Commenters stated that forcing nuclear units to reduce generation to accommodate all the wind that would be built under EPA's "best" system thus would create electricity shortages as the day warms and electric demand increases and wind power decreases, yet nuclear units would not be able to ramp up quickly enough to meet the increasing load.

Commenters noted that while some level of renewable resource utilization is appropriate, renewable resources cannot provide baseload generation or reliability to the grid and cannot be the sole substitute for coal

- fired units.

Comment 26 : Commenters had concerns wi th how the EPA has integrated and projected the displacement of fossil

- fuel generation with incremental energy efficiency and renewable energy measures in Building Block 3.
Response 26 : The EPA addresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenters stated that the inclusion of RE in state goals also is unreasonable because EPA incorrectly assumes that RE displaces all affected fossil generation in proportion to that generation's relative emission contribution and that RE typically primarily displaces gas, as many coal plants do not provide load

- following support. Commenters urged EPA to recognize that RE megawatts will not proportionally displace coal

- fired generation since a megawatt of RE does703 not equal a megawatt of replaced coal because RE has a much lower, and more variable , capacity factor.

Commenters also stated that EPA mistakenly assumes that renewables and EE acquired in a state will directly reduce emissions from coal

- fired EGUs in that state and noted that this assumption is unrealistic. Commenters provided an example as to how this assumption does not correlate to a real

- life scenario: "adding renewable generation in one state in the WECC will impact markets across the entire region, from British Columbia to Arizona. Adding new renewable generation will, all else bein g equal, result in less generation dispatched somewhere in the WECC, which may or may not involve EGUs in the same state where the renewable generation was added. Exactly which units will be offset by the additional generation is extremely complicated. Fac tors affecting which units would be dispatched differently include hydro conditions and hydro flexibility, gas prices, planned and forced outages for generation and transmission, loads/temperatures across the entire region, transmission constraints, etc. D epending on seasons, the renewable generation may not affect any EGU in any state

-- at times, the additional renewable generation may end up displacing hydro generation rather than thermal generation."

Commenters stated that this approach would further exac erbate issues that stakeholders have raised concerning stranded assets, remaining useful life, and grid reliability. Commenters noted that EPA has observed similar issues with the implementation of Building Block 2 as "states with large NGCC capacity and l ower NGCC utilization must reduce the use of coal, oil, and gas steam EGUs to a significantly greater extent than states with lower NGCC capacity and/or higher NGCC utilizat i on."

Commenters noted that in the Proposed Rule, compliance actions taken under Bu ilding Block 3 (and 4) did not displace fossil steam generation in determining a state's emission reduction goals. Commenters noted that this treatment would allow a state's utility to utilize existing generating resources to accommodate energy demand grow th. Commenters stated that many smaller utilities, primarily munis and co

- ops, often grow into generating assets, which results in increased utilization of the unit through the initial phase of its useful life. Commenters stated that the proposal to treat emission reductions would not only increase the stringency of the BSER state emission reduction goals but also diminish the economic value of existing generating resources which the c ommenters strongly oppose d

.

Comment 27 : Commenters noted that the level of pipeline and transmission infrastructure required to be built to meet the EPA's goals in the Proposed Rule can present numerous challenges to states.
Response 27 : See sections V.A, V.D and V.E of the final rule preamble o f the CPP for the EPA’s response to this comment.

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

Commenters stated that the Proposal fails to acknowledge the political challenges associated with adding or modifying transmis sion infrastructure to support the needed increase in renewables generation. Commenters noted that the act of modifying or adding transmission704 infrastructure is carried out in the market place, not by RTOs, States, or FERC. Commenters also noted that State s have authority over siting and permitting of generation and transmission facilities while State and regional institutions determine how to allocate costs, subject to FERC orders, which affects the market risks for a range of stakeholders, including proje ct developers. Commenters stated that the result is a complex mix of legal issues and political dynamics that impact plans to deploy renewable electricity technologies.

Commenters noted that right of way and easement processes are a significant variable in transmission infrastructure upgrades and are highly dependent on landowners and can also be influenced by public opinion. Commenters noted that just as permitting of renewable facilities encounters an increasing number of permits and approvals with long s tudy periods, so too does the construction of power lines to move energy from renewable facilities to load centers. Commenters estimated a 10

- 15 year timeline for transmission construction and iterated that this country has never built this expected level of transmission and pipeline expansion and generation.

Comment 28 : Commenters noted that recent development in transmission line construction and best practices in renewable energy dispatch are helping to address any reliability concerns with respect to wind energy.

Response 28 : See sections V.D and V.E of the final rule preamble of the CPP for the EPA’s response to this comment.
The following are summaries of the specific public comments under this comment:

Commenters stated that although inadequate transmission capacity can hinder both new and existing wind projects, recent devel opments in transmission line expansion mitigate these

concerns. Commenters noted that over 3,500 miles of transmission lines came online in 2013 alone, with investor

- owned utilities making transmission investments of $17.5 billion, and that there are curre ntly 15,000 miles of transmission lines and over 170 projects in various stages of development in the U.S. worth more than $60 billion in potential investments. Commenters noted that EEI has estimated that 76 percent of this new transmission capacity "woul d

-- at least in part

-- support the integration of renewable energy."

Comment 29 : Commenters stated that the EPA's assumptions regarding the amount of renewable generation that can feasibly and at reasonable cost be added to Alabama's grid are not

unreasona ble, and given technological advances and price declines, EPA's assumptions are overly conservative.
Response 29 : See section V.E of the final rule preamble of the CPP for the EPA’s response to this comment.

The following are summaries of the specific public comments under this comment:705 Commenters noted that while Alabama may be behind other states when it comes to renewable penetration, its significant potential remains, and recent trends will allow it to capitalize on that potential going forward with substantial benefits to the state.

Commenters noted the benefits of future wind deals for Alabama and stated that they will be even greater as a result of additional technological advances and continuing price declines. Commenters cited a report from the Lawrence Berkeley National Laboratory which stated that wind energy pricing is at an all

- time low and c ommenters proceeded to detail the capital cost and installation cost declines for wind energy in recent years. Commenters also noted that transmission co nstraints that might have served as barriers to additional cost

- effective wind deals are quickly being resolved, and provided details about the Plains & Eastern Clean Line Transmission Project which will have the capacity to deliver approximately 3,500 meg awatts (MW) primarily from renewable energy generation facilities from the Oklahoma Panhandle region to load

- serving entities in the Mid

- South and Southeast.

Commenters also noted that Alabama's technical potential for renewable generation greatly exceeds the state's total 2012 generation and its utility

- scale solar potential alone is over 25 times greater than current state generation. Commenters noted a study by Arizona State University which ranked Alabama 8th among states in terms of solar potential, wh ile the DOE's SunShot Initiative assumes Alabama will have a cumulative installed solar PV capacity of 2.3 gigawatts (GW) by 2030. Commenters stated that the cost of building in

- state solar generation will be lower than EPA's assumptions and that this pric ing will make it more economical for Alabama's utilities to buy solar energy generated by independent producer rather than engage in self

- build projects.

Commenters stated that with benefits of this kind and degree, EPA is right to assume that Alabama's u tilities will continue to invest in cost

- effective renewable generation both within and outside of the state. However, c ommenters stated that Alabama would do well to remove legal and policy barriers that have prevented independent actors from contributing to the state's progress on the policy front.

