From: Frey, Nathan J. <Nathan_J._Frey@omb.eop.gov>

Sent: Friday, July 24, 2015 1:29 PM

To: Culligan, Kevin; Harvey, Reid; Vasu, Amy

Cc: Szabo, Aaron; Grossman, Andrea

Subject: Summary of Interagency Comments Under EO 12866 and 13563 -- Revised CPP RIA

and Goal Computation TSD with mass based approach

Attached please find a summary of interagency comments under EO 12866 and 13563 on the

latest revisions to the Clean Power Plan RIA and Goal Computation TSD.

Thanks and please let me know if you have any questions.

Nathan

<< SummaryofInteragencyCommentsUnder EO12866_13563_CPP_ RIA w Mass.docx >>

<< SummaryofInteragencyCommentsU nderEO12866_13563_CPP_ GoalComputation

TSDwMass.docx >>

## Summary	of	Interagency	Working	Com ments	on	Draft	Language	under

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1 *Major Comments

Reviewer notes that modeled scenarios are inconsistent with the requirements and flexibilities stated in

the preamble.

1. *Reviewer recommends changing the mass

‐ based scenario to one in which all states can trade

allowances with other states within their interconnect instead of the scenario in which each

state must achieve its goal independently (see page 3

‐ 9). The illustrative approaches modeled in

the RIA do not provide an equivalent comparison of rate to mass because the RIA examines a

rate case where EGUs can use energy efficiency savings or renewable generation occurring

within the interconnect for compliance, but a mass case where EGUs must reduce their

emissions within each state. The illustrative approaches modeled in the RIA offer EGUs in a rate

setting access to compliance instruments throughout the interconnect (e.g., a MWh of RE can be

used by any EGU within the interconnect to achieve their rate goal), but EGUs in a mass setting

access only to compliance instruments within the state (e.g., a MWh of RE only reduces the

need to buy allowances within the state that it was built, assuming it displaces fossil

generation). In the rule, mass

‐ based state plans have access to at least the same level of

flexibility as rate

‐ based state plans. In the rule, mass

‐ based state plans have access to at least

the same level of flexibility as rate

‐ based state plans. However, in the RIA, the mass

‐ based state

plan is modeled as though it has less flexibility, and therefore ends up with higher cost than is in

fact likely.

a. *At a minimum, reviewer suggests that EPA include the following comment when

describing the mass

‐ based approach, “In the rule, mass

‐ based state plans have access to

at least the same level of flexibility as rate

‐ based state plans. The mass

‐ based approach

modeled in IPM offers EGUs less flexibility than the modeled rate

‐ based approach,

because the modeled mass

‐ based approach does not allow trading between states. If

the available trading flexibility were modeled, the cost of the mass

‐ based approach

would be less than that modeled.”

2. *On page 1375 the preamble to 111(d) states: “Therefore, the EPA is requiring that states [with

a mass

‐ based plan]

... demonstrate that they have addressed the risk of leakage [to new NGCC]

in their mass

‐ based state plan and show that there is equivalency with a rate

‐ based approach.”

Reviewer notes that the current RIA shows (Table 3

‐ 11) that in 2030, leakage to new NGCC in

the mass setting is 107 TWh more than in the rate setting, representing about 41MMT. This

leakage is significant and the steps taken in the modeled approach should not be considered as

meeting the requirement of “addressing the risk of leakage” as stated in the preamble.

a. *Reviewer recommends that instead of modeling only a clean energy/RE set

‐ aside EPA

model instead the proposal in the draft federal plan which includes an clean energy/RE

set

‐ aside in addition to an output based set

‐ aside for existing NGCC, which would more

directly encourage utilities to reduce leakage to new NGCC. Reviewer understands that

modeling an output based set

‐ aside in IPM is challenging, but reviewer recommends

that EPA consider that option again.

b. *Alternatively, reviewer recommends that EPA explicitly state that, as indicated in the

preamble, states must do more than create a clean energy/RE set

‐ aside funded at 5

percent of allowances to address leakage to new NGCC. According to the preamble (pg

215) the example offered is both a clean energy/RE set

‐ aside and an output

‐ based set

‐

aside and not just the clean energy/RE set

‐ aside: “The EPA proposes that a state

allowance

‐ distribution methodology must address leakage by providing incentive to

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2 counteract leakage, e.g., by including allowance set

‐ asides like the output

‐ based

allocation and clean energy set

‐ asides detailed in section V.D.3, or other allocation

approaches designed to counteract leakage.”

c. *At a minimum, reviewer recommends that EPA clarify in the RIA (and in the preamble)

what they mean by “addressed the risk of leakage” such that states have some guidance

in understanding that the 41MMT of leakage modeled in the RIA is too much leakage.

