## MEMORANDUM

**DATE:** 11/10/14 **FROM:** Ken Mitchell/EPA Region 4 **TO:** Clean Power Plan for Existing Power Plants; Docket Id: OAR–2013 - 0602 **SUBJECT:** Discussion of the Clean Power Plan with Tennessee Department of Environmental

Quality
**SUMMARY :**  

### Region 4 provided information on the Clean Power Plan to the Tennessee Department of Environmental Quality on 7/1 5 /14 

### . The Clean Power Plan for Existing Power Plants was p roposed on June 2, 2014.
**ATTENDEES :**  **EPA** Beverly Banister/EPA R4 Keith Goff

/EPA R4 Ken Mitchell/EPA R4 Other EPA R4 staff Janet McCabe/OAR HQ Joe Goffman/OAR HQ Reid Harvey/OAR HQ Other EPA OAR HQ staff **External Stakeholders** Bob Martineau/TDEC Michelle Walker/TDEC Kendra Abkowitz Brooks/TDEC Katie Southworth/TDEC Other TDEC Staff **ATTACHMENT Advance Questions for Discussion of the Clean Power Plan wit**  **h Tennessee Department of** 

**Environmental Quality on 7/1**  **5 /14**  **First Activity :**  We would like a step
- by
- step walk through of how EPA applied the developed BSER (Building Blocks 1
-4) to Tennessee, including all data sources utilized, calculations performed, assumptions made, modeling or projecting done, etc.... , to reach the interim and final rates. We expect that this activity will bring up many questions that may also be covered below as specific questions. **Second Activity** : We do not fully understand EPA’s explanation as to how states and utilities that took early actions to reduce carbon emissions see a benefit of those early actions in the guidelines. We would like to walk through specific examples in Tennessee where TVA made choices about specific coal plants, but at different points in time.

 **Example 1** : John Sevier in Rogersville, Tennessee .  **Example 2** : Allen: TVA now considering retirement and conversion to NG or other options. **Questions :**  **PERFORMANCE STANDARD** 1. Understanding that EPA set the overall BSER by developing each of the Building Blocks, why did EPA also feel it was necessary to apply the BSER to each state to set the performance standard instead of letting the state’s do that in their plans? 2. EPA has s uggested that states have no ability to appeal or otherwise change their emission rates once the guidelines have been finalized. How does that not equate to EPA setting the performance standard for the states? 3. What happens if a state, in submitting its plan, presents a demon paradi stration that it cannot achieve what EPA has set as BSER in one building block as applied to its state and also submits documentation that it cannot “make
- up” for that reduction in the other building blocks? 4. We would like to con firm that the interim rate must be achieved as an average over the interim compliance period
- not just the rate that is met in year 2029. If that is the case, what is the rationale behind requiring the multi
-year average vs. achieving the rate in 2029? D oesn’t that remove flexibility for the states that EPA has indicated the Guidelines give them? Doesn’t it suggest that EPA is directing the timing of state action as well as setting the performance standard for states? **AFFECTED SOURCE** Has EPA looked at th e possibility that some facilities may become “affected sources” at a later date due to a change in use? How should states deal with this possibility? (the new source definition is based on net output sold to the grid, not purely capacity)**COAL**

