December 20 , 2013

Mr. Joseph Goffman Counsel to Assistant Administrator Office of Air and Radiation U.S. EPA 1200 Pennsylvania Ave, NW 20004 Washington, D.C. (via email) Dear Mr. Goffman: The American Public Power Association (APPA) is the national service organization representing the interests of over 2,000 municipal and other state - and locally - owned, not - for-profit electric utilities throughout the United States (all but Hawaii). Collectively, public power utilities deliver electricity to one of every seven electricity consumers (approximately 47 million people), serving some of the nation’s largest cities, as well as utilities in Puerto Rico, American Samoa, Guam, Northern Marianas Islands, and the U.S. Virgin Islands. However, the vast majority of APPA’s members serve communities with populations of 10,000 people or less. Overall, public power utilities’ primary purpose is to provide reliable, efficient service to local customers at the lowest possible cost, consistent with good environmental stewardship. Public power utilities are locally created governmental institutions that address a basic community need: they operate on a not- forprofit basis to provide an essential public service, reliably and efficiently, at a reasona ble price. APPA appreciated the opportunity to speak at the November 8, 2013 l istening s ession held by the Environmental Protection Agency ( EPA) on its expected proposal to address greenhouse gas (GHG) emissions from e xisting fossil - fuel fired power plants pursuant to Section 111 (d) of the Clean Air Act (CAA) . The association is providing these written comments on the expected existing plant rule in response to the request for such comments by the agency . APPA further references comments we filed with EPA in June 2012 on the original proposed New Source Performance Standards (NSPS ) for GHG emissions from new fossil fuel - fired power plants . 1 While the agency withdrew that proposal earlier this year, APPA believes much of we expressed in our comments is relevant to the forthcoming NSPS for existing power plants proposal . In November 2013, APPA adopted a set of policy principles on NSPS for GHG emissions from existing fossil fuel - fired power plant s . A copy of the principles is attache d . The principles outline policy positions APPA believes must be adhered to in any regulatory regime to reduce GHG emissions from existing power plants under Section 111(d) of the CAA . Issues address ed by the principles include the need for the standards to be technologic ally achievable ; that they do not impose undue costs on consumers ; that they do not jeopardize electric reliability or create any reliability gaps; among other things. Most

1 See Docket Number EPA - HQ - OAR- 2011 - 0660 or http://www.publicpower.org/files/PDFs/APPA -NSPS Comments - WithAttachments - Final.pdf

### Joseph Goffman

Page 2 December 20, 2013 importantly, the principles stress the need for EPA to recognize the key role states have in developing and implementing Section 111(d) with maximum flexibility and discretion. 

### Public Power’s Gen **eration Portfolio** Public power utilities provide electricity to approximately 14% of the population, and own about 9.8 percent of the generating capacity in the country. Further, of the 2,010 public power utilities nationwide, only about 650 own any ge neration , much of it of relativity small size. The chart below shows public powers generation portfolio: 

### Credit for Reduction of **Carbon Dioxide ( CO**  **2** 

### ) **Made to Date** Although worldwide CO 2 emissions have not decreased , 2 they have decreased significantly in the U.S. due to several factors. 3 They range from increased use of renewable energy sources for generation to increased use of energy efficiency and demand side management to reduce load . Other factors include the retirements of coal - fired generation units, conversion of coal - fired units to natural gas - fired units, and flat electricity demand because of the sluggish economic recovery . To date, APPA is aware of the announced closure of 17 coal fired power plants (some with multiple generating units) in 2013 . Based on EPA’s assessment of annual output emission rates for CO 2 , 4 as well the increasing use of renewable resources by public power utilities, 5 APPA estimates that collectively, public power utilities have thus far reduced their emissions by more than 39 million metric tons of CO **2** since 2005. APPA believes EPA and state environmental agencies should give electric utilities credit for the ir CO 2 reductions that resulted from their increased use of renewable energy resource s , fuel switching to lower or non - emitting resources, and power plant closures. APPA agrees with EPA Administrator Gina McCarthy’s many public statements regarding the agency’s ability to “ measure the results, not the motivations .” 