Reviewer notes that, all else equal, less leakage to new NGCC would probably increase

the cost of the mass

‐ based plan.

3. *On page ES

‐ 5, reviewer notes that the scenario modeled in the RIA appears to be inconsistent

with the trading restrictions outlined on page 1352

‐ 1354 in the preamble. Trading between rate

‐

based states that do not have joint state plans “are only allowed for states that impose rate

‐

based emission limits for affected EGUs that are equal to the CO2 emission performance levels

in the emission guidelines.” Specifically, the RIA states: “the final rule provides additional

options to allow individual EGUs to use creditable out

‐ of

‐ state reductions to achieve required

CO2 reductions, without the need for up

‐ front interstate agreements.”

a. *Reviewer recommends modeling a rate

‐ based scenario that is consistent with the

preamble, namely, EGUs adopt subcategory specific emissions standards or states adopt

a blended rate with other states in which trading occurs.

b. *At a minimum, reviewer suggests editing the above sentence from the RIA to read as

follows, and also clarify this point in section 3.6: “In addition, the final rule provides

options to allow individual EGUs to use creditable out

‐ of

‐ state reductions to achieve

required CO 2 reductions, provided that the state has adopted the subcategory

‐ specific

emissions standards or has adopted an interstate blended agreement.”

Mass Trading Plan

1. *Reviewer recommends EPA clarify for the mass

‐ based approach what constraints on averaging

are applied to affected EGUs. Are the mass caps from the Goal Computation TSD applied yearly,

in steps (2022

‐ 2024, 2025

‐ 2027, 2028

‐ 2029), or are the constraints that the interim cap must be

met on average from 2022

‐ 2029?

2. *Reviewer recommends clarifying how the clean energy/RE set

‐ aside allowances are allocated.

Reviewer reiterates comment from the federal plan that the RE set

‐ aside should include energy

efficiency and all new zero emitting generation and renamed the clean energy set

‐ aside.

Rate Trading Plan

1. *Reviewer recommends EPA clarify for the rate

‐ based approach what constraints on averaging

are applied to affected EGUs. Reviewer recommends EPA clarify what rate goals were modeled

in the RIA: were the goals from the Goal Computation TSD applied yearly, in steps(2022

‐ 2024,

2025

‐ 2027, 2028

‐ 2029), or are the goals met on average from 2022

‐ 2029.

Cost Estimates

1. *Reviewer recommends that EPA include a discussion of why the annual costs for the mass

‐

based policy rise steadily from 2020 to 2030 but the annual costs in the rate

‐ based policy start

high in 2020, fall in 2025 and then increase in 2030.

a. *Additionally, with respect to Table 3

‐ 9, reviewer recommends further clarifying why

the Base Case has an increase in power sector generating costs. Why does the policy

decrease total power sector generating costs in 2025, but not in 2030?

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3 2. *Pages 3

‐ 19, 3

‐ 20, reviewer requests reconsidering the inclusion of additional MRR costs

referenced in the following sentence: “In addition, in the absence of specific information, EPA

assumed that 27 states with strong, state

‐ driven energy efficiency programs as documented in

the U.S. EPA’s Energy and Environment Guide to Action 1 would submit a plan under the state

measures approach, which adds to the state respondent burden.” This appears to be the only

attempt by EPA to predict what type of approach any state will take. Adding these MRR costs

appears to be inconsistent with the assumption that all states in both modeled cases adopt

identical approaches. In the absence of further analysis supporting a correlation between a

state’s existing energy efficiency policy and the likelihood that the state will choose a state

measures approach, reviewer is concerned with the assumption that 27 states will choose an

option that requires additional reporting costs. Reviewer recommends removing these

additional costs from the MRR estimates, and including in a footnote that different types of

state plans chosen by states could result in higher MRR costs.

Previously Submitted Comments about Modeled Cases

1. Reviewer recommends considering cases other than a blended rate case and mass case

– a good

option would be to include case where states select the two

‐ rate program (as proposed in the

Federal Implementation Plan). Reviewer notes that there is limited modelling experience with a

two

‐ rate program in the rule making or literature and thus believes that a model run would be

beneficial.

2. Reviewer recommends clarifying on page 1

‐ 4 that the proposed CPP is not designed to achieve a

socially optimal level of emissions reductions (because BSER is not designed to achieve a socially

optimal level of emissions reductions).

3. Reviewer recommends changing the mass

‐ based scenario to one in which all states can trade

allowances instead of the scenario in which each state must achieve its goal independently (see

page 3

‐ 9). This change is imperative because the current approach does not provide an

equivalent comparison between rate with trading and mass without trading.

