UNITED STATES ENVIRONMENTAL PROTECTION AGEN C Y WASHINGTO N , D
. C
. 204 60

OFFICE OF AIR AND RADIATION 

### MEMORANDUM Subject: From : To: Summary of Stakeholder Meeting s Carissa Cyran Dockets E PA-HQ-OAR-20 13

- 0602. EPA -HQ-O AR-20 13-0603 , and EPA-HQOAR-20 13-0495 Th i s memorandum summarizes meetings with stakeho ld ers during the week of Februa ry 2 , 2015. On February 2 , Associate Assistant Adm ini strator for C lim ate and Senior Counse l for Air and Radiation Joseph GotTman met with representatives from Hoosie r E nergy. Sign

- in sheet and presentation are attached
. On Febru ary 3 , Associate Assistant Admin i strator for Climate and Senior Co un sel for Air and Radiation Joseph Goffman met with re presentati ves from Wyoming Department of Environmental Quality . Sign-in sheet attached. On February 3 , Associa t e Assistant Adm ini strator for C limate and Senior Counsel for Air and Radiation Joseph Goffman met w ith Bill Ritter , Director of the Center for the New Energy Economy at Co lorado State University. S ign-in sheet and handouts are attached. On February 4, Associate Ass i stant Administrator for C lim ate and Senior Counse l for A ir and Radiation Joseph Goffman met with representatives from National Hydropower Assoc iati on. Sign -in sheet attached
. On February 5 , Assoc iate Ass i stant Admin i st rator for Climate and Sen ior Coun s el for Air and Radiation Joseph Goffman met with representatives from the Clean Energy Group
. S ign -in sheet attached. On February 5 , Associate Assistant Administrator for C l imate and Sen io r Counsel for Air a nd Radiation Joseph Goffman met with representatives from Exelon. Sign -in sheet attac hed.

I n t erne t Add r ess (U RL ) · http 1/www epa gov Recycled / Recy c lable • Pron t ed w 1 t h Vegetab l e 011 Based Inks on 100 % Postconsumer Process Chlo,ne Free Recyc le d Pa pe r

### Date: February 2 , 2015 M ee ting: Hoosier Energy Discu ss ion on C PP Rule(s) Discussed: 

# lPP Written



# Materials **o** Organ iz ation Phone Number



# ~)~ **~?k --.J~~** 



# ---J..---.: **_...!__ J**  **--~ v**  **~** 

# o1 24 va- ?0,_j --

**~71**



# r- ---- ---

-1--- 

# --~--_-_-_- 

# j



# =~-+----=- 

# _ _j

**~- 1-**  **---** - - **~----** 

# [_

----- ______L - -

# HOOSIER 

# ENERGY An Alternative to EPA's Clean Power Plan

Introductions • Hoosier Energy Participants Donna S nyder Sr
. VP & 

### CFO 

## B o b Richhart February 2 , 2015



## Michalene Reilly Mgr ., Spe c ial Projects- Environmental 

## Caleb Steiner VP , Management Serv i ces Sr
. Financial Analyst 

## Tom Van Paris Jay H olloway VP , Member Services & 

### Communication Sutherland , Asbill & 

### Brennan 

## Randy H aymaker Direc tor of Public Affair s 

## Rae Cronmiller National Rural Electric Cooperative Association 

## • Concerns with the C lean Power Plan - Reliability , affordability, remaining useful life of existing resources- lead us to propose an alternative 2



### 1

# An Alternative
• Addresses these concerns and achieves essentially the same, if not lower, emissions level as the CPP in 2030 • Intended as a new framework • Acknowledges Energy Supply and Environmental Coordination Act of 197 4 and Fuel Use Act of 1978-essentially required all new generation to be coal-based and shaped nation 's preference for new base load coal for next three decades • States determine achievable heat rate improvements on unit-byunit basis-recognizes those improvements that have already occurred



# An Alternative
• States determine unit-by-unit baseline for measuring heat rate improvements using highest of years 201 0-2012-recognizes that substantial pollution control upgrades resulted in long outage periods during this time-frame so sing le year may not be representative • Measurement based on gross generation-recognizes that operation of pollution control equipment makes up majority of auxiliary power used at power plants • NSPS emissions rate test used for NSR projects HOOSIER 

### ENERGY '\!•

3



### HOOSIER 

### ENERGY



## .

**'~'"'**

4 1



# .

2

# An Alternative
• Recognizes remaining useful life of existing resources: • Un i ts online before 1978 phase out in 2030 unless they meet lll(b) new source performance standard • Units online 1978 and later phase out in 2050 unless they meet Ill (b) new source performance standard • Pre-1978 units that have performed significant upgrades to pollution control equipment from 2003 to present would also be included with the units from 1978 and beyond • Recognizes that billions of dollars have been invested in recent years to comply w i th multiple EPA regulations with expectation of 33 years or more of continued operation • Reduces burden on consumers to pay for these investments and new replacement generation at the same time • Cons i stent with DOE timeline that more advanced and cost effective c arbon capture technologies could be developed beyond 2035


# An Alternative
• Assuming average heat rate improvements of 2% and replacement of pre-1978 coal generation with natural gas , estimated annual emission reduction in 2030 of 750 million tons under the alternative versus 612 million tons under the CPP • Estimate is conservative as voluntary investments in renewables and energy efficiency programs wou l d like l y result in additional reductions • FERC , NERC regional transmission organizations and independent system operators retain emergency authority to determine facilities needed for g r id reliabil i ty • At a minimum , a lternative should be sub-categorization for small fossil electric power generation utilities as defined by SBA (750 employees or less) 