Comment 30 : Commenters expressed contrasting views on the potential for implementing RE measures in Arkansas
Response 30 : Biomass is not considered part of BSER in this rule and therefore it is not included in goal setting or compliance evaluations. However, similar to other technologies outside of BSER, biomass may be considered as a part of a state’s plan to meet the emissi on guidelines. The EPA addresses considerations related to the technical feasibility and associated grid integration costs of significant RE penetration in both the preamble (section V.E) and GHG Mitigation Measures TSD.

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

Commenters stated that companies such as Clean Line Energy are preparing to deliver thousands of MW of wind energy from the Great Plains across the Midwest to the eastern states and that706 Arkansas could be a sign ificant recipient of this energy source if a planned 500 MW converter station is built in Central Arkansas.

In contrast, c ommenters stated that Arkansas does not have the wind resource potential of the overwhelming majority of the five other states in the South Central region. Commenters stated that Arkansas does not have appreciable amount of solar resources using current technology, but does have the potential for developing great biomass resources although it is currently unclear whether an EGU firing bi omass will be considered by the final rule to be CO2 neutral. Commenters noted that Arkansas does have existing hydropower facilities and some developable hydropower potential as well.

Comment 31 : Commenters noted that there are several options available to them in terms of purchasing renewable energy sources, which include installing PV or solar thermal facilities or wind energy.
Response 31 : See sections V.A and V.E of the final rule preamble of the CPP for the EPA’s response to this comment.

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

Commenters noted that solar is most likely the lowest cost alternative for Arizona, as it has an approximate cost of $2000/kW and a capa city factor of 0.25. Commenters stated that the challenge with incorporating these renewable sources lies in their uncertain reliability. Commenters noted that they cannot count on renewables to "meet load" and must maintain sufficient backup power generat ion capacity to meet load should the renewables be off

- line due to lack of sunlight, wind, or other reasons.

Comment 32 : Commenters noted that solar energy is the only renewable energy option for Florida, but reminded the EPA of the existing issues with s olar implementation in the state.
Response 32 : The final building block 3 methodology does not rely on state

- specific deployment estimates, but rather cost

- effective RE at an interconnection level. The EPA addresses considerations related to the technical feasibility and availability of regional RE resources in both the preamble (section V.E) and GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenters noted that NREL has determined that there is no reliable on

- shore wind in Florida and that the only source of renewable energy that is feasible in Florida is solar. Commenters noted the ways which they have promoted the addition of solar generation in the ir city, but noted that there are inherent challenges with solar generation that make a one to one replacement of fossil fuel generation problematic. Commenters noted that solar energy requires large amounts of land. Commenters stated that assuming 7.4 acr es are needed for 1 MW of PV solar panels and an average PV capacity of factor of 20%, the required land use for Florida to meet its renewable707 energy goal of 22,109,614 MWh would be approximately 93,385 acres. Commenters stated that EPA must consider the e nvironmental impacts for clearing such a significant amount of land to meet the required level of renewable energy. Commenters stated that even if roof

- top solar were installed to meet the goal in place of solar farms, the 500MW total capacity is infeasibl e.

Commenters stated that because the potential for wind power in Florida is very limited, most of the remaining potential renewable energy studied was from solar power

- much of that solar PV power. However, c ommenters stated that the still

- considerable c ost of solar PV compared with fossil

- fueled electricity

- particularly with the current low price and abundance of natural gas

- limits the expansion of solar PV to levels that are much lower than those EPA is contemplating in the proposed guidelines. Comm enters also noted that the capacity factor of solar PV is only 15 to 20 percent, making it necessary to backup solar power with conventional generation resources for 80 to 85 percent of the time.

Comment 33 : Commenters stated that not only does the EPA fa il to consider the age of Louisiana's non

- hydro RE fleet, but it also fails to conduct any analysis of the economic viability of this type of generation.
Response 33 : See section V.E of the final rule preamble of the CPP for the EPA’s response to this comment.
The following are summaries of the specific public comments under this comment:

Commenters noted that the majority of generation produced by Louisiana's biomass fleet comes from the burning of black liquor, a byproduct of pulp and paper mills, and that over 60 percent of Louisiana's biomass capacity is fueled by black liquor. Commenters noted that another 36 percent is wood and waste wood and less than four percent comes from agricultural byproduct (such as bagasse from sugar cane production and ri ce hulls). Commenters stated that continued generation at these types biomass facilities is not a function of an RPS, but rather the economic viability of these industries and that as with other limited resources, increased generation will increase costs o f the commodity in manufacturing and other processes. Commenters noted that even if Louisiana adopted an RPS, it is highly unlikely that these existing non

- hydro RE generation facilities would see "new life" through re

- powering or other marginal investment s given their age, and the nature of the industries to which they are tied. Commenters concluded that any RE target developed for Louisiana needs to factor these unique agricultural sector factors, as well as the age of the existing base of RE generation i n the state and that EPA's proposed targets do neither.

Comment 34 : Commenters stated that South Carolina has tremendous untapped cost

- effective renewable capacity that can be tapped to help achieve the state emissions rate target and the state's renewab le potential greatly exceeds the potential represented in Building Block 3.
Response 34 : See section V.E of the final r ule preamble of the CPP for the EPA’s response to this comment.708 The following are summaries of the specific public comments under this c omment:

Commenters noted, specifically, that the state's utility

- scale solar potential is 19 GW for urban solar systems and 1,555 GW for rural solar farms while the state's rooftop solar technical potential is 12 GW. Commenters noted that under these potential estimates published by NREL, the rooftop solar alone could generate around 19 million MWh, or more than twice the new renewable generation envisioned in Building Block 3.

Commenters stated that South Carolina's in

- state potential is not limited t o solar and noted that increased hub heights and other technological advances in wind turbines have helped increase South Carolina's inshore wind potential to over 5,000 MW. Commenters noted that the state's offshore wind potential at a 90 meter hub height is even greater at 130,244 MW, and coupled with solar, the state could far surpass the 9.6 million MWh included in Building Block 3 even if only a small fraction of the available renewable resource is developed.

Commenters further noted that South Carolin a could add significant levels of renewable energy without impacting grid reliability. Commenters cited a study by the Pacific Northwest National Laboratory noted that the electric system is ready to accommodate 6,800 MW of installed PV capacity when integ rating up to 20% of total load from solar generation onto Duke Energy Carolinas.

Comment 35 : Commenters asserted that their investments into landfill gas and coal bed methane should be counted towards their renewable energy targets. Commenters said t he state in which they operate has a Renewable Portfolio Standard and considers these two sources of energy to be renewable, however under the CPP these renewable sources are not allowed to be considered as helping their facilities reach target goals, both because most of the resources are located in other states and because of the EPA's determination that wind and solar would be the only renewables counted towards renewable energy before the CPP.
Response 35 : A description of the RE technologies that are not part of building block 3 but may be relied upon for compliance is available in section VIII discussion of non

- BSER measures.

A discussion regarding the use of some biomass feedstocks, including waste

- to

- energy, for compliance purposes can be found in VIII.I and Section VIII.K of the preamble.