4. Reviewer suggests clarifying on or around page 3

‐ 23 how the rate case in Table 3

‐ 11 reduces the

incentive for nuclear to operate relative to business as usual, resulting in the loss of 6

‐ 8GWh of

nuclear energy. Reviewer suggests revisiting the analysis to ensure nuclear is treated

appropriately.

5. Reviewer recommends revisiting the assumption that rate and mass approaches achieve the

same level of energy efficiency as discussed on page ES

‐ 7 (which states: “the level of energy

efficiency measures is determined outside of IPM and is assumed to be the same in the two

illustrative plan approaches.”)

6. Reviewer requests additional text clarification as to how the rate based goals relate to the single

state wide goal (page 3

‐ 7)

7. Reviewer requests clarifying in the modeled cases if states maintain their own rate targets

versus using blended rates, and whether the blended rates are single state or multi

‐ state.

1 U.S. Environmental Protection Agency. Energy and Environment Guide to Action: State Policies and

Best Practices for Advancing Energy Efficiency, Renewable Energy, and Combined Heat and Power, 2015

Edition. Available online at: http://epa.gov/statelocalclimate/resources/action

‐ guide.html.

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4 8. Reviewer requests information as to how IPM models ramping of individual units, if available.

(page 3

‐ 5)

9. Reviewer recommends short discussion as to how the model determines “avoided generation”

when compared to the base case scenario. (page 3

‐ 7)

10. Reviewer requests explanation as to how each compliance region achieves varying heat rates

(2.1

– 4.3%), yet all seem to be at the same cost ($100 / kW). Typically, higher heat rate

improvements cost more. (page 3

‐ 19)

Previously Submitted Comments about Assumptions

1. Reviewer recommends revisiting the assumption that costs for monitoring, reporting, and

recordkeeping costs are the same for the rate and mass cases (Footnote 5, ES

‐ 8). Reviewer

notes that these costs are likely to be higher in the rate based policy relative to the mass based

policy because only stack emissions have to be tracked under the mass based policy.

2. Reviewer recommends clarifying why (for example on page ES

‐ 17) the three assumptions

related to PM2.5 are the correct assumptions; whether they are conservative assumptions; and

how alternative assumptions would change the conclusions.

3. Reviewer recommends describing in further detail what drives the 109 MMT CO2 reductions in

2020 compared to BAU since this period is outside of the compliance start period of 2022.

Reviewer recommends explaining what the largest drivers of changes in emissions would be

over this period before the program starts and how emissions reductions are calculated or

prescribed in the model specification. This could be explained in more detail on page 3

‐ 10.

4. Reviewer recommends explaining in more detail, for example on page 3

‐ 4, the differences

between the RIA base case compared to that which was used in the June 2014 proposal. There

appear to be significant upgrades/changes from previous versions which lead to different

emissions outcomes and generation mixes and it would be helpful to understand more explicitly

what the differences are and what is driving the changes.

a. Reviewer specifically recommends stating any difference in generation that occurred

between the BAU assumptions for the June 2014 proposal and this RIA.

5. Reviewer recommends highlighting that available RE is limited to only hydro, utility scale PV,

wind, and geothermal in the compliance scenarios, likely underestimating potential. Reviewer

also recommends noting that distributed RE generation is a valid compliance method that is not

captured in the compliance scenarios. (Page 3

‐ 7)

6. Reviewer recommends indicating that restricting trading at the interconnect level in the rate

scenario limits actions that can be taken by Texas as compared to other states within an

interconnect. (Page 3

‐ 8)

7. Reviewer recommends clarifying the text to indicate that double

‐ counting of RE and EE

measures is not permitted at all under the rule, not just in this scenario, by editing the text: “ As

described in the rule preamble In this rate

‐ based scenario, specific generation (or avoided

generation) from EE/RE procurement may only be used once for compliance toward a state

goal;” (Page 3

‐ 9)

8. In AEO 2015, behind the meter generation of renewable energy and energy efficiency savings

are portrayed as reduced demand. Reviewer recommends noting that AEO 2015 demand

projections include reductions in demand due to distributed PV generation. Instead of showing

up as a valid compliance action, distributed PV shows up as a reduction in demand. This

inconsistency should be noted. (Page 3

‐ 11)

9. Reviewer recommends explaining why non

‐ hydro renewables decrease in the rate

‐ scenario

when compared to the base case. It is likely because of additional demand reductions, but this

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5 odd result should be made clear if that is the case. Similarly the small increase in the share of RE

in 2030 as compared to the base case is likely due to total demand reduction. Reviewer

recommends presenting the generation projection results also as a percentage of total demand

in table 3

‐ 11 and Figure 3

‐ 4. (Page 3

‐ 22)

10. Reviewer recommends using the most current version of the Social Cost of Carbon for

calculation of benefits.