### HOOSIER 

### ENERGY

**~** • <;!"'

5



### HOOSIER 

### ENERGY '.!
..

6



### 3

### 4

### Hoosier Energy's Alternative to EPA's Clean Power Plan


### National energy policy should be determined by Congress, not by EPA. If Congress decides that transitioning to a lower -carbon economy is the energy policy path to pursue, then Hoo s ier Energy believes that transition sho uld be done in an orderly and cost-effective fashion-one that recognize s reliability concern s and realistic time horizon s and considers the useful life that remains in the valuable generating resources that currently exist. National concerns over natural gas availability prompted Congress to enact the Energy Supply and Environmental Coordination Act of 1974 1 

### followed by the Fuel U se Act of 1978 (together, th e Acts). The Acts esse ntially required all new electric generation to be coal capable. The Acts economically prohibited new generation from u s ing natural gas as t he primary fuel because of the historically higher fuel cost of natural gas coupled with the additional capital cost required to construct facilities that could run on both coal and natural gas . Durin g the time the Acts were in effect, the nation 's electricity need s grew substantially, particularly in rural America. As a result , about 60% of rural electric cooperatives' total baseload ge neration was constructed under the Acts. Although the Acts were repealed in 1987 , their influence continued to s hap e the nation 's preference for new base l oad coal g eneration for the next two decades
. Subsequent to original construction, billions of dollars have been invested in these coal-fired generating resources for pollution control equipment to meet
numerou s re g ulations i ss ued by EPA and to ensure their continued economic and reliable operation for the remainder of their u sef ul life-at least 33 years from the time the most recent inve st ment was made i n the unit
.
1 15 U.S
. C. §791, 

### et seq.

### Congress expects sta tes to consider factors such as remainin g useful life and stranded investments in determining the s tandard of performance to apply to each generating unit. The following alternative to the Clean Power Plan does ju st that :
• States would determine unit-by-unit C0 2 

### emission limits based upon heat rate improvements that are achievable for each unit, taking into account in vest ments in efficiency improvements that have already been made. Based on all unit-specific information , s tates would determine the ma ss- based emission limit applicable to the existing units
. C0 2 

### emissions would be measured on a gross basis , which is consistent with all previous EPA rules
. • On a unit-by- unit basis, sta tes would u se the highest of three years 

### (2010, 2011 or 

### 2012} to determine a C0 2 

### emissions ba se line. This acknow l edges that utilitie s were performing significan t sc heduled outages during this time-frame to install equipment for compliance with other EPA regulations and i s consistent w ith prior EPA rulemakings
. Natural gas prices were also at historical lows in 

### 2012 which distorts normal coal generation capacity factors and, therefore, makes the use of 

### 2012 as the sole baseline year inappropriate.
• Units which came on l ine prior to 

### 1978 would be phased out in 

### 2030 unle ss they can meet a valid new sou rce performance standard by that time.
• Units brought on line in 

### 1978 or thereafter 2 

### would be a llo wed to operate to 

### 2050 unle ss they can meet a valid new source performance stan dard prior to or by that time. A

2 Another alternative would be to consider any unit that has performed significant upgrades to pollution control equi pment from 2003 to pr ese nt to also be included with the unit s from 1978 and beyond. 

### 2

### 2050 timeframe recognizes a remaining useful life of 33 3 

### years for these existing coal units. The timeframe is also consistent with the Department of Energy' s timeline that a second generation of carbon capture technology might be developed by 2025 and more advanced and cost effective technologie s could be developed beyond 2035. 4


### • While the alternative should provide sufficient time for an orderly and cost - effective trans ition to a less carbon inten si ve energy portfolio, FERC, NERC , regional transmi ss ion organization s and independent system operators would retain their authority to determine which facilities are needed for grid reliability and to declare facilities that cannot clo se for that reason, if necessary . Based on a revi ew of the nation's existi ng coal units and using a conservative assumption that pre - 1978 coal units would be replaced with NG CC unit s, C02 emi ss ions under the alternative are es se ntially equivalent to the CPP in 2030. At a minimum, EPA should re cognize this alternative as a sub-categorization for sma ll fossil electric power generat i on utilitie s as defined by the Small Busine ss Admi ni s trat ion. Hoosier would also propose that the CPP or any alternative have lan g u age which allows NERC to declare an energy emergency and utilize units as needed to insure r e liability
.

3 Assumes EPA issues a final rule in 2015 and approves state implementation plan s in 2017. To th e extent these dates are exten ded then this timeframe would also be extended as investments in genera ting units would be continuing
. 4 Energy .g ov web s it e (http:/

### I e n ergy .g ov /fe/science - innovation/carbon - cap ture - and - sto r age - r esearc h/carbon capture - rd) discussing ca rb on capture R&D and t h e 2"d and 3 'd genera t ion time line for more advance d and cost effective carbon captur e. 

### 3\ •ddt 

# vcu-.0:-rr**?rEV~** 

# DrETf2;TCH 

# At-**f''l_CJ41~YL** 

# (L**t{M~)** 301, 77''c<Of%

# ~·~6'f'i<! 3o7- 

## n7- 739 

# 3 srevt: . OIE7P..u:H-dJwro
. ool) 

# 3u7-7?1

- 7jz7**({l..u._ ,i_,~"\..~**  

## w

# 1 19.!Jdr.-


## G!JtJ ; 

## rJ

# flfr(~ GlYth

# ,o**fR~** =f:1?-

- 

# JP!?v**0:5/;l't,tfo<t.f(tf?~~JPV** 

# &;) · e 

# tf';.JJ-/o/



# .**kw~** 

# b

# C /J/Ft: 

# OJ!Fr 

# f{Jl 

# if1/Jf?

.