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

Commenters noted that there are differences as to what constitutes RE between states and the government; for example, the state of In diana classifies biogenic methane as a renewable resource, but this resource is not specifically cited in the Clean Power Plan even though the EPA's own Landfill Methane Outreach Program assigns methane a global warming potential (GWP) factor of 25 compare d to carbon dioxide.709 Comment 36 : Commenters stated that the Appalachian Hardwood Center at West Virginia University determined that remaining pulpwood from West Virginia timber harvesting could potentially support the hardwood needs of four 50 MW wood

- fi red power plants and at a 34 percent capacity factor, these four plants would collectively generate on an annual basis 595,680 MWh, or 5.8 percent of West Virginia's RE goal under the proposed regulation.
Response 36 : Biomass is not considered part of the best system of emission reduction in this rule. However, similar to other technologies outside of BSER, biomass may be considered as a part of a state’s plan to meet the emission guidelines.

Not all forms of biomass are expected to be approvable. A state would propose qualifying biomass feedstocks or categories of biomass feedstocks in its plan and the proposed treatment of biogenic CO2 emissions, including measures to ensure emission reduction benefits. State plans must include analysis supporting how pro posed qualifying feedstocks or feedstock categories are considered appropriate as a CO2 emission mitigation approach as well as the proposed treatment of biogenic CO2 emissions (i.e., the proposed level of biogenic CO2 emissions from use of the biomass fee dstock that would not be counted when demonstrating compliance with an emission standard, or when demonstrating achievement of the CO2 emission performance rates or a state
rate

- based or mass

- based CO2 emission goal) and quality control measures. The EPA w ould review the appropriateness and basis for such determinations and accounting measures in the course of its review of a state plan.

For more detail on BSER, refer to section V of the preamble. For more detail on biomass, refer to section VIII.G of the preamble.

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

Commenters noted that the serious obstacles to development of West Virginia's first wood

- fired power plants are their ability to produce competitive electric rates an d the identification of combined heat and power (CHP) opportunities.

Comment 37 : Commenters submitted pricing data for 5 different forms of biopower, including Levelized Cost of Energy.
Response 37 : Biomass is not considered part of the best system of emission reduction in this rule. However, similar to other technologies outside of BSER, biomass may be considered as a part of a state’s plan to meet the emission guidelines.

Not all forms of biomass are expected to be approvable. A state would propose qu alifying biomass feedstocks or categories of biomass feedstocks in its plan and the proposed treatment of biogenic CO2 emissions, including measures to ensure emission reduction benefits. State plans must include analysis supporting how proposed qualifying feedstocks or feedstock categories are considered appropriate as a CO2 emission mitigation approach as well as the proposed treatment of biogenic CO2 emissions (i.e., the proposed level of biogenic CO2 emissions from use of the biomass feedstock that woul d not be counted when demonstrating compliance with an emission standard, or when demonstrating achievement of the CO2 emission performance rates or a state710 rate

- based or mass

- based CO2 emission goal) and quality control measures. The EPA would review the appropriateness and basis for such determinations and accounting measures in the course of its review of a state plan.

For more detail on BSER, refer to section V of the preamble. For more detail on biomass, refer to section VIII.G of the preamble.

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

Commenters noted that from their data it is clear that diverse forms of biomass electricity are technically available at price ranges that includes most Avoided Costs. However, c ommen ters also stated that they agree with the EPA that biomass should be evaluated against other alternative fuels. Commenters asserted that a side

- by

- side comparison shows that biomass power is on par in terms of cost, reliability, and dispatchability with na tural gas fuel.

Comment 38 : Commenters stated that the EPA should include projections for new biomass electricity in the IPM, especially landfill gas, anaerobic digestion, and CHP.
Response 38 : These resources are not included in building block 3, but may qualify as non

BSER measures. Refer to section VIII for further detail.

Comment 39 : Commenters generally supported the inclusion of renewable energy as a "building block" to be used in the setting of each state's emission rate standard as part of the final rule for Section 111(d) and urged the EPA to strengthen its targets for reducing em issions.
Response 39 : See sections V.A and V.E of the final rule preamble of the CPP for the EPA’s response to this comment.
The following are summaries of the specific public comments under this comment:

Commenters stated that EPA should factor in a greater potential for even greater renewable energy development in the west to develop targets that will achieve significantly greater reductions, as the west has "tremendous renewable energy potential, vast quantities o f onshore wind exist across the west, particularly in the plains where onshore wind potential is unmatched in the nation." Commenters additionally stated that Colorado can outpace the assumed growth in RE generation EPA relied on to set its target and urge d EPA to strengthen the standard for Colorado to reflect this.

Commenters added that distributed generation, regardless of type, helps reduce emissions by bringing electricity on

- site or near to demand, reducing transmission losses, as well as wear

- and

tea r on utility equipment by mitigating peak demand. Commenters stated that, with emerging technologies, distributed generation can be coupled with storage, frequency response, and voltage support equipment to help meet peak evening demand, provide ancillary services, and allow even higher levels of renewable energy integration.711 Commenters stated that Colorado's continuing progress since in incorporating renewables since 2010 proves that it is entirely feasible for the country to meet the new clean power plan goals and that Colorado is a model to hold up to other states.

Commenters urged EPA to adopt a better approach to estimating the growth potential for RE and adopt stronger benchmarks that more accurately reflect that potential.

Commenters were encouraged by the flexibility offered in the proposal to ensure that renewable energy can and will be a significant component of the compliance strategy that states use to meet the standard.

Commenters stated that the U.S. has the potential for replacing coal plant e nergy completely by 2050. Commenters cite d a Stanford study, which is a state

- by

- state blueprint that would show how to both replace fossil fuel generation and improve the health and economic position of citizens.

Comment 40 : Support for development of RE on tribal lands

. Response 40 : The information provided in this comment was valuable in finalizing the building block 3 methodology, which is described in section V.E.6 of the preamble and in the GHG Mitigation Measures TSD.

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

In comments on the Tribal & Territories Supplemental Proposal, commenters stated support for the development of sustainable, renewable energy (RE) development on Tribal lands both for its benefits to the environment and human health, and as a means of creating desirable jobs in Indian country. Commenters acknowledged the EPA's stated limitations of building blocks 1, 2, and 4, and was supportive of the proposal for the applic ation of BB3 in Indian country

.

Comment 41 : Commenters opposed including renewable energy in the BSER under Building Block 3.
Response 41 : Affected EGUS may procure qualifying incremental RE independent of a state plan for compliance. Refer to section VIII of the final preamble in su pport of the CPP for additional detail.

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

Commenters stated that unless EPA excludes "Building Block 3" from the goal

- setting methodology or explicitly permits states to use renewable energy developed independent of a state plan for compliance, the Proposed Rule will delay of the construction of new renewab le generation, which is contrary to EPA's stated goal of reducing CO2 emissions. Commenters noted that this delay is likely to increase the costs of undertaking renewable projects, and thus the overall cost of achieving compliance with the Proposed Rule, b ecause companies will be712 forced to compete for vendors in the few years between when a plan is approved and the compliance period. Commenters stated that EPA could have implemented an effective and far
more cost

- effective emission reduction program by sett ing goals based on controls at affected sources and allowing states to meet those goals through alternative means, like renewable energy

resources.

Commenters stated that even if permissible, it is not at all clear that it is feasible for states to
meet t he proposed required emissions reductions. Commenters stated that the other building blocks seem equally ambitious and fraught with uncertainty. Commenters further stated that Building Block 3 assumes, among other things, a significant acceleration in the growth of renewables despite their intermittency.