11. Reviewer recommends altering assumptions related to energy efficiency in the analysis cases

such that a state’s projected energy savings are not below what is currently achieved or

required by existing state policies. If a state is currently achieving, or is mandated through an

existing EERS to achieve during the analyzed period, annual incremental savings of greater than

1%, then the analyzed cases should assume that the state continues to achieve its current level

of annual incremental savings, or the level of annual incremental savings mandated as part of its

EERS for a given year, whichever is greater. If this is not feasible, text should be included to point

out that this method is likely to underestimate the level of efficiency savings in the analysis.

12. Reviewer recommends clarifying, on 3

‐ 17, that the power industry’s “compliance costs”

appropriately include only the administrator cost portion of the total energy efficiency costs, as

these are the only costs that are born by the utilities and recovered through electricity rates (as

described on 3

‐ 14). Current text is unclear about what costs are included.

13. Reviewer recommends either noting the absence of concentrating solar power (CSP) in the

compliance scenario, or including it, as it is a valid BSER technology as of the latest Draft Rule.

(Page 3

‐ 7)

14. Reviewer recommends clarifying the methodology used to determine the electricity prices

reported under the base and policy scenarios, specifically explaining the costs that are included

when determining electricity prices.

15. Reviewer recommends describing the assumptions about the distribution of energy efficiency

measure lives for determining the costs and demand reductions from EE programs. These

distribution assumptions are referenced in section 3.6.2, but are not reported, and are also

relevant for the calculation of total savings by year described in section 3.6.1.

Previously Submitted Comments on the Labor and GDP Effects

1. Reviewer recommends considering analysis conducted by the Congressional Budget Office that

suggests that increased regulation of environmental pollutants at coal

‐ fired power plants could

boost GDP. See: statement of Douglas W. Elmendorf, Director, Congressional Budget Office,

before the Senate Budget Committee, Policies for Increasing Economic Growth and Employment

in 2012 and 2013 (November 15, 2011).

a. Specifically from page 49: “On balance, CBO expects that delaying or eliminating

[regulations regarding emissions from coal

‐ burning power plants] would reduce

investment and output during the next few years, because the response to the factors

that would tend to boost investment under those circumstances would probably be

smaller than the response to the factors that would reduce investment. One reason for

that conclusion is that the amount of investment in power plants other than that

spurred by those regulations is expected to be relatively small—adding less than 1

percent to total generating capacity each year between 2013 and 2035, according the

Energy Information Administration. Another reason for that conclusion is that the price

increases that will probably result from those regulations—EPA estimates that one of

the regulations will increase customers’ electric bills by about 4 percent—are not

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6 expected to occur for several years, so they probably will not have an appreciable effect

on household spending in the next few years.”

*New Technical Comments

1. *Page ES

‐ 2: The description of the 3 rd building block reads “substituting increased generation

from zero

‐ emitting generating units for reduced generation from affected fossil fuel

‐ fired

generating units.” Reviewer recommends clarifying if zero

‐ emitting generation only includes RE

or if has been expanded to include all zero

‐ emitting generators. Reviewer recommends EPA

clarifies exactly which zero

‐ emitting generators are included.

2. *Page 2

‐ 6: Reviewer notes that the 2012 column in Table 2

‐ 2 is probably listing 2013 EIA data.

Although it is not an exact match with the 2013 EIA data table, it is much closer to 2013 data

than the 2012 numbers. Reviewer recommends clarifying this table.

3. *Page 2

‐ 9, Transmission discussion: Reviewer recommends, on Pg. 2

‐ 9, clarifying what is meant

by “multiple areas” for monitoring/control of the system (e.g., are these balancing authorities,

grid operators?).

4. *Page 2

‐ 10, Transmission discussion: Reviewer recommends, on Pg. 2

‐ 10, changing that utilities

coordinate

.... to balance “their common generation and load needs” to “the system across their

respective service territories” to reflect the jurisdictions within which utilities’ decisions are

effective and to clarify that different utility service territories do not always have common

generation/load.

5. *Page 3

‐ 10, Section 3.6: Reviewer recommends adding a footnote to figure 3

‐ 1 noting that the

regional boundaries do not directly align with the interconnection boundaries (e.g., ERCOT does

not include all of Texas).

6. *Reviewer recommends clarifying on page 3

‐ 13 what year's generation is used to calculate the

annual incremental energy efficiency savings of 1 percent.