**~** 

# GrPfjod-IP.

# Center for Ene rgy Economics a

nd Pubhc Policy Summnry R eport 

## Th e Impact of r he Coa l Economy o n Wyo min g Prep a r e d for: Wyoming Infrast ru c ture Authority

**~cbruary** 

### 20 I 

### 5

R

obert Godby Ro ge r Coupa l D av id Tay lor T im Co n s idin e

Center for En ergy Eco nomi cs and Publi c Poli cy Dcpanmcnr of Economics and Finan ce University of Wyo min g

Laramie, Wyoming

### TI1is page left blank.SUMMARY REPORT: IMPACT OF THE COAL ECONOMY ON \XfYOM I 1 G 

## EXECUTIVE SUMMARY Coal production h as been a co rn e rs ron c of th e mod e rn Wyomi n g eco nomy since th e 19 7 0 's, and ha s se rved as W y oming 's mo s t stab le source of r ax revenues ove r th e p as t f o ur d ecades. In th e cu rr ent marker e n v ironm e nt , th e coal indu s tr y in Wyoming is facing s i g nifi ca nr pre ss ure. 

### 0 es pire irs c ritical rol e in Wyomin g, f e w srudies have quanrified the coa l indus try 's impa c t on th e stat e wide economy, a nd rhose rhat h ave a re significantly our of dare.

· lhi s s tud y addresses thi s inf o rmation gap by de sc ri b in g th e imp orta n ce of th e 

### coal sccro r ro Wyoming's eco n omy roday
. l r do c uments th e ri s ks and c h a ll e nges facing rhe coa l indu stry in th e future due to marker condi tion s and regulato r y thr eats, and u s in g t h e mo s t rece nt dara ava ila ble, conducts an imp ac t analys is to d e te rmin e h ow th ese ri sks could affec t rhe Wyoming economy and state revenues through 2030
. The porenrial impa cts of proposed carbo n r egulations introdu ce d by th e E n vironmenta l Prot cc rion Agency's ( EPA ) C le a n Powe r Plan arc a lso es tim ated, as a rc rh e potential impa c t s rh ar lar ge - sca le int e rn a ti o nal coal cxpo rrs co uld h ave on \'Vyornin g's economy. Thi s r e port concludes with analysis of th e policy c h o ices W yo min g faces in response ro th ese marker c h a ll e n ges.

S hare of g r oss s tate produc e ( GSP ): Share o r rota ll abor in c ome: S h a r e of r ora l emp l oyment: Stare r eve nu e direc d y from coa l mining, nor including ocher acti vities : 

### Th e Importan ce of Coal to the Wyomin g Economy Today Since 2008, coa l produ c tion in Wyomin g has fa ll e n b y 17%, a nd coal marke r s re main depressed. Assess ment of market forces ch a r may h ave caused thi s d ecl in e s u gges t s that rh e thr ee mo s t imporranr conrr iburors ro the d e clin e h ave been: 

### •

• FaJlin g n a tural gas prices, causing some coa l ro b e di sp laced as a ge n e ra tion fuel n atio n ally S l ow national economic growth, whi c h has r e du ced el ectri city d e m and and t h e n eed for W yo ming coa l
• Growth of renewable e n e rgy production, which h as di s placed some coal- fire d generation Fi g ure 

### ES-l summarizes rh e outlook from five well-known ene r gy mark e t forecasters r ega rding coa l production ove r th e n ext 25 yea rs . Four of th e five rorecasrs sugges r 7.ero or n ega tive growth in rhe n ca r te rm re lat i ve ro rhe cu rre nt nationa l ourpur of



### Coni economy 1 4. 0 %

9. 3% 

### 5
. 9 % Coal mining only 1 1. 3%

4.7% 1.8 % 

### $ 1 .3 billion , or 1 1.2 % of a JI government reve nues collected in the state 

### 7l;e "coni economy" includ es rtf / rtctivity m used by the presence of con/mining, mil

- shipping nnd coni-fired electricity genenuion in \'(lyoming
. All figures used are for fiscal year 20 1 2.! MPACTOFT II E C O AL ECONOMY ON WYOM I NC

1,600 1,400 

# 1 1,200

400 200
flA -2014 Re f Nence EVA ICF IHSGI INFORUM
• 2025 1035 2040 Fi g ure ES
- 1. Fo r ecasts o f U.S. c oa l p r od u cti o n . approximatel y I billion to n s annua ll y . ' I h rough 2 0 4 0 , rh c ourl oo k f o r co a l produ c ti o n g e r s co n s id e rabl y wea ke r i n seve ra l cases, p a ni c u l ary tho se th a t a ss um e mo re s t ri nge nt ca rbo n reg u lat io n s occ ur. 

### The Pote n ti al of Exp and e d Inte rn a ti o nal Coal Exp orts fro m Wyomin g Coal ex po rt s ro i nt e rn at io n a l ma rke ts p ro v id e o n e po ss ible m ea n s of prot ec t i n g a nd ex p a nd i n g future coa l prod u ct io n in W yom in g . Th e primary cha ll e n ge fa c in g a ma j o r e xpa n sion ofW yom i ng coa l c xpons r o f o r

e ig n d es r i n arion s is a lac k of port ca p ac i ty ch a r wo uld a ll ow ex p a n s i o n o f expo n s h ipm e nt s a r c omp e t i t ive cos t. D e velopm e nt of su c h po n s h as pr ove n diffi c u lr . and h as o fr e n b ee n op p osed o ut s ide Wyo min g on e n v ironm e nraJ g ro und s . C on ce rn s assoc ia te d w i t h po r t d eve l opm e nt - pri m a r il y i n Or ego n a nd Wa s h i n g ro n - r a n ge from loca l t ra ffi c co n ges ti o n pr o bl e m s, du st a nd air qu a li ty c o n ce rn s, a n d t h e i mp li ca t io n t h a t s uc h ex p orrs co uld co nrribure s ig nifi can tl y ro g lob a l clim a te c han ge .