Commenters stated that while increasing use of zero

- emitting generation is a significant component our strategy to reduce the CO 2 intensity of our energy production, it should not factor into the BSER dete rmination for existing EGUs. Commenters noted that the BSER determination should be based on measures that can be achieved at the source

-- in this case, fossil

- fired EGUs.

Commenters stated that RE is only rarely achievable with a state

- only implementation, and must be balanced over a regional plan, making it impossible to establish goals within the allotted timeframe imposed by the rule.

Comment 42 : Commenters asked how the EPA came up with the methodology for Building Block 3's approach and wanted to know what the methodology was for ensuring compliance with the Data Quality Act.
Response 42 : See section V.E of the final rule preamble of the CPP for a detailed description of the final building block 3 methodology

. Compliance considerations related to incremental RE are described in section VIII of the final rule preamble of the CPP.
The following are summaries of the specific public comments under this comment:

Commenters stated that the reasonableness of EPA's assumptions underlying Building Block 3 depend on: 1) the renewables market potential in each region; and 2) the ability of the state and the key participants in each state to realize this potential in a reasonable period of time.

Commenters stated that the information needed to address the first issue includes: the availability of zero

- carbon resource potential defined as renewables in a distinct region; the portion of zero

carbon resources defined as renewables tha t are included in setting the goal for each state; the portion of zero carbon resources defined as renewables that can be used for compliance (for example, biomass may be an issue); and the ability to convert this resource potential to electricity
at a rea sonable cost. To address the second issue, the c ommenters stated that EPA needs to address: the ability to build any new transmission to bring these qualifying renewables to market

- in a timely way and at reasonable cost; the need for and ability to integ rate this generally intermittent generation into a reliable electric system, particularly as the renewables percentage increases; the speed with which the state, the state's suppliers (primarily merchants and utilities), and the state's purchasers (primari ly utilities) institute a procurement process that meets the713 requirements of this building block; the relative consistency between the definition of qualifying renewables for states that have a renewable portfolio standard and the definition of renewable

e nergy for this building block, and the ability to reconcile the two; and the need for enabling state legislation, and to work out whether this building block is enforceable at the federal or state level.

Comment 43 : Commenters requested comment as to whic h emission reduction measures not included in the four building blocks can be used to meet state targets. Commenters also wanted clarification as to which resources will be considered renewable.
Response 43 : See section VIII of the final rule preamble of the CPP for a description of the non

BSER measures available to affected EGUS in demonstrating emission performance standards

.

Comment 44 : Commenters requested that all forms of zero

- emitting generation, including baseload n uclear and hydropower generation receive equal credit in reaching state emissions targets, and should not be included in standard

- setting.
Response 44 : Incremental hydropower and nuclear are available to be credited in an identical

manner as zero

- emitting RE technologies in the final rule.
The following are summaries of the specific public comments under this comment:

Commenters stated that EPA's proposal should be structured around the following two principles with respect to zero

- emitting generation:

1. Avoided emissions from nuclear, renewables or hydro should have the same compliance value as emission reductions;

2. All zero

- emission generation (nuclear, renewables, and hydro) should receive comparable treatment in that none of them should be included in the standard

setting process but can all be used to demonstrate compliance with the standard.

In particular, c ommenters stated that nuclear power is presented with a major challenge as the proposal does not provide incentive for the preservation of a state 's existing nuclear fleet, as EPA intended, because it has included a portion of that fleet in the state's reduction target.

Comment 45 : Commenters noted that the decline in U.S. reliance on its coal generation has coincided with rapid domestic expansion of zero

- and lower

- carbon generating unit development and electricity generation. Commenters then went on to give figures from the wind and solar industries, and also talk ed about increases in energy efficiency.714 Response 45 : The resources and data provide d in this comment were valuable in finalizing the building block 3 methodology, which is described in section V.E.6 of the preamble and in the GHG Mitigation Measures TSD.

Comment 46 : Issues related to rapid construction of RE
Response 46 : The final building block 3 methodology does not rely on state

- specific deployment estimates, but rather cost

- effective RE at an interconnection level. The EPA addresses considerations related to the technical feasibility and availability of regional RE re sources in both the preamble (section V.E) and GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenters stated that the EPA Clean Power Plan seems to force them to construct renewable capacity within their current state, because of the difficulties of coordinating credit for intra

- state transmission. Commenters stated this could require the construction of capacity in locations that are not ideal either for financial reasons or for environmental reasons. Commenters worried that the construction of transmission lines from these new plants can cause non

- air quality destruction to the local environment and harm ecosystems in ways that could be avoided if allowed to construct capacity in a better loc ation.

Comment 47 : Commenters requested that Power Purchase Agreements be allowed to count towards renewable generating targets. Commenters claimed that even though they do not own the resources, they are purchasing, and therefore contributing, to the renewable capacity that resource provides.
Response 47 : The EPA agrees that ownership is not a necessary condition to procuring credit for incremental RE. See sections V.A and V.E of the final rule preamble of the CPP for the EPA’s response to this commen t.

Comment 48 : Commenters stated they would like the EPA to credit them for their two hydroelectric plants which produce in total 12 MW of energy, offsetting 795,250 tons of CO2. Commenters felt that their company is being punished for their early action to generate renewable energy.
Response 48 : The BSER is forward

- looking in identifying cost

- effective opportunities for emission reductions from 2012; however, the cost and availability of th ese emission reduction opportunities is the result of many factors, including previous actions. The final building block 3 methodology is described in detail in V.E.6 of the preamble and in the GHG Mitigation Measures TSD.715 Comment 49 : Commenters stated th at the EPA's Proposed RPS Approach underestimates the amount of electricity than can be cost

- effectively generated by renewables over t he 2020

- 2030 compliance period.
Response 49 : The EPA is not finalizing an approach that relies on state RPS requirements to set a regional target for RE. The final building block 3 methodology is described in detail in V.E.6 of the preamble and in the GHG Mitigation Measures TSD.

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

Commenters stated that expected increases in fuel prices, such as those forecast in DOE's Annual Energy Outlook, should also be accounted for in EPA's analysis of the economics of renewable
energ y additions as well as the expected retirement of large amounts of inflexible generation and the addition of new flexible resources, such as new gas generation, demand response, and energy efficiency. Commenters asserted that it is unreasonable for EPA to estimate future renewable energy deployment patterns through the year 2030 based on the generation mix and power system that existed in 2012.

Commenters stated that EPA's modeling approach should account for the changes in generation and capacity mix that are a likely outcome of the Rule and urged EPA to include an iterative modeling approach that includes the impact of increased renewable generation on decisions about generator additions, retirements, commitment, and dispatch. Commenters noted that if suc h analysis is beyond the scope of IPM's capabilities, EPA should rely on the results of similar analysis described above that has been conducted by DOE, NREL, and grid operators, and use those results as inputs into EPA's modeling.