### CO **2** 

### Reductions from **Future Coal** **- Fired Power Plant R** **etirements** In addition, while APPA does not know how many utilities will switch their remaining coal - fired power plants to natural gas, there have been many reports from organizations such as SNL, Bloomberg, the North American Electric Reliability Corporation (NERC ) , and ScottMadden Associates that predict between 62 to 110 GW of coal - fired power plants will be replaced with new natural gas - fired power plants . Such fuel switching from coal to natural gas will result in the reduction of CO 2 emissions by

2 On December 3, 2013 , International Energy Agency’s World Energy Outlook indicated that CO 2 emissions from Europe, China , and Japan are expected to rise by 20 percent by 2035 largely due to the increased use of fossil fuels in Europe, Japan , and China. 3 These decreases in CO 2 also reflect changes in industrial fuel switching from coal to natural - gas and increased efficiency standards in the automobile sector , along with natural auto fleet turnover. 4 http://www.epa.gov/cleanenergy/documents/egridzips/eGRID2012V1_0_year09_GHGOutputrates.pdf 5 Based on an analysis of Ventyx data, 2013. **Public Power's Generation Portfolio** 

### Joseph Goffman

Page 3 December 20, 2013 approximately half if the units are dispatched roughly the same amount of time. EPA should factor these reductions in its proposed NSPS for existing fossil fuel - fired power plants and give credit for them . 

### Importance of Cooperative Federalism **in Addressing CO 2**  

### Regulation EPA is not required to set an existing N SPS for electric generating units ( EGU s) . However, the President has directed the agency to do so. APPA is strongly concerned that such a standard could harm residential, commercial, and industrial electric customers by signi ficantly increasing electricity costs , as well as impact electric reliability in certain parts of the country . The likelihood of these negative impacts will increase substantially if the NSPS is based on un - commercialized and /or undemonstrated technologies , such a s carbon capture and geologic storage and /or if the standard is implemented too quickly . For these reasons and others, states must retain primacy in developing and implementing the NSPS for existing sources. APPA believes it is clear that Congress gave s tates the primary authority to “establish standards of performance for existing sources ” ( in contrast to the exclusive authority it gave to EPA to set NSPS for new sources ) . Section 111(d) of the CAA gives states broad discretion to develop such plans, and to implement and enforce them . Moreover , Section 111(d)(2) state s that EPA shall approve state plans that are “satisfactory” under S ection 111(d) . 

### One Size D **oes Not**  **Fit A ll**  State flexibility is critical to achieving CO 2 reductions in a reasonable and cost - effective manner. Many s tates have renewable resource and/or energy efficiency requirements that are already reducing CO 2 emissions. Most APPA members comply with these state regulations even though they are not legally required to do so . Th e s e utilities should receive credit for these reductions in the state NSPS . Some states have implemented GHG reduction requirements ahead of EPA. In addition, because the age , type of EGU , and fuel sources can vary considerably by state , they should be given maximum flexibility to accommodate these varying factors. In November 2013, the National Association of Regulatory Utility Commissioners (NARUC ) passed a resolution6 calling for c ooperative f ederalism and general deference to state agencies. State energy and air officials have echoed similar views on the need for cooperative federalism at a number of public meetings held by think tanks on NSPS for existing power plants . Virtually all states have urged EPA to take slow, deliberative steps on NSPS for existing power plants and to recognize the need for states to exercise their maximum authority. This view of state primacy has even come from states that took early action to reduce CO 2 emissions under state regulations. States are in the best position to determine how to address renewables, energy efficiency , and related programs in their ju

risdiction . They may want to address baseline issues slightly differently , just as they mi ght want to use their own existing methods of measurement, monitoring , and verification . EPA should not make State Implementation Plan (SIP) approval contingent upon “cookie - cutter” approaches to verification. States should be encouraged to use their own existing systems. The proposed NSPS for existing plants, like the re -proposed NSPS for new power plants released on Sept ember 20, 2013 , should evaluate all fuel type s differently. Separate NSPS standards should be set based upon the fuel type, age of plant, remaining useful life of the plant, and consider other impacts on 6 http://www.naruc.org/Resolutions/Resolution on Increased Flexibility with Regard to the EPAs Regulation of Greenhouse Gas Emissions from Existing Power Plants.pdf

### Joseph Goffman

Page 4 December 20, 2013 plants owner s, such as stranded assets or debt. In addition, the regulations should take into consideration related infrastructure issues, such as the proximity of CO 2 and natural gas pipeline s , natural gas storage, etc . to existing power plants. 

### E **PA Should Regulate the**  **Source of the CO 2**  

### at the Point of Generation **and Be Achievable**  **by “Affected**  **Sources ,**  **” Not “Systems”**  Some have advocated for a broad “systems -based” approach for regulating existing power plants under S ection 111(d). Such an approach would require EPA to set a standard based on the achievab ility of a standard for the utility industry as an entire “system . ” However, the CAA does not allow EPA to prescribe a

n NSPS that is only achievable by individual sources trading credits nationally if it is not based on a technology that is “adequately demonstrated” and achievable by individual ly- covered sources. Once the NSPS has been established based on what is adequately demonstrated and achievable for an “affected source, ” s tates are free to implement the standard more flexibly , including allowing in - state trading . E ach state should have the freedom to make the determination as to participation in bilateral or multistate coordination or trading with other states. 