### 2 In a dd ition ro e nv ironm e n t a l c on ce rn s, h oweve r, rh e g reates t c h al le n ge i n ac h iev in g s u c h p o rt ex p a n s i o n m ay b e th e p e rce ive d weakn ess of th e coal m a rke r and d omes t ic coal produ ce r s t h e m s el ves . For examp le, A r c h C o a l , In c . , a fin a n c ial b acke r o f o n e of r wo p rop ose d la rge wesr coas t port ex pa n s ion s (M ill e nn iu m Bu lk T e r min a l i n Lo n gvi ew, W as hi n g to n ) h as ex p e ri e n ce d a s h a r p d e cl i n e in ir s cap ira l valu e . A r c h Coa l h o ld s a 38% in ve srm e nr in t h e pr ojec t. I n Nove m b e r 20 14 , Am b rc En e rgy, Ltd. , th e m a j o ri ty b ac k e r of t h e Mi ll e nn i um Bulk T e rmin a l pr ojec r, a nn o un ced in a reg ul a tory fi lin g rh at it wa s di ves t i ng ir s N o rrh Am e r ica n c o a l ex port asse ts, s el li n g t h e m lO a D e n ve r- b as ed pri va te- eq u ity firm . Furth e r, Pe abod y E n e rgy Co rp o rat ion , o w n e r o f h a lf of th e p ro p osed Gate w ay Pac ifi c Termin a l i n B e llingh a m , \'V'as hingro n is a lso in weak fin a n c i a l co nditi o n . C lo u d Peak En e rgy, I n c . , w ith an i nt e res t a t borh pl a nn e d r e r minal s r ecentl y re p o rted losses o n c o a l ex p o r rs and di ves r e d o f ex p o rt m i n e int e res ts. W eak n e ss i n U.S . co a l marke r s h as le fr do m es t ic firm s with l imit ed abili ty to fin a n ce la rge-sca le in ves tm e nt s. Th e ge n e ral m a rke t willin g n ess to s u pp o rt s u c h p roj ec r s is a ls o u n ce rta in .IMPACT OF THE COAL ECONOMY ON WYOMING
I f opposition ro proposed new termina l s cou ld be overcome and rhe projects financed, rh e impact on rhe Wyomi n g economy cou l d be substa n t ia l , espec i ally i f a ll of rhe proposed te r minal capac i ty were access ib le. Most of th ese potentia l economic benefits would accrue ro rhe Powder Ri ver Basin; however, rhc secondary effects wou l d be felt throughout rhe stare . 

### Th reats to th e D o m es ti c C oal M ark e t I n add i tion to i nte rn ationa l export scenari os, t h is repo rr ana lyzed rh e potentia l i mpact of existing domest ic ma rker c h a ll e n ges. Us i ng rh e U . S. Energy I nformation Age n cy's (EIA) An n ua l Energy Outlook 2014 (A£020 14) projections, aut h o rs assembled seve r a l Wyoming coa l producti on scenarios. These scenarios considered the f ollowing influences on coal production: 

### I. 

### Fundamental market efficts driving coal market demand and production costs: • Conr i nued weak demand due to low natural gas prices caused by r ecent i nc reases i n domestic natura l gas production • Cont i nued weak dema n d due to s lower national economic growth lead i ng to s lowe r elect ri c i ty load 

### • growt h Decreases i n p roductiv i ty growrh i n rhe coal m i n i ng sector, r esu l ting i n increased coal production costs 

### 2. Regulatory changes a.Decting Wyomi11g energy rnarkets: • U.S. E PA p roposed Clean Power P lan fo r n ew a n d existi ng elect ri cityge n erat i ng power p lanrs 1

The EPA Clean Power Plan is also referred to as "Ill (d)"- the section number of the Clean Air Act that the rule falls under.


### 3 I '
. I ' 

### h'' .., I**~** I ! k I I I 'I :, i l I 1 (l!J J,-.li l
. l•.lh 1 l•ii\ 1 /.i'!l·
..:ll/.l l:(l/',1
. I ', I' I i I ' I \ i •/
., I
.. 1 :·, II ) l\1
I ncrease i n Gross State Produce 

### $ 1 .2 billion a nnually I nc rease i n jobs: 

### 4, 000 + n ew 

### j o b s Inc r ease i n l abo r in come: 

### $ 3 4 5 m illi o n an n ua11 y
Analys is of EIA coa l p roduct io n proj ect ions using an i mpact model consrrucrcd spec i fically for rhis srudy suggests that of the fundamental factors t h at may decrease Wyom in g coa l production, r ising coa l costs pose the g r eatest rh rear. Fo r examp le, using rhe E T A's scena r ios and assumptions, i n a worst-case scenari o assum i ng a n economy ar fu ll emp l oymenr and grow i ng norma ll y, coal production i n Wyom i ng cou ld fall by 20% f rom 20 1 2 levels by 2030. The decrease cou ld occur due to lower productiv i ty growth ar m i nes and higher wage a n d cap i ta l cosr g rowth r h an recent hi stor ic norms. Based on t h ese assumptions, emp loyment losses i n the stare wou ld roral nea rl y 4,800 jobs by 2030, relative to 20 1 2 emp loyme n t levels. Assuming n o changes to the regu l atory landscape of 20 1 2, E I A p rojecti o n s suggest l ow natura l gas p ri ces a n d s l ow i ngeco n omicgrowth prese n t a muc h small er th r eat to future Wyom i ng coa l productio n t h an ri s i ng coa l p roducti on costs. I n both low gas price a n d s low growrh scena ri os cons ide r ed, coa l ou t pu t levels wou ld be be t wee n 4% and 8% greate r by 2030
. While adve r se marker effects could result i n less ourpur rhan rh ese esti mates, espec i a ll y i f mu l t i ple market effects occurred simultaneously, rh e ana lysis suggests t har fu n damenta l marker facro rs pose a less se ri o u s rhrea t ro Wyomi n g coa l production rha n th ose presented by potent ia l carbo n r egulations.