Comment 50 : Commenters noted that IPM assumes a wind plant availability factor of 95%, though more recent data indicate that current wind plant availability is significantly higher

. Response 50 : The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, particularly in the reevaluation of onshore wind cost and performance assumptions. The EPA updated performance assumptions to reflect the latest NREL mid

- case estimates from the Annual Technology Baseline.
The following are s ummaries of the specific public comments under this comment:

Commenters stated that a report by Sandia National Laboratory finds that a large sample of existing wind projects has an average availability factor of 97.6% and that others report that the avail ability for newly installed turbines is even higher and that improvements in availability are expected to continue. Commenters stated that EPA should use this value to best account for the expected availability of turbines that will be added in the future. Commenters added that when assessing the impact of the availability factor on wind plant generation, EPA should take into account that planned outages are typically scheduled for low wind periods to minimize the loss of generation and so that, if needed, cranes can be safely operated at the wind plant site.716 Comment 51 : Commenters asserted that IPM's modeling assumption of perfect foresight biases generation investment decisions against stably

- priced renewable energy, as it fails to account for the uncerta inty associated with other energy sources, particularly fuel prices.
Response 51 : The EPA disagrees with this comment and believes that IPM is an appropriate tool to evaluate the technical feasibility and cost

- effectiveness of RE. For additional discussion on the role of IPM in building block 3, refer to the GHG Mitigation Measures TSD.
The following are summaries of the specific public comments under this comment:

Commenters noted that fossil generation in particular faces significant uncertainty about future fuel prices, as well as uncertainty about pending and future environmental regulations. Commenters added that many utilities and state regulators have publicly noted wind energy's value for reducing fuel price risk in explaining their reasons for investing in wind energy. Commenters stated that Lawrence Berkeley National Laboratory researchers were able to analyze market price signals to quantify the cost of gas fuel price risk at "$0.4

- $0.8/MMBtu ($0.6/MMBtu on average) [in 2003 dollars] for terms ranging from 2

- 10 years. At an aggressive heat rate of 7,000 Btu/kWh, this "premium" translates into 0.3

- 0.6/kWh (0.4/kWh on average) [in 2003 dollars]." Commenters noted the res earcher's conclusion that "utilities and others that have relied on EIA reference case gas price forecasts in resource acquisition, modeling, and planning exercises over the past three years have likely produced results that are biased in favor of gas

- fire d generation relative to fixed

- price renewable generation (again, presuming that long

term price stability is an important consideration)". Commenters stated that EPA should make a similar adjustment to the IPM resource cost calculations to appropriately a ccount for the cost of fuel price risk and appropriately value wind generation's lack of fuel price risk.

Commenters stated that EPA should ensure that the IPM turn

- down limit assumptions properly account for the evolving capabilities of conventional gener ators to cycle and provide power system flexibility and ensure that the modeling captures solutions, like transmission upgrades or the conversion of conventional generators to synchronous condensers, that can be used to meet Area Protection Constraints. Co mmenters noted, for the turn

- down limit assumptions, that new
gas generators are demonstrating significantly enhanced flexibility, and future gas generators are expected to continue this trend. In addition, Commenters stated that many coal generators demon strated their ability to move to a more flexible operating profile during 2012 when gas prices were anomalously low, causing some gas generators to be dispatched as baseload while coal generators were dispatched as mid

- merit cycling units. Commenters noted , for the area protection constraints, that based on the demonstrated experience of successfully building transmission, adding Static VAR Compensators (SVCs), or converting existing conventional generators to synchronous condensers to provide local voltage support, allowing local reliability concerns to be met while allowing uneconomic generating resources to retire, EPA should also ensure that the modeling captures solutions that can be used to meet Area Protection Constraints, including the conversion of conventional generators to synchronous condensers as well as transmission upgrades and the addition of devices such as SVCs.

Comment 52 : New transmission construction in IPM models717 Response 52 : Total transfer capabilities between regions in IPM remain constant over time except to reflect transmission projects that are in advanced stages of development . The deployment of RE has associated transmission costs reflected in the steps to which the resource is assigned , where the cost reflects several conside rations related to transmission, including distance to existing transmission and population density that would increase the cost of procuring transmission rights of way . The appropriateness of relying on IPM to evaluate the cost

effectiveness and technica l feasibility of incremental RE is discussed in detail in the GHG Mitigation Measures TSD.

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

Commenters noted that, while the IPM documentation appeared to indicate that new
tran smission construction is not factored into the IPM model runs, the impact of future transmission additions could be modeled by at least assuming that the rate of transmission build over the last several years persists, and that a better option would be to use the projections made in reports such as NERC's Long

- Term Reliability Assessment, the Department of Energy's National Electric Transmission Congestion Study, and the Edison Electric Institute's (EEI) Transmission Projects: At a Glance.

Commenters noted that the impact of future transmission additions could be modeled by at least assuming that the rate of transmission build over the last several years persists and that a better option would be to use the projections made in reports such as NERC's Long

- Ter m Reliability Assessment, which found transmission additions during the next 10 years are expected to include 7,400 circuit miles of lines currently under construction, 20,622 circuit miles of planned lines, and 7,360 miles of conceptual lines; the Departm ent of Energy's National Electric Transmission Congestion Study, to be finalized in 2015; and the Edison Electric Institute's (EEI) Transmission Projects: At a Glance, which found EEI's members (investor

- owned utilities) alone plan to spend $60 billion on new transmission infrastructure over the next ten years. Commenters stated that the IPM documentation appeared to indicate that new transmission construction is not factored into the IPM model runs, noting that "[d]ue to uncertainty surrounding the buildin g of new transmission lines in the U.S., EPA Base Case v5.13 does not exercise IPM's capability to model the building of new transmission lines." Commenters stated that if new transmission build is allowed in the IPM modeling, the assumed cost of building new transmission should be validated against recent transmission cost data.

Comment 53 : Commenters stated that the reserve margin contribution of wind energy in ERCOT in the EPA's IPM modeling should be updated to account for updates ERCOT has made to its reserve calculation based on new data.
Response 53 : The EPA periodically conducts a comprehensive review of wind reserve margin contribution on a national basis. The recent updates that ERCOT adopted are not ed but any updates to assumptions will be reserved for a future version of IPM to allow for a comprehensive, national

- level review of reserve calculations.

The following are summaries of the specific public comments under this comment:718 Commenters noted that ERCOT has recently updated its wind rese rve margin contribution from 8.7% for all wind generation to a summer value of 12% for non

- coastal wind resources, a winter value of 19% for non

- coastal wind resources, a summer value of 56% for coastal (land

- based but near the coast) wind resources, and a winter value of 36% for coastal resources

.

Comment 54 : Commenters stated that EPA should review the wheeling charges described in Table 3.4 on pages xvii.6

- 12 of Chapter 3 of the IPM documentation, as many appear to be higher than current and future whe eling charges and that EPA should account for the fact that these charges are likely to significantly decrease in the future as inter

- regional coordination on grid operations improve and new transmission infrastructure is completed.
Response 54 : The EPA p eriodically conducts a comprehensive review of interregional transmission assumptions in IPM. The EPA determined the current representation of wheeling charges to be reasonable but will further review those assumptions for the next version of IPM.

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

Commenters specifically noted the following charges that they appear to be particularly high relative to current wheeling costs:

1. The $6/MWh wheeling charge between both MIS_MAPP and M AP_WAUE and other parts of MISO. Commenters stated that the vast majority of these two areas, and the vast majority of the wind resources that have been or are under development in those areas, are in the MISO footprint and therefore are not subject to any wheeling charges. Commenters stated that the exte nt to which the ongoing integration of some of WAPA's Balancing Authorities into SPP will reduce wheeling charges and improve transfer limits into with SPP should also be evaluated and incorporated into the IPM modeling assumptions.