### CCS **Requirements Should Not Be Imposed on Existing**  **Coal -**  **or Gas -**  **Fired Generation**  Despite EPA assertions in the re -proposed NSPS for new sources that c arbon c apture and s equestration (CCS) is adequately demonstrated, this is not true . Even though some plants have invested in piloting CCS technology , it has not been commercially demonstrated. The CCS projects EPA points to are still in development or have barely commenced . At thirteen meetings since 2006 , APPA has provided EPA with six white papers on the limitations of CCS . 7 APPA appreciates recent public comments by EPA Administrator McCarthy that CCS is not appropriate for existing power plants. We hope the proposed NSPS for existing power plants will match what Administrator McCarthy has stated regarding the inappropriateness of CCS for such power plants. 

### EPA and S **tates Should**  **R ecognize**  **U nique**  **C haracteristics**  **of Public Power When Reviewing Feasibil** **ity** APPA believes that EPA and state regulatory agencies should recognize the key characteristics of public power utilities, such as consumer ownership, not - for-profit operation, relatively small size, limited generation ownership , and other factors , when setting NSPS and related implementation deadlines. APPA has highlighted these unique characteristics of public power to EPA at several meetings (including the Small Entity Representative meeting held in the summer of 2012 and at a recent meeting convened by Resources for the Future (RFF) on October 28, 2013 , at the request of the agency . Additionally, these issues were discussed with Administrator McCarthy, Acting Assistant Administrator for Air and Radiation Janet McCabe , and Mr. Goffman at a November 13, 2013, meeting with APPA and members of its CEO Climate Change and Generation Policy Task Force . 

### C **onclusion** APPA believes that Congress should take the lead on addressing greenhouse gas emissions from power plants. But since Congress has not addressed this and EPA has decided to regulate GHG emissions from
7 See http://www.publicpower.org/files/HTM/CCS.html

### Joseph Goffman

Page 5 December 20, 2013 power plants , state governments should take the lead on doing so. They are the most knowledgeable about the generation portfolios of utilities operating in their borders and work closely with utilities on a variety of environmental issues. States are in the best position to determine how to most effectively reduce CO 2 emissions from power plants while protecting the interests of electric consumers. S tate environmental and energy regulatory agencies have a greater ability to understand the unique issues facing utilities operating in their boundarie s than EPA does . APPA looks forward to providing more detailed comments during the official comment period , as well as meeting with EPA before the proposed rule is sent to the Office of Management and Budget (OMB) for review in early 2014 . Sincerely,

James J. Nipper Senior Vice President of Government Relations Attachments( 1 )

### Attachment 1**APPA PRINCIPLES ON EPA RULEMAKINGS TO ESTABLISH STANDARDS OF**  **PERFORMANCE**

**FOR EXISTING ELECTRIC GENERATING UNITS UNDER SECTION 111(d) OF THE CLEAN AIR ACT** 



### December 2013 The issue of global climate change needs to be addressed. Since the Clean Air Act (CAA) was not designed for regulation of carbon dioxide or other greenhouse gases (GHGs), APPA believes Congress should take the lead in addressing the issue. However, it is very unlikely Congress will enact broad climate change legislation in the near future due to a lack of consensus about whether and how to address the issue. Partly due to this stalemate in Congress, the President has instructed the Environmental Protection Agency (EPA) to exercise the discretion given to it by the U.S. Supreme Court to regulate GHGs. Thus, APPA will work with EPA and the states to develop a regulatory regime that is consistent with Section 111(d) of the CAA, is workable for public power utilities and their customers, and adheres to the following principles:

 Is based on commercially demonstrated, cost - effective, and available technology;  Recognizes the substantial emission reductions from the power sector that have already occurred and will continue to occur as a result of unit retirements, fuel switching, energy efficiency programs, and increasing use of renewable and other non - emitting or lower emitting energy sources, both voluntarily and pursuant to state mandates, among other factors;  Recognizes the key role states have in developing and implementing Section 111(d) with maximum flexibility and discretion;  Provides credit for early action;  Minimizes costs to all consumers to keep electricity affordable;  Protects the ability of U.S. industries to compete in world markets;  Does not jeopardize reliability or create any reliability gaps;  Recognizes regional and state diversity ;  Recognizes that generation resources can serve load in multiple states;  Recognizes key characteristics of public power utilities, such as consumer ownership, not - forprofit operation, relatively small size, limited or joint generation ownership, and other factors;  Prevents consumers of load- serving entities from paying stranded costs for existing fossil - fired generation units, allows existing fossil - fired units to operate for their remaining useful life, and ensures utilities can manage risks on investments, including regulatory risks, they make to comply with the state programs implemented under Section 111(d);  Provides sufficient time for compliance, including incremental approaches; and  Considers the impacts on different wholesale electricity market des igns and operations.