### Potential Impacts of the EPA's C lean Power Plan Propo sal lhe EPA's Clean Power Plan targets carbon dioxide emiss ion s reduct i ons of 30% of 2005 l eve ls, but places th e burden of reduction un eve nly among states. ln Wyoming, the proposed rules would r equire a reduction i n th e stare's CO 1 

### e mi ss ions rare by 19% from 20 1 2 levels. The: EPA's proposed Ill (d) rules allow stares to 

### determine rhe means of meeting mand a t ed**~:missions** 

### reductions goa l s . These may includ t: energy efficiency as a reduction mechanism, a nd stares may choose to design reg ion a l comp liance programs, coope ratin g with othe r stares . Given the ra n ge and un cerra in ry of the policy comb i nations states may choose, projections of the potential imp act of th e proposed r egu lat ion were performed as four separate scena ri os . Scenarios considered include allowing energy efficiency (EE) to be used as a comp li ance st rat egy, and th e degree of srate cooperation (nationwide or regional)
. Scenario I co n siders nati onal sca le cooperat ion with ene r gy IMPACT OF THE COAL ECONOMY ON WYOMING 

### efficiency; Scena ri o 2 considers national scale cooperation without energy effic i e n cy. Similarly, Scena rio 3 co n s id ers regio nal level coope r at ion with energy efficiency and Scenario 4 considers regional lev e l cooperation without energy effic i ency. To define the potential impa cls of the EPA 111 (d) proposals, authors en li sted th e h e lp of Rhodium Group, a New York-based consulra n cy that shared a set of proprietary simu l ations developed to 

### esrimare rhe impact of rhe EPA's proposed greenhouse gas (G HG ) regu lations on the nation a l economy. A comparison of the Rh od ium Group mode led sce nario s corresponding to tho se scenario s cons i dered in th is study for Wyoming coa l production is presented i n Figure ES-2. Regardless of how po li cy is implem e nr ed, i mposmon of proposed II I 

### (d) rul es results in a significant decline in projected Wyoming coa l**ou~ut** 

### in a ll scenarios. By 2030, these declines range from approximately 20% to 

### 4 5% decreases f rom 20 I 2 production levels, depending on the scenario. 

## C

o a l Produ c ti o n: 111 ( d) Sce n a r i o s 500**~** 

### LSO 0 ,,...,.. :::: -ut.J 

### 0 35::

....**~** 

## 3:: 

## = 25: 

### 2 )"" 

# -**~,.,** ... c 0 15::

### ~ 

## 1co ..j 

## -g 50

.... 0.. 0 

# - 

# - - 

# - 

# - 

# - -

N M**~** 

### ;q**~** .....**~ ~**  

### R rl N M**~** rl ,..... .-! rl N N N N 

### R 

### R R R R 

### R R 

### R R R 

### R R R

- Rhod uM A E 0201L Reference

- 111d • Nat ana 

### w / EE llld· Reg ·ona . w / EE

- - GHG 525 

### 1 nc**S~b** 

### an nua 'i GHG $1C 

### n:: 5:a 

### an nua**~** 

### - ow gas 

# - . 

# - . 

# - .

. 

# -
- 

# - - ..... 

# - - 

# - 

# - -**~ ~**  ..... 

### Pi! f<J fro: rl N M**~** 

### !11**~** N M M M M 

### R 

### R R R 

### R R R R R R R R

- A E 0201' Referenc e

- llld · Nat ona 

### wi o EE

- llld ·Reg ana ,• ; / o EE

- • • GHG 510 

### nc 5';, 

### annua ..,. Figur e ES-2. C<>al prod u ct io n proj ec tions ac r oss Ill ( d ) r egu l atory sce nario s. 

### 4 

# .__

t-.. 1-'9.**~** 0 M -.:- 

### R R 

### R RIMPACT OF THE COA L

**ECONO~IY** ON \WOMI 1 G
For co mparison, aur h o r s s how h ow forecasrs for various carbo n r axes, a common ly co n s id ered policy option, co mp a re c o rh e EPA's Ill (d ) rul es u s in g the E I A AE0 2 0 14 ca rbon tax sce nari os . 1l1 e impa c r of a greenhouse gas rax of $ 25/ron res u l ts i n th e mo s r detrim e nta l h ypo t h e ti ca l ourco m e for coa l production, a nd oc h e r sce narios w ith a $ 10/ t o n rax level ha ve a n imp ac t s imil a r r o th e va ri ous Ill ( d ) scena rio s m odeled. Th e ways in whi ch other srares c h oose ro implem e nt I I I (d) co mpli a n ce m eas ures h ave an imp ac t on W y oming. In orde r of p r oduc t i on outco m e fr

om b est (g rea tes t produ ct ion ) ro wo rst ( leas t production), t h e poli cy sce n a ri os co n s id e r e d ra nk as fo ll ows: I. 1 a tiona I cooperarion wirh ene rgy efficiency 2. Regional coope ration with energy efficiency 3 . Nat ional coope ration without e n e rgy effic ie n cy 4 . R eg ionaJ coope r a ti o n without energy efficiency In cluding energy efficiency. regardless of th e scale of coope ra ti o n wich o ch e r scares, r esu lc s in g rea c er coa l production ch an scenari os th a t do n or includ e



### ,.. .... : v v c 

## lll(d) Employment changes due to Coal Impact (Statewide)



# • • I ·2 

### c=•
2::20

• llld- Not ona \. EE • llld
- Not ona \ o EE • llld- Reg ona v 1 EE llld- R eg ·o na vue EE energy efficiency
. Energy effic iency measures n.:duce electricity demand and d f ecri vely r esult in ca rbon re du c cion s ac r oss th e w id e r economy. 