2. $8/MWh between LADWP (W EC_LADW) and the Imperial Irrigation District (WECC_IID), and another $8/MWh between these two areas and Southern California Edison (WECC_SCE) and San Diego Gas and Electric (WEC_SDGE). Combined with the $8/MWh wheeling charge from WECC_AZ to WECC_IID, a t otal pancaked wheeling charge of $16/MWh could exist for paths moving electricity across the Imperial Irrigation District between Arizona and San Diego Gas and Electric, which appears to be excessive relative to current practice.

3. Commenters stated that the assumed $8/MWh wheeling charges among most Western states are very high relative to reality. For example, the WECC_WY

- WECC_UT wheeling charge of $8/MWh should be $0/MWh to reflect that most of both areas are within the footprint of PacifiCorp. Commenters stated that the same is true for the $8/MWh wheeling charge between WECC_NNV and WECC_PNW, and the charge between WECC_SNV and WECC_UT, as a large share of all of those areas fall within service territories that are now owned by PacifiCorp719 4. Also of concern to Commenters we re the total pancaked rates of $14/MWh for two wheeling charges moving electricity across S_D_REST between SPP and the TVA (S_C_TVA) and Southern Company (S_SOU) IPM regions. These costs seem higher than those that are impos ed on existing transactions of wind generation between those regions.

5. Commenters stated that EPA should account for how the $3/MWh wheeling charge across the MISO

- PJM seam, and among the other RTOs, will be reduced due to increased inter

- regional coordinat ion in transmission scheduling over time.

Comment 55 : Commenters noted that the EIA data that the IPM documentation references as support for the 2.8% figure for transmission line losses appears to include lower

- voltage distribution system losses, which a ccount for the vast majority of total power system losses and should not be included in calculating the transmission losses between regions.
Response 55 : The EPA periodically conducts a comprehensive review of interregional transmission assumptions in IPM

. The EPA determined the current representation to be reasonable but will review transmission line loss assumptions for the next version of IPM.

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

Commenters noted, in contrast, PJM's data are based only on losses on the high

- voltage transmission system, which are significantly less than 1% of total generation on average which is consistent with other report of transmission

- system losses. Commenters stated that because inter

regional power transfers will typically occur on high

- voltage transmission lines, this is a more appropriate loss factor for this calculation and, if possible, IPM's modeling of transmission losses should also be indexed for transmission lin e loading level and for winter and summer periods, to account for the fact that losses tend to be higher when transmission lines are heavily loaded and when ambient temperatures are higher.

Comment 56 : Commenters advocated for allowing privately

- owned sol ar generation to be credited toward a utility’s or state’s compliance obligations and described the need for a methodology to quantify credits for solar generation.
Response 56 : Distributed solar technologies may be eligible for compliance as a non

- BSER

me asure. Refer to Section VIII for additional details.

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

Commenter s noted that Michigan may experience rapid growth in the number of small solar projects where the generation is u sed by the customer behind the meter. Commenter s said that the rule should include a methodology for counting behind

- the

- meter distributed generation if metering and monthly reporting requirements are onerous. Commenter s said that Michigan's REC tracking a nd certification system, MIRECS, provides for aggregation of similar generators720 into a single account to reduce administrative costs. C ommenter s stated annual generation is calculated using a formula and MIRECS includes both monthly generation and RE credi ts awarded.

Commenter s stated that distributed solar generation has the potential to be a significant source of renewable energy in Georgia by 2030, but given the time constraints of the CPP rule development, they ha ve not had sufficient time to develop a methodology for tracking these projects and calculating carbon emission reductions associated with them. However, commenter s thought that a suitable method can developed that would not only allow a state to take credit for emission reductions associated w ith these projects but also have the effect of promoting further development of distributed solar. Commenter s stated that the final CPP rule should allow for development of a methodology for quantifying carbon reduction credits associated with distributed solar and incorporating those credits into the state plan at any time during the interim compliance period.

Commenter s said that the final rule should clarify that privately

- owned, grid

- connected solar will count towards a utility's or state's obligations, provided that it displaces CO2 emissions. Commenter s stated that it should not matter whether the utility owns the un its. Commenter s concluded that customer

- owned and third

- party

- owned solar should be strongly encouraged because experience to date indicates that privately

- owned solar will spread fast if there are incentives to build it.

Comment 57 : The following comment refers to the EPA's push for wind and solar over other renewable energies.
Response 57 : The RE technologies that contribute to building block 3 are utility

- scale, zero

emitting RE technologies with significant commercial deployment over the past five year s. Other RE technologies, including certain types of biomass, may be procured as non

- BSER measures by affected EGUs in demonstrating compliance with the relevant emission performance standards. There is no mismatch between building block 3 and compliance because all of the RE technologies that constitute the building block 3 generation level are fully creditable for compliance. Refer to section VIII for additional information on the role of RE in state plans.

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

Commenters stated that EPA's proposal also arbitrarily prefers solar and wind generating sources over biomass. Commenters said EPA treats biomass as zero

- carbon in setting states' goals but suggests it will not count as z ero

- carbon in compliance, and that this mismatch occurs as a result of EPA's method of calculating each state's renewable energy potential. Commenters said because EPA bases the level of renewable potential in each state on regional renewable energy standa rd policies, which at times include biomass, the calculation of state targets assumes biomass will count as zero

- carbon renewable energy; however, EPA indicates that the Agency is preparing an updated accounting framework that it expects states to use when determining the extent to which biomass contributes to compliance, suggesting that not all biomass generation will be considered zero

- carbon. Commenters said this would cause EPA to treat biomass721 emissions differently when calculating a state's goal and w hen calculating state compliance with the goal. Commenters concluded that EPA has not justified such a distinction and, therefore, has acted in an arbitrary manner.

Comment 58 : Solar Energy Measures are Adequately Demonstrated Because They are Currently Being Used by Utilities and Other Owners of Affected EGUs.

Response 58 : The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, which is described in section V.E.6 of the preamble and in the GHG Mitiga tion Measures TSD. Utility

- scale solar PV and CSP directly contribute to building block 3 generation levels, while other solar technologies are available to affected EGUs as non

BSER measures in demonstrating compliance with the relevant emission performa nce standards.

Distributed technologies, as a demand

- side resource, present unique data and technical challenges (such as the role of evaluation, measurement and verification (EM&V) procedures in verifying their production, the diverse economic incentives of different parties involved in their deployment, and the variety of grid integration policies and conditions across potential deployment sites) that complicate identifying a technically feasible and cost

- effective level of generation. Consequently, the E PA is, at this time, choosing not to include distributed technologies as part of the BSER (although, as explained in section VIII.K of the preamble, distributed RE technologies that meets eligibility criteria may be used for compliance).

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

Commenters stated, renewable energy is an emerging alternative to traditional electrical generation but it has reliability issues. Commenters said, another shortcoming of renewables is that it is unable to generate large amounts of baseload energy as those produced by traditional units. Commenters said, renewables can only function as a supplement when natural resources, such as wind and solar, are available to supply power.

Commenters stated, s olar energy measures have been adequately demonstrated because they are currently being used by owners of affected EGUs, including utilities and independent power producers, to shift generation away from fossil resources and diversify their energy mix with cleaner resources. Commenters said, for example, NRG, Inc., which owns a significant energy portfolio comprised of both fossil and renewable energy assets, recently announced that it intends to reduce its carbon emissions by 2050 through divestment of dir ty fossil resources and investment in renewable resources such as wind and solar.