1. Does the 6% heat rate improvement possible set in Building Block One reflect what will happen at coal plants when their new dispatch reality is to “follow the load” vs. being used a base load plants? If so, how did EPA specifically factor that into the 6% improvem ent possible determination? **SHIFTING CAPACITY TO NGCC** 1. 70% seems like a high number for these facilities, has EPA considered how operation of NGCC at that level might have an effect on the useful life of the facility? Are there any examples of plants that c onsistently run at that level over the life of the plant such that we know, today, what impact that has on the plant’s useful life? Did EPA evaluate how any reduction in useful life of the plant might impact the investments made at those plants in its exa mination of the cost of the Guidelines? 2. EPA and EIA estimates for available natural gas reserves suggest that there will be enough to meet future demand. Has EPA considered the application of Guidelines that will affect natural gas recovery and distributio n in its IPM runs or other analysis? (some of those are not final, and are mentioned in the RIA) **RENEWABLE ENERGY** 1. How can states take credit for long
-term RE power purchase agreements where the RE is generated in another state? Can this be done through an MOU without being incorporated into a multi
- state plan? Will the generating state have to reflect the “loss” in their plan? 2. Combined heat and power
- how do we show that this is offsetting grid demand? 3. Off
-the
- grid RE
- how can states show that this is offse tting grid demand? 4. Can states include hydro as an abatement measure in state plans? If not, why when all other forms of RE can be counted? What is the rationale behind the distinction there? 5. Please explain what new and expanded hydro potential EPA considered in their analysis. **NUCLEAR** 1. Please explain the 6% applied to existing nuclear capacity in states where the facilities are clearly not “at risk” of being shut down. What is the rationale o f requiring this nationally? 2. Does the “to
- be
- constructed nuclear calculation” consider the possibility in variance of capacity of the final nuclear reactor? 3. What is EPA’s rationale on including “to
- be
- constructed” nuclear in Tennessee, Georgia and South C arolina that has not received final permits and cannot, as of the date of the Guidelines, serve the market without those permits? Did EPA consider discounting that nuclear amountapplied to these states given the uncertainties that may still exist at thos e facilities? This may

help these states in meeting the required “average” over the interim compliance period. 4. Will EPA allow a state to adjust their rate should a nuclear facility not be constructed on time, or should the facility have to shut down (fo r example, in the case of natural disaster or for a national security issue)? **ENERGY EFFICIENCY** 1. We would like to generally discuss what EPA reviewed and considered when applying the BSER to Tennessee for energy efficiency and discuss, in greater detail, qu estions below regarding state resources to credit energy efficiency programs within Tennessee’s state plan. **RELIABILITY/ TRANSMISSION** 1. It appears that the IPM model runs assume that future years will be operating under conditions where grid availability/ capacity is sufficient to meet the needs of the system. How are the costs of new transmission and upgrades considered in your analysis? Is it considered as a part of the cost of new generation (for example, IGCC plants), or is it generally allocated acro ss the board? 2. How might states credit new and upgraded transmission? (especially in multi
- state regional delivery context) 3. How might states credit new and upgraded distribution? 4. Please talk generally about how demand response might be factored into a st ate plan. How can that be reported and what demonstration will be required? Also, general enforceability issues here
- how might that work? What does EPA expect in plan demonstrations? **STATE RESOURCES** 1. Recognizing that not all states have PSC, PUC driving st andards for EE and RE programs, is EPA working on a calculator or some kind of a tool that will help states calculate the value of EE and RE program measures using a standard protocol for calculation of credits? The AVERT tool, as we understand it, is sim ply a conversion tool that calculates emission reductions from energy reduction inputs. States without the built
- in requirements of robust EM&V protocols need tools to assist in determine how to appropriately credit EE and RE programs that may be outside the utility programs (and perhaps for some utility programs). What is EPA doing to develop tools for states in these circumstances? 2. Can EPA provide technical assistance with regard to evaluating standard approaches for EM&V of EE and RE? 3. EPA has indicate d that Integrated Resource Planning Modeling can be used to support state plans. What happens when that modeling covers a multi
- state region, but not the entire multi
state region? Is EPA developing modeling tools for states to use or will EPA provide st ates access to its modeling tools?4. Can EPA assist states with modeling tools necessary to approach converting to a mass
- based

approach? If so, when? TN does not have a PUC and the state does not currently have that kind of modeling capability or experience . **REPORTING REQUIRMENTS** 1. What tools will EPA provide states to assist us in complying with our reporting responsibilities? Standard reporting format, method, guidelines? **STATE PLAN DEVELOPMENT** 1. What if a state would like to do an individual plan that has shared elements with another state? 2. Please explain options for enforcement of policies such as building codes and appliance standards, and how these might look in a state plan. Voluntary EE pro grams such as state Lead
By- Example programs are another example.