### ll1 e I I I ( d) dimare regul ario n ha s the pore nri a l co dra s t icall y d ec rease Wyomi n g coal produ c rion. Projected coal oucput under rhe most favorable p roducr i on circumstances decreases by 32% of 2012 produccion by 2025. Usi n g rhe production outcomes desc ri bed in Hgu re ES-2, even in rh c bcsr case, i mpacr modeling of rh e Ill (d) sce n a ri o suggcs c s a lo ss of ove r 7,000 jobs across rhc state by 2025, rel at ive LO 20 1 2 e mplo y m e nr. Orh e r scenario s ana lyz.cd ex hibit co ntinuou s and g r eate r losses . Eftccrs of t h e regulations would impact the Powder River Basin region ofWyom in g most seve rely, where one i n ten jobs would be eliminated. Comp li catin g rh e ana lys is of rh e eco n o mi c impact of the EPA's Ill (d) rule on the Wyoming eco n omy is th e potential to usc lucl-swirch in g betwee n coa l and natural gas as a m ea n s for th e srare to co mpl y w irh th e r eg ul a tion
. S in ce Wyoming pr oduces a significant a m ou nr of na t ural gas, a uth ors accounted for porcnri :dly mirigaring cffcc r s of rhc narural gas secro r ro determine rhe ove ra ll i mpa c t ofrhe EPA's propo sed Clea n Po wer Pl an regu la ti ons o n th e s car e .

- 2.o=.

. .:.c;. 

## lll(d) Employment changes due to Gas Impact (Statewide)



# -

-

· · . 11 1 

# . 1 1 •

**2~25** 

# I

• 111d
- Na: ana \'• EE • 111d- f.Jat ana \I o EE a llld
- Reg ana v. EE 11ld
- Reg ana v. 'o EE F i

g u re ES
- 3. Combin ed coa l and natural gas e mpl oy m en t e ff ects due to EPA lll (d) imp actS. 

## 5Thi s an a lys i s indi c ate s rhar d es pir e the Ill (d ) rules stimu latin g Wyom in g' s n atura l gas scc ror, e mplo y m e nt losses in th e st a re's c oal i ndu s tr y a rc n o r o ff set b y th e additi o n a l n a tura l gas prod uc ti o n prompted b y c arb o n regul a ti o n . The n ega ti ve impact to e mpl oy m e nt in W yomin g from redu ce d c oal produ c t i o n is



### appr~x **matcl y**  rwo to four rime s large r rhan rh e po s itiv e e mp l o y ment eff ec ts from narura l gas product ion. A c ro ss all s cenario s a n a ly-ze d , th e tot a l impa c t on s ta te wid e e mplo y m e nt ra nges from a 0.3 % d e clin e in 2 016 ro a 3
. 2% d e clin e in 2 0 3 0 , r e la tive to 2 01 2 e mpl oy m e nt le ve ls. The imp ac t of th e re gulatio n s would be exp ec t ed ro lead to a c ontra c tion i n state wid e e c onomic activ i ty a nd empl oy m e nt regardl ess of an y orh e r off se ttin g eco nomi c g ro wth in Wyomin g . I MPACT OF T HE COAL ECONOMY 0 ' \VYOMI ' G 

### State Rev e nu es Amhors an a lyzed borh rhl' d t ec r of c hang es in coa l produ c ti o n from fundam e nt a l m a rk e r ri s ks (s h o wn in Fi g ure ES-4

- ad ver se produ c tion co s t c h a n ges, s low eco nomi c growth , and co ntinued low n a tura l gas pri ces) and potential Ill ( d ) impa c ts on s tate r e ve nu es . Of th e fu n dam e mal marke r ri s k scen a ri o s, s r a te re ve nu es w e re hi g h e st in th e case of hi g h e r coa l produ c t io n cos ts, rh e wors t out co m e for th e wi de r W yomin g ec onomy in t e r m s of e mploy m e nt a nd produ c ti o n. Conve rs el y, s ta r e r evenu e s w e r e l owest in th e low c oa l produ c tion costs sce nario, th e bes t outc om e for th e s t a te w id e e c onomy. Oth e r s cenari os h ad littl e imp ac t o n s t a r e r eve nu es . 

## Total Coal Economy State Revenue Change from Reference: Market Scena r ios



# - -- - 

# -• I -2 a.c = .

- !.O.C ' o H

**~h** E :::cn L 01· E:::on H gh Coa Co st Figure ES-4. To t a l c oal eco nom y t ax revenue ch ange.



# 7he scenario in which coal production is highest results in the lowest tax revenues to Wyoming.

6 

# - · I 

# - - • 

# - - -

Le

w Coa Cost t- gh Ga s Ro L 01·. Ga5 Re501.r:::e

Th e p ote nti a l impa c ts o f propo se d ca rbo n regul a ti o n s o n s tare re ve nu es a re se ve re . Th e m os r f avor a bl e o ut co m e s for s ta r e r eve nu es are th ose in whi c h e n e rgy e ffi c ie n cy is u se d as a c ompli a n ce strategy, as s hown in Figur e ES- 5. B eca us e EPA's I II ( d ) is a nti c ip a ted r o in c rease dem a nd for n a tural gas in d cc rri c iry ge n e ra ti o n , auth o rs a l so co n s id e re d th e p ote nti a ll y o ff se rr i n g eff e c ts rhi s c ould have on s r a r

e r eve nu e s. Combin e d coal and ga s e ff ects on s rar e re v e nue s a re s hown in Figure E S- 6. Tax r eve nu es c ontinue ro d e clin e in all p o l i<:y impl e ment a tion sce n a rio s, s u gges tin g th a t p os iti ve n a tural gas ef f ec ts d o n ot off set t hl'IMPACT OF THE COAL ECONOMY ON WYOM I NG 

## Total Coal Economy Ta x Revenue Change from Reference: 111(d) Scenarios


# ---· I I

• llld

- I Jat on a W' EE • 111d- Nat on a w/o EE e llld- Reg ona \',I EE • llld- Reg ona ,·,/o EE Fi gure ES
- 5. Total economy tax r even u e c h ange: Il l ( d ) scenarios. 