Commenters stated, in many states some solar and wind technologies have already reached grid parity, making the utilities' choice to install or purchase renewable energy ove r fossil resources a decision based solely on price. Commenters said, as previously noted, utilities can now sign solar power purchase agreements for $50

- $60/MWh.

Commenters stated, further, in some cases solar is even competitive with base load generatio n. Commenters said, for example, a new conventional natural gas combined cycle power plant costs $66/MWh while a new conventional coal fired power plant costs $96/MWh. Commenters said,722 in some cases the interest in solar generation has created a backlog of applications for interconnection; in others, utilities have combined solar procurement with their long term resource planning and procurement due to the competitive price and hedge value of solar relative to natural gas and other generation.

Commenters st ated, further, utilities have become heavily involved in the valuation and procurement of distributed PV through RPS policies, value of solar dockets, and direct ownership as the price of distributed PV drops and the benefits to both the grid and ratepayer s is being realized.

Commenters provided a discussion of solar procurement by entities that own or operate affected EGUs. Commenters said, each of the models discussed below shows that utility scale and distributed PV, as well as CSP and SHC, can be procu red by utilities to reduce generation (and emissions) from affected units.

1. Distributed PV is Adequately Demonstrated and Should be Included in Building Block 3 Because Utilities and Other Owners of Affected EGUs Currently Procure Distributed PV

Commen ters stated, utilities and other entities that own affected EGUs are procuring distributed PV on an increasing basis. Commenters said, some of the most common examples are residential systems, commercial systems, community solar, and distributed solar RECs . Commenters discussed examples of utility solar procurement programs and activities. Commenters also provided URLs to many of the solar procurement programs and activities within the tables followed by another table showing solar on the grid within the se rvice territory of each utility, as well as a table that shows current CSP projects. Finally, the commenters provided details on specific utility solar procurement programs.

2. Solar Procurement Methods

a. Solar Purchases

Commenters stated, purchases of s olar energy output can take on a number of different forms, but predominately are comprised of power purchase agreements (PPAs), feed

- in tariffs (FITs), value of solar rates, and excess generation net metering contracts. Commenters said, all can be
constru cted to various contract lengths and amounts. Commenters listed examples, and provided a list of further examples and program descriptions.

b. Solar Ownership

Commenters stated, this refers to ownership and operation of solar electricity resources as
ente rprise assets by entities that own or operate affected EGUs. Commenters said, the most common evidentiary benefits of the ownership model are the ability to provide stable prices, large

- scale market activity, and/or procurement risk mitigation. Commenters listed examples, and provided a list of further examples and program descriptions.

c. Unregulated Activities723 Commenters stated, this refers to business models adopted by unregulated entities, such as holding companies or unregulated subsidiaries of IOUs. Commenters said, these unregulated bodies principally participate in the solar markets either by developing and owning solar installations, by selling solar power output to load

- serving utilities, or by making financial investments in the solar industry. Commenters listed examples, and provided a list of further examples and program descriptions.

d. Community Solar

Commenters stated, in its most basic form, a utility community solar program consists of one or more larger utility

- managed photovoltaic proje cts from which customers can purchase a fractional share of the electricity output to virtually offset their electric bill as if the solar system were on their property, i.e. net metered. Commenters listed examples, and provided a list of further examples and program descriptions.

e. Property Leasing

Commenters stated, this topic captures programs where utilities or other entities have leased customer property for the installation of one or more solar projects. Commenters said, under this model, customers are typically compensated with a nominal annual lease payment in exchange for access to the property over a set contract term. Commenters listed examples, and provided a list of further examples and program descriptions.

f. Requests for Proposals

Commente rs stated, utilities often issue requests for proposals as part of their efforts to increase solar or renewable energy more broadly within their service territories. Commenters said, a utility

- issued RFP may either seek a specific single partner, or just a s likely announce that a variety of projects are being sought such that, when combined, allow for a target amount of solar/renewable energy generation to be reached. Commenters listed examples, and provided a list of further examples and program descriptio ns.
g. Merchant Solar Plants

Commenters stated, a merchant plant is a power plant built for the purpose of selling directly to the wholesale electricity market, rather than under contract. Commenters said, while merchant plants are traditionally fossil pl ants, solar companies are now constructing merchant plants that will sell solar energy directly in wholesale spot markets. Commenters said, the off takers in these markets are generally utilities that may choose to purchase from a solar plant rather than a fossil plant, which allows utilities to reduce emissions from their overall energy mix.

Commenters provided an example:

First Solar Barilla PV Plant: Commenters said, First Solar has recently completed the initial 18MW phase of the Barilla PV plant in Tex as, the first plant in the state to operate without a power purchase agreement. Commenters said, this merchant solar plant, located in West Texas, will instead sell electricity on Texas' ERCOT grid spot market.724 h. Solar REC Purchases

Commenters stated, uti lities around the country purchase solar RECs and distributed generation renewable energy credits (RECs) from solar systems to comply with state renewable portfolio standards. Commenters said, one of the primary motivations of such standards is to shift
ge neration away from affected EGUs and towards lower emitting renewable energy resources. Commenters said, currently, 23 states and the District of Columbia have renewable portfolio standards that include solar and distributed solar carve

- outs. Commenters sa id, under these requirements, utilities are required to purchase solar renewable energy credits (SRECs) from distributed solar systems that are then used to reduce the utility's overall reliance on carbon emitting resources. Commenters said, a utility will generally issue an RFP to purchase RECs when purchased in large quantities. Commenters said, the primary goals of state solar requirements are to reduce emissions, stimulate economic activity, hedge against fossil fuel prices, and improve grid resiliency and reliability through increased solar deployment. Commenters said, these goals are clearly aligned with the requirements for establishing the BSER as set forth under 111(d). Commenters said, for a full list of solar RPS requirements, see DSIRE Solar Poli cy Guide.

Commenters provided examples:

Nevada Energy Integrated Resource Plan: Commenters said, Nevada Energy IRP counts distributed PV towards the NV RPS, so distributed PV penetration is tracked closely and is included as part of the utilities' overall resource plan.

New Jersey RPS section 14:8

- 2.1 Purpose and scope:

Commenters said, the purpose and scope of the NJ RPS states: "(a) Each supplier/provider, as defined at N.J.A.C. 14:8

- 1.2, that sells electricity to retail customers in New Jersey, shall inc lude in its electric energy portfolio electricity generated from renewable energy sources. This subchapter is designed to encourage the development of renewable sources of electricity and new, cleaner generation technology; minimize the environmental impac t of air pollutant emissions from electric generation; reduce possible transport of emissions and minimize any adverse environmental impact from deregulation of energy generation; and support the reliability of the supply of electricity in New Jersey."

New York RPS Objectives (Case 03

- E

- 0188):

Commenters said, the objective of the NY RPS states: "New York's Environment: improve New York's environment by reducing air emissions, including greenhouse gas emissions, and other adverse environmental impacts on N ew York State, including upon underserved communities, of electricity generation..."

i. Utility Engagement in the Valuation of Distributed PV

Commenters stated, as distributed PV generation becomes a larger portion of the energy mix, many utilities are wor king to properly value distributed PV generation. Commenters said, currently, there have been 15 value of solar studies or proceedings undertaken by states. Commenters said, these proceedings involve dozens of stakeholders engaging in a robust725 analysis of the benefits and costs of solar to the utility, ratepayers, and the grid. Commenters said, in addition, there are active dockets in Louisiana, South Carolina, and New York evaluating the benefits and costs of distributed PV.