7. *Reviewer recommends clarifying what emission rate is used for new NGCC units in the IPM

model runs in the RIA. Is the rate for 111(b) used or a lower rate?

8. *Reviewer notes that all the references to analysis for Alaska, Hawaii, and the territories have

been removed from the RIA. Reviewer request clarification as to how and if EPA plans to set

goals for these entities and the corresponding justification.

9. *Reviewer recommends that EPA quantify the affect that the 5% RE set

‐ aside has on leakage

between affected and unaffected EGUs. Reviewer recommends including a discussion that

shows how much the leakage to new NGCC decreases between IPM model runs that include and

do not include an RE set

‐ aside (with everything else held constant). Reviewer recommends that

part of the discussion includes how 5% was chosen as the optimal level for the RE set

‐ aside.

10. * Reviewer believes that section 3.12 discussion social costs disproportionally emphasizes costs

related to energy efficiency expenditures and recommends moving the majority of the

discussion to the demand side efficiency TSD which is referenced. (page 345

‐ 47)

11. * Reviewer suggests that EPA staff review Table 2.1 “Summary of Employment Impact

Multipliers from Key Studies” in this study:

http://www.pnnl.gov/main/publications /external/technical_reports/PNNL

‐ 23402.pdf

. The

references EPA included to energy efficiency jobs literature are incomplete. Additional

references are available, and many of the references have found a higher number of energy

efficiency jobs per million dollar invested than the numbers selected by EPA.

12. *Reviewer recommends that the table with supply side job losses be added to the table listing

energy efficiency job gains to display the aggregate impact of positive net jobs.

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7 13. *Reviewer notes that restricting trade to within the interconnect is inconsistent with the trading

flexibility described in the preamble.

Previously Submitted Technical Comments

1. Reviewer recommends clarifying the discrepancy on page 3

‐ 20 with respect to the “vast

majority of existing coal boilers...projected to adopt the

... heat rate improvements.” Page 2

‐ 6

suggests that there are 312 GW of regulated coal capacity and page 3

‐ 20 suggests that 99 GW of

coal capacity will adopt the heat rate improvements. That seems inconsistent with a “vast

majority.”

2. Reviewer recommends modifying the language on page 3

‐ 26 that explains why new NGCC is not

prevalent in the rate

‐ based model. Reviewer suggests the following language:

a. “Due largely to the electricity demand reduction attributable to the demand

‐ side energy

efficiency improvements applied in the illustrative scenarios, the EPA projects less new

natural gas combined cycle capacity be built under the rate

‐ based scenario than is built

in the base case over the period covered by the rule.” In addition, the incentives

underlying a rate

‐ based policy which is defined to exclude new natural gas would be

expected to suppress the building of new natural gas combined cycle capacity relative to

business as usual. Specifically, increased generation from existing natural gas combined

cycle generates credits to offset coal generation, whereas new natural gas combined

cycle capacity does not generate credits to offset coal.

3. Reviewer recommends clarifying on page 3

‐ 33 if it is true that most analysis is conducted in “net

energy output.”

4. Reviewer recommends citing the residence time of carbon dioxide in the atmosphere of over

thousands of years.

a. Reference: Archer, D. et al. Atmospheric lifetime of fossil fuel carbon dioxide. Annual

Review of Earth and Planetary Sciences 37

, 117

‐ 134,

doi:10.1146/annurev.earth.031208.100206 (2009).

5. Reviewer recommends using more up to date energy efficiency costs, as the given values are

significantly higher than published, peer

‐ reviewed, recent program and participant costs of 3.3

to 5.5 cents/kWh for residential, commercial, and industrial EE programs. Reviewer

recommends using 4.6 cents/kWh on average (See: http://emp.lbl.gov/sites/all/files/total

‐ cost

‐

of

‐ saved

‐ energy.pdf ). (Page 3

‐ 13) If the original costs are retained for any reason, reviewer still

recommends referencing the source above to demonstrate that costs included in the analysis

are likely above observed costs. Regardless of costs used, reviewer recommends including a

citation to the source of the costs.

6. Reviewer recommends, on or near page 2

‐ 8, clarifying what is meant by “multiple areas” for

monitoring/control of the system (e.g., are these balancing authorities, grid operators?).

7. Reviewer recommends, on or near page 2

‐ 8, changing that utilities coordinate

.... to balance

“their common generation and load needs” to “the system across their respective service

territories” to reflect the jurisdictions within which utilities’ decisions are effective

8. Reviewer recommends clarifying what baseline means on page. ES

‐ 2. Says “based on baseline

generation for the two types of units (fossil stem and NGCC) “

Typographic Comments

1. Reviewer recommends adding “billion” after “$8.4” on page ES

‐ 9.