## Total Energy Tax Revenue Change from Reference: 111 (d) Scenarios



## .,,.. "":

.... v.v

**~**

,.. ,... w '""'"!) 

# • • I 

# • • -2:.c=o

**-.!:.:=~** 

# I 

# I 

# I

**~** .... ,...

**~** ........ ,/"'c

**~:15** 2A"'IA v..:.v • 1::::1 - tic: on a ,., EE • 111::1-

**IJ~:** on a\ o EE llld- Reg ona \'• EE • llld- Reg ona v. o EE Fi gure ES-6. Total energy e c onomy t ax revenue c h ange: I ll ( d ) scenarios. losses in s ta te reve nu e du e ro lo w e r co al produ c ti o n caused b y 

### 111 ( d ) . Au t h o rs a l so f o und th at stare revenue is hi g h est i n Lh e s ce n a ri o wo r s t fo r coa l produ c ti o n . O ve ra ll , proposed carbo n regu la tion s n: su lr in a predicted decline in the stare's comb in ed coal and natural gas revenues of berween 36% and 46% by 2030, as shown i n Fi gu r e ES-6. 

### Co n cl u s i o n s

' )h e greates t ri sks W yo min g's coa l indu s rr y 

### faces. a n d by ex t e n s io n th e g rca r csr ri sks t o s t a re reve nu es d e r i ved from coa l pro d u c ti on, arc pose d b y p ropo se d carbon regulatio n s. Significant expa n s ion of i nrcrnar io n al coal ex pons on rh c o r de r of I 00 m ill ion ron s a nn ua ll y may be po ss ib le with th e ope ni ng of proposed new expo rt term in a l s, w hi c h wo uld h ave s ig n ifica nt eco n o mi c he n cfir ro W yo min g . 

### 7 

# Wyo m ing may have to choose wh eth er to prioriti ze production and employmen t or its own revenues in implem enting its carbon mitigation strategies.By 2030, th e r em 1in a ls wou ld n or, h oweve r, en ti re ly ofEer th e po t enti a l coa l p r od u ct io n losses res ultin g f ro m ca rbon regul a ti o n s in an y of th e p o li cy sce n a ri os c on s id e re d in rhi s s tud y. 1l1 c w ays in whi c h p o li cy m a k ers in Wyoming a nd ac ro ss th e n a tion impl e m e nt s tr a teg ies ro m ee t n ew ca rb o n r egu la ti o n s is critical to rh c eco n o mi c i mpac ts th e s ta r e will ex p e ri e n ce . G r ea te r u sc of energy effic i e n cy m easures cou pl ed w ith w id e r coo p e r a ti o n a m o n g s t a r es a r a n at io n a l sc a le a r c c riti ca l to minimi z in g th e imp ac t of rh e regul a ti o n o n W yo min g's ec onom y . I M P ACT OF T i lE COJ\L ECONOMY ON WYOMING
1l1 e w ays in w h ic h Wyom i ng i mp lements p olicies to m ee t c arb o n r eg ul a ti o n s w iU a ls o h ave a n imp ac t on s ta r e r e ve nu es. Poli c i es ch a r res ult in th e hi g h es t s c

a r

e reve nu es h ave th e w ors t imp ac ts on th e c o a l industr y and b y ex te n s ion st a te wide produ c ti o n a nd e mp l o y m e nt. Thi s s u gges ts th at th e s t are m ay h ave ro c h oose wh e th e r ro prioriti ze s ta r e pro du c ti o n a nd e m p loy m e nt o r irs ow n r eve n ues in im p lem e ntin g it s ca r bo n miti ga tion s tra t egies
. M o re imp o rta nt will be w h e th e r Wyo min g ca n inAu e n ce o th er s tares ro i m pl eme nt ca r bo n co n tro l s trate gi es l ea s t d e trim e nta l ro irs c o a l indu s try.

Thi s re p ort wou ld n or h ave bee n p oss i b le w ith o u t assista n ce from a nu mbe r o f peo pl e. Th ank yo u r o Ma h d i C h a h ka ndi , G ab ri e ll e H o r vat h a nd J c nn a C a nrrcll , rh e de di cated g ra du a t e s rud e nrs w h o hel ped w ith rh e d a t a c oll ec ti o n a nd a n a lys is n ecessary ro pr e p a r e rhi s re port. W e are a lso i nd ebt e d to T r ev o r H o u se r a nd Rh o dium Group f o r a ll o win g us th e u se o f th e ir EPA lll ( d ) rul e s imul a ti o n s d e s c ribin g th e p o te nti a l effe c ts o f th ese pro p ose d rul es o n W yoming c oal a nd narural g as output. Th e ir willin g n ess to share is g rc arl y :1ppr ec iate d. Oth e rs se r ved as reso urces, offe re d p a ti e nr h e lp a nd g uid a n ce in th e pr e p a rat i o n of v ari o u s sec ri o n s in thi s re p o rt a nd d ese r ve m e nti o n. (a n A ndr ews a t R oc ky Mounra in P owe r rea d seve ra l vers io n s of ea rl y c h a p te r s, offe ri ng correc ti o n s a nd co mm ents. Help a nd in s ig ht was a l so oH e r