Commenters stated, finally, the graph below shows methods that utilities have used to procure solar energy outside RPS requirements in the past 12 months (Nov. 2013

- Nov. 2014). Commenters provided a map showing utility procurement outside the RPS: 3 GW in 12 months.

Commenters stated, each of the models discussed above shows that utility scale and distributed PV, as well as CSP and SHC, can be procured to reduce generation (and emissions) from affected EGUs.

Comment 59 : Commenters stated that solar energy measures are adequately demons trated

Response 59 : The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, which is described in section V.E.6 of the preamble and in the GHG Mitigation Measures TSD. Utility

- scale solar PV and CSP di rectly contribute to building block 3 generation levels, while other solar technologies are available to affected EGUs as non

BSER measures in demonstrating compliance with the relevant emission performance standards.

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

Commenters stated, the utilities that own the covered sources affected by the EPA proposed rule are already including solar measures as a way to comply with RPS policies, which are intended to diversify state energ y portfolios and reduce carbon emissions. Commenters said, in many states solar technologies have reached grid parity, making the utilities choice to install or purchase solar energy rather than conventional generation resources based solely on price. Comm enters said, in some cases the interest in solar generation has created a backlog of applications for interconnection; in others, utilities have combined solar procurement with their long term resource planning and procurement due to the competitive nature of solar relative to natural gas and other generation.

Commenters stated, utilities are including solar measures through various approaches. Commenters said, for example, Colorado's largest utility, Xcel Energy, has installed 87 MW of utility

- scale solar with an additional 170 MW planned. Commenters said, this includes solar projects which are being purchased for 25

- year Power Purchase Agreements at rates competitive with the long

- term forecast for natural gas

- fired generation. Commenters said, through th e Solar*Rewards program, more than 19,800 Colorado customers have installed PV systems, leading to more than 200 MW of distributed solar generation.

Commenters stated, Clean Energy Collective, one of the pioneering solar garden developers based in Colorad o, recently opened the 8th and 9th arrays in Colorado as part of Xcel Energy's Solar*Rewards Communities program. Commenters said, combined, CEC's power contribution to the Xcel Energy grid is over 4 megawatts. Commenters said, CEC now operates 16 communit y solar projects in Colorado.726 Commenters stated, other utilities also have ambitious solar energy programs. Commenters said, the city of Fort Collins municipal utility, for example, chose 20 projects totally 4.3 MW last winter as part of its Fort Collins S olar Power Purchase Program (SP3). Commenters said, the objective of the SP3 is to procure new locally installed solar capacity to help meet the community's renewable energy commitments under the Colorado Renewable Energy Standard (RES). Commenters said, t hese projects will be located on a commercial customer's property with Utilities purchasing the electric output of the project under an extended contract. Commenters said, Fort Collins also has a small PV Rebate program which is so popular that the 2014 pr ogram "sold out'' in the spring when all 2014 rebate funds were reserved for 72 residential rebate requests. The utility is also selling shares in a Community Solar Garden.

Commenters stated, Colorado Springs Utilities, another large municipal utility, has also found solar gardens popular. Commenters said, before construction began this year, SunShare LLC sold all of the power that will be generated by a 2 MW solar garden. Commenters said, the Pikes Peak Library District, Security Water District and the Uni versity of Colorado at Colorado Springs joined the city of Manitou Springs and hundreds of individual consumers bought the
power.
Commenters stated, numerous Rural Electric Associations (REAS) in Colorado also have solar programs. Commenters said, several offer rebates for rooftop systems. Commenters said, others have found success with community solar projects, including Holy Cross Energy, San Miguel Power Association and United Power.

Commenters stated, these examples of utility ownership of solar highl ight the fact that solar is adequately demonstrated, and that utilities consider solar projects to be, not only a part of the best system of emission reduction, but part of prudent resource planning.

Comment 60 : Solar Energy Measures are Adequately Demons trated

Response 60 : The resources and data provided in this comment were valuable in finalizing the building block 3 methodology, which is described in section V.E.6 of the preamble and in the GHG Mitigation Measures TSD. Utility

- scale solar PV and CSP d irectly contribute to building block 3 generation levels, while other solar technologies are available to affected EGUs as non

BSER measures in demonstrating compliance with the relevant emission performance standards.

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

Commenters stated, the EPA must include all forms of solar, including distributed solar, in its final determination of the BSER. Commenters said, distributed solar, utility solar and CSP are all a system of emissi ons reduction that is technically feasible, is implemented at reasonable cost, is driving solar innovation, and does not negatively impact the electric system. Commenters said, further, these forms of solar energy are adequately demonstrated to reduce emis sions from covered sources. Commenters said, for these reasons, EPA must include solar as part of building block 3 in its determination of the best system of emissions reduction.727 Commenters stated, the utilities that own the covered sources affected by the EPA proposed rule are already including solar measures as a way to comply with RPS policies, which are intended to diversify state energy portfolios and reduce carbon emissions. Commenters said, in many states solar technologies have reached grid parity, making the utilities' choice to install or purchase solar energy rather than conventional generation resources based solely on price. Commenters stated that in some cases the interest in solar generation has created a backlog of applications for interconne ction; in others, utilities have combined solar procurement with their long term resource planning and procurement due to the competitive nature of solar relative to natural gas and other generation.

Commenters stated, utilities are including solar measure s through various approaches [and provided two examples, SMECO Solar, and Constellation Energy Group]. Commenters said, these examples of utility ownership of solar highlight the fact that solar is adequately demonstrated, and that utilities consider solar projects to be a part of the best system of emission reduction.

Comment 61 : Commenters stated that EPA's preamble and its interpretation of "affected entity" in the preamble to the Rule is invalid, explaining that the proposed Rule instructs that state plans must achieve the "identified performance level . . . in Table I . . . for affected entities in [each] state." 79 Fed. Reg. at 34951 (emphasis added). Commenters noted, "Affected entities," in turn, is defined as "[a]n affected EGU, or another entity with obligations under this subpart for the purpose of meeting the emissions performance goal requirements in these emission guidelines." Commenters said nuclear plants play a critical role in displacing carbon

- intensive energy sources, thereby assisting s tates in "meeting the[ir] emissions performance goal." Therefore, commenters noted that nuclear plants fit squarely within the definition of "affected entity." Commenters said, as an "affected entity," by the terms of the Rule, states can rely on nuclear
p lants to achieve their "identified performance level . . . in Table I." However, commenters believed EPA's preamble attempts to re

- interpret the proposed Rule in a manner inconsistent with the clear text of the proposed Rule, which is impermissible. See C hristensen v. Harris Cnty., 529 U.S. 576, 588 (2000). Specifically, commenters stated that the preamble attempts to artificially limit the definition of "affected entity" from an "entity with obligations . . . for . . . meeting the emissions performance go al requirements[,]" to one in which EPA limits what entities states can use to meet their emission guidelines, such as only allowing 6% of generation from nuclear plants to be included. Commenters stated that this limiting construction is contrary to the b road definition of "affected entity" in the proposed Rule and is therefore impermissible.

Response 61 : EPA has decided not to include this provision in the final CPP. New, existing and under

- construction nuclear are not affected EGUs, nor are they included in the BSER. Generation from new or uprated nuclear capacity may be used to adjust the rate of an affected EGU

.