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8 2. Reviewer recommends, on or near page 2

‐ 8, referring to the ERCOT/Texas interconnection

consistently and consistent with changes to the preamble text.

3. Table 3

‐ 11 is incorrectly referred to as table 3

‐ 3. (Page 3

‐ 21)

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Major Comments on Treatment of Existing NGCC in BB2 and the Fossil Steam Rate

1. Reviewer recommends correcting the inconsistency between the methodologies used for BB2 in

“Step 6” and “Step 7” in the TSD. “Step 6” uses NGCC generation equal to “NGCC Potential at

75% CF” minus “Post BB3 NGCC Gen” to replace fossil steam generation. However, “Step 7” only

adds back the emissions of “NGCC Potential at 75% CF” minus “2012 NGCC Gen” to the

numerator of the fossil steam rate equation. Reviewer recommends using “NGCC Potential at

75% CF” minus “Post BB3 NGCC Gen” for both steps.

2. Reviewer recommends EPA adopts the approach of defining the amount of NGCC generation to

replace fossil steam as the NGCC generation “post step 6 levels minus the post step 5 levels” as

considered in footnote 9 on page 15. (This is the same as using “NGCC Potential at 75% CF”

minus “Post BB3 NGCC Gen” as mentioned above.) While footnote 9 correctly notes that this

could increase the amount of BB2 ERCs generated, it is difficult to predict the absolute effect on

stringency since stringency depends on what measures units ultimately use to comply.

Reviewer requests additional clarification on the formula used for BB2 ERCs.

3. Reviewer recommends that incremental NGCC generation not be measured from baseline

levels, because measuring NGCC from baseline levels results in effective load growth in the fossil

steam rate. Measuring incremental NGCC from baseline levels is similar to the effective load

growth caused by RE and EE in the proposed rule, which was eliminated in the draft final rule.

The most appropriate way to determine what NGCC generation replaces fossil steam is to

measure incremental NGCC generation from NGCC generation after BB3 which maintains the

2012 generation levels in the denominator of the fossil steam rate equation.

4. Reviewer requests a meeting with EPA technical staff to walk through the calculations and

discuss the issues in the TSD, particularly with respect to the issues mentioned above.

* Major Comments on Treatment of Non

‐ affected EGUs

1. * Reviewer recommends that when setting the mass goals, EPA account for the fact that new

NGCC can also be used to meet load growth. The TSD implicitly assumes that the MWhs of

renewable energy generation potential that are not needed to meet the national technology

specific rates, multiplied by two, are used to meet load growth. Reviewer recommends that EPA

acknowledge that another way that load growth could be met is through unaffected fossil EGUs

(i.e., new NGCC units). Reviewer recommends that if the mass goals are accounting for load

growth then the mass goals should cover affected and non

‐ affected EGUs or EPA should explain

and give an example of how states should treat load growth when states chose to include

unaffected fossil EGUs and how that accounts for the risk of leakage to unaffected EGUs.

2. * Reviewer requests that in addition to statewide rate

‐ and mass

‐ based targets, the TSD should

include a method and mass goals for states that choose to include unaffected fossil EGUs in

their state plan. The Preamble repeatedly mentions that this option of covering both affected

and unaffected sources is available to states, and lists it as the first option (on page 1375) of

ways the states can meet the requirement for addressing the risk of leakage under a mass

‐ based

plan.

a. * Reviewer recommends that the EPA set mass goals for states that choose to include

unaffected fossil EGUs in their state plan, and that these states be allowed to use these

goals to demonstrate compliance with an emissions standard plan.

b. * If providing mass targets for affected and unaffected EGUs is not possible, reviewer

recommends that EPA provide guidance, similar to the EE EM&V guidance currently in

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development, providing states with as much direction as possible as to how a state

should 1) calculate a cap that includes unaffected fossil EGUs and 2) create the

demonstration that the cap would result in affected EGUs meeting the emissions

standard mass goal, as required by EPA.

Technical Comments on Word Document

1. *Reviewer recommends including an appendix with the mass goals in the TSD similar to

Appendix 6 on page 25 which lists the rate state goals.

2. *Reviewer recommends that footnote 13 and 14 be combined or the order switched (page 20).

The two footnotes seem to be closely related and footnote 14 seems to cover the first piece of

information the reader needs. See below for recommended edit. Alternatively, reviewer

recommends rewording footnote 13 to clarify how the message varies from footnote 14.

a. “Note that even when the minimized procedure increases the share of potential BB3

generation assigned to a subcategory of affected EGUs (in column M below), the total

amount of building block 3 generation assigned to that subcategory (i.e., potential BB3

generation multiplied by the share) is always reduced from the original value. The fossil

steam and NGCC shares of total generation are allowed to vary in this computation

because under rate

‐ based compliance

, the RE quantified under building block 3 that was

not captured in the source category

‐ specific performance rate could be deployed and

claimed for compliance by either steam or NGCC units, as long as the amount of building

block 3 generation assigned to that subcategory is not greater than the original value

. at

any possible balance of generation across both steam and NGCC units .”

3. *Reviewer recommends the following edit on page 21 for clarity. “The amount of difference in

‘Potential BB3’ that is not needed to meet the Eastern Interconnect goals across all regions for

2030 is 166,203,128 MWh, obtained by subtracting the minimum potential needed to meet the

source category

‐ specific...”

4. *Reviewer recommends clarifying the following footnote on page 22, as it is not clear how

historically a MWh of RE and a MWh of affected EGU generation would be related in the

absence of a state rate target. “The assumption that one MWh of incremental RE enables one

MWh of additional affected EGU generation is consistent with the historical performance of

affected sources over time as well as expected future demand levels.”

5. *Reviewer recommends using the correct operations on the left side of the equation on page

23. The emissions should be added in the numerator and the generation should be added in the

denominator.

Current: ଵ,଴ଷଵ,଴଴଴	௟௕௦

ଵ,଴଴଴	ெௐ௛ ൅ ଴	௟௕௦

ଵ	ெௐ௛ ൅ ሺ ଵ,଴ଷଵ	௫	ଶ ሻ ௟௕௦

ଵ	ெௐ௛ ൌ ଵ,଴ଷଷ,଴଺ଶ	௟௕௦

ଵ,଴଴ଶ	ெௐ௛ ൌ ଵ,଴ଷଵ	௟௕௦

ெௐ௛

Revised : ଵ,଴ଷଵ,଴଴଴	௟௕௦ା଴	௟௕௦ା ሺ ଵ,଴ଷଵ	௫	ଶ ሻ ௟௕௦

ଵ,଴଴଴	ெௐ௛ାଵ	ெௐ௛ାଵ	ெௐ௛ ൌ ଵ,଴ଷଷ,଴଺ଶ	௟௕௦

ଵ,଴଴ଶ	ெௐ௛ ൌ ଵ,଴ଷଵ	௟௕௦

ெௐ௛

6. *Reviewer recommends editing the example on page 23 to be from the state perspective and

not from a specific EGU. As written it currently implies that every EGU emission rate occurs at

twice the state goal rate, which is not true more broadly. Recommend instead: “One

incremental ERC enables the emission of twice the mass of the target rate. For example, if the

state’s target rate is 1,031 lb/MWh, then procuring one additional ERC allows the state in

## Summary	of	Interagency	Working	Com ments	on	Draft	Language	under

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aggregate to emit 1,031 lb × 2 = 2,062 lb more. This is the source of the factor of two in the

equation on page 23.”

7. *Reviewer recommends clarifying the derivation or citing an appendix for the 3,192,419 MWh

noted for Arizona in the example calculation on page 23.

8. *Reviewer recommends showing units for the state goals listed on page 25.

Previously Submitted Technical Comments on Word Document

1. Reviewer requests the opportunity to review the spreadsheet that aggregates the unit

‐ level

data to the state level in “Step 1” on page 8. Reviewer recommends that this spreadsheet be

made available as part of this TSD.

2. Reviewer recommends clarifying that some of example columns that are shown in the TSD

document are not calculated in the excel spreadsheet. For example, in “Step 3” on page 10

column H, the Fossil Steam Emission Rate before BB1 is not calculated in the Excel spreadsheet.

3. Reviewer recommends clarifying that the total baseline generation referred to in the last

sentence on page 13 is the total fossil baseline generation.

4. Reviewer requests the opportunity to review the Excel attachment titled “State

‐ level

adjustments” reference in Appendix 7 on page 22.

5. Reviewer recommends clarifying why unit generation in 2012 is compared to the unit

generation in years 2010 and 2014 to evaluate if there is a significant outage (page 22). Why

were years 2010 and 2014 chosen as opposed to other years?

6. Reviewer recommends clarifying whether the discussion about unit outage adjustments includes

emergency and/or maintenance outages (see page 22 and other similar discussions throughout

the document).

7. Reviewer recommends clarifying the statement on page 30 that “the 111(d) baseline analysis

does not include units that use less than 10% fossil fuel on a heat input basis in 2012, units that

are retired or under construction, and certain commercial and industrial units...”The reviewer

understood that under construction units were included in the baseline data.

8. Reviewer recommends clarifying the “non

‐ methodological change”

– “4. Changes to unit

categorization” on page 33. The terms “under construction” and “commenced operations in

2012” are not used as the reviewer expected. Changes or edits to clarify this section would be

helpful.

9. Reviewer notes that the BB3 incremental generation numbers on page 3 are inconsistent with

those in Table 9 of the most recent revised Final Draft that was reviewed (Final Draft numbers

are 435 TWh Eastern, 178 TWh Western, 100 TWh Texas).

10. Reviewer recommends not assuming that all biomass emissions should be counted as emissions

from fossil fuel units when co

‐ fired, given that some percentage of the existing biomass would

qualify as sustainably sourced under EPA’s Biogenic Assessment Framework (page 31).

Reviewer recommends, for 2012 BSER purposes, changing the historic emissions rate for

biomass to be consistent with the preamble, i.e. counting sustainably sourced and waste

derived biomass as zero emissions.

11. Consistent with the preamble and the federal plan, reviewer recommends that Indian lands with

affected EGUs receive their own rate rather than being included in state rates.

Previously Submitted Technical Comments on Excel Spreadsheet

## Summary	of	Interagency	Working	Com ments	on	Draft	Language	under

EO12866/13563	Interagency	Review.		Subject	to	Further	Policy	Re view.

1. Review recommends that EPA clarifies what column V represents in the associated excel file in

tab “Appendix 3

– State

‐ level Data.” Columns T and U seem to be all that is needed to represent

Under Construction NGCC.

2. Reviewer recommends clarifying why the Fort Calhoun Nuclear Plant (line 5249) in Appendix 1

shows negative electric generation. Page 33 explains that the cause for fossil units having

negative generation is from matching the EPA emissions data with the generation data from EIA,

but it is unclear how this pertains to zero emitting nuclear.

Previously Submitted Comments on Additional Potential

1. Reviewer recommends increasing the BSER RE deployment rates throughout the interim period.

2. Reviewer recommends increasing the total amount of existing gas in BB2, per the major

comments above.

3. Reviewer recommends increasing the ramp rate of existing gas in building block 2 to 22%

increase in utilization every year.

4. Reviewer recommends applying separate BSER goals to each interconnect.

Previously Submitted Typographic Comments

1. Reviewer recommends numbering each equation for ease of reference throughout text.

2. Reviewer recommends referring to specific table numbers when first referencing columns within

a given table for clarity.

3. Reviewer recommends changing column F to column G in the last sentence on page 12. “The

total baseline generation (columns B & C) equals the total remaining generation and renewable

generation (columns FG

, H, I, and J) reflecting that...”

4. Reviewer notes that the current “Figure 1” appears incorrectly labeled and should be “Table 1”

(page 3).

5. Reviewer recommends reformatting the equations presented in “Exhibit A” on page 4 such that

it is clear that the “replacement generation” is in the denominator

6. Reviewer recommends re

‐ wording the following for clarity on page 8, and indicating what other

adjustments besides those regarding under construction units were made (if any): “EPA then

made the aforementioned adjustments to the state

‐ level values to address concerns addressed

by commenters’ concerns. This included adding in the expected generation and emissions from

likely affected units considered under construction.”

7. Reviewer recommends showing in Table 1 (page 9) the example calculation with coal as well as

NGCC so both the 55% and 60% capacity factors for under construction units are shown.

8. Reviewer recommends that throughout text that is within equations, the multiplication sign “×”

be used consistently instead of the asterisk “*” or the letter “ x ”.

9. Reviewer recommends that throughout the text that the output of an equation be shown in

‐ line

with the equation consistently (compare equation under Table 1 with equation beneath Table

3).

10. Reviewer recommends removing the extraneous dash between “extent that” on page 13.

11. Reviewer recommends defining ERC briefly in Footnote 8 on page 15, as it has not been defined

in this document.

## Summary	of	Interagency	Working	Com ments	on	Draft	Language	under

EO12866/13563	Interagency	Review.		Subject	to	Further	Policy	Re view.

12. Reviewer recommends making generation units consistent in equations below table 7 on page

16. Generation units are in GWh while rate units are lbs/MWh.

13. Reviewer recommends the following edit on page 18. “Final category

‐ specific rate

– The 2030

emission rate (as calculated above) becomes the state goal category specific goal for 2030 and

each year thereafter”

14. Reviewer recommends adding “Table 9:” to the table heading on page 18.

15. Reviewer recommends the following edit on page 22. “ Commenters States suggested that 2012

was an abnormal year for hydro...”