c d by rh e W)ro min g T n f

ras rru c rurc Au th o ri ry (W LA) S tud y Tec hni cal S upp o rt G ro up , includin g J o n a th a n D o wnin g (W y omin g Minin g A ss o c iation ), M a rr J o n es ( Bu rl ington N o rth e rn Sa nra Fe}, Eve re tt Kin g (Ambrc En e rgy), Bill Mai ( Uni vc r s i ry of W yomin g) , Colin M c Kee ( W y omin g Go ve rnor 's OfH cc), Rita M ey e r ( Ro c ky Mount a in Powe r), Dan No bl e (W yo min g D e partm e nt o f Re ve nu e), Jo e Ritz man (SS A M a rin e), Greg Sc h ae f e r ( Arc h Coa l), D ec k S lo an ( Arc h Coa l), John Lowell ( Arc h Coa l), a nd Nath a n Ni c hol as (Wyom in g Go ve rnor 's Offi ce). WlA bo a rd m e mb e rs Mike E as l ey (C h a irm a n ); Ky le Whi te ( Vi ce C h a irm a n ); D o n C ollin s (Tr eas ure r ); D av id Sparks ( m e mb e r); a nd J.M. S h afe r ( m e mb e r ) a lso con tribur ed to thi s eff on: , as did fo rm e r WlA b oa rd m e m be r B ryce F r ee m a n (Wy omin g's Ofllce of Co n s um e r Ad voca t e) . The rep o rt co uld n o t h ave b ee n c o mpl e te d ,.v ith ou t rh e s upport o f rh e WJ A, a nd in p a rti c ul a r irs Ex ec mi ve Direc to r, L oyd Drain , and rh e e ff o rt s of L:lllra Ladd , o ur pr oj ec t liai so n. As s i s tan ce fro m th e Uni ve r s iry of W y omin g's Sc hool of En e rgy R eso urces (S ER), es p ec i a ll y Abby M e llin ge r Sco tt a nd Dian a Gra nt Hulm e, w as a ls o c ru c ial to th e proj ec t. Fundin g for rh e r e p o rt w as pr ov id e d b y rh e WIA a nd rh c ER. As u s u a l , a ll e rr o rs re m a inin g a r c s tri c tl y rh e aut h o r s', a nd a re nor th e r espo n s ib ilit y o f tho se wh o h ave h e lp ed us al o n g t h e way . Th ank yo u eve ryo n e, a nd a h ea rrf e lr th a n ks a nd o u r a p o log ies to th ose we h ave f o r

g ott e n to m c nci o n as w e ll. 

### 8

### Meeting: Hydro and CAA Sec lll(d) Meeting Rule(s) Discussed:

# ~ 

# P-P Written Materials? Yes @ 

### Name Organization 

# L/ .Nlrf 

# C!../OCC! . 

# IN**~.;,. c.** **/7 _/** **Ail~** IVJ / ,.{J _A 

# k , I 

# Sdf-**~** 

## 1 

# !1/1-IA 

# hA V( 

# 1 /

A f

A-s 

# N W-1+**~**

# ~k t- e e_ 

# f!;l uCJJ 

# Wt'f {

u- 

# (N e- /lw
. {vr**() et~**  

# rV1 

# Mt**Cw ~**  rf P/d

u 

# ' 

# rA I (?.f\. /J 

## 5 J1 M- h 

# e.rA**jft-/1;/~** 

# £fJJ

# v !1/) , 

# c v 

### Phone Number
c:2. 002. (of{).._- 

## 1100 )( ;:;,**~** 0


# ,, j( 

# , . 

# x/s< D


# , , 

# ''X 2-0V

## cJ**;)** &w ?-:3 /u '-1



# t9 9- 

# 3lf 

# s , YiJa l( S<-1"':> - 

## q (Q3 

# Lf 2_cJ2 

# stf

# 7!1cv ,

### Date: February 5 , 2015 Meeting: Clean Energy Group Re: lll(d) Rule(s) Discussed: 

# C:.., pf> Written Materials? Y 

# e@ Na m e Org ani z ation Pho ne Numb e r

# --**-- -=** **~~ ~-~~~** **fl** __________

# -- __ 6

_ 9

_ (
-

__

# ! __ 

# G c? 

## v**~** 

# f 

# cit IV ') JK 

## (% 

# f**~** 

# f 

# c q 7 

# 3

- L( 

# 3 (J , 

# 'i ) 0 

# h

---- --+------------- --

# 1-~A.A Lt?tJ/ni5 )i; . n:_(J7/"ft,___ ?-o 

# z-

# ':?~<;~ q

# ms

V' ;J_ 

### 1,,. 

# l--'**------ --~------------** **---!**

### .5~{ 

## 6C{(- 

## 7tY-j 0

## (Y\**~** vI

## \~ I,-

## 52-~~- 

# ''
. '-_
... ---------t- -'l__G_"'-_ ·

## --~**~-·**_:-,__ \ 

### q_y __ 'G
__ ---1 

# 3 c '-"'-'

# ~\~=----1---'-f\v---\~~J._-~..J=-~( 

# r -

to 

# ?3 f--(=- 1 

### \1_1
... ,· :__.____;. 

## r)"--?t_r'\

# -'--A-'--'-·~_,___,**e~**_ _._/-+1....L--1

# ~ll**~~~** .JG mfx2IZ

# ~**Je!Ailb:>~c"'-\')h**

### Date: February 5, 2015 Meeting: Meeting with Exe lon Ru le(s) Discussed: 

# t_,pp Written Materials?

# ~ Nam e

# ~~**~l1lM** &tYlV\ J'DC?

# <?~**\"'" ~~L.** 

# ~~**~~ ~** 

r

# (),ef~ 

# Jl /) ()

I

I

r--- 

### Org ani z ation

# ~ f'H_& ,



# LxD -?'1("- 

# f?A



# Ef!1- Phone Numb e r 

# dO)- 

# Co31-C)5SQ ?02**&~7 o~:;l**  

# --

. . 7 

### /::--.:>- :-:-.**~~** 

### i

_ )**~** 

### . 

# -I 

# 1 1 

# ? 

# _ill5l/}**~** c; ( 

# 8 

# I i 

# '2oi 

# 56 9 3'201 

## I ,

I


### I

-'- !

- 